Renew Holdings Regulatory News (RNWH)

30 Jun 2005 07:00

Montpellier Group PLC30 June 2005 Montpellier Group Plc ("Montpellier" or the "Group") Interim Results for the six months ended 31 March 2005 Montpellier, the UK construction business, today announces further progress inits recovery with strong trading in all its businesses and a 31% increase in itsforward order book. Highlights • Turnover of £225m (2004: £212m) • Profit after tax and exceptional items of £147,000 (2004: loss of £19.53m as restated) • Earnings per share of 0.25p (2004: loss per share of 31.82p as restated) • Forward order book of £582m (2004: £444m) • Appointment of Group Chief Executive • Discussions with management of Bullock Construction regarding possible sale Roy Harrison, Executive Chairman, said: "I am pleased to report another period of good progress in the Group's recovery. Trading in all of our businesses has been strong, with our chosen marketsectors buoyant and offering significant growth opportunities. This has resultedin a much improved order book of £582m." "The Board is confident that the actions it has taken, and continues to take,will restore the Group's financial position by the year end, providing a stableplatform for the future." 30 June 2005 Enquiries: Montpellier Group Plc Tel: 020 7522 3200 Roy Harrison, Executive ChairmanSandy McArthur, Group Financial Controller College Hill Tel: 020 7457 2020Matthew GregorowskiMark Garraway MONTPELLIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 CHAIRMAN'S STATEMENT Introduction I am pleased to report another period of good progress in the Group's recovery.The Group has benefited from its strategy of focusing on its three chosen marketsectors - Social Housing, Remediation and Building in Partnership - areas inwhich the Group's businesses have core contracting skills, good market share andstrong regional and national brands. Each of these markets is buoyant and offerssignificant growth opportunities. During the period we continued to encounter problems in the finalisation ofcertain legacy contract settlements. At the interim stage last year, weannounced contract exposures which led to considerable provisions being made atthe half year, the majority of which were retained at the year end. The Boardhas continued to review all its contracts on a regular basis and has decided toprovide an additional £1.9 million at this half year in respect of identifiedlegacy contract exposures. The Board will continue to keep these legacy issuesunder close review. Despite these, the Group was still profitable for theperiod. In December, following the reorganisation of Allenbuild through the autumn oflast year, we announced a number of actions which would reduce the Group'sexposure to higher risk, lower margin businesses. As part of these actions, wesubsequently closed down YJL Construction and reallocated its ongoing contractsto our Walter Lilly business, which is now successfully managing these out. Ourapproach of phasing out exposure to high risk, low margin business areas and thecontrol mechanisms which are in place across the Group are resulting in a muchreduced risk profile going forward. The Board anticipates that the total exceptional cost for the year, related toall the Group's reorganisations and restructuring, will be in the region of £6million. Results and Dividend Turnover for the six months to 31 March was £225 million (2004: £212 million)and profit after tax and exceptional items was £147,000 (2004: operating loss of£19.53 million as restated). Earnings per share were 0.25p (2004: loss per shareof 31.82p as restated). The Board is not recommending the payment of a dividend. Approach for Bullock Construction As reported on 24 May, the Board received an approach by the management ofBullock Construction, the Group's principal social housing business, for apotential management buy out. The Board has received expressions of interestfrom a number of third parties and has subsequently decided to progressdiscussions with management, which may or may not lead to an agreement for thesale of the business to them. The Board recognises that a sale of Bullock would provide the Group with thescope to deal comfortably with all legacy contract and property valuationissues, significantly improve the Group's balance sheet and provide cash tosupport the development of the Group's remaining core businesses. Thesebusinesses have good strength and depth of management and have considerablecapacity for growth. The strengthened balance sheet would also provide greaterfinancial leverage for the Group and greater security for the members of itsclosed pension scheme. Appointment of Group Chief Executive As previously announced, Brian May was appointed Group Chief Executive on 20June. Brian has extensive experience in the construction industry, previously asChief Executive of HBG Construction and Laing Construction respectively, andhaving spent most of his career at Tarmac Construction and John Mowlem, latterlyas Managing Director of Mowlem's Building Division. The Board welcomes Brian to the Group, and has every confidence that with hisextensive industry knowledge and experience the business will now take maximumadvantage of the strong markets available to the Group under his leadership. Iwill remain as Executive Chairman for such a period of time to facilitate aneffective handover of the day to day running of the business, after which time Iwill revert to a non-executive role. Operational Review Remediation Through VHE Construction the Group provides a number of specialist remediationservices across the UK. VHE itself deals with brownfield land reclamation,principally of former industrial sites to enable development and includes soiland waste treatment services. Shepley Engineers focuses on nucleardecommissioning, and the refurbishment and rebuilding of wrought and cast ironhistorical structures. All of VHE's specialist services are in high demand, underpinned by theGovernment's commitment to the development of brownfield land and to maintenanceand decommissioning of UK nuclear assets, a long-term multi-billion poundcommitment by the Nuclear Decommissioning Authority. Shepley Engineers isretained at BNFL's nuclear site at Sellafield for the next two years andcurrently has orders of £33 million. VHE carry out remediation projects throughout the UK, currently for such clientsas the Welsh Development Agency at Abercwmboi in South Wales, and for RWE ThamesWater in Reading. The Division's order book at 31 March was £55 million, 60% upon the same period last year, with orders of six to twelve months averageduration. Building in Partnership The Division consists of a number of regional construction businesses -Allenbuild, Britannia, YJL London and Walter Lilly - each of which operates inniche market sectors and benefits from strong regional brands. All of thesebusinesses are taking advantage of good growth opportunities and, following thereorganisation of Allenbuild, are all winning new work through partneringagreements with key clients in both the public and private sectors. Walter Lilly has won two significant contracts in London to refurbish theCaledonian Club and extend the Jodrell Laboratory at the Royal Botanical Gardensin Kew; Allenbuild has won two major contracts to build custodial centres inPreston and Lancashire for Lancashire Constabulary; and as framework contractorfor Tesco, Britannia Construction has recently been awarded four further majorcontracts to extend and refurbish stores in Swindon, Midsomer Norton, Worcesterand New Milton. The combined order book of the Group's Building companies at the end of the halfyear was £203 million (2004: £272 million). This is a reduction on the previousyear, reflecting the closure of YJL Construction, and Allenbuild's more measuredapproach to winning new work. Social Housing Through its Bullock Construction and Allenbuild subsidiaries, the Group providesnew build and refurbishment services to the social housing sector in partnershipwith Housing Associations and Local Authorities. Bullock Construction, which operates across the North and Midlands regions, is amarket leader in social housing refurbishment and continues to benefit from theGovernment's Decent Homes Initiative. It has just commenced a major five yearhousing improvement programme with Bradford Community Housing Trust and wasrecently appointed to deliver an ALMO (Arms Length Management Organisation)improvements programme for Leeds South Homes over the next five years. Allenbuild provides new build services in the South East, and as part of theGentect Homes consortium is building hundreds of affordable homes of varyingtenure over the next few years. The first project commenced in late 2004. The Social Housing order book at 31 March was £324 million (2004: £137 million),with contracts of three years average duration. Property Portfolio The Group continues its strategy of realising value from its portfolio of UK andUS property assets in order to generate additional cash. The existing propertyassets are being actively managed and the Group is currently reassessing thepotential realisable value for a number of its properties in order to facilitatetheir sale. During the period the Group did not realise proceeds from intendedproperty disposals. The Group is not pursuing the acquisition of any new sites. Outlook Following a period of great change and an enormous amount of hard work by allthe Group's employees, I am pleased to be able to hand over a business to ournew Chief Executive which has a clear strategy and focus centred on its nichebusinesses. The Group's core divisions operate in strong and growing marketsectors and continue strengthening their regional presence, focused on marginimprovement and low risk contracting. Trading in all the Group's businesses is strong. The Group's order book has seensome significant growth and was valued at £582 million as at 31 March 2005, upfrom £444 million at the same period last year. In addition, these orders are ofa much higher quality, predominantly generated from framework and partneringagreements with the Group's key clients. The Board is confident that the actionsit has taken, and continues to take, will restore the Group's financial positionby the year end, providing a stable platform for the future. Roy HarrisonExecutive Chairman29 June 2005 MONTPELLIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 GROUP PROFIT AND LOSS ACCOUNT Notes Six months ended Year ended 31 March 30 September Restated 2005 2004 2004 £000 £000 £000Turnover: Group ongoing operations andshare of joint ventures 227,320 212,603 461,695Less share of joint ventures' turnover (2,113) (258) (3,036)Ongoing operations 221,321 193,857 405,598Discontinuing operations 3,886 18,488 53,061Group turnover - continuing 225,207 212,345 458,659Cost of sales (including exceptionallosses on problem contracts) 1 (204,995) (210,521) (442,534)Gross profit 20,212 1,824 16,125Administrativeexpenses (includingexceptional income & costs) 1 (18,633) (20,552) (22,834)Other operating income - 584 2,098Ongoing operations 3,721 (8,591) 6,027Discontinuing operations (2,142) (9,553) (10,638)Group operating profit/(loss) -continuing 1,579 (18,144) (4,611)Loss on disposal of subsidiarycompanies 1 - (495) (495)Loss on closure of operations 1 (864) - -Profit/(loss) on ordinary activities 715 (18,639) (5,106)before interestNet interest (payable)/receivable (328) 66 88Other finance charges - FRS 17 pension (240) (961) (1,921)Profit/(loss) on ordinary activitiesbefore taxation 147 (19,534) (6,939)Taxation 3 - - (106)Profit/(loss) for the period 147 (19,534) (7,045)Dividends 4 - - -Retained profit/(loss) for the period 147 (19,534) (7,045)Basic earnings/(loss) per Ordinary Share 5 0.25p (31.82p) (11.62p) Diluted earnings/(loss) per Ordinary Share 5 0.25p (31.82p) (11.62p) MONTPELLIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Six months ended Year ended 31 March 30 September Restated 2005 2004 2004 £000 £000 £000Profit/(loss) for the period 147 (19,534) (7,045)Exchange movements in reserves (67) (461) 110Surplus on revaluation of landfill assets - - 416Movement on actuarial deficit in the pension scheme - - 11,294Movement on deferred tax relating to the pension deficit (103) 121 (8,943)Total recognised losses since last annual report (23) (19,874) (4,168) MONTPELLIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 GROUP BALANCE SHEET Notes 31 March 30 September Restated 2005 2004 2004 £000 £000 £000Fixed assetsIntangible assets: Goodwill 4,753 5,057 4,905Tangible assets:Investment Properties - 7,110 -Other Tangible Fixed Assets 16,169 16,674 16,969Investments 30 31 30Investments in joint ventures:Loans to joint ventures 444 2,058 625Share of gross assets 9,495 18,661 13,241Share of gross liabilities (4,905) (12,713) (8,105) 5,034 8,006 5,761 25,986 36,878 27,665Current assetsStocks and work in progress 16,574 10,928 8,641Debtors:due after more than one year 8,252 16,632 10,160due within one year 87,698 83,298 94,500Current asset investments - assets held for resale 7,375 - 7,388Cash at bank and in hand 9,823 7,011 18,068 129,722 117,869 138,757Creditors: amounts falling due within one year (134,122) (128,564) (145,383)Net current liabilities (4,400) (10,695) (6,626) Total assets less current liabilities 21,586 26,183 21,039Creditors: amounts falling due after more thanone yearLong-term debt (8,363) (8,363) (8,363)Other creditors (6,066) (4,999) (5,215)Net assets excluding pension liability 7,157 12,821 7,461Pension liability 2 (2,065) (23,494) (2,346)Net assets/(liabilities) 5,092 (10,673) 5,115 Share capital 6 5,990 5,939 5,990Share premium account 5,893 5,862 5,893Capital redemption reserve 2,050 2,050 2,050Revaluation reserve 489 73 489Capital reserve 1,846 1,846 1,846Profit and loss account (11,176) (26,443) (11,153)Equity shareholders' funds/(deficit) 7 5,092 (10,673) 5,115 MONTPELLIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 GROUP STATEMENT OF CASH FLOW Notes Six months ended Year ended 31 March 30 September 2005 2004 2004 £000 £000 £000 Net cash (outflow)/inflow from operating activities 8 (21,974) (5,384) 1,677 Returns on investments and servicing of financeNet interest (paid)/received (218) 66 87 TaxationNet corporation tax received - 380 527 Capital expenditure and financial investmentPayments to acquire tangible fixed assets (659) (9,525) (9,687)Proceeds on sale of tangible fixed assets 142 2,572 2,681Proceeds on sale of current asset investments - 150 150Loans repaid by joint venture 155 (392) 1,053Proceeds on sale of shared equity portfolio 2,019 - - 1,657 (7,195) (5,803) Acquisitions and disposalsCash disposed on disposal of subsidiaries - (1,076) (1,076)Receipt from sale of business - 2,000 3,746 - 924 2,670 Equity dividends paid to shareholders - (682) (682)Cash outflow before financing (20,535) (11,891) (1,524) FinancingIssue of share capital - 174 256Acquisition of own shares - (192) (192)Movement in short-term borrowings 3,600 (1,104) (1,103)Finance lease payments (240) (120) (360) 3,360 (1,242) (1,399) Decrease in cash during the period (17,175) (13,133) (2,923) MONTPELLIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 NOTE 1 DISCONTINUING OPERATIONS & EXCEPTIONAL ITEMS (a) Discontinuing Operations Discontinuing operations relate to the activities of YJL Construction (excludingYJL Infrastructure) and a division of Britannia Interior Contracts Limited,which are in the process of being closed down. These activities are shown asdiscontinuing as they do not meet the definition of discontinued as defined byFRS 3. (b) Operating Exceptional Items The operating profit/(loss) includes the following amounts that the Directorsregard as exceptional because of their value and nature, but which do not fallto be recorded as non-operating exceptional items under the requirements of FRS3. Six months ended Year ended 31 March 30 September 2005 2004 2004 £000 £000 £000 Reduction in pension deficit followingsettlements of liabilities (i) - - 19,250Cost of incentives to members connectedto the settlements (i) - - (4,959) - - 14,291Contract losses on specific problem contractsincepted in prior years (ii) (2,899) (15,741) (21,674)Write down of properties for resale (iii) - (1,617) (1,617)Redundancy and reorganisation costs (iv) (345) (882) (882) (3,244) (18,240) (9,882) (i) Defined benefit pension scheme During the year ended 30 September 2004 the Directors made a number of offers todeferred members of the scheme to transfer their entitlements under the definedbenefit scheme to a defined contribution arrangement and a number of offers topensioners of the scheme to buy out certain benefits attributable under thescheme. The figure recorded above shows the movement on the FRS 17 actuarialdeficit relating to these transfers and the costs reflect the sums paid tofacilitate these transfers. (ii) Contract losses During the year ended 30 September 2004 the Group suffered a number ofcontractual issues that relate to contracts incepted in prior years where thedifficulties relating to these contracts were not identified in the prior periodor became more apparent in this period as negotiations to resolve the contractterms progressed. During the period ended 31 March 2005 additional contractlosses have been incurred to resolve legacy contract issues. (iii) Write down of properties held for resale Provision was made in the prior year against the purchase value of twoproperties to reflect their market value as at 31 March 2004 and 30 September2004. (iv) Redundancy and reorganisation costs During the current and preceding periods a number of exceptional costs, whichprimarily relate to redundancies, have been incurred as a result ofreorganisations within the Group which do not constitute a fundamentalreorganisation as defined by FRS 3. In the period to 31 March 2005 these costsrelate to the reorganisation of Allenbuild. With the exception of contract losses which have been included in gross margin,all other operating exceptionals are reflected in the administrative expenses inthe profit and loss account. (c) Non-Operating Exceptional Items Six months ended Year ended 31 March 30 September 2005 2004 2004 £000 £000 £000Loss on disposal of subsidiary companies - (495) (495)Loss on closure of operations (864) - - The loss on disposal of subsidiary companies relates to the disposal, during theyear ended 30 September 2004, of the Group's loss-making subsidiaries CornhillInteriors Limited, Lodge and Sons (Builders) Limited and YJL Facilities Limited. The loss on closure of operations is in respect of redundancy costs directlyconnected with the closure of YJL Construction (excluding YJL Infrastructure)and a division of Britannia Interior Contracts Limited. Note 2 Defined Benefit Pension Scheme During the year ended 30 September 2004, the Group fully adopted therequirements of FRS 17 "Retirement Benefits". The deficit (net of a related deferred tax asset) shown on the balance sheet asat 31 March is the amount calculated as at 30 September adjusted forcontributions, charges and finance costs in the period, offset by the associatedmovement in the deferred tax asset. No interim valuation of the assets andliabilities of the scheme has been carried out and, accordingly, there is noactuarial gain or loss shown in the STRGL in respect of the interim period.Actuarial gains and losses in respect of the whole year and the deficit/surplusat the end of the year will be reported in the annual financial statements. This change in accounting policy resulted in a prior year adjustment andrestatement of comparatives in the last annual report. Accordingly, comparativesfor the six month period ended 31 March 2004 have been restated in this report. Set out below is the impact on the profit and loss account, consolidatedstatement of total recognised gains and losses, and the Group balance sheet forthe six months ended 31 March 2004. Six months ended 31 March 2004 SSAP 24 Reverse Total pre Apply FRS 17 SSAP 24 pension FRS 17 £000 £000 £000 £000 £000Profit & loss accountOperating loss (20,242) 2,150 (18,092) (52) (18,144)Loss after tax (20,671) 2,150 (18,521) (1,013) (19,534) Statement of total recognisedgains and lossesMovement on deferred taxation - - - 121 121 Balance sheetNet assets/(liabilities) 9,780 3,041 12,821 (23,494) (10,673) The restatement of the 31 March comparatives has resulted in the balance sheettotal as at 31 March 2004 decreasing by £20.5m from net assets of £9.8m to netliabilities of £10.7m. As reported in the 2004 Annual Report, the Groupimplemented a number of pension transfer initiatives to both deferred membersand pensioners of the scheme during the second half of 2004, which resulted in areduction in the pension scheme deficit of £19.2m at a total cost of £5m. Thebenefit of this reduction combined with actuarial movements and ongoing paymentsinto the scheme resulted in the FRS 17 deficit reducing to £3.3m (£2.3m net ofdeferred tax) as at 30 September 2004. Further details of the most recent formal FRS 17 valuation and the impact of thepension scheme initiatives are set out in the 2004 Annual Report. Note 3 Taxation on profit on ordinary Activities Six months ended Year ended 31 March 30 September 2005 2004 2004 £000 £000 £000Current tax:UK corporation tax on profits/(losses) for the - - -periodAdjustments in respect of previous periods - - 150 - - 150Foreign tax - - 33Total current tax - - 183Deferred tax - - (289) Taxation charge on profit/(loss) on ordinary - - (106)activities The Group and Company have significant unused tax losses available to carryforward against future taxable profits. A significant element of these lossesrelate to activities which are not forecast to generate the level of profitsneeded to utilise these losses. A deferred tax asset has been recognised to theextent considered reasonable by the Directors, where recovery is expected to berecognisable within 12 months of the balance sheet date. Note 4 Dividends No dividends were paid or proposed in the current or preceding period. Note 5 Earnings per Ordinary share Six months ended Year ended 2005 2004 2004 31 March 31 March 30 September Weighted Weighted Weighted average average average number of EPS number of EPS number of EPS Earnings shares Pence Earnings shares Pence Earnings shares Pence £000 000 £000 000 £000 000 Restated Restated Basic earnings per share 147 59,899 0.25 (19,534) 61,381 (31.82) (7,045) 60,609 (11.62)Dilutive effect of options - - - - - - - - -Diluted earnings per share 147 59,899 0.25 (19,534) 61,381 (31.82) (7,045) 60,609 (11.62) Note 6 Share capital 31 March 30 SeptemberGroup 2005 2004 2004 £000 £000 £000 Authorised:100,000,000Ordinary Shares of 10p each 10,000 10,000 10,000 10,000 10,000 10,000Allotted, called up and fully paid:59,898,927 (2004: March 59,388,757 and September 59,898,927)Ordinary Shares of 10p each 5,990 5,939 5,990 5,990 5,939 5,990 Changes in share capital No 10p Ordinary Shares have been issued since 1 October 2004. Note 7 Reconciliation of movements in Group shareholders' funds 31 March 30 September Restated 2005 2004 2004 £000 £000 £000 Profit/(loss) for the period 147 (19,534) (7,045)Other recognised gains and losses for the year (net) (170) (340) 2,877Share issue - 175 257Share buyback - (8,192) (8,192)Net movement on shareholders' funds (23) (27,891) (12,103)Opening shareholders' funds 5,115 17,218* 17,218Closing shareholders' funds 5,092 (10,673)** 5,115 * Previously opening shareholders' funds at 1 October 2003 amounted to £38,930,000 before prior year adjustment in respect of the adoption of FRS 17, amounting to £21,712,000, as detailed in the Annual Report for the year ended 30 September 2004. ** Previously closing shareholders' funds at 31 March 2004 amounted to £9,780,000 before prior year adjustment in respect of the adoption of FRS 17, amounting to £20,453,000. Note 8 Net cash (outflow)/inflow from operating activities Six months ended Year ended 31 March 30 September Restated 2005 2004 2004 £000 £000 £000 Operating profit/(loss) 1,579 (18,144) (4,611)Non operating exceptional items (864) (495) (495) 715 (18,639) (5,106)Depreciation 1,380 767 1,839Amortisation of subsidiary goodwill 152 152 304(Increase)/decrease in stocks and work inprogress (7,933) 2,529 4,816Profit on sale of fixed assets (50) (473) (91)Impairment of current asset investments - 1,616 1,616Decrease/(increase) in operating debtors andprepayments 6,691 (769) (7,338)(Decrease)/increase in creditors and accruals (22,810) 10,786 24,795Decrease in pension deficit (625) (2,098) (20,434)Foreign exchange and other non-cash movements 506 745 1,276Net cash (outflow)/inflow from operating (21,974) (5,384) 1,677activities Note 9 Basis of preparation (a)The accounts for the six months ended 31 March 2005 and the equivalent periodin 2004 have not been audited or reviewed by the Company's auditors. They havebeen prepared on a going concern basis in accordance with applicable accountingstandards consistent with the accounting policies set out in the 2004 AnnualReport. The interim report was approved by the Directors on 29 June 2005. (b) The abridged information in this statement relating to the year ended 30September 2004 is derived from full accounts upon which the auditors issued anunqualified opinion and which did not contain a statement under S237(2) of theCompanies Act 1985 and which have been delivered to the Registrar of Companies. (c) The Group continues to have net current liabilities at the period end andhas incurred a cash outflow during the period, partly because of delays inrealising cash from contracts (including legacy problem contracts) and fromdisposals of assets held for resale. On the basis of expected realisations ofcash from its contracts, assets held for resale and other assets, which mightinclude the disposal of Bullock, and its ongoing banking facilities theDirectors are satisfied that the Group has adequate resources to continue inoperational existence for the foreseeable future. This interim statement is being sent to all shareholders and is also availableupon request from the Company Secretary, Montpellier Group Plc, 39 Cornhill,London EC3V 3NU, or via the website www.montpelliergroup.plc.uk. This information is provided by RNS The company news service from the London Stock Exchange