Mountfield Group Plc
(the "Company" or the "Group")
Half-yearly report to 30 June 2016
Mountfield Group Plc , the AIM listed construction company specialising in supplying and installing raised access flooring and the construction, fitting out and refurbishing of data centres and commercial and residential buildings, announces its half-yearly report to 30 June 2016.
· Gross profit of £1m (H1 2015: £1.1m) on revenue of £4.9m (H1 2015: £7.3m).
· Group margins increased from 14.8% (in the first half of 2015) to 20.8%.
· Net profit before tax increased from £246k (in the first half of 2015) to £316k.
· Directors expect the performance to continue in the second half of the year.
· The business of Connaught Access Flooring Limited ("CAF" or "Connaught") continues to cement its position as a market leader.
· Mountfield Building Group Limited ("MBG") is now able to achieve sustainable profitability.
· Neither Company has seen a post-Brexit decline in business activity.
Andy Collins - Group CEO said:
"The results are particularly satisfying because they show that the Board's key objectives of establishing Connaught as a market leader in the raised access flooring market and positioning MBG on a path of sustainable profitability, have been met.
It is very encouraging that demand for the services of the Group Companies have not been reduced since the Brexit vote and the state of activity that we saw ahead of the vote has continued undiminished."
Peter Jay, Chairman
Andy Collins, Chief Executive Officer
+44 (0)1268 561 516
WH Ireland (Nominated Adviser)
Paul Shackleton
+44 (0)20 7220 1666
Chairman and CEO's Statement
The first half of the year saw an increase in the unaudited pre-tax profits of the Group from £245k to £316k and the Directors expect the improvement in net profits to continue in the second half of the year.
The Directors are satisfied that the market remains strong and they do not see any reduction in demand for the services of the Group companies following the Brexit vote.
CAF achieved a profit of £397k during the first half of 2016 (H1 2015: £321k). The key feature of the period was the completion of its £5m + contract for flooring at a new City HQ building. The successful completion of this contract has cemented its position as one of the very few companies able to undertake access flooring contracts of this nature. This is evidenced by the record volume of tenders for the supply and installation of raised access flooring for prestigious new developments in and around London. Conversion of even a small proportion of these tenders will provide a significant contribution to turnover over the next 2-3 years.
The smaller contract business of CAF also continues to perform well.
CAF has already begun to expand its management team to enable it to handle a larger and more varied workload and has appointed a marketing development director whose role will be to increase awareness of CAF and its businesses amongst main contractors, developers and architects.
MBG's net profits increased for the half-year from £46k in 2015 to £71k and the Directors now believe it is able to achieve sustainable profitability because of its reduced operating costs and altered business strategy. The Directors anticipate that the second half of the year will see an improvement to its net profit over that achieved in the first half of 2016.
MBG now primarily undertakes contracts of a low risk nature, direct for its clients in various areas of specialist construction including the construction of data centres, commercial and residential properties. This strategy together with the reduced overheads has enabled it to operate profitably.
Its remains the intention of the Group to extend its business activities and continue to explore acquisition opportunities in the market.
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2016
6 months to 30 June 2016
6 months to 30 June 2015
12 months to 31 December 2015
(unaudited)
(audited)
Note
£
Revenue
4,915,089
7,253,265
13,033,039
Cost of sales
(3,892,054)
(6,179,663)
(11,155,909)
Gross profit
1,023,035
1,073,602
1,877,130
Administrative expenses
(695,182)
(796,210)
(1,673,235)
Operating profit
327,853
277,392
203,895
Net finance costs
(11,436)
(31,752)
(26,778)
Profit before income tax
316,417
245,640
177,117
Income tax expense
3
(68,871)
(43,862)
(60,728)
Total comprehensive profit for the period
247,546
201,778
116,389
Earnings per share
4
Basic & diluted
0.097p
0.079p
0.046p
There are no recognized gains and losses other than those passing
through the Statement of Comprehensive Income
Condensed consolidated statement of financial position
As at 30 June 2016
30 June 2016
(Unaudited)
30 June 2015
31 December 2015
ASSETS
Non-current assets
Intangible assets
6,874,308
Property, plant and equipment
97,612
109,490
102,213
Deferred income tax assets
329,932
407,032
346,304
7,301,852
7,390,830
7,322,825
Current assets
Inventories
84,870
88,279
72,835
Trade and other receivables
2,743,903
4,024,658
2,345,797
Cash and cash equivalents
396,024
355,571
350,232
3,224,797
4,468,508
2,768,864
TOTAL ASSETS
10,526,649
11,859,338
10,091,689
EQUITY AND LIABILITIES
Share capital and reserves
Issued share capital
254,244
Share premium
1,490,682
Share based payments reserve
68,871
Capital redemption reserve
7,500
Merger reserve
12,951,180
Reverse acquisition reserve
(2,856,756)
Retained earnings
(9,564,591)
(9,726,749)
(9,812,138)
TOTAL EQUITY
2,351,130
2,188,972
2,103,583
Current liabilities
Trade and other payables
3,590,023
4,674,126
3,532,971
Short-term borrowings
1,620,615
1,976,600
1,403,568
Finance lease liabilities
2,399
3,564
4,147
Current tax payable
52,499
57,743
-
5,265,536
6,712,033
4,940,686
Non-current liabilities
Loan notes
2,909,983
2,956,001
3,047,420
2,332
TOTAL LIABILITES
8,175,519
9,670,366
7,988,106
TOTAL EQUITY & LIABILITIES
Condensed consolidated statement of changes in equity
Share capital
Capital redemption reserve £
Reverse Acquisition reserve
Total
Balance at 1 January 2015
66,084
(9,928,527)
1,984,407
Total comprehensive income
Share based payments
2,787
Balance at 30 June 2015
Balance at 1 July 2015
(85,389)
Balance at 31 December 2015
Balance at 1 January 2016
Balance at 30 June 2016
Condensed consolidated cash flow statement
6 months to
12 months to
Cash from operating activities:
Adjusted for:
Depreciation
6,861
7,035
14,418
Share based payment provision
(Increase)/ decrease in inventories
(12,035)
(5,980)
9,464
(Increase)/ decrease in trade and other receivables
(398,109)
(601,891)
1,076,972
(Decrease)/ increase in trade and other payables
2,483
433,673
(707,481)
Cash (used in)/ generated by operations
(72,947)
113,016
600,055
Finance costs
(35,412)
(33,993)
Finance income
3,661
7,215
Taxation paid
(13,881)
Net cash (outflow)/inflow from operating activities
(84,383)
81,265
559,396
Cash flows from investing activities
Purchase of equipment
(2,259)
(6,884)
(7,667)
Net cash flows from used in investing activities
Cash flows from financing activities:
Finance lease rentals
(1,747)
(5,696)
(6,768)
Repayment of non-convertible loan notes
(137,437)
(90,946)
(305,790)
Proceeds from short-term loans
(74,999)
(161,419)
Net cash flows from financing activities
(139,184)
(171,641)
(473,977)
Net (decrease)/increase in cash and cash equivalents
(225,826)
(97,260)
77,752
Cash and cash equivalents brought forward
(424,988)
(502,740)
Cash and cash equivalents carried forward
(650,814)
(600,000)
For the purposes of the cash flow statement, cash and cash equivalents comprise the following:
As at 30 June 2015
As at 31 December 2015
Cash at bank and in hand
Bank overdraft
(1,046,838)
(955,571)
(775,220)
1. Notes to the Interim Report
Basis of preparation
The Group's interim financial statements for the six months ended 30 June 2016 were authorised for issue by the directors on 19 September 2016.
The consolidated interim financial statements, which are unaudited, do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2015 have been filed with the registrar of companies at Companies House. The audit report on the statutory accounts for the year ended 31 December 2015 was unqualified and did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006.
The annual financial statements of Mountfield Group Plc for the year ended 31 December 2016 will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU ("IFRS"). Accordingly, these interim financial statements have been prepared using accounting policies consistent with those which will be adopted by the Group in the financial statements and in compliance with IAS 34 "Interim financial reporting".
The consolidated interim financial statements have been prepared in accordance with the accounting policies set out in the annual financial statements for the year ended 31 December 2015.
Basis of consolidation
The Group financial information consolidates that of the company and its subsidiaries.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
2. Segmental reporting
Segment information is presented in respect of the Group's business segments, which are based on the Group's management and internal reporting structure.
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 have 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:
Mountfield
Direct contracting and trade contracting services to both main contractors and corporate end users.
Connaught
Providing raised flooring systems to both main contractors and corporate end users.
Land sourcing
Sourcing land and enhancing value.
Segmental operating performance
Six months to 30 June 2016
Six months to 30 June 2015
Twelve months to 31 December 2015
Segmental revenue
PBT
£'000
Construction
1,734
71
3,405
46
5,918
(420)
Fit -out
3,198
397
3,934
321
7,517
467
4,932
468
7,339
367
13,435
47
Inter-segmental revenue and unallocated costs
(17)
(152)
(86)
(121)
(402)
130
4,915
316
7,253
246
13,033
177
Business segments assets and liabilities
Segment assets
Segment liabilities
2,469
3,727
2,823
4,253
1,380
3,300
Fit-out
1,184
1,831
2,096
1,871
1,838
1,314
2
3,653
5,558
4,919
6,126
3,218
4,614
Goodwill - Construction
2,000
Goodwill - Fit-out
4,874
Goodwill - Land sourcing
Other unallocated assets & liabilities
2,565
66
3,544
3,374
10,527
8,123
11,859
9,670
10,092
7,988
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.
Revenue by geographical destination
Revenue is attributable to the United Kingdom and other EU markets.
Total assets including property, plant and equipment and intangible assets are all held in the UK.
3. Income tax (expense)/credit (continuing operations)
Current tax on income for the period
(52,499)
Deferred tax (expense)
(16,372)
Income tax (expense)/credit in the income statement
4. 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. In calculating the diluted earnings per share, share options outstanding have been taken into account where the impact of these is dilutive.
The weighted average number of shares in the period was:
Number
Basic ordinary shares of 0.1p each
254,244,454
Dilutive ordinary shares from Warrants & options
Total Diluted
In the six months to 30 June 2016, the exercise price of the options and warrants exceeded the average market price of ordinary shares in the period, thus there is no dilutive effect on the weighted average number of ordinary shares or the diluted earnings per share.
Earning attributable to equity shareholders of the parent
Continuing operations
Basic earnings per share
Diluted earnings per share