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VHE Holdings PLC (VHE)

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Tuesday 13 June, 2000

VHE Holdings PLC

Final Results

VHE Holdings PLC
13 June 2000

                                   

                               VHE HOLDINGS PLC
                           2000 PRELIMINARY RESULTS

VHE   Holdings  plc,  the  Yorkshire-based  specialist  land  remediation  and
engineering  group, announces Preliminary Results for the year to  31st  March
2000.

Highlights
* Results in line with expectations set out in the interim statement
* Pre-tax loss for the year was £7.820m (1999 : £135,000)
  - Pre-tax loss in first half of £7.875m
  - Profit second half of £55,000
* Underlying  operating  profit  performance  improved  first  half  loss  of
  £707,000 to second half profit of £110,000
* Group turnover of £45.70m (1999 : £59.40m)
* Reduction in uncertified work-in-progress from £12.19m to £2.35m
* No dividend
* Improved  performance  at two Cumbrian-based engineering  companies;  start
  new financial year with reasonable order books, good prospects
* 2000/1  order book at core VHE Construction significantly better than  last
  year
  

Regarding Prospects, John Parkinson, Chairman, said:

'We  enter  the current financial year with a higher than usual proportion  of
this year's budget covered by orders on hand .'

'The  Board  is acutely aware of the recent disappointing performance  of  the
company  and  is  actively reviewing all its options  to  enhance  shareholder
value.'

'On the operational front our budgets reflect continued progress building from
the change of fortune recorded in the second half.'

Contact:
VHE Holdings plc                                      01226 715666
John Parkinson, Chairman        
Philip Underwood, Chief Executive
Richard  Littlehales, Finance Director
                                
Binns & Co PR Ltd.                                    020 7786 9600
Peter Binns, Simon Ellis, Jane Mallinson
                                       
Chairman's Statement


Results

The  results for the year to 31st March 2000 are in line with the expectations
set out in the interim statement.

The pre-tax loss for the year was £7.820m (£135,000 profit). This was made  up
of a pre-tax loss in the first half of £7.875m and a recovery to profitability
of £55,000 in the second half.

The first half loss included a net loss of £6.232m in respect of Leabrook Road
and  an  exceptional plant restructuring provision of £0.645m, and exceptional
total  of  £6.877m. The underlying operating profit performance has progressed
from  a  loss  of  £707,000 in the first half to a profit of £110,000  in  the
second.

Balance Sheet

At  the year end we had cash of £1.129m and net borrowings (adjusted for  long
term  loans  and other financial obligations) of £0.934m. The year end  figure
was  boosted by the receipt of the Leabrook settlement, but nevertheless  cash
management was good in the second half.

Creditor  days were 86 (91) and debtor days 66 (88). The key issue from  which
shareholders  should take comfort is the substantial reduction in  uncertified
work-in-progress  from £12.190m, (£3.335m net of Leabrook  Road)  to  £2.305m,
which  is a reflection of the Board's progressively prudent approach to profit
recognition.

Dividend

In  view  of  the  disappointing results for the  year,  the  Board  does  not
recommend the payment of  a dividend.

Operating Performance

The  main  Cumbrian  sited  companies,  Shepley  Engineers  Limited  and  West
Cumberland  Engineering Limited, improved performance progressively  and  have
gone  into  the  current financial year with reasonable order books  and  good
prospects.

VHE  Construction  plc  suffered  a downturn  in  turnover  from  £49.408m  to
£35.325m, and an erosion of gross margin. We enter the current financial  year
with a higher than usual proportion of this year's budget covered by orders on
hand  and  management  is confident that the quality of  that  order  book  is
significantly better than last year.



Employees

It  has  been a very tough year and I should like to record my thanks  to  our
employees for their loyalty and commitment.

Prospects

The  Board  is  acutely aware of the recent disappointing performance  of  the
company  and  is  actively reviewing all its options  to  enhance  shareholder
value.

On  the operational front our budgets reflect continued progress building from
the change of fortune recorded in the second half.




John Parkinson
Chairman



                         GROUP PROFIT AND LOSS ACCOUNT
                       For the Year Ended 31 March 2000


                                                            2000          1999
                                             Notes         £'000         £'000
                                                                              
Turnover                                                  45,703        59,401
Cost of sales                                           (41,336)      (51,629)
                                                      ----------    ----------
                                                                              
Gross profit                                               4,367         7,772
                                                      ----------    ----------
                                                                              
Net operating expenses                                   (4,964)       (5,425)
                                                                              
Operating (loss)/profit before                                                
  exceptional items                                        (597)         2,347
Exceptional items                                                             
Costs associated with                            2                            
  Leabrook settlement                                    (6,294)       (1,743)
Costs associated with                            3                            
  Shafton re-organisation                                  (434)             -
                                                      ----------    ----------
                                                                              
Operating (loss)/profit                                  (7,325)           604
                                                                
Interest receivable and                                                       
 similar income                                               49           109
Interest payable and                                                          
  similar charges                                          (544)         (578)
                                                      ----------    ----------
                                                                              
(Loss)/profit on ordinary                                                     
  activities before taxation                             (7,820)           135
Tax on profit on ordinary                        4                            
  activities                                                 468         (101)
                                                      ----------    ----------
                                                                              
(Loss)/profit for the financial year                     (7,352)            34
Dividends                                                      -             -
                                                      ----------    ----------
                                                                              
Retained (loss)/profit for the year                      (7,352)            34
                                                      ----------    ----------
                                                                              
Basic and fully diluted  (loss)/                                              
earnings per ordinary share                      5       (22.9p)          0.1p
                                                      ----------    ----------
                                                                              
Dividend per ordinary share                                  Nil           Nil
                                                      ----------    ----------


All activities relate to continuing operations.

The  Group has no recognised gains and losses other than the losses above  and
therefore no separate statement of total recognised gains and losses has  been
presented.

There is no difference between the loss on ordinary activities before taxation
and  the  retained  loss for the year stated above and their  historical  cost
equivalents.


                              GROUP BALANCE SHEET
                               At 31 March 2000

                                                            2000          1999
                                                                           (as
                                             Notes         £'000     restated)
                                                                         £'000
                                                                              
Fixed assets
Tangible assets                                  6         5,114         7,274
                                                      ----------    ----------
                                                           5,114         7,274
                                                      ----------    ----------
                                                                              
Current assets
Stock                                                      1,077           623
Debtors: amounts falling due                                                  
  after more than one year                                   979           603
Debtors: amounts falling                                                      
  due within one year                                      9,930        20,518
Cash at bank and in hand                                   1,129           234
                                                      ----------    ----------
                                                          13,115        21,978
                                                                              
Creditors: Amounts falling                                                    
  due within one year                                   (12,565)      (15,216)
                                                      ----------    ----------
                                                                              
Net current assets                                           550         6,762
                                                      ----------    ----------
                                                                              
Total assets less current liabilities                      5,664        14,036
                                                      ----------    ----------
                                                                              
Creditors: amounts falling due                                                
  after more than one year                                 (947)       (1,781)
Provisions for liabilities                                                    
  and charges                                              (840)       (1,000)
Accruals and deferred income                               (180)         (206)
                                                      ----------    ----------
                                                                              
                                                         (1,967)       (2,987)
                                                      ----------    ----------
                                                                              
Net assets                                                 3,697        11,049
                                                      ----------    ----------
                                                                              
Capital and reserves                               
Called up share capital                                    3,210         3,210
Profit and loss account                                      487         7,839
                                                      ----------    ----------
                                                                              
Equity shareholders' funds                                 3,697        11,049
                                                      ----------    ----------



                           GROUP CASH FLOW STATEMENT
                       For the Year Ended 31 March 2000

                                                            2000          1999
                                                           £'000         £'000
                                                                              
Net cash inflow/(outflow) from operating activities        4,011         (615)
                                                      ----------    ----------
                                                                              
Returns on investments and servicing of finance
Bank interest received                                        49           109
Interest paid on Bank and other loans                      (475)         (460)
Interest paid on finance leases                                               
  and hire purchase agreements                              (69)         (118)
                                                      ----------    ----------
                                                                              
Net cash outflow on investments                                               
  and servicing of finance                                 (495)         (469)
                                                      ----------    ----------
                                                                              
Taxation
UK corporation tax paid                                    (292)         (859)
                                                      ----------    ----------
                                                                              
Capital expenditure
Purchase of tangible fixed assets                          (126)       (1,005)
Sale of tangible fixed assets                                892           957
                                                      ----------    ----------
                                                                
                                                             766          (48)
                                                      ----------    ----------
                                                                              
Acquisitions
Purchase of Business                                           -         (614)
                                                      ----------    ----------
                                                                              
Equity dividends paid                                          -         (321)
                                                      ----------    ----------
                                                                              
Net cash inflow/(outflow) before financing                 3,990       (2,926)
                                                      ----------    ----------
                                                                              
Financing
Receipt of grants                                              -            75
Repayment of loans                                         (629)         (810)
Repayment of principal under finance leases                                   
 and hire purchase agreements                              (813)         (869)
                                                      ----------    ----------
                                                                              
Net cash (outflow) from financing                        (1,442)       (1,604)
                                                      ----------    ----------
                                                                              
Increase/(decrease) in cash                                2,548       (4,530)
                                                      ----------    ----------


Reconciliation of operating (loss)/profit to net cash inflow
from operating activities

                                                            Year         Year
                                                           ended        ended
                                                        31 March     31 March
                                                            2000         1999
                                                           £'000        £'000
                                                      ----------   ----------
Operating (loss)/profit                                  (7,325)          604
Depreciation, Amortisation of grants and profit on                           
  sales of tangible fixed assets                           1,055        1,403
Decrease/(Increase) in stocks                                235          (5)
Decrease/(Increase) in debtors                               214        (140)
Decrease in amounts recoverable on contracts              10,006          294
(Decrease) in creditors                                    (174)      (2,771)
                                                      ----------   ----------
Net cash inflow/(outflow)from operating activities         4,011        (615)
                                                      ----------   ----------



                                 At           Cash        Other            At
                            1 April           Flow     non-cash      31 March
                               1999                     changes          2000
Analysis of net debt          £'000          £'000        £'000         £'000
                          ----------    ----------   ----------    ----------
Cash at bank and  in hand    (1,419)         2,548            -         1,129
Debt due after one year      (1,400)             -          600         (800)
Debt due within one year       (636)           629        (600)         (607)
Finance leases and hire 
 purchase agreements         (1,093)           813        (376)         (656)
                          ----------    ----------   ----------    ----------
Net Debt                     (4,548)         3,990        (376)         (934)
                          ----------    ----------   ----------    ----------

Reconciliation of net cashflow to movement in net debt

                                                           Year          Year
                                                          ended         ended
                                                       31 March      31 March
                                                           2000          1999
                                                          £'000         £'000
                                                    -----------    ----------
                                                                             
Increase/(Decrease) in cash in the period                 2,548       (4,530)
Cash outflow from a decrease in debt                      1,442         1,679
                                                     ----------    ----------
                                                                             
Change in net debt resulting from cashflows               3,990       (2,851)
Other non-cash items:                                                        
New finance leases                                        (376)         (199)
                                                     ----------    ----------
                                                                             
Movement in net debt in the period                        3,614       (3,050)
Net debt at beginning of period                         (4,548)       (1,498)
                                                     ----------    ----------
Net debt at end of period                                 (934)       (4,548)
                                                     ----------    ----------

NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS
For the Year Ended 31 March 2000


1  The  unaudited preliminary consolidated financial statements are  prepared
   under   the   historical   cost  convention.  The  unaudited   preliminary
   consolidated   financial  statements  comply  with   relevant   accounting
   standards  (UK GAPP) and have been prepared using accounting policies  set
   out  on  pages  23 to 25 of the Group's 1999 Annual Report  and  Accounts.
   The above financial information does not constitute statutory accounts  as
   defined  be  section  240  of  the Companies  Act  1985.  The  comparative
   information  is an extract from the statutory accounts for  the  financial
   year  ended  31 March 1999 restated as per note 6 below.  Those  accounts,
   upon  which  the  auditors issued an unqualified  opinion  which  did  not
   contain  a  statement  under either section 237(2) or (3) of the Companies
   Act 1985, have been delivered to the Registrar of Companies.
   

2  Settlement cost of the Leabrook settlement are:

  
                                                    2000                 1999
                                                   £'000                £'000
                                                                              
   Legal and professional charges                  1,739                1,743
   Write down of value and cost provisions         4,555                    -
                                              ----------           ----------
                                                   6,294                1,743
                                              ----------           ----------


3  Shafton Engineering Services Limited
  
   Re-organisation costs include provisions for plant and stock  write  downs
   and redundance costs.

4  The  taxation credit for the year reflects tax recoverable from the  carry
   back  of  losses,  overprovisions  of prior  years,  and  the  release  of
   deferred tax.  There are tax losses carried forward for which relief  will
   only be available against future trading profits.

5  The  calculations  of earnings per share is based on  a  loss  of  £7.352m
   (1999:  profit of £34,000) and 32,102,727 shares (1999: 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.

6  In  the light of developing experience with the application of FRS 12  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.




                                                                                

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