VHE Holdings PLC
16 December 1999
VHE HOLDINGS PLC
I999 INTERIM RESULTS
VHE Holdings plc, the Yorkshire-based specialist land remediation and
engineering group, announces interim results for the six months ended 30
September 1999.
Highlights
1999 1998
* Turnover £23.91m £37.04m
* Operating profit (£7.58m) £1.07m
* Pre-tax profits (£7.88m) £0.86m
* Earnings per share (24.5p) 1.8p
* No dividend
* Turnover down due to reduced activity by a principal trading partner and
the deferral of a number of contracts to the second half.
* Leabrook Road dispute resolved, accounting for £6.23m of the loss for
the period.
* £645,000 to cover plant, related spares write-downs; plant restructuring
and replacement of large part of scraper fleet with more modern,
versatile equipment.
Regarding the results and the Leabrook Road dispute, John Parkinson, said:
'These results reflect three main factors - the Leabrook Road settlement, the
reorganisation of our plant operation and a thorough review of our contract
balances as at 30 September 1999.
I do not wish to disguise the fact that the Board is very unhappy at the
outcome of the Leabrook Road dispute. The fact that the matter has been at
last settled does yield some benefits - it enables us to focus more clearly on
the business, it injects cash (£4.5m) into the company, and provides us with a
longer term tax benefit.
It should be recognized that these accounts show the write-downs associated
with the Leabrook settlement but before the receipt of the cash.'
Regarding prospects, Mr Parkinson commented:
' The order book is strong and the second half prospects look encouraging..
Now is the time to start delivering.'
Contact:
John Parkinson, Chairman Tel: 01226 715 666
Philip Underwood, Chief Executive
Richard Littlehales, Finance Director
Peter Binns/Jane Mallinson, Binns & Co Tel: 0171 786 9600
VHE Holdings plc
Interim Results Announcement
To 30 September 1999
Results
I am extremely disappointed to report a loss of £7.875m for the six months
period to 30th September 1999 (1998: profit £591,000). Loss per share was
24.5p (1998: earnings per share 1.8p ). The directors do not recommend the
payment of a dividend.
These results reflect three main factors - the Leabrook Road settlement, the
reorganisation of our plant operation and a thorough review of our contract
balances as at 30th September 1999.
Leabrook Road
On October 12th the Board announced the settlement of the dispute and advised
shareholders that the terms of the settlement would result in a write-off of
£4.355m. The legal and professional costs in this financial year have been
£1.677m, and this, together with final cost provisions, means that Leabrook
Road accounts for £6.232m of the loss for the period.
The fact that the matter has at last been settled does yield some benefits -
it enables us to focus more clearly on the business, it injects cash (£4.5m)
into the company, and it provides us with a longer-term tax benefit. That
said, I do not wish to disguise the fact that the Board is very unhappy at the
outcome. The decision to pursue the matter and to incur the costs was based
upon professional advice, which until after the commencement of arbitration
encouraged the Board to be confident of a satisfactory outcome.
Plant Restructuring
In the aftermath of the Leabrook settlement the Board and the executive
management team have been undertaking some in-depth reviews of many aspects of
the business.
Over the past few years, and prospectively, the profile of our work has
changed. As a service provider to the property development sector we no longer
require the bulk earthworks capacity previously retained to carry out civils
infrastructure works. We are planning to retire a large part of our motor
scraper and rigid dump trucks fleets and replace with modern versatile plant
compatible with our market's needs. We have provided £645,000 in these
accounts principally to cover plant and related spares write-downs.
Operating Performance
Before considering the Operating Performance shown in these accounts, it is
pertinent to explain the hardline position we have taken on uncertified work-
in-progress. Bluntly, we have written down the carrying values, irrespective
of the technical merits of our case, to reflect levels of realisation which
our executive team knows will be achieved.
In view of the foregoing it is difficult to compare these half-year results
with previous periods in relation to margins. Turnover for the period was
significantly down on last year, partly due to reduced activity by one of our
principal trading partners and partly due to a number of contracts being
deferred to commence in the second half.
Balance Sheet and Cash
It should be recognised that these accounts show the write-downs associated
with the Leabrook settlement but before the receipt of the cash (£4.5m).
The bulk of the Leabrook cash was received in October and together with our
current banking facilities accommodates our medium term requirements.
Prospects
The order book is strong and the second half prospects look encouraging.
However, shareholders will quite rightly say that they have heard it all
before. The Board and the Executive Team are under no illusion that now is the
time to start delivering.
J.Parkinson
15 December 1999
GROUP PROFIT AND LOSS ACCOUNT
6 months ended 30 Year ended
September (unaudited) 31 March
1999 1998 1999
£'000 £'000 £'000
Turnover 23,912 37,049 59,401
-------- -------- --------
Operating (loss)/profit
before exceptional items (707) 2,034 2,347
------- ------- -------
Costs associated with
Leabrook settlement (5) (6,232) (957) (1,743)
Costs associated with
Shafton re-organisation (6) (645) - -
------- ------- -------
Total operating (loss)/profit (7,584) 1,077 604
Net interest (291) (219) (469)
------- ------- -------
(Loss)/profit on ordinary
activities before taxation (7,875) 858 135
Tax on profit on ordinary
activities (4) - (267) (101)
------- ------- -------
(Loss)/profit on ordinary
activities after taxation (7,875) 591 34
Dividend - - -
------- ------- -------
Retained (loss)/profit (7,875) 591 34
-------- ------- -------
Basic and Fully Diluted
earnings per share (24.5p) 1.8p 0.1p
------- ------- -------
Dividend per share Nil Nil Nil
------- ------- -------
Notes:
1. The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's 1999 statutory accounts. The
interim financial statements, which have been approved by the directors,
are unaudited and do not constitute full financial statements as defined
in Section 240 of the Companies Act 1985.
2. The comparative figures for the year ended 31 March 1999 do not comprise
full financial statements and have been extracted from the Group's 31
March 1999 statutory accounts, on which the Auditors gave an unqualified
opinion but drew attention to the disclosure of uncertainties relating to
amounts recoverable on contracts. The Group's 1999 financial statements
have been filed with the Registrar of Companies.
3. The calculation of earnings per share is based on a loss of £7,875,000
(1998: profit of £591,000) and 32,102,727 shares (1998: 32,102,727
shares) in issue during the period. The fully diluted earnings per share
calculation takes into account any potentially dilutive future share
issues which, at the balance sheet date, could be anticipated. There is
no difference between the basic and fully diluted earnings per share.
4. Taxation has been provided based on the estimated effective rate for the
full year.
5. Settlement cost of the Leabrook settlement are: 1999 1998
------- -------
£'000 £'000
Legal and professional charges 1,677 957
Write down of value and cost provisions 4,555 -
------- -------
6,232 957
------- -------
6. Shafton Engineering Services Limited
Re-organisation costs include provisions for plant and related spares
write downs and redundancy costs.
GROUP BALANCE SHEET
At 30 September At 31 March
1999 1999
£'000 (as restated)
£'000
Fixed assets
Tangible assets (7) (8) 5,747 7,274
------- -------
5,747 7,274
Current assets
Stocks (8) 1,025 623
Debtors 16,409 21,121
Cash at bank and in hand 4 234
------- -------
17,438 21,978
Creditors
- amounts falling due within one year (17,250) (15,216)
------- -------
Net current assets 188 6,762
------- -------
Total assets less current
liabilities 5,935 14,036
------- -------
Creditors
- amounts falling due after
more than one year (1,568) (1,781)
Provision for liabilities and charges (1,193) (1,206)
------- -------
(2,761) (2,987)
------- -------
Net assets 3,174 11,049
------- -------
Capital and reserves
Called up share capital 3,210 3,210
Profit and loss account (36) 7,839
------- -------
Equity shareholders' funds 3,174 11,049
------- -------
Notes:
7. In the light of developing experience with the application of FRS12 the
company has restated the figures in the balance sheet at 31 March 1999 to
include the asset in respect of landfill restoration costs of £340,000
(less depreciation of £38,000) previously shown as an intangible fixed
asset within the cost of landfill sites included in tangible fixed assets.
8. The reorganisation of Shafton Engineering has resulted in the
reclassification of certain items of plant from fixed assets to stocks as
these assets are now held for resale. The written down value of these
assets prior to the restructuring provisions was £1.125m; the realisable
value of this plant now reflected in stocks is £765,000.
9. Interim results will be circulated to shareholders and a copy of the
announcement will be available for inspection at the Company's registered
office at Engine Lane, Shafton, Barnsley, South Yorkshire, S72 8SP.
GROUP CASH FLOW STATEMENT
6 months ended Year ended
30 September 31 March
1999 1999
£'000 £'000
Cash (outflow)/inflow from
operating activities (1,283) (615)
------- -------
Returns on investments and
servicing of finance
Interest received 26 109
Interest paid (278) (460)
Interest paid on finance leases and
hire purchase agreements (39) (118)
------- -------
Net cash outflow from returns on
investments and servicing of finance (291) (469)
------- -------
Taxation
UK corporation tax paid (122) (859)
------- -------
Capital expenditure
Purchase of tangible fixed assets (82) (1,005)
Sale of tangible fixed assets 50 957
------- -------
Net cash (outflow) on
capital expenditure (32) (48)
------- -------
Acquisition
Purchase of Business - (614)
-------- --------
Equity dividends paid - (321)
-------- --------
Net cash (outflow) before financing (1,728) (2,926)
-------- --------
Financing
Receipt of grants - 75
Repayment of loans (79) (810)
Repayment of principle under finance
leases and hire purchase agreements (389) (869)
-------- --------
Net cash outflow from financing (468) (1,604)
-------- -------
(Decrease) in cash in the period (2,196) (4,530)
-------- -------
GROUP CASH FLOW STATEMENT
Reconciliation of operating profit to net cash inflow from operating
activities
6 months Year ended
ended 31 March
30 September 1999
1999 £'000
£'000
Operating profit/(loss) (7,584) 604
Depreciation, Amortisation of grants and
profit on sales of tangible fixed assets 615 1,403
Decrease/(Increase) in stocks (402) (5)
Assets transferred fixed assets to stock 1,125
Decrease(Increase) in debtors 516 (140)
Decrease in amounts recoverable on
contracts 4,196 294
Increase/(Decrease) in creditors 251 (2,771)
------- -------
Net cash (outflow) from operating
activities (1,283) (615)
------- -------
Analysis of net debt
At 1 April 1999 Cash Other At 30
Flow non cash September
changes 1999
£'000 £'000 £'000 £'000
Cash at bank
and in hand (1,419) (2,196) (3,615)
Debt due after
one year (1,400) 50 (1,350)
Debt due within
one year (636) 29 (607)
Finance leases
and hire purchase
agreements (1,093) 389 (194) (898)
------- ------- ------- -------
Net Debt (4,548) (1,728) (194) (6,470)
------- ------- ------- -------
Reconciliation of net cashflow to movement in net debt
6 months Year ended
ended 31 March
30 September 1999
1999
£'000 £'000
(Decrease) in cash in the period (2,196) (4,530)
Cash outflow from a decrease in debt 468 1,679
------- -------
(1,728) (2,851)
Change in net debt resulting from cashflows
Other non-cash items: (199)
New finance leases (194)
------- -------
Movement in net debt in the period (1,922) (3,050)
Net debt at beginning of period (4,548) (1,498)
------- -------
Net debt at end of period (6,470) (4,548)
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