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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| U.k. Spac Plc | LSE:SPC | London | Ordinary Share | GB00B3CQW227 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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| 0.00 | 0.00% | 0.205 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
TIDMMOGP
RNS Number : 3761A
Mountfield Group plc
07 June 2016
Mountfield Group Plc
("Mountfield", the "Group" or the "Company")
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2015
Mountfield, the AIM listed construction company is pleased to announce its Final Results for the year ended 31 December 2015.
The Final Results will be posted to the Company's website on: www.mountfieldgroupplc.com .
Contacts:
Mountfield Group Plc 01245 237 527 Andy Collins, Chief Executive Officer WH Ireland Limited (Nominated adviser) 0207 220 1666 Chris Fielding, Head of Corporate Finance
STRATEGIC REPORT
FOR THE YEARED 31 DECEMBER 2015
CHAIRMAN'S REPORT
Key Features
-- Group moves back into profit -- Connaught has another strong year -- MBG shows the benefits of the overhaul of its business. -- Both businesses looking strong for 2016.
-- Turnover: GBP13.033m (2014: GBP11.802m)
-- Operating profit: GBP203,895 (2014: GBP74,385)
-- EBITDA: GBP218,314 (2014: GBP89,557)
-- PBT: GBP177,117 (2014: PBT (Excluding impairment) GBP50,244)
-- Earnings per share: 0.046p (2014: (1.53p))
2015 was a year of major positive change for Mountfield Group Plc ("Group"). Connaught Access Flooring Limited ("CAF") continued to perform extremely well and further strengthened its position among the small number of companies able to compete for the largest commercial flooring contracts. The significantly rationalised Mountfield Building Group Limited (including its subsidiary MBG Construction Limited) ("MBG") showed that it is on a sustainable and profitable path to recovery in 2016 and onwards.
The Group's operating profit was increased from GBP74,385 in 2014 to GBP203,895 in 2015 with CAF continuing to be the principal driver of the Group's revenue and profits (with a PBT of GBP467,428 against GBP240,885 in 2014) and continues to be a leader in its field.
MBG's transformation, which followed the extensive rationalisation that was completed in April 2015, into a construction company with a substantially reduced cost structure and a business strategy that limited its choice of contracts to those where consistent margins are paired with low risk. It is now trading profitably and has excellent prospects and it was only the effect of two legacy contracts that were taken on in 2013 and 2014 under the previous strategy that prevented it from recording a profit in 2015. Excluding these two legacy contracts MBG would have produced an operating profit of GBP400,285 in 2015.
So far in 2016 MBG and secured works totaling GBP3m and is involved in negotiations on a number of other works including those for its long standing client base.
The Group's highlight was clearly CAF's contract to supply and install 70,000 m2 of flooring at a new City of London HQ. The contract has proceeded well and is likely on completion to have produced revenue of GBP4m in 2015, with an additional GBP1.5m expected in 2016. In addition the Company has complimented the larger contracts by further developing its special works division, which produces strong margins. Combined with its core business CAF produced a turnover of GBP7.5m in 2015.
Outlook
The outlook for CAF continues to be strong into 2016/17 and based on the volume of high quality tenders for large commercial flooring contracts combined with expected developments into the supply and installation of new products associated with CAF's core activities, the Board believes that the prospects for CAF are increasingly bright for a number of years.
Due to the significant progress made by the Group Companies in 2015 and to date the Board is satisfied that both will perform strongly during the remainder of 2016 and in 2017. CAF is already involved in negotiations of large scale flooring contracts and MBG is trading profitably since the restructuring of its business.
AGM Resolutions - Loan Notes
At the AGM it is proposed that resolutions that provide for the conversion of outstanding Loan Notes (originally issued in October 2008 to Andy Collins and Graham Read) into Founder Shares. These Founder Shares will not be quoted on any exchange or carry a right to vote or to receive a dividend. The shares will carry the right to receive, collectively the first GBP2.3m of the amount by which the consideration arising on a sale by shareholders in Group attributable to CAF and/or MBG exceeds GBP20m.
Peter Jay
Executive Chairman
CEO's REPORT
The Group Board is currently comprised of:
Peter Jay - Executive Chairman - in addition to being Group Chairman Peter also manages the Group's relationships with its nomad, brokers and professional advisers. Peter was formerly a corporate lawyer and a partner in DAC Beachcroft LLP.
Andy Collins - Group Chief Executive - Andy is responsible for managing the business of the Group and also that of its subsidiary, CAF, a specialist supplier and installer of flooring for commercial properties whose business and reputation he has developed significantly since appointment in 2004. Before joining the Group, Andy was a Divisional Financial Director at ISG Plc.
Graham Read - Managing Director of MBG - Graham founded the business of MBG in 1986 and has had over 20 years' experience in the construction industry.
Adrian Sainsbury - Non-Executive Director - Adrian is a senior banker in the City of London and had previously worked for a number of leading banks in various capacities.
The Board is supported by Andy May, a partner in the firm of Barnes Roffe LLP. Andy attends meetings of the Group's Board and oversees its accounting and finance functions.
Group Companies
The Group is comprised of two principal trading companies, MBG and CAF.
CAF is a leading supplier and installer of raised access flooring systems to main contractors and corporate end users for office and data centre installations.
It has established itself as one of the few recognised specialists for the flooring elements of fitting out contracts in commercial office space for new build and refurbishment projects for corporate end users such as BP, HP, Linklaters, Merrill Lynch, Reed Smith, BBC, Standard Chartered Bank, Henderson Global, Lockton and Unilever.
The current optimism in the fit-out sector which extends into 2018 plays to CAF's strengths as it enables the Company to present its professionalism and credentials and compete on quality of service, expertise and experience, rather than simply on price.
Following requests from clients, efforts are under way to extend the range and nature of the products that the Company supplies and installs to others used in the fit-out process.
MBG comprises the construction division of the Group and in addition to its extensive experience of undertaking work for the data centre sector MBG also undertakes specialist construction work for end used clients in areas such as property fabric repair and maintenance, property renovation, fit-out of office, retail and leisure premises and construction management services for clients including architectural practices.
In addition, MBG is retained to undertake building fabric repair and maintenance works on a nationwide basis for a large proportion of the property portfolio of a leading telecoms operator.
Finance
The Group is financed from the cash it generates from its operations, with the support of a bank overdraft facility of GBP600,000. Post year end it has been agreed that it will be replaced by a mixture of term loan and overdraft, totalling GBP450,000.
The construction market
The Group continues to experience extremely strong levels of activity in terms of enquiries and tenders and the Board is confident as to the strength and sustainability of the current strong demand for services provided by the Group.
Group's strategy
The Board strategy is for the Group to become a highly profitable, mid-sized operation that provides specialist construction and flooring services in a number of diverse but related areas but with a particular focus on the fit-out sector. The Group's reputation has been built on its ability to undertake and to manage specialist construction services to a high level of quality and to deliver the completed project to the client on time. This will remain at the core of its strategy.
Principal risks
The principal risks and uncertainties facing the Group relate to:
Attraction and retention of key employees
The Group's future success is substantially dependent on the continued services and performance of its directors, senior management and other key personnel and its ability to continue to attract and retain highly skilled and qualified personnel.
The senior executive directors of the business all have significant shareholdings in the parent company and are all permanent employees. The other senior management and key personnel, most of whom have been with the Company for a long time, are participating in the Company's share option scheme which was introduced in 2012.
Economic downturn and other macroeconomic factors
The Group's success is substantially dependent on the general level of economic activity and economic conditions in the United Kingdom.
Many of the Group's contracts, including renewals or extensions of previous contracts, are awarded through competitive bidding processes. Any downturn in the economy, or any other macroeconomic factor, either in the UK or globally, may reduce the number of contracts coming up for bidding.
The competitive bidding processes present a number of additional risks, including the incurring of substantial cost and managerial time to prepare bids and proposals for contracts that the Group may not ultimately win. The Group may face additional competition in the bidding process either from existing competitors or new market entrants.
The Company is seeking to mitigate its exposure to the sectors in which it currently operates by diversifying its client base and in particular expanding into closely aligned areas of activity. It is also seeking to diversify by modest investment in new businesses in the same sector.
Reliance on key customers and clients
The business of the Group is dependent upon the continuing contracts that it has, and relationships that it has developed, with certain customers.
Whilst signed contracts are in place with key customers, the successful completion and timing of contracted projects are not guaranteed and are susceptible to external factors outside of the control of the Group. Similarly, contracted projects may in some circumstances be susceptible to delays or variation by customers or be affected by unforeseen changes in circumstances relating to the market, technology, legislation, economic or other business factors. This may affect the cash flow and subsequent performance of the Group.
The Group works with a well-established client base and the performance of individual projects is monitored on at least a monthly basis by board members to identify any issues with specific projects.
Reliance on Subcontractors
The Group utilises subcontractors on a project-by-project basis to meet contractual obligations. Such projects will rely on the subcontractors performing their duties and obligations, not only in terms of timely delivery but also in terms of their performance obligations. Any such non-performance may result in time and cost over-runs on the Group's projects and reduce the value of its returns.
Subcontractors are vetted by senior management and normally engaged to work on closely defined and managed aspects of contracts. Most subcontractors have a long standing trading history with the Group.
Health and safety
The Group undertakes Construction activities, often working within difficult conditions and with heavy machinery which if improperly used could result in personal injury or in extreme cases, fatalities.
The Group takes the health and safety of its employees and clients very seriously and employs Health and Safety advisors on all significant contracts. It also has a firm of Health and Safety Advisors with whom it consults on a regular basis.
Key performance indicators
The Directors use a number of performance indicators which are used to manage the business but, as with most businesses the focus in the Statement of Comprehensive Income at the top level is on sales, margins, staff numbers and overheads compared to budget and the prior year. In the Statement of Financial Position the focus is on managing working capital. The key performance indicators are disclosed in the Strategic Report.
Financial instruments
Details of the Group's financial risk management objectives and policies are included in note 19 to the financial statements.
Andrew Collins
Chief Executive Officer
DIRECTORS' REPORT FOR THE YEARED 31 DECEMBER 2015
The directors present their annual report and audited financial statements for the year ended 31 December 2015.
Principal activities
The principal activities of the Group are the supply of fit-out services (and, in particular the supply and installation of flooring systems) to data centres, office, retail and other commercial premises and of specialist construction services including those related to property fabric repair and refurbishment.
Review of business
A detailed review of the development of the business is contained in the Chairman's and Chief Executive's Statement, which are included in the Strategic Report.
Results
The Group made a pre-tax operating profit from continuing operations of GBP177,117 (2014: Loss GBP3,839,828) for the year ended 31 December 2015 on turnover of GBP13,033,039 (2014: GBP11,802,018).
At 31 December 2015 the Group had net assets of GBP2,103,583 (2014: GBP1,984,407).
Dividends
The Directors do not propose payment of any dividends for the year ended 31 December 2015.
Directors
The Directors who served during the year were:
P H Jay
G J Read
A J Collins
A J Sainsbury
Charitable Donations
During the year the Group made charitable donations totaling GBPnil (2014: GBP5,510).
Substantial Shareholdings
So far as the Directors are aware the parties who are directly or indirectly interested in 3% or more of the nominal value of the company's share capital at 31 December 2015 are as follows:
Hot Features
Premium
Number of shares % Ordinary share
issued capital
Peter Jay 24,738,520 9.73%
Graham Read 84,374,654 33.19%
Andy Collins 32,300,000 12.70%
In addition, the directors are aware of the following nominee shareholdings as at 31 December 2015:
Number of shares % Ordinary share
issued capital
Barclayshare Nominees
Limited 11,708,176 4.61%
Hargreaves Lansdown
(Nominees) Limited 8,621,046 3.39%
HBSC Global Custody
Nominee (UK) Limited 8,411,728 3.31%
Creditor payment policy
The Group's current policy concerning the payment of trade creditors is to:
a) Settle the terms of payment with suppliers when agreeing the terms of each transaction;
b) Ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
c) Pay in accordance with the Group's contractual and other legal obligations.
At the year end trade creditors represented 86 days' expenses.
Going Concern
The Directors have prepared and reviewed financial forecasts and the cash flow requirements to meet the Group and the Company's financial objectives. The Directors are satisfied that, taking into account the current cash resources and facilities available to the business and its future cash requirements, it is appropriate to prepare accounts on a going concern basis.
Disclosure of information to auditors
Each of the Directors who are in office at the date when this report is approved has confirmed that, as far as they are aware, there is no relevant audit information of which the auditor's are unaware. Each of the Directors have confirmed that they have taken all the steps that they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that the auditor's are aware of such information.
Auditors
A resolution proposing the re-appointing of Adler Shine LLP as auditor will be put to the members at the next Annual General Meeting.
On behalf of the Board
Andrew Collins
Director
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. The Directors have chosen to prepare the financial statements for the Group and the Company in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
International Accounting Standards requires that financial statements present fairly for each financial year the company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for the preparation and presentation of financial statements". In virtually all circumstances a fair presentation will be achieved by compliance with all applicable IFRSs. A fair presentation also requires directors to:
-- consistently select and apply appropriate accounting policies;
-- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and
-- provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF MOUNTFIELD GROUP PLC
We have audited the financial statements of Mountfield Group plc for the year ended 31 December 2015 which comprise the Group and Parent Company Statement of Financial Position, the Group Statement of Comprehensive Income, the Group and Parent Company Statements of Cash Flow, the Group and Parent Company Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors' Responsibilities set out on page 9, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report and financial statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's and the Parent Company's affairs as at 31 December 2015 and of the Group's profit for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the group Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the Parent Company financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or -- we have not received all the information and explanations we require for our audit.
Christopher Taylor FCA (Senior statutory auditor)
for and on behalf of Adler Shine LLP Aston House, Cornwall Avenue
Chartered Accountants London N3 1LF
Statutory Auditor
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2015
2015 2014
Note GBP GBP
Revenue 3 13,033,039 11,802,018
Cost of sales 4 (11,155,909) (10,005,744)
------------- --------------
Gross profit 1,877,130 1,796,274
Administrative expenses 5 (1,673,235) (1,721,889)
------------- --------------
Operating profit - before
impairment 203,895 74,385
Impairment of Goodwill 8 - (3,914,213)
Operating profit/(loss) 203,895 (3,839,828)
Net finance costs 5 (26,778) (24,141)
------------- --------------
Profit/(loss) before
income tax 177,117 (3,863,969)
Income tax expense 6 (60,728) (35,605)
Profit/(loss) for the
year and total comprehensive
income 116,389 (3,899,574)
Earnings per share 7
Basic earnings/(loss)
per share 0.046p (1.534p)
Diluted earnings/(loss)
per share 0.046p (1.534p)
======= =========
There are no recognised gains and losses other than those passing through the Statement of Comprehensive Income.
As permitted by Section 408 of the Companies Act 2006, no separate Statement of Comprehensive Income is presented in respect of Mountfield Group Plc. Its profit for the year ended 31 December 2015 was GBP69,490 (2014: loss GBP5,793,810).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
2015 2014
Note GBP GBP
ASSETS
Non-current assets
Intangible assets 8 6,874,308 6,874,308
Property, plant and
equipment 9 102,213 108,966
Deferred income tax
assets 16 346,304 407,032
------------ ------------
7,322,825 7,390,306
------------ ------------
Current assets
Inventories 10 72,835 82,299
Trade and other receivables 11 2,345,797 3,435,142
Cash and cash equivalents 12 350,232 185,064
------------ ------------
2,768,864 3,702,505
------------ ------------
TOTAL ASSETS 10,091,689 11,092,811
============ ============
EQUITY AND LIABILITIES
Issued share capital 13 254,244 254,244
Share premium 1,490,682 1,490,682
Share based payments
reserve 68,871 66,084
Capital redemption reserve 7,500 7,500
Merger reserve 12,951,180 12,951,180
Reverse acquisition
reserve (2,856,756) (2,856,756)
Retained earnings (9,812,138) (9,928,527)
------------ ------------
TOTAL EQUITY 2,103,583 1,984,407
------------ ------------
Current liabilities
Trade and other payables 14 3,532,971 4,252,826
Short-term borrowings 15 1,403,568 1,783,833
Finance lease liabilities 15 4,147 6,635
Income tax - 13,882
------------ ------------
4,940,686 6,057,176
Non-current liabilities
Loan notes 15 3,047,420 3,046,947
Finance lease liabilities 15 - 4,281
7,988,106 9,108,404
------------ ------------
TOTAL EQUITY AND LIABILITIES 10,091,689 11,092,811
============ ============
The financial statements were approved by the board on 6 June 2016
Andrew Collins
Director
COMPANY REGISTRATION NO. 06374598
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2015
2015 2014
Note GBP GBP
Cash flows from operating
activities
Operating profit 203,895 74,385
Adjusted for:
Depreciation 14,418 15,172
Share-based payment charge 2,787 30,325
Decrease/(increase) in
inventories 9,464 (1,811)
Decrease/(increase) trade
and other receivables 1,076,972 (191,229)
(Decrease) in trade and
other payables (707,481) (79,564)
----------- ----------
Cash generated in operations 600,055 (152,722)
Finance costs (33,993) (31,145)
Finance income 7,215 7,004
Taxation paid (13,881) (91,349)
----------- ----------
Net cash inflow/(outflow)
from operating activities 559,396 (268,212)
----------- ----------
Cash flows from investing
activities
Purchases of property,
plant and equipment (7,667) (9,753)
Net cash used in investing
activities (7,667) (9,753)
----------- ----------
Cash flows from financing
activities
Finance lease rentals (6,768) (5,730)
Repayment of non-convertible
loan notes (305,790) (325,582)
Repayment of short-term
loans (161,419) (107,469)
----------- ----------
Net cash flows (used in)/generated
from financing activities (473,977) (438,781)
----------- ----------
Net cash increase/(decrease)
in cash and cash equivalents 77,752 (716,746)
Cash and cash equivalents
brought forward (502,740) 214,006
----------- ----------
Cash and cash equivalents
carried forward 12 (424,988) (502,740)
=========== ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2015
Share
based Capital Reverse
Share Share payment redemption Merger acquisition Retained
capital premium reserve reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2014 254,244 1,490,682 329,781 7,500 12,951,180 (2,856,756) (6,322,975) 5,853,656
Total
comprehensive
income
for the
year - - - - - - (3,899,574) (3,899,574)
Share
based
payment
charge - - 30,325 - - - - 30,325
Cancelled
share
options - - (294,022) - - - 294,022 -
Lapsed
Warrants
At 31
December
2014 254,244 1,490,682 66,084 7,500 12,951,180 (2,856,756) (9,928,527) 1,984,407
Total
comprehensive
income
for the
year - - - - - - 116,389 116,389
Share
based
payment
charge - - 2,787 - - - - 2,787
At 31
December
2015 254,244 1,490,682 68,871 7,500 12,951,180 (2,856,756) (9,812,137) 2,103,583
===================== ===================== ===================== ===================== ===================== ===================== ============ ==============
Merger Reserve
The merger reserve exists as a result of the acquisitions of Mountfield Building Group Limited, MBG Construction Limited, Connaught Access Flooring Holdings Limited and Mountfield Land Limited where the consideration included the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 2006. The merger reserve represents the difference between the nominal value of the share capital issued by the Company and the fair value of those shares at the date of acquisition.
Reverse Acquisition Reserve
The reverse acquisition reserve exists as a result of the method of accounting for the acquisition of Mountfield Building Group Limited and MBG Construction Ltd (note 1.5).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2015
1 Accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.
1.1 General information
Mountfield Group plc is a company incorporated in England and Wales. The registered number of the Company is 06374598. The address of its registered office is 3C Sopwith Crescent, Wickford Business Park, Wickford, Essex SS11 8YU.
1.2 Going concern
At 31 December 2015, the Group had a net overdraft balance of GBP424,988.
The group has agreed facilities with its bank and the revised agreements should be executed shortly after the approval of these financial statements. The new facility is made up of a three year fixed term loan of GBP350,000 and an overdraft of GBP100,000. Based on the current working capital forecast, the Group is unlikely to need additional funds within twelve months of the date of approval of these financial statements in order to maintain its proposed work levels of expenditure providing contracts progress as planned, new contracts are secured and the Group is able to continue successfully managing its cash resources. After making enquiries and considering the assumptions upon which the forecasts have been based, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
1.3 IFRS compliance and adoption
Statement of compliance with IFRS
These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs), IFRIC Interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The adoption of these standards has not resulted in any changes to the Group's accounting policies and has not affected amounts reported in prior years.
The financial statements have been prepared under the historical cost basis.
Sources of estimation uncertainty
The preparation of financial statements under IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an ongoing basis and any revision to estimates or assumptions are recognised in the period in which they are revised and in future periods affected.
Significant judgements
The material areas in which estimates and judgements are applied are as follows:
Goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which the goodwill has been allocated. The value in use calculation requires the Company to estimate future cashflows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Details regarding the goodwill carrying value and assumptions used in carrying out the impairment reviews are provided in note 8.
Receivables
The Group reviews the net recoverable value of its accounts receivables on a periodic basis to provide assurance that recorded accounts receivables are stated net of any required provision for impairment. Factors that could impact recoverability include the financial propriety of customers and related economic trends. Changes in these factors that differ from managements estimates can result in an adjustment to the carrying value and amounts charged to income in specific periods. More details on gross balances and provisions made are included in note 11.
Accounting for construction contracts
In accordance with IAS 11 "Construction Contracts", management is required to estimate total expected contract costs and the percentage of contract completion in determining the appropriate revenue and profit to recognise in the period. The Group uses the work of expert professional Chartered Surveyors to determine accurately the level of work that has been completed by the year-end. The Group also has appropriate control procedures to ensure that all estimates are determined on a consistent basis and are subject to appropriate review and authorisation.
Significant judgements
Share-based payments
The estimates of share-based payments costs require that management selects an appropriate valuation model and makes decisions on various inputs into the model, including the volatility of its own share price, the probable life of the options before exercise and behavioral consideration of employees.
Deferred taxation
The Group provides for deferred taxation using the liability method. Deferred tax assets are recognised in respect of tax losses where the Directors believe that it is probable that future profits will be relieved by the benefit of tax losses brought forward. The Board considers the likely utilisation of such losses by reviewing budgets and medium term plans for each taxable entity within the Group. If the actual profits earned by the Group's taxable entities differ from the budgets and forecasts used then the value of such deferred tax assets may differ from that shown in these financial statements.
Presentation and functional currency
The financial statements are presented in pounds sterling, which is the Group's functional currency.
1.4 Standards and interpretations
At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:
Effective date
(period beginning
on or after)
IFRS Amendments resulting from September 1 January 2016
5,7, 2014 Annual improvements to
IAS19,34 IFRSs
IFRS Finalised version, incorporating 1 January 2018
9 requirements for classification
and measurement, impairment,
general hedge accounting and
de-recognition
IFRS Amendments regarding the sale 1 January 2016
10 or contribution of assets between
an investor and its associate
or joint venture
IFRS Amendments regarding the application 1 January 2016
10 of the consolidation exception
IFRS Amendments regarding the accounting
11 of acquisition of an interest 1 January 2016
in a joint operation
IFRS Amendments regarding the application 1 January 2016
12 of the consolidation exception
IFRS Revenue and contracts with 1 January 2017
15 customers
IAS 1 Amendments resulting from the 1 January 2016
disclosure initiative
IAS 16 Amendments regarding the classification 1 January 2016
of acceptable methods of depreciation
and amortisation
IAS 16 Amendments bring bearer plants 1 January 2016
into scope of IAS 16
IAS 27 Amendments reinstating the 1 January 2016
equity method as an accounting
option for investments in subsidiaries,
joint ventures and associated
in an entity's separate financial
statements
IAS 28 Amendments regarding the sale 1 January 2016
or contribution of assets between
an investor and its associate
joint venture
IAS 28 Amendments regarding the application 1 January 2016
of the consolidation exception
IAS 38 Amendments regarding the clarification 1 January 2016
of acceptable methods of depreciation
and amortisation
IAS 41 Amendments to bring bearer 1 January 2016
plants into scope of IAS 16
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the Group's financial statements.
1.5 Basis of consolidation
Subsidiaries
The Group financial statements consolidate the financial statements of the Company and all its subsidiaries. Subsidiaries include all entities over which the Group has the power to govern financial and operating policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control commences until the date that control ceases. Intra-group transactions are eliminated in preparing the Consolidated Financial Statements.
A list of the significant investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 2 to the Company's separate financial statements.
Business combinations and goodwill
On 16 October 2008, Mountfield Group plc ("the Company") acquired the entire issued share capital of Mountfield Building Group Limited, which has one wholly owned subsidiary, MBG Construction Limited (the "MBG Group") acquired in August 2008. The consideration of GBP7,622,000 was satisfied by the issue of 51,220,000 Ordinary Shares of 0.1p each at a price of 10p per share and by the issue of GBP2,500,000 unsecured non-convertible loan notes.
As a result of these transactions, the former shareholders of MBG Group became the majority shareholders in the Company. Accordingly, the substance of the transaction was that MBG Group acquired the Company in a reverse acquisition.
Under IFRS 3 'Business Combinations', the acquisition of MBG Group has been accounted for as a reverse acquisition.
The acquisitions of Connaught Access Flooring Limited, MBG Construction Limited and Mountfield Land Limited are accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree plus any costs directly attributable to the business combination.
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of the cost of acquisition over the fair value of the Group's share of the net identifiable assets and contingent liabilities acquired. Identifiable assets are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised but tested annually for impairment or when trigger events occur, and is carried at cost less accumulated impairment losses.
1.6 Revenue recognition
Revenue is stated exclusive of VAT and consists of sales of services to third parties.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Retentions are recognised throughout the life of a contract and are deducted from the sales invoice.
Revenue relating to contracts includes the amount initially agreed in the contract plus any variations in contract work to the extent that it is probable they will result in revenue and can be reliably measured. As soon as the outcome of the contract can be measured reliably, revenue and expense is recognised in the statement of comprehensive income on a stage of completion basis. The stage of completion is determined by reference to a survey of work performed. Any losses are recognised immediately in the statement of comprehensive income as soon as they are foreseen.
1.7 Contract work in progress
Revenue from fixed price construction contracts is recognised on the percentage of completion method, measured by reference to the percentage of contract costs incurred for work performed to date to the estimated total contract costs or the proportion of the value of work done to the total value of work under the contract, except where these would not be representative of the stage of completion. Full provision is made for all known or expected losses on individual contracts immediately once such losses are foreseen.
1.8 Amounts recoverable on long term contracts
Profit on long term contracts is taken as the work is carried out if the final outcome can be assessed with reasonable certainty. The profit included is calculated on a prudent basis to reflect the proportion of the work carried out at the year end, by recording turnover and related costs as contract activity progresses. Turnover is calculated as that proportion of total contract value which costs incurred to date bear to total expected costs for that contract. Revenues derived from variations on contracts are recognised only when they have been accepted by the customer. Full provision is made for losses on all contracts in the year in which they are first foreseen. Amounts which are recoverable on long-term contracts are shown within debtors under the heading 'Amounts Recoverable on Contracts' which have not yet been invoiced and are stated net of discounts allowed.
1.9 Share-based payments
The Group makes equity-settled share-based payments to its employees and directors. The fair value of options and warrants granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options and warrants granted is measured based on the Black-Scholes framework, taking into account the terms and conditions upon which the instruments were granted. At each balance sheet date, the Company revises its estimate of the number of options and warrants that are expected to become exercisable.
1.10 Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the statement of comprehensive income in the year to which they relate.
1.11 Impairment
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
1.12 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation.
Property, plant and equipment is depreciated over the estimated useful life of the asset, as follows:
Freehold land Not depreciated Freehold buildings 2% per annum straight line Leasehold improvements Over the period of the lease Fixtures, fittings and equipment 10% per annum reducing balance Plant and equipment 20% - 25% per annum straight line Motor vehicles 20% - 25% per annum straight line 1.13 Leasing
A lease is classified as a finance lease if it transfers substantially all the risks and rewards of ownership. All other leases are classified as operating leases. Classification is made at the inception of the lease.
Assets obtained under finance leases are capitalised as property, plant and equipment and depreciated over the shorter of the lease term and their useful lives. Obligations under such arrangements are included in payables net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the statement of comprehensive income so as to produce constant periodic rates of charge on the net obligations outstanding in each period.
Rentals paid under operating leases are charged to the statement of comprehensive income as incurred on a straight line basis over the lease term.
1.14 Inventories
Inventories are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving items. Cost includes direct materials, direct labour and those overheads that have been incurred in bringing the inventory to its present location and condition.
1.15 Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
The financial instruments, which excludes current receivables and payables, comprise cash or overdrafts and unsecured non-convertible loan notes. The Directors consider the fair value not to be materially different to the carrying value for the financial instruments. During the year under review, the Group did not enter into derivative transactions and did not undertake trading in any financial instruments.
1.16 Trade and other receivables
Trade receivables are recognised at fair value less any provision for impairment. A provision for impairment is made when collection of the full amount is no longer probable. Bad debts are written off when identified. The fair value of trade and other receivables are equivalent to their book values as set out in the financial information.
1.17 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand, demand deposits and other short-term highly liquid investments that is readily convertible to a known amount of cash and is subject to an insignificant risk of change in value.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents net of outstanding bank overdrafts.
1.18 Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
1.19 Share capital
The Company has one class of ordinary share, which carries no rights to fixed income. All ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company's residual assets.
Ordinary shares issued by the Company are classified as equity and recorded at fair value on initial recognition received, net of direct issue costs.
1.20 Trade and other payables
Trade payables are initially recognised at fair value and subsequently at amortised cost. The fair value of the trade and other payables are equivalent to their book values as set out in the financial information.
1.21 Taxation
The taxation charge represents the sum of current tax and deferred tax.
The current tax charge is based on the taxable profit/loss for the period using the tax rates that have been enacted or substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred tax is provided using the liability method, in respect of temporary differences between the carrying amount of the assets and liabilities and their tax base. Deferred tax is recognised in the statement of comprehensive income, except when the tax relates to items charged or credited directly in equity, in which case the tax is also recognised in equity.
Deferred tax assets are recognised only when it can be regarded as probable that there will be suitable taxable profits in the foreseeable future against which the deductible temporary difference can be utilised. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date.
2 Segmental reporting
Segmental information is presented in respect of the Group's business segments, which are based on the Group's management and internal reporting structure as at 31 December 2015. The chief operating decision-maker has been identified as the Board of Directors (the Board). The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports and on the internal report's structure.
Segment performance is evaluated by the Board based on revenue and profit before tax (PBT). Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis, such as centrally managed costs relating to individual segments and costs relating to land used in more than one individual segment.
Given that income taxes and certain corporate costs are managed on a centralised basis, these items are not allocated between operating segments for the purposes of the information presented to the Board and are accordingly omitted from the analysis below.
The Group comprises the following segments:
Construction
Direct contracting and trade contracting services to both main contractors and corporate end users.
Fit-out
Providing raised flooring systems to both main contractors and corporate end users.
Segmental operating performance
2015 2014
-------------------- ---------------------
Profit Profit
/(loss) /(loss)
before before
Revenue tax Revenue tax
GBP'000 GBP'000 GBP'000 GBP'000
Construction 5,918 (420) 6,809 (4,490)
Fit-out 7,517 467 5,374 241
--------- --------- --------- ----------
13,435 47 12,183 (4,249)
Inter-segmental revenue
and unallocated (402) 130 (381) 385
--------- --------- --------- ----------
13,033 177 11,802 (3,864)
========= ========= ========= ==========
Business segments assets and liabilities
2015 2014
----------------------- ------------------------
Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000
Construction 1,380 3,300 2,652 4,651
Fit-out 1,838 1,314 1,560 887
-------- -------------
3,218 4,614 4,212 5,538
Goodwill - Construction 2,000 - 2,000 -
Goodwill - Fit-out 4,874 - 4,874 -
Other unallocated assets
& liabilities - 3,374 7 3,570
-------- ------------- --------- -------------
10,092 7,988 11,093 9,108
======== ============= ========= =============
Unallocated assets consist of deferred tax, trade and other receivables and cash held by the Parent Company. Unallocated liabilities consist of trade and other payables and interest bearing loans owed by the Parent Company.
Other segment information
2015 2014
GBP'000 GBP'000
Depreciation included in segment
results
Construction 6 7
Fit-out 8 8
-------- --------
14 15
======== ========
Revenue by geographical destination
Revenue is attributable to the United Kingdom of GBP12,996,264 (2014 - GBP11,559,326) and other EU of GBP36,775 (2014 - GBP242,692) markets.
Total assets including property, plant and equipment and intangible assets are all held in the United Kingdom.
3 Construction contracts
2015 2014
GBP GBP
Contract revenue recognised
in relation to construction
contracts in the year and
retentions 13,033,039 11,802,018
=========== ===========
For contracts in progress
at the balance sheet date:
Aggregate cost incurred
to date 8,413,522 6,377,341
Recognised profit to date 2,375,900 1,027,629
Retentions due 62,293 160,101
=========== ===========
Major customers
Total group revenue to four customers all relating to construction and fit-out, totalled GBP9,111,870 split as follows:
Construction 2015 2014
GBP GBP
Customer 1 1,528,038 1,904,986
Customer 2 1,828,443 1,144,580
---------- ----------
3,356,481 3,049,566
========== ==========
Fit-out 2015 2014
GBP GBP
Customer 1 1,533,962 4,281,525
Customer 2 - 389,336
Customer 3 4,221,427 -
---------- ----------
5,755,389 4,670,861
========== ==========
4 Cost of sales 2015 2014
GBP GBP
Direct costs 11,155,909 10,005,744
Adjustment to amount receivable on long - -
term contracts
----------- -----------
Total cost of sales 11,155,909 10,005,744
=========== ===========
5 Other income and expenses
2015 2014
GBP GBP
Finance expenses
Interest on finance leases (913) (784)
Other interest (4,160) (3,072)
Bank interest (28,920) (27,289)
--------------- -----------------
Interest paid (33,993) (31,145)
Finance income
Bank interest received - -
Other interest received 7,215 7,004
--------------- -----------------
Net finance costs (26,778) (24,141)
=============== =================
Administrative expenses include:
2015 2014
GBP GBP
Depreciation of property, plant
and equipment
- owned by the Group 11,697 11,066
- held under finance leases 2,722 4,106
Operating lease rentals - other 51,675 47,934
Auditors remuneration
Fees payable to the company's
auditor for the audits of the
parent company, consolidated
financial statements and the
subsidiaries 37,000 35,750
======= =======
Average number of employees
The average number of employees (including executive Directors) was:
2015 2014
No. No.
Administration 8 8
Cost of sales 17 18
Management 11 12
----- -----
36 38
===== =====
Wages and salaries
2015 2014
GBP GBP
Wages and salaries 1,722,879 1,786,948
Social security costs 188,415 194,030
Post-employment benefits 43,424 58,775
---------- ----------
1,954,718 2,039,753
========== ==========
Key management personnel compensation
2015 2014
GBP GBP
Short-term employee
benefits 11,329 13,060
Post-employment
benefits 42,000 58,775
------- -------
53,329 71,835
======= =======
Directors' remuneration
2015 2014
Salaries and fees Benefits in kind Post-employment benefit Total Total
GBP GBP GBP GBP GBP
G Read - - - - 15,827
A Collins 7,956 3,373 42,000 53,329 56,214
P Jay 50,000 - - 50,000 50,000
A Sainsbury 12,000 - - 12,000 8,000
------------------- ------------------ ------------------------ -------- --------
69,956 3,373 42,000 115,329 130,041
=================== ================== ======================== ======== ========
The remuneration as disclosed for G Read includes GBPnil (2014: GBP4,350) of pension contributions paid for his wife, J Read. The number of Directors for whom retirement benefits are accruing under money purchase pension schemes was 1 (2014:2).
6 Income tax expense
2015 2014
GBP GBP
Current tax
UK corporation tax - 13,881
-------------- --------------
Total current tax - 13,881
Deferred tax
Deferred tax debit - continuing
operations 60,728 21,724
-------------- --------------
Income tax expense 60,728 35,605
============== ==============
Factors affecting tax charge
Profit/(loss) before income
tax -continuing operations 177,117 (3,863,969)
-------------- --------------
Profit before income tax
multiplied by effective
rate of UK corporation tax
of 20.25% (2014: 21.49%) 35,866 (830,366)
Effects of:
Expenses not deductible
for tax purposes 35,573 867,143
Depreciation for period
in excess of capital allowances (2,765) 283
Tax losses not utilised
and carried forward (8,853) (18,721)
Other adjustments (23,955) (4,458)
Current tax charge - 13,881
============== ==============
7 Earnings per share
The basic earnings per share is calculated by dividing the earnings attributable to equity shareholders by the weighted average number of shares in issue. The diluted earnings per share is calculated by dividing the earnings attributable to equity shareholders by the weighted average number of shares in issue plus the number of warrants and share options.
2015 2014
Basic earnings per
share GBP GBP
Profit/(loss) for
the financial year 116,389 (3,899,574)
Weighted average number
of shares 254,244,454 254,244,454
=============== ===============
2015 2014
Diluted earnings per
share GBP GBP
Profit/(loss) for
the financial year 116,389 (3,899,574)
Number of shares 254,244,454 254,244,454
=============== ===============
8 Intangible assets
The carrying amount of goodwill relates to the construction and fit-out segments of the business.
Goodwill
GBP
Cost
At 1 January 2014 10,788,521
Additions -
-----------------
At 31 December 2014 10,788,521
Additions -
-----------------
At 31 December 2015 10,788,521
-----------------
Amortisation and impairment
At 1 January 2014 3,914,213
Impairment -
-----------------
Balance at 31 December
2015 3,914,213
-----------------
Net book value
At 31 December 2015 6,874,308
=================
At 31 December 2014 6,874,308
=================
Impairment of goodwill
Goodwill has been allocated for impairment testing to two groups of cash - generating units ('CGU') identified according to operating segments being Construction and Fit-out as disclosed in Note 2.
For the purposes of impairment testing of goodwill the carrying value of the CGUs (including goodwill) are compared to the recoverable amount of the CGUs and any deficits are provided. The carrying value of the CGUs includes only those assets that can be attributed directly, or allocated on a reasonable and consistent basis.
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on three year financial budgets approved by management. Cash flows beyond the three year period are extrapolated using the estimated growth rates stated below.
The key assumptions used in the value-in-use calculations for each CGU are as follows:
-- Terminal value based on 2% future growth in cash flows -- Discount rate of 7.37%
Revenue was based upon actual amounts measured in prior periods which were projected forward in accordance with expected trends.
Based on the assumptions above, no impairment of goodwill is deemed necessary.
9 Property, plant and equipment
Freehold and Plant Motor
leasehold Fixtures and fittings and equipment vehicles Total
GBP GBP GBP GBP GBP
Cost
At 1 January
2014 183,418 47,705 43,928 63,565 338,616
Additions - 2,367 7,386 - 9,753
At 31 December
2014 183,418 50,072 51,314 63,565 348,369
Additions - 6,483 1,185 - 7,668
At 31 December
2015 183,418 56,555 52,499 63,565 356,037
-------------- ----------------------------------------- ------------------------- --------------- -----------------------
Depreciation
At 1 January
2014 126,670 41,673 22,743 33,146 224,232
Charge for the
year 1,657 3,345 2,442 7,729 15,173
At 31 December
2014 128,327 45,018 25,185 40,875 239,405
Charge for the
year 1,657 3,303 2,732 6,727 14,419
At 31 December
2015 129,984 48,321 27,917 47,602 253,824
-------------- ----------------------------------------- ------------------------- --------------- -----------------------
Net book
value
At 31 December
2015 53,434 8,234 24,582 15,963 102,213
============== ========================================= ========================= =============== =======================
At 31 December
2014 55,091 5,054 26,129 22,690 108,964
============== ========================================= ========================= =============== =======================
The net book value of property, plant and equipment includes an amount of GBP5,444 (2014: GBP12,319) in respect of assets held under finance leases.
The net book value of freehold and leasehold property includes an amount of GBP3,636 (2014: GBP4,693) in respect of leasehold improvements to a property leased by Connaught Access Flooring Limited.
10 Inventories
2015 2014
GBP GBP
Materials and finished
goods 72,835 82,299
======= ==============
The amount of inventories recognised as expense during the year was GBP9,464 (2014 - GBP80,489).
11 Trade and other receivables
2015 2014
GBP GBP
Trade receivables 74,357 635,118
Contract retentions 570,214 590,790
Other receivables 27,357 147,171
Prepayments 33,163 54,776
Amounts recoverable on long
term contracts 1,640,706 2,007,287
Total trade and other receivables 2,345,797 3,435,142
========== ==========
Based on prior experience and an assessment of the current economic environment, management believes there is no further credit risk provision required in excess of the normal provision for impairment of trade receivables.
The average credit period taken on sales is 3 days. No interest is charged on overdue receivables. There is no material difference between the fair value of receivables and their book value.
Amounts recoverable on long-term contracts are stated net of discounts allowed of GBPNil (2014: GBP23,481).
The movement in the provision for impairment of trade receivables is as follows:
2015 2014
GBP GBP
Balance at 1 January 12,000 12,000
Charge/(credit) to the statement
of comprehensive income - -
------- ----------
Balance at 31 December 12,000 12,000
======= ==========
11 Trade and other receivables (continued)
The Group's trade and other receivables that were past due date but not impaired relate to a number of individual customers for whom there is no reason to believe that the debt is not recoverable. The ageing of these trade receivables and contract retentions is as follows:
2015 2014
GBP GBP
Trade receivables
Three to six months 9,271 21,358
Six to nine months - -
Nine to twelve months 11,000 181
More than twelve months 24,390 22,407
-------- -------
44,661 43,946
======== =======
Contract retentions
Three to six months 10,109 10,934
Six to nine months 4,874 9,775
Nine to twelve months 6,758 5,435
More than twelve months 126,147 55,023
-------- -------
147,888 81,167
======== =======
12 Cash and cash equivalents
2015 2014
GBP GBP
Cash at bank and in
hand 350,232 185,064
======== ========
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
At the balance sheet date the Group had a bank overdraft facility of GBP600,000 with Barclays Bank Plc, secured by a fixed charge over the book debts and property of the Group and a floating charge over all other assets of the Group. The directors have provided limited guarantees. Please see Note 21 for further details.
For the purpose of the cash flow statement, cash and cash equivalents comprise the following at 31 December 2015:
2015 2014
GBP GBP
Cash at bank and in
hand 350,232 185,064
Bank overdraft (775,220) (687,804)
---------- ----------
(424,988) (502,740)
========== ==========
13 Share capital
2015 2014
---------------------- ----------------------
Number GBP Number GBP
Allotted, called
up and fully paid
Ordinary shares
of 0.1p each 254,244,454 254,244 254,244,454 254,244
============ ======== ============ ========
Warrants
Details of the warrants outstanding during the period are as follows:
Weighted
average Weighted
remaining average
contractual exercise
life (years) Number price
GBP
At 1 January
2014 1.8 10,000,000 0.07
Granted - - -
Lapsed (1.8) (10,000,000) (0.07)
-------------- ---------------------------- ---------------------
At 31 December
2014 - - -
Granted - - -
Lapsed - - -
-------------- ---------------------------- ---------------------
At 31 December
2015 - - -
============== ============================ =====================
Share Options
At 31 December 2015, outstanding awards to subscribe for ordinary shares of 0.10p each in the Company granted in accordance with the rules of the Mountfield EMI share option scheme were as follows:
Number Weighted Weighted
average average
remaining exercise
contractual price
life (years) (pence)
Brought forward 33,499,994 1.51 3.00
Granted -
Cancelled (12,333,332)
Carried forward 21,166,662 1.51 3.00
============= ============== ==========
The fair value of the remaining share options has been calculated using the Black-Scholes model. The assumptions used in the calculation of the fair value of the share options outstanding during the year are as follows:
Grant Date 22 May 11 June 1 June
2012 2012 2014
Exercise period May 2013 June 2013 June 2015
- May - June - June
2016 2016 2018
Share price
at date of grant 1.5p 1.5p 2.7p
Exercise price 3.0p 3.0p 3.0p
Shares under
option 11,666,664 7,499,998 2,000,000
Expected volatility 57% 57% 69%
Expected life
(years) 2.5 2.5 2.5
Risk free rate 1.02% 1.02% 1.02%
Expected dividend
yield 0% 0% 0%
Fair value per
option 0.13p 0.13p 0.84p
Volatility was determined by reference to the standard deviation of expected share price returns based on a statistical analysis of monthly share prices over a 3 year period to grant date. All of the above options are equity settled and the charge for the year is GBP2,787 (2014: GBP30,325).
14 Trade and other payables (current)
2015 2014
GBP GBP
Trade payables 2,641,238 3,378,199
Other payables 65,678 61,265
Accruals 417,408 418,333
Other taxes and social
security costs 394,765 395,029
---------- ----------
3,519,089 4,252,826
========== ==========
The average credit taken for trade purchases is 86 days. The directors consider that the carrying amount of trade payables approximate their fair value.
15 Borrowings
2015 2014
GBP GBP
Current
Bank overdrafts 775,220 687,804
Net obligations under finance
leases 4,147 6,635
Short-term unsecured loan - 225,000
Short-term unsecured loan
from Director 448,348 529,137
Unsecured non-convertible
loan notes 180,000 341,892
---------- ----------
1,407,715 1,790,468
---------- ----------
Non - current
Unsecured non-convertible
loan notes 3,047,420 3,046,947
Net obligations under finance
leases - 4,281
---------- ----------
3,047,420 3,051,228
---------- ----------
Total borrowings 4,455,135 4,841,696
========== ==========
On 16 October 2008 the Company issued GBP2,500,000 unsecured non-convertible loan notes to the vendors of Mountfield Building Group Limited and GBP3,000,000 unsecured non-convertible loan notes to the vendors of Connaught Access Flooring Holdings Limited as part of the consideration for the acquisition of the entire share capital of each company. Repayments of GBP165,700 (2014: GBP325,582) were made against the loan notes in the period.
The loan notes are non-transferrable and carry interest at a rate of 2 per cent above the base rate of Barclays Bank plc per annum.
During the year, interest of GBP30,121 on the loan notes was waived.
The short-term unsecured loan from a Director accrues interest at 6% pa but all interest to 31 December 2015 was waived.
2015 2014
GBP GBP
Non-current borrowings
Analysis
Repayable between one and
two years 180,000 325,582
Repayable between two and
five years 2,867,420 2,721,365
3,047,420 3,046,947
============ ==========
2015 2014
GBP GBP
Net obligations under finance
leases
Analysis
Repayable within one year 4,147 6,635
Repayable between one and
five years - 4,281
4,147 10,916
Included in current liabilities (4,147) (6,635)
-------- --------
- 4,281
======== ========
16 Deferred taxation
2015 2014
GBP GBP
Deferred tax analysis:
Deferred tax losses (346,304) (407,032)
Deferred tax expense relating
to origination and reversal
of temporary differences - -
(346,304) (407,032)
========== ==========
2015 2014
GBP GBP
Movement in deferred tax
during the year
At 1 January (407,032) (428,756)
Debit for the year 60,728 21,724
---------- ----------
At 31 December (346,304) (407,032)
========== ==========
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the tax benefit through future taxable profits is probable.
17 Capital commitments
There were no capital commitments at the year-end date.
18 Operating lease commitments
Commitments under non-cancellable operating leases in respect of property leases expiring:
2015 2014
GBP GBP
Less than one year 4,400 4,400
Between two and five years 36,159 36,159
------- -------
40,559 40,559
======= =======
19 Financial instruments
Capital risk management
The Group manages its capital to ensure its ability to continue as a going concern and to maintain an optimal capital structure to reduce cost of capital. The capital structure of the Group comprises equity attributable to equity holders of the Company consisting of issued ordinary share capital, reserves and retained earnings as disclosed in Consolidated Statement of Changes in Equity and cash and cash equivalents as disclosed in Note 12.
The Group maintains or adjusts its capital structure through the payment of dividends to shareholders, issue of new shares and buy-back of existing shares.
Categories of financial instruments
2015 2014
GBP GBP
Financial assets
Loans and receivables at
amortised cost including
cash and cash equivalents:
Cash and cash equivalents 350,232 185,064
Trade and other receivables 2,447,938 3,435,142
------------ ------------
Total 2,798,170 3,620,206
------------ ------------
Financial liabilities
Trade and other payables 4,172,379 5,020,844
Unsecured non-convertible
loan notes 3,227,420 3,388,839
Secured borrowings 779,367 698,720
------------ ------------
8,179,166 9,108,403
------------ ------------
Net (5,380,996) (5,488,197)
============ ============
Cash and cash equivalents
This comprises cash and short-term deposits held by the Group. The carrying amount of these assets approximates their fair value.
General risk management principles
The Group's activities expose it to a variety of risks including market risk (interest rate risk), credit risk and liquidity risk. The Group manages these risks through an effective risk management programme and through this programme, the Board seeks to minimise potential adverse effects on the Group's financial performance. The Directors have an overall responsibility for the establishment of the Group's risk management framework. A formal risk assessment and management framework for assessing, monitoring and managing the strategic operational and financial risks of the Group is in place to ensure appropriate risk management of its operations.
The following represent the key financial risks that the Group faces:
Market risk
The Group's activities expose it primarily to the financial risk of interest rates.
Interest rate risk
The Group's interest rate exposure arises mainly from its interest bearing borrowings. Contractual agreements entered into at floating rates expose the entity to cash flow risk. Interest rate risk also arises on the Group's cash and cash equivalents. The Group does not enter into derivative transactions in order to hedge against its exposure to interest rate fluctuations.
Credit risk
The Group's principal financial assets are trade and other receivables and bank balances and cash.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The Group's credit risk is primarily attributable to trade receivables and amounts recoverable on contracts. The Group has a policy of assessing credit worthiness of potential and existing customers before entering into transactions. There is ongoing credit evaluation on the financial condition of accounts receivable using independent ratings where available or by assessment of the customer's credit quality based on its financial position, past experience and other factors. The Group manages the collection of its receivables through its post completion project monitoring procedures and ongoing contact with customers so as to ensure that any potential issues that could result in non-payment of the amounts due are addressed as soon as identified.
The maximum exposure to credit risk in respect of the above at 31 December 2015 is the carrying value of financial assets recorded in the financial statements.
Liquidity risk
The Group closely monitors its access to bank and other credit facilities in comparison to its outstanding commitments on a regular basis to ensure that it has sufficient funds to meet the obligations of the Group as they fall due.
The Board receives regular forecasts which estimate cash flows over the next eighteen months, so that management can ensure that sufficient funding is in place as it is required.
Fair value of financial assets and liabilities
The Directors consider that there is no significant difference between the book value and fair value of the Group's financial assets and liabilities.
20 Pension costs
The Group operates a defined contribution pension scheme in respect of the directors and employees. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to GBP43,424 (2014: GBP58,775).
21 Directors' guarantees
Andrew Collins and Graham Read have given a guarantee limited to GBP100,000 in respect of the overdraft facility for Connaught Access Flooring Limited. Andrew Collins, Graham Read and Peter Jay have given a guarantee limited to GBP800,000 in respect of Mountfield Group Plc's overdraft facility.
22 Related party transactions
The Company made a loan of GBP24,892 (2014: GBP5,000) to Mountfield Building Group Limited, a subsidiary undertaking. The Company made sales of GBPnil (2014: GBP328,386) to Mountfield Building Group Limited. At 31 December 2015, GBP1,513,047 (2014: GBP1,405,734) was owed to Mountfield Building Group Limited in respect of these transactions and expenses of GBP132,205 (2014; GBP341,119) were paid on behalf of the Company by Mountfield Building Group Limited.
During the year Connaught Access Flooring Limited, a subsidiary undertaking, paid expenses of GBP556,246 (2014: GBP200,737) on behalf of the Company. The Company made sales of GBP331,388 (2014: GBP326,408) to Connaught Access Flooring Limited. At 31 December 2015, GBP947,620 (2014: GBP1,029,137) was owed to Connaught Access Flooring Limited.
At 31 December 2015, the Company owed GBP34,200 (2014: GBP34,200) to MBG Construction Limited.
As at 31 December 2015, balances remaining unpaid on the unsecured non-convertible loan notes to Graham Read and Andrew Collins amounted to GBP2,720,182 (2014: GBP2,730,182) and GBP492,238 (2014: GBP658,657) respectively. Interest for the year has been waived and interest in respect of prior periods has also been waived.
During the year, the Group repaid GBP80,789 to Graham Read (2014: GBP107,467). The balance outstanding at 31 December was GBP448,348 (2014: GBP529,137). Interest is charged at 6% per annum on this loan but has been waived for 2015.
During the year, Zeme Limited invoiced GBP33,333 (2014: GBP50,620) for the services of Peter Jay as a director of Mountfield Group Plc. As at 31 December 2015, GBP61,332 (2014: GBP25,859) was due to Zeme Limited, a company controlled by Peter Jay.
During the year, the Group was invoiced GBP1,210 (2014: GBP6,784) for accountancy and bookkeeping services by Read & Co, a Chartered accountancy practice controlled by Graham Read's brother. The group made sales of GBPnil (2014: GBP3,720) to them during the year. As at 31 December 2015 the balance owed by Read & Co was GBP8,028 (2014: GBP7,548).
During the year ended 31 December 2015 Connaught Access Flooring Limited made sales of GBP9,173 (2014 - GBP9,006) to and purchases of GBP4,738 (2014 - GBP26,958) from Corinthian Ceramics Limited, a company of which Andrew Collins is a director. At 31 December 2015, GBP2,415 (2014 - GBP2,702) was owed by Corinthian Ceramics Limited in respect of these transactions.
23 Control
In the opinion of the directors, Graham Read, director and shareholder, is the ultimate controlling party.
24 Post Balance Sheet Event
There were no events after the balance sheet date to note.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
Company no. 06374598
2015 2014
Note GBP GBP
ASSETS
Non-current assets
Investments 2 6,874,000 6,874,000
Deferred income tax
assets 8 - -
------------- -------------
6,874,000 6,874,000
------------- -------------
Current assets
Other receivables 3 - 6,404
Cash and cash equivalents 4 - -
------------- -------------
- 6,404
------------- -------------
TOTAL ASSETS 6,874,000 6,880,404
============= =============
EQUITY AND LIABILITIES
Issued share capital 5 254,244 254,244
Share premium 1,490,682 1,490,682
Share based payments
reserve 68,869 66,084
Capital redemption
reserve 7,500 7,500
Merger reserve 12,951,180 12,951,180
Retained losses (13,841,597) (13,911,088)
------------- -------------
TOTAL EQUITY 930,878 858,602
------------- -------------
Current liabilities
Trade and other payables 6 2,692,361 2,609,633
Short-term borrowings 7 9,460 9,448
Loan notes 7 180,000 341,892
Income tax 13,881 13,881
------------- -------------
2,895,702 2,974,854
Non-current liabilities
Loan notes 7 3,047,420 3,046,948
5,943,122 6,021,802
------------- -------------
TOTAL EQUITY AND LIABILITIES 6,874,000 6,880,404
============= =============
The financial statements were approved by the board on 6 June 2016.
Andrew Collins
Director
COMPANY CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2015
Notes 2015 2014
GBP GBP
Cash flows from operating
activities
Operating profit/(loss) 69,490 (5,793,811)
Adjusted for:
Impairment of investment
in subsidiaries - 6,147,629
Share-based payment charge 2,787 30,325
Decrease in trade and other
receivables 6,404 24,018
Increase in trade and other
payables 85,813 27,986
------------ ------------
Net cash inflow from operating
activities 164,494 437,647
------------ ------------
Cash flows from financing
activities
Loans (repaid) by subsidiary
undertakings (3,087) (117,937)
Repayment of non-convertible
loan notes (161,419) (325,582)
Net cash flows used in
from financing activities (164,506) (443,519)
------------ ------------
Net cash decrease in cash
and cash equivalents (12) (5,872)
Cash and cash equivalents
brought forward (9,448) (3,576)
------------ ------------
Cash and cash equivalents
carried forward 4 (9,460) (9,448)
============ ============
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2015
Share
based Capital
Share Share payment redempt'n Merger Retained
capital premium reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP
At 1 January
2014 254,244 1,490,682 329,781 7,500 12,951,180 (8,411,299) 6,622,088
Total
comprehensive
income
for the
year - - - - - (5,793,811) (5,793,811)
Cost of
shares
issued - - 30,325 - - - 30,325
Lapsed
Warrants - - (294,022) - - 294,022 -
---------------------- ----------------------------- --------------------------- ----------------------- ------------------------- ------------- ------------
At 31
December
2014 254,244 1,490,682 66,084 7,500 12,951,180 (13,911,088) 858,602
Total
comprehensive
income
for the
year - - - - - 69,491 69,491
Cost of
shares
issued - - 2,785 - - - 2,785
At 31
December
2015 254,244 1,490,682 68,869 7,500 12,951,180 (13,841,597) 930,878
====================== ============================= =========================== ======================= ========================= ============= ============
Merger reserve
The merger reserve exists as a result of the acquisitions of Mountfield Building Group Limited, MBG Construction Limited, Connaught Access Flooring Holdings Limited and Mountfield Land Limited where the consideration included the issue of new shares by the Company, thereby attracting merger relief under the Companies Act 2006. The merger reserve represents the difference between the nominal value of the share capital issued by the Company and the fair value of those shares at the date of acquisition.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2015
1 ACCOUNTING POLICIES
The accounting policies of the Company are shown in the Consolidated Financial Statements on pages 16 to 21.
1.1 Investment in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment.
2 Investment in subsidiary undertakings
Shares
in subsidiary
undertakings
Cost GBP
At 1 January 2014 19,365,817
Additions -
-----------------
At 31 December 2014 19,365,817
Additions -
-----------------
At 31 December 2015 19,365,817
-----------------
Accumulated Impairment
provisions
At 1 January 2014 6,344,188
Impairment provision 6,147,629
-----------------
At 31 December 2014 12,491,817
Impairment provision -
-----------------
Balance at 31 December
2015 12,491,817
-----------------
Net book value
At 31 December 2015 6,874,000
=================
At 31 December 2014 6,874,000
-----------------
The following companies are the principal subsidiary undertakings at 31 December 2015 and are all consolidated:
Percentage
Country of Class of shares
Subsidiary undertakings incorporation of share held
Mountfield Building England and
Group Limited Wales Ordinary 100%
MBG Construction Limited England and
* Wales Ordinary 100%
Connaught Access Flooring England and
Holdings Limited Wales Ordinary 100%
Connaught Access Flooring England and
Limited ** Wales Ordinary 100%
England and
Mountfield Land Limited Wales Ordinary 100%
* Interest held indirectly by Mountfield Building Group Limited.
** Interest held indirectly by Connaught Access Flooring Holdings Limited.
The principal activity of these undertakings for the last relevant financial year was as follows:
Subsidiary undertakings Principal activity
Mountfield Building Refurbishment and fitting
Group Limited out contracting services
Construction and refurbishment
MBG Construction Limited contractors
Connaught Access Flooring
Holdings Limited Intermediate holding company
Connaught Access Flooring
Limited Specialist flooring contractor
Mountfield Land Limited Dormant
The following was an associate of the group at the year end and its results for the year ended 31 May 2015 are shown below.
Percentage
Country Class of shares
Associates of incorporation of share held
England
Hub (UK) Limited and Wales Ordinary 20%
The principal activity of Hub (UK) Limited is general construction consultant and contractor.
Associates
Aggregate Loss
of capitalised for the
reserves Year
GBP GBP
Hub (UK) Limited (GBP142,267) (2,850)
============= ==========
3 Trade and other receivables
2015 2014
GBP GBP
Prepayments - 6,404
======
4 Cash and cash equivalents
2015 2014
GBP GBP
Cash at bank - -
===== ==================
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. The fair value of cash and cash equivalents is GBPnil (2014: GBPnil).
For the purpose of the cash flow statement, cash and cash equivalents comprise the following at 31 December 2015:
2015 2014
GBP GBP
Bank overdraft (9,460) (9,448)
======== ========
5 Share capital
2015 2014
---------------------- ---------------------------
Number GBP Number GBP
Allotted, called up and fully paid
Ordinary shares of 0.1p each 254,244,454 254,244 254,244,454 254,244
============ ======== ============ =============
Details of changes in share capital are included at note 13 to the Consolidated Financial Statements.
6 Trade and other payables
2015 2014
GBP GBP
Trade payables 185,969 113,131
Amounts owed to subsidiary
undertakings 2,465,987 2,469,072
Accruals 34,668 25,150
Other tax and social
security costs 5,736 2,281
---------- ----------
2,692,360 2,609,634
========== ==========
7 Borrowings
2015 2014
GBP GBP
Current liabilities
Bank overdraft 9,460 9,448
Unsecured non-convertible
loan notes 180,000 341,892
---------- ----------
189,460 351,340
---------- ----------
Non-current liabilities
Unsecured non-convertible
loan notes 3,047,420 3,046,947
---------- ----------
3,236,880 3,398,287
========== ==========
Details of the loan notes are included at Note 15 to the Consolidated Financial Statements.
8 Deferred taxation
2015 2014
GBP GBP
Deferred tax analysis:
Deferred tax losses - -
====== =========
Movement in deferred
tax during the year:
At 1 January 2015 - (17,383)
Charge for the year - -
---------
At 31 December 2015 - -
=========
9 Capital Commitments
There were no capital commitments at the year end.
10 Contingent liabilities
Under the terms of the Group's banking facilities, the Company has provided a cross guarantee to the Group's bankers. At the year end, the net balance due to the Group's bankers in respect of the guarantee was GBP424,988 (2014: net balance in Group's bank accounts was GBP502,740).
11 Key management personnel compensation
Key management personnel expenses are disclosed in Note 5 to the Consolidated Financial Statements.
12 Directors' guarantees
Directors' benefits - advances, credits and guarantees are disclosed at Note 21 to the Consolidated Financial Statements.
13 Related party disclosures
Related party disclosures are detailed at Note 22 to the Consolidated Financial Statements.
14 Financial instruments
Details of key risks are included at Note 19 to the Consolidated Financial Statements.
Categories of financial instruments
2015 2014
GBP GBP
Financial assets
Loans and receivables
at amortised cost - 6,404
- 6,404
------------ ------------
Financial liabilities
Trade and other payables 2,692,360 2,623,514
Bank overdraft 9,460 9,448
Unsecured non-convertible
loan notes 3,227,420 3,388,839
------------ ------------
5,929,240 6,021,801
------------ ------------
(5,929,240) (6,015,397)
============ ============
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAAKKELDKEAF
(END) Dow Jones Newswires
June 07, 2016 02:01 ET (06:01 GMT)
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