Half Yearly Report

RNS Number : 9876K

Clarke(T.) PLC

06 August 2013

 



TClarke plc

Interim Results for the six months ended 30 June 2013

TClarke plc, the Building Services Group (The Group), announces its interim results for the six months ended 30th June 2013.

Highlights:

Group revenue                                                               £114.7m (30th June 2012: £90.7m)

Profit before taxation                                                      £0.8m (30th June 2012: £0.5m)

Profit before tax margin                                                  0.7% (30th June 2012: 0.5%)

Underlying operating profit                                              £1.2m (30th June 2012: £1.5m)

Underlying operating profit margin                                   1.0% (30th June 2012: 1.7%)

Earnings per share                                                         1.23p (30th June 2012: 0.79p)

Earnings per share - underlying                                       1.50p (30th June 2012: 2.19p)

Forward order book                                                        £225m (30th June 2012: £230m)

Net cash                                                                        £7.8m (31st December 2012: £5.6m)

Interim dividend per share                                              1.0p (2012: 1.0p)

New contracts secured include:

·      Bank Underground Station, London

·      Aberystwyth Student Accommodation, Wales

·      Queen Elizabeth II Hospital, Hertfordshire

·      BNP Paribas, London

·      Hendon Apartments, London

·      Imperial Tobacco Phase 2, Bristol

·      Mark Lane, Commercial Office, London

·      University of Bath, Somerset

·      Witham Leisure Centre, Essex

·      Barclays Bank, Gloucester

 Mark Lawrence, Chief Executive commented:

" The Group has performed well, delivering a profitable half year, despite the continuing challenges in our markets.  The forward order book has been maintained at £225 million and we have improved the visibility of our workload, with some projects extending into 2015 and beyond. 

Competition remains fierce, yet we remain focused on choosing carefully which projects we tender for.  Our cash position is solid and we ended the half year with an increased balance of £7.8 million. 

Looking forward, there are signs of increased client activity especially in London, although this has yet to translate into improved margins."

-ends-

 Date 6th August 2013

For further information contact:

TClarke plc
Mark Lawrence                                                  Martin Walton

Group Chief Executive                                         Finance Director
Tel: [phone]                                            Tel: [phone]

www.tclarke.co.uk    

N+1 Brewin                                                     Broker Profile

(Financial Adviser and Broker)                       Simon Courtenay

Sandy Fraser                                                     Tel: [phone]

Tel: [phone]                                            www.broker-profile.com

www.n1singer.com

Chairman's Statement

We have delivered profitable financial results, maintaining our discipline of securing contracts at commercially acceptable levels, despite fierce competition when bidding for projects. The underlying operating profit for the six months was £1.2m (30th June 2012: £1.5m), with revenues of £114.7m (30th June 2012: £90.7m).

As can be seen by this announcement we have secured an impressive range of new contracts across the UK. A positive validation of our strategy to focus on key sectors is confirmed by our forward order book which has been replenished and stands at £225m (30th June 2012: £230m).

A continued focus on cash management throughout the period has seen net cash improve to £7.8m as at 30 June 2013 from £5.6 million as at 31 December 2012, with average net cash balances during the period of £4.0 million.

The Board proposes to maintain the interim dividend at 1.0p (2012: 1.0p). This will be paid on 11th October 2013 to shareholders on the register at 13th September 2013.

Our outlook remains cautious as market conditions are tough and remain challenging. Whilst there are signs of increased client activity this has yet to translate into improved margins on current projects or those under active consideration.

Going forward we have good visibility on a number of fully committed high quality opportunities particularly in the London commercial market. We remain committed to providing the highest quality of service to our clients, together with the best possible return for our shareholders.

Russell Race

Chairman

6th August 2013

Operational Review

The group is managed in three operational areas, South, North and Scotland and to provide nationwide coverage we operate from 16 locations across the UK, the majority of which trade under the TClarke brand.

Our strategy is to create a well-balanced businessby focusing on eight key sectors in building services:

·      Facilities Management

·      Intelligent Buildings

·      Green Technologies

·      Transport

·      Mission Critical

·      Manufacturing

·      Residential

·      M&E Contracting

In common with many in the construction sector we are exposed to today's difficult trading environment. Frustratingly opportunities are taking longer to convert into firm orders and margins remain under pressure. However our forward order book now stands at an impressive £225m with good visibility through 2015. Our contracts at London Underground's Victoria and Bank Stations have visibility through to 2017 and 2021 respectively.

Recent Contract Awards include:

·      Bank Underground Station, London

·      Aberystwyth Student Accommodation, Wales

·      Queen Elizabeth II Hospital, Hertfordshire

·      BNP Paribas, London

·      Hendon Apartments, London

·      Imperial Tobacco Phase 2, Bristol

·      Mark Lane, Commercial Office, London

·      University of Bath, Somerset

·      Witham Leisure Centre, Essex

·      Barclays Bank, Gloucester

·      60 VE Fire Alarm, London

·      Springfield Community Center, Corsham

·      CALA Homes, Fairmilehead, Edinburgh

·      Yorkshire Building Society, Leeds

·      BAE Systems, Farnborough and South Wales

·      Fitzroy Place, Residential, London

·      Drumchapel Police Station, Glasgow

·      Fulston Manor School, Kent

·      Leverndale Hospital Mother & Baby, Glasgow

·      ITV Studios London, London

·      20 Fenchurch Street - Cat A Works, London

·      Filton Campus, Bristol

·      Plot L Chelmsford Business Park, Chelmsford

·      Carlsberg Brewery, Leeds

·      Cruddas Park College, Newcastle

·      South Tyneside College, Newcastle

·      Cornwall Council Security Framework, Cornwall

·      Royal London Hospital OPD enabling works, London

·      Newcastle College, Newcastle

Waitrose Stores including:          

·      Helensburgh, Argyll       

·      Chipping Sodbury, Gloucestershire          

·      Aylesbury, Buckinghamshire       

·      Oundle, Northamptonshire          

·      Watford, Hertfordshire

·      Henley on Thames, Oxfordshire  

·      Sidcup, Kent     

·      Westbury Park, Bristol    

TClarke - South

The South Division is the largest of our three operating divisions and includes our two London businesses. 90% of targeted 2013 revenues for this division are now secured although some of the individual business unitshave capacity for the third and fourth quarters.

With a sensible and selective tendering approach £95m of contracted revenues have now been secured for 2014 and beyond.

Reaffirming our rail capabilities we are pleased to have recently secured the M&E services package for the Bank station capacity upgrade project. The Bank and Monument Tube station complex is located in the heart of the City of London financial district and is the fourth busiest interchange station on the Underground network served by six lines (Northern, Central, Waterloo & City, and at the Monument end of the same station complex, the District and Circle, as well as the Docklands Light Railway (DLR)).

Other current projects include data centres at Buckinghamshire, Gloucestershire and Northamptonshire which are scheduled for completion between September and early 2014. Commercial developments at 20 Fenchurch Street, 240 Blackfriars and JP Morgan, Victoria Embankment are due for completion in the spring of 2014.

Our Cardiff office has made further progress and has secured another significant project, the 1,000 Bed Student Accommodation project for Aberystwyth University following on from the previous successful win for the Cardigan Health and Social Care Centre.

Tendering opportunities remain strong across the division and in the London market there are several large commercial office schemes and high end residential schemes that are progressing to a construction stage which we are currently bidding.

TClarke - North

The North Division includes our Accrington, Newcastle and Leeds operations. 80% of targeted 2013 revenues are now secured. Mainly driven by our FM frameworks, £18m of revenues have been secured for 2014 and beyond.

We continue to work extensively for BAE at Wharton and Samlesbury and are current bidding opportunities for them at Barrow.

Our business at Newcastle delivered a solid performance in the first half of the year including the successful handover of the INTO Project at Newcastle University.

The data centre we have been undertaking in the North East with our engineers and operatives from Newcastle and Leeds is expected to close out in October. 

TClarke - Scotland

In Scotland, we operate from our main office in Falkirk and a regional office in Aberdeen.  Whilst having streamlined the business to achieve a low cost base, contracting in Scotland remains fiercely competitive, particularly in the commercial M&E market.

Whilst we have been successful in securing commercial M&E projects at Drumchapel Police Station and Leverndale Hospital Mother & Baby Unit both in Glasgow the business is more focused towards IT led projects, engineering and the residential market.

Last year across Scotland we delivered over 1,000 residential units, this year to date we have secured 1,750 and a further 1,000 for 2014 and beyond.

80% of targeted revenues for this year are now secured and over £12m of work for 2014 and beyond.

Summary and Outlook

We believe trading will remain challenging and our markets will continue to face margin pressures; however we remain optimistic about future opportunities and will continue to focus on winning quality work.

Clients are reassured by our financial strength, service levels and operational stability. Our strong, healthy order book provides a platform to grow the business.

Mark Lawrence

Group Chief Executive

6th August 2013

Financial review                      

Summary of financial performance

Revenue increased by £24.0m (26.4%) to £114.7m (2012: £90.7m), gross profit reduced by £0.3m from £11.7m (12.9%) to £11.4m (9.9%), reflecting the continuing pressure on margins throughout our markets.

Underlying operating profit fell by £0.3m to £1.2m (2012: £1.5m). Underlying operating profit consists of operating profit before amortisation of intangible assets and non-recurring costs totalling £0.1m (2012: £0.8m).

Profit before tax increased by £0.3m to £0.8m (2012: £0.5m).  Taxation was £0.2m (2012: £0.1m), and the effective tax rate was 31.9% (2012: 27.8%).

Basic earnings per share were 1.23p (2012: 0.79p) and diluted earnings per share were 1.19p (2012: 0.78p).  Underlying earnings per share were 1.50p (2012: 2.19p).

The results by division are considered below. 

TClarke - South

The South, which is our largest division and includes the group's central operating costs, saw revenue increase to £91.3m (2012: £60.7m).  The operating result was £nil (2012: £0.2m profit), reflecting the market conditions.  The underlying operating result was also £nil (2012: £0.6m profit, after adjusting for £0.2m long term employee benefit charges arising from the acquisition of DG Robson in 2010 and £0.2m restructuring costs). 

TClarke - North

Revenue in the North decreased by £6.2m to £17.0m (2012: £23.2m), with 2012's revenue having benefited from some significant one-off contracts in the North-West which were secured at competitive margins.  Operating profit increased by £0.3m to £0.9m (2012: £0.6m).

Underlying operating profit was £1.0m before adjusting for £0.1m intangibles amortisation (2012: £0.9m underlying operating profit, before adjusting for £0.2m intangibles amortisation and £0.1m restructuring charges).

TClarke Scotland

Revenue in Scotland decreased by £0.4m to £6.4m (2012: £6.8m), however Scotland achieved a break even operating result (2012: £0.1m underlying operating loss before restructuring costs of £0.1m), continuing the improvement seen since 2011 and reflecting the impact of the restructuring of the business in previous years to focus on profitable contract opportunities in its core residential, engineering and IT sectors. 

Cash flow

Our net cash position improved to £7.8m at 30 June 2013, up £2.2m since the year end.  Net cash inflow in the period was £2.2m (2012: £0.1m), after dividend payments of £0.8m (2012: £0.8m).

Net cash inflow from operating activities was £3.3m (2012: £1.1m), with an improved working capital position.  Our cash position has been boosted by positive cashflows on a number of projects in progress, but we are mindful of the need to fund current and future projects and we will continue to monitor and manage our cash and working capital position closely.

Dividend

The interim dividend has been maintained at 1.0p (2012: 1.0p) and will be paid on 11th October 2013 to shareholders on the register at 13th September 2013 as detailed in note 6.

Pension obligations

The pension scheme deficit has decreased by £0.8m in the six months to 30th June 2013 due in the main to an increase in the discount rate applied to the scheme liabilities.  The triennial actuarial valuation of the scheme as at 31st December 2012 is currently in progress, and we expect to have the results available by the end of the year.  We continue to meet our ongoing funding obligations to the pension scheme, with employers' contributions amounting to £0.4m in the first half of the year.

Martin Walton

Finance Director

6th August 2013

Condensed consolidated income statement
							Unaudited		Unaudited		Audited
							6 Months to		6 Months to		12 Months to
							30 06 2013		30 06 2012		31 12 2012
							£000		£000		£000
Revenue							114,707		90,725		193,834
Cost of sales							(103,354)		(79,026)		(169,918)
Gross profit							11,353		11,699		23,916
Other operating income							38		62		127
Administrative expenses:
Amortisation of intangible assets							(143)		(170)		(341)
Non-recurring costs							-		(638)		(880)
Other administrative expenses							(10,233)		(10,242)		(21,123)
Total administrative expenses							(10,376)		(11,050)		(22,344)
Profit from operations							1,015		711		1,699
Finance income							13		8		22
Finance costs							(277)		(269)		(524)
Profit before taxation							751		450		1,197
Taxation							(240)		(125)		(349)
Profit for the period							511		325		848
Earnings per share:
Attributable to owners of TClarke plc:
Basic							1.23p		0.79p		2.05p
Diluted							1.19p		0.78p		2.01p
Condensed consolidated statement of comprehensive income
							Unaudited		Unaudited		Audited
							6 Months to		6 Months to		12 Months to
							30 06 2013		30 06 2012		31 12 2012
							£000		£000		£000
Profit for the period							511		325		848
Other comprehensive income / (expense):
Revaluation of land and buildings							-		-		25
Actuarial gain / (loss) on defined benefit pension scheme							565		(1,586)		(1,559)
Other comprehensive income / (expense) for the period, net of tax							565		(1,586)		(1,534)
Total comprehensive income / (expense) for the period							1,076		(1,261)		(686)

Condensed consolidated statement of financial position
	Unaudited		Unaudited		Audited
	30 06 2013		30 06 2012		31 12 2012
	£000		£000		£000
Non-current assets
Intangible assets	23,558		23,872		23,701
Property, plant and equipment	5,790		6,267		5,933
Deferred taxation	1,999		2,344		2,151
	31,347		32,483		31,785
Current assets
Inventories	457		514		327
Amounts due from customers under construction contracts	21,213		19,583		16,644
Trade and other receivables	32,225		24,763		35,990
Current tax receivables	271		-		-
Cash and cash equivalents	7,849		702		5,572
	62,015		45,562		58,533
Total assets	93,362		78,045		90,318
Current liabilities
Amounts due to customers under construction contracts	(3,092)		(3,086)		(6,791)
Trade and other payables	(54,687)		(38,203)		(47,144)
Current tax liabilities	-		(520)		(221)
Obligations under finance leases	(53)		(136)		(138)
	(57,832)		(41,945)		(54,294)
Net current assets	4,183		3,617		4,239
Non-current liabilities
Retirement benefit obligation	(11,086)		(12,113)		(11,896)
Obligations under finance leases	(48)		(88)		(31)
	(11,134)		(12,201)		(11,927)
Total liabilities	(68,966)		(54,146)		(66,221)
Net assets	24,396		23,899		24,097
Equity attributable to owners of the parent
Share capital	4,140		4,140		4,140
Share premium	3,050		3,049		3,050
Revaluation reserve	765		758		773
Retained earnings	16,441		15,952		16,134
Total equity	24,396		23,899		24,097

Condensed consolidated statement of cash flows
	Unaudited	Unaudited			Audited
	6 Months to	6 Months to			12 Months to
	30 06 2013	30 06 2012			31 12 2012
	£000		£000		£000
Net cash generated by operating activities (see note 7)	3,300		1,090		6,411
Investing activities
Interest received	13		8		22
Purchase of property, plant and equipment	(191)		(197)		(594)
Receipts on disposal of property, plant and equipment	63		96		447
Net cash used in investing activities	(115)		(93)		(125)
Financing activities
Shares issued	-		-		1
Equity dividends paid	(828)		(828)		(1,242)
Repayments of obligations under finance leases	(80)		(27)		(33)
Net cash used in financing activities	(908)		(855)		(1,274)
Net increase in cash and cash equivalents	2,277		142		5,012
Cash and cash equivalents at beginning of period	5,572		560		560
Cash and cash equivalents at end of period (see note 7)	7,849		702		5,572

Condensed consolidated statement of changes in equity
For the six  months ended 30th June 2013
		Share capital	Share premium	Revaluation reserve	Retained earnings	Total
		£000	£000	£000	£000	£000
At 1st January 2013		4,140	3,050	773	16,134	24,097
Comprehensive income
Profit for period		-	-	-	511	511
Other comprehensive income:
	Actuarial gain on retirement benefit obligation	-	-	-	762	762
	Deferred income tax charge on actuarial gain on retirement benefit obligation	-	-	-	(197)	(197)
Total other comprehensive income		-	-	-	565	565
Total comprehensive expense		-	-	-	1,076	1,076
Transactions with owners
Share based payment credit		-	-	-	51	51
Dividends paid		-	-	-	(828)	(828)
Total transactions with owners		-	-	-	(777)	(777)
Transfers		-	-	(8)	8	-
At 30th June 2013		4,140	3,050	765	16,441	24,396

Condensed consolidated statement of changes in equity
For the six  months ended 30th June 2012
		Share capital	Share premium	Revaluation reserve	Retained earnings	Total
		£000	£000	£000	£000	£000
At 1st January 2012		4,140	3,049	768	17,974	25,931
Comprehensive income
Profit for period		-	-	-	325	325
Other comprehensive income:
	Actuarial loss on retirement  benefit obligation	-	-	-	(2,114)	(2,114)
	Deferred income tax credit on actuarial loss on retirement benefit obligation	-	-	-	528	528
Total other comprehensive expense		-	-	-	(1,586)	(1,586)
Total comprehensive expense		-	-	-	(1,261)	(1,261)
Transactions with owners
Share based payment credit		-	-	-	57	57
Dividends paid		-	-	-	(828)	(828)
Total transactions with owners		-	-	-	(771)	(771)
Transfers		-	-	(10)	10	-
At 30th June 2012		4,140	3,049	758	15,952	23,899

Condensed consolidated statement of changes in equity
For the year ended 31st  December 2012
		Share capital	Share premium	Revaluation reserve	Retained earnings	Total
		£000	£000	£000	£000	£000
At 1st January 2012		4,140	3,049	768	17,974	25,931
Comprehensive income
Profit for period		-	-	-	848	848
Other comprehensive income:
	Actuarial loss on retirement  benefit obligation	-	-	-	(1,865)	(1,865)
	Deferred income tax credit on actuarial loss on retirement benefit obligation	-	-	-	465	465
	Effect of change in rate of tax			25	(159)	(134)
Total other comprehensive income / (expense)		-	-	25	(1,559)	(1,534)
Total comprehensive income / (expense)		-	-	25	(711)	686
Transactions with owners
Shares issued on exercise of options		-	1	-	-	1
Share based payment credit		-	-	-	93	93
Dividends paid		-	-	-	(1,242)	(1,242)
Total transactions with owners		-	1	-	(1,149)	(1,149)
Transfers		-	-	(20)	20	-
At 31st December 2012		4,140	3,050	773	16,134	24,097

Notes to the condensed consolidated financial statements for the six months to 30th June 2013

Note 1 - Basis of preparation

TClarke plc (the 'company') is a company incorporated and domiciled in the United Kingdom.  The consolidated interim financial statements comprise the condensed financial statements of the company and its subsidiaries (together the 'group'). 

These interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ('IAS 34) as adopted by the European Union, and the Disclosure and Transparency Rules ('DTR') of the Financial Services Authority. They do not include all the information required for the full annual financial statements, and should be read in conjunction with the financial statements of the group as at and for the year ended 31st December 2012.

The figures for the year ended 31st December 2012 do not constitute statutory accounts but have been extracted from the group's statutory accounts for that year. The statutory accounts for the year ended 31st December 2012 have been delivered to the Registrar of Companies House and a copy has been made available on the company's website at www.tclarke.co.uk. The auditors' report on those accounts was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The interim financial statements have not been audited or reviewed by the company's auditors.

Note 2 - Accounting policies

Except as described below, the financial statements have been prepared using the accounting policies and presentation that were applied in the audited financial statements for the year ended 31st December 2012.

Taxes on income in the interim periods are accrued using the estimated effective tax rate that would be applicable to expected total annual earnings.

Note 3 - Segmental information

The group provides electrical and mechanical contracting and related services to the construction industry and end users.

For management and internal reporting purposes the group is organised geographically into three regional divisions; the South (which includes the group's central operating costs), the North and Scotland, and an internal property division, reporting to the Chief Executive, who is the chief operating decision maker.  All assets and liabilities of the group have been allocated to segments, apart from the retirement benefit obligation and tax assets and liabilities.

30th June 2013	South £000	North £000	Scotland £000	Property £000	Unallocated & elimination £000	Total £000
Total revenue	91,333	20,996	6,471	-	-	118,800
Inter segment revenue	-	(4,005)	(88)	-	-	(4,093)
Revenue from external operations	91,333	16,991	6,383	-	-	114,707
Underlying profit from operations	20	1,010	2	126	-	1,158
Amortisation of intangibles	-	(143)	-	-	-	(143)
Profit from operations	20	867	2	126	-	1,015
Finance income	39	27	-	-	(53)	13
Finance costs	(322)	(4)	(4)	-	53	(277)
(Loss) / profit before tax	(263)	890	(2)	126	-	751
Taxation expense						(240)
Profit for the period from continuing operations						511
Assets	65,336	20,851	7,297	4,285	(4,407)	93,362
Liabilities	(51,933)	(7,304)	(4,188)	(1,249)	(4,292)	(68,966)
Net assets	13,403	13,547	3,109	3,036	(8,699)	24,396

30th June 2012	South £000	North £000	Scotland £000	Property £000	Unallocated & elimination £000	Total £000
Total revenue	67,281	23,276	7,273	-	-	97,830
Inter segment revenue	(6,615)	-	(490)	-	-	(7,105)
Revenue from external operations	60,666	23,276	6,783	-	-	90,725
Underlying profit / (loss) from operations	617	893	(108)	118	-	1,520
Amortisation of intangibles	-	(170)	-	-	-	(170)
Non-recurring costs:
Restructuring charges	(202)	(96)	(129)	-	-	(427)
Long-term employee benefits arising from previous acquisitions	(212)	-	-	-	-	(212)
Profit / (loss) from operations	203	627	(237)	118	-	711
Finance income	15	23	-	-	(30)	8
Finance costs	(295)	-	(4)	-	30	(269)
(Loss) / profit before tax	(77)	650	(241)	118	-	450
Taxation expense						(125)
Profit for the period from continuing operations						325
Assets	47,690	21,801	6,074	4,780	(2,300)	78,045
Liabilities	(32,664)	(8,395)	(3,135)	(1,968)	(7,984)	(54,146)
Net assets	15,026	13,406	2,939	2,812	(10,284)	23,899

31st December 2012	South £000	North £000	Scotland £000	Property £000	Unallocated & elimination £000	Total £000
Total revenue	137,279	51,162	15,518	-	-	203,959
Inter segment revenue	(7,561)	(2,474)	(90)	-	-	(10,125)
Revenue from external operations	129,718	48,688	15,428	-	-	193,834
Underlying profit from operations	470	2,133	100	217	-	2,920
Amortisation of intangibles	-	(341)	-	-	-	(341)
Non-recurring costs:
Restructuring charges	(244)	-	(141)	-	-	(385)
Long-term employee benefits arising from previous acquisitions	(282)	-	-	-	-	(282)
Adjustment to purchase   consideration	(213)	-	-	-	-	(213)
Loss / (profit) from operations	(269)	1,792	(41)	217	-	1,699
Finance income	11	61	-	-	(50)	22
Finance costs	(561)	(3)	(10)	-	50	(524)
(Loss) / profit before tax	(819)	1,850	(51)	217	-	1,197
Taxation expense						(349)
Profit for the period from continuing operations						848
Assets	61,171	24,445	7,199	4,360	(6,857)	90,318
Liabilities	(44,847)	(13,301)	(3,570)	(1,450)	(3,053)	(66,221)
Net assets	16,324	11,144	3,629	2,910	(9,910)	24,097

Note 4 - Taxation expense

The effective income tax rate applied for the period is 31.9% (30th June 2012: 27.8%; 31st December 2012: 29.2%).

Note 5 - Earnings per share

A.   Basic earnings per share

The earnings per share represent the profit for the period divided by the weighted average number of ordinary shares in issue. 

	Unaudited 30 06 2013 £000	Unaudited 30 06 2012 £000	Audited 31 12 2012 £000
Profit attributable to equity holders of the parent	511	325	848
Weighted average number of ordinary shares (000s)	41,400	41,400	41,400

B.   Diluted earnings per share

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.  The company has three categories of dilutive potential ordinary shares: share options granted under the Savings Related Option Scheme, and share options and conditional share awards granted under the Equity Incentive Plan.  Further details of these schemes are given in note 19 of the 2012 annual report and financial statements.

	Unaudited 30 06 2013 £000	Unaudited 30 06 2012 £000	Audited 31 12 2012 £000
Profit attributable to equity holders of the parent	511	325	848
Weighted average number of ordinary shares in issue (000s)	41,400	41,400	41,400
Adjustments
Savings Related Share Options (000s)	594	74	201
Equity Incentive Plan (000s)	963	370	486
Weighted average number of ordinary shares for diluted earnings per share (000s)	42,957	41,844	42,087

C.   Underlying earnings per share

Underlying earnings per share represents the profit for the period from continuing operations adjusted for amortisation of intangible assets, long-term employee benefit costs arising from acquisitions, adjustments to purchase consideration and restructuring costs, and the tax effects of these items, divided by the weighted average number of ordinary shares in issue.  Underlying earnings is the basis on which the performance of the operating divisions is measured.

The underlying profit for the period is calculated as follows:

	Unaudited 30 06 2013 £000	Unaudited 30 06 2012 £000	Audited 31 12 2012 £000
Profit from continuing operations attributable to owners of the company	511	325	848
Adjustments:
Amortisation of intangible assets	143	170	341
Adjustment to purchase consideration	-	-	213
Long term employee benefits arising from previous acquisitions	-	212	282
Restructuring costs	-	427	385
Tax effect of adjustments	(34)	(226)	(246)
Underlying profit after tax from continuing operations	620	908	1,823
Weighted average number of ordinary shares in issue (000s)	41,400	41,400	41,400
Adjustments
Savings Related Share Options (000s)	594	74	201
Equity Incentive Plan (000s)	963	370	486
Weighted average number of ordinary shares for diluted earnings per share (000s)	42,957	41,844	42,087
Underlying earnings per share	1.50p	2.19p	4.40p
Diluted underlying earnings per share	1.44p	2.17p	4.32p

Note 6 - Interim dividend

An interim dividend of 1.0p per share (2012: 1.0p) was approved by the board on 5th August 2013 and has not been included as a liability as at 30th June 2013.  The shares will go ex-dividend on 11th September 2013 and the dividend will be paid on 11th October to shareholders on the register as at 13th September 2013.  A dividend reinvestment plan is available for shareholders.  Those shareholders who have not elected to participate in this plan, and who would like to participate with respect to the 2013 interim dividend, may do so by contacting Capita Registrars on 0870 162 3131. The last day for election for the interim dividend reinvestment is 16th September 2013 and any requests should be made in good time ahead of that date.

Dividends paid in period	Unaudited 30 06 2013 £000	Unaudited 30 06 2012 £000	Audited 31 12 2012 £000
Final dividends in respect of previous year	828	828	828
Interim dividend in respect of the current year	-	-	414
Dividends recognised in the period	828	828	1,242

Note 7 - Notes to the consolidated statement of cash flows

A. - Reconciliation of operating profit to net cash from operating activities	Unaudited 30 06 2013 £000	Unaudited 30 06 2012 £000	Audited 31 12 2012 £000
Profit from continuing operations	1,015	711	1,699
Depreciation charges	308	356	673
Equity settled share based payment expense	51	57	93
Amortisation of intangible assets	143	170	341
Defined benefit pension scheme credit	(314)	(175)	(353)
Profit on sale of fixed assets	(27)	(54)	(39)
Operating cash flows before movements in working capital	1,176	1,065	2,414
(Increase) / decrease in inventories	(129)	(73)	114
(Increase) / decrease in contract balances	(8,268)	(2,640)	4,003
Decrease / (increase) in debtors	3,765	1,666	(9,550)
Increase in creditors	7,546	1,066	9,984
Cash generated by operations	4,090	1,084	6,965
Corporation tax paid	(778)	55	(464)
Interest paid	(12)	(49)	(90)
Net cash generated by operating activities	3,300	1,090	6,411

B. Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments that are readily convertible into cash, less bank overdrafts.

Note 8 - Pension commitments

The present value of the defined benefit pension scheme and the related past and current service costs were measured using the projected unit method. The amount included in the balance sheet arising from the group's obligations in respect of its defined benefit retirement scheme is as follows:

	Unaudited 30 06 2013 £000	Unaudited 30 06 2012 £000	Audited 31 12 2012 £000
Present value of defined benefit obligations	36,918	36,464	36,989
Fair values of scheme assets	(25,832)	(24,351)	(25,093)
Deficit in scheme recognised in the statement of financial position	11,086	12,113	11,896
Key assumptions used:
Rate of increase in salaries	3.90%	3.10%	3.50%
Rate of increase of pensions in payment	3.10%	2.25%	2.85%
Discount rate	4.90%	4.35%	4.60%
Inflation assumption	3.40%	2.60%	3.00%
Expected return on scheme assets	4.60%	5.00%	4.60%
Mortality assumptions (years):	Unaudited 30 06 2013	Unaudited 30 06 2012	Audited 31 12 2012
Life expectancy at age 65 for current pensioners:
Men	23.6	23.7	23.5
Women	24.9	26.1	24.7
Life expectancy at age 65 for future pensioners (current age 45)
Men	24.8	25.1	24.8
Women	26.4	27.3	26.3

Note 9 - Related party transactions

Transactions between the company and its subsidiary undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Full disclosure of the group's other related party transactions is given in Note 22 to the group's financial statements for the year ended 31st December 2012. There have been no material changes in these relationships in the six months ended 30th June 2013 that have materially affected the financial position or performance of the group during that period.

Note 10 - Risks and uncertainties

Details of the key risks facing the group are included on pages 12 to 14 of the group's annual report and financial statements for the year ended 31st December 2012. Details of further potential risks and uncertainties arising for the six months ended 30th June 2013 are included within the Chairman's statement and the Business and Financial Reviews as appropriate. The directors consider that the main areas of risk and uncertainty with respect to the remainder of 2013 remain market conditions, operational risk, cost inflation, people, health and safety, credit and liquidity risk, cash flow interest rate risk and risk from pension obligations.

Statement of directors' responsibilities

The directors confirm that the interim management report includes a fair review of the information required by DTR 4.2.7 (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year) and DTR 4.2.8 (disclosure of related party transactions and changes therein). The directors also confirm that the interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and present a true and fair view of the assets, liabilities, financial position and profit of the group.

On behalf of the Board

RussellRace - Chairman

Mark Lawrence - Chief Executive

Martin Walton - Finance Director

6th August 2013

 

END

 

 

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