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VHE Holdings PLC (VHE)

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Thursday 16 December, 1999

VHE Holdings PLC

Interim Results - 6 Months to 30 September 1999

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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