Interim Results
Montpellier Group PLC
30 May 2003
MONTPELLIER GROUP PLC
Interim results for the six months ended 31 March 2003
Montpellier Group, the AIM listed investment, construction and property Group, announces a 31% increase in profit
after tax for the six months ended 31 March 2003.
• Profit after tax up 31% to £3.4m (2002: £2.6m)
• Turnover of £211.5m (2002: £217.5m)
• Basic earnings per share up 10% to 4.3p per share (2002: 3.9p per share)
• Net asset value up 13% to 47.6p per share (2002: 42.0p per share)
• Construction Division record forward order book of £530.5m as at 31 March 2003 (2002: £398.0m)
• Interim dividend maintained at 0.5p per share
Commenting on the results, Paul Sellars, Group Managing Director, said:
'This has been another very successful period for the Group. With our various acquisitions now bedded down our three
operating divisions are performing according to plan and we are confident of a strong result for the year.'
30 May 2003
ENQUIRIES:
Montpellier Group Tel: 020 7522 3200
Paul Sellars, Group Managing Director
College Hill Tel: 020 7457 2020
Matthew Gregorowski
Mark Garraway
CHAIRMAN'S STATEMENT
I am once again pleased to report steady progress for the period within the three divisions, Investment, Construction
and Property. The acquisitions that the Group has made during the recent past are now fully integrated and will
contribute to future growth. We look forward to improving the performance in all our business areas. The recent
announcement of the recommended bid for Bullough plc is an important step forward for the Investment Division. Our
construction order book is at an all time record level.
FINANCIAL REVIEW
The profit for the period after tax was £3.4m (2002: £2.6m). Earnings per share were 4.3p (2002: 3.9p) and net assets
per share at 31 March 2003 were 47.6p (2002: 42.0p)
Due to timing differences on the commencement of certain construction contracts, turnover of £211.5m (2002: £217.5m)
was slightly down on the previous year. However the forward order book in the Construction Division stood at £530m on
31 March 2003 (2002: £398m).
INVESTMENT DIVISION
The Group acquired Union Investment Management Limited (UIM) in March 2002 as part of its strategy of building up the
Investment Division, which we regard as an important part of the future development of the Group. I am pleased to
report that this acquisition has proved to be extremely successful, bringing in a wealth of experience and skills,
particularly in the area of corporate finance. The recently announced recommended bid for Bullough plc is the first
transaction led by UIM since it became part of the Montpellier Group.
Over the last 15 months the Group has made investments in several quoted companies. It is our intention to work
closely with the management of these businesses in order to realise greater value for Montpellier shareholders.
In a number of these investments I am pleased to report good progress over the period.
Bullough plc - 29.9%
Bullough has two business activities; first, the design and manufacture of oil fired boilers and warm air central
heating units, and second the manufacture and distribution of office furniture.
On the 6th May 2003 Montpellier announced a recommended bid for Bullough at 14p.
Cape PLC - 29.9%
Following the sale of its loss-making manufacturing business, Cape is now focussed on its successful Industrial
Services Division. Cape has recently announced the settlement of the South African litigation, and the resolution of
a number of other legal issues. With surplus property assets and a profitable core business, we believe that the
outlook for Cape is good.
Jarvis Porter Group PLC - 26.6%
On the 24th April 2003 Jarvis Porter announced the acquisition of Darby Group Plc, a glass manufacturer, for a
consideration of £7.5m. It has further announced the purchase of a 29.73% stake in European Colour Plc, one of
Europe's leading suppliers of organic pigments to the printing ink, paint and plastics industries.
Peter Gyllenhammar has now joined the Board of Jarvis Porter to represent Montpellier's interests and contribute to
the future development of the company.
Walker Greenbank PLC - 25.6%
Walker Greenbank is an international group of companies involved in the manufacture and distribution of wall
coverings and furnishing fabrics. On 21 May 2003 the company announced the sale of its loss-making Weavestyle and
Contracts Fabric business for £2.8m. Whilst trading in currently difficult market conditions it nevertheless remains
a business with excellent potential.
Quadnetics plc - 6.7%
Quadnetics is a leading company involved in the development, design, integration and control of advanced CCTV systems
and related control and networking products. We believe it has substantial growth prospects in an increasingly
important sector. This has been demonstrated by the recent share price increase.
The Group also has several other quoted investments. The strategy of the Group is to work closely with the management
of each business in which we have an investment.
We are confident that the strategy of making well-researched investments in asset-backed quoted companies will
produce substantial and steady profit for the Group in the future. The timing of such profits is obviously difficult
to predict but we are confident that our resources and expertise in the area of small cap company investments will
bring future profits.
UIM has also provided corporate finance services to other companies, producing a steady flow of fee income.
CONSTRUCTION DIVISION
The Construction Division continues to develop. Our strategy of retaining niche businesses with long established
reputations is proving a successful formula, with our order book now standing at a record level of £530m at the end
of March. In line with the Group's objectives the proportion of work in publicly funded projects has increased.
Whilst we continue to play a major role in the private development sector we are cautious with regard to potential
growth in this area in the short to medium term.
During the period work commenced on the £60m social housing refurbishment contract in Bradford and also on the £150m
contract for the refurbishment of the 38 stations on the London Underground Northern Line. We have also recently been
awarded a major contract for the refurbishment of the roof structure at St. Pancras Station in London.
Our range of construction services encompasses the reclamation and remediation of brownfield land through to new
build, refurbishment and facilities management. We are taking full advantage of increases in Government expenditure
throughout the UK in the areas of health care and education with a particular focus on schools and universities.
We continue to carefully monitor the risks and margins in the various sectors in which we work. Our objective is to
increase the returns from our existing businesses and to grow profits rather than turnover through focus on
specialisation. We would also consider acquisition opportunities which complement our existing skills.
PROPERTY DIVISION
During this period I am pleased to announce the sale of 14 acres of development land in the Dearne Valley in South
Yorkshire. We have retained a profit share arising from future planning gain on the property. We also exchanged
contracts on the sale of the 24-acre industrial complex in Barnsley which was formerly the headquarters for the VHE
Construction business, which has now relocated to new purpose built premises.
The pre-let office schemes in Wigan and Leeds were sold at a yield of 7.5%, demonstrating the continuing demand for
quality, well let commercial development particularly in the north of England. A distribution depot which we have
constructed in Perth, Scotland for Securicor has now been completed. The sale of this development is anticipated to
take place in early June 2003.
The Property Division continues to support the Group in meeting its corporate objectives of converting property
assets from its existing portfolio into cash. Where we have development opportunities we will seek joint venture
partners or retain a share of future profits.
DIVIDENDS
I am pleased to report that we are maintaining the interim dividend at 0.5p per share. This will be paid to
shareholders on the register on 13 June 2003, payable on 9 July 2003.
PROSPECTS
The three operating divisions of Investment, Construction and Property and represent excellent opportunities to
develop earnings, dividends and assets.
We have a strong management team and will continue to search out opportunities which will enable us to build
shareholder value.
MONTPELLIER GROUP PLC
Group Profit and Loss Account
for the six months ended 31 March 2003
Notes Six months ended Year ended
31 March 30 September
2003 2002 2002
£000 £000 £000
Turnover: Group and share of joint ventures 212,841 218,497 447,856
Less share of joint ventures' turnover (1,310) (1,038) (2,621)
Group turnover - continuing 211,531 217,459 445,235
Cost of sales (191,606) (198,392) (409,306)
Gross profit 19,925 19,067 35,929
Administrative expenses (19,659) (16,701) (32,584)
Other operating income 574 199 756
Group operating profit - continuing 840 2,565 4,101
Income from joint ventures - - -
Share of associates' operating profit/(loss) 1,255 (525) (426)
Amortisation of negative goodwill on associates 638 635 1,251
Total operating profit - continuing 2,733 2,675 4,926
Share of associate's profit on disposal of subsidiary 788 - -
Profit on ordinary activities before interest and taxation 3,521
Net interest (payable)/receivable (245) 201 64
Share of associates' net interest payable (328) (139) (139)
Profit on ordinary activities before taxation 2,948 2,737 4,851
Taxation receivable/(payable) on ordinary activities 1 403 (146) 393
Share of associates' taxation receivable/(payable) 1 22 (30) (30)
Profit for the period before minority interests 3,373 2,561 5,214
Minority interests - (147) (147)
Profit for the period 3,373 2,414 5,067
Dividends 2 (393) (392) (862)
Retained profit for the period 2,980 2,022 4,205
Basic earnings per Ordinary Share 3 4.30p 3.93p 7.25p
Diluted earnings per Ordinary Share 3 4.25p 3.86p 7.13p
Group Statement of Total Recognised Gains and Losses
Six months ended Year ended
31 March 30 September
2003 2002 2002
£000 £000 £000
Profit for the period 3,373 2,414 5,067
Exchange movements in reserves 55 (91) (63)
Total recognised gains relating to the period 3,428 2,323 5,004
Prior year adjustment - 104 82
Total recognised gains since previous annual reports 3,428 2,427 5,086
MONTPELLIER GROUP PLC
Group Balance Sheet
at 31 March 2003
Note 31 March 30 September
2003 2002 2002
£000 £000 £000
Fixed assets
Intangible assets: Goodwill 5,606 1,735 5,811
Tangible assets 18,665 23,075 19,226
Investments 30 30 30
Investments in joint ventures:
Loans to joint ventures 580 1,710 526
Share of gross assets 16,006 20,957 18,306
Share of gross liabilities (9,366) (15,795) (11,610)
7,220 6,872 7,222
Investments in associates:
Share of associates' net assets 18,459 11,843 13,414
Negative goodwill (4,984) (6,990) (5,119)
13,475 4,853 8,295
44,996 36,565 40,584
Current assets
Stocks and work in progress 15,850 19,968 22,868
Debtors: due after more than one year 2,016 1,781 2,390
due within one year 96,756 90,987 89,698
Current asset investments 4,773 6,576 6,488
Cash at bank and in hand 836 - 6,446
120,231 119,312 127,890
Creditors: amounts falling due within one year (118,676) (122,433) (125,642)
Net current assets/(liabilities) 1,555 (3,121) 2,248
Total assets less current liabilities 46,551 33,444 42,832
Creditors: amounts falling due after more than one year
Long term debt (8,798) (524) (8,363)
Other creditors (349) - (135)
(9,147) (524) (8,498)
Net assets 37,404 32,920 34,334
Share capital 4 7,860 7,836 7,838
Share premium account 5,795 5,782 5,782
Revaluation reserve 73 73 73
Capital reserve 1,846 1,846 1,846
Profit and loss account 21,830 17,383 18,795
Equity shareholders' funds 37,404 32,920 34,334
MONTPELLIER GROUP PLC
Group Statement of Cash Flows
for the six months ended 31 March 2003
Note Six months ended Year ended
31 March 30 September
2003 2002 2002
£000 £000 £000
Net cash (outflow)/inflow from operating activities 5 (6,432) (4,050) 6,520
Returns on investments and servicing of finance
Net interest (paid)/received (127) 254 (95)
Taxation
Corporation tax refunded/(paid) 596 - (332)
Capital expenditure and financial investment
Net purchases of tangible fixed assets (297) (4,707) (1,342)
Net sales/(purchases) of current asset investments 40 (4,540) (5,026)
Loans (advanced)/repaid by joint ventures (59) (262) 830
Net cash outflow from capital expenditure and financial (316) (9,509) (5,538)
investment
Acquisitions and disposals
Payments to acquire subsidiary undertakings - (4,287) (11,740)
Payments to acquire associated undertakings - (3,571) (3,571)
Cash acquired on acquisition of subsidiaries - - 532
Net cash outflow from acquisitions and disposals - (7,858) (14,779)
Equity dividends paid to shareholders (470) (609) (1,001)
Cash outflow before use of liquid resources and financing (6,749) (21,772) (15,225)
Management of liquid resources
Decrease in short-term deposits with banks 563 3,742 2,883
Financing
Issue of share capital 35 - 4
Movement in short-term borrowings 657 (4,533) (5,168)
Movement in long-term borrowings 435 134 7,973
Finance lease payments (110) (270) (440)
1,017 (4,669) 2,369
Decrease in cash during the period (5,169) (22,699) (9,973)
Note 1 Taxation
Six months ended Year ended
31 March 30 September
2003 2002 2002
£000 £000 £000
Current tax:
UK corporation tax on profits of the year - (340) 32
Adjustments in respect of previous periods 403 155 317
403 (185) 349
Foreign tax - - 5
Total current tax 403 (185) 354
Deferred tax - 39 39
Group taxation 403 (146) 393
Share of associates' tax 22 (30) (30)
Taxation receivable/(payable) on profit on ordinary activities 425 (176) 363
Note 2 Dividends
Six months ended Year ended
31 March 30 September
2003 2002 2002
Pence Pence Pence
Interim 0.5 0.5 0.5
Final 0.6
0.5 0.5 1.1
£000 £000 £000
Interim 393 392 392
Final 470
393 392 862
Note 3 Earnings per Ordinary Share
31 March 31 March 30 September
2003 2002 2002
Earnings Weighted Earnings Weighted Earnings Weighted
average average average
number of number of number of
shares shares shares
EPS EPS EPS
£000 £000 Pence £000 £000 Pence £000 £000 Pence
Basic 3,373 78,443 4.30 2,414 61,372 3.93 5,067 69,893 7.25
earnings
per share
Dilutive - 975 (0.05) - 1,200 (0.07) - 1,137 (0.12)
effect of
options
Diluted 3,373 79,418 4.25 2,414 62,572 3.86 5,067 71,030 7.13
earnings
per share
Note 4 Share capital
Group Six months ended Year ended
31 March 30 September
2003 2002 2002
£000 £000 £000
Authorised:
100,000,000
Ordinary Shares of 10p each 10,000 10,000 10,000
10,000 10,000 10,000
Allotted, called up and fully paid:
78,604,877 (2002: March 78,355,712 and September 78,376,138)
Ordinary Shares of 10p each 7,860 7,836 7,838
7,860 7,836 7,838
Changes in share capital
A total of 228,739 10p Ordinary Shares have been issued since 1 October 2002. Of these, 23,157 were issued through
the early exercises of the Employee Sharesave Scheme ('SAYE') and 205,582 were issued through exercises of the Long
Term Incentive Plan ('LTIP'). No shares were bought back, resulting in a share capital figure of 78,604,877.
Note 5 Net cash (outflow)/inflow from operating activities
6 months ended Year ended
31 March 30 September
2003 2002 2002
£000 £000 £000
Operating profit 840 2,565 4,101
Depreciation 850 648 1,717
Amortisation of subsidiary goodwill 161 (650) 758
Exchange losses/(gains) 191 (173) 377
Decrease in stocks and work in progress 6,820 5,387 770
Profit on sale of fixed assets - (129) (112)
Profit on sale of current asset investments (402) (93) (97)
Increase in operating debtors and prepayments (7,012) (344) (721)
(Decrease)/increase in creditors and accruals (7,301) (11,261) 2,105
Investment (write down reversal) / write down (579) - 579
Goodwill adjustments and other non-cash movements - - (2,957)
Net cash (outflow)/inflow from operating activities (6,432) (4,050) 6,520
Note 6 Basis of preparation
a) The accounts for the six months ended 31 March 2003 and the equivalent period in 2002 have not been audited
or reviewed by the Company's auditors. They have been prepared in accordance with applicable accounting standards
consistent with the accounting policies set out in the 2002 Annual Report.
b) The abridged information in this statement relating to the year ended 30 September 2002 is derived from full
accounts upon which the auditors issued an unqualified opinion and which did not contain a statement under S237(2) of
the Companies Act 1985 and which have been delivered to the Registrar of Companies.
This interim statement is being sent to all shareholders and is also available upon request from the Company
Secretary, Montpellier Group Plc, 39 Cornhill, London EC3V 3NU.
END
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