Interim Results
Worthington Nicholls Group plc
29 June 2007
Worthington Nicholls Group plc
Interim results for the period ended 31 March 2007
Worthington Nicholls Group plc ('Worthington Nicholls', the 'Company' or 'Group
'), one of the UK's leading installers of air conditioning, heating, ventilation
and chilled water systems, announces interim results for the period ended 31
March 2007.
Interim financial and business highlights:
• Turnover of £8.8 million
• Gross profit of £2.8 million
• Loss before interest and tax of £174,000
• Raised £6 million before expenses towards identified acquisitions
• Expansion into Europe implemented
• Acquired Lumenglow Limited (December 06)
Post-interim financial and business highlights:
• Approximately £34 million of revenue in total currently invoiced or
contracted to year end
• Current new business pipeline of £61.3 million
• Raised a further £20 million before expenses for working capital
requirements and additional acquisitions in May 2007
• Current cash bank balance of approximately £13 million
• Acquired Woods Holdings Wilmslow Limited, Euro Property Services
(London) Limited and Classic Interiors Contractors Limited in May 2007
• Secured first ever 'F' gas compliance contract with IHG Managed
Services, part of the global Intercontinental Hotels Group
Peter Worthington, Chairman of Worthington Nicholls, said:
'Having secured our first 'F' gas contract recently, we believe this regulation
driven market will be a strong driver for future growth, and we are devoting
considerable marketing and sales resource to this opportunity.
Looking forward, further acquisitions are an important part of our growth
strategy and we are currently reviewing a number of potential targets. I am very
pleased with the development of the Group to date and have full confidence of
its continued performance in the future.'
Enquiries, please contact:
Worthington Nicholls 0870 609 1829
Mark Worthington, Chief Executive
David Levis, Corporate Director
Gresham PR 020 7404 9000
Neil Boom
Blue Oar Securities 020 7448 4400
Rhod Cruwys / Romil Patel
Chairman's statement
Worthington Nicholls Group plc has had a productive period in the half-year to
31 March 2007. Moreover, since the six-month period under review the Group has
also completed a further three acquisitions, taking the total number of
companies acquired since Worthington Nicholls joined AIM last June to five.
Integration of the recent acquisitions is progressing well, and we are of the
opinion that they will all prove to be positive additions to the Group. We are
also encouraged by the fact that the two companies we acquired in 2006 are
performing well, and that our operational management and staff have the
ambition, skills and experience that will enable us to become Europe's leading
independent installers of air conditioning systems in hotels, shops and offices.
Also in the period reviewed there was a successful share placing in December
2006 which raised a total of £6 million before expenses for identified
acquisitions. This was followed by a more recent placing in May 2007 which
raised an additional £20 million before expenses, giving the Group the
significant cash resources for further acquisitions and continued organic
expansion.
Results for the interim period ended March 2007
The financial results for the six months ended 31 March 2007 show that the Group
delivered revenues of £8.8 million, gross profit of £2.8 million and a loss
before interest and tax of £174,000. As the Company was only incorporated on 3
February 2006 and the Group was only formed on 6 June 2006, there is no
comparative information available for the six months to 31 March 2006.
Our investors may be aware that we generally see a split in turnover which is
weighted towards the second half of the year. This year, the split has been more
pronounced than normal, which is largely due to a number of the large contracts
finishing at roughly the same time, causing a lag before we were able to start
on new contracts. Work on these new contracts has now begun.
The Board does not believe it is likely that the second half weighting trend
will become more pronounced going forward and that this anomaly is likely to be
a one-off caused by the way the contracts have fallen this financial year.
The Group has seen a rapidly increasing revenue run rate to date with Q1 revenue
of £2.6 million and Q2 revenue of £6.2 million. Post the interim period, the
Group has achieved revenue of approximately £10 million to date in Q3 and so
far, has approximately a further £15 million in revenue already contracted and
scheduled to take place within the financial period ending 30 September 2007.
Today, we can report that currently we have submitted tenders for approximately
£61.3 million worth of additional new business. This represents a decrease of
£23.7 million in the new business pipeline figure from that reported in April
2007's trading statement, which is a function of the Company's ability to
convert its business pipeline into contracted revenue. Of the £23.7 million
decrease in the pipeline, £8.42 million of this has been converted into
contracted revenue, representing a conversion rate of 36%.
We expect profit margins across the Group to remain stable for the full year as
a whole recognising the benefit derived from the increased run rate of revenue
in the second half of the financial year. In the interim period to 31 March
2007, the Group recorded administrative expenses of approximately £3 million.
The increased overheads, relative to revenue, are due to costs associated with
investing in a new sales team and contracts commencing in the second half of the
financial year.
Given the projected revenue run rate increase from contracted revenue and the
new business pipeline, we are looking forward to a busy end to the year.
Our cash position at the end of March 2007 showed we had £0.5 million in the
bank. Following a placing in May 2007, raising £19 million (net of expenses),
the Group currently has approximately £13 million of cash in the bank. From the
proceeds of the placing, £3.5 million has been utilised in completing the 3 most
recent acquisitions and £2.5 million has been used to repay short-term bank
borrowings.
It is the intention of the Company to utilise its strong balance sheet and its
financial resources to continue to expand the Group through both organic growth
and acquisitions.
New Contracts
Earlier this month we announced the signing of a significant maintenance
contract with IHG Managed Services, part of the global Intercontinental Hotels
Group. This was a key milestone in our development of the Group, not only
because of the nine-year length of the contract, but also because it is the
first major contract that will enable us to help our client comply with the new
European Union 'F' gas legislation, which comes into force on 4 July 2007 and
demands the phasing out and replacement of R22 refrigerant gases with more
environmentally-friendly alternatives.
Worthington Nicholls sees the R22 replacement market as a very significant
potential driver of new growth, the market for which independent analysts value
at over £7 billion in the UK alone.
As a group, we have been actively highlighting our services to existing and
potential clients to enable them to comply with this legislation. Naturally, we
were delighted to have secured this first 'F' gas compliance contract with IHG
Managed Services.
Another strategically significant contract win was the installation of new and
replacement air conditioning systems into the Park Hotel in Amsterdam. Park
Hotel is owned by Grand City Hotels & Resorts, which has a hotel estate of
approximately 3,000 additional bedrooms in Germany. Having won the mandate for
the Park Hotel in Amsterdam, we hope to secure further hotel contracts from
Grand City Hotels & Resorts in Western Europe.
During the period under review, the Group has also secured additional contracts
from Q2 Solutions Pty Limited, De Vere, Hotel du Vin, the Paramount Group, Q
Hotels Group and the Malmaison chain.
Dividend
Our policy is to pay a full-year dividend only. Accordingly, at this stage in
the Group's development, we do not propose an interim dividend
Future Prospects
Having secured our first 'F' gas contract recently, we believe this market will
be a strong driver for future growth, and we are devoting considerable marketing
and sales resource to this regulation driven market.
Looking forward, further acquisitions are an important part of our growth
strategy and we are currently reviewing a number of potential targets. I am very
pleased with the development of the Group to date and have full confidence of
its continued performance in the future.
Peter Worthington
Group Chairman
29 June 2007
FINANCIAL RESULTS:
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited
6 months ended
31 March 2007
Note
£'000s
Turnover 8,841
Cost of sales (6,039)
_______
Gross profit 2,802
Administrative expenses (3,024)
Other operating income 48
_______
Operating (loss)/profit (174)
Other interest receivable and similar income 2
Interest payable and similar charges (125)
_______
(Loss)/profit on ordinary activities before (297)
taxation
Taxation on (loss)/profit on ordinary activities 2 89
_______
Retained (loss)/profit (208)
_______
Earnings per ordinary share:
- Basic 3 (0.29p)
- Diluted 3 (0.28p)
The Group has no recognised gains or losses other than the results reported
above.
The results above also represent the historic cost profit.
CONSOLIDATED BALANCE SHEET
Unaudited
31 March
2007
£'000s
Fixed assets
Intangible assets 29,051
Tangible assets 1,914
_______
30,965
_______
Current assets
Stock and work in progress 944
Debtors and prepayments 12,792
Cash at bank and in hand 485
_______
14,221
Creditors: amounts falling due within one year (4,964)
_______
Net current assets 9,257
_______
40,222
Total assets less current liabilities
Creditors: amounts falling due after more than one year (1,458)
_______
Net assets 38,764
_______
Capital and reserves
Called up share capital 735
Share premium account 36,772
Merger reserve 663
Profit and loss account 594
_______
Equity shareholders' funds 38,764
_______
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
Unaudited
31 March
2007
£'000s
Retained (loss)/profit for the period (208)
Equity dividend paid (294)
FRS20 - Share based payments 109
New share capital subscribed (net of expenses) 6,042
Transfer to merger reserve 75
_______
Net movement in equity shareholders' funds 5,724
Opening equity shareholders' funds 33,040
_______
Closing equity shareholders' funds 38,764
_______
CONSOLIDATED CASH FLOW STATEMENT
Unaudited
31 March
2007
£'000s
Net cash outflow from operating activities (4,052)
Returns on investments and servicing of finance
Interest received 2
Interest paid (91)
Interest element of hire purchase contracts (34)
_______
(123)
_______
Taxation (328)
_______
Capital expenditure and financial investment
Purchase of tangible fixed assets (252)
_______
(252)
_______
Acquisitions
Cash consideration (net of cash balances acquired) (182)
_______
Dividends
Equity dividend paid (294)
_______
Net cash outflow before management of liquid (5,231)
resources and financing
_______
Financing
Repayment of loans and borrowings (18)
Proceeds from issue of equity shares (net of 6,042
expenses)
Capital element of hire purchase repayments 46
_______
6,070
_______
Increase in cash in the period 839
_______
ANALYSIS OF NET DEBT
Unaudited
30 September Cash flow Acquisitions/ 31 March
2006 Transfers 2007
£'000s £'000s £'000s £'000s
Cash at bank and in 519 (44) 10 485
hand
Overdraft (967) 935 (62) (94)
(448) 891 (52) 391
Debt due within one
year (19) 18 (130) (131)
Debt due after one
year (1,077) - 30 (1,047)
Loan notes (325) - - (325)
Obligations under hire
purchase contracts (104) (46) (19) (169)
Net debt (1,973) 863 (171) (1,281)
NOTES TO THE INTERIM FINANCIAL RESULTS
1 Basis of preparation
The Group's Interim Results consolidate the results of the Company and its
subsidiary companies made up to 31 March 2007.
The information set out does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.
The interim financial information has been prepared on the basis of accounting
policies set out in the statutory accounts for the period ended 30 September
2006, with the exception of accounting for share based payments. This follows
the adoption of Financial Reporting Standard 20 (FRS 20 - Share-based Payments)
for the year ending 30 September 2007. In accordance with the standard, the cost
of share options awarded to employees measured by reference to their fair value
at the date of grant is recognised over the vesting period of the options based
on the number of options which, in the opinion of the Directors, will ultimately
vest. The cost of the share options is charged to the profit and loss account
and transferred within reserves.
No adjustment is required to comparative figures for the period ended 30
September 2006.
2 Taxation
The charge for taxation on the loss for the 6 months ended 31 March 2007 is
based on an effective rate of 30% which has been calculated by reference to the
projected charge for the full year.
3 Earnings per ordinary share
Basic earnings per ordinary share represents the loss for the period of £208,000
divided by the weighted average number of ordinary shares in issue of
70,744,110.
The diluted earnings per ordinary share is based on 73,646,717 ordinary shares,
the difference to the basic calculation representing the additional shares that
would be issued on the conversion of all the dilutive potential ordinary shares.
There is no material difference to earnings if all the dilutive potential
ordinary shares are converted.
4 Comparative period
The Company's comparative interim period to 31 March 2006 showed a profit and
loss of nil, as, at the date of such reporting the Group had not yet been
formed. As such, no comparative information has been disclosed.
5 Accounts and interim announcement
Copies of the Interim Report will be sent to all shareholders in due course.
Additional copies will be available from Worthington Nicholls Group Plc, Ground
Floor, Barons Court, Manchester Road, Wilmslow, Cheshire SK9 1BQ.
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