Inspirit Energy Regulatory News (INSP)

6 Sep 2005 07:00

Inspace Plc06 September 2005 Press Release 6 September 2005 Inspace plc ("Inspace" or "the Company") Interim Results for the six months ended 30 June 2005 Inspace plc (AIM:INSP), the property based support services business that hasestablished itself as one of the UK's leading social housing repair andmaintenance providers, announces its Interim Results for the six months ended 30June 2005. Highlights • Turnover on continuing operations up 64 per cent to £70.8 million (2004: £43.3 million)• Operating profit on continuing operations up 70 per cent to £3.57 million (2004: £2.1 million)• Diluted earnings per share up 71 per cent to 3.94 pence (2004: 2.31 pence)• Order book now exceeding £450 million and extending as far as 2020• Net cash of £3.6 million• All debt settled on flotation• Shareholder funds increased from £0.9 million to £13.6 million Commenting on the Results, Colin Enticknap, Executive Chairman of Inspace plc,said: "We are pleased with the way the first half year has unfolded. Interimresults are just ahead of expectation, forward order books have reached recordlevels, and our people have coped well with the transition to operating in theAIM environment. "With a clear strategy, scaleable infrastructure and empowered culture, weshould now be well placed to build upon these early achievements, and to moveforward with confidence to the next stage of our development." For further information:Inspace plcColin Enticknap, Executive Chairman Tel: +44 (0) 1462 678 910colin.enticknap@inspace.co.uk www.inspace.co.uk Seymour PierceMark Percy, Corporate Finance Tel: +44 (0) 20 7107 8000markpercy@seymourpierce.com www.seymourpierce.com Media enquiries:AbchurchHenry Harrison-Topham Tel: +44 (0) 20 7398 7700henry.ht@abchurch-group.com www.abchurch-group.com Chairman's statement Overview The first half of 2005 has naturally been a unique period in the development ofthe business, and one that we can now look back upon with a reasonable degree ofsatisfaction. We have seen the successful implementation of a number of structural changes;the de-merger of the business from our previous parent company; theestablishment of a new Board with appropriate non-executive representation; thecreation of a new executive management team along with strong functional supportand independent systems and procedures; and, most notably, the flotation of thebusiness on the AIM Market of the London Stock Exchange. Any one of these events might easily have distracted us from day to dayoperations, but our people rose to these short term challenges with theircharacteristic energy and enthusiasm and, through their determined effort, wehave continued to achieve controlled turnover growth, to deliver sustainablelevels of profit, and to generate positive cash. Just as importantly, we havecontinued to strengthen our order book, so important if we are to drive futuregrowth and further enhance the quality of our earnings. Financial Highlights Turnover on continuing operations grew substantially by 64% to reach £70.8million. Comparable operating profit grew by 70%, reaching £3.57 million and representinga return of 5.0%. Interest payable exceeded that received by £0.12 million dueto charges incurred prior to flotation. Consequently, profit on ordinaryactivities before taxation was £3.45 million. Having settled outstanding debt from the funds raised at flotation, half yearcash sat at a healthy £3.6 million with no borrowings. Enforcing strict cashmanagement principles remained a priority during the period, which helped toimprove our cash conversion rate to 61%. These factors combined to effect a dramatic improvement in our balance sheet.With net current assets of £12.7 million and shareholders' funds of £13.6million, we can now demonstrate enhanced covenant strength as we continue topursue substantial projects to build our order book. Our order book has continued to grow with the successful acquisition of socialhousing contracts, in chronological order, for Richmond upon Thames ChurchesHousing Trust, for Basildon District Council, for the Corporation of London, andmost recently, for the London Borough of Hammersmith & Fulham. Assuming thatprojects run for their full term, our order book has now reached £450 million,which represents an increase of 61% upon this time last year. Dividend The encouraging first half performance has allowed the Board to declare aninterim dividend of 0.933p per share, payable to those Shareholders on theregister on 24 May 2005, and 0.161p per share payable to those on the registeron 16 September 2005, consistent with the interim dividend policy outlined inthe AIM Admission document. Both interim dividends will be paid on 14 October2005. Operational Performance Our portfolio strategy brings important benefits and we saw evidence of this inthe first half year, as all parts of our business made important contributionsto group profit. Inspace Partnerships, which maintains and improves social housing stock,justified its position as our primary growth driver. We saw its proportion ofcontinuing group turnover grow from 17% in 2002, to 24% in 2003 and to 35% in2004. As expected, that trend has continued during the first half of 2005, andhas now reached 42%, helped in part by additional Decent Homes revenues securedfrom Barnsley and Colchester local authorities, in both instances off the backof well performing repair and maintenance contracts. Encouraging levels ofperformance based revenues, typical under our partnering contracts, keptoperating margins up at 6.4%. Inspace Maintain and Inspace Environment, which jointly maintain corporate andpublic sector real estate, also delivered encouraging performances. Bothcontinued to build relationships with their key customers; those perceived tooffer higher volumes and more robust spend patterns. Barclays, Premier TravelInn, HBOS and Whitbread Restaurants remain prime corporate examples. Royal Mailand Suffolk County Council represent public sector equivalents. Turnover, whichrepresented 44% of the group's total, delivered operating margins of 4.3%,slightly lower than this time last year reflecting our first half investment inInspace Environment, where we have strengthened its board and relocated its headoffice ahead of its planned expansion. Inspace Complete, our design led interiors business, achieved good growth in theperiod, primarily as a result of increased public sector activity on thegovernment's Job Centre refurbishment programme. With 14% of the group'sturnover falling within this business, we were satisfied to see operatingmargins at 3.6%, particularly bearing in mind that this part of our business isable to generate working capital. People I have already mentioned the exceptional performances delivered by our people,far too many to mention individually, whose considerable efforts have beengreatly appreciated. I must also express my personal gratitude to Andrew Telfer,who was instrumental in ensuring our successful AIM listing, and also to DuncanForbes and his supporting MDs; Gerry Graville, Karim Khan and Mick Williamson,for their unstinting commitment and professional leadership during what hasnaturally been a critical period. Whilst there have been many changes for us all to embrace as we have travelleddown the flotation path, cultural shift has thankfully not been one of them. Theculture, philosophy and self imposed controls inherited from Willmott Dixon havestood up well to the more rigorous requirements demanded of AIM companies, andwill provide us with a good platform for the future. Future Prospects We have had an encouraging first six months, but we are not complacent; there ismuch more for us to do if we are to meet our aspirations for the rest of thisyear and create the right context for growth in 2006 and beyond. Our focus will remain divided between serving social housing landlords on theone hand, and serving corporate and public sector real estate clients on theother. In social housing terms, the challenge for the remainder of this year will be toeffectively mobilise the teams who will deliver the four recently securedprojects. Experience tells us that the quality of service delivery, and theresultant level of both customer satisfaction and performance related incentivepayments, are hugely dependant upon decisions taken at the very outset.Alongside this priority, we must also remain focussed upon our tracking list,which contains over £1 billion of schemes meeting our target profile, nurturingin particular those relationships which will provide the tender opportunities tosatisfy our new workload demands for 2006. In corporate and public sector terms, our short term challenge will betechnology related. During the next six months, we must complete the developmentphase of our software systems replacement programme, which is expected toprovide important medium term service and efficiency improvements to InspaceMaintain, Inspace Environment and Inspace Complete, ahead of the implementationphase scheduled for next year. Assembling the balance of our base work loadrequirement for 2006 will, naturally, also remain an important second half yearpriority. Summary It is easy to forget that the business has only existed as a stand alone entitysince the beginning of this year. Much has been achieved since; a successfulflotation on AIM, encouraging first half results, a growing order book, and theassembly of an experienced and balanced top team with a pragmatic understandingof short term priorities and clear, ambitious plans for the future. We hope thatShareholders will share the Board's satisfaction with our early achievements asa stand alone business, and our confidence that with the potential offered byour markets and the quality inherent in our people, we offer the prospect to dobetter still. Colin EnticknapExecutive Chairman6 September 2005 Group Profit and Loss Account Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 Notes £'000 £'000 £'000 TurnoverContinuing operations 2 70,815 43,256 101,731Discontinued operations 2 - 5,541 5,541 _________ __________ __________ 70,815 48,797 107,272Cost of sales (54,341) (36,900) (79,615) _________ _________ _________Gross profit 16,474 11,897 27,657Administrative expenses (12,903) (9,909) (21,407) _________ _________ _________ Operating profitContinuing operations 2 3,571 2,100 6,362Discontinued operations 2 - (112) (112) _________ _________ _________ 3,571 1,988 6,250Net interest payable and similar (126) - -charges __________ __________ __________Profit on ordinary activities before 3,445 1,988 6,250taxation Tax on profit on ordinary activities 3 (1,082) (635) (1,965) __________ __________ __________Profit for the financial period 2,363 1,353 4,285Dividends* 4 - (1,350) (4,275) __________ __________ __________Retained profit for the financial 2,363 3 10period _________ _________ _________ Earnings per share 5 4.04 3.01 8.82Fully diluted earnings per share 5 3.94 2.31 7.32 _________ _________ _________ *Half year 30 June 2004 on a proforma basis Group Balance Sheet Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 Notes £'000 £'000 £'000 Fixed assetsTangible assets 899 615 579 _________ _________ _________ Current assetsStocks 6 913 1,295 721Debtors 7 32,594 19,018 24,314Cash and bank balances 3,648 35 37 _________ _________ _________ 37,155 20,348 25,072 Creditors: amounts falling due within 8 (24,469) (20,028) (24,398)one year _________ _________ _________Net current assets 12,686 320 674 _________ _________ _________ 13,585 935 1,253 _________ _________ _________ Capital and reservesCalled up share capital 1,343 927 1,125Share premium 9,864 - 113Capital redemption reserve 3 - -Profit and loss account 2,375 8 15 _________ _________ _________ 9 13,585 935 1,253 _________ _________ _________ Group Cash Flow Statement Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 Notes £'000 £'000 £'000 Cash flow from operating activities 10 2,168 2,379 3,657 Returns on investments and servicing of (126) - -finance Taxation paid (484) (324) (1,742) Capital expenditure and financial (498) (143) (312)investment Equity dividends paid (4,275) (1,900) (1,900) _________ _________ _________Cash flow before use of liquid (3,215) 12 (297)resources and financingFinancing 6,826 - 311 _________ _________ _________Increase in cash 3,611 12 14 _________ _________ _________ Reconciliation of net cash flow tomovement in net funds Increase in cash 3,611 12 14 _________ _________ _________Opening net funds 37 23 23 _________ _________ _________Closing net funds 3,648 35 37 _________ _________ _________ Notes to the Financial Statements 1. Basis of preparation The interim financial information for the six months to 30 June 2005 has beenprepared on the basis of the accounting policies applied in the Group'sstatutory accounts for the year to 31 December 2004 as set-out in the AIMAdmission document prepared for the Group's flotation on AIM. The Directorsexpect those accounting policies to apply to the accounts for the year to 31December 2005. The half year information has not been audited and does notrepresent statutory accounts. The information shown for the year to 31 December2004 has been extracted from the AIM Admission document. 2. Segmental analysis Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 £'000 £'000 £'000 TurnoverAnalysis by class of business:Social housing maintenance 29,482 14,354 35,154Corporate and public sector maintenance 31,105 27,761 56,885Interior design, installation and furnishing 10,228 1,141 9,692Discontinued activities - 5,541 5,541 _________ _________ _________ 70,815 48,797 107,272 _________ _________ _________ Operating profitAnalysis by class of business:Social housing maintenance 1,873 1,077 2,552Corporate and public sector maintenance 1,334 1,407 3,195Interior design, installation and furnishing 364 (384) 615Discontinued activities - (112) (112) _________ _________ _________ 3,571 1,988 6,250 _________ _________ _________ 3. Taxation The taxation charge for the period has been calculated based on the estimatedtax rate for the year of 31.40%. 4. Dividends An interim dividend of 0.933p per ordinary share will be paid to theshareholders on the register at 24 May 2005 (57,876,783 shares), representing 5/6ths of the total interim dividend, and an interim dividend of 0.161p perordinary share will be paid to the shareholders on the register at 16 September2005 (67,136,042 shares), representing 1/6th of the total interim dividend. Bothpayments will be made on 14 October 2005. 5. Earnings per share Earnings per share have been calculated by dividing the profit on ordinaryactivities of £2.363 million (June 2004: £1.353 million; December 2004: £4.285million) by 58,532,666 shares (June 2004: 45,000,000 shares; December 2004:48,584,462 shares) being the weighted average number of ordinary shares in issueduring the year. The fully diluted earnings per share is based on 59,952,559 ordinary shares(June 2004: 58,549,950 shares; December 2004: 58,549,950 shares) having takeninto account the dilutive effect of shares which have been made available toemployees under existing incentive schemes. Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 £'000 £'000 £'000 6. StocksStock of raw materials 277 296 265Work in progress 636 999 456 _________ _________ _________ 913 1,295 721 _________ _________ _________ 7. DebtorsTrade debtors 16,849 8,739 9,889Prepayments 1,568 807 492Accrued income 6,987 3,881 5,676Deferred tax 13 17 13Amounts recoverable on contracts 7,177 5,574 8,244 _________ _________ _________ 32,594 19,018 24,314 _________ _________ _________ 8. CreditorsTrade creditors 12,292 7,829 10,849Due to Willmott Dixon Limited - 5,520 3,143Payments on account 1,727 2,245 1,333Corporation tax 1,082 635 484Other taxes and social security 4,127 - -Accruals 5,241 2,449 4,314Proposed dividends - 1,350 4,275 _________ _________ _________ 24,469 20,028 24,398 _________ _________ _________ 9. Reconciliation of movements in equityshareholders' funds Profit for the financial period 2,363 1,353 4,285Dividends* - (1,350) (4,275) _________ _________ _________ 2,363 3 10Call on share capital 531 - 311Capital redemption (3) - - _________ _________ _________ 2,891 3 321Issue of shares 10,054 - -Costs associated with issue of shares (613) - - _________ _________ _________Net proceeds from issue of shares 9,441 - - _________ _________ _________Movement in equity shareholders' funds 12,332 3 321Opening shareholders' funds 1,253 932 932 _________ _________ _________Closing shareholders' funds 13,585 935 1,253 _________ _________ _________ *Half year 30 June 2004 on a proforma basis Inspace plc floated on AIM on 26 May 2005 and issued 9,259,259 additionalordinary shares. During the period 678,096 ordinary shares were also issuedunder share incentive schemes. A call on share capital was also made during the period in respect of 1,201,402shares issued under share incentive schemes. 1,351,263 partly called shares werealso re-purchased and cancelled by the Company. 10. Cash flows Unaudited Unaudited Audited half year half year year ended 30 Jun 2005 30 Jun 2004 31 Dec 2004 £'000 £'000 £'000 Reconciliation of operating profit to net cashinflow from operating activities Operating profit on ordinary activities before 3,571 1,988 6,250interest and taxationDepreciation 180 151 305Loss on sale of fixed assets - - 34Decrease/(increase) in stock, work in progress andamounts recoverable on long term contracts 875 (3,279) (5,379)(Increase)/decrease in debtors (9,344) 2,551 376Increase in payments on account 394 1,414 502Increase/(decrease) in trade and other creditors 6,492 (446) 1,569 _________ _________ _________Net cash inflow from operating activities 2,168 2,379 3,657 _________ _________ _________ Analysis of change of net fundsOpening cash and bank balances 37 23 23Increase in cash 3,611 12 14 _________ _________ _________Closing net funds 3,648 35 37 _________ _________ _________ - Ends - This information is provided by RNS The company news service from the London Stock Exchange