Annual Financial Report

RNS Number : 4313J

Mountfield Group plc

30 June 2011

 



CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2010

The Company is pleased to present the Group's financial statements for the year ended 31 December 2010 The year to 31 December 2010 proved to be a tough year for the Group with both subsidiaries - Mountfield Building Group Limited and Connaught Access Flooring Limited - experiencing a decline in turnover as challenging market conditions persisted. The return of tendering activity in our core data centre and IT market noted in the latter part of 2010 has continued to gather pace into 2011. In May 2011 the Company announced that it had been awarded three contracts with an aggregate value of approximately £5 million to fit out various data centres in the UK for leading data centre operators.  The Directors are encouraged by the increased level in demand and are optimistic that it will continue. In May 2011 the Group completed a fundraising of £560,000, before expenses, resulting in the Group's shareholder base being enhanced with the addition of small cap institutions.  The market for new data centres was weak in 2010, not only in terms of enquiries but also the construction of new data centres.  General construction and fit-out work also suffered due to the difficult economic environment, as a result margins on contracts won remained under pressure. Working Capital As a result of the difficult market conditions, working capital has been under pressure and the Group has taken steps to manage its creditors, cut costs and restructure the business by moving further towards using sub-contract labour rather than employing a fixed workforce. In order to support the Group further, the Executive Directors have reduced their emoluments and also as loan note holders they have waived all interest relating to these loans (£130,355) for the year under review.  In addition repayment of £4.4m of loan notes due in 2011 have been deferred to June 2016. Results Revenue                                                          £8.5m  (2009: £10.33m) Loss before tax                                               £0.87m (2009: £2.43m) ·    Mountfield Building Group made a pre-tax loss of £0.95m (2009:£1.28m) based upon turnover of £4.5m (2009:£5.15m) for the year ended 31 December 2010, after eliminating inter-company trading. ·    Connaught Access Flooring made a pre-tax profit of £309,000 (2009:£369,000) based upon turnover of £4m (2009:£5m) for the year ended 31 December 2010.  ·    Mountfield Land had no turnover during the year to 31 December 2010 (2009:£Nil) and recorded a loss of £1,073 (2009:£108,000 loss). ·    The Company made a pre-tax loss for the year ended 31 December 2010 of £227,047 which included a share-based payment during the year of £nil (2009:£986,000 loss including a share based payment of £242,000)

Divisional reviews The Group consists of three integrated businesses:- Mountfield Building Group Limited (¨MBG¨) MBG has two divisions; direct contracting and trade contracting services.  The former works as the main contractor with end user clients and specialises in the nationwide installation of data centres for large companies.  The trade contract division delivers specialist building work and multi trade packages and refurbishment for main development contractors. During 2010 the focus was on winning smaller scale contracts from existing clients in order to source revenue and also to maintain the relationships with clients during the downturn.  This was successfully achieved and MBG did not lose any of its core clients during that period. Connaught Access Flooring Limited ("Connaught") Connaught is a provider of flooring systems to both main contractors and corporate end users primarily focused on the data centre market. The Company has established itself as one of the few recognised specialists for fitting commercial office space for corporate end users. However with the continuing decline in the commercial office market a refocus has seen diversification into refurbishment projects in existing office space as end users take stock. Despite adverse market conditions, our data centre works held up well throughout the year with two significant projects completed and thus, allied with diversification into the residential sector and broadening of our main contractor relationships, we have seen a reasonably profitable year and one in which we have created solid foundations for 2011. Mountfield Land Limited ("ML") ML was set up to source and enhance the value of land before selling its interest. Whilst residential market conditions remain very tough we have identified significant new opportunities in the commercial property sector which should enable ML to focus on securing construction business for the Group. We will, however, continue to seek opportunities in the residential market. Data Centre Market After two years in which there has been little sign of activity, this market it is now showing strong growth in certain areas, such as the banking and the retail sectors.  This is driven by companies setting up their own facilities in order to reduce costs rather than outsource them to data centres operated by telecom companies.  The Directors believe that over the next three years there will be further growth in the data centre market and that with the Company's experience, reputation and contacts, it is ideally placed to benefit from this growth.

Strategy The Group's strategy is to continue as a leading player in the data centre market while also providing a full range of specialist construction and property services to both the private and public sectors on a nationwide basis.  Accordingly, the Group will continue to seek to identify and acquire complementary businesses that can extend the range of services, increase the opportunity for cross selling and leverage its brands across the marketplace. This strategy is focused on positioning the Group as a preferred supplier as market confidence returns. The Group will use the breadth of its services to continue to identify new revenue streams within the trade construction and data centre sectors and as highlighted above, this is likely to include the housing market. Outlook The sharp downturn in revenue and activity that the Group suffered during 2009 and 2010 required the Directors to consider the viability of each part of the Group and its structure.  The Directors believe that the resulting changes have made the Group more streamlined, focused and efficient and this should enable it to capitalise on these achievements as the data centre market improves. On behalf of the board we would like to thank our staff whose dedication has helped the business during these lean times.  Their professional approach and success in bringing new skills to the business has meant that the Group has emerged with considerably greater potential now than ever before and can continue to look forward to a positive future.

Peter Jay Executive Chairman 29 June 2011

Graham Read Chief Executive Officer 29  June 2011

For further information please contact:

Mountfield Group PLC

Peter Jay/Graham Read

[phone]

Arbuthnot Securities Limited (Nomad)

Tom Griffiths

[phone]

First Columbus LLP (Broker)

John Nuttall

[phone]

De Facto Financial (Media enquiries)

Mike Wort, Anna Dunphy

[phone]

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
				2010		2009
				£		£
Revenue				8,498,436		10,327,407
Cost of sales				(7,694,878)		(9,915,477)
Gross profit				803,558		411,930
Administrative expenses				(1,601,582)		(2,175,176)
Share based payments				-		(241,665)
Loans written off				-		(267,777)
Operating loss				(798,024)		(2,272,688)
Net finance costs				(74,191)		(160,674)
Loss before income tax				(872,215)		(2,433,362)
Income tax credit				244,044		596,011
Total comprehensive loss for the year				(628,171)		(1,837,351)
Loss per share
- basic (p)				(0.36)		(1.08)
- diluted (p)				(0.36)		(1.08)
All amounts relate to continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2010
					2010		2009
					£		£
ASSETS
Non-current assets
Intangible assets					15,816,529		15,816,529
Property, plant and equipment					140,587		188,828
Deferred income tax assets					664,240		425,040
					16,621,356		16,430,397
Current assets
Inventories					76,381		125,924
Trade and other receivables					2,224,408		3,366,770
Cash and cash equivalents					600,852		699,865
					2,901,641		4,192,559
TOTAL ASSETS					19,522,997		20,622,956
EQUITY AND LIABILITIES
Share capital and reserves
Issued share capital					175,311		171,311
Share premium					608,074		492,074
Share based payments reserve					294,022		294,022
Merger reserve					12,951,180		12,951,180
Reverse acquisition reserve					(2,856,756)		(2,856,756)
Retained earnings					(1,115,613)		(487,442)
TOTAL EQUITY					10,056,218		10,564,389
Current liabilities
Trade and other payables					3,245,601		3,985,842
Short-term borrowings					1,786,357		690,175
Finance lease liabilities					8,573		18,845
Income tax					30		38,031
					5,040,561		4,732,893
Non-current liabilities
Loan notes					4,412,705		5,306,318
Finance lease liabilities					13,513		19,356
Provision for deferred taxation					-		-
TOTAL LIABILITIES					9,466,779		10,058,567
TOTAL EQUITY AND LIABILITIES					19,522,997		20,622,956

CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
					2010		2009
					£		£
Cash flows from operating activities
Operating loss					(798,024)		(2,272,688)
Adjusted for:
Depreciation					46,839		54,933
Loss on disposal of fixed asset					3,091		138
Loans written off					-		267,777
Share based payment					-		241,665
Decrease in inventories					49,543		9,556
Decrease in receivables					1,008,542		827,277
Decrease in payables					(778,501)		(474,577)
Cash used in operating activities					(468,510)		(1,345,919)
Finance costs					(37,501)		(17,650)
Finance income					1,570		339
Taxation received					100,663		(667,983)
Net cash outflow from operating activities					(403,778)		(2,031,213)
Cash flows from investing activities
Purchase of equipment					(9,630)		(21,904)
Proceeds from sale of property, plant and equipment					7,941		-
Net cash outflow from investing activities					(1,689)		(21,904)
Cash flows from financing activities
Proceeds from issue of shares					120,000		175,327
Finance lease rentals					(16,115)		(7,443)
Repayment of non-convertible loan notes					(420,621)		(113,419)
Proceeds from short term loan loans					350,000		-
Net cash flows generated from financing activities					33,264		54,465
Net decrease in cash and cash equivalents					(372,203)		(1,998,652)
Cash and cash equivalents brought forward					9,690		2,008,342
Cash and cash equivalents carried forward					(362,513)		9,690

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
		Share capital		Share premium		Share based payments reserve		Merger reserve		Reverse acquisition reserve		Retained earnings		Total
		£		£		£		£		£		£		£
At 1 January 2009		169,558		318,500		52,357		12,951,180		(2,856,756)		1,349,909		11,984,748
Total comprehensive income		-		-		-		-		-		(1,837,351)		(1,837,351)
Share based payments		-		-		241,665		-		-		-		241,665
Shares issued in period to settle creditor		1,753		173,574		-		-		-		-		175,327
At 31 December 2009		171,311		492,074		294,022		12,951,180		(2,856,756)		(487,442)		10,564,389
Shares issued in period to settle creditor		4,000		116,000		-		-		-		-		120,000
Total comprehensive income		-		-		-		-		-		(628,171)		(628,171)
At 31 December 2010		175,311		608,074		294,022		12,951,180		(2,856,756)		(1,115,613)		10,056,218

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
1   Preparation of non-statutory information The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The consolidated balance sheet as at 31 December 2010 and the consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow statement, consolidated statement of changes in shareholders equity and associated notes for the year then ended have been extracted from the Group's 2010 statutory financial statements upon which the auditor's opinion is unqualified, and does not include any statement under section 498 (2) or (3) of the Companies Act 2006.
2   Post Balance Sheet Events  On 12 May 2011, it was announced that the Company had raised £560,000 by way of a placing of 37,333,334 new ordinary shares of 0.1 pence each at a price of 1.5 pence per share. The proceeds of the issue will be used to fund working capital and expenses of the issue. The new shares issued represent approximately 17.56% of the Company's enlarged issued share capital. On 29 June, it was announced that the Company had issued 4,099,333 new ordinary shares of 0.1 pence each at a price of 1.5 pence per share in settlement of creditors. Following these allotments, the Company had 216,744,454 ordinary shares of 0.1p each in issue.
3	Loss per share
	The basic loss per share is calculated by dividing the earnings attributable to equity shareholders by the weighted average number of shares in issue. In calculating the diluted loss per share, share warrants outstanding have been taken into account where the impact of these is dilutive.
	The weighted average number of shares in the period were:
							2010				2009
							Number				Number
	Basic Ordinary Shares of 0.1p each						172,648,673				170,879,375
	Dilutive Ordinary Shares from warrants						-				-
	Total diluted						172,648,673				170,879,375
	In the year ended 31 December 2010, the conditions attached to the warrants were not met and as such there is no dilutive effect on the average weighted number of ordinary shares or the diluted loss per share.

3	Loss per share (continued)
									2010		2009
	Loss attributable to equity share holders of the parent								£628,171		£1,837,351
	Basic loss per share (p)								(0.36)		(1.08)
	Diluted loss per share (p)								(0.36)		(1.08)
4	Preliminary Statement
	Copies of the annual report for the year ended 31 December 2010 have been sent to shareholders and will be available on the company's website www.mountfieldgroupplc.com and from the company at 9 Hurricane Close Wickford Business Park Wickford Essex SS11 8YR

 

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