GSH.L Regulatory News (GSH)

27 Mar 2008 07:01

GSH Group PLC27 March 2008 GSH Group plc Interim Results for the six months ended 31 January 2008 GSH Group plc (AIM: GSH) ("GSH" or "the Group"), the international provider ofbespoke facilities management and energy management solutions, announces interimresults for the six months ended 31 January 2008. Financial Highlights: • Turnover increased 26% to £88.3 million (2007: £70.2 million) • Underlying profit before tax* up 14% to £4.0 million (2007: £3.5 million) • Basic adjusted earnings per share were 12.9 pence, an increase of 7.5% (2007: 12.0 pence) • Cash reserves at the end of the period of £8.8 million (2006: £5.4 million) • The board has approved an interim dividend of 2.9 pence per share (2007: 2.6 pence) * Underlying profit is defined as profit before adjustments in respect of non-trading items. Operational Highlights: • Record order book at period end of £609 million (2007: £521 million) with strong bid pipeline • Contract wins since the period end have added a further £255 million to the order book • Significant contract extension and geographic expansion with HBoS • Continued investment in infrastructure and technology to support future growth Stuart Graham, Chairman of GSH said: "We are encouraged by the prospects for theGroup in the second half of the year and significantly for the longer term.Financially and operationally the business is in excellent shape and we have arecord order book and a healthy bid pipeline. There is strong demand for ourservices and having continued to invest significantly in the business we arewell positioned for growth and therefore the Board looks forward to the futurewith confidence." For further information, please contact:GSH Group plc 01782 200455Colin Tennent, Chief Executive OfficerDavid Simons, Chief Financial Officer Bell Pottinger Corporate & Financial 020 7861 3932Ann-marie WilkinsonChris Hamilton KBC Peel Hunt 020 7418 8912Julian BluntDaniel Harris CHAIRMAN'S STATEMENT Introduction I am pleased to present our interim results for the six months ended 31 January2008 which reflect another strong Group performance. Financial Review Turnover increased by 26% to £88.3 million (2007: £70.2 million) with underlyingprofit before tax up 14% to £4.0 million (2007: £3.5 million). During theperiod, turnover increased by 25% in the UK, 10% in Mainland Europe and by 74%in our US business. Operating margin has decreased by 0.5 percentage points to 4.5% (2007: 5.0%) reflecting investment in the direct cost base, particularly in the US, to support our future growth. Basic adjusted earnings per share were 12.9 pence, an increase of 7.5% (2007:12.0 pence). Diluted adjusted earnings per share were 12.6 pence (2007: 11.8pence). Cash reserves at the end of the period were £8.8 million (2007: £5.4 million). The contracted order book for the Group remains healthy and at the period endwas £609 million (2007: £521 million). Contract wins since the period end haveadded a further £255 million to this figure. The order book is well balancedwith 22% relating to contracts within the public sector, 25% financial services,13% in telecommunications and ICT, 19% real estate, 8% retail and 13% others. Dividend The board has approved an interim dividend of 2.9 pence per share (2007: 2.6pence) which will be paid on 16 May 2008 to all shareholders on the register atclose of business on 18 April 2008. Operational Review UK and Eire Revenue in our UK and Eire business grew by 25% to £68.8 million (2007: £55.0million) driven by a mix of new awards and extensions to existing contracts. OurUK business has secured new contract wins and extensions to existing contractswith Ikea, DTZ and Abbey. In Eire contract wins with Allied Irish Bank, TheRoyal College of Surgeons and National Irish Bank amounted to £13.8 million inthe period. Our ability to deliver high quality, innovative services for clients and ourtrack record of longstanding client relationships has again enabled us to securea number of contract extensions and enhancements. HBoS plc, which has been aclient for the last 8 years recently undertook a strategic review of its groupproperty, and since the period end has awarded GSH a five year contract due tocommence in April 2008 for the entire HBoS UK estate. The HBoS propertyportfolio comprises 1,558 properties nationwide including 1,419 high streetretail sites, 137 major employment sites and commercial buildings and twoEuropean 24/7 critical data centres. GSH will provide a combination of technicalservices and energy management services. The total contract value over the fiveyear period amounts to £250 million. We have also extended the scope of ourcontract with Pfizer, through our partnership agreement with Jones Lang LaSalleand will be providing a comprehensive suite of both mechanical and electricalservices. Our UK and Eire order book at the period end was a record £408 million (2007:£350 million). We continue to invest in both infrastructure and technology to ensure we areconstantly ahead in the market place. We are currently installing a state of theart customer service centre at our head office in Stoke to further enhance ourcustomer support. This will consolidate our call centre operations into onebuilding and further improve the levels of contract management. At the end of2007 we commenced the upgrade of both our Maximo asset management system andwireless hand-held technology, the roll out of these will be completed over thenext few months. Mainland Europe Revenue in the period grew by 10% to £11.5 million (2007: £10.5 million)achieved through new contract wins with Global Switch and Corus in theNetherlands and contract extensions with KPN and Schiphol Airport. In Belgium we were awarded our largest single contract with General Motors forthe provision of technical services, starting in April 2008 with a total valueof £14.1 million. This is a significant win for GSH and was achieved with thesupport of our European joint venture partner, HSG, which clearly demonstratesthe benefits of the JV for both parties. Our contracted order book for our Mainland Europe business at the period end was£119 million (2007: £115 million). US Revenue in the US business grew 74% to £8.0 million (2007: £4.6 million). Thiswas primarily as a result of a series of energyplus contract wins amounting to£18.4 million. The acquisition of KMH has proven to be a real asset to the business with thesuccessful installation of controls into existing energy client's premises and astrong pipeline of further installations. We have invested heavily in recruitment and training to service the significantcurrent growth rate of this business and to support future expansion. In the US we have a strong order book which at the period end has increased 46%to £82 million (2007: £56 million). Energy Management GSH's innovative energy management offering continues to develop as legislation,increased energy prices and pressure to meet environmental objectives createsincreased awareness and ultimately increased demand for cost effective andefficient solutions. During the period we have seen significant growth in contract awards both in theUK and our international businesses. We have been awarded a total of 22contracts worth £157 million. Board Changes I will be stepping down as Chairman today. I have thoroughly enjoyed my timehere and wish the business, management and team every continued success for thefuture. I will be succeeded by John Kelly whose appointment has been announcedtoday and who has served as a non-executive director of GSH since July 2007.John's considerable business experience makes him ideally placed to providecontinued leadership and guidance to the Board. Outlook We are encouraged by the prospects for the Group in the second half of the year.Financially and operationally the business is in excellent shape and we have arecord order book and a healthy bid pipeline. We have strong contract growthacross all our geographies and our solid blue-chip customer base in the UKprovides us with good earnings visibility. There is strong demand for ourservices and having continued to invest significantly in the business we arewell positioned for growth and therefore the Board looks forward to the futurewith confidence. Stuart William Graham Chairman 27 March 2008 INDEPENDENT REVIEW REPORT BY BAKER TILLY UK AUDIT LLP TO GSH Group plc Introduction We have been engaged by the Company to review the condensed set of financialstatements in the interim financial report for the six months ended 31 January2008 which comprises the Consolidated Income Statement, the ConsolidatedStatement of Recognised Income and Expense, the Consolidated Balance Sheet, theConsolidated Cash Flow Statement and the Notes. We have read the otherinformation contained in the interim financial report and considered whether itcontains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements. This report, including the conclusion, has been prepared for and only for theCompany for the purpose of meeting the requirements of the AIM Rules forCompanies and for no other purpose. We do not, therefore, in producing thisreport, accept or assume responsibility for any other purpose or to any otherperson to whom this report is shown or into whose hands it may come save whereexpressly agreed by our prior consent in writing. Directors' Responsibilities The interim financial report is the responsibility of, and has been approved by,the directors. The directors are responsible for preparing and presenting theinterim financial report in accordance with the AIM Rules for Companies. As disclosed in the notes, the annual financial statements of the Group areprepared in accordance with International Financial Reporting Standards andInternational Financial Reporting Interpretations Committee ("IFRIC")pronouncements as adopted by the European Union. The condensed set of financialstatements included in this interim financial report has been prepared inaccordance with the measurement and recognition criteria of InternationalFinancial Reporting Standards and IFRIC pronouncements, as adopted by theEuropean Union. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the interim financial report based on our review. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the interim financial reportfor the six months ended 31 January 2008 is not prepared, in all materialrespects, in accordance with the measurement and recognition criteria ofInternational Financial Reporting Standards and IFRIC pronouncements as adoptedby the European Union, and the AIM Rules for Companies. Baker Tilly UK Audit LLP Chartered Accountants Festival Way Festival Park Stoke-on-Trent Staffordshire ST1 5BB 27 March 2008 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the six month period ended 31 January 2008 6 months to 6 months 12 months to 31 to 31 to 31 January 2008 January 2007 July £000 £000 £000REVENUE-CONTINUING OPERATIONS 88,285 70,168 157,401Direct costs (67,653) (51,525) (118,168) GROSS PROFIT 20,632 18,643 39,233Administrative expenses (16,666) (15,111) (31,120) PROFIT FROM OPERATIONS-CONTINUING OPERATIONS 3,966 3,532 8,113Finance income 198 80 254Finance costs (178) (67) (206) UNDERLYING PROFIT 3,986 3,545 8,161Pension gain - - 132Share based payment charge (498) - (254) PROFIT BEFORE TAXATION 3,488 3,545 8,039Tax expense (1,207) 1,180) (2,050) PROFIT FOR THE FINANCIAL PERIOD 2,281 2,365 5,989 PROFIT ATTRIBUTABLE TO EQUITY HOLDERSOF THE PARENT 2,281 2,365 5,989 EARNINGS PER ORDINARY SHARE- Basic 10.6p 12.0p 29.9p - Diluted 10.3p 11.8p 29.5p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the six month period ended 31 January 2008 6 months to 6 months 12 months to 31 to 31 to 31 January 2008 January 2007 July 2007 £000 £000 £000 PROFIT FOR THE FINANCIAL PERIOD 2,281 2,365 5,989 Actuarial gain on retirement benefit obligations - - 121Deferred tax on actuarial gain - - (36)Deferred tax on share awards (132) 34 106Exchange differences on the retranslation of overseas undertakings 239 6 85 TOTAL RECOGNISED INCOME AND EXPENSE FOR THEPERIOD 2,388 2,405 6,265 ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 2,388 2,405 6,265 CONSOLIDATED BALANCE SHEETat 31 January 2008 31 January 2008 31 January 2007 31 July 2007 £000 £000 £000 £000 £000 £000ASSETSNON CURRENT ASSETSIntangible assets 7,115 2,903 7,029Property, plant and equipment 5,576 4,743 4,895Investments 44 43 44Deferred taxation 286 359 368 TOTAL NON CURRENT ASSETS 13,021 8,048 12,336 CURRENT ASSETSInventories 4,463 7,355 3,648Trade and other receivables 35,973 24,241 32,403Short term investments 494 - 494 Cash and cash equivalents 8,800 5,393 11,890 TOTAL CURRENT ASSETS 49,730 36,989 48,435 TOTAL ASSETS 62,751 45,037 60,771 LIABILITIESCURRENT LIABILITIES Trade and other payables (42,417) (34,491) (40,272)Financial liabilities (50) (50) (53)Current taxation (1,537) (1,414) (1,319) TOTAL CURRENT LIABILITIES (44,004) (35,955) (41,644) NON CURRENT LIABILITIES Financial liabilities (52) (83) (59)Provisions (720) (535) (832)Retirement benefit obligations (272) (571) (315) TOTAL NON CURRENT (1,044) (1,189) (1,206)LIABILITIES TOTAL LIABILITIES (45,048) (37,144) (42,850) NET ASSETS 17,703 7,893 17,921 EQUITYShare capital 216 200 216Share Premium Account 5,364 89 5,364Capital redemption reserve 682 682 682Investment in own shares (1,790) (707) (86)Share based payment reserve 657 37 363Translation reserve 397 79 158Retained earnings 12,177 7,513 11,224 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE 17,703 7,893 17,921PARENT CONSOLIDATED CASH FLOW STATEMENTFor the six month period ended 31 January 2008 6 months to 6 months to 12 months to 31 January 2008 31 January 2007 31 July 2007 £000 £000 £000 £000 £000 £000CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 3,488 3,545 8,039 Adjustments for:Depreciation 312 341 589Amortisation of intangibles 56 48 112Share based payment charge 498 - 254Finance income (198) (80) (254)Finance costs 178 67 206 CASH FLOWS FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 4,334 3,921 8,946 Changes in working capital:(Increase)/decrease in inventories (815) (1,117) 2,779Increase in trade and other receivables (4,576) (3,892) (8,820)Increase in trade and other payables 2,548 839 5,322Decrease in provisions (156) (239) (1) CASH GENERATED FROM OPERATIONS 1,335 (488) 8,226Finance costs (178) (67) (206)Income tax paid (1,040) (772) (2,048) NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES 117 (1,327) 5,972 CASH FLOWS FROM INVESTING ACTIVITIESFinance income received 198 80 254Purchase of intangible assets (44) (14) (63) Purchase of property, plant and equipment (960) (493) (1,124)Sale of property, plant and equipment 7 20 91Deferred consideration paid (395) - -Purchase of subsidiary undertakings - - (5,239)Cash acquired with subsidiary undertakings - - 1,159 Payments for short term performance bonds and asset funding (724) - (494) NET CASH USED IN INVESTING ACTIVITIES (1,918) (407) (5,416) CASH FLOWS FROM FINANCING ACTIVITIESFinance lease rental payments (9) (54) (70)Equity dividends paid (1,337) (1,030) (1,560)Issue of ordinary share capital - - 3,971Receipts from exercised share options 2 22 33Payments to acquire own shares (148) (11) (12)Sale of treasury shares 8 - 867 NET CASH (USED IN)/ GENERATED FROM FINANCING (1,484) (1,073) 3,229ACTIVITIES NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS (3,285) (2,807) 3,785Cash and cash equivalents at start of period 11,890 8,200 8,200Effect of exchange rates on cash 195 - (95)and cash equivalents CASH AND CASH EQUIVALENTS AT END OF PERIOD 8,800 5,393 11,890 NOTES TO THE INTERIM REPORT For the six month period ended 31 January 2008 REVENUE 6 months to 31 6 months to 31 12 months to January 2008 January 2007 31 July 2007 £000 £000 £000Facilities management 63,813 55,351 121,692Projects 8,815 7,750 16,966Energyplus 15,657 7,067 18,743 88,285 70,168 157,401 CHANGES IN SHAREHOLDERS' EQUITY Share Share Capital Invest- Share trans- Retained Total capital premium re - ment in based lation earnings account demption own payment reserve reserve shares reserve £000 £000 £000 £000 £000 £000 £000 £000 At 31 July 2006 200 89 682 (913) 3 73 6,373 6,507Total recognised income and expense - - - - 34 6 2,365 2,405Dividends - - - - - - (1,030) (1,030)Investment in own shares - - - 11 - - - 11Reserve transfer - - - 195 - - (195) -Expense in relation toshare-base payments - - - - - - - - At 31 January 2007 200 89 682 (707) 37 79 7,513 7,893Total recognised incomeand expense - - - - 72 79 3,709 3,860Dividends - - - - - - (530) (530)Issue of shares and netpremium 16 5,275 - - - - - 5,291Investment in own shares - - - 1,072 - - - 1,072Reserve transfer - - - (451) - - 451 -Expense in relation toshare-base payments - - - - 254 - 81 335 At 31 July 2007 216 5,364 682 (86) 363 158 11,224 17,921Total recognised incomeand expense - - - - (132) 239 2,281 2,388Dividends - - - - - - (1,314) (1,314)Reclassification from netassets - - - (1,730) - - - (1,730)Investment in own sharesm - - - 10 - - - 10Reserve transfer - - - 16 - - (16) -Expense in relation toshare-base payments - - - - 426 - 2 428 At 31 January 216 5,364 682 (1,790) 657 397 12,177 17,7032008 The reclassification from net assets in the half year to 31 January 2008 relatesto the reclassification of loans relating to one of the group's share optionschemes. The directors believe the new presentation to be a fairerrepresentation. PRINCIPAL EXCHANGE RATES 31 January 2008 31 January 2007 31 July 2007 Average Period end Average Period end Average Period endUS $ 2.0226 1.9900 1.9143 1.9631 1.9481 2.0243Euro • 1.4179 1.3461 1.4875 1.5148 1.4829 1.4826 EARNINGS PER ORDINARY SHARE The calculations of earnings per share are based on the following profits andnumber of shares: 31 January 2008 31 January 2007 31 July 2007 Basic Basic Diluted Basic Basic Diluted Basic Basic Diluted adjusted adjusted adjusted £000 £000 £000 £000 £000 £000 £000 £000 £000 Profit for thefinancial period 2,281 2,281 2,281 2,365 2,365 2,365 5,989 5,989 5,989Pensionadjustment - - - - - - - (132) -Tax on pensionadjustment - - - - - - - 43 -Share-basedpayments - 498 - - - - - 254 - Adjusted profit for financial 2,281 2,779 2,281 2,365 2,365 2,365 5,989 6,154 5,989period Weighted average number of shares 31 January 31 January 31 July 2008 2007 2007 Number of Number of shares shares Number of shares For basic earnings per share 21,560,542 19,663,672 20,019,549Exercise of share options 534,736 410,413 307,010 For diluted earnings per share 22,095,278 20,074,085 20,326,559 The Group's earnings per share are asfollows: 6 months to 31 6 months to 31 12 months to January 2008 January 2007 31 July 2007 - Basic 10.6p 12.0p 29.9p - Diluted 10.3p 11.8p 29.5p - Basic adjusted 12.9p 12.0p 30.7p - Diluted adjusted 12.6p 11.8p 30.3p NOTE TO THE FINANCIAL INFORMATION The interim results are unaudited and do not comprise full financial statementswithin the meaning of Section 240 of the Companies Act 1985. The results for theyear ended 31 July 2007 are in abbreviated form and have been extracted from thepublished financial statements. These were audited and reported upon withoutqualification by Baker Tilly UK Audit LLP and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange