Interim Results

RNS Number : 6293E

Mavinwood PLC

30 September 2008

 



Mavinwood Plc

('Mavinwood' or 'the Company')

Interim results for the six months ended 30th June 2008

Financial key points                                                                                        2008                  2007

Continuing operations:

Revenue                                                                                                              £36.0m              £29.5m

Earnings before interest, tax, amortisation of intangible assets 

and share based payments charge (EBITA)                                                    £3.5m                £4.8m

Operating profit                                                                                                     £2.3m                £3.8m 

Profit before tax                                                                                                     £0.9m                £2.9m

Basic earnings per share from continuing operations                                      0.06p                 0.45p

Adjusted profit before tax*                                                                                 £2.1m                £3.9m

Adjusted fully diluted earnings per share*                                                        0.29p                 0.51p 

Basic (loss) /earnings per share                                                                         (0.18p)                0.39p

* before discontinued operations, amortisation of intangible assets, share based payments charge and notional interest on contingent consideration

Kevin Mahoney, Chief Executive, commented;

'At the beginning of the year we anticipated that the first 6 months of 2008 would be behind last years results but were confident that the second half would see considerable improvement. Unfortunately, as we announced on 24 September the insurance repair division lost a major contract which we expected to retain.

Whilst our Document Handling division has performed extremely well, ahead of market expectations, Emergency Repair has suffered as Insurance Companies have reacted to the global market turmoil by cutting costs. This was exacerbated by the under performance of the social housing business at Mono Services which was sub-scale and unprofitable. I am pleased to announce that we sold this social housing business on 27 September and the retained operation is expected to be profitable in the second half.

Although we have been through a difficult period I am confident that the Group is in a strong position to provide good returns for shareholders in the medium to long term.'  

Enquiries:

Mavinwood plc

Kevin Mahoney, Chief Executive                               020 7661 9650

Mike Vincent, Finance Director                                 020 7661 9651

Collins Stewart

Adrian Hadden                                                              020 7523 8353

Threadneedle Communications

John Coles                                                                    020 7653 9848

CHIEF EXECUTIVE'S REVIEW

RESULTS

Revenue from continuing operations in the six months ended 30 June 2008 was £36.0 million (2007: £29.5 million), with profit before tax of £0.9 million (2007: £2.9 million) and basic earnings per ordinary share of 0.06p (2007: 0.45p).

We think, however, that it is more relevant to consider Mavinwood's performance from continuing operations before share based payments charge, amortisation of intangible assets and notional interest on contingent consideration. On this basis, EBITA was £3.5 million (2007: £4.8 million), profit before tax was £2.1 million (2007: £3.9 million), and fully diluted earnings per share were 0.29p (2007: 0.51p). Comparative figures for 2007 have been restated for the sale of Mono Services Limited.

The Mavinwood Group comprises two divisions, Emergency Repair and Document Handling.

EMERGENCY REPAIR

			Six months ended  30 June  2008		Six months ended  30 June  2007		Year  ended  31 December 2007
			£'000		£'000		£'000
Revenue	ANSA, Independent Inspections and Mono Services continuing operations	*	20,061		24,201		45,726
	Peter Cox	**	8,438		-		4,232
	Total		28,499		24,201		49,958
EBITA***	ANSA, Independent Inspections and Mono Services continuing operations	*	2,092		3,894		7,326
	Peter Cox	**	294		-		288
	Business development and integration costs		(652)		-		-
	Total		1,734		3,894		7,614
* Ansa, Independent Inspections and Mono continuing operations throughout  2008 and 2007
** Peter Cox 3 months in 2007
*** excluding share based payments charge

This division includes three businesses that serve principally the insured repair sector. Approximately 90% of sales are to the leading insurance companies.

All three businesses share a common business process that is:

• Take the emergency call from the customer via the insurer

• Arrange a survey to validate or repudiate the claim and cost out the repair

• Undertake the repair either by directly employed labour or sub contractors

ANSA specialises in drainage surveys and repair; Independent Inspections specialises in flooring surveys and restoration and Mono Services in building fabric surveys and repairs both often due to water damage. 

ANSA and Independent Inspections are national businesses.

There is some customer overlap between the businesses but one of our opportunities moving forward is to offer all our services to a wider range of customers.

All these businesses operate to high service standards. Examples of key performance indicators that are monitored on a continuous basis are:

• Response times in terms of contacting a policyholder after they report an insured event

• Courtesy of staff and customer satisfaction

• Average cost per claim

 A range of integration projects are underway including:

• Optimising IT platforms

• Purchasing initiatives 

• Optimising back office functions

• Reviewing marketing opportunities and widening the service offering

Turning to the key issues within each operation: 

ANSA

Sales were down by 14%, mostly volume related. The cost base at ANSA is being addressed to bring costs down in line with reduced volumes. 

Operating profit however declined by 40% partly because we invested £0.5m in retaining and expanding one particular insurance contract. However, as announced on 24 September, this contract has not been renewed. ANSA remains a good business and customers continue to benefit from strong performance in claims validation, service delivery and cost control.

INDEPENDENT INSPECTIONS

Independent Inspections' volume of instructions were some 15% up on the first half of 2007. The robust management action taken in the first half of 2007 to reduce costs has benefited the operation in the second half of 2007 and into 2008. New revenue streams are being developed to enhance the business performance further. Independent's business tends to be stronger in the second half of the year.

MONO SERVICES

Mono Services operates in the building fabric repair business for one large insurer via their joint venture partner and in the social housing market. The insurance work was re-directed via the joint venture partner from May 2007 and transition costs and different work practices adversely affected its profitability compared to the first half of 2007. Due to reduced volumes and a change in the mix of customers, the social housing contracts were unprofitable. 

There was no real overlap between the two types of business; job values were smaller in social housing and executed by different teams. In terms of size, the insurance business runs annualised sales of £8m of sales per annum whereas the social housing activity is around £5m.

We concluded that the social housing business is sub-scale and it has been sold on 27 September. The retained insurance business has been combined with ANSA and is expected to return to profit in the second half. 

PETER COX

Peter Cox is a national provider of damp and waterproofing, timber preservation and wall stabilisation for property. Sales grew by 5% in a difficult market but investment in the fleet and information technology has meant a reduction in profit for the first half. Peter Cox's business is seasonal with profits skewed to the second half.

BUSINESS DEVELOPMENT AND INTEGRATION COSTS

£0.1m was incurred on developing new business streams and we are bidding on a series of new tenders. £0.5m was spent in integration of the division in the first half, principally on building the IT infrastructure for the division.

  DOCUMENT HANDLING

			Six months ended  30 June  2008		Six months ended  30 June  2007		Year  ended  31 December 2007
			£'000		£'000		£'000
Revenue	Restore and Wansdyke	*	4,944		4,407		8,934
	DCS	**	2,607		924		3,022
	Total		7,551		5,331		11,956
EBITA***	Restore and Wansdyke	*	1,629		1,338		2,808
	DCS	**	948		292		1,078
	Total		2,577		1,630		3,886
* Wansdyke and Restore throughout 2008 and 2007
** DCS 9 months in 2007
*** excluding share based payments charge

RESTORE AND WANSDYKE

Document Handling serves a wide range of customers, including law firms, corporates of varying sizes, financial services companies, councils and health trusts. Our customers are mostly based in London and the South across to Bristol and South Wales. The majority of sales are the storage and retrieval of archive boxes but also individual files and other material such as magnetic media and film. 

Scanning of documents on a selective basis is also offered to clients. Shredding/pulping of documents at the end of their useful lives is currently outsourced, although this would form a logical product extension.

Restore and Wansdyke are operated under one management team.

We operate a combination of freehold and leasehold sites at Wansdyke and Restore respectively. Due to the absence of rental charges, the return on sales at Wansdyke is higher than that at Restore. 

The market for the physical storage of archives continues to grow well in excess of GDP, with especially strong growth in sectors such as professional services. Overall volume growth in Restore and Wansdyke compared to the first half of 2007 was 11% and the return on sales is 33%.

We are gradually utilising our underground storage facilities near Bath and we have plenty of capacity for the medium term expansion for the business.

DOCUMENT CONTROL SERVICES (DCS)

We acquired DCS on 26 March 2007. DCS is a quality national operation scanning and indexing documents with high intellectual property content. The business has a blue chip customer base including Network Rail, Highways Agencies, oil and gas companies, city councils and property companies. DCS has met its profit expectation under its earn out agreement for the year to 30 June 2008 and the contingent consideration of £2 million is being settled.

CENTRAL COSTS

Central costs have increased from £724,000 to £805,000 in the first half of 2008.

INTEREST

Net interest payable amounted to £1,441,000 (2007: £884,000).  

  PROFIT BEFORE TAX

The profit before tax from continuing operations for the period ended 30 June 2008 was £899,000 (2007: £2,943,000). However, the Directors believe that an adjusted measure of profit before tax and earnings per share provides shareholders with a more appropriate representation of the underlying earnings derived from the Group's continuing business. The items adjusted for in arriving at that underlying level are as follows:

			Six months ended  30 June  2008		Restated Six months ended  30 June  2007		Restated Year  ended  31 December 2007
			£'000		£'000		£'000
Profit before tax			899		2,943		5,509
Amortisation of intangible assets			206		62		288
Share based payments charge			960		911		1,892
Notional interest on contingent consideration			75		(58)		62
Adjusted profit before tax			2,140		3,858		7,751

TAX

Due to the distortions caused by the non-deductibility of the notional interest on the contingent consideration and amortisation of intangible assets, the reported tax charge is 67.9% (2007: 30.6%). However, the underlying tax rate during 2008 was 28.5%, as a percentage of adjusted profit before taxation (2007: 30.4%). 

EARNINGS PER SHARE (EPS)

			Six months ended  30 June  2008		Restated Six months ended  30 June  2007		Restated Year  ended  31 December 2007
Earnings per share from continuing operations (pence)
Basic			0.06p		0.45p		0.64p
Diluted			0.05p		0.39p		0.54p
Adjusted earnings per share from continuing operations (pence)
Basic			0.33p		0.59p		1.19p
Diluted			0.29p		0.51p		1.02p

Basic EPS is 0.06p, which compares with 0.45p in 2007. Basic EPS adjusted as above was 0.33p (2007: 0.59p). Assuming the exercise of all options and awards under the LTIP in 2008 at an average price of 15.0p plus the conversion of the convertible A shares (2007: 17.6p), the fully diluted adjusted EPS becomes 0.29p (2007: 0.51p). 

DIVIDENDS

Mavinwood intends to re-invest profits in the business and the Board do not recommend declaring an interim dividend (2007: Nil).

SHARE ISSUES

New equity was issued on two occasions in the first six months of 2008. 0.5 million shares were issued on exercise of awards under the LTIP to the previous head of Document Handling who retired due to ill health in late 2007. 3.3 million shares were allotted at 12.0p per share on 5 June 2008 as part funding of the contingent consideration for DCS.

BALANCE SHEET

Net assets increased to £51.1m in the half year reflecting the loss for the period of £0.8m plus the share issues. Goodwill and intangibles on the seven acquisitions at 30 June 2008 were £70.3m (2007: £64.2m). 

Property, plant and equipment totalled £11.4m (2007: £11.3m) principally comprising the freehold underground storage facilities at Wansdyke, but also computer systems, storage racking and vehicles. 

Operating working capital (excluding cash) amounted to a net £9.1m at 30 June 2008. Net debt at 30 June 2008 totalled £33.3m (2007: £24.6m) after deferred financing costs of £0.3m (2007: £0.3m).  

CASH FLOW

The net cash inflow from continuing operations before capital expenditure was £2,330,000 (2007: £1,648,000). This inflow is after taking account of an outflow of £1.6m on working capital principally due to slow payment by insurers at the half year. However, this outflow was considerably better than the £3.6m outflow sustained in the first half of 2007.

Capital expenditure totalled £701,000 (2007: £1,135,000) compared to depreciation of £471,000 (2007: £467,000).  Significant expenditure comprised the fitting out of empty space in the underground storage areas at Wansdyke and installing new racking at both Restore and Wansdyke. 

Deferred consideration in respect of the acquisitions of Peter Cox and DCS of £1.9 million was paid in the first half.

BOARD

There were no changes to the Board in the half year. 

OUTLOOK

This has been a very mixed six months for our two divisions. Document Handling has continued to grow significantly with organic operating profit up by 21%. Emergency Repair has however suffered in a difficult market as insurance companies have reacted to the developing 'credit crunch'. We are taking significant costs out of the Emergency Repair division to mitigate the drop in volume. Operating difficulties at Mono exacerbated under performance although these issues have been stemmed by the sale of the Mono social housing business in September. 

The fourth quarter of 2008 is now unlikely to see any pick up in activity in Emergency Repair, made worse by the non renewal of an insurance contract. Accordingly, we now expect underlying profit before tax for the full year to be below the reported level of 2007 which was £7.3m.

Management continue to explore opportunities for enhancing shareholder value. 

Kevin Mahoney    

Chief Executive Officer                                        30 September 2008

  Condensed Consolidated Interim Income Statement

for the six months ended 30 June 2008

			Unaudited		Unaudited Restated		Unaudited Restated
			Six months ended		Six months ended		Year ended
			30 June 2008		30 June 2007		31 December 2007
	Note		£'000		£'000		£'000
Continuing operations
Revenue		2	36,050		29,532		61,914
Cost of sales			(21,305)		(17,631)		(36,091)
Gross profit			14,745		11,901		25,823
Administrative expenses			(12,405)		(8,074)		(17,942)
Operating profit			2,340		3,827		7,881
Investment income			57		40		106
Finance costs			(1,498)		(924)		(2,478)
Profit before tax			899		2,943		5,509
Income tax expense		3	(610)		(900)		(2,602)
Profit from continuing operations			289		2,043		2,907
Discontinued operations Loss from discontinued operations		7	(1,136)		(276)		(323)
(Loss)/ profit for the period			(847)		1,767		2,584
Attributable to
Equity holders of the Company			(847)		1,767		2,584
(Loss)/ earnings per share (pence)
	Basic	4	(0.18)p		0.39p		0.56p
	Diluted	4	(0.18)p		0.33p		0.48p
Earnings per share from continuing operations (pence)
	Basic	4	0.06p		0.45p		0.64p
	Diluted	4	0.05p		0.39p		0.54p

  Consolidated Statement of Changes in Shareholders' Equity

for the six months ended 30 June 2008

	Share capital		Share premium		Share based payments reserve		Retained earnings		Total equity
	£'000		£'000		£'000		£'000		£'000
Balance at 1 January 2007	503		40,060		1,102		2,572		44,237
Profit for the period	-		-		-		1,767		1,767
	503		40,060		1,102		4,339		46,004
Issue of shares during the period	4		996		-		-		1,000
Share based payments charge	-		-		900		-		900
Balance at 30 June 2007	507		41,056		2,002		4,339		47,904
Profit for the period	-		-		-		817		817
	507		41,056		2,002		5,156		48,721
Issue of shares during the period	5		895		-		-		900
Share based payments charge	-		-		992		-		992
Balance at 1 January 2008	512		41,951		2,994		5,156		50,613
Loss for the period	-		-		-		(847)		(847)
	512		41,951		2,994		4,309		49,766
Issue of shares during the period	4		483		-		-		487
Issue costs	-		(37)		-		-		(37)
Share based payments charge	-		-		960		-		960
Awards under the LTIP exercised	-		-		(86)		-		(86)
Balance at 30 June 2008	516		42,397		3,868		4,309		51,090

  Condensed Consolidated Interim Balance Sheet

at 30 June 2008

		Unaudited		Unaudited		Unaudited
		30 June 2008		30 June 2007		31 December 2007
	Note	£'000		£'000		£'000
Assets
Non-current assets
Intangible assets		70,348		64,192		70,634
Property, plant and equipment		11,383		11,303		12,220
Investments		507		550		556
Deferred tax asset		-		-		179
		82,238		76,045		83,589
Current assets
Inventories		506		323		381
Trade and other receivables		18,731		18,499		23,140
Cash and cash equivalents  5		449		908		1,108
		19,686		19,730		24,629
Assets held for sale  7		5,736		-		-
Total assets		107,660		95,775		108,218
Liabilities
Current liabilities
Trade and other payables		(9,815)		(12,087)		(15,554)
Bank overdrafts and loans  5		(7,560)		(3,444)		(4,337)
Current tax liabilities		(957)		(3,025)		(1,229)
Other financial liabilities  5		(23)		(116)		(45)
Provisions  6		(2,302)		(989)		(3,698)
		(20,657)		(19,661)		(24,863)
Liabilities directly associated with assets classified as held for sale  7		(5,504)		-		-
Net current (liabilities)/assets		(739)		69		(234)
Non-current liabilities
Bank loans  5		(26,170)		(21,918)		(27,643)
Deferred tax liability		(4,239)		(4,478)		(5,099)
Provisions  6		-		(1,814)		-
		(30,409)		(28,210)		(32,742)
Net assets		51,090		47,904		50,613
Shareholders equity
Called up share capital		516		507		512
Share premium account		42,397		41,056		41,951
Share based payments reserve		3,868		2,002		2,994
Retained earnings		4,309		4,339		5,156
Attributable to  equity holders of the Company		51,090		47,904		50,613

   Condensed Consolidated Interim Statement of Cash Flows

for the six months ended 30 June 2008

		Unaudited		Unaudited Restated		Unaudited Restated
		Six months ended		Six months ended		Year ended
		30 June 2008		30 June 2007		31 December 2007
		£'000		£'000		£'000
Cash inflow from operating activities
	Continuing operations
	Profit for the period	289		2,043		2,907
	Depreciation of property, plant and equipment	471		467		843
	Amortisation of intangible assets	206		62		288
	Finance costs recognised in profit and loss	1,441		884		2,372
	Income tax expense recognised in profit and loss	610		900		2,602
	Share based payments charge	960		911		1,892
	Gain on disposal of property, plant and equipment	-		-		(33)
	Movement in working capital
	Change in inventories	(125)		(12)		(1)
	Change in trade and other receivables	(981)		(4,850)		(4,845)
	Change in trade and other payables	(541)		1,243		986
Net cash generated  from continuing  operations		2,330		1,648		7,011
	Discontinued operations
	Loss for the period	(1,270)		(398)		(462)
	Income tax expense recognised in profit and loss	134		122		139
	Movement in working capital
	Change in inventories	-		-		13
	Change in trade and other receivables	204		(280)		(1,100)
	Change in trade and other payables	903		19		186
Net cash generated  from discontinued operations		(29)		(537)		(1,224)

Net cash generated from operations

2,301

1,111

5,787

  Condensed Consolidated Interim Statement of Cash Flows (continued)

for the six months ended 30 June 2008

		Unaudited		Unaudited Restated		Unaudited Restated
		Six months ended		Six months ended		Year ended
		30 June 2008		30 June 2007		31 December 2007
		£'000		£'000		£'000
Net cash generated from operations		2,301		1,111		5,787
	Net finance costs	(1,248)		(996)		(1,575)
	Income taxes paid	(1,176)		(189)		(2,782)
Net cash (used by)/generated  from operating activities		(123)		(74)		1,430
Cash flows from investing activities
	Purchases of property, plant and equipment	(701)		(1,135)		(2,582)
	Proceeds from share issues	388		-		-
	Contingent consideration	(1,539)		-		(106)
	Acquisition of subsidiary, net of cash acquired	(400)		(5,581)		(6,988)
Cash flows used in investing activities		(2,252)		(6,716)		(9,676)
Cash flows from financing activities
	Repayment of borrowings	(1,000)		(1,000)		(2,000)
	Repayment of indebtedness	-		-		(4,794)
	New bank loans raised	2,500		6,550		14,300
	Loan note receipts	28		-		-
	Deferred financing costs	(18)		(70)		(192)
	Increase in bank overdrafts	223		444		337
	Finance lease principal repayments	(22)		(76)		(147)
Net cash generated in financing activities		1,711		5,848		7,504
Net decrease in cash and cash equivalents		(664)		(942)		(742)
	Cash and cash equivalents at start of period	1,108		1,850		1,850
	Less: Net cash and cash equivalents included in discontinued operations	5		-		-
Cash and cash equivalents at the end of period		449		908		1,108

  Notes to the Consolidated Interim report 

for the six months ended 30 June 2008 

1    Basis of preparation

The unaudited interim financial information for the half year ended 30 June 2008, which has been approved by the Board of Directors on 29 September 2008, has been prepared based on the accounting policies consistent with those used in the financial statements for the year ended 31 December 2007 and those expected to be applied in the financial statements for the year ended 31 December 2008.

The results for the previous periods have been restated to show the impact of discontinued operations. 

The interim report for the six months ended 30 June 2008 does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The restated results for the year ended 31 December 2007 have been extracted from the financial statements for the year ended 31 December 2007 which have been filed with the Registrar of Companies. The auditors' report contained therein, was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 

  2    Segmental information

	Unaudited		Unaudited		Unaudited
	Six months ended		Six months ended		Year ended
	30 June 2008		30 June 2007		31 December 2007
	£'000		£'000		£'000
Revenue
The revenue was derived from the Group's principal activities in the UK as follows:
Emergency Repair	28,499		24,201		49,958
Document Handling	7,551		5,331		11,956
	36,050		29,532		61,914
Results
The profit after tax was derived from the Group's principal activities in the UK as follows:
Emergency Repair	1,734		3,894		7,614
Document Handling	2,577		1,630		3,886
Central costs	(805)		(724)		(1,439)
Share based payments charge	(960)		(911)		(1,892)
Amortisation of intangible assets	(206)		(62)		(288)
Operating profit	2,340		3,827		7,881
Net finance cost	(1,441)		(884)		(2,372)
Profit before tax	899		2,943		5,509
Income tax expense	(610)		(900)		(2,602)
Profit after tax	289		2,043		2,907

Segmental assets:
Emergency Repair	70,198		59,171		71,433
Document Handling	37,344		36,341		36,533
Central	118		263		252
Total	107,660		95,775		108,218
Segmental liabilities:
Emergency Repair	(14,509)		(13,764)		(14,297)
Document Handling	(6,143)		(6,150)		(5,004)
Central	(35,918)		(27,957)		(38,304)
Total	(56,570)		(47,871)		(57,605)
Segmental net assets:
Emergency Repair	55,689		45,407		57,136
Document Handling	31,201		30,191		31,529
Central	(35,800)		(27,694)		(38,052)
Total	51,090		47,904		50,613

Property, plant and equipment additions	701		1,135		2,287
Depreciation of property, plant and equipment and amortisation of intangible assets	677		529		1,131

3    Tax

The underlying tax charge is based on the expected effective tax rate for the full year to 31 December 2008 and is calculated as 28.5% on profit before tax. 

4    Earnings per ordinary share

Basic earnings per share have been calculated on the profit after tax for the period and the weighted average number of ordinary shares in issue during the period.

Adjusted earnings per share that are before share based payments charge, amortisation of intangible assets and notional interest on contingent consideration have been presented in addition to the basic earnings per share since, in the opinion of the Directors, this provides shareholders with a more appropriate representation of the underlying earnings derived from the Group's businesses.

	Unaudited		Unaudited		Unaudited
	Six months ended		Six months  ended		Year  ended
	30 June 2008		30 June 2007		31 December 2007
	No. of shares		No. of shares		No. of shares
Weighted average number of shares in issue	463,302,426		455,409,225		457,684,786
(Loss)/profit for the period	(847)		1,767		2,584
Total basic (loss)/ earnings per ordinary share	(0.18p)		0.39p		0.56p
	£'000		£'000		£'000
Profit after taxation on ordinary activities	289		2,043		2,907
Adjustments
Amortisation of intangible assets	206		62		252
Share based payments charge	960		641		1,892
Tax effect	-		-		312
Notional interest on contingent consideration	75		(58)		62
Adjusted earnings	1,530		2,688		5,425
Basic earnings per ordinary share from continuing operations	0.06p		0.45p		0.64p
Adjusted basic earnings per ordinary share (before amortisation of intangible assets, share based payments charge and notional interest on contingent consideration)	0.33p		0.59 p		1.19p

	No. of shares		No. of shares		No. of shares
Weighted average number of Shares in issue	463,302,426		455,409,225		457,684,786
Convertible 'A' shares	21,747,162		28,823,625		30,467,786
Share options and awards under the LTIP	45,028,761		44,590,775		46,116,659
Weighted average fully diluted number of shares in issue	530,078,349		528,823,625		534,269,141
Total fully diluted (loss)/ earnings per ordinary share	(0.18p)		0.33p		0.48p
Fully diluted earnings per ordinary share	0.05p		0.39p		0.54p
Adjusted fully diluted earnings per ordinary share (before amortisation of intangible assets, share based payments charge and notional interest on contingent consideration)	0.29p		0.51p		1.02p

The diluted earnings per share are the basic earnings per share adjusted for the dilutive effect of the conversion into fully paid shares of the outstanding share options and awards under the LTIP. They are also adjusted for the conversion of the A shares into ordinary shares at the average price for the period of 15.0p (30 June 2007: 17.61p; 31 December 2007: 18.4p). 

5    Analysis of changes in net debt

	Audited								Unaudited
	At						Non cash		At
	1 January						movement		30 June
	2008		Cash flow		Disposals		2007		2008
	£'000		£'000		£'000		£'000		£'000
Cash and cash equivalents	1,108		(664)		5		-		449
Current financial liabilities
Bank loans repayable within one year	(4,337)		(1,733)		-		(1,490)		(7,560)
Finance leases repayable within one year	(45)		22		-		-		(23)
Non-current financial liabilities
Bank loans repayable in more than one year	(28,000)		-		-		1,500		(26,500)
Deferred financing costs	357		63		-		(90)		330
Net debt	(30,917)		(2,312)		5		(80)		(33,304)

6    Contingent consideration

The Group paid contingent consideration in the period in respect of the following companies:

					£'000
Restore Limited					89
Peter Cox Limited					1,050
Document Control Services Limited					400
					1,539
Additional contingent consideration of £1,600,000 has been provided for on a discounted basis in respect of Document Control Services Limited. This is due as follows:

	Unaudited		Unaudited		Unaudited
	Six months ended		Six months ended		Year ended
	30 June 2008		30 June 2007		31 December 2007
	£'000		£'000		£'000
Less than 1 year	1,564		-		1,889
Greater than 1 year	-		1,814		-
	1,564		1,814		1,899

7    Discontinued operations

The sale of Mono Services Limited ('the company') was completed on 27 September 2008. Prior to this date, the insurance building repair business was transferred to another group company 'Ansa Building Services Limited' leaving the social housing contracts in the company. The consideration for the sale was £450,000.

The social housing business had been shown as discontinued operations. An analysis of the loss on discontinued operations is shown below:

	Unaudited		Unaudited		Unaudited
	Six months ended		Six months ended		Year ended
	30 June 2008		30 June 2007		31 December 2007
	£'000		£'000		£'000
Revenue	2,246		2,872		6,239
Trading loss for the period	(469)		(398)		(462)
Taxation Provision for loss on disposal Impairment of goodwill	134 (466) (335)		122 - -		139 - -
	(1,136)		(276)		(323)

The net assets of the company have been classified as held for sale at 30 June. An analysis of the net assets at 30 June is given below.

					£'000
Property, plant and equipment					346
Inventories					164
Trade and other receivables					5,226
Trade and other payables					(5,708)
Bank overdrafts					(5)
Current tax losses available for group relief					222
Provisions					(13)
Net assets classified as held for sale					232

Adjustments have been made to the asset value in respect of this business in order that it is held at its estimated realisable value at 30 June. This has resulted in a provision for loss on disposal of £0.5m. Goodwill of £0.3m has also been written off. The final result on sale will be booked in the accounts for the year ended 31 December 2008.

ENDS

 

END

 

 

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