Half Yearly Report

RNS Number : 9278S
Mountfield Group plc
30 September 2014
 



 

30 September 2014

 

 

 

Mountfield Group Plc

 

(the "Company" or the "Group")

 

Half-yearly report to 30 June2014

 

 

Mountfield Group plc (the "Group"), the AIM listed construction company specialising in building, fitting out and refurbishing commercial buildings and, in particular, data centres, announces its half-yearly report to 30 June 2014.

 

·      Gross profit of £0.8m (2013: £1.0m) on revenue of £5.6m (£5.2m).

·      Group margins decreased from 19.6% to 15.0%.

·      Mountfield Building Group Limited ("Mountfield") revenues reduced by 14% to £2.2m due to contract starts delayed into H2. Margins fell from 18.6% to 4.3% due to less payment than anticipated being received on a major contract and also extra staff costs of employees recruited to increase the number of contracts that the Group is able to process.

·      Connaught Access Flooring Limited ("Connaught") revenues increased by 20% to £3.4m with a improvement in margins from 19.9% to 22.1%.

·      Cash used in operations was £430k against cash generated from operations of £197k in the corresponding period of 2013.

·      Administrative expenses increased to £0.82m (£0.76m)

·      Pre-tax profits decreased to £4k from £236k.

·      Group pipeline and level of activity remain high.

·      Directors confident for Group's prospects for 2014 and beyond.

 

 

 

Graham Read, Chief Executive Officer,said:

 

"Demand for the Group's services remaining strong in the first half of 2014 but as a result of margins coming under pressure (in particular on one of Mountfield's contracts) and starts being deferred on some others, pre-tax profits during the period were reduced to a level (£4k) below those achieved in the same period of 2013 (£236k). This reduction does not reflect a general weakening in the Group's business or of its prospects as the change in strategy for Mountfield that put increased emphasis on fit-out and building fabric repair work is producing additional work, contacts and opportunities and demand for its services in the data centre construction area remain strong. It does however reflect a lower than expected payment being received from the main contractor on a major contract.

 

In addition Connaught has made another strong contribution to the Group's performance.

 

The Directors do not believe that the problems that affected the Group profits in the first half of 2014 will impact on the Group in the longer term. The Group is currently in late stage negotiations on a number of significant contracts which, if concluded as expected, will result in a satisfactory performance for the year as a whole."

 

 

Mountfield Group Plc

Peter Jay, Chairman

Graham Read, Chief Executive Officer

 

+44 (0)1268 561 516

 

WH Ireland (Nominated Adviser)

Chris Fielding

 

 

+44 (0)20 7220 1666



 

 

 

 

    Chairman and CEO's Statement

 

The reduction in the Group's pre-tax profits in the first half of 2014 from £236k (2013) to £4k despite revenue increasing to £5.6m from £5.3m (2013) was caused principally by the reduction in projected margin on a major contract that was undertaken by Mountfield referred to above and the delayed start on certain of its other contracts.

 

The composition of the Group's construction activities continues to change as it makes increased efforts to acquire business in the areas of fit-out of office, industrial and leisure premises and on building fabric repair work. These efforts have led in recent weeks to Mountfield being awarded contracts for work with an aggregate value of £1.5m. In addition demand for the Group's services, both in terms of construction (Mountfield) and flooring (Connaught) in the data centre field, remain high. With the Group's pipeline remaining at high levels the prospects for the second half of the year remain extremely encouraging.

 

The first half of the year saw Group margins slip back to the figure last seen in 2012 (15.0%) but an improvement is anticipated in the second half of the year as the Group's undertakes more higher margin work.

 

The first half of 2014 has seen another strong performance by Connaught. Its reputation for completing large flooring projects has produced contracts in respect of major new office developments with new ones being already under negotiation.

 

The Directors do not believe that the problems that affected the Group profits in the first half of 2014 will impact on the Group in the longer term. The Group is currently in late stage negotiations on a number of significant contracts which, if concluded as expected, will result in a satisfactory performance for the year as a whole."

 

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2014

 



6 months to     30 June 2014


6 months to     
30 June 2013


12 months to      
31 December 2013



(unaudited)


(unaudited)


(audited)


Note

£


£


£

Revenue


5,608,294


5,227,055


12,312,140

Cost of sales


(4,765,697)


(4,203,485)


(9,865,759)

Gross profit


842,598


1,023,570


2,446,381

Administrative expenses


(824,105)


(756,566)


(1,601,870)

Operating Profit


18,493


267,004


844,512

Net finance (costs)/income


(14,102)


(31,169)


(79,173)

Profit before income tax


4,391


235,835


765,339

Income tax expense

3

(7,481)


(57,756)


(262,279)








Total comprehensive (loss)/profit for the period


(3,090)


178,079


502,760








Earnings per share

    4













Basic & diluted


(0.001)p


0.08p


0.22p








There are no recognized gains and losses other than those passing through the Statement of Comprehensive Income


Condensed consolidated statement of financial position

As at 30 June 2014

 



30 June 2014

 

(Unaudited)

30 June 2013

 

(Unaudited)

31 December 2013

 

(audited)



£

£

£

ASSETS





Non-current assets





Intangible assets


10,788,521

10,788,521

10,788,521

Property, plant and equipment


111,672

121,814

114,384

Deferred income tax assets


428,756

599,986

428,756



11,328,949

11,510,321

11,331,661

Current assets





Inventories


79,474

78,588

80,488

Trade and other receivables


2,688,090

2,851,689

3,243,910

Cash and cash equivalents


678,567

195,038

313,675



3,446,131

3,125,314

3,638,073

TOTAL ASSETS


14,775,081

14,635,636

14,969,734






EQUITY AND LIABILITIES





Share capital and reserves





Issued share capital


254,244

216,744

254,244

Share premium


1,490,682

1,120,432

1,490,682

Share based payments reserve


342,779

329,771

337,279

Merger reserve


12,951,180

12,951,180

12,951,180

Reverse acquisition reserve


(2,856,755)

(2,856,756)

(2,856,756)

Retained earnings


(6,326,064)

(6,654,170)

(6,322,974)

TOTAL EQUITY


         5,856,066

         5,107,201

5,853,656






Current liabilities





Trade and other payables


3,538,910

4,181,966

4,557,390

Short-term borrowings


2,114,600

1,718,892

1,087,665

Finance lease liabilities


8,735

5,439

6,917

Current tax payable


98,831

64,478

91,350



5,761,076

5,970,775

5,743,322

Non-current liabilities





Loan notes


3,152,893

3,553,475

3,363,029

Finance lease liabilities


5,046

4,184

9,727

TOTAL LIABILITES


8,919,015

9,528,435

9,116,078






TOTAL EQUITY & LIABILITIES


14,775,081

14,635,636

14,969,734

 

 

 

 

 

 

 

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2014

 

 


Share capital

 

£

Share premium

 

£

Other reserves

 

£

Capital redemption reserve             £

Reverse Acquisition reserve

£

Merger reserve

 

£

Retained earnings

 

£

Total

 

 

£

Balance at 1 January 2013

216,744

     1,120,432

320,960

-

(2,856,755)

12,951,180

(6,832,250)

4,920,310

Total comprehensive income

-

-

-

-

-

-

           178,079

          178,079

Share based payments

-

             -

8,811

-

-

-

                   -

   8,811   

 

Balance at 30 June 2013

 

216,744

 

1,120,432

 

329,771

                           -

 

(2,856,755)

 

12,951,180

 

(6,654,171)

 

 5,107,201

 

Balance at 1 July 2013

 

216,744

 

1,120.432

 

329,771

                          -

 

(2,856,755)

 

12,951,180

 

(6,654,171)

 

 5,107,201

Total comprehensive income

-

-

-

-

-

-

     324,681

     324,681

Shares issued  in period

45,000

405,000

-

-

-

-

        -

 450,000

Share cancelled in period

(7,500)

-

-

7,500

-

-

              -

                  -

Cost of shares issued

-

(34,750)

-

-

-

-

                 -

    (34,750)

Share based payments

-

-

6,524

-

-

-

                 -

        6,524

Cancelled share options

-

-

(6,516)

-

-

-

          6,516

               -

 

Balance at 31 December 2013

 

254,244

         1,490,682

 

329,779

                   7,500

 

(2,856,755)

 

12,951,180

 

(6,322,974)

 

5,853,656

 

Balance at 1 January 2014

 

254,244

 

1,490,682

 

329,779

                  7,500

 

(2,856,755)

 

12,951,180

 

(6,322,974)

 

5,853,656

-

-

-

-

-

-

  (3,090)

  (3,090)

Share based payment

-

-

5,500

-

-

-

-

5,500

 

Balance at 30 June 2014

 

254,244

 

1,490,682

 

335,279

                  7,500

 

(2,856,755)

 

12,951,180

 

(6,326,064)

 

5,856,066

 

 

 

Condensed consolidated cash flow statement

For the six months ended 30 June 2014



6 months to

30 June 2014

 

(unaudited)

6 months to

30 June 2013

 

(unaudited)

12 months to

31 December 2013

 

 (audited)



£

£

£

Cash from operating activities:





Operating profit


18,493

267,004

844,512

Adjusted for:





Depreciation


7,248

8,299

18,042

Loss on disposal of property, plant and equipment


-

-

-

Share based payment provision


5,500

8,810

15,335

(Increase)/ decrease in inventories


1,014

(3,021)

1,517

(Increase)/ decrease in trade and other receivables


555,820

(623,205)

(1,015,430)

(Decrease)/ increase in trade and other payables


(1,018,480)

570,540

1,114,529

Cash (used in)/ generated by operations


(430,405)

228,427

978,505






Finance costs


(17,565)

(34,850)

(86,393)

Finance income


3,463

3,681

7,220

Taxation paid


-

-

(6,692)

Net cash (outflow)/inflow from operating activities


 

(444,507)

 

197,257

 

892,640






Cash flows from investing activities





Purchase of equipment


(4,538)

(13,679)

(15,994)

Proceeds from sale of equipment


-

-

-

Net cash flows from used in investing activities


 

(4,538)

 

(13,679)

 

(15,994)






Cash flows from financing activities:





Proceeds from issue of shares


-

-

450,000

Costs of shares issued


-

-

(34,750)

Finance lease rentals


(2,863)

(6,205)

816

Repayment of non-convertible loan notes


(219,636)

(165,446)

(351,392)

Proceeds from short-term loans


200,000

150,000

30,904

 

Net cash flows from financing activities


 

(22,499)

 

(21,651)

 

95,578

 

Net (decrease)/increase in cash and cash equivalents


 

(471,544)

 

161,927

 

972,224






Cash and cash equivalents brought forward


214,006

(758,219)

(758,218)

 

Cash and cash equivalents carried forward


 

(257,538)

 

(596,292)

 

214,006

 

 

 

 

 

For the purposes of the cash flow statement, cash and cash equivalents comprise the following:

 

 


  As at 30 June 2014

As at 30 June 2013

As at 31 December 2013


£

£

£

Cash at bank and in hand

678,567

195,038

313,675

Bank overdraft

(936,10)

(791,330)

(99,669)






(257,538)

(596,292)

(214,006)

 

 

 

1.     Notes to theInterim Report

 

Basis of preparation

The Group's interim financial statements for the six months ended 30 June 2014 were authorised for issue by the directors on 30 September 2014.

 

The consolidated interim financial statements, which are unaudited, do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2013 have been filed with the registrar of companies at Companies House. The audit report on the statutory accounts for the year ended 31 December 2013 was unqualified and did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006.

 

The annual financial statements of Mountfield Group Plc for the year ended 31 December 2014 will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU ("IFRS"). Accordingly, these interim financial statements have been prepared using accounting policies consistent with those which will be adopted by the Group in the financial statements and in compliance with IAS 34 "Interim financial reporting".

 

The consolidated interim financial statements have been prepared in accordance with the accounting policies set out in theannual financial statements for the year ended 31 December 2013.

 

Basis of consolidation

The Group financial information consolidates that of the company and its subsidiaries.

 

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

2.     Segmental reporting

 

Segment information is presented in respect of the Group's business segments, which are based on the Group's management and internal reporting structure. 

 

 

The chief operating decision-maker has been identified as the Board of Directors (the Board). The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Management have determined the operating segments based on these reports and on the internal report's structure.

 

Segment performance is evaluated by the Board based on revenue and profit before tax ("PBT"). Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis, such as centrally managed costs relating to individual segments and costs relating to land used in more than one individual segment.

 

Given that income taxes and certain corporate costs are managed on a centralised basis, these items are not allocated between operating segments for the purposes of the information presented to the Board and are accordingly omitted from the analysis below.

 

The Group comprises the following segments:

 

Mountfield

Direct contracting and trade contracting services to bothmain contractors and corporate end users.

 

Connaught

Providing raised flooring systems to bothmain contractors and corporateend users.

 

Land sourcing

Sourcing land and enhancing value.

 

 

 

 

 

 

 

 

 

 

Segmental operating performance

 

 


Six months to 30 June 2014

Six months to 30 June 2013

Twelve months to 31 December 2013


Segmental revenue

PBT

Segmental revenue

PBT

Segmental revenue

PBT


£'000

£'000

£'000

£'000

£'000

£'000

Construction

2,244

(413)

2,606

14

6,681

(15)








Fit -out

3,371

546

2,714

359

5,791

365








Land sourcing

-

-

-

-

-

-




5,320

373

12,472

350

Inter-segmental revenue and unallocated costs

                 (7)

             (129)

 

(93)

 

(138)

(160)

415


5,608

4

5,227

236

12,312

765

 

Business segments assets and liabilities

 


Six months to 30 June 2014

Six months to 30 June 2013

Twelve months to 31 December 2013


Segment assets

Segment liabilities

Segment assets

Segment liabilities

Segment assets

Segment liabilities


£'000

£'000

£'000

£'000

£'000

£'000

Construction

1,764

3,681

1,456

3,935

2,388

4,195








Fit-out

2,151

1,385

2,311

1,543

1,764

1,059








Land sourcing

-

2

-

2

-

2


3,915

5,068

3,767

5,480

4,152

5,254








Goodwill - Construction

5,914

-

5,914

-

5,914

-

Goodwill - Fit-out

4,874

-

4,874

-

4,874

-

Goodwill - Land sourcing

-

-

-

-

-

-

Other unallocated assets & liabilities

72

3,844

81

4,048

30

3,862


14,775

8,912

14,636

9,528

14,970

9,116

 

Unallocated assets consist of deferred tax, trade and other receivables and cash held by the Parent Company. Unallocated liabilities consist of trade and other payables and interest bearing loans owed by the Parent Company.

 

Revenue by geographical destination

 


6 months to       30 June 2014

6 months to       30 June 2013

12 months to           31 December 2013


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

United Kingdom

5,431

3,624

9,092

Other EU

177

1,603

3,220


5,608

5,227

12,312

 

Total assets including property, plant and equipment and intangible assets are all held in the UK.

 

 

 

 

 

3.                Income tax (expense)/credit (continuing operations)

 


6 months to       30 June 2014

6 months to       30 June 2013

12 months to           31 December 2013


(unaudited)

(unaudited)

(audited)


£

£

£

Current tax on income for the period

(7,481)

(57,756)

(91,350)

Deferred tax (expense)/credit

                         -

                     -

(171,229)

Income tax (expense)/credit in the income statement

(7,481)

(57,756)

(262,579)

 

 

 

 

4.           Earnings per share

 

The basic earnings per share is calculated by dividing the earnings attributable to equity shareholders by theweighted average number of shares in issue. In calculating the diluted earnings per share, share options outstanding have been taken into account where the impact of these is dilutive.

 

 

 

The weighted average number of shares in the period was:

 



6 months to 30 June 2014


6 Months to 30 June 2013


12 months to 31 December 2013



(unaudited)


(unaudited)


(audited)










number


number


number








Basic ordinary shares of 0.1p each


254,244,454


216,744,454


231,169,112

Dilutive ordinary shares from warrants & options


-


-


-








Total diluted


254,244,454


216,744,454


231,169,112

 

 

In the six months to 30 June 2014, the exercise price of the options and warrants exceeded the average market price of ordinary shares in the period, thus there is no dilutive effect on the weighted average number of ordinary shares or the diluted earnings per share.

 

Earning attributable to equity shareholders of the parent

 



6 months to 30 June 2014


6 Months to 30 June 2013


12 months to 31 December 2013



(unaudited)


(unaudited)


(audited)








Continuing operations














Basic earnings / (loss) per share


(0.001)p


0.08p


0.22p

Diluted earnings / (loss) per share


(0.001)p


0.08p


0.22p








 


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