Interim Results

Inspace Plc 06 September 2005 Press Release 6 September 2005 Inspace plc ('Inspace' or 'the Company') Interim Results for the six months ended 30 June 2005 Inspace plc (AIM:INSP), the property based support services business that has established itself as one of the UK's leading social housing repair and maintenance providers, announces its Interim Results for the six months ended 30 June 2005. Highlights • Turnover on continuing operations up 64 per cent to £70.8 million (2004: £43.3 million) • Operating profit on continuing operations up 70 per cent to £3.57 million (2004: £2.1 million) • Diluted earnings per share up 71 per cent to 3.94 pence (2004: 2.31 pence) • Order book now exceeding £450 million and extending as far as 2020 • Net cash of £3.6 million • All debt settled on flotation • Shareholder funds increased from £0.9 million to £13.6 million Commenting on the Results, Colin Enticknap, Executive Chairman of Inspace plc, said: 'We are pleased with the way the first half year has unfolded. Interim results are just ahead of expectation, forward order books have reached record levels, and our people have coped well with the transition to operating in the AIM environment. 'With a clear strategy, scaleable infrastructure and empowered culture, we should now be well placed to build upon these early achievements, and to move forward with confidence to the next stage of our development.' For further information: Inspace plc Colin Enticknap, Executive Chairman Tel: +44 (0) 1462 678 910 colin.enticknap@inspace.co.uk www.inspace.co.uk Seymour Pierce Mark Percy, Corporate Finance Tel: +44 (0) 20 7107 8000 markpercy@seymourpierce.com www.seymourpierce.com Media enquiries: Abchurch Henry Harrison-Topham Tel: +44 (0) 20 7398 7700 henry.ht@abchurch-group.com www.abchurch-group.com Chairman's statement Overview The first half of 2005 has naturally been a unique period in the development of the business, and one that we can now look back upon with a reasonable degree of satisfaction. We have seen the successful implementation of a number of structural changes; the de-merger of the business from our previous parent company; the establishment of a new Board with appropriate non-executive representation; the creation of a new executive management team along with strong functional support and independent systems and procedures; and, most notably, the flotation of the business on the AIM Market of the London Stock Exchange. Any one of these events might easily have distracted us from day to day operations, but our people rose to these short term challenges with their characteristic energy and enthusiasm and, through their determined effort, we have continued to achieve controlled turnover growth, to deliver sustainable levels of profit, and to generate positive cash. Just as importantly, we have continued to strengthen our order book, so important if we are to drive future growth and further enhance the quality of our earnings. Financial Highlights Turnover on continuing operations grew substantially by 64% to reach £70.8 million. Comparable operating profit grew by 70%, reaching £3.57 million and representing a return of 5.0%. Interest payable exceeded that received by £0.12 million due to charges incurred prior to flotation. Consequently, profit on ordinary activities before taxation was £3.45 million. Having settled outstanding debt from the funds raised at flotation, half year cash sat at a healthy £3.6 million with no borrowings. Enforcing strict cash management principles remained a priority during the period, which helped to improve our cash conversion rate to 61%. These factors combined to effect a dramatic improvement in our balance sheet. With net current assets of £12.7 million and shareholders' funds of £13.6 million, we can now demonstrate enhanced covenant strength as we continue to pursue substantial projects to build our order book. Our order book has continued to grow with the successful acquisition of social housing contracts, in chronological order, for Richmond upon Thames Churches Housing Trust, for Basildon District Council, for the Corporation of London, and most recently, for the London Borough of Hammersmith & Fulham. Assuming that projects run for their full term, our order book has now reached £450 million, which represents an increase of 61% upon this time last year. Dividend The encouraging first half performance has allowed the Board to declare an interim dividend of 0.933p per share, payable to those Shareholders on the register on 24 May 2005, and 0.161p per share payable to those on the register on 16 September 2005, consistent with the interim dividend policy outlined in the AIM Admission document. Both interim dividends will be paid on 14 October 2005. Operational Performance Our portfolio strategy brings important benefits and we saw evidence of this in the first half year, as all parts of our business made important contributions to group profit. Inspace Partnerships, which maintains and improves social housing stock, justified its position as our primary growth driver. We saw its proportion of continuing group turnover grow from 17% in 2002, to 24% in 2003 and to 35% in 2004. As expected, that trend has continued during the first half of 2005, and has now reached 42%, helped in part by additional Decent Homes revenues secured from Barnsley and Colchester local authorities, in both instances off the back of well performing repair and maintenance contracts. Encouraging levels of performance based revenues, typical under our partnering contracts, kept operating margins up at 6.4%. Inspace Maintain and Inspace Environment, which jointly maintain corporate and public sector real estate, also delivered encouraging performances. Both continued to build relationships with their key customers; those perceived to offer higher volumes and more robust spend patterns. Barclays, Premier Travel Inn, HBOS and Whitbread Restaurants remain prime corporate examples. Royal Mail and Suffolk County Council represent public sector equivalents. Turnover, which represented 44% of the group's total, delivered operating margins of 4.3%, slightly lower than this time last year reflecting our first half investment in Inspace Environment, where we have strengthened its board and relocated its head office ahead of its planned expansion. Inspace Complete, our design led interiors business, achieved good growth in the period, primarily as a result of increased public sector activity on the government's Job Centre refurbishment programme. With 14% of the group's turnover falling within this business, we were satisfied to see operating margins at 3.6%, particularly bearing in mind that this part of our business is able to generate working capital. People I have already mentioned the exceptional performances delivered by our people, far too many to mention individually, whose considerable efforts have been greatly appreciated. I must also express my personal gratitude to Andrew Telfer, who was instrumental in ensuring our successful AIM listing, and also to Duncan Forbes and his supporting MDs; Gerry Graville, Karim Khan and Mick Williamson, for their unstinting commitment and professional leadership during what has naturally been a critical period. Whilst there have been many changes for us all to embrace as we have travelled down the flotation path, cultural shift has thankfully not been one of them. The culture, philosophy and self imposed controls inherited from Willmott Dixon have stood up well to the more rigorous requirements demanded of AIM companies, and will provide us with a good platform for the future. Future Prospects We have had an encouraging first six months, but we are not complacent; there is much more for us to do if we are to meet our aspirations for the rest of this year and create the right context for growth in 2006 and beyond. Our focus will remain divided between serving social housing landlords on the one hand, and serving corporate and public sector real estate clients on the other. In social housing terms, the challenge for the remainder of this year will be to effectively mobilise the teams who will deliver the four recently secured projects. Experience tells us that the quality of service delivery, and the resultant level of both customer satisfaction and performance related incentive payments, are hugely dependant upon decisions taken at the very outset. Alongside this priority, we must also remain focussed upon our tracking list, which contains over £1 billion of schemes meeting our target profile, nurturing in particular those relationships which will provide the tender opportunities to satisfy our new workload demands for 2006. In corporate and public sector terms, our short term challenge will be technology related. During the next six months, we must complete the development phase of our software systems replacement programme, which is expected to provide important medium term service and efficiency improvements to Inspace Maintain, Inspace Environment and Inspace Complete, ahead of the implementation phase scheduled for next year. Assembling the balance of our base work load requirement for 2006 will, naturally, also remain an important second half year priority. Summary It is easy to forget that the business has only existed as a stand alone entity since the beginning of this year. Much has been achieved since; a successful flotation on AIM, encouraging first half results, a growing order book, and the assembly of an experienced and balanced top team with a pragmatic understanding of short term priorities and clear, ambitious plans for the future. We hope that Shareholders will share the Board's satisfaction with our early achievements as a stand alone business, and our confidence that with the potential offered by our markets and the quality inherent in our people, we offer the prospect to do better still. Colin Enticknap Executive Chairman 6 September 2005 Group Profit and Loss Account Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 Notes £'000 £'000 £'000 Turnover Continuing operations 2 70,815 43,256 101,731 Discontinued operations 2 - 5,541 5,541 _________ __________ __________ 70,815 48,797 107,272 Cost of sales (54,341) (36,900) (79,615) _________ _________ _________ Gross profit 16,474 11,897 27,657 Administrative expenses (12,903) (9,909) (21,407) _________ _________ _________ Operating profit Continuing operations 2 3,571 2,100 6,362 Discontinued operations 2 - (112) (112) _________ _________ _________ 3,571 1,988 6,250 Net interest payable and similar (126) - - charges __________ __________ __________ Profit on ordinary activities before 3,445 1,988 6,250 taxation Tax on profit on ordinary activities 3 (1,082) (635) (1,965) __________ __________ __________ Profit for the financial period 2,363 1,353 4,285 Dividends* 4 - (1,350) (4,275) __________ __________ __________ Retained profit for the financial 2,363 3 10 period _________ _________ _________ Earnings per share 5 4.04 3.01 8.82 Fully diluted earnings per share 5 3.94 2.31 7.32 _________ _________ _________ *Half year 30 June 2004 on a proforma basis Group Balance Sheet Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 Notes £'000 £'000 £'000 Fixed assets Tangible assets 899 615 579 _________ _________ _________ Current assets Stocks 6 913 1,295 721 Debtors 7 32,594 19,018 24,314 Cash and bank balances 3,648 35 37 _________ _________ _________ 37,155 20,348 25,072 Creditors: amounts falling due within 8 (24,469) (20,028) (24,398) one year _________ _________ _________ Net current assets 12,686 320 674 _________ _________ _________ 13,585 935 1,253 _________ _________ _________ Capital and reserves Called up share capital 1,343 927 1,125 Share premium 9,864 - 113 Capital redemption reserve 3 - - Profit and loss account 2,375 8 15 _________ _________ _________ 9 13,585 935 1,253 _________ _________ _________ Group Cash Flow Statement Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 Notes £'000 £'000 £'000 Cash flow from operating activities 10 2,168 2,379 3,657 Returns on investments and servicing of (126) - - finance Taxation paid (484) (324) (1,742) Capital expenditure and financial (498) (143) (312) investment Equity dividends paid (4,275) (1,900) (1,900) _________ _________ _________ Cash flow before use of liquid (3,215) 12 (297) resources and financing Financing 6,826 - 311 _________ _________ _________ Increase in cash 3,611 12 14 _________ _________ _________ Reconciliation of net cash flow to movement in net funds Increase in cash 3,611 12 14 _________ _________ _________ Opening net funds 37 23 23 _________ _________ _________ Closing net funds 3,648 35 37 _________ _________ _________ Notes to the Financial Statements 1. Basis of preparation The interim financial information for the six months to 30 June 2005 has been prepared on the basis of the accounting policies applied in the Group's statutory accounts for the year to 31 December 2004 as set-out in the AIM Admission document prepared for the Group's flotation on AIM. The Directors expect those accounting policies to apply to the accounts for the year to 31 December 2005. The half year information has not been audited and does not represent statutory accounts. The information shown for the year to 31 December 2004 has been extracted from the AIM Admission document. 2. Segmental analysis Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 £'000 £'000 £'000 Turnover Analysis by class of business: Social housing maintenance 29,482 14,354 35,154 Corporate and public sector maintenance 31,105 27,761 56,885 Interior design, installation and furnishing 10,228 1,141 9,692 Discontinued activities - 5,541 5,541 _________ _________ _________ 70,815 48,797 107,272 _________ _________ _________ Operating profit Analysis by class of business: Social housing maintenance 1,873 1,077 2,552 Corporate and public sector maintenance 1,334 1,407 3,195 Interior design, installation and furnishing 364 (384) 615 Discontinued activities - (112) (112) _________ _________ _________ 3,571 1,988 6,250 _________ _________ _________ 3. Taxation The taxation charge for the period has been calculated based on the estimated tax rate for the year of 31.40%. 4. Dividends An interim dividend of 0.933p per ordinary share will be paid to the shareholders on the register at 24 May 2005 (57,876,783 shares), representing 5/ 6ths of the total interim dividend, and an interim dividend of 0.161p per ordinary share will be paid to the shareholders on the register at 16 September 2005 (67,136,042 shares), representing 1/6th of the total interim dividend. Both payments will be made on 14 October 2005. 5. Earnings per share Earnings per share have been calculated by dividing the profit on ordinary activities of £2.363 million (June 2004: £1.353 million; December 2004: £4.285 million) by 58,532,666 shares (June 2004: 45,000,000 shares; December 2004: 48,584,462 shares) being the weighted average number of ordinary shares in issue during the year. The fully diluted earnings per share is based on 59,952,559 ordinary shares (June 2004: 58,549,950 shares; December 2004: 58,549,950 shares) having taken into account the dilutive effect of shares which have been made available to employees under existing incentive schemes. Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 £'000 £'000 £'000 6. Stocks Stock of raw materials 277 296 265 Work in progress 636 999 456 _________ _________ _________ 913 1,295 721 _________ _________ _________ 7. Debtors Trade debtors 16,849 8,739 9,889 Prepayments 1,568 807 492 Accrued income 6,987 3,881 5,676 Deferred tax 13 17 13 Amounts recoverable on contracts 7,177 5,574 8,244 _________ _________ _________ 32,594 19,018 24,314 _________ _________ _________ 8. Creditors Trade creditors 12,292 7,829 10,849 Due to Willmott Dixon Limited - 5,520 3,143 Payments on account 1,727 2,245 1,333 Corporation tax 1,082 635 484 Other taxes and social security 4,127 - - Accruals 5,241 2,449 4,314 Proposed dividends - 1,350 4,275 _________ _________ _________ 24,469 20,028 24,398 _________ _________ _________ 9. Reconciliation of movements in equity shareholders' funds Profit for the financial period 2,363 1,353 4,285 Dividends* - (1,350) (4,275) _________ _________ _________ 2,363 3 10 Call on share capital 531 - 311 Capital redemption (3) - - _________ _________ _________ 2,891 3 321 Issue of shares 10,054 - - Costs associated with issue of shares (613) - - _________ _________ _________ Net proceeds from issue of shares 9,441 - - _________ _________ _________ Movement in equity shareholders' funds 12,332 3 321 Opening shareholders' funds 1,253 932 932 _________ _________ _________ Closing shareholders' funds 13,585 935 1,253 _________ _________ _________ *Half year 30 June 2004 on a proforma basis Inspace plc floated on AIM on 26 May 2005 and issued 9,259,259 additional ordinary shares. During the period 678,096 ordinary shares were also issued under share incentive schemes. A call on share capital was also made during the period in respect of 1,201,402 shares issued under share incentive schemes. 1,351,263 partly called shares were also re-purchased and cancelled by the Company. 10. Cash flows Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 £'000 £'000 £'000 Reconciliation of operating profit to net cash inflow from operating activities Operating profit on ordinary activities before 3,571 1,988 6,250 interest and taxation Depreciation 180 151 305 Loss on sale of fixed assets - - 34 Decrease/(increase) in stock, work in progress and amounts recoverable on long term contracts 875 (3,279) (5,379) (Increase)/decrease in debtors (9,344) 2,551 376 Increase in payments on account 394 1,414 502 Increase/(decrease) in trade and other creditors 6,492 (446) 1,569 _________ _________ _________ Net cash inflow from operating activities 2,168 2,379 3,657 _________ _________ _________ Analysis of change of net funds Opening cash and bank balances 37 23 23 Increase in cash 3,611 12 14 _________ _________ _________ Closing net funds 3,648 35 37 _________ _________ _________ - Ends - This information is provided by RNS The company news service from the London Stock Exchange

Companies

Inspirit Energy Holdings (INSP)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today