Interim Results

RNS Number : 8804F

Renew Holdings PLC

23 May 2017

 

Renew Holdings plc

("Renew" or the "Group" or the "Company")

Interim Results

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces another set of record interim results for the six months ended 31 March 2017. With a strong order book and growth in both revenue and operating profit, the Board is increasing its interim dividend in line with its progressive policy by 13% to 3.00p.

Financial Highlights

	H1 2017	H1 2016
Revenue	£289.4m	£265.1m	+9%
Adjusted operating profit*	£12.1m	£10.5m	+15%
Adjusted operating margin*	4.2%	4.0%	+5%
Adjusted profit before tax*	£12.0m	£10.3m	+11%
Adjusted earnings per share*	15.49p	13.31p	+16%
Interim dividend per share	3.00p	2.65p	+13%

*Adjusted results are stated prior to exceptional items and amortisation charges

Operational Highlights

·  Engineering Services revenue up 6% to £234.3m (H1 2016: £221.3m)

·  Engineering Services operating profit* up 14% to £11.9m (H1 2016: £10.4m)

·  5% increase in Engineering Services order book to £435m (H1 2016: £416m)

·  Group expected revenue for H2 fully secured

·  After the £7m acquisition of Giffen, net debt £3.5m (H1 2016: £4.2m)

o  The Board expects to report net cash at the end of this financial year

·  Interim dividend increased by 13% to 3.00p per share (H1 2016: 2.65p)

R J Harrison OBE, Chairman said: "Our established strategy of providing engineering services in regulated UK infrastructure markets continues to deliver positive results for Renew. This has been another record half year, with strong growth in both revenue and operating profit. I am particularly pleased with the improvement in Group operating margin to 4.2%, on track to meet our target of 4.5% for the year. As a result, the Board has increased the interim dividend by 13% and we are confident of delivering full year results in line with market expectations."

Renew Holdings plc			Tel: [phone]
Paul Scott, Chief Executive
John Samuel, Group Finance Director
Numis Securities Limited			Tel: [phone]
Stuart Skinner/Kevin Cruickshank (Nominated Adviser)
Michael Burke (Corporate Broker)
Walbrook PR	Tel: [phone] or [e-mail]
Paul McManus		Mob: [phone]
Nick Rome		Mob: [phone]
Lianne Cawthorne		Mob: [phone]

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.

About Renew Holdings plc

Engineering Services, which accounts for over 80% of Group revenue and 90% of operating profit, focuses on the key markets of Energy (including Nuclear), Environmental and Infrastructure, which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

Specialist Building focuses on the High Quality Residential market in London and the Home Counties.

For more information please visit the Renew Holdings plc website: www.renewholdings.com

Chairman's Statement

Renew has again delivered record interim results with strong growth in both operating profit and revenue.

Our established strategy of providing engineering services in regulated UK infrastructure markets continues to deliver positive results. The Group focuses on directly delivering essential works to critical infrastructure which are mainly funded through our clients' operational expenditure budgets.

Results

Group operating profit, prior to exceptional items and amortisation charges, increased by 15% to £12.1m (2016: £10.5m), on revenue up 9% to £289.4m (2016: £265.1m). Operating margin increased to 4.2% (2016: 4.0%) with earnings per share prior to exceptional items and amortisation charges increasing by 16% to 15.49p (2016: 13.31p). After the £5.8m exceptional impairment charge detailed below, profit before income tax was £4.8m (2016: £8.8m).

In Engineering Services, revenue grew by 6% to £234.3m (2016: £221.3m), representing 81% (2016: 84%) of Group revenue with operating profit prior to exceptional items and amortisation charges increasing by 14% to £11.9m (2016: £10.4m), giving an improved operating margin of 5.1% (2016: 4.7%).

In Specialist Building, the Group remains focused on contract selectivity and risk management within the High Quality Residential market in London and the Home Counties which has been particularly strong. Operating profit was £1.2m (2016: £1.1m) on revenue of £53.6m (2016: £44.4m).

Exceptional items

At the end of April 2017, the Group decided to withdraw from its loss-making low pressure, small diameter gas pipe replacement activities and as a result has reviewed the carrying value of its investment in that business. The Board has determined that a non-cash impairment charge of £5.8m should be made which is included within exceptional items. Our gas operations are now completely focused on medium pressure activities which will result in lower revenue but which have been consistently profitable. This restructuring will result in up to £0.5m of exceptional charges relating to redundancy and other costs which will be recorded in the second half of this financial year. Following these actions, the Board expects that its gas business will return to profitability in the financial year ending 30 September 2018.

Dividend

In line with its progressive policy, the Board is increasing the interim dividend by 13% to 3.00p (2016: 2.65p) per share which will be paid on 3 July 2017 to shareholders on the register at 2 June 2017.

Order book

The Group's order book at 31 March 2017 was £517m (2016: £515m). The Group's expected revenue for the second half of the financial year is fully secured.

Cash

At 31 March 2017, the Group had net debt of £3.5m (2016: £4.2m). The Board expects to report a net cash position at the end of the financial year.

Acquisition

In November 2016, Renew acquired Giffen Holdings Ltd, a specialist mechanical, electrical and power services provider for £7m which broadens the Group's offering within the railway environment. The integration of Giffen is progressing well.

Board changes

On 3 April 2017, the Group appointed David Brown to the Board as a Non-Executive Director. David is Group Chief Executive of The Go-Ahead Group Plc, a position he has held since 2011. I welcome David to our Board.

Outlook

Renew is a leading provider of engineering support services to the UK's critical Energy, Environmental and Infrastructure markets, where ongoing engineering maintenance requirements provide long-term, sustainable opportunities. Our expertise in these target markets and our direct delivery model positions us to provide our clients with an integrated and responsive service.

It remains the Board's strategy to grow our Engineering Services business both organically and through selective, earnings enhancing acquisitions. The Board is confident that Renew will achieve its financial target of a 4.5% Group operating margin and report results in line with market expectations for the year ending 30 September 2017. 

R J Harrison OBE

Chairman

23 May 2017

Chief Executive's Review

Renew is a leading engineering services provider supporting critical UK infrastructure across the Energy, Environmental and Infrastructure markets.

The Group provides integrated engineering services to support a wide range of assets which include nuclear and traditional power sites, water, flood alleviation and gas infrastructure, rail and wireless telecoms networks. We provide long-term asset care and maintenance services as well as emergency reactive works.

Engineering Services

Engineering Services revenue grew by 6% to £234.3m (2016: £221.3m). Operating profit prior to exceptional items and amortisation grew 14% to £11.9m (2016: £10.4m), increasing the operating margin to 5.1% (2016: 4.7%) and representing 91% (2016: 91%) of segment operating profit.

At 31 March 2017, the Engineering Services order book increased by 5% to £435m (2016: £416m).

Energy

Renew provides engineering support services to assets across the nuclear, fossil and renewable energy markets.

We operate at 12 of the Nuclear Decommissioning Authority's ("NDA") 17 nuclear licenced sites in the UK. The investment required to clean up the UK's nuclear legacy is estimated at £70bn and will take over 120 years to complete. The largest of the sites on the NDA's decommissioning programme is Sellafield, which is currently allocated 73% of this expenditure. The scale of the decommissioning challenge there requires much of the work to be delivered through long-term programmes of work.

As the largest mechanical and electrical contractor at Sellafield, the Group supports long-term programmes associated with new and existing operational plant in the waste treatment, reprocessing, decontamination, decommissioning and clean up operations. We are strongly positioned on the 10-year Decommissioning Delivery Partnership Framework which is estimated at £500m with head room to increase expenditure to £1.5bn over the term to 2025. We are also engaged across numerous other long-term, high priority programmes at Sellafield including; Magnox Swarf Storage Silo, Bulk Sludge Retrieval, Site Remediation & Decommissioning, Box Encapsulation Plant, Pile Fuel Cladding Silo, the Bundling Spares Framework and the Tanks and Vessels Framework.

Elsewhere, our established relationship with Magnox as sole provider on the national Electrical, Controls and Instrumentation Framework runs to 2021. In the period, we were also engaged through a new contract at the Drigg Low Level Waste Repository.

We have repositioned the gas business which is now focused exclusively on medium pressure and larger diameter gas activities in London and the South East. This market is driven by the long-term 30/30 Iron Mains Replacement Programme which gives good visibility to 2032. A key factor going forward is our exclusive regional position on the medium pressure framework for Southern Gas Networks which is gaining momentum. 

Environmental

Renew provides engineering support services to the UK's water and sewer infrastructure networks as well as to flood alleviation and coastal protection programmes.

For Northumbrian Water, we undertake a range of tasks on the AMP 6 Sewerage Repair and Maintenance Framework. We are engaged by Wessex Water on the AMP 6 Civils & EMI Delivery Partners Framework, where work levels have increased as the AMP 6 programme accelerates. We have also experienced high demand on Welsh Water's Pressurised Pipelines Framework, with work also undertaken on the Major and Minor Civils and the Emergency Reactive frameworks.

As sole provider on the Environment Agency's MEICA Framework to 2019, we support around 600 flood and water management sites throughout the Northern Region. Work is also undertaken nationally for the Environment Agency on four minor works frameworks.

During the period, we were appointed as sole supplier on the national Canal & River Trust MEICA Framework. Work includes maintenance, renewal and emergency reactive tasks on around 1,000 of the Trust's assets across England and Wales over the seven-year term. These assets include swing bridges, lock gates, sluices, water level and flow monitoring systems and pumping stations.

In addition to our ongoing work under several frameworks for National Grid, our land remediation activities include a major scheme at Sighthill for Glasgow City Council.

At the Palace of Westminster, where we have long-term contracted work associated with the Cast Iron Roof programme and the Courtyards Conservation Framework, we anticipate further growth opportunities.

Infrastructure

As a major provider of infrastructure services to Network Rail, we undertake a wide range of planned maintenance and renewals tasks alongside a 24/7 emergency reactive service across the rail network.

We are sole provider on seven Infrastructure Projects frameworks over the current CP5 investment period, delivering renewal schemes nationally on assets including bridges, viaducts and specialist tunnel refurbishments. We deliver a high volume of maintenance tasks through six Asset Management frameworks and are the major structures renewals and sole maintenance contractor in Scotland.

The acquisition of Giffen Holdings Ltd ("Giffen") broadens the Group's offering to Network Rail and creates opportunities for the Group with London Underground Limited and Train Operating Companies.

In wireless telecoms, we work for all of the UK's major cellular network operators and several original equipment manufacturers. Work is concentrated on the 4G roll out programmes, which are driven by increasing consumer demand. 

Specialist Building

The Group's Specialist Building operations focus on the High Quality Residential market in London and the Home Counties where we specialise in major structural engineering works.

This market is robust and continues to provide stable earnings. Specialist Building revenue grew by 21% to £53.6m (2016: £44.4m), with an operating profit of £1.2m (2016: £1.1m). The forward order book was £82m (2016: £99m).  Expected revenue for the year is fully secured.

Strategy

We remain committed to developing our engineering services business in our existing infrastructure markets both organically and through selective acquisitions to build on our integrated service offering.

The Group focuses on developing long-term relationships with its clients for whom we directly deliver day-to-day maintenance and renewal services alongside emergency reactive works to the country's key infrastructure assets.

Paul Scott

Chief Executive

23 May 2017

Condensed consolidated income statement

for the six months ended 31 March 2017

		Before exceptional items and amortisation of intangible assets	Exceptional items and amortisation of intangible assets (see Note 3)	Six months ended 31 March		Before amortisation of intangible assets	Amortisation of intangible assets	Year ended 30 September
		2017	2017	2017	2016	2016	2016	2016
	Note	Unaudited £000	Unaudited £000	Unaudited £000	Unaudited £000	Audited £000	Audited £000	Audited £000
Group revenue from continuing activities	2	289,404	-	289,404	265,079	525,737	-	525,737
Cost of sales		(259,180)	-	(259,180)	(237,763)	(469,180)	-	(469,180)
Gross profit		30,224	-	30,224	27,316	56,557	-	56,557
Administrative expenses		(18,113)	(7,149)	(25,262)	(18,315)	(34,603)	(2,954)	(37,557)
Operating profit	2	12,111	(7,149)	4,962	9,001	21,954	(2,954)	19,000
Finance income		81	-	81	131	373	-	373
Finance costs		(216)	-	(216)	(333)	(624)	-	(624)
Other finance income - defined benefit pension schemes		-	-	-	-	625	-	625
Profit before income tax	2	11,976	(7,149)	4,827	8,799	22,328	(2,954)	19,374
Income tax expense	5	(2,315)	243	(2,072)	(1,760)	(5,268)	532	(4,736)
Profit for the period from continuing activities		9,661	(6,906)	2,755	7,039	17,060	(2,422)	14,638
Loss for the period from discontinued operation	4			-	-			(4,026)
Profit for the period attributable to equity holders of the parent company				2,755	7,039			10,612
Basic earnings per share from continuing activities	6			4.42p	11.35p			23.53p
Diluted earnings per share from continuing activities	6			4.38p	11.26p			23.33p
Basic earnings per share	6			4.42p	11.35p			17.06p
Diluted earnings per share	6			4.38p	11.26p			16.91p
Proposed dividend	7			3.00p	2.65p			8.00p

Operating profit for the six months ended 31 March 2016 is stated after charging £1,477,000 of amortisation cost.

Condensed consolidated statement of comprehensive income 

for the six months ended 31 March 2017

			Six months ended		Year ended
			31 March		30 September
		2017		2016	2016
		Unaudited		Unaudited	Audited
		£000		£000	£000
Profit for the period attributable to equity holders of the parent company		2,755		7,039	10,612
Items that will not be reclassified to profit or loss:
Movement in actuarial valuation of the defined benefit pension schemes		-		-	(14,229)
Movement on deferred tax relating to the defined benefit pension schemes		-		-	2,561
Total items that will not be reclassified to profit or loss		-		-	(11,668)
Items that are or may be reclassified subsequently to profit or loss:
Exchange movement in reserves		84		135	291
Total items that are or may be reclassified subsequently to profit or loss		84		135		291
Total comprehensive income for the period attributable to equity holders of the parent company		2,839		7,174		(765)

Condensed consolidated statement of changes in equity

for the six months ended 31 March 2017

	Called up	Share	Capital	Cumulative	Share based		Total
	share	premium	redemption	translation	payments	Retained	equity
	capital	account	reserve	adjustment	reserve	earnings	Unaudited
	£000	£000	£000	£000	£000	£000	£000
At 1 October 2015	6,192	6,989	3,896	1,056	327	6,509	24,969
Transfer from income statement for the period						7,039	7,039
Dividends paid						(2,960)	(2,960)
New shares issued	40	1,492					1,532
Recognition of share based payments					11		11
Exchange differences				135			135
At 31 March 2016	6,232	8,481	3,896	1,191	338	10,588	30,726
Transfer from income statement for the period						3,573	3,573
Dividends paid						(1,651)	(1,651)
Recognition of share based payments					233		233
Exchange differences				156			156
Actuarial movement recognised in the pension schemes						(14,229)	(14,229)
Movement on deferred tax relating to the pension schemes						2,561	2,561
At 30 September 2016	6,232	8,481	3,896	1,347	571	842	21,369
Transfer from income statement for the period						2,755	2,755
Dividends paid						(3,349)	(3,349)
New shares issued	27	1,154					1,181
Recognition of share based payments					1		1
Exchange differences				84			84
At 31 March 2017	6,259	9,635	3,896	1,431	572	248	22,041

 

Condensed consolidated balance sheet

at 31 March 2017

			31 March		30 September
		2017		2016	2016
		Unaudited		Unaudited	Audited
		£000		£000	£000
Non-current assets
Intangible assets
- goodwill		58,505		56,259	56,259
- other		3,819		2,757	1,280
Property, plant and equipment		13,188		14,095	13,673
Retirement benefit assets		9,834		17,284	7,704
Deferred tax assets		2,355		1,674	1,581
		87,701		92,069	80,497
Current assets
Inventories		5,032		5,077	5,362
Assets held for resale		1,500		1,567	1,500
Trade and other receivables		92,973		94,452	93,520
Current tax assets		-		1,389	-
Cash and cash equivalents		2,671		8,192	14,084
		102,176		110,677	114,466
Total assets		189,877		202,746	194,963
Non-current liabilities
Borrowings		-		(6,200)	(3,100)
Obligations under finance leases		(2,569)		(2,134)	(3,030)
Retirement benefit obligations		(1,918)		(407)	(2,110)
Deferred tax liabilities		(2,504)		(3,654)	(1,664)
Provisions		(312)		(580)	(312)
		(7,303)		(12,975)	(10,216)
Current liabilities
Borrowings		(6,200)		(6,200)	(6,200)
Trade and other payables		(148,946)		(149,881)	(153,472)
Obligations under finance leases		(2,426)		(2,944)	(2,623)
Current tax liabilities		(2,741)		-	(863)
Provisions		(220)		(20)	(220)
		(160,533)		(159,045)	(163,378)
Total liabilities		(167,836)		(172,020)	(173,594)
Net assets		22,041		30,726	21,369
Share capital		6,259		6,232	6,232
Share premium account		9,635		8,481	8,481
Capital redemption reserve		3,896		3,896	3,896
Cumulative translation adjustment		1,431		1,191	1,347
Share based payments reserve		572		338	571
Retained earnings		248		10,588	842
Total equity		22,041		30,726	21,369

 

Condensed consolidated cashflow statement

for the six months ended 31 March 2017

	Six months ended		Year ended
	31 March		30 September
	2017	2016	2016
	Unaudited	Unaudited	Audited
	£000	£000	£000
Profit for the period from continuing operations	2,755	7,039	14,638
Amortisation of intangible assets	1,140	1,477	2,954
Goodwill impairment	5,800	-	-
Depreciation	2,080	1,968	4,036
Profit on sale of property, plant and equipment	(328)	(275)	(569)
Charge in respect of share option exercise	1,181	1,532	1,532
Decrease/(increase) in inventories	530	(91)	60
Decrease/(increase) in receivables	5,252	(2,063)	(63)
(Decrease)/increase in payables	(12,952)	253	2,609
Current service cost in respect of defined benefit pension scheme	29	29	47
Cash contribution to defined benefit schemes	(2,322)	(2,322)	(4,701)
Charge in respect of share options	1	11	244
Finance income	(81)	(131)	(373)
Finance costs/(other income)	216	333	(1)
Interest paid	(216)	(333)	(624)
Income taxes paid	-	(800)	(863)
Income tax expense	2,072	1,760	4,736
Net cash inflow from continuing operating activities	5,157	8,387	23,662
Net cash outflow from discontinued operating activities	(1,525)	(2,003)	(6,109)
Net cash inflow from operating activities	3,632	6,384	17,553
Investing activities
Interest received	81	131	373
Proceeds on disposal of property, plant and equipment	381	359	1,020
Purchases of property, plant and equipment	(698)	(1,471)	(1,304)
Acquisition of subsidiaries net of cash acquired	(7,014)	(208)	(208)
Net cash outflow from investing activities	(7,250)	(1,189)	(119)
Financing activities
Dividends paid	(3,349)	(2,960)	(4,611)
Loan repayments	(3,100)	(3,100)	(6,200)
Repayment of obligations under finance leases	(1,347)	(1,620)	(3,225)
Net cash outflow from financing activities	(7,796)	(7,680)	(14,036)
Net (decrease)/increase in continuing cash and cash equivalents	(9,889)	(482)	9,507
Net (decrease) in discontinued cash and cash equivalents	(1,525)	(2,003)	(6,109)
Net (decrease)/increase in cash and cash equivalents	(11,414)	(2,485)	3,398
Cash and cash equivalents at the beginning of the period	14,084	10,662	10,662
Effect of foreign exchange rate changes	1	15	24
Cash and cash equivalents at the end of the period	2,671	8,192	14,084
Bank balances and cash	2,671	8,192	14,084

 

Notes to the condensed consolidated accounts

1 - Basis of preparation

(a) The condensed consolidated interim financial report for the six months ended 31 March 2017 and the equivalent period in 2016 has not been audited or reviewed by the Group's auditor. It does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. It has been prepared under the historical cost convention and on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The report does not comply with IAS34 "Interim Financial Reporting", which is not currently required to be applied for AIM companies and it was approved by the Directors on 23 May 2017.

(b) The accounts for the year ended 30 September 2016 were prepared under IFRS and have been delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006. In this report, the comparative figures for the year ended 30 September 2016 have been audited. The comparative figures for the period ended 31 March 2016 are unaudited.

(c) For the year ending 30 September 2017, there are no new accounting standards, which have been adopted by the EU, applied and implemented for the condensed consolidated interim financial report.  The accounting policies adopted in the preparation of the condensed consolidated interim financial report are consistent with those adopted in the Group's accounts for the year ended 30 September 2016.

(d) On 31 October 2014 Places for People Group Limited ("PFP") acquired 50% of the ordinary share capital of Allenbuild Ltd, a Specialist Building subsidiary.  PFP acquired the remaining 50% on 31 January 2016.  Consequently, Allenbuild Ltd has been treated as a discontinued operation.

(e) The principal risks and uncertainties affecting the Group are unchanged from those set out in the Group's accounts for the year ended 30 September 2016.  The Directors have reviewed financial forecasts and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, the Group continues to adopt the going concern basis in preparing the condensed consolidated interim financial report.

This condensed consolidated interim financial report is being sent to all shareholders and is also available upon request from the Company Secretary, Renew Holdings plc, Yew Trees, Main Street North, Aberford, West Yorkshire LS25 3AA, or via the website www.renewholdings.com.

2 - Segmental analysis 

Operating segments have been identified based on the internal reporting information provided to the Group's Chief Operating Decision Maker. From such information, Engineering Services and Specialist Building have been determined to represent operating segments.               

					Six months ended               31 March							Year ended 30 September
					2017			2016				2016
					Unaudited			Unaudited				Audited
Revenue is analysed as follows:					£000			£000				£000
Engineering Services					234,263			221,345				436,213
Specialist Building					53,573			44,375				90,503
Inter segment revenue					(399)			(641)				(983)
Segment revenue					287,437			265,079				525,733
Central activities					1,967			-				4
Group revenue from continuing operations					289,404			265,079				525,737
	Before exceptional items and amortisation of intangible assets 2017 Unaudited		Exceptional items and amortisation of intangible assets 2017 Unaudited		Six months ended 31 March				Before amortisation of intangible assets 2016 Audited		Amortisation of intangible assets 2016 Audited		Year Ended 30 September 2016 Audited
					2017 Unaudited		2016 Unaudited
	£000		£000		£000		£000		£000		£000		£000
Analysis of operating profit
Engineering Services	11,939		(7,149)		4,790		8,929		21,541		(2,954)		18,587
Specialist Building	1,158		-		1,158		1,054		2,334		-		2,334
Segment operating profit	13,097		(7,149)		5,948		9,983		23,875		(2,954)		20,921
Central activities	(986)		-		(986)		(982)		(1,921)		-		(1,921)
Operating profit	12,111		(7,149)		4,962		9,001		21,954		(2,954)		19,000
Net finance (costs)/other income	(135)		-		(135)		(202)		374		-		374
Profit before income tax	11,976		(7,149)		4,827		8,799		22,328		(2,954)		19,374

Operating profit for the six months ended 31 March 2016 is stated after charging £1,477,000 of amortisation cost. 

3 - Exceptional items and amortisation of intangible assets

	Six months ended				Year ended
	31 March				30 September
	2017		2016		2016
	Unaudited		Unaudited		Audited
	£000		£000		£000
Acquisition costs re Giffen Holdings Ltd	209		-		-
Impairment of goodwill	5,800		-		-
Total charges arising from exceptional items	6,009		-		-
Amortisation of intangible assets	1,140		1,477		2,954
	7,149		1,477		2,954

Following the decision in April 2017 to withdraw from the loss-making low pressure, small diameter gas pipe replacement activities of Forefront Utilities Ltd, the Board has carried out a review of the carrying value of goodwill attributable to that cash generating unit which has resulted in an impairment charge of £5,800,000.

4 - Discontinued operation analysis

	Six months ended				Year ended
	31 March				30 September
	2017		2016		2016
	Unaudited		Unaudited		Audited
	£000		£000		£000
Revenue	147		4,876		7,500
Expenses	(147)		(4,876)		(11,493)
Loss before income tax	-		-		(3,993)
Income tax credit - benefit of tax losses	-		-		785
Income tax charge - adjustment in respect of previous period	-		-		(818)
Loss for the period from discontinued operation	-		-		(4,026)

5 - Income tax expense

	Six months ended		Year ended
	31 March		30 September
	2017	2016	2016
	Unaudited	Unaudited	Audited
	£000	£000	£000
Current tax:
UK corporation tax on profits for the period	(1,877)	(1,598)	(3,742)
Adjustments in respect of previous periods	-	-	(171)
Total current tax	(1,877)	(1,598)	(3,913)
Deferred tax	(195)	(162)	(823)
Income tax expense	(2,072)	(1,760)	(4,736)

6 - Earnings per share

Six months ended 31 March												Year ended 30 September
		2017				2016							2016
		Unaudited					Unaudited								Audited
	Earnings	EPS	DEPS		Earnings		EPS		DEPS			Earnings			EPS			DEPS
	£000	Pence	Pence		£000		Pence		Pence			£000			Pence			Pence
Earnings before exceptional items and amortisation	9,661	15.49	15.37		8,250		13.31		13.20			17,060			27.43			27.19
Exceptional items and amortisation	(6,906)	(11.07)	(10.99)		(1,211)		(1.96)		(1.94)			(2,422)			(3.90)			(3.86)
Basic earnings per share - continuing operations	2,755	4.42	4.38		7,039		11.35		11.26			14,638			23.53			23.33
Loss for the period from discontinued operation	-	-	-		-		-		-			(4,026)			(6.47)			(6.42)
Basic earnings per share	2,755	4.42	4.38		7,039		11.35		11.26			10,612		17.06				16.91
Weighted average number of shares		62,376	62,860				62,001		62,524					62,201			62,739

The dilutive effect of share options is to increase the number of shares by 484,000 (March 2016: 523,000; September 2016: 538,000) and reduce the basic earnings per share by 0.04p (March 2016: 0.09p; September 2016: 0.15p).  On 13 January 2017 273,503 new Ordinary shares of 10p each were issued following the exercise of share options bringing the total number in issue to 62,591,451.

7 - Dividends

The proposed interim dividend is 3.00p per share (2016: 2.65p).  This will be paid out of the Company's available distributable reserves to shareholders on the register on 2 June 2017, payable on 3 July 2017. In accordance with IAS 1, dividends are recorded only when paid and are shown as a movement in equity rather than as a charge in the income statement.

8 - Intangible assets

			Goodwill	Contractual rights and customer relationships
			£000	£000
Cost:
At 1 April 2016			57,067	12,323
Addition			-	-
At 1 October 2016			57,067	12,323
Addition			8,046	3,679
At 31 March 2017			65,113	16,002
Impairment losses/amortisation:
At 1 April 2016			(808)	(9,566)
Amortisation			-	(1,477)
At 1 October 2016			(808)	(11,043)
Amortisation			-	(1,140)
Impairment			(5,800)	-
At 31 March 2017			(6,608)	(12,183)
Carrying amount:
At 1 April 2016 (unaudited)			56,259	2,757
At 1 October 2016 (audited)			56,259	1,280
At 31 March 2017 (unaudited)			58,505	3,819

On 31 October 2016, the Group acquired the whole of the issued share capital of Giffen Holdings Ltd ("Giffen") for a cash consideration of £5m with a further £2m payment to redeem loans.

The Board's preliminary estimate is that goodwill of £8m arises on acquisition which will be reviewed for impairment one year after the acquisition as permitted by IFRS 3.  Goodwill will be finally determined following the completion of the audit of the accounts of Giffen for the year ended 30 September 2016.  The goodwill is attributable to the expertise and workforce of the acquired business.

Other intangible assets, provisionally valued at £3.7m, representing contractual rights and customer relationships, were also acquired and will be amortised over their useful economic lives, which range from two to five years, in accordance with IFRS 3.  Deferred tax has been provided on this amount. Amortisation of this intangible asset commenced in November 2016.

 

END

 

 

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