Renew Holdings Regulatory News (RNWH)

29 Nov 2005 07:00

Montpellier Group PLC29 November 2005 Montpellier Group Plc("Montpellier" or the "Group") Preliminary Results for the year ended 30 September 2005 Montpellier, the UK specialist construction services business, today announces areturn to profitability and dividend payments for the year and outlines itsfuture strategy. HIGHLIGHTS • Group turnover of £455m (2004: £459m) • Group profit before tax of £1.2m (2004: loss of £6.9m) • Earnings per share of 3.46p (2004: loss of 11.62p) • Ongoing operational profit before exceptional items of £2.7m (2004 £0.3m) • Financial position underpinned by £18m net cash inflow from sale of Bullock • Elimination of FRS 17 pension liability • Appointment of Group Chief Executive • Strategy in place to leverage extensive skills base within specialist markets • Dividend of 0.2p (2004: nil) Roy Harrison, Chairman, commented: "I am pleased to report a year of significant and positive change for the Group. The sale of Bullock has transformed our financial position and after athorough review we have every confidence that the Group's legacy contractexposures are a thing of the past." "The second half of the year has seen continued success from the Group'sstrategy of focusing on the market sectors in which we have excellent skills andexperience. Brian May, the Group's new Chief Executive, is driving thisstrategy to create an even greater focus on these strengths to take maximumadvantage of the strong markets in which our businesses operate. The Boardproposes to change the Group's name to Renew Group Plc reflecting this strategy." "The Board is confident that the Group is now capable of delivering reliable andgrowing cash backed profits going forward." 29 November 2005 ENQUIRIES: Montpellier Group Plc Tel: 020 7522 3200 Brian May, Chief Executive Sandy McArthur, Group Financial Controller College Hill Tel: 020 7457 2020 Matthew Gregorowski Mark Garraway The report and accounts will be posted to shareholders in due course and copiesof the preliminary announcement are available upon request from the CompanySecretary, 39 Cornhill, London, EC3V 3NU or via the company's website:www.montpelliergroup.plc.uk MONTPELLIER GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 CHAIRMAN'S STATEMENT Introduction I am pleased to report a year of significant and positive change for the Group.As a result of the sale of Bullock Construction, which was approved byshareholders on 16 September 2005, the Group has been able to underpin itsfinancial position. The total consideration was £42.2m, resulting in a net cashinflow of £18m after the repayment of intra group balances. In June, Brian Maywas appointed as the Group's new Chief Executive. Since his arrival he hasvisited all of the Group's businesses and as part of these visits has completed,with the support of the subsidiary company directors and the Board, a furtherreview of its legacy contract exposures. It is the Board's view that theselegacy contract issues have now been provided for consistent with the expectedlevel of cash recoveries from those contracts. The Group's activities have been reorganised in line with its core skills baseand it is now operating from a much reduced overhead base. Actions have beentaken to reduce the Group's exposure to higher risk, lower margin contracts andthe Group's businesses are now winning new work through partnering agreementswith their key clients. With the successful introduction of the controlmechanisms which were noted in this report last year and which have now beenfully implemented, the Group's overall risk profile has been greatly reduced. Group strategy and name change The second half of the year has seen continued success from the Group's strategyof focusing on the market sectors in which we have excellent skills andextensive experience. Following the sale of Bullock, Brian May will look todevelop this strategy and create even greater focus on the Group's corestrengths in its specialist areas of activity. This is outlined in more detailin the Chief Executive's review that follows. The past year has been an incredibly difficult and challenging period for theGroup and there has been a great deal of change, including the sale and closureof a number of the Group's businesses. Reflecting this more focused approach,the Board is proposing to change the Group's name to Renew Group Plc. An EGMwill be held in January 2006 in order for shareholders to approve this namechange. Results and dividend Group turnover for the year ended 30 September 2005 was £455m (2004: £459m) andprofit before tax was £1.2m (2004: loss before tax of £6.9m). The resultingearnings per share for the period was 3.46p compared to a loss per share lastyear of 11.62p. Net assets on the Group balance sheet as at 30 September were£4.7m with a cash balance of £13.6m and indebtedness of £12m. Group turnover from ongoing operations was £330m (2004: £349m). Profit fromongoing operations before exceptional items was £2.7m (2004: £0.3m). The totalprovisions made during the year against legacy contracts in our ongoingbusinesses, which were procured during 2002-2003 and all of which are nownearing financial agreement with the client, was a further £15.4m. Therestructuring of ongoing businesses and other exceptional items amounted to£4.4m. The Board is recommending the payment of a dividend of 0.2p in the current year,and having returned to the dividend list, it intends to pursue a progressivedividend policy. Lovell Pension Scheme The Group adopted FRS17 with effect from 1 October 2003. The Group has againthis year implemented a number of pension transfer initiatives to both deferredmembers and pensioners of the scheme that resulted in a reduction of the pensionscheme fund deficit of £3.7m with a total cost of £1.1m. The benefit of thisfurther reduction in deficit, along with an improved investment performanceafter a review of investment strategy by the fund's Trustees, has resulted inthere being no FRS17 liability as at 30 September 2005. The resultant asset hasnot been recognised in the Group balance sheet in accordance with the guidanceestablished by FRS17. Property The Group continues its strategy of realising value and cashflow from itsportfolio of UK and US property assets. These assets are being activelymanaged, and during the year £1.3m was written off the value of two of theGroup's UK properties in order to facilitate their future sale. During theyear, the Group realised £2.6m (2004: £4.4m) from property sales. Employees This year has again been a difficult one for our employees and the Boardappreciates the continued hard work, commitment and loyalty they havedemonstrated throughout the period. Board and Management With the appointment of Brian May as Chief Executive, I have stepped down asExecutive Chairman and have taken up the role of Non Executive Chairman as from1 October 2005. Outlook At 30 September 2005 the Group's order book stood at £193m (2004 comparative:£217m). This accords with the Group's focus on the specialist areas of activitythat will form the core of its strategy going forward and on lower risk, highermargin contracting. By continuing this focus and taking advantage of the strongmarkets in which its businesses operate, the Board is confident that the Groupis now capable of delivering reliable and growing cash backed profits. 28 November 2005 Roy HarrisonChairman CHIEF EXECUTIVE'S REVIEW In the period to the end of the financial year, and subsequently, I have visitedall of our subsidiary businesses, met our senior staff and visited a largenumber of our projects. These visits have enabled me to undertake a detailedassessment of the performance and prospects for each business. The majority ofthe Group's businesses have been profitable for many years and trade underwell-respected and long-standing brand identities operating in selected markets,defined by specialist activity, regional knowledge and experience. This review process has enabled me to gain a full understanding of the Group'sbusinesses and agree with the Board a strategy for the Group going forward.This is fundamentally a development of the Group strategy which was implementedlast year, focusing on the specialisms of our constituent brands which sets themapart from others in the market. As mentioned in the Chairman's Statement it isproposed to change the Group's name to Renew Group Plc to better reflect thisstrategy. The Group's specialist areas of activity are: • Land remediation• Nuclear decommissioning• Social housing• High quality residential• Structural refurbishment• Restoration• Retail• Science and Education• Rail infrastructure These markets have good future prospects and the Board will look to grow theGroup's operations in each while building on client relationships which havebeen developed over many years. All the Group's businesses will continuedeveloping these relationships to ensure longer term working arrangements andincreased repeat and negotiated business. Key to the Group's strategic objectives is having an effective and efficientexecutive control in place. I have formed an Executive Management Committeecomprising the Managing Directors of the subsidiary businesses, who will allreport directly to me. This new committee will co-ordinate the strategy, acrossthe Group, sharing knowledge and best practice, and continue to implement keyprocesses to ensure that we effectively manage all our risks and safely deliverhigh quality services. In addition, control will be enhanced by regular visits to the individualbusinesses by me and my senior financial and commercial colleagues to ensurethat all controls are being implemented and that Group policies are communicatedwidely. The specialist differentiators within the Group give us an excellent opportunityto develop the business further and I am confident that we will deliver reliableand growing profits in the years ahead. MONTPELLIER GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 GROUP PROFIT AND LOSS ACCOUNT Note 2005 2004 £000 £000 Turnover: Group and share of joint ventures 457,750 461,695Less share of joint ventures' turnover (2,714) (3,036) Ongoing operations 330,113 349,485Discontinuing operations 39,052 53,171 Total continuing operations 369,165 402,656Discontinued operations 85,871 56,003 Group turnover 455,036 458,659Cost of sales (including exceptional items - see note 1) (437,409) (442,534) Gross profit 17,627 16,125Administrative expenses (including exceptional items - see note 1) (37,689) (22,834)Other operating income 53 2,098 Group operating loss (20,009) (4,611)Income from joint ventures - - Ongoing operations before exceptional items 2,687 272Exceptional items 1 (19,845) 1,038 Ongoing operations after exceptional items (17,158) 1,310Discontinuing operations (8,351) (10,378) Total continuing operations (25,509) (9,068)Discontinued operations 5,500 4,457 Total operating loss before interest, including share of joint ventures 1 (20,009) (4,611)Profit/(Loss) on disposal of subsidiary companies 22,300 (495) Profit / (Loss) on ordinary activities before interest 2,291 (5,106) Bank interest receivable 921 2,280Interest payable (1,597) (2,192)Other finance charges - FRS17 pension (440) (1,921) Profit / (Loss) on ordinary activities before taxation 1,175 (6,939)Taxation receivable / (payable) on ordinary activities 2 899 (106) Profit / (Loss) for the financial year 2,074 (7,045) Dividends proposed 3 (120) - Profit / (loss) transferred to / (from) reserves 1,954 (7,045) Basic earnings / (loss) per Ordinary Share 4 3.46p (11.62p)Diluted earnings / (loss) per Ordinary Share 4 3.46p (11.62p) MONTPELLIER GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2005 2004 £000 £000 Profit / (Loss) for the financial year 2,074 (7,045)Exchange movements in reserves (171) 110Surplus on revaluation of landfill assets - 416Movements in defined benefit pension scheme (2,222) 2,351 Total recognised gains and losses for the year (319) (4,168) Prior Year Adjustment - (21,712) Total recognised gains and losses since the last annual report (319) (25,880) MONTPELLIER GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 GROUP BALANCE SHEET 2005 2004 £000 £000Fixed assetsIntangible assets: Goodwill 4,602 4,905Tangible assets 14,930 16,969Investments - 30Investments in joint ventures: Loans to joint ventures 438 625 Share of gross assets 9,704 13,241 Share of gross liabilities (5,276) (8,105) 4,866 5,761 24,398 27,665Current assetsStocks and work in progress 9,573 8,641Debtors: due after more than one year 5,751 10,160Debtors: due within one year 72,836 94,500Current asset investments 6,089 7,388Cash at bank and in hand 13,590 18,068 107,839 138,757Creditors: amounts falling due in less than one year (115,140) (145,383) Net current liabilities (7,301) (6,626) Total assets less current liabilities 17,097 21,039Creditors: amounts falling due after more than one yearLong-term debt (8,363) (8,363)Other creditors (4,058) (5,215) Net assets excluding pension liability 4,676 7,461 Pension Liability - (2,346) Net assets 4,676 5,115 Capital and reservesShare capital 5,990 5,990Share premium account 5,893 5,893Capital redemption reserve 3,896 3,896Revaluation reserve 73 489Profit and loss account (11,176) (11,153)Equity shareholders' funds 4,676 5,115 PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 GROUP STATEMENT OF CASH FLOW 2005 2004 £000 £000 Net cash (outflow) / inflow from operating activities (25,338) 1,677 Returns on investments and servicing of financeInterest received 921 2,279Interest paid (1,597) (2,192) (676) 87TaxationNet corporation tax received - 527 Capital expenditure and financial investmentPayments to acquire tangible fixed assets (640) (682)Payments to acquire current asset investments - (9,005)Proceeds on sale of tangible fixed assets 225 2,681Proceeds on sale of current asset investments - 150Loans repaid by joint venture 200 1,053 (215) (5,803)Acquisitions and disposalsReceipt from sale of subsidiaries 21,343 3,746Receipt from sale of shared equity loans 1,894 -Cash disposed on disposal of subsidiaries (3,380) (1,076) 19,857 2,670Equity dividends paid to shareholders - (682)Cash outflow before use of liquid resources and financing (6,372) (1,524) Management of liquid resourcesDecrease in liquid resources - - FinancingIssue of share capital - 256Acquisition of own shares - (192)Movement in short-term borrowings 3,600 (1,103)Finance lease payments (623) (360) 2,977 (1,399) Decrease in cash during the year (3,395) (2,923)Reconciliation of net cash flow to movement in net fundsDecrease in cash during the year (3,395) (2,923)Movement in borrowings (2,977) 1,463Movement in liquid resources - - Changes in net funds arising from cash flows (6,372) (1,460)Other non-cash movements (1,680) 4,776 Movement in net funds during the year (8,052) 3,316Opening net funds 8,321 5,005 Closing net funds 269 8,321 MONTPELLIER GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005 NOTES TO THE PRELIMINARY STATEMENTFOR THE YEAR ENDED 30 SEPTEMBER 2005 1. Operating loss The total operating loss for this year includes the following amounts that theDirectors regard as exceptional items because of their value and nature butwhich do not fall to be recorded as non-operating exceptional items under therequirements of FRS 3 2005 2004 £000 £000Ongoing activities:Reduction in pension deficit following settlements of liabilities (a) 3,650 19,250Cost of incentives to members connected to the settlements (a) (1,111) (4,959) 2,539 14,291 Contract losses on legacy contracts procured in 2002/2003 (b) (15,437) (10,754)Impairment of fixed assets and current asset investments (1,749) (1,617)Redundancy and reorganisation costs (454) (882)Other non recurring costs (4,744) - (19,845) 1,038 Loss on discontinuing items of £8.4m (2004: £10.4m) is after charging: Contract losses on legacy contracts procured in 2002/2003 (b) (4,758) (10,660)Redundancies (1,289) (260)Closure Costs (259) - (6,306) (10,920) (a) In both years the Directors have made a number of offers to deferred members of the Lovell Pension scheme to transfer their entitlements under the scheme to a defined contribution arrangement and a number of offers to pensioners of the scheme to buy out certain benefits attributable under the scheme. The reduction in pension deficit recorded above shows the movement on the FRS 17 actuarial deficit relating to these buy outs and transfers and the cost of incentives reflect the sums paid to facilitate these transfers. (b) As noted in the Chairman's statement to these accounts, the Group suffered significant losses on contracts procured in 2002/2003. (c) The contract losses are included in cost of sales, the remaining exceptional items are included in administration costs. 2. Taxation credit/(charge) on ordinary activities Analysis of credit/(charge) in year 2005 2004 £000 £000 Current tax:UK Corporation Tax on profits of the year - -Adjustments in respect of previous periods 1 150 1 150Foreign tax - 33 Total current tax 1 183Deferred tax 898 (289) Taxation credit/(charge) on profit/(loss) on ordinary activities 899 (106) There is no UK Corporation Tax charge due to trading losses in this year. TheGroup has available further unused tax losses to carry forward against futuretaxable profits. 3. Dividends 2005 2004 Pence Pence Interim dividend - -Final dividend 0.2 - Total dividend 0.2 - £000 £000 Interim - -Final 120 - Total dividend 120 - A final dividend of 0.2 pence per Ordinary Share will be paid to shareholders onthe register on 3 March 2006, payable on 28 March 2006. As there was no interimdividend the total dividend for the year is 0.2 pence. 4. Earnings/(Loss) per Ordinary share 2005 2004 Earnings Weighted EPS Pence Restated Weighted EPS Pence average number Earnings average number of shares of shares £000 000s £000 000s FRS 14 Basis Basic 2,074 59,899 3.46 (7,045) 60,609 (11.62)earnings/(loss)per shareDilutive Effect of - - - - - -options Diluted earnings/(loss) 2,074 59,899 3.46 (7,045) 60,609 (11.62)per share 5. Preliminary Statement This statement, which has been agreed with the auditors, was approved by theboard on 28 November 2005. It is not the Group's statutory accounts. Thestatutory accounts for the year ended 30 September 2004 have been delivered tothe Registrar of Companies and received an audit report which was unqualifiedand did not contain statements under s237(2) of the Companies act 1985. Thestatutory accounts for the year ended 30 September 2005 have not yet beenapproved, audited or filed. This information is provided by RNS The company news service from the London Stock Exchange