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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Redhall Group Plc | LSE:RHL | London | Ordinary Share | GB0001112035 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMRHL
RNS Number : 1332R
Redhall Group PLC
07 December 2016
For immediate release 7 December 2016
Redhall Group plc
("Redhall" or the "Group")
Preliminary Results
Redhall Group plc (AIM: RHL), the high integrity Manufacturing and Specialist Services group, announces its preliminary results for the year ended 30 September 2016.
Highlights
-- Significant order book and profit growth achieved in latest stage of transformation to high integrity Manufacturing and Specialist Services group
-- Manufacturing order book growth of 109% to GBP23m (2015: GBP11m)
-- Adjusted operating profit of GBP0.9m (2015: loss of GBP0.7m), slightly ahead of market expectations
-- Revenue on continuing operations of GBP43.8m (2015: 44.7m)
-- Adjusted operating profit before exceptional and central costs of GBP3.3m significantly increased (2015: GBP1.2m)
-- Group loss after exceptional items and losses of discontinued businesses of GBP1.7m (2015: loss of GBP12.2m)
-- Group order book of GBP29m (2015: GBP21m) benefiting from major contract awards in defence, nuclear decommissioning and infrastructure sectors
-- Investment of GBP0.8m made in FY16 in manufacturing capability and new product development. A further GBP0.4m approved since year end
-- Hinkley Point C Nuclear new build project providing major tender opportunities
Martyn Everett, Chairman of Redhall, commented:
"I am pleased to report that Redhall has more than doubled its manufacturing order book to GBP23 million and has achieved an adjusted operating profit of GBP0.9 million in FY16. We are on track to create a high integrity Manufacturing business engaged in the defence, nuclear decommissioning, infrastructure and nuclear new build sectors and will focus this year on delivering further improvements in profitability and operational performance and building a robust platform for a sustainable period of growth"
Contact details:
Hot Features
Premium
Redhall Group plc Tel: +44 (0) 1924 385
386
Phil Brierley, Chief Executive
Chris Kelly, Group Finance Director
Buchanan
Mark Court, Sophie Cowles, Jane Tel: +44 (0) 20 7466
Glover 5000
GCA Altium, NOMAD and Financial
Advisors
Paul Lines, Simon Lord Tel: +44 (0) 845 505
4343
WH Ireland, Broker
Adrian Hadden, Nick Prowting Tel: +44 (0) 20 7220
1666
CHAIRMAN'S STATEMENT
Redhall achieved two important goals during the year in its transformation to a high integrity Manufacturing and Specialist Services group. Firstly the manufacturing order book has grown substantially and is now GBP23 million of the total group order book of GBP29 million (2015: GBP11 million and GBP21 million respectively). Secondly, the Group made an adjusted operating profit of GBP0.9 million before interest, tax, amortisation, exceptional items and IFRS2 charges (2015: loss of GBP0.7 million).
The Board's confidence in the Group's strategy to focus on high integrity Manufacturing opportunities has been endorsed by the award of a number of major contracts in the defence, nuclear decommissioning and infrastructure sectors and the announcement in September that the UK Government has approved the investment in the nuclear new build project at Hinkley Point C. This is expected to be the first of a number of similar major projects.
The Group made a substantial investment in capital and development projects during the year. The total level of capital expenditure was GBP0.8 million. We have new machining equipment at Jordan Manufacturing, which has already improved our efficiency and performance on a number of substantial projects, and we have invested in a new test facility and product development at Booth Industries ("Booths"). Product development has become key for our customers who need an increasingly high level of security, fire, acoustic and insulation properties in our products to respond to ever more stringent regulation and security requirements. Since the year end, we have approved a further GBP0.4 million investment at Booths for laser cutting equipment to improve efficiency and quality and to reduce manufacturing costs. This new equipment will be in operation in our second quarter.
Trading results
Revenue in the year to 30 September 2016 from continuing operations was GBP43.8 million (2015: GBP44.7 million). Adjusted operating profit before exceptional items was GBP0.9 million (2015: loss of GBP0.7 million). Adjusted fully diluted earnings per share for the continuing business amounted to nil pence per share (2015: loss of 3.34p).
This result reflects a strong performance from our Specialist Services businesses which have provided a bridge in profitability whilst we have invested in the growth of our Manufacturing businesses during the year.
Exceptional items
This year, the level of operating exceptional items has significantly reduced, reflecting the end of the sustained restructuring implemented in previous years. The Group has reduced its cost base by initiatives including relocating its head office, reducing the cost of central services, and relocating smaller operations to more appropriate facilities. The total operating exceptional items for the continuing business associated with this amounted to GBP0.4 million.
For the discontinued businesses the Group has incurred costs in exiting from contracts and agreeing final accounts. This process has been more protracted than originally anticipated and negotiations are ongoing on a small number of accounts. The total amount of these exceptional costs incurred in the discontinued businesses amounted to GBP1.0 million (2015: GBP8.1 million).
Financial position
In December 2015 the Group agreed new three-year bank facilities with HSBC Bank plc and funds managed by Henderson. These facilities amounted to GBP11.2 million at the year end, of which GBP8.2 million was drawn.
Net assets at 30 September 2016 amounted to GBP15.5 million (2015: GBP18.6 million). The reduction includes an increase in the pension deficit to GBP3.8 million (2015: 2.0 million). The deficit increased significantly following the UK's decision on the European membership referendum in June, as a result of a material reduction in gilt yields.
Dividend
The Board does not recommend a dividend (2015: nil).
People
Our people have worked extremely hard to deliver the requirements of the second stage of our strategic plan. We are very grateful for their commitment which has achieved an operating profit for the continuing businesses and a much improved level of future orders.
Prospects
The turnaround of Redhall through the creation of a high integrity Manufacturing business focussed on the defence, nuclear decommissioning, infrastructure and nuclear new build sectors remains on track.
We are currently engaged in a number of very significant tenders which if successful will provide Redhall with a strong and sustainable long term order book. These tenders include major door and fabrication packages for the nuclear new build project at Hinkley Point C. They also include initial inquiries for further nuclear new build projects of which there are currently plans for a further five developments.
Our specialist fabrication manufacturing facility at Jordan Manufacturing has also seen substantial order growth in the year and is a leading fabricator for contractors in the nuclear decommissioning market. There is also a material increase in the level of tenders in this sector and, whilst this requires substantial investment in bidding resources, we are confident that these will sustain an increase in turnover in the coming years.
Our successful delivery on recent defence and rail infrastructure projects has also driven the increase we have seen in the order book and we will continue to work on these projects during the next 18 months, whilst looking to secure further similar projects.
We remain cautious about the recovery of the oil and gas sectors but once there is an improvement we are well placed to benefit from opportunities that might arise.
Our Specialist Services segment, which has served the group well for the last two years, will reduce in our 2017 financial year following BAE's decision not to renew our contract to provide blast and spray and insulation services to the Astute submarine programme. However, our telecommunications and food process businesses, Redhall Networks and Redhall Jex, are expected to continue to perform well in the new financial year.
We will focus this year on delivering further improvements in profitability and operational performance and building a robust platform for a sustainable period of growth.
Martyn Everett
Chairman
7 December 2016
STRATEGIC REPORT
Overview
Our strategic focus in the 2016 financial year has been on investment, improvement and growth in our high integrity Manufacturing based business, concentrating on the key markets of defence, decommissioning, nuclear new build and major infrastructure. We have made significant strides forward and I am pleased that the Group has reported an adjusted operating profit slightly ahead of market expectations and has delivered an order book which is greatly improved in both value and quality. The overall order book now stands at GBP29 million (2015: GBP21 million) of which GBP23 million (2015: GBP11 million) is high integrity manufacturing. This has created a solid platform for our future performance.
These improvements were enabled by our fund raising at the end of the previous financial year, which provided investment in our asset base, our bidding and pre-contract capability and research and development and gave our customers increased confidence in Redhall.
We are now moving into a period of growth for our manufacturing businesses and we are confident that we can deliver a strong performance in FY17 based on our clients' current delivery requirements.
This confidence is based on the improving order book and on the growing pipeline of opportunities we are experiencing in many of our core markets. These opportunities include: increased manufacturing spend in decommissioning at Sellafield, the commencement of the Successor boat programme and associated defence spending, the growing requirement for high integrity doors to combat the security threat to key infrastructure and the ongoing spend in large rail infrastructure for Crossrail, Crossrail 2 and HS2. These markets will be a source of work for many years. When coupled with the considerable opportunity presented by nuclear new build, most imminently Hinkley Point C, we believe that our strategy of focusing on high integrity manufactured products in these markets will produce long term benefits for all our stakeholders.
Our Specialist Services segment performed particularly well in the year. All businesses in the segment delivered strong operating profits and generated cash which helped facilitate our improvement plan.
The Group made an adjusted operating profit on continuing operations of GBP0.9 million on revenue of GBP43.8 million. Before deducting group and central services costs the adjusted profit amounted to GBP3.3 million. The result is slightly ahead of market expectations and represents a significant step forward. It is of note that the result in this financial year was despite the significant downturn in the oil and gas sector which has historically driven a large proportion of the Group's manufacturing turnover and profit.
Health and Safety
The health and safety of our employees and those who may be affected by our business remains our highest priority. All of our six subsidiaries have accredited management systems to control health and safety risks to OHSAS 18001 and environmental management systems certified to BS EN ISO 14001.
During the year, many of our subsidiaries once again applied for health and safety awards from The Royal Society for the Prevention of Accidents (RoSPA), which recognises high or very high levels of performance. All of our businesses that applied obtained a minimum of the Gold Award.
Manufacturing
Our Manufacturing segment made an adjusted profit of GBP0.9 million during the year on turnover of GBP17.2 million (2015: GBP0.3 million and GBP18.5 million respectively). We have worked extremely hard with our customers to develop high class products and solutions, particularly for the defence, nuclear decommissioning and infrastructure sectors. This has required substantial investment of GBP0.8 million in capital equipment, test facilities and product development. The requirements of our markets are changing and our customers are asking us to provide ever more sophisticated products with security, fire, blast, pressure and acoustic properties.
Booth Industries has won and delivered a substantial amount of defence and infrastructure related work in the year both in the UK and France. We are currently manufacturing and delivering doors to the majority of the new stations and the tunnels on the Crossrail project. Booths has also developed a number of market leading high integrity door and blast products during the year which keep us at the forefront of the manufacture of products that are relied upon for the UK's day to day security across a number of sectors.
Jordan Manufacturing grew significantly during the year. It is being repositioned particularly in the nuclear decommissioning, nuclear new build and high integrity fabrication markets. It is also looking to diversify into other areas where there is good demand for Jordan's skills. It has delivered a number of key and diverse projects during the year including further glovebox manufacture for Dounreay Site Restoration Limited (DSRL) and over packs and floor plates for use at Sellafield. Other fabrications have been supplied for submarines, 3D printers and offshore skids. It is pleasing to note that the relationship enjoyed with DSRL will continue. Jordan Manufacturing was awarded the minor works framework for DSRL in November, which lasts for a period of up to 4 years and has prequalified for the major works framework tender due to be submitted in the first quarter of 2017.
Our investment in key people has been significant as we build our manufacturing sales and tendering teams, our engineering and design capability and our commercial support. We are also developing a comprehensive learning and development programme. Our teams are now working extremely hard to meet and exceed the exacting standards required by our clients. The high levels of tenders we are currently experiencing are anticipated to continue for some considerable time and our focus is on identifying the opportunities to which our capabilities are best matched.
Specialist Services
Specialist Services consisted of our activities in installation and maintenance of the telecommunications network infrastructure, design, manufacture and installation of process lines in food and pharmaceutical markets and specialist surface finishings to Astute class submarines. We were informed in October 2016 that our contract for surface finishings to Astute class submarines would not be renewed. The Group was unable to submit a compliant tender as it considered that the new terms represented a material increase in the level of risk. The interim contract that Redhall Marine has been working under since December 2015 is due to end in January 2017.
Turnover in the year was GBP26.6 million and the segment profit was GBP2.4 million (2015: GBP26.2 million and GBP0.9 million respectively). All of the businesses performed ahead of the previous year and expectations.
Redhall Networks benefited from continuing high levels of infrastructure work and our number of delivery teams was increased to take advantage of the level of work available. Mobile communications is an ever increasing part of our national infrastructure and the maintenance, upgrading and consolidation of the network by the operators provides us with confidence that the volumes experienced in Redhall Networks will continue.
In the food and pharmaceutical sectors demand was maintained for the services provided by Redhall Jex in the first half. We benefited from good volumes on capital project work for major customers such as Kellogg's, Mondelez and Nestle. The second half performance was not as strong as the first half due to the completion of a number of these capital projects. We are, however, seeing an increase in opportunities as new projects are commencing and management has established new customer relationships to supplement existing ones.
Redhall Marine also performed well during the period. Our focus is now moving to the successful demobilisation and agreement of final accounts with BAE for work on boats 2 to 7.
Discontinued operations
Site Services consisted of our businesses held for strategic divestment and closure. At the year end we had completed all but one of the projects that were on site in Redhall Nuclear when we announced the closure of our site based nuclear business.
Exceptional items
During the year we incurred GBP0.4 million of exceptional operating costs in our continuing businesses relating to relocation and redundancy costs as we completed the strategic restructuring. We also incurred GBP1.0 million of exceptional costs relating to discontinued operations due to the costs of exiting contracts and agreeing final accounts.
Outlook
We are pleased that in the 2016 financial year the Group achieved another important phase of the strategic plan by delivering an adjusted operating profit and a substantially improved order book. We have now created momentum for our manufacturing businesses to deliver substantial growth. In addition, we anticipate that both our Redhall Networks and Redhall Jex businesses will continue to make a substantial contribution in the next financial year.
Further growth in our high integrity manufacturing order book is a key focus for the Group as we continue to deliver our strategic plan. We have successfully secured a number of important orders in the defence sector both in the UK and abroad and we continue to bid for sizable contracts for delivery in 2017 and 2018. We now have considerable knowledge in this sector and firmly see it as one of our core markets.
We are experiencing an increase in opportunities in the decommissioning market particularly from Sellafield Ltd and DSRL but also from Magnox. This has already resulted in an order intake of GBP8.8m in the year with further work packages being released for tender.
Both Booth Industries and Jordan Manufacturing have submitted important bids for Hinkley Point C the most significant of which was the recent bid for security doors which was led by Booth Industries in consortium with Baumert from France. Whilst contract awards for Hinkley Point C are not expected to commence until the middle of 2017, success in tenders for this major project will be of a long term nature and would contribute to significant increases in the order book. The nuclear new build sector could be very important for the Group if, as predicted, up to five further facilities are constructed over the next two decades.
We have established close relationships with the Centre for Protection of National Infrastructure and a number of our products have been developed to comply with their requirements in a market where security is an increasingly important element for manufactured products for the nation's infrastructure.
Booths has been active in the year in the delivery of special doors and hatches to Crossrail stations and tunnels. We have focussed heavily on product development for this type of infrastructure which led us to build the largest door test facility in Europe. We expect that the investment we have made in these products will provide further opportunities on projects such as Crossrail, HS2 and Crossrail 2 as well as with London Underground. We have also recently signed agreements to work on a major tunnel project in Israel.
Although work winning remains a clear focus for the Group, we are acutely aware of the importance of efficiently delivering the increase in production resulting from the growth in our order book. We have and will continue to invest in product development and capital equipment to keep the group at the forefront of its chosen markets. We will also invest in the quality of our people and extend the access our people have to learning and development opportunities to create the highest calibre teams.
Our 2017 financial year is another important phase in the delivery of the Group's strategic plans and for Redhall as a high integrity manufacturing led business. We expect the Group to deliver a strong performance, further building shareholder value.
Phil Brierley
Chief Executive
7 December 2016
CONSOLIDATED INCOME STATEMENT
Year to 30
Year to 30 September September
2016 2015
Before Exceptional Before Exceptional
exceptional items exceptional items
(Note
Note items (Note 2) Total items 2) Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 1 43,823 - 43,823 44,704 - 44,704
Cost of sales (33,739) (164) (33,903) (34,518) (252) (34,770)
===================================================== === =========== =========== ======== =========== =========== ========
Gross profit 10,084 (164) 9,920 10,186 (252) 9,934
Administrative expenses (9,924) (233) (10,157) (11,178) (988) (12,166)
===================================================== === =========== =========== ======== =========== =========== ========
Operating profit/(loss) 1 160 (397) (237) (992) (1,240) (2,232)
===================================================== === =========== =========== ======== =========== =========== ========
Continuing businesses 3,295 (287) 3,008 1,212 (972) 240
Central costs (2,439) (110) (2,549) (1,884) (268) (2,152)
----------------------------------------------------- --- ----------- ----------- -------- ----------- ----------- --------
Adjusted operating profit/(loss)* 856 (397) 459 (672) (1,240) (1,912)
Amortisation of acquired
intangible assets (323) - (323) (321) - (321)
IFRS 2 (charge)/credit (373) - (373) 1 - 1
===================================================== === =========== =========== ======== =========== =========== ========
Operating profit/(loss) 160 (397) (237) (992) (1,240) (2,232)
===================================================== === =========== =========== ======== =========== =========== ========
Financial expenses 4 (857) - (857) (1,411) - (1,411)
===================================================== === =========== =========== ======== =========== =========== ========
Loss before tax from
continuing operations (697) (397) (1,094) (2,403) (1,240) (3,643)
Tax credit 5 407 - 407 551 - 551
===================================================== === =========== =========== ======== =========== =========== ========
Loss on continuing operations (290) (397) (687) (1,852) (1,240) (3,092)
Loss on discontinued
operations net of tax 3 - (983) (983) (964) (8,105) (9,069)
===================================================== === =========== =========== ======== =========== =========== ========
Loss attributable to
equity holders
=========== =========== ======== =========== =========== ========
of the Parent Company (290) (1,380) (1,670) (2,816) (9,345) (12,161)
===================================================== === =========== =========== ======== =========== =========== ========
Loss per share 7
Basic (0.83)p (24.57)p
Diluted (0.83)p (24.57)p
* Adjusted operating profit/(loss) is profit/(loss) before financial expenses, IFRS 2 charge, tax and amortisation of intangible assets acquired with business combinations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year to Year to
30 September 30 September
Note 2016 2015
GBP000 GBP000
Loss for the year (1,670) (12,161)
Other comprehensive income:
Items that will not be reclassified
to profit or loss:
Remeasurement of defined benefit
liability 8 (1,963) (509)
Tax on actuarial loss 5 318 102
Revaluation gains on fixed assets 6 46 (1)
======================================= ==== ============ ============
Other comprehensive income for the
year net of tax (1,599) (408)
======================================= ==== ============ ============
Total comprehensive income attributable to
equity holders of the Parent Company (3,269) (12,569)
============================================= ============ ============
The accompanying notes form part of these financial statements
CONSOLIDATED BALANCE SHEET
As at As at
30 September 30 September
Note 2016 2015
GBP000 GBP000
Assets
Non-current assets
Property, plant and equipment 2,648 2,501
Intangible assets 2,732 2,792
Purchased goodwill 18,305 18,305
Deferred tax asset 6 1,032 154
=============================== ==== ============ ============
24,717 23,752
Current assets
Inventories 636 517
Trade and other receivables 11,452 14,968
Cash and cash equivalents 1,021 687
Assets held for sale - 440
=============================== ==== ============ ============
13,109 16,612
Liabilities
Current liabilities
Trade and other payables (9,217) (13,628)
Current tax payable (19) (19)
=============================== ==== ============ ============
(9,236) (13,647)
Non-current liabilities
Borrowings (9,269) (6,175)
Deferred tax liabilities - -
Retirement benefit obligations (3,796) (1,960)
=============================== ==== ============ ============
(13,065) (8,135)
=============================== ==== ============ ============
Net assets 15,525 18,582
=============================== ==== ============ ============
Shareholders' equity
Share capital 12,284 12,284
Share premium account 28,326 28,326
Merger reserve 12,679 12,679 Revaluation reserve 102 102 Other reserve 1,389 1,177 Retained earnings (39,255) (35,986) =============================== ==== ============ ============ Total equity 15,525 18,582 =============================== ==== ============ ============
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Share Share Merger Revaluation Other Retained
capital premium reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2014 12,269 21,297 12,679 144 251 (23,459) 23,181
Share capital issued during
the year net of expenses 15 7,029 - - 927 - 7,971
Employee share-based
compensation - - - - (1) - (1)
----------------------------- ------------ ------- ------- ----------- ------- -------- --------
Transactions with owners 12,284 28,326 12,679 144 1,177 (23,459) 31,151
============================= ============ ======= ======= =========== ======= ======== ========
Loss for the year - - - - - (12,161) (12,161)
Transfer between reserves in
respect of depreciation on
property
revaluations - - - (3) - 3 -
Transfer between reserves
following
disposal - - - (39) - 39 -
Other comprehensive income
for
the year - - - - - (408) (408)
============================= ============ ======= ======= =========== ======= ======== ========
Total comprehensive income
for
the year - - - (42) - (12,527) (12,569)
At 30 September 2015 12,284 28,326 12,679 102 1,177 (35,986) 18,582
============================= ============ ======= ======= =========== ======= ======== ========
Employee share-based
compensation - - - - 212 - 212
----------------------------- ------------ ------- ------- ----------- ------- -------- --------
Transactions with owners 12,284 28,326 12,679 102 1,389 (35,986) 18,794
============================= ============ ======= ======= =========== ======= ======== ========
Loss for the year - - - - - (1,670) (1,670)
Other comprehensive income
for
the year - - - - - (1,599) (1599)
============================= ============ ======= ======= =========== ======= ======== ========
Total comprehensive income
for
the year - - - - - (3,269) (3,269)
At 30 September 2016 12,284 28,326 12,679 102 1,389 (39,255) 15,525
============================= ============ ======= ======= =========== ======= ======== ========
Other reserves comprise share based compensation GBP462,000 (2015: GBP250,000), equity reserve relating to the grant of options on conversion of debt GBP925,000 (2015: GBP925,000) and other reserves of GBP2,000 (2015: GBP2,000).
CONSOLIDATED CASH FLOW STATEMENT
Year to Year to
30 September 30 September
Note 2016 2015
GBP000 GBP000
Cash flows from operating activities
Loss after taxation (1,670) (12,161)
Adjustments for:
Depreciation 331 697
Amortisation of intangible assets 415 519
Difference between pension charge and
cash contributions (196) (307)
Loss/(profit) on disposal of property,
plant and equipment - 102
Loss on sale of discontinued operations
(net of tax) - 5,147
Share-based payments charge/(credit)* 212 (1)
Financial income - -
Financial expenses 857 1,411
Deferred tax credit (514) (576)
Decrease in trade and other receivables 3,516 5,809
(Increase)/decrease in inventories (119) 144
Decrease in trade and other payables (4,407) (2,239)
================================================== ============ ============
Cash absorbed by operations (1,575) (1,455)
Interest paid (792) (1,361)
================================================== ============ ============
Net cash absorbed by operating activities (2,367) (2,816)
================================================== ============ ============
Cash flows from investing activities
Purchase of property, plant and equipment (478) (103)
Purchase of intangible assets (355) (17)
Proceeds from disposal of assets held
for sale 440 395
Net proceeds from sale of discontinued
operations (net of cash disposed of) - 5,114
Interest received - -
=========================================== ===== ============ ============
Net cash used in investing activities (393) 5,389
================================================== ============ ============
Cash flows from financing activities
Proceeds from issue of share capital
(net of costs incurred) - 4,971
Proceeds from borrowings 9,744 -
Repayment of facility (5,745) -
Repayment of long-term borrowing (905) (5,075)
================================================== ============ ============
Net cash generated by financing activities 3,094 (104)
============================================ ===== ============ ============
Net increase in cash and cash equivalents 334 2,469
Cash and cash equivalents at beginning
of year 687 (1,782)
============================================ ===== ============ ============
Cash and cash equivalents at end of
year 1,021 687
============================================ ===== ============ ============
See note 3 for cash flows relating to discontinued activities
*IFRS 2 amount charged to reserves net of employer's national insurance
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SEGMENT ANALYSIS
IFRS8 "Operating Segments" requires an entity to report on those operating segments that engage in business activities from which it may earn revenues and incur expenses; whose operating results are regularly reviewed by the chief operating decision maker ("CODM"); and for which discrete financial information is available. The CODM has been identified ultimately as the Board of Directors.
The Board assess the performance of the operating segments based on a measure of operating profit or loss which excludes the effects of exceptional items. Central costs and unallocated items represent head office functions and items such as amortisation of acquired intangible assets arising on the acquisition of businesses. Central costs for the period from 1 October 2015 include the costs of the Group's centralised Finance, IT and HR functions. These activities were previously incurred in the individual segments.
The activities of each business segment are as follows:
Manufacturing
Manufacturing encompasses the design, manufacture and installation of bespoke specialist plant and equipment typically in the nuclear defence, nuclear decommissioning, oil and gas, petrochemical, chemical, pharmaceutical and food sectors. The division has particular expertise in the design and manufacture of high integrity fire and blast resistant doors, window and wall systems.
Specialist Services
Specialist Services comprises our activities in installation and maintenance of the telecommunications network infrastructure, design, manufacture and installation of process lines in food and pharmaceutical markets and specialist surface finishings to Astute class submarines.
Site Services
During the previous period the activities of the Site Services segment were discontinued following the Group's decision to sell its Engineering business and to close its site-based Nuclear contracting businesses. The results of these businesses are disclosed in Note 3.
OPERATING SEGMENTS
Year to 30 September 2016
Loss on
continuing
Revenue operations
GBP000 GBP000
Manufacturing 17,228 863
Exceptional items - (209)
=========================================== ======= ==========
Total Manufacturing 17,228 654
=========================================== ======= ==========
Specialist Services 26,595 2,432
Exceptional items - (78)
=========================================== ======= ==========
Total Specialist Services 26,595 2,354
=========================================== ======= ==========
Central costs - (2,439)
Exceptional items - (110)
=========================================== ======= ==========
Total Central costs - (2,549)
=========================================== ======= ==========
Total operations before exceptional items* 43,823 856
Exceptional items - (397)
=========================================== ======= ==========
Total operations 43,823 459
=========================================== ======= ==========
Amortisation of acquired intangible assets (323)
IFRS 2 charge (373)
Operating loss (237)
Financial expenses (857)
Group loss before tax - continuing (1,094)
Tax 407
=========================================== ======= ==========
Group loss for the year - continuing (687)
=========================================== ======= ==========
*Adjusted operating profit is stated before exceptional items, IFRS 2 charge and amortisation of intangible assets acquired with business combinations.
Year to 30 September 2015
Loss on
continuing
Revenue operations
GBP000 GBP000
Manufacturing 18,461 321
Exceptional items - (867)
=========================================== ======= ==========
Total Manufacturing 18,461 (546)
=========================================== ======= ==========
Specialist Services 26,243 891
Exceptional items - (105)
=========================================== ======= ==========
Total Specialist Services 26,243 786
=========================================== ======= ==========
Central costs - (1,884)
Exceptional items - (268)
=========================================== ======= ==========
Total Central costs - (2,152)
=========================================== ======= ==========
Total operations before exceptional items* 44,704 (672)
Exceptional items - (1,240)
=========================================== ======= ==========
Total operations 44,704 (1,912)
=========================================== ======= ==========
Amortisation of acquired intangible assets (321)
IFRS 2 credit 1
Operating loss (2,232)
Financial income -
Financial expenses (1,411)
Group loss before tax (3,643)
Tax 551
=========================================== ======= ==========
Group loss for the year (3,092)
=========================================== ======= ==========
* Adjusted operating profit is stated before exceptional items, IFRS 2 charge and amortisation of intangible assets acquired with business combinations.
2016 2015
GBP000 GBP000
Operating segment assets
Manufacturing 7,477 8,881
Specialist Services 5,431 4,952
Site Services - discontinued 1,471 3,785
Head office and Central 946 1,134
Unallocated:
- Cash and cash equivalents 1,021 687
- Acquired intangible assets 2,143 2,466
- Purchased goodwill 18,305 18,305
- Deferred tax 1,032 154
========================================= ====== ======
Total assets 37,826 40,364
========================================= ====== ======
Operating segment liabilities
Manufacturing 3,101 4,712
Specialist Services 4,067 4,664
Site Services - discontinued 791 2,008
Head office and Central 1,258 2,244
Unallocated:
- Current borrowings - -
- Non-current borrowings 9,269 6,175
- Retirement benefit obligations 3,796 1,960
- Current tax 19 19
- Deferred tax - -
========================================= ====== ======
Total liabilities 22,301 21,782
========================================= ====== ======
Net assets 15,525 18,582
========================================= ====== ======
Capital expenditure
Manufacturing 373 20
Specialist Services 79 11
Site Services - discontinued - 25
Head office and Central 26 47
478 103
========================================= ====== ======
Depreciation
Manufacturing 203 182
Specialist Services 71 83
Site Services - discontinued - 385
Head office and Central 57 47
331 697
========================================= ====== ======
Amortisation of intangible assets
Manufacturing - development costs 92 78
Unallocated - acquired intangible assets 323 441
415 519
========================================= ====== ======
Continuing operations
Geographical segments
2016 2015
GBP000 GBP000
Revenue by destination
United Kingdom 41,833 41,697
Other European Union countries 953 439
Other overseas locations 1,037 2,568
================================================== ====== ======
43,823 44,704
================================================== ====== ======
All of the Group's assets and capital expenditure
originate in the United Kingdom.
Analysis of revenue by category
2016 2015
GBP000 GBP000
Sales of goods manufactured by the Group 15,881 17,732
Sales of services 27,942 26,972
================================================== ====== ======
43,823 44,704
================================================== ====== ======
Practically all of the Group's revenue is considered to be contract revenue as defined by IAS11.
Customers accounting for more than 10% of revenue
One customer accounted for more than 10% of revenue in the year, which is a customer of the Specialist Services segment and accounted for revenue of GBP10.2 million (2015: one customer accounting for GBP9.6 million of revenue in the Specialist Services segment).
2. EXCEPTIONAL ITEMS
The Board has separately identified, by virtue of their size or incidence, certain credits and charges to the consolidated income statement that should be separately disclosed to enable users of the financial statements to better understand the underlying performance of the Group:
Continuing operations
2016 2015
Cost of sales
Redundancy and restructuring costs 15 252
Provisions against contracts 149 -
164 252
=================================== ==== =====
Administrative expenses
Redundancy and restructuring costs 233 883
Loss on disposal of properties - 105
233 988
=================================== ==== =====
Exceptional items before tax 397 1,240
Tax credit - -
Exceptional items after tax 397 1,240
=================================== ==== =====
Redundancy and restructuring costs reflect the costs of resizing the businesses. These are split between cost of sales and administrative expenses on the basis of the function of the business to which they relate.
Discontinued operations
Redundancy and restructuring costs of GBP983,000 (2015: GBP8,105,000) relate to the winding down and ultimate closure of those businesses which are discontinued.
3. DISCONTINUED OPERATIONS
Income and expenditure incurred on discontinued operations during the period comprised the Site Services business. RESL was sold on 13 May 2015 and on 14 May 2015 the Group announced the closure of its site based nuclear contracting businesses.
Site Services comprised certain engineering and nuclear related activities. These included engineering activities in industrial processes including oil and gas, petrochemical and chemical, and included design, project management and execution of on-site works through qualified and experienced engineers and trades personnel. Activities included mechanical design and construction, storage tank services, plant modifications and upgrades, repair and maintenance, shutdown services and offsite services.
The segment also included activities in both the civil and defence nuclear sectors and included design, project management and execution of on-site works through qualified and experienced engineers and trades personnel. Activities in the civil sector included decommissioning and waste management, support to operating nuclear power stations, and nuclear new build. Activities in the defence sector encompassed activities on behalf of the Ministry of Defence and included the design and manufacture of specialist equipment and mechanical and electrical engineering activities for the AWE establishment at Aldermaston.
The result for the current financial year related to the completion of a small number of contracts at customer sites.
2016 2015
GBP000 GBP000
Revenue 487 24,132
Cost of sales (487) (21,222)
================================================= ====== ========
Gross profit - 2,910
Administrative expenses - (3,899)
================================================= ====== ========
Adjusted operating loss before exceptionals - (989)
Exceptional items (983) (2,958)
Operating loss before impairment and loss
on disposal of operations (983) (3,947)
Impairment - -
Loss on disposal of operations - (5,147)
================================================= ====== ========
Operating loss and loss before taxation (983) (9,094)
Taxation credit/(charge) - 25
================================================= ====== ========
Loss after taxation from discontinued operations (983) (9,069)
================================================= ====== ========
During the period, discontinued operations contributed a net inflow of GBP0.11m 2015: GBP4.37m outflow) to the Group's operating cash flows and a net
inflow of GBPnil (2015: GBP5.09m inflow) to investing activities. There were no cash flows from financing activities.
The adjusted operating loss before exceptionals is stated after amortisation of acquired intangible assets of GBPnil (2015: GBP120,000).
Geographical segments
2016 2015
GBP000 GBP000
Revenue by destination
United Kingdom 487 23,302
Other European Union countries - -
Other overseas locations - 830
================================================== ====== ======
487 24,132
================================================== ====== ======
All of the Group's assets and capital expenditure
originate in the United Kingdom.
Analysis of revenue by category
2016 2015
GBP000 GBP000
Sales of goods manufactured by the Group - -
Sales of services 487 24,132
487 24,132
====== ======
Practically all of the Group's revenue is considered to be contract revenue as defined by IAS11.
4. FINANCIAL INCOME AND EXPENSES
2016 2015
Financial expenses
Interest on bank loans and overdrafts (703) (1,262)
Net finance expense on pension scheme* (154) (149)
(857) (1,411)
* Includes GBP85,000 of pension administration expenses paid for by the Company (2015: GBP89,000).
5. TAX EXPENSE
2016 2015
GBP000 GBP000
(a) Recognised in the income statement
Current tax charge:
Current year - -
Adjustment in respect of prior years 107 -
================================================== ======= ========
Current tax charge 107 -
Deferred tax credit (312) (583)
Effect of change of tax rate 96 9
Prior years (298) (2)
================================================== ======= ========
Deferred tax credit (514) (576)
================================================== ======= ========
Tax credit in the income statement (407) (576)
================================================== ======= ========
2016 2015
GBP000 GBP000
(b) Reconciliation of the effective tax rate
Loss before tax - continuing operations 1,094 (3,643)
Loss before tax - discontinued operations 983 (9,094)
================================================== ======= ========
Loss before tax (2,077) (12,737)
================================================== ======= ========
Tax at standard rate of UK corporation tax
of 20% (2015: 20.5%) (415) (2,611)
Expenses not deductible for tax purposes 48 131
Income not taxable for tax purposes (31) -
Tax losses not recognised 86 1,065
Adjustments in relation to prior periods (191) (2)
Change in tax rate 96 11
Non deductible loss on disposal of investment - 830
Tax credit in the income statement (407) (576)
Tax credit in the income statement - continuing
operations 407 551
Tax credit in the income statement - discontinued
operations - 25
2016 2015
GBP000 GBP000
(c) Deferred tax (credit)/charge recognised
in other comprehensive income
Actuarial losses (318) (102)
Accelerated capital allowances (46) 1
================================================== ======= ========
(364) (101)
6. DEFERRED TAX ASSETS AND LIABILITIES
Recognised deferred tax assets and liabilities
The net deferred tax liability at the year-end and movement during the year is analysed as follows:
Credit/(charge)
to
Balance as Disposal Balance as
at Consolidated Credit of at
1 October 2015 Income directly to 30 September
Statement equity investment 2016
GBP000 GBP000 GBP000 GBP000 GBP000
Accelerated capital
allowances/revaluation
gains on fixed
assets 170 46 46 - 262
Short term timing
differences 30 93 - - 123
Losses 528 128 - - 656
Buildings (160) 160 - - -
Intangible assets (803) 152 - - (651)
Retirement benefits 389 (65) 318 - 642
======================== ========== ================ =============== ========== ============
154 514 364 - 1,032
======================== ========== ================ =============== ========== ============
Credit/(charge)
to
Balance as Disposal Balance as
at Consolidated (Charge)/credit of at
1 October directly to 30 September
2014 Income Statement equity investment 2015
GBP000 GBP000 GBP000 GBP000 GBP000
Accelerated capital
allowances 196 124 (1) (149) 170
Short term timing
differences 56 (20) - (6) 30
Losses 508 320 - (300) 528
Buildings (275) 115 - - (160)
Intangible assets (892) 89 - - (803)
Retirement benefits 339 (52) 102 - 389
======================== ========== ================ =============== ========== ============
(68) 576 101 (455) 154
======================== ========== ================ =============== ========== ============
Unrecognised deferred tax assets
Deferred tax assets have not been recognised on tax losses of GBP16,200,000 (2015: GBP16,300,000) as their recovery is insufficiently certain in the longer term. GBP14,100,000 are related to the discontinued site services segment.
Effect of reduction in the main rate of Corporation tax
The reduction in the main rate of corporation tax from 20% to 19% effective from 1 April 2015 was substantively enacted on 26 October 2015. It was further announced that the rate will be reduced to 17% effective from 6 September 2016. Accordingly, deferred tax balances have been recognised at the reduced rate of 17% in theses financial statements.
7. LOSS PER SHARE
Basic and diluted loss per share
The calculation of the basic loss per share of 0.83p (30 September 2015: loss per share 24.57p) is based on 200,050,084 shares (30 September
2015: 49,491,094:) being the weighted average number of shares in issue throughout the period and on a loss of GBP1,670,000 (30 September 2015: loss of GBP12,161,000).
The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted loss per share for both the year ended 30 September 2016 and 30 September 2015 are identical to those used for the basic loss per share. This is because the exercise of share options would have the effect of reducing the loss per share and is, therefore, not a dilution under the terms of IAS33. The dilutive potential ordinary shares are therefore not included in the table below. At 30 September 2016 there were 27,640,436 outstanding options under relevant schemes and 18.5 million shares under option to funds managed by Henderson. These may impact dilutive earnings per share in future.
Adjusted earnings per share
The Directors believe that helpful additional earnings per share calculations are earnings per share on adjusted bases (i.e. based on profit before exceptional items, IFRS 2 charge and amortisation of acquired intangible assets and on a fully taxed basis). The basic and adjusted weighted average numbers of shares and the adjusted earnings have been calculated as follows:
2016 2015
Number Number
Basic weighted average number of shares 200,050,684 49,491,094
Dilutive potential ordinary shares arising
from share options - -
============================================= =========== ==========
Adjusted weighted average number of shares 200,050,684 49,491,094
============================================= =========== ==========
GBP000 GBP000
Earnings:
Loss before tax (2,077) (12,737)
Exceptional items 1,380 9,345
Amortisation of acquired intangible assets 323 441
IFRS 2 charge/(credit) 373 (1)
============================================= =========== ==========
Adjusted loss before tax (1) (2,952)
Tax at 20% (2015: 20.5%) - 605
============================================= =========== ==========
Adjusted loss after tax (1) (2,347)
============================================= =========== ==========
Adjusted, fully taxed basic loss per share 0.00p (4.74)p
============================================= =========== ==========
Adjusted, fully taxed diluted loss per share 0.00p (4.74)p
============================================= =========== ==========
Continuing operations
GBP000 GBP000
Loss before tax (1,094) (3,643)
Exceptional items 397 1,240
Amortisation of acquired intangible assets 323 321
IFRS 2 charge/(credit) 373 (1)
============================================= =========== ==========
Adjusted loss before tax (1) (2,083)
Tax at 20% (2015: 20.5%) - 427
============================================= =========== ==========
Adjusted loss after tax (1) (1,656)
============================================= =========== ==========
Adjusted, fully taxed diluted loss per share 0.00p (3.34)p
============================================= =========== ==========
Discontinued operations
GBP000 GBP000
Loss before tax (983) (9,094)
Exceptional items 983 8,105
Amortisation of acquired intangible assets - 120
============================================= =========== ==========
Adjusted loss before tax - (869)
Tax at 20% (2015: 20.5%) - 178
============================================= =========== ==========
Adjusted loss after tax - (691)
============================================= =========== ==========
Adjusted, fully taxed diluted loss per share 0.00p (1.40)p
============================================= =========== ==========
8. RETIREMENT BENEFIT OBLIGATION
The Group sponsors a defined benefit pension scheme in the United Kingdom, the Booth Industries Group PLC Staff Pension and Life Assurance Scheme ("the Booth Scheme") and operates a small number of defined contribution pension schemes and makes contributions to personal pension plans.
a) Defined benefit scheme
Pension benefits are linked to the members' final pensionable salaries and service at their retirement date (or date of leaving if earlier). The scheme is closed to new entrants. The scheme is governed by a Board of Trustees who meet on a quarterly basis. The Group has opted to recognise all actuarial gains and losses immediately through the Consolidated Statement of Comprehensive Income.
The most recent formal actuarial valuation was carried out as at 6 April 2015. The results of this valuation have been updated to 30 September 2016 by an independent qualified actuary. The assumptions used were as follows:
Assumptions
The following were the principle actuarial
assumptions at the reporting date:
2016 2015
Discount rate 2.40% 3.70%
Retail Prices Index (RPI) inflation 3.00% 2.90%
Consumer Prices Index (CPI) inflation 2.00% 1.90%
Salary increases n/a 1.90%
Rate of increases to pensions in payment subject
to inflationary increases:
- RPI capped at 5% pa 2.90% 2.80%
- RPI capped at 2.5% pa 2.30% 2.20%
- CPI capped at 3% pa 1.80% 1.70%
- CPI capped at 5% pa with minimum 3% pa 3.10% 3.10%
Revaluation of deferred pensions (non-GMP) 2.00% 1.90%
Mortality basis pre and post retirement S2PMA/S2PFA +2 S2PMA/S2PFA
years +2 years
CMI 2014
CMI 2015 with with a long
a long term rate term rate
of improvement of improvement
of 1% pa of 1% pa
Allowance for cash commutation 95 % of maximum 95 % of maximum
Proportion married 80% for males 80% for males
70% for females 70% for females
Asset class 2016 2015
% of total % of total
Market value scheme assets Market value scheme assets
GBP000 GBP000
Equities 12,167 54% 9,657 48%
DGF's 996 5% - -
Bonds 2,285 10% 4,452 22%
Gilts 4,051 18% 3,747 19%
LDI 1,134 5% - -
Property 1,662 7% 1,877 9%
Cash 162 1% 307 2%
=============
Total 22,457 100% 20,040 100%
=============
Actual return on
assets over period: 3,029 431
Pension expense
Amounts recognised within administrative expenses
within the income statement are:
2016 2015
GBP000 GBP000
Charge for current service cost (49) (86)
Administration costs (52) (50)
======
(101) (136)
Following the 6 April 2015 valuation the Company agreed to pay annual contributions of GBP365,000 for the year to 5 April 2016, followed by contributions of GBP140,000 for the following 2 years. Contributions will then increase to GBP305,000 per annum until 5 April 2027. Total employer contributions in 2016 were GBP297,000 (2015: GBP443,000).
The amounts credited/(charged) to financial
income and expense are:
2016 2015
GBP000 GBP000
Return on assets recorded as interest* 645 687
Interest on pension scheme liabilities (799) (836)
======
Net financial expense (154) (149)
======
* Includes GBP85,000 of pension administration expenses paid for by the Company (2015: GBP89,000).
Total actuarial gains and losses recognised in the consolidated statement of comprehensive income
The cumulative actuarial loss recognised in the consolidated statement of comprehensive income from 1 October 2006 (being the transition date to the adoption of International Financial Reporting Standards) is GBP4,743,000 (2015: loss GBP2,780,000).
Analysis of movement in retirement benefit
obligation
2016 2015
GBP000 GBP000
Retirement benefit obligation at start of
the year 22,000 21,854
Current service cost 49 86
Interest cost on retirement benefit obligation 799 836
Contributions by employees 18 28
Benefits paid and transfers out (875) (968)
Actuarial losses 4,262 164
Retirement benefit obligation at end of year 26,253 22,000
Change in fair value of scheme assets during the year
2016 2015
GBP000 GBP000
Fair value at start of the year 20,040 20,156
Interest income 730 776
Actual return on assets less interest 2,299 (345)
Employer contributions 297 443
Member contributions 18 28
Benefits paid (875) (968)
Administration costs (52) (50)
Fair value at end of the year 22,457 20,040
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the percentage amounts shown below:
2016 2015
Change in Change in
defined
Change in defined benefit Change in benefit
Assumption assumption obligation assumption obligation
Discount rate +/- 0.5% pa + 8% / - 7% +/- 0.5% pa +/- 7%
RPI and CPI inflation +/- 0.5% pa +/- 3% +/- 0.5% pa +/- 3%
Future salary increases n/a n/a +/- 0.5% pa +/- 1%
Assumed life expectancy + 1 year + 4% + 1 year + 3%
b) Defined contribution schemes and personal pension plans
The Group operates a small number of defined contribution pension schemes and contributes to a number of personal pension plans. The total expense for these schemes during the year was GBP469,000 (2015: GBP1,022,000).
9. BASIS OF PREPARATION
The financial information set out above for the years ended 30 September 2016 and 2015 ("the financial information"), has been prepared with consistent accounting policies and in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and are effective at 30 September 2016.
The financial information does not constitute the statutory financial statements (as defined by S434 of the Companies Act 2006) for those years. The 2016 financial statements, upon which the auditors issued an unqualified opinion and did not contain a statement either under sections 498(2) or 498(3) of the Companies Act 2006, have not yet been delivered to the Registrar.
The 2015 financial statements have been delivered to the Registrar and included the auditors' report which was unqualified and did not contain a statement either under sections 498(2) or 498(3) of the Companies Act 2006.
The annual report and accounts for the year ended 30 September 2016 will be posted to shareholders. Copies will be available from the Company's registered office, Unit 3 Calder Close, Wakefield WF4 3BA and will be made available on the Company's website at www.redhallgroup.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BRBDDRXGBGLL
(END) Dow Jones Newswires
December 07, 2016 02:00 ET (07:00 GMT)
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