Half-year Report

RNS Number : 5447T

TClarke PLC

21 July 2020

 

TClarke plc

Half Year Results for the six months ended 30th June 2020

TClarke plc ("the Group" or "TClarke"), the Building Services Group, announces its half year results for the six months ended 30th June 2020.

Business Highlights: 

· Net cash £7.5million; an increase of 108%.

· Underlying operating profit of £2.2million.

· Underlying operating margin 2.1%

· Restructuring programme completed yielding cost savings of £4million per annum.

· Renewed and extended bank facilities of £25million with maturity 31 August 2024

·     Order Book increased to £402million (30th June 2019: £370million).

Financial Highlights:	2020	2019
Revenue	£106.1m	£171.3m
Operating profit - underlying1 (EBIT)	£2.2m	£5.0m
Operating profit - underlying1 before depreciation and amortisation (EBITDA)	£3.4m	£6.0m
Non underlying restructuring costs	(£3.0m)	Nil
Operating margin - underlying1	2.1%	2.9%
Profit before tax - underlying1	£1.7m	£4.6m
(Loss)/Profit before tax - reported	(£1.5m)	£4.5m
Net cash	£7.5m	£3.6m
Earnings per share - underlying2	3.10p	8.67p
Forward order book	£402m	£370m

¹   Underlying profit is operating profit before amortisation of intangible assets and non-underlying items.

²  Underlying earnings per share is calculated by dividing underlying profit after tax by the weighted average number of shares in issue.

Mark Lawrence, Chief Executive, commented

"TClarke has successfully remained profitable throughout the first half of this year.

The Group took early and decisive action to both protect and reposition our business and maximise the many opportunities available in the technology, data centre and infrastructure market sectors.

The business has paid strict attention to cash collection and our cash position has improved to £7.5million after the cost of our restructuring programme.  Our banking facilities of £25million have been renewed with the RCF being extended to August 2024.

Our order book is strong and we have no shortage of opportunities in Data Centres and Infrastructure. Since the beginning of April we have bid £600million of opportunities.

All of the above demonstrates that TClarke is a stable, safe and dependable choice for our customers.

Date: 21^st July 2020

For further information contact:

TClarke plc
Mark Lawrence 

Group Chief Executive

Trevor Mitchell

Finance Director 
Tel: [phone] 

www.tclarke.co.uk

Cenkos Securities plc (Corporate Broker)

Max Hartley (Corporate Finance)

Nick Searle (Sales)

Tel: [phone]

www.cenkos.com

RMS Partners  

Simon Courtenay

Tel: [phone]

Trading

The Group has continued to trade in line with the update issued on 28^th May 2020. The Group had a strong first three months of 2020 maintaining its 3% underlying operating margin on a turnover of £70million. Quarter 2 saw turnover drop to £36million as the result of many sites closing. Despite the drop in turnover the Group has achieved a small profit for the period from April to June. TClarke has also completed a restructuring programme to enable it to remain one of the most stable and resilient businesses in the sector. Annualised savings of £4million have been realised at a cost of £3.0million which is included in non underlying items in the Income Statement.

Underlying operating profit for the six months to 30 June was £2.2million (2019: £5.0million), with revenues of £106.1million (2019: 171.3million). Underlying operating margin across the Group was 2.1% (2019: 2.9%).

TClarke has three Operating Regions; UK North, UK South and London. Both London and UK South have reported good underlying operating margins for the first six months of 3.2% and 3.1% respectively. UK North reported a loss of £0.2million for the period due to a significant number of sites, particularly in Scotland, being closed for more than three months. Many of these sites have now reopened and the region is expected to return to profitability for the remainder of the year.

At 30th June 2020 the Group had cash of £22.5million having drawn down its RCF of £15million. In addition the Group has a £10million unutilised overdraft facility available to it. The half year net cash position of £7.5million is after incurring restructuring costs of £3.1million and a £2million investment in GOOEE, a smart buildings solution. The strong cash position means that TClarke is well placed to take advantage of a number of data centre opportunities that are currently being bid.

Dividend

TClarke recently paid the final dividend for 2019 of 3.65p per share on 17^th July 2020. The Board proposes to consider dividends for 2020 once the results for the year can be forecast with reasonable certainty.

Order Book

The Group's forward order book, which only reflects contracts where we have a firm commitment to proceed, has remained resilient and of high quality. At 30 June the order book stood at £402million (2019: £370million).

Operational Review

The Group is managed in three operational areas, London, UK South and UK North, providing nationwide coverage from nineteen locations across the UK.

TClarke's focus is on repeat customers and framework contracts in the following key markets  

· Technologies including data centres

· Infrastructure

· Residential & Accommodation

· Facilities Management & Frameworks

· M&E Contracting

 

TClarke - London 

	30 06 2020 £m	30 06 2019 £m
Revenue	58.7	101.1
Underlying operating profit	2.0	4.3
Underlying operating profit margin	3.2%	4.3%
Order book	252	236

London is the most significant of our three operating divisions in terms of size and profitability and includes our combined M&E London business, our London technology business and our off-site prefabrication facility at Stansted.

Operating margins were 3.2% in spite of a number of sites closing for 3 months.

TClarke - UK South

	30 06 2020 £m	30 06 2019 £m
Revenue	29.1	36.4
Underlying operating profit	0.9	1.4
Underlying operating profit / (loss) margin	3.1%	3.8%
Order book	72	66

UK South operates from our offices at Birmingham, Derby, Kimbolton, Newport, Peterborough, Portishead, Plymouth and St Austell, and is able to target a vast range of construction and facilities management opportunities across the region.

Our strategy of targeting medium sized projects has produced a strong first half performance in the current trading environment.

TClarke has just completed the Nightingale Hospital Exeter. The hospital is a 116 bed Hybrid Hospital. The hospital has all of the facilities that you would expect from a hospital and will provide intensive care and step-down care to patients across 5 separate wards.

TClarke delivered the complete M&E infrastructure package including HV, LV distribution, Water and Gas distribution, Medical Gasses, Generators, UPS, Ventilation, Heating and Cooling along with the fit out of the modular buildings over a period of just six weeks.

TClarke - UK North

	30 06 2020 £m	30 06 2019 £m
Revenue	18.3	33.8
Underlying operating (loss)/ profit	(0.2)	0.8
Underlying operating (loss)/ profit margin	(1.1%)	2.4%
Order book	78	68

UK North division operates from seven locations; Liverpool, Manchester, Leeds, Newcastle, Falkirk, Aberdeen and Dumfries.

An underlying operating loss of £0.2million was recorded mainly as a result of sites over large parts of the North West and Scotland being closed from March. Many of these sites have now reopened; Scotland in particular is securing a number of new opportunities through our reputation and ability to resource work for this year.

Pensions

An actuarial loss of £6million, net of tax, has been recognised in reserves during the period, with the pension scheme deficit increasing to £29.9million (30th June 2019: £26.1million). The increase in the deficit is the result of the discount rate falling to 1.6%; the effect of which has been partially offset by investment performance in the period exceeding the long term assumption. In accordance with the Group's agreed deficit reduction plan, described in detail in the most recent annual report, the annual deficit reduction contribution is set at £1.5 million for the current year, and will remain at this amount until the review of the next triennial actuarial valuation of the scheme at 31 December 2021.

Banking Facilities

At this important time the Group successfully renewed and extended its banking facilities on the same terms. The Group has a £10million overdraft facility, repayable on demand, and a £15 million revolving credit facility expiring 31st August 2024.  At the half year point, the RCF was fully drawn down. The entire overdraft facility was unutilised. The gross cash balance was £22.5million at 30 June 2020 and therefore the Group has up to £32.5million available to support the Group's work flows and funding demands during the course of the year.

As previously stated, the strength of the Group means that it does not envisage using any of the government backed loan schemes.

In addition the Group has £40.1million bonding facilities in place of which £23.1million were unutilised at 30 June 2020.

Summary and Outlook

TClarke has taken immediate and decisive action to both protect its business and position it to take advantage of the opportunities arising in a post COVID world. TClarke remains financially strong with net cash of £7.5million at 30 June and banking facilities of £25million.

The current market uncertainty particularly around productivity achievable for the remainder of the year means that it is not possible to provide accurate market guidance at this time. However, the Board expects the Group to remain profitable for 2020 and is cautiously optimistic for 2021 as a result of the secured order book and the number of exciting opportunities currently being tendered.

 

Condensed consolidated income statement
							Unaudited		Unaudited		Audited
							6 Months to		6 Months to		12 Months to
							30 06 2020		30 06 2019		31 12 2019
							£m		£m		£m
Revenue							106.1		171.3		334.6
Cost of sales							(90.9)		(149.5)		(296.1)
Gross profit							15.2		21.8		38.5
Administrative expenses:
Amortisation of intangible assets							(0.2)		(0.1)		(0.2)
Non-underlying costs							(3.0)		-		-
Other administrative expenses							(13.0)		(16.8)		(28.3)
Total administrative expenses							(16.2)		(16.9)		(28.5)
Operating (loss)/profit							(1.0)		4.9		10.0
Finance costs							(0.5)		(0.4)		(1.0)
(Loss)/profit before taxation							(1.5)		4.5		9.0
Taxation							0.3		(0.9)		(1.2)
(Loss)/Profit for the period							(1.2)		3.6		7.8
Earnings per share
Attributable to owners of TClarke plc
Basic							(2.85)p		8.46p		18.37p
Diluted							(2.85)p		8.03p		17.49p
Underlying basic							3.10p		8.67p		18.81p
Condensed consolidated statement of comprehensive income
							Unaudited		Unaudited		Audited
							6 Months to		6 Months to		12 Months to
							30 06 2020		30 06 2019		31 12 2019
							£m		£m		£m
(Loss)/Profit for the period							(1.2)		3.6		7.8
Other comprehensive expense Items that will not be reclassified to profit or loss
Actuarial loss on defined benefit pension scheme, net of tax							(6.0)		(2.6)		(5.7)
Revaluation of freehold property							-		-		0.4
Other comprehensive (expense)/income for the period, net of tax							(6.0)		(2.6)		(5.3)
Total comprehensive (expense)/income for the period							(7.2)		1.0		2.5

 

Condensed consolidated statement of financial position
	Unaudited		Unaudited		Audited
	30 06 2020		30 06 2019		31 12 2019
	£m		£m		£m
Non-current assets
Investments	2.0		-		-
Intangible assets	25.3		25.5		25.5
Property, plant and equipment	7.9		8.7		9.0
Deferred taxation	5.9		4.5		4.8
Total non-current assets	41.1		38.7		39.3
Current assets
Inventories	0.3		0.3		0.2
Amounts due from customers under construction contracts	39.6		39.2		44.6
Trade and other receivables	31.3		67.2		41.9
Cash and cash equivalents	22.5		3.6		12.4
Total current assets	93.7		110.3		99.1
Total assets	134.8		149.0		138.4
Current liabilities
Borrowings	(15.0)		-		-
Amounts due to customers under construction contracts	(1.5)		(7.9)		(0.1)
Trade and other payables	(68.3)		(88.4)		(84.6)
Current tax liabilities	-		(1.0)		(0.2)
Obligations under leases	(1.5)		(4.1)		(1.4)
Total current liabilities	(86.3)		(101.4)		(86.3)
Net current assets	7.4		8.9		12.8
Non-current liabilities
Obligations under leases	(2.9)		-		(2.8)
Retirement benefit obligation	(29.9)		(26.1)		(26.4)
Total non-current liabilities	(32.8)		(26.1)		(29.2)
Total liabilities	(119.1)		(127.5)		(115.5)
Net assets	15.7		21.5		22.9
Equity attributable to owners of the parent
Share capital	4.3		4.3		4.3
Share premium	3.8		3.8		3.8
ESOT share reserve	(2.0)		(2.0)		(2.0)
Revaluation reserve	0.9		0.5		0.9
Retained earnings	8.7		14.9		15.9
Total equity	15.7		21.5		22.9

 

Condensed consolidated statement of cash flows
	Unaudited	Unaudited			Audited
	6 Months to	6 Months to			12 Months to
	30 06 2020	30 06 2019			31 12 2019
	£m		£m		£m
Net cash (used in) / generated by operating activities (see note 5A)	(2.1)		(6.1)		3.9
Investing activities
Acquisition of equity investment	(2.0)		-		-
Purchase of property, plant and equipment	(0.1)		(0.1)		(0.3)
Receipts on disposal of property, plant and equipment	-		-		-
Net cash generated (used in) / by investing activities	(2.1)		(0.1)		(0.3)
Financing activities
New shares issuance	-		0.1		0.1
Facility fee	(0.1)		(0.1)		(0.1)
(Repayment)/Drawdown of bank borrowing	15.0		-		-
Equity dividends paid	-		(1.4)		(1.7)
Acquisition of shares by ESOT	-		(0.6)		(0.6)
Repayment of lease obligations	(0.6)		(0.6)		(1.3)
Net cash (used in)/generated from financing activities	14.3		(2.6)		(3.6)
Net (decrease) / increase in cash and cash equivalents	10.1		(8.8)		-
Cash and cash equivalents at beginning of period	12.4		12.4		12.4
Cash and cash equivalents at end of period (see note 5)	22.5		3.6		12.4

Condensed consolidated statement of changes in equity For the six months ended 30th June 2020
		Share capital	Share premium	ESOT share reserve	Revaluation reserve	Retained earnings		Total
		£m	£m	£m	£m	£m		£m
At 1st January 2020		4.3	3.8	(2.0)	0.9	15.9		22.9
Comprehensive income
Loss for the period		-	-	-	-	(1.2)		(1.2)
Other comprehensive expense
	Actuarial loss on retirement benefit obligation	-	-	-	-	(7.4)		(7.4)
	Deferred income tax on actuarial gain on retirement benefit obligation	-	-	-	-	1.4		1.4
Total other comprehensive expense		-	-	-	-	(6.0)		(6.0)
Total comprehensive expense		-	-	-	-	(7.2)		(7.2)
Total transactions with owners		-	-	-	-	-		-
At 30th June 2020		4.3	3.8	(2.0)	0.9	8.7		15.7

Condensed consolidated statement of changes in equity For the six months ended 30th June 2019
		Share capital	Share premium	ESOT share reserve	Revaluation reserve	Retained earnings		Total
		£m	£m	£m	£m	£m		£m
At 1st January 2019		4.3	3.7	(1.4)	0.5	15.0		22.1
Comprehensive income
Profit for the period		-	-	-	-	3.6		3.6
Other comprehensive income
	Actuarial loss on retirement benefit obligation	-	-	-	-	(3.1)		(3.1)
	Deferred income tax on actuarial gain on retirement benefit obligation	-	-	-	-	0.5		0.5
Total other comprehensive expense		-	-	-	-	(2.6)		(2.6)
Total comprehensive income		-	-	-	-	1.0		1.0
Transactions with owners
Dividends paid		-	0.1	-	-	-		0.1
Shares based payment credit		-	-	-	-	(1.4)		(1.4)
Shares acquired by ESOT		-	-	(0.6)	-	0.3		0.3
Shares distributed by ESOT		-	-	-	-	-		(0.6)
Total transactions with owners		-	0.1	(0.6)	-	(1.1)		(1.6)
At 30th June 2019		4.3	3.8	(2.0)	0.5	14.9		21.5

Condensed consolidated statement of changes in equity For the year ended 31st December 2019
		Share capital	Share premium	ESOT share reserve	Revaluation reserve	Retained earnings		Total
		£m	£m	£m	£m	£m		£m
At 1st January 2019		4.3	3.7	(1.4)	0.5	15.0		22.1
Comprehensive income
Profit for the year		-	-	-	-	7.8		7.8
Other comprehensive income
	Actuarial gain/(loss) on retirement benefit obligation	-	-	-	-	(6.9)		(6.9)
	Deferred income tax on actuarial gain on retirement benefit obligation	-	-	-	-	1.2		1.2
	Revaluation of freehold property, net of tax	-	-	-	0.4	-		0.4
Total other comprehensive income		-	-	-	0.4	(5.7)		(5.3)
Total comprehensive income		-	-	-	0.4	2.1		2.5
Transactions with owners
New shares		-	0.1	-	-	-		0.1
Share based payment credit		-	-	-	-	0.5		0.5
Shares acquired by ESOT		-	-	(0.6)	-	-		(0.6)
Dividends paid		-	-	-	-	(1.7)		(1.7)
Total transactions with owners		-	0.1	(0.6)	-	(1.2)		(1.7)
At 31st December 2019		4.3	3.8	(2.0)	0.9	15.9		22.9

 

Notes to the condensed consolidated financial statements for the six months to 30th June 2020

Note 1 - Basis of preparation

TClarke plc (the 'company') is a company incorporated and domiciled in the United Kingdom.  The nature of the Group's operations and its principal activities are set out in Note 2 below and in the interim management report.  The consolidated interim financial statements comprise the condensed financial statements of the company and its subsidiaries (together the 'Group'). 

These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  The statutory accounts for the year ended 31st December 2019 were approved by the Board of Directors on 19th March 2020 and have been delivered to the Registrar of Companies 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 any statement under section 498 of the Companies Act 2006.

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 Conduct 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 2019.

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

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 2019.

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

Estimates and financial risk management

The preparation of interim financial statements requires the Directors to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities at the reporting date and the amounts of revenue and expense incurred during the period that may not be readily apparent from other sources.  The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.  Actual results may differ from these estimates.

In preparing these interim financial statements, the significant judgements made by the Directors in applying the Group's accounting policies and the key sources of uncertainty together with the Group's financial risk management objectives and policies were the same as those that applied to the financial statements as at and for the year ended 31st December 2019. The principal risks and uncertainties continue to be those which are set out on pages 28-31 of the Group's annual report and accounts for the year ended 31st December 2019, under the following headings: Political, economic and market conditions; Financial strength; Reputation; Winning new work; Contract delivery; People and skills; Health and safety; Supply chain; Pensions; and Cyber security.

Going concern

The Group has renewed and extended its banking facilities on the same terms. The Group has a £10million overdraft facility, repayable on demand, and a £15 million revolving credit facility expiring 31st August 2024.  At the half year point, the RCF was fully drawn down; the overdraft facility was unutilised. As with all such facilities the overdraft is subject to annual review and is repayable on demand. 

To support the Group's operations the Group also have available bonding facilities of £40.1 million, of which £23.1 million is currently unutilised.

After making appropriate enquiries, the Directors are satisfied that the Company and Group have adequate resources to continue their operations for the foreseeable future.  Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.

 

Note 2 - 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; London, UK South & UK North, reporting to the Chief Executive, who is the chief operating decision maker.

30th June 2020	London	UK South	UK North	Group costs	Unallocated	Total
	£m	£m	£m	£m	£m	£m
Revenue from contracts with customers	58.7	29.1	18.3	-	-	106.1
Underlying operating profit/(loss)	2.0	0.9	(0.2)	(0.5)	-	2.2
Non-underlying costs	-	-	-	-	(3.0)	(3.0)
Amortisation of intangibles	-	-	(0.2)	-	-	(0.2)
Operating profit	2.0	0.9	(0.4)	(0.5)	(3.0)	(1.0)
Finance costs	-	-	-	-	(0.5)	(0.5)
Profit/(loss) before tax	2.0	0.9	(0.4)	(0.5)	(3.5)	(1.5)
Taxation (expense)/credit	-	-	-	-	0.3	0.3
Profit/(loss) for the period	2.0	0.9	(0.4)	(0.5)	(3.2)	(1.2)

	London £m	UK South £m	UK North £m	Total £m
Business sector
Facilities Management and Frameworks	1.1	5.0	3.0	9.1
Infrastructure	7.1	12.2	8.4	27.7
M&E Contracting	27.1	6.1	1.8	35.0
Residential & Accommodation	7.8	5.6	4.6	18.0
Technologies	15.6	0.2	0.5	16.3
Total revenue	58.7	29.1	18.3	106.1

 

30th June 2019	London	UK South	UK North	Group costs	Unallocated	Total
	£m	£m	£m	£m	£m	£m
Revenue from contracts with customers	101.1	36.4	33.8	-	-	171.3
Underlying operating profit/(loss)	4.3	1.4	0.8	(1.5)	-	5.0
Non-underlying costs	-	-	-	-	-	-
Amortisation of intangibles	-	-	(0.1)	-	-	(0.1)
Operating profit/(loss)	4.3	1.4	0.7	(1.5)	-	4.9
Finance costs	-	-	-	-	(0.4)	(0.4)
Profit/(loss) before tax	4.3	1.4	0.7	(1.5)	(0.4)	4.5
Taxation expense	-	-	-	-	(0.9)	(0.9)
Profit/(loss) for the period	4.3	1.4	0.7	(1.5)	(1.3)	3.6

	London £m	UK South £m	UK North £m	Total £m
Business sector
Facilities Management and Frameworks	1.7	4.6	7.1	13.4
Infrastructure	7.9	13.1	8.2	29.2
M&E Contracting	59.5	13.2	5.3	78.0
Residential & Accommodation	7.9	4.0	11.5	23.4
Technologies	24.1	1.5	1.7	27.3
Total revenue	101.1	36.4	33.8	171.3

31st December 2019	London	UK South	UK North	Group costs	Unallocated	Total
	£m	£m	£m	£m	£m	£m
Revenue from contracts with customers	201.0	66.3	67.3	-	-	334.6
Underlying operating profit/(loss)	8.2	3.6	1.4	(3.0)	-	10.2
Amortisation of intangibles	-	-	(0.2)	-	-	(0.2)
Operating profit/(loss)	8.2	3.6	1.2	(3.0)	-	10.0
Finance costs	-	-	-	-	(1.0)	(1.0)
Profit/(loss) before tax	8.2	3.6	1.2	(3.0)	(1.0)	9.0
Taxation expense	-	-	-	-	(1.2)	(1.2)
Profit/(loss) for the period	8.2	3.6	1.2	(3.0)	(2.2)	7.8

 

	London £m	UK South £m	UK North £m	Total £m
Business sector
Facilities Management and Frameworks	2.7	11.6	14.9	29.2
Infrastructure	14.2	23.4	18.7	56.3
M&E Contracting	112.7	25.4	9.8	147.9
Residential & Accommodation	26.9	5.5	23.4	55.8
Technologies	44.5	0.4	0.5	45.4
Total revenue	201.0	66.3	67.3	334.6

Note 3 - Taxation expense

The effective corporation tax rate applied for the period is 20.0% (30th June 2019: 20.0%).

Note 4 - 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 2020 £m	Unaudited 30 06 2019 £m	Audited 31 12 2019 £m
Earnings
(Loss)/Profit attributable to owners of the Company	(1.2)	3.6	7.8
Weighted average number of ordinary shares (000s)	42,211	42,077	42,145
Basic earnings per share	(2.85)p	8.46p	18.37p

 

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 Share Option Scheme, and conditional share awards and options granted under the Equity Incentive Plan.  Further details of these schemes are given in note 19 of the 2019 annual report and financial statements.

	Unaudited 30 06 2020 £m	Unaudited 30 06 2019 £m	Audited 31 12 2019 £m
Earnings
Profit attributable to owners of the Company	(1.2)	3.6	7.8
	(1.2)	3.6	7.8
Weighted average number of ordinary shares in issue (000s)	42,211	42,077	42,145
Adjustments
Savings Related Share Options (000s)	385	520	474
Equity Incentive Plan
Conditional share awards (000s)	2,453	1,691	1,654
Options (000s)	-	80	-
Weighted average number of ordinary shares for diluted earnings per share (000s)	45,049	44,368	44,273

C.  Underlying earnings per share

Underlying earnings per share represents the profit for the period for the period adjusted for amortisation of intangible assets and non-underlying 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 2020 £m	Unaudited 30 06 2019 £m	Audited 31 12 2019 £m
Profit attributable to owners of the company	(1.2)	3.6	7.8
Adjustments
Amortisation of intangible assets	0.1	0.1	0.2
Non-underlying items	3.0	-	-
Tax effect of adjustments	(0.5)	-	-
Underlying profit after tax	1.4	3.7	8.0
Weighted average number of ordinary shares in issue (000s)	42,211	42,077	42,145
Adjustments
Savings Related Share Options (000s)	385	520	474
Equity Incentive Plan
Conditional share awards (000s)	2,453	1,691	1654
Options (000s)	-	80	-
Weighted average number of ordinary shares for diluted earnings per share (000s)	45,049	44,368	44,273
Underlying earnings per share	3.10p	8.67p	18.81p
Diluted underlying earnings per share	2.90p	8.24p	17.90p

 

Note 5 - Notes to the consolidated statement of cash flows

A. - Reconciliation of operating profit to net cash from operating activities	Unaudited 30 06 2020 £m	Unaudited 30 06 2019 £m	Audited 31 12 2019 £m
Operating (loss)/profit	(1.0)	4.9	10.0
Depreciation charges	1.2	1.0	2.1
Profit on sale of property, plant and equipment	-	-	-
Equity settled share based payment expense	0.2	0.2	0.5
Amortisation of intangible assets	0.2	0.1	0.2
Additional pension contribution	(2.9)	-	(1.5)
Defined benefit pension scheme charge / (credit)	(0.4)	(0.3)	(1.3)
Operating cash flows before movements in working capital	(2.7)	5.9	10.0
Movement in inventories	-	-	0.1
Decrease / (Increase) in contract balances	6.4	(13.3)	(14.2)
Decrease / (Increase) in operating trade and other receivables	10.9	1.6	14.4
(Decrease) / increase in operating trade and other payables	(16.3)	0.6	(4.6)
Cash (used in) / generated by operations	(1.7)	(5.2)	5.7
Corporation tax paid	(0.2)	(0.8)	(1.5)
Interest paid	(0.2)	(0.1)	(0.3)
Net cash (used in) / generated by operating activities	(2.1)	(6.1)	3.9

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 6 - 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 2019. There have been no material changes in these relationships in the six months ended 30th June 2020 that have materially affected the financial position or performance of the Group during that period.

 

Note 7 - Pension commitments

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

	Unaudited 30 06 2020 £m	Unaudited 30 06 2019 £m	Audited 31 12 2019 £m
Present value of defined benefit obligations	73.5	68.0	70.7
Fair value of scheme assets	(43.6)	(41.9)	(44.3)
Deficit in scheme recognised in the statement of financial position	29.9	26.1	26.4
Key assumptions used
Rate of increase in salaries	2.45%	2.65%	2.45%
Rate of increase of pensions in payment	2.80%	3.10%	3.10%
Discount rate	1.60%	2.40%	2.10%
Inflation assumption	2.90%	3.35%	3.15%
Mortality assumptions (years)	Unaudited 30 06 2020	Unaudited 30 06 2019	Audited 31 12 2019
Life expectancy at age 65 for current pensioners:
Men	21.7	21.7	21.7
Women	23.9	23.9	23.9
Life expectancy at age 65 for future pensioners (current age 45)
Men	22.7	22.7	22.7
Women	25.1	25.2	25.0

Statement of Directors' responsibilities

The Directors confirm that the condensed interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

· an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

· material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

On behalf of the Board

Iain McCusker - Chairman

Mark Lawrence - Chief Executive

Trevor Mitchell - Finance Director

21st July 2020

 

END

 

 

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