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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hargreaves Services Plc | LSE:HSP | London | Ordinary Share | GB00B0MTC970 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 560.00 | 552.00 | 564.00 | 1,898 | 08:16:08 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Sanitary Services, Nec | 211.46M | 27.92M | 0.8510 | 6.58 | 183.7M |
From Apr 2019 to Apr 2024
TIDMHSP
RNS Number : 8939W
Hargreaves Services PLC
15 February 2017
15 February 2017
HARGREAVES SERVICES PLC
(the "Group" or "Hargreaves")
Interim Results for the six months ended 30 November 2016
Hargreaves Services plc (AIM: HSP), a diversified group delivering key projects and services to the infrastructure, energy and property sectors, today announces its interim results for the six months ended 30 November 2016.
FINANCIALS
Hot Features
Premium
Unaudited Unaudited Change
Six Months Six Months %
ended ended 30
30 Nov Nov 2015
2016
Continuing Revenue GBP170.9m GBP174.8m (2.2)%
Continuing Operating
Profit GBP0.1m GBP4.9m (98.0)%
Underlying Operating
Profit GBP2.1m GBP4.1m (48.8)%
Continuing Profit
Before Tax GBP0.2m GBP0.8m (75.0)%
Underlying Profit
Before Tax GBP0.9m GBP3.2m (71.9)%
Diluted EPS 0.0p 0.5p (100.0)%
Underlying Diluted
EPS 0.3p 7.0p (95.7)%
Interim Dividend 2.7p 1.7p 58.8%
Net Debt GBP36.9m GBP30.8m 19.8%
Net Asset Value GBP129.2m GBP141.3m (8.6)%
HIGHLIGHTS
-- Overall performance in the first half was in line with management expectations;
-- Strong prospects in Germany expected to drive outperformance in second half as announced in December;
-- Property & Energy portfolio development progressing well with planning permission granted for an energy-from-waste plant near Grangemouth and the planning decision on our Blindwells development expected in March;
-- Good progress being made with the integration of CA Blackwell to establish our new Specialist Earthworks division;
-- Wind down of coal mining activities and the commencement of the site restoration programme at Tower underpins the expectation of full repayment of Joint Venture loans;
-- Legacy asset realisation programme progressing well, with all surplus coal and coke stocks contracted;
-- Net debt expected to fall materially during the second half, with the final outcome dependent on the timing of material property disposals;
Commenting on the interim results, Chairman David Morgan said: "It is pleasing to see how much progress we have made towards the three strategic goals we set ourselves a year ago. First, earnings from the continuing Distribution & Services operations are well set to deliver operating profit within the target range that we set. Second, good progress is being made in creating and then delivering the targeted GBP35m-GBP50m uplift in value from our Property & Energy portfolio. Lastly, it is very gratifying to see the progress that has been made in the realisation of cash from the legacy assets and the increasing confidence that this realisation will be achieved without the need for any net impairment of the book value."
For further details:
Hargreaves Services plc Gordon Banham, CEO Iain Cockburn, Finance Director 0191 373 4485 Buchanan (Financial PR) Mark Court / Sophie Cowles 0207 466 5000 N+1 Singer (NOMAD and Joint Corporate Broker) Sandy Fraser / Nick Owen 020 7496 3000 Investec (Joint Corporate Broker) Sara Hale / Rob Baker 020 7597 4000
INTERIM STATEMENT
Hargreaves Services plc announces its interim results for the six months ended 30 November 2016.
BUSINESS REVIEW
The Board is pleased with the progress that has been made during the period towards the achievement of the strategic goals set out in the 2016 Repositioning Strategy. In this regard, good progress has been made with the stabilisation of our Distribution & Services activities, the development of the Property & Energy portfolio and in realising cash from the Legacy Assets.
Trading in the first half was in line with management expectations. Revenue was GBP170.9m compared with GBP174.8m in the prior period as the reduction in coal sales and industrial services revenues following the closure of Redcar steelworks and a number of coal-fired power stations was largely offset by the GBP40.0m of revenue contributed by CA Blackwell. Underlying Operating Profit for the first half was GBP2.1m compared with GBP4.1m in the comparative period. Cash performance was in line with expectations with net debt of GBP36.9m at the end of the first half.
The table below summarises the results for the period by Operating Division.
Distribution Property
& Services & Energy Legacy Corporate Total
30 November 30 November 30 November 30 November 30 November
2016 2016 2016 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------------- ------------ ------------ ------------ ------------
Revenue
Total revenue 159,569 1,376 10,205 - 171,150
Inter-segment
revenue (229) - - - (229)
------------------------- ------------- ------------ ------------ ------------ ------------
Revenue from
external customers 159,340 1,376 10,205 - 170,921
Segment operating
profit 2,826 (834) 579 (2,424) 147
Intangible amortisation 123 - - - 123
Share of profit
in associates
and jointly
controlled entities
(net of tax) 1,236 - - - 1,236
Share of tax
in associates
and jointly
controlled entities 629 - - - 629
------------------------- ------------- ------------ ------------ ------------ ------------
Underlying segment
operating profit 4,814 (834) 579 (2,424) 2,135
------------------------- ------------- ------------ ------------ ------------ ------------
Net financing
costs (1,239) (238) - 267 (1,210)
Underlying segment
profit before
tax 3,575 (1,072) 579 (2,157) 925
------------------------- ------------- ------------ ------------ ------------ ------------
Distribution Property
& Services & Energy Legacy Corporate Total
30 November 30 November 30 November 30 November 30 November
2015 2015 2015 2015 2015
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------------- ------------ ------------ ------------ ------------
Revenue
Total revenue 174,766 674 - - 175,440
Inter-segment
revenue (593) - - - (593)
------------------------- ------------- ------------ ------------ ------------ ------------
Revenue from
external customers 174,173 674 - - 174,847
------------------------- ------------- ------------ ------------ ------------ ------------
Segment operating
profit 8,927 (630) - (3,436) 4,861
Intangible amortisation 198 - - - 198
Share of loss
in associates
and jointly
controlled entities
(net of tax) (855) - - - (855)
Share of tax
in associates
and jointly
controlled entities (94) - - - (94)
Underlying segment
operating profit 8,176 (630) - (3,436) 4,110
------------------------- ------------- ------------ ------------ ------------ ------------
Net financing
costs (1,002) (218) - 311 (909)
Underlying segment
profit before
tax 7,174 (848) - (3,125) 3,201
------------------------- ------------- ------------ ------------ ------------ ------------
Review of Underlying Performance
Distribution & Services
The table below shows revenue and underlying operating performance across our Distribution & Services operations.
30 November 2016 30 November 2015
Underlying Operating Underlying Operating
Operating Profit Operating Profit
Revenue Profit Margin Revenue Profit Margin
GBP000 GBP000 % GBP000 GBP000 %
Distribution
& Services
Coal Distribution 68,515 2,770 4.0% 105,589 4,497 4.3%
Industrial
Services 30,710 222 0.7% 47,203 2,961 6.3%
Logistics 25,095 722 2.9% 27,971 718 2.6%
Specialist
Earthworks 39,977 1,100 2.8% - - -
Inter division (4,957) - - (6,590) - -
Distribution
& Services Total 159,340 4,814 3.0% 174,173 8,176 4.7%
Coal Distribution
Revenue in Coal Distribution was GBP68.5m, a reduction of GBP37.1m on the GBP105.6m in the comparative period, due to lower levels of thermal coal being traded and a GBP26.7m reduction in metallurgical coal sales following the closure of the Redcar steelworks, which led to our decision to exit metallurgical coal trading in the UK.
As set out in our strategy the Group remains committed to the sourcing and distribution of coals for the speciality markets. Sales of speciality coal totalled 329,000 tonnes in the first half and were in line with management expectations. On-going coal production is focused on speciality coal and currently limited to the House of Water site in Scotland which yields a high proportion of speciality coals. The new coal processing plant at the Killoch railhead has been successfully built and commissioned and is delivering the expected improvements in speciality coal yield from the House of Water site.
Production at the Tower site by our joint venture Tower Regeneration Limited is addressed in the Legacy Asset Realisations section below.
In Europe our associate operation has traded well in the first half. Favourable recent market conditions have resulted in a very strong order book to start the second half and the Board expects the Group's share of the operation to exceed its profit expectation for the full year by approximately GBP3m. The Group is encouraged by the opportunities presented by the European markets which are much larger and are proving to be more robust than the UK.
Industrial Services
The UK operation produced a strong first half performance, ahead of management expectations, although, due to the closure of Redcar steelworks and a number of coal fired power stations, this performance was significantly lower than the comparative period. Revenue in the UK was GBP23.4m compared with GBP41.8m in the comparative half last year. The UK strategy remains focused on growing outside of our traditional coal and steel sectors.
The international operations generated revenue growth, although the level of growth achieved was lower than the ambitious targets set. Reported revenue was GBP7.3m, 35% higher than the GBP5.4m posted in the comparative period. The GBP0.4m operating loss posted in the first half was below the GBP0.2m operating profit posted in the comparative period and behind management expectations following the delay to one major project.
Given the overall profile of contracts and planned site outages, our expectation for the Division continues to be that operating profit will be weighted to the second half and a strong second half profit performance is expected.
Logistics
The bulk haulage operations performed in line with management expectations in the first half in both revenue and profit terms. Progress continues to be made in re-aligning our fleet in a market that now has negligible coal movements. Revenue and underlying operating profit were GBP25.1m and GBP0.7m respectively, compared with GBP28.0m and GBP0.7m in the comparative period. The improvement in margin from 2.6% to 2.9% reflects the progress made in aligning the business to the areas of activity.
Specialist Earthworks
The new Specialist Earthworks business incorporates the CA Blackwell acquisition and the recently formed Group plant pool operation. Revenue for the first half was GBP40.0m relating to the CA Blackwell operations acquired in January 2016. The Division recorded an underlying operating profit of GBP1.1m. The Division was formed with the acquisition of Blackwell and hence there are no comparative numbers.
Good progress continues to be made on the integration of the business and a new leadership team has been established. As the integration has continued, our understanding and assessment of the costs to conclude two specific contracts has highlighted a shortfall in fair value provisions of GBP2.7m. Consequently as reported on 22 December 2016 we have adjusted our assessment of fair value and have increased goodwill from GBP0.8m to GBP3.5m. The Group acquired the CA Blackwell group in full knowledge of, and at a price that reflected, a number of historic contractual challenges. The Board is confident that the acquisition was well structured and presented good value for shareholders.
The Group continues to support the Hemerden tungsten mine operated by Wolf Minerals and is in negotiation to vary the existing contract to the benefit of both parties. Enabling works have now commenced on the A14 project as we await conclusion of negotiation on the earthworks sub-contract. The Group continues to work through the back log of old contracts and claims, many of which were identified in due diligence and either provisioned on acquisition or covered by warranties or cash escrow as part of the transaction consideration.
Our strategy for developing the CA Blackwell business remains unchanged. Once we have worked through the historic contractual issues, we will focus the business on the sectors offering the best fit to our competences and resources. We see strong synergy and overlap with our skills in bulk road transport, mining and brownfield restoration and remediation.
Property & Energy
Although disappointed by the planning delays with respect to the Blindwells project, the Board is generally pleased with the continuing development of the Property & Energy portfolio.
As expected, realisations were limited in the period. The Property business contributed GBP1.4m of revenue in the first half and a net operating loss of GBP0.8m. Progress continues to be made on further short term realisations and management anticipates reporting an improved position at the time of the full year results.
Encouraging progress also continues to be made in planning terms across a number of sites, most notably, Blindwells, Westfield, Monckton and Maltby. The main focus of attention in the first half was, and remains, the delivery of planning consent for the Blindwells site and the Board understands that the planning decision is now due in March.
Good progress continues to be made in working to achieve the realisation of properties acquired as part of the Blackwell transaction. The Group has allowed an extra six months to achieve a full realisation and is confident that the value to be obtained will cover the current book values.
The book value of the Group's Property & Energy portfolio is held at historic cost, which stood at GBP32.3m at 30 November 2016. In addition to continuing to account for property realisations, the Group has commissioned a formal valuation of its property portfolio and expects to report that value, alongside the historic cost book value, in the upcoming Preliminary Results in August 2017. It is the intention of the Board to update and report this valuation on an annual basis to provide shareholders with an opportunity to understand and track progress in its development.
Encouraging progress has also been made with the development of the Group's energy interests. We are pleased to report that the Earls Gate Energy from Waste project at Grangemouth, Scotland, has received planning permission, an important step in its development progress. A planning application has also been submitted for an energy plant at Westfield, a former open cast coal site in Fife, Scotland, as part of a broader master-planning initiative.
Work continues on a number of projects to develop value from the Group's 75MW of grid connections and we remain focused on expanding the 70MW of consented on-shore wind capacity. The Board sees significant potential future value from these initiatives.
During the period the total capital expenditure on property and energy development projects amounted to GBP3.2m.
Legacy Asset Realisations
We are pleased with the progress the Group has made towards realising the value from its portfolio of legacy assets.
Surplus coal and coke stocks with a balance sheet value of GBP10.9m at 31 May 2016 have all been contracted for sale. No loss or impairment against book value is expected and the coal is expected to have been realised into cash by the end of the financial year.
The Board is also pleased with progress at the Tower Joint Venture. Hargreaves expects to reach agreement with its joint venture partners to optimise the utilisation of plant at Tower, in exchange for a lower contract margin. This agreement will preserve the fleet's value and is expected to maximise plant disposal proceeds when liquidity returns to the heavy plant markets. This, in combination with the improved coal proceeds achieved through the higher coal price, significantly increases the likelihood of recovering the full amount of our outstanding loans, including future accrued interest.
Net Debt
Net Debt at 30 November 2016 was GBP36.9m. Whilst working capital requirements associated with the Specialist Earthworks business are expected to increase as the A14 contract ramps up, net debt is targeted to reduce significantly in the second half as our contracted coal stocks are delivered. Although legacy asset sales and property disposals all carry a degree of timing risk management expects that year end net debt will not exceed GBP10m.
Dividend
Reflecting the progress made together with the visibility on the prospects for the second half of the year the Board has approved the payment of an interim dividend of 2.7p per share. The interim dividend will be payable on 7 April 2017 to shareholders on the register at 24 February 2017.
Recent Trading and Outlook
The Distribution & Services operations are well placed to deliver a strong result for the second half. The Board expects to deliver an operating profit in the region of GBP3m higher than previous expectations, mainly arising from profit outperformance in Europe. Although the longer-term visibility of performance in the European business remains low, due to the trading nature of the business, the Group remains impressed and encouraged by the performance of the European management team and the opportunities presented by the larger and more resilient European carbon markets. The Board will work with and support local management to identify strategies to improve the predictability and visibility of earnings.
The Board expects the Industrial Services operation to deliver a stronger performance in the second half in operating profit terms. A delay in the commencement of a major project in Hong Kong will mean that, although the operation will grow year on year, it is likely to under-perform against internal profit targets. The Logistics and Specialist Earthworks businesses are expected to deliver in line with management's expectations in the second half.
In Property the focus remains on the delivery of planning permission for the Blindwells site, with a decision expected next month.
Excellent progress continues to be made in the development of the Group's portfolio of energy projects. Many of these projects present significant value creation opportunities but are specialist and capital intensive. The Group is working to structure these assets into a separate legal entity to provide greater flexibility in deciding how these projects could be exploited. This is expected to optimise longer term value without adding complexity to the Group's business whilst minimising any impact or demands on the Group's balance sheet.
The Board remains confident of achieving its previously stated five year target for the creation of value from its Property & Energy portfolio. The publication of independently assessed market valuation numbers at the time of the Preliminary Results should provide investors with a better indication of that potential.
Efforts will continue to achieve the orderly marketing and disposal of legacy assets. The management team has demonstrated that it understands the markets for and valuations of these assets and we remain confident that the legacy asset positions will be exited for a value no less than the overall balance sheet position.
Summary
The Board is pleased with the performance and re-positioning of the business and is confident that the business will continue to demonstrate excellent progress towards realising the intrinsic value of the Group's operations and the value inherent in the Group's balance sheet. As debt levels reduce through the second half of the year careful consideration will be given to the application of cash to create shareholder value.
FINANCIAL REVIEW
Revenue
Following the turbulent and challenging conditions the Group experienced across all of its markets in prior periods, the Group enjoyed a more stable trading environment during the six months to 30 November 2016. Reported Revenue decreased by GBP3.9m from GBP174.8m in the six months to 30 November 2015 to GBP170.9m in the six months to 30 November 2016.
Operating Profit and Margins
Underlying operating profit reduced by GBP2.0m from GBP4.1m to GBP2.1m, largely driven by the reduced level of coal trading activity within our Distribution & Services division. Revenues from the sale of coke, bulk and metallurgical coal were significantly lower, due to continuing negligible thermal coal shipments and the impact of the closure of Redcar steelworks in the period to 30 November 2015.
The acquisition of CA Blackwell in January 2016 has been successfully integrated into the Group and contributed GBP1.1m of underlying operating profit. The Logistics business generated an operating profit of GBP0.7m, consistent with the comparative period. The series of steel and power plant closures which occurred last year, combined with the continued challenging conditions and delays in major projects in Hong Kong, resulted in operating profit in the Industrial Services operations in the first half falling from GBP3.0m to GBP0.2m. This fall was largely in line with current management expectations and timing of projects and outages in the second half is expected to be more favourable than in the first half.
The Property & Energy division made good progress in the period with regard to the development of a number of property sites and energy projects. This early progress is yet to translate into reported financial returns, with the division reporting a GBP0.8m operating loss for the period.
The process to complete the realisation of legacy assets into cash started well in the first half and generated an operating profit contribution of GBP0.6m in the period. The book value of legacy assets at 30 November 2016 totals GBP42.0m, a significant decrease from the GBP60m of assets reported at 31 May 2016.
Following the previously announced restructure of central operations, the cost of the corporate division has decreased significantly from GBP3.4m to GBP2.4m for the six months to 30 November 2016.
Reported Group continuing operating profit fell from GBP4.9m to GBP0.1m whilst continuing profit before tax decreased from GBP0.8m to GBP0.2m.
Goodwill
The Group completed the acquisition of CA Blackwell in January 2016. Following experience with the business, the Group has re-measured goodwill in respect of two historic contracts where it became clear in the first half that further work and defect rectification would be required. Consequently, an increase of GBP2.7m has been recognised in goodwill with a corresponding decrease in acquired net assets of GBP2.7m. The decrease in acquired net assets reflects an increase in contract accruals at the acquisition date. This brings the goodwill to a total of GBP3.5m for the acquisition. No further revisions are expected to be required and the Board remains comfortable with the carrying value of the revised goodwill amount given the cash and profits that it expects to generate from the business.
Retirement Benefit Obligations
The Group is a member of two industry-wide defined benefit pension schemes and one concessionary fuel scheme as a result of its former deep mining operations at Maltby Colliery.
UK gilt yields remain weak and the falls over the first half have given rise to an increase in accounting estimates of the defined benefit pension scheme deficits. As a result, the Group has recognised an estimated increase in its defined benefit pension deficit of GBP4.1m, from GBP5.7m at 31 May 2016 to GBP9.8m at 30 November 2016. The Directors remain committed to funding these schemes. A full valuation is currently under review and is expected to be completed by 31 May 2017.
Interest
In the six months to 30 November 2016, continuing net finance expenses for the Group increased by GBP0.3m from GBP0.9m to GBP1.2m. This movement reflects a modest increase in average Group net debt levels during the period. Net debt (comprising cash and cash equivalents, bank overdrafts and other interest bearing loans and borrowings) at 30 November 2016 was GBP36.9m. The Group expects net debt to fall in the second half.
Taxation
Income tax expense for the first half was GBP0.2m compared with GBP0.5m for the six months ended 30 November 2015. This charge includes GBP146,000 relating to the impact on deferred taxation of the planned reduction in the UK corporation tax rate to 17%. The tax charge on current period results has been calculated based upon an estimated effective tax rate for the full year of 1.7%. This effective tax rate is significantly lower than the current UK corporation tax rate due to the expected utilisation of previously unrecognised tax losses within the Group's Specialist Earthworks business.
Earnings per Share
Reported basic earnings per share decreased by 0.52p from 0.49p to a loss of 0.03p, reflecting the small reported profit after tax during the period. Underlying diluted earnings per share decreased by 96.0% from 7.04p to 0.28p. The weighted average diluted number of shares in the period decreased slightly from 32.3m to 32.2m, as a result of a reduced number of unvested share options in employee share schemes.
Net Debt
Net debt increased by GBP4.6m from GBP32.3m at 31 May 2016 to GBP36.9m at 30 November 2016. The net debt increase reflects the Group's strong operating cash inflows since 31 May 2016, benefiting from the unwinding of legacy coal inventories. This was offset by the seasonal stock build in advance of the colder winter months as well as tax payments of GBP6.2m in the period, including a GBP5.2m advance payment in respect of the lease planning arrangement carried out in the year ended 31 May 2011.
Group net assets decreased from GBP131.4m at 31 May 2016 to GBP129.2m at 30 November 2016. Gearing (measured as net debt compared to net assets) at the end of November 2016 was 28.6%, compared with 24.6% at 31 May 2016.
The Group's financial position remains strong with net debt at 30 November 2016 equal to 2.6 times the last 12 months' earnings before interest, tax, depreciation and amortisation ("EBITDA"), comfortably below our maximum covenant levels.
Cash Flow
Net cash flow from operating activities, before working capital movements, generated an inflow of GBP4.2m. Movements in working capital have resulted in a cash inflow of GBP2.3m for the period, making total cash inflow from operating activities of GBP6.5m.
The improvement within the working capital of the Group has been driven by the realisation of legacy assets, totalling GBP15m in the first half. This improvement has been offset by seasonal stock builds within our Coal Distribution business unit, as well as the anticipated unwind of the strong working capital position reported at 31 May 2016.
Tax payments of GBP6.2m included a final advance payment to HMRC of GBP5.2m in respect of the lease planning arrangement previously reported upon.
Net capital expenditure in the six months to 30 November 2016 was a net spend of GBP3.4m, a reduction of GBP0.9m compared to the period to 30 November 2015. Significant capital expenditures included development of the Group's Property & Energy projects, investment in surface mine stripping assets and capital investments in our Blackwell Plant business. Proceeds from sale of property, plant and equipment of GBP3.6m were mainly generated from surplus plant disposals, as we continue to orientate and synergise our yellow plant fleet.
Repayment of finance lease liabilities totalled GBP5.2m for the period, an increase of GBP2.4m compared to the prior period. This reflects the increase in the size of the Group's yellow plant fleet following the acquisition of CA Blackwell in the prior year.
The final dividend of 0.6 pence per share was paid in October 2016, resulting in a cash payment of GBP0.2m.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 November 2016
Unaudited Unaudited
six six
months months Audited
year
Ended ended ended
30 November 30 November 31 May
2016 2015 2016
Continuing activities Note GBP000 GBP000 GBP000
--------------------------------------- ----- ------------ ------------ ----------
Revenue 170,921 174,847 340,665
Cost of sales (151,722) (153,062) (296,291)
--------------------------------------- ----- ------------ ------------ ----------
Gross profit 19,199 21,785 44,374
Other operating income 1,607 57 265
Other administrative expenses (20,659) (16,981) (39,434)
--------------------------------------- ----- ------------ ------------ ----------
Operating profit (before exceptional
items) 147 4,861 5,205
Exceptional items - (2,255) (12,378)
--------------------------------------- ----- ------------ ------------ ----------
Operating profit/(loss) (after
exceptional items) 147 2,606 (7,173)
--------------------------------------- ----- ------------ ------------ ----------
Financial income 153 483 1,153
Financial expenses (1,363) (1,392) (2,785)
Share of profit/(loss) of
associates and jointly controlled
entities (net of tax) 1,236 (855) (1,792)
--------------------------------------- ----- ------------ ------------ ----------
Profit/(loss) before tax 173 842 (10,597)
Income tax (expense)/credit 4 (159) (462) 1,082
--------------------------------------- ----- ------------ ------------ ----------
Profit/(loss) for the period/year
from continuing operations 14 380 (9,515)
--------------------------------------- ----- ------------ ------------ ----------
Discontinued operations
Loss for the period/year from
discontinued operations - (157) (940)
--------------------------------------- ----- ------------ ------------ ----------
Profit/(loss) for the period/year 14 223 (10,455)
--------------------------------------- ----- ------------ ------------ ----------
Other comprehensive (expense)/income
Items that will not be reclassified
to profit or loss
Actuarial gains and losses
on defined benefit pension
plans (5,654) - (1,098)
Tax recognised on items that
will not be reclassified to
profit or loss 961 - 181
Items that are or may be reclassified
subsequently to profit or
loss
Foreign exchange translation
differences 2,173 (582) 149
Effective portion of changes
in fair value of cash flow
hedges 347 (7) 1,119
Tax recognised on items that
are or may be reclassified
subsequently to profit or
loss (63) (109) (40)
--------------------------------------- ----- ------------ ------------ ----------
Other comprehensive (expense)/income
for the period/year, net of
tax (2,236) (698) 311
Total comprehensive expense
for the period/year (2,222) (475) (10,144)
--------------------------------------- ----- ------------ ------------ ----------
Profit/(loss) attributable
to:
Equity holders of the company (9) 155 (10,498)
Non-controlling interest 23 68 43
--------------------------------------- ----- ------------ ------------ ----------
Profit/(loss) for the period/year 14 223 (10,455)
--------------------------------------- ----- ------------ ------------ ----------
Total comprehensive (expense)/income
for the period/year attributable
to:
Equity holders of the company (2,245) (543) (10,187)
Non-controlling interest 23 68 43
--------------------------------------- ----- ------------ ------------ ----------
Total comprehensive expense
for the period/year (2,222) (475) (10,144)
--------------------------------------- ----- ------------ ------------ ----------
GAAP measures
Basic earnings per share (pence) 6 (0.03) 0.49 (32.96)
Diluted earnings per share
(pence) 6 (0.03) 0.48 (32.96)
Basic earnings per share from
continuing operations (pence) 6 (0.03) 0.98 (30.01)
Diluted earnings per share
from continuing operations
(pence) 6 (0.03) 0.97 (30.01)
--------------------------------------- ----- ------------ ------------ ----------
Non-GAAP measures (continuing)
Basic underlying earnings
per share (pence) 0.28 7.13 5.70
Diluted underlying earnings
per share (pence) 0.28 7.04 5.63
--------------------------------------- ----- ------------ ------------ ----------
Condensed Consolidated Balance Sheet
as at 30 November 2016
Restated
Unaudited Unaudited Audited*
30 November 30 November 31 May
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------ ------------ ------------ ----------
Non-current assets
Property, plant and equipment 68,679 57,487 68,095
Investment property 5,126 5,126 5,126
Intangible assets 12,313 9,479 12,223
Investments in associates
and jointly controlled entities 2,501 4,181 1,043
Derivative financial instruments 369 - -
Deferred tax assets 3,048 2,574 3,207
------------------------------------ ------------ ------------ ----------
92,036 78,847 89,694
------------------------------------ ------------ ------------ ----------
Current assets
Assets held for sale 5,040 5,040 5,040
Inventories 40,533 60,423 46,983
Derivative financial instruments 348 114 32
Trade and other receivables 127,610 105,892 117,310
Cash and cash equivalents 27,457 21,804 21,161
------------------------------------ ------------ ------------ ----------
200,988 193,273 190,526
------------------------------------ ------------ ------------ ----------
Total assets 293,024 272,120 280,220
------------------------------------ ------------ ------------ ----------
Non-current liabilities
Interest-bearing loans and
borrowings (59,441) (48,417) (46,098)
Retirement benefit obligations (9,764) (4,917) (5,699)
Provisions (3,919) (5,154) (4,189)
Derivative financial instruments - (390) (66)
------------------------------------ ------------ ------------ ----------
(73,124) (58,878) (56,052)
------------------------------------ ------------ ------------ ----------
Current liabilities
Interest-bearing loans and
borrowings (4,965) (4,146) (7,401)
Trade and other payables (84,047) (57,609) (77,844)
Income tax liabilities - (8,679) (6,271)
Provisions (867) - (867)
Derivative financial instruments (834) (1,538) (430)
------------------------------------ ------------ ------------ ----------
(90,713) (71,972) (92,813)
------------------------------------ ------------ ------------ ----------
Total liabilities (163,837) (130,850) (148,865)
------------------------------------ ------------ ------------ ----------
Net assets 129,187 141,270 131,355
------------------------------------ ------------ ------------ ----------
Condensed Consolidated Balance Sheet (continued)
as at 30 November 2016
Restated
Unaudited Unaudited Audited*
30 November 30 November 31 May
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------- ------------ ------------ ----------
Equity attributable to equity
holders of the parent
Share capital 3,314 3,314 3,314
Share premium 73,955 73,955 73,955
Other reserves 211 211 211
Translation reserve (1,409) (4,313) (3,582)
Merger reserve 1,022 1,022 1,022
Hedging reserve 222 (1,147) (62)
Capital redemption reserve 1,530 1,530 1,530
Retained earnings 49,934 66,288 54,582
------------------------------- ------------ ------------ ----------
128,779 140,860 130,970
Non-controlling interest 408 410 385
------------------------------- ------------ ------------ ----------
Total equity 129,187 141,270 131,355
------------------------------- ------------ ------------ ----------
* Figures are audited excluding impact of restatement to intangible assets and trade and other payables
Consolidated Statement of Changes in Equity
for the six months ended 30 November 2015
Capital Total Non-
Share Share Translation Hedging Other redemption Merger Retained parent controlling Total
Capital premium reserve reserve reserves reserve reserve earnings equity interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
June 2015 3,314 73,955 (3,731) (1,141) 211 1,530 1,022 72,999 148,159 342 148,501
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Total
comprehensive
income and
expense for
the period
Profit for the
period - - - - - - - 155 155 68 223
Other
comprehensive
income
Foreign
exchange
translation
differences - - (582) - - - - - (582) - (582)
Effective
portion of
changes in
fair value of
cash flow
hedges - - - (7) - - - - (7) - (7)
Tax recognised
on other
comprehensive
income - - - 1 - - - (110) (109) - (109)
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Total other
comprehensive
income - - (582) (6) - - - (110) (698) - (698)
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Total
comprehensive
income and
expense for
the period - - (582) (6) - - - 45 (543) 68 (475)
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Transactions
with owners
recorded
directly in
equity
Equity settled
share-based
payment
transactions - - - - - - - 275 275 - 275
Dividends paid - - - - - - - (6,433) (6,433) - (6,433)
Purchase of
own shares - - - - - - - (598) (598) - (598)
Total
contributions
by and
distributions
to owners - - - - - - - (6,756) (6,756) - (6,756)
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Balance at
30 November
2015 3,314 73,955 (4,313) (1,147) 211 1,530 1,022 66,288 140,860 410 141,270
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Consolidated Statement of Changes in Equity
for the six months ended 30 November 2016
Capital Total Non-
Share Share Translation Hedging Other redemption Merger Retained parent controlling Total
capital premium reserve reserve reserves reserve reserve earnings equity interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
June 2016 3,314 73,955 (3,582) (62) 211 1,530 1,022 54,582 130,970 385 131,355
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Total
comprehensive
income and
expense for
the period
(Loss)/profit
for the
period - - - - - - - (9) (9) 23 14
Other
comprehensive
income
Foreign
exchange
translation
differences - - 2,173 - - - - - 2,173 - 2,173
Effective
portion of
changes in
fair value of
cash flow
hedges - - - 347 - - - - 347 - 347
Remeasurement
of defined
benefit
pension plans - - - - - - - (5,654) (5,654) - (5,654)
Tax recognised
on other
comprehensive
income - - - (63) - - - 961 898 - 898
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Total other
comprehensive
income - - 2,173 284 - - - (4,693) (2,236) - (2,236)
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Total
comprehensive
income and
expense for
the period - - 2,173 284 - - - (4,702) (2,245) 23 (2,222)
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Transactions
with owners
recorded
directly in
equity
Equity settled
share-based
payment
transactions - - - - - - - 245 245 - 245
Dividends paid - - - - - - - (191) (191) - (191)
Total
contributions
by and
distributions
to owners - - - - - - - 54 54 - 54
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Balance at
30 November
2016 3,314 73,955 (1,409) 222 211 1,530 1,022 49,934 128,779 408 129,187
-------- -------- ------------ -------- --------- ----------- -------- --------- -------- ------------ --------
Condensed Consolidated Cash Flow Statement
for the six months ended 30 November 2016
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 November 30 November 31 May
2016 2015 2016
GBP000 GBP000 GBP000
-------------------------------------- ------------ ------------ -----------
Cash flows from operating
activities
Profit/(loss) for the period/year
from continuing operations 14 380 (9,515)
Adjustments for:
Depreciation 5,277 3,618 9,261
Depreciation of mining assets 402 2,505 7,263
Amortisation and impairment
of goodwill and intangible
assets 123 376 1,026
Net finance expense 1,210 909 1,632
Share of (profit)/loss of
jointly controlled entities
(net of tax) (1,236) 855 1,792
Impairment of investment
in joint venture - - 4,302
Profit on sale of property,
plant and equipment (1,738) (57) (265)
Equity settled share-based
payment expense 245 442 520
Income tax expense/(credit) 159 462 (1,082)
Translation of non-controlling
interest (221) 125 (5)
-------------------------------------- ------------ ------------ -----------
4,235 9,615 14,929
Change in inventories 6,442 (2,631) 15,541
Change in trade and other
receivables (9,704) 1,484 10,696
Change in trade and other
payables 6,405 (14,280) (21,775)
Change in provisions and
employee benefits (897) (870) 754
-------------------------------------- ------------ ------------ -----------
6,481 (6,682) 20,145
Interest paid (918) (3,684) (4,011)
Income tax paid (6,206) (5,387) (6,702)
-------------------------------------- ------------ ------------ -----------
Net cash from continuing
operating activities (643) (15,753) 9,432
Net cash from discontinued
operating activities - (894) (3,156)
Net cash from operating activities (643) (16,647) 6,276
-------------------------------------- ------------ ------------ -----------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 3,646 761 1,613
Dividends received - 802 839
Acquisition of subsidiaries
(net of cash acquired) - (273) (4,110)
Acquisition of property,
plant and equipment (7,085) (5,580) (15,075)
-------------------------------------- ------------ ------------ -----------
Net cash from investing activities
in continuing operations (3,439) (4,290) (16,733)
Net cash from investing activities
in discontinued operations - - -
Net cash from investing activities (3,439) (4,290) (16,733)
-------------------------------------- ------------ ------------ -----------
Cash flows from financing
activities
Purchase of own shares - (598) (598)
Payment of finance lease
liabilities (5,164) (2,751) (6,591)
Payment of other loan balances - - (2,890)
Dividends paid (191) (6,433) (6,924)
Proceeds from Group banking
facilities 15,500 9,000 5,000
-------------------------------------- ------------ ------------ -----------
Net cash from financing activities
in continuing operations 10,145 (782) (12,003)
Net cash from financing activities
in discontinued operations - (282) (282)
Net cash from financing activities 10,145 (1,064) (12,285)
---------------------------------------- ------- --------- -----------
Net increase/(decrease) in
cash and cash equivalents 6,063 (22,001) (22,742)
Cash and cash equivalents
at the start of the period/year 21,161 43,853 43,853
Effect of exchange rate fluctuations
on cash held 233 (48) 50
---------------------------------------- ------- --------- -----------
Cash and cash equivalents
at the end of the period/year 27,457 21,804 21,161
---------------------------------------- ------- --------- -----------
Notes to the Interim Report
1. Basis of preparation
The interim financial information set out in this statement for the six months ended 30 November 2016 and the comparative figures for the six months ended 30 November 2015 are unaudited. This financial information does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. It does not comply with IAS 34 'Interim Financial Reporting', as is permissible under the rules of the AIM market ("AIM").
This interim statement, which is neither audited nor reviewed, has been prepared in accordance with the measurement and recognition criteria of Adopted IFRS's. This statement does 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 31 May 2016.
2. Accounting policies
The accounting policies applied in preparing these interim financial statements are the same as those applied in the preparation of the annual financial statements for the year ended 31 May 2016, as described in those financial statements.
3. Status of financial information
The comparative figures for the financial year ended 31 May 2016 are not the company's statutory financial statements for that financial year and are restated after an adjustment to intangible assets and trade and other payables relating to the re-measurement of goodwill referred to in the Financial Review. The statutory financial accounts for the financial year ended 31 May 2016 have been reported on by the company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
4. Taxation
Income tax for the six month period is charged at 19.83% (six months ended 30 November 2015: 20.0%; year ended 31 May 2016: 20.0%). The effective tax rate, excluding the impact of JCEs, is 1.73%, representing the best estimate of the annual effective rate expected for the full year.
5. Dividends
The dividend of 0.6 pence per ordinary share, proposed in the 2016 Annual Accounts and agreed by the shareholders at the Annual General Meeting on 5 October 2016, was paid on 21 October 2016.
The directors have recommended an interim dividend of 2.7 pence per share which will be paid on 7 April 2017 to shareholders on the register at the close of business on 24 February 2017.
6. Earnings per share
Earnings per share for the ordinary shares are as follows:
Unaudited
six months Unaudited Audited
ended Unaudited six months Unaudited year Audited
30 November six months ended six months ended year
2016 ended 30 November ended 31 May ended
Continuing 30 November 2015 30 November 2016 31 May
and 2016 Continuing 2015 Continuing 2016
discontinued Continuing and discontinued Continuing and discontinued Continuing
------------------ ---------------- ------------- ----------------- ------------- ----------------- ------------
Ordinary shares
Basic earnings
per share (0.03) (0.03) 0.49 0.98 (32.96) (30.01)
------------------ ---------------- ------------- ----------------- ------------- ----------------- ------------
Diluted earnings
per share (0.03) (0.03) 0.48 0.97 (32.96) (30.01)
------------------ ---------------- ------------- ----------------- ------------- ----------------- ------------
The calculation of earnings per share is based on the profit for the period/year attributable to equity holders and on the weighted average number of shares in issue and ranking for dividend in the period.
Unaudited Unaudited Audited
six months Unaudited six months Unaudited year Audited
ended six months ended six months ended year
30 November ended 30 November ended 31 May ended
2016 30 November 2015 30 November 2016 31 May
Continuing 2016 Continuing 2015 Continuing 2016
and discontinued Continuing and discontinued Continuing and discontinued Continuing
----------------- ----------------- ------------- ----------------- ------------- ----------------- ------------
(Loss)/profit
for the
period/year
attributable
to equity
holders
(GBP000) (9) (9) 155 312 (10,498) (9,558)
----------------- ----------------- ------------- ----------------- ------------- ----------------- ------------
Weighted average
number of
shares 31,825,447 31,825,447 31,887,488 31,887,488 31,851,053 31,851,053
Earnings per
ordinary share
(pence) (0.03) (0.03) 0.49 0.98 (32.96) (30.01)
----------------- ----------------- ------------- ----------------- ------------- ----------------- ------------
The calculation of diluted earnings per share is based on the profit for the period/year and on the weighted average number of ordinary shares in issue in the period/year adjusted for the dilutive effect of the share options outstanding. The effect on earnings per ordinary share is nil p in the period/year due to the loss attributable to equity holders.
Unaudited Unaudited Audited
six months Unaudited six months Unaudited year
ended underlying ended underlying ended Audited
30 November six months 30 November six months 31 May year
2016 ended 2015 ended 2016 ended
Continuing 30 November Continuing 30 November Continuing 31 May
and 2016 and 2015 and 2016
discontinued Continuing discontinued Continuing discontinued Continuing
---------------------- --------------- ------------- --------------- ------------- ---------------- ------------
(Loss)/profit
for the period/year
attributable
to equity
holders (GBP000) (9) (9) 155 312 (10,498) (9,558)
---------------------- --------------- ------------- --------------- ------------- ---------------- ------------
Weighted average
number of
shares 32,177,392 32,177,392 32,309,031 32,309,031 32,251,497 32,251,497
Diluted earnings
per ordinary
share (pence) (0.03) (0.03) 0.48 0.97 (32.96) (30.01)
---------------------- --------------- ------------- --------------- ------------- ---------------- ------------
Underlying basic and diluted earnings per share are calculated on the same weighted average number of shares in the tables above, and on underlying profit after tax, as reconciled below:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 November 30 November 31 May
2016 2015 2016
Underlying Underlying Underlying
--------------------------- ------------- ------------- ------------
(Loss)/profit for the
period/year attributable
to equity holders from
continuing operations
(GBP000) (9) 312 (9,558)
--------------------------- ------------- ------------- ------------
Amortisation/impairment
of intangibles/goodwill 123 198 584
Exceptional items - 2,255 12,378
Tax effect of above
items (25) (491) (1,587)
--------------------------- ------------- ------------- ------------
Continuing underlying
profit after tax 89 2,274 1,817
--------------------------- ------------- ------------- ------------
7. Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Board of Directors, since they are responsible for strategic decisions. The Group has changed its reportable operating segments effective 1 June 2016 and the segmental information for the comparative period has been re-stated accordingly.
Distribution Property
& Services & Energy Legacy Corporate Total
Unaudited Unaudited Unaudited Unaudited Unaudited
30 November 30 November 30 November 30 November 30 November
2016 2016 2016 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------------- ------------ ------------ ------------ ------------
Revenue
Total revenue 159,569 1,376 10,205 - 171,150
Inter-segment
revenue (229) - - - (229)
------------------------ -------------- ------------ ------------ ------------ ------------
Revenue from
external customers 159,340 1,376 10,205 - 170,921
------------------------ -------------- ------------ ------------ ------------ ------------
Segment operating
profit/(loss) 2,826 (834) 579 (2,424) 147
Share of profit
in associates
and jointly
controlled entities 1,236 - - - 1,236
Net financing
costs (1,239) (238) - 267 (1,210)
------------------------ -------------- ------------ ------------ ------------ ------------
Profit/(loss)
before taxation 2,823 (1,072) 579 (2,157) 173
------------------------ -------------- ------------ ------------ ------------ ------------
Distribution Property
& Services & Energy Legacy Corporate Total
Unaudited Unaudited Unaudited Unaudited Unaudited
30 November 30 November 30 November 30 November 30 November
2015 2015 2015 2015 2015
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------------- ------------ ------------ ------------ ------------
Revenue
Total revenue 174,766 674 - - 175,440
Inter-segment
revenue (593) - - - (593)
------------------------ -------------- ------------ ------------ ------------ ------------
Revenue from
external customers 174,173 674 - - 174,847
------------------------ -------------- ------------ ------------ ------------ ------------
Segment operating
profit/(loss) 8,927 (630) - (3,436) 4,861
Share of loss
in jointly controlled
entities (855) - - - (855)
Net financing
costs (1,002) (218) - 311 (909)
------------------------ -------------- ------------ ------------ ------------ ------------
Profit/(loss)
before taxation
(pre exceptional
costs) 7,070 (848) - (3,125) 3,097
------------------------ -------------- ------------ ------------ ------------ ------------
Exceptional
Costs (2,255)
Profit before
taxation 842
------------------------ -------------- ------------ ------------ ------------ ------------
8. Interim results
These results were approved by the Board of Directors on 14 February 2017. Copies of this interim statement will be sent to all shareholders and will be available to the public from the Group's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FZLLFDLFBBBL
(END) Dow Jones Newswires
February 15, 2017 02:00 ET (07:00 GMT)
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