RNS Number : 7993E
Hargreaves Services PLC
14 February 2018
 

 

14 February 2018

 

 

HARGREAVES SERVICES PLC

(the "Group" or "Hargreaves")

 

Interim Results for the six months ended 30 November 2017

 

Hargreaves Services plc (AIM: HSP), a diversified group delivering key projects and services to the industrial, energy and property sectors, announces its interim results for the six months ended 30 November 2017.

 

KEY FINANCIAL RESULTS

 

Unaudited

Six Months ended 30 Nov 2017

 

Unaudited

Six Months

ended 30 Nov 2016

 

Revenue

£150.3m

£170.9m

 

Underlying Operating Profit*

Operating (Loss)/Profit

£2.3m

£(2.7)m

£2.1m

£0.1m

 

Underlying EPS

2.7p

0.3p

 

EPS

Interim Dividend

(4.0)p

2.7p

0.0p

2.7p

 

Net Debt

£20.6m

£36.9m

 

Net Asset Value

Net Assets per Share

£134.9m

423p

£129.2m

406p

 

                                               

* Underlying Operating profit is defined by the Board as Operating Profit prior to exceptional items and amortisation of intangible assets and includes the Group's share of pre-tax profit of its German associate.

 

HIGHLIGHTS

 

·      First half underlying trading in line with management expectations;

·      Underlying Operating Profit improved;

·      Interim dividend maintained at 2.7p;

·      Net debt reduced by 44%;

·      Property development and realisation programme progressing; and

·      Brockwell Energy spin off progressing with financial closure expected in the next few months.

 

Commenting on the interim results, Chairman David Morgan said: "The Group's operational focus on delivering consistent performance with an emphasis on risk management and margin improvement is beginning to bear fruit. Progress on the key strategic objective of realising value from the Group's Property and Energy assets has continued with further significant news, particularly in respect of the Energy portfolio, expected in the next few months. The Group has a strong balance sheet to support its strategy and the Board remains confident that there is substantial shareholder value to be realised."

 

For further details:

 

Hargreaves Services plc

Gordon Banham, Group Chief Executive

John Samuel, Group Finance Director

 

 

0191 373 4485

Buchanan (Financial PR)

Mark Court / Sophie Wills / Henry Wilson

 

0207 466 5000

N+1 Singer (NOMAD and Joint Corporate Broker)

Sandy Fraser/ Rachel Hayes

 

020 7496 3000

Investec (Joint Corporate Broker)

Sara Hale / Rob Baker

020 7597 5970

 

CHAIRMAN'S STATEMENT

 

Results

 

Underlying trading in the first half was in line with management expectations. Revenue was £150.3m (2016: £170.9m). The reduction is primarily due to the inclusion of £10.2m of Legacy asset sales in 2016, whereas only £0.4m of such sales arose in the current period. Additionally, the first half of the year saw a reduction of £6.3m in revenue on three legacy contracts in Specialist Earthworks. 

 

Underlying Operating Profit for the first half was slightly higher than the comparative period at £2.3m (2016: £2.1m). The improvement derives from Distribution & Services which recorded an increase in Underlying Operating Profit to £5.1m (2016: £4.8m). Underlying Operating Profit is defined by the Board as Operating Profit prior to exceptional items and amortisation of intangible assets and includes the Group's share of pre-tax profit of its German associate. Operating loss under IFRS was £2.7m (2016: profit £0.1m).

 

The Specialist Earthworks business has continued to manage to completion three legacy contracts inherited from the acquisition of C. A. Blackwell. These contracts reported £3.6m (2016: £9.9m) of revenue and incurred operating losses of £2.8m in the period, which are recorded as exceptional. There were no losses recorded on these contracts in the comparative period as they were accounted for in a fair value adjustment to goodwill. One of these contracts has now completed and as the other two have now moved much closer to completion, a more accurate assessment of their likely financial outcome has been possible. The last of these contracts is expected to complete on site by April 2018 and full provision has been made for all expected losses.

 

After accounting for the exceptional item of £2.8m (2016: £nil), amortisation of intangible assets of £0.2m (2016: £0.1m) and adjusting for tax on the profits of the German associate of £0.7m (2016: £0.6m), the loss before tax was £1.9m (2016: profit £0.2m).

 

Earnings Per Share

 

Underlying basic earnings per share were 2.7p (2016: 0.3p) and (4.0)p (2016: 0.0p) on a reported basis.

 

Net Debt

 

Net debt reduced to £20.6m (2016: £36.9m) primarily due to the recovery of £5.6m of the Tower loan and the proceeds from Legacy coal asset sales. These inflows occurred in the second half of the 2017 financial year and were reflected within the May 2017 closing balance sheet. As a result, net interest charges have reduced to £0.6m (2016: £1.2m). The Group has substantial headroom on its banking facilities and is operating well within covenant levels. Net debt is not expected to be materially different by the end of the financial year.

 

Dividend

 

The Board is maintaining the interim dividend at 2.7p (2016: 2.7p). This will be paid on 6 April 2018 to shareholders on the register at 23 February 2018.

 

Board Changes

 

As previously announced, on 2 January 2018, Iain Cockburn stepped down as Group Finance Director to take up the role of Chief Financial Officer of Brockwell Energy Limited, the holding company for the Group's interests in the electricity generation sector, on a full-time basis. Iain has been succeeded by John Samuel, formerly Group Finance Director at Renew Holdings plc. Additionally, Kevin Dougan retired from the Board on 1 December 2017. I would like to thank both Iain and Kevin for their many years of service to the Group. I look forward to working with Iain as the Brockwell project develops.

 

Strategy

 

In April 2016, we announced three key strategic objectives.

 

First, to report an Underlying Operating Profit from the Distribution & Services business in excess of £10m by the year ending 31 May 2018. This was achieved in the year ended 31 May 2017, and these interim results indicate that this improved operating performance is being sustained.

 

Second, to create more than £35m of value from the Property & Energy portfolio by 2021. To date only £2.4m has been realised in cash from the Property portfolio and the work to realise further value continues. The successful development of the Blindwells site will be a key demonstration that the Group possesses substantial latent value in the land portfolio.

 

A key element of the value creation in the Property and Energy portfolio is the separation and spin off of the Energy business into Brockwell Energy Limited. The process to secure funding for Brockwell is well advanced with discussions progressing with several credible financial institutions. The Brockwell management team and their advisers have indicated that they are confident of achieving financial close within the next few months.

 

Finally, to generate £60m of cash from the realisation of Legacy assets. To date, £27m has been recorded and the net book value of the remaining legacy assets is £33m, compared with £42m one year ago.

 

In August 2017, we outlined four additional short term strategic goals to be achieved in the current financial year. In Distribution & Services, these were to grow and improve the profit resilience of Hargreaves Raw Materials Services GmbH ("HRMS"), the Group's German based European raw materials trading associate business, and to refocus the Specialist Earthworks business around its core competencies. In Property & Energy, these were the successful spin off of Brockwell Energy, which I have commented on above, and the sale of the first development plot at Blindwells.

 

In October 2017, we announced that the Board of HRMS had identified the opportunity to build a Carbon Pulverisation Plant in Germany which will add resilience to future trading prospects. HRMS is a key supplier of specialist raw materials to major European customers in the steel, foundry, smelting, ferroalloy, sugar, limestone, insulation, refractory and ceramic industries. The HRMS Board believes that there is a long-term market opportunity for the supply of bulk carbon products in Europe. The project is underpinned by agreements with a key strategic customer, including a guaranteed minimum off-take volume. Funding for the project through a combination of cash reserves and new and existing debt facilities in Germany is now secured. These funding arrangements have no material impact on the Group's current banking arrangements in the UK. Construction work has commenced, and the plant is expected to become operational in calendar year 2019.

 

The two remaining legacy contracts in Specialist Earthworks, which have resulted in the exceptional costs incurred in this period, are expected to complete on site within the next two months. In respect of the other activities of this business, we reported in August 2017 that management is being highly selective and only engaging with contracts where the scope of work is within the business' core competence and where risk is managed and substantially mitigated through appropriate terms and conditions. The consequence of these actions has been a reduction of 12% in revenue (excluding legacy contracts).

 

In Property, we indicated previously that we hoped to achieve a sale of the first development plot at the key Blindwells site near Edinburgh in this financial year. Due to planning delays, this will not now happen until next financial year. Despite that short-term delay, which will not impact expected results for the current financial year, progress on the project has been good with substantial interest generated from developers.

 

Outlook

 

The Group's strategy remains to deliver long term sustainable profits from its core trading businesses in Distribution & Services whilst optimising investment in Property & Energy to maximise value. These results confirm that the Group is making headway towards meeting its declared strategic objectives with further progress expected in the second half of this financial year. The Board anticipates reporting full year results in line with its expectations.

 

 

 

 

David Morgan

Chairman

14 February 2018

 

 

Chief Executive's Review

 

Distribution & Services

 

The Distribution & Services business recorded revenue of £146.8m (2016: £159.3m) and an Underlying Operating Profit of £5.1m (2016: £4.8m). Operating Profit under IFRS was £0.1m (2016: £2.8m). When the revenue on legacy contracts within Specialist Earthworks is excluded, revenue reduced by 4.1% to £143.2m (2016: £149.4m) and therefore the Underlying Operating Profit margin increased to 3.6% from 3.2%. Further information on the performance of each business within this segment is given below.

 

Coal Distribution

 

Revenue in Coal Distribution was £54.8m (2016: £57.9m), due to lower volumes of low margin thermal coal being traded however, Underlying Operating Profit increased by 21% to £3.4m (2016: £2.8m). Of that, our German associate contributed £2.0m (2016: £1.9m) as it continued to trade well, and the UK operations contributed £1.4m (2016: £0.9m), an increase of 56%. Our coal production and processing sites at House of Water and Killoch in Scotland continue to yield a high proportion of speciality coals, pricing of which has been strong. Favourable trading conditions are expected to persist in the second half of the financial year.

 

Industrial Services

 

Revenue was £28.7m (2016: £30.7m) with an Underlying Operating Profit of £0.3m (2016: £0.2m) representing a slight improvement due principally to a reduction in first half losses in the Hong Kong operation. As in the prior year, the cyclical profiling of contracts and planned site outages, particularly in Hong Kong, means that operating profit will be heavily weighted to the second half in which a strong profit performance is expected.

 

Logistics

 

Revenue of £22.8m (2016: £25.1m) and Underlying Operating Profit of £0.6m (2016: £0.7m) has been recorded. In the last financial year to 31 May 2017, this business had a strong first half and a very weak second half. Steps have been taken both to reduce overhead and to focus on areas of activity which offer better margins such that the business is now consistently recording monthly operating profits.

 

Specialist Earthworks

 

Excluding the impact of the three legacy contracts which have been reported in exceptional items, the Specialist Earthworks business recorded revenue of £38.6m (2016: £44.0m) and an underlying operating profit of £0.8m (2016: £1.1m). Activity levels have decreased as a result of greater contract selectivity and risk mitigation.

 

Although the Group acquired C. A. Blackwell at a price that reflected a number of historic contractual challenges and risks, the financial outcome of certain projects is materially worse than was expected and as disclosed to the Group at the time of the acquisition. As a result, and as reported in November 2017, the Group is pursuing a claim against the vendors of this business for breach of warranty. This matter may take some time to reach resolution.

 

The C. A. Blackwell business has two principal current contracts which support the forward outlook, being the A14 bulk earthworks project and the materials handling activity at the Hemerden tungsten mine in Devon. Both contracts are profitable and provide longevity and good visibility of future workflow. Future business opportunities with similar operational and contractual characteristics are being pursued.

 

Property & Energy

 

Property & Energy contributed £3.1m (2016: £1.4m) of revenue in the first half and a net operating loss of £0.7m (2016: £0.8m).

 

Property

 

In August 2017, we reported that the independent Red Book valuation of our property assets had been completed providing a market value of £49m and a development value of £83m compared with a book value at 31 May 2017 of £31m. This exercise demonstrated the substantial potential value gain available from the property portfolio. We will update the property valuation on a comparable basis when we announce our preliminary results. The net book value as at 30 November 2017 stood at £31.8m (2016: £32.3m). £0.8m of development spend has been incurred at Blindwells in the period. Sales of certain sites in which we have decided not to invest for longer term development return are expected to take place in the second half of this financial year.

 

Energy

 

We are pleased to report that planning permission has been received in principle for an energy from waste plant and other industrial developments at the 400 acre site at Westfield, a former open cast coal mine in Fife. During the period the total capitalised expenditure on energy development projects amounted to £1.6m (2016: £0.7m).

 

Legacy Asset Realisations

 

During the period sales of Legacy Assets amounted to £0.4m (2016: £10.2m) with minimal Underlying Operating Profit being recorded (2016: £0.6m).

 

The principal remaining Legacy Assets comprise loans due from the Tower Joint Venture of £17m (2016: £22m) and surplus plant and machinery. Subsequent to the period end, a further £2m of cash has been received from the disposal of surplus mining equipment from Maltby. The majority of the remaining Legacy assets are expected to be realised during calendar year 2019.

 

Summary

 

Having faced a number of market and commercial challenges over the last few years, each of the Group's businesses within Distribution & Services are at different stages of positioning themselves to deliver greater shareholder value. Each of these businesses is profitable and has robust processes for the management of risk and return. Each has differing market and financial opportunities which the Board reviews regularly, managing the allocation of capital accordingly.

 

Group net assets increased by 4% to £134.9m (2016: £129.2m), equivalent to 423p per share. Gearing (measured as net debt compared to net assets) at the end of November 2017 was 15% (2016: 29%). The Group's strong balance sheet provides an excellent basis from which to create sustainable returns and shareholder value.

 

 

 

 

 

 

Gordon Banham

Group Chief Executive

14 February 2018

 

 

 

 

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 November 2017

 

 

 

Unaudited

Unaudited

 

 

 

six months

six months

Audited

 

 

Ended

ended

year ended

 

 

30 November

30 November

31 May

 

 

2017

2016

2017

 

Note

£000

£000

£000

 

 

 

 

 

Revenue

 

150,268

170,921

342,868

Cost of sales

 

(135,364)

(151,722)

(306,266)

 

 

 

 

 

Gross profit

 

14,904

19,199

36,602

Other operating income

 

691

1,607

4,870

Administrative expenses

 

(15,444)

(20,659)

(40,309)

 

 

 

 

 

Operating profit before exceptional items

 

151

147

1,163

 

 

 

 

 

Exceptional items

 

(2,809)

-

(470)

 

 

 

 

 

Operating (loss)/profit after exceptional items

 

(2,658)

147

693

Financial income

 

328

153

1,766

Financial expenses

 

(913)

(1,363)

(3,858)

Share of profit of associates and jointly controlled entities (net of tax)

 

1,324

1,236

5,487

 

 

 

 

 

(Loss)/profit before tax

 

(1,919)

173

4,088

Taxation

5

633

(159)

694

 

 

 

 

 

(Loss)/profit for the period/year from continuing operations

 

(1,286)

14

4,782

 

 

 

 

 

Other comprehensive (expense)/income

 

 

 

 

Items that will not be reclassified to profit or loss

 

 

 

 

Remeasurements of defined benefit pension plans

 

-

(5,654)

(544)

Tax recognised on items that will not be reclassified to profit or loss

 

-

961

36

Items that are or may be reclassified subsequently to profit or loss

 

 

 

 

Foreign exchange translation differences

 

(249)

2,173

2,594

Effective portion of changes in fair value of cash flow hedges

 

(237)

347

349

Tax recognised on items that are or may be reclassified subsequently to profit or loss

 

62

(63)

(63)

Other comprehensive (expense)/income for the period/year, net of tax

 

(424)

(2,236)

2,372

 

 

 

 

 

Total comprehensive (expense)/income for the period/year

 

(1,710)

(2,222)

7,154

 

 

 

 

 

(Loss)/profit attributable to:

 

 

 

 

Equity holders of the company

 

(1,262)

(9)

5,138

Non-controlling interest

 

(24)

23

(356)

 

 

 

 

 

Profit for the period/year

 

(1,286)

14

4,782

 

 

 

 

 

Total comprehensive (expense)/income for the period/year attributable to:

 

 

 

 

Equity holders of the company

 

(1,686)

(2,245)

7,510

Non-controlling interest

 

(24)

23

(356)

 

 

 

 

 

Total comprehensive (expense)/income for the period/year

 

(1,710)

(2,222)

7,154

 

 

 

 

 

GAAP measures

 

 

 

 

Basic earnings per share (pence)

7

(3.96)

(0.03)

16.14

Diluted earnings per share (pence)

7

(3.96)

(0.03)

15.93

 

 

 

 

Non-GAAP measures (continuing)

 

 

 

 

Basic underlying earnings per share (pence)

7

2.65

0.28

18.12

Diluted underlying earnings per share (pence)

7

2.62

0.28

17.88

 

 

Condensed Consolidated Balance Sheet

as at 30 November 2017

 

Unaudited

Unaudited

 

Audited

 

30 November

30 November

31 May

 

2017

2016

2017

 

£000

£000

£000

 

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

66,766

68,679

63,664

Investment property

11,544

5,126

12,124

Intangible assets

12,122

12,313

12,389

Investments in associates and jointly controlled entities

8,206

2,501

6,917

Other financial assets

87

369

7

Deferred tax assets

2,715

3,048

2,844

 

 

 

 

 

101,440

92,036

97,945

Current assets

 

 

 

Assets held for sale

3,186

5,040

5,040

Inventories

22,332

40,533

29,147

Derivative financial instruments

429

348

139

Trade and other receivables

119,546

127,610

121,657

Cash and cash equivalents

17,587

27,457

27,817

 

 

 

 

 

163,080

200,988

183,800

 

 

 

 

Total assets

264,520

293,024

281,745

 

 

 

 

Non-current liabilities

 

 

 

Interest-bearing loans and borrowings

(424)

(59,441)

(38,587)

Retirement benefit obligations

(4,209)

(9,764)

(5,103)

Provisions

(4,421)

(3,919)

(5,344)

Derivative financial instruments

-

-

(12)

 

 

 

 

 

(9,054)

(73,124)

(49,046)

 

 

 

 

Current liabilities

 

 

 

Interest-bearing loans and borrowings

(37,807)

(4,965)

(4,965)

Trade and other payables

(81,266)

(84,047)

(88,958)

Provisions

(600)

(867)

(600)

Derivative financial instruments

(869)

(834)

(249)

 

 

 

 

 

(120,542)

(90,713)

(94,772)

 

 

 

 

Total liabilities

(129,596)

(163,837)

(143,818)

 

 

 

 

Net assets

134,924

129,187

137,927

 

 

 

Condensed Consolidated Balance Sheet (continued)

as at 30 November 2017

 

Unaudited

Unaudited

 

Audited

 

30 November

30 November

31 May

 

2017

2016

2017

 

£000

£000

£000

 

 

 

 

Equity attributable to equity holders of the parent

 

 

 

Share capital

3,314

3,314

3,314

Share premium

73,955

73,955

73,955

Other reserves

211

211

211

Translation reserve

(1,237)

(1,409)

(988)

Merger reserve

1,022

1,022

1,022

Hedging reserve

49

222

224

Capital redemption reserve

1,530

1,530

1,530

Retained earnings

56,075

49,934

58,630

 

134,919

128,779

137,898

 

 

 

 

Non-controlling interest

5

408

29

 

 

 

 

Total equity

134,924

129,187

137,927

 

Consolidated Statement of Changes in Equity

for the six months ended 30 November 2017

 

 

 

 

 

 

Capital

 

 

Total

Non-

 

 

Share

Share

Translation

Hedging

Other

redemption

Merger

Retained

parent

controlling

Total

 

capital

premium

reserve

reserve

reserves

reserve

reserve

earnings

equity

interest

equity

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 June 2017

3,314

73,955

(988)

224

211

1,530

1,022

58,630

137,898

29

137,927

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income and expense for the period

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

-

-

(1,262)

(1,262)

(24)

(1,286)

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation differences

-

-

(249)

-

-

-

-

-

(249)

-

(249)

Effective portion of changes in fair value of cash flow hedges

-

-

-

(237)

-

-

-

-

(237)

-

(237)

Tax recognised on other comprehensive income

-

-

-

62

-

-

-

-

62

-

62

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income

-

-

(249)

(175)

-

-

-

-

(424)

-

(424)

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income and expense for the period

-

-

(249)

(175)

-

-

-

(1,262)

(1,686)

(24)

(1,710)

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners recorded directly in equity

 

 

 

 

 

 

 

 

 

 

 

Equity settled share-based payment transactions

-

-

-

-

-

-

-

143

143

-

143

Dividends paid

-

-

-

-

-

-

-

(1,436)

(1,436)

-

(1,436)

 

 

 

 

 

 

 

 

 

 

 

 

Total contributions by and distributions to owners

-

-

-

-

-

-

-

(1,293)

(1,293)

-

(1,293)

 

Balance at 30 November 2017

3,314

73,955

(1,237)

49

211

1,530

1,022

56,075

134,919

5

134,924

 

Consolidated Statement of Changes in Equity

for the six months ended 30 November 2016

 

 

 

 

 

 

Capital

 

 

Total

Non-

 

 

Share

Share

Translation

Hedging

Other

redemption

Merger

Retained

parent

controlling

Total

 

Capital

premium

reserve

reserve

reserves

reserve

reserve

earnings

equity

interest

equity

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 June 2016

3,314

73,955

(3,582)

(62)

211

1,530

1,022

54,582

130,970

385

131,355

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income and expense for the period

 

 

 

 

 

 

 

 

 

 

 

(Loss)/profit for the period

-

-

-

-

-

-

-

(9)

(9)

23

14

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation differences

-

-

2,173

-

-

-

-

-

2,173

-

2,173

Effective portion of changes in fair value of cash flow hedges

-

-

-

347

-

-

-

-

347

-

347

Remeasurement of defined benefit pension plans

-

-

-

-

-

-

-

(5,654)

(5,654)

-

(5,654)

Tax recognised on other comprehensive income

-

-

-

(63)

-

-

-

961

898

-

898

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income

-

-

2,173

284

-

-

-

(4,693)

(2,236)

-

(2,236)

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income and expense for the period

-

-

2,173

284

-

-

-

(4,702)

(2,245)

23

(2,222)

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners recorded directly in equity

 

 

 

 

 

 

 

 

 

 

 

Equity settled share-based payment transactions

-

-

-

-

-

-

-

245

245

-

245

Dividends paid

-

-

-

-

-

-

-

(191)

(191)

-

(191)

 

 

 

 

 

 

 

 

 

 

 

 

Total contributions by and distributions to owners

-

-

-

-

-

-

-

54

54

-

54

 

Balance at 30 November 2016

3,314

73,955

(1,409)

222

211

1,530

1,022

49,934

128,779

408

129,187

 

Condensed Consolidated Cash Flow Statement

for the six months ended 30 November 2017

 

Unaudited

Unaudited

 

 

six months

six months

Audited

 

ended

ended

year ended

 

30 November

30 November

31 May

 

2017

2016

2017

 

£000

£000

£000

 

 

 

 

Cash flows from operating activities

 

 

 

(Loss)/profit for the period/year from continuing operations

(1,286)

14

4,782

Adjustments for:

 

 

 

Depreciation

4,680

5,277

11,333

Depreciation of mining assets

1,015

402

862

Impairment of Property, Plant and Equipment

-

-

2,655

Amortisation and impairment of goodwill and intangible assets

179

123

315

Net finance expense

585

1,210

2,092

Share of profit of jointly controlled entities (net of tax)

(1,324)

(1,236)

(5,487)

Profit on sale of Property, Plant and Equipment

(691)

(1,738)

(1,783)

Equity settled share-based payment expense

143

245

471

Income tax (credit)/expense

(633)

159

(694)

Translation of non-controlling interest

123

(221)

(373)

 

2,791

4,235

14,173

 

 

 

 

Change in inventories

6,817

6,442

17,828

Change in trade and other receivables

610

(9,704)

2,178

Change in trade and other payables

(5,628)

6,405

7,641

Change in provisions and employee benefits

(2,111)

(897)

(38)

 

2,479

6,481

41,782

 

 

 

 

Interest paid

(282)

(918)

(1,306)

Income tax received/(paid)

2,226

(6,206)

(6,994)

 

 

 

 

Net cash from operating activities

4,423

(643)

33,482

 

 

 

 

Cash flows from investing activities

 

 

 

Proceeds from sale of property, plant and equipment

3,405

3,646

5,284

Acquisition of subsidiaries (net of cash acquired)

-

-

(248)

Acquisition of property, plant and equipment

(11,001)

(7,085)

(19,971)

 

 

 

 

Net cash from investing activities

(7,596)

(3,439)

(14,935)

 

 

 

 

Cash flows from financing activities

 

 

 

Payment of finance lease liabilities

(3,003)

(5,164)

(8,612)

Dividends paid

(1,436)

(191)

(1,053)

(Repayments of)/proceeds from Group banking facilities

(2,510)

15,500

(2,500)

 

 

 

 

Net cash from financing activities

(6,949)

10,145

(12,165)

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(10,122)

6,063

6,382

Cash and cash equivalents at the start of the period/year

27,817

21,161

21,161

Effect of exchange rate fluctuations on cash held

(108)

233

274

 

 

 

 

Cash and cash equivalents at the end of the period/year

17,587

27,457

27,817

 

 

 

Notes to the CONDENSED Interim FINANCIAL INFORMATION

 

1.         Basis of preparation

 

The condensed consolidated interim financial information set out in this statement for the six months ended 30 November 2017 and the comparative figures for the six months ended 30 November 2016 is unaudited. This financial information does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. It does not comply with IAS 34 'Interim Financial Reporting', as is permissible under the rules of the Alternative Investment Market.

 

The condensed consolidated interim financial information, which is neither audited nor reviewed, has been prepared in accordance with the measurement and recognition criteria of adopted International Financial Reporting Standards. This statement does not include all the information required for the full annual financial statements and should be read in conjunction with the financial statements of the Group as at and for the year ended 31 May 2017. For the year ending 31 May 2018, there are no new IFRS which apply to the condensed consolidated interim financial information.

           

2.         Accounting policies                

 

The accounting policies applied in preparing the condensed consolidated interim financial information are the same as those applied in the preparation of the annual financial statements for the year ended 31 May 2017, as described in those financial statements.  

 

3.         Status of financial information           

                                                           

The comparative figures for the financial year ended 31 May 2017 are not the company's statutory financial statements for that financial year. The statutory financial accounts for the financial year ended 31 May 2017 have been reported on by the company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

4.         Principal risks and uncertainties                 

                                      

The principal risks and uncertainties affecting the Group are unchanged from those set out in the Group's accounts for the year ended 31 May 2017.  The Directors have reviewed financial forecasts and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, the Group continues to adopt the going concern basis in preparing the condensed consolidated interim financial information.           

 

5.         Taxation                                                                     

                                                                       

Income tax for the period is charged at 19% (2016: 19.83%). The effective tax rate, after removing the impact of JCEs is 19.5% (1.7%), representing an estimate of the annual effective rate for the full year to 31 May 2018.

 

 

6.         Dividends                                                                    

                                                                       

The final dividend of 4.5 pence per ordinary share, proposed in the 2017 annual accounts and approved by the shareholders at the Annual General Meeting on 3 October 2017, was paid on 20 October 2017.       

      

The directors have proposed an interim dividend of 2.7 pence per share (2016: 2.7p) which will be paid on 6 April 2018 to shareholders on the register at the close of business on 23 February 2018. This will be paid out of the Company's available distributable reserves. In accordance with IAS 1, dividends are recorded only when paid and are shown as a movement in equity rather than as a charge in the income statement.

 

 

 

7.         Earnings per share

           

 

Six months ended 30 November 2017

Unaudited

Six months ended 30 November 2016

Unaudited

Year ended 31 May 2017

Audited

 

Earnings

EPS

DEPS

Earnings

EPS

DEPS

Earnings

EPS

DEPS

 

£000

Pence

Pence

£000

Pence

Pence

£000

Pence

Pence

 

 

 

 

 

 

 

 

 

 

Earnings before exceptional items and amortisation

846

2.65

2.62

89

0.28

0.28

5,767

18.12

17.88

Exceptional items and amortisation

(2,108)

(6.61)

(6.53)

(98)

(0.31)

(0.31)

(629)

(1.98)

(1.95)

Basic earnings per share

(1,262)

(3.96)

(3.96)

(9)

(0.03)

(0.03)

5,138

16.14

15.93

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

 

31,888

32,244

 

31,825

32,177

 

31,842

32,267

 

The calculation of diluted earnings per share is based on the (loss)/profit for the period/year and on the weighted average number of ordinary shares in issue in the period/year adjusted for the dilutive effect of the share options outstanding. The effect on weighted average number of shares is 356,000 (2016: 352,000), the effect on basic earnings per ordinary share is nil p (2016: nil).

 

8.         Segmental information

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Board of Directors, since they are responsible for strategic decisions.

 

 

Distribution & Services

Property & Energy

Legacy

Corporate

Total

 

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

 

30 November

30 November

30 November

30 November

30 November

 

2017

2017

2017

2017

2017

 

£000

£000

£000

£000

£000

Revenue

 

 

 

 

 

Total revenue

147,247

3,595

373

-

151,215

Inter-segment revenue

(444)

(503)

-

-

(947)

 

 

 

 

 

 

Revenue from external customers

146,803

3,092

373

-

150,268

 

 

 

 

 

 

Underlying segment operating profit

5,136

(745)

46

(2,111)

2,326

Intangible amortisation and share of profit in associates and jointly controlled entities

(2,175)

-

-

-

(2,175)

 

 

 

 

 

 

Segment operating profit/(loss)

2,961

(745)

46

(2,111)

151

Share of profit in associates and jointly controlled entities (net of tax)

1,324

-

-

-

1,324

Net financing costs

(887)

(249)

-

551

(585)

 

 

 

 

 

 

Profit/(loss) before taxation (prior to exceptional costs)

3,398

(994)

46

(1,560)

890

 

 

 

 

 

 

Exceptional Costs

(2,809)

-

-

-

(2,809)

Profit/(loss) before Taxation

589

(994)

46

(1,560)

(1,919)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Distribution & Services

Property & Energy

Legacy

Corporate

Total

 

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

 

30 November

30 November

30 November

30 November

30 November

 

2016

2016

2016

2016

2016

 

£000

£000

£000

£000

£000

Revenue

 

 

 

 

 

Total revenue

159,569

1,376

10,205

-

171,150

Inter-segment revenue

(229)

-

-

-

(229)

 

 

 

 

 

 

Revenue from external customers

159,340

1,376

10,205

-

170,921

 

 

 

 

 

 

Underlying segment operating profit

4,815

(834)

579

(2,424)

2,136

Intangible amortisation and share of profit in associates and jointly controlled entities

(1,989)

-

-

-

(1,989)

 

 

 

 

 

 

Segment operating profit/(loss)

2,826

(834)

579

(2,424)

147

Share of profit in jointly controlled entities

1,236

-

-

-

1,236

Net financing costs

(1,239)

(238)

-

267

(1,210)

 

 

 

 

 

 

Profit/(loss) before taxation

2,823

(1,072)

579

(2,157)

173

                                                                       

9.         Condensed consolidated interim financial information                                                          

                                                           

The condensed consolidated interim financial information was approved by the Board of Directors on 13 February 2018. Copies of this interim statement will be sent to all shareholders and will be available to the public from the Group's registered office.

 

 


This information is provided by RNS
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