REG-Mouchel Grp plc Preliminary results - Part 2
Released: 06/10/2009
Part 2 : For preceding part double-click [nRn1F2758A]
2009 £000 2008
£000
ASSETS
Non-current assets
Goodwill 109,717 118,121
Other intangible assets 60,538 71,488
Property, plant and equipment 24,769 18,094
Deferred tax assets 8 28,739 21,926
Financial instruments 9 - 337
223,763 229,966
Current assets
Trade and other receivables 183,033 163,400
Assets held for sale 7 - 3,984
Cash and cash equivalents 12 52,426 51,792
235,459 219,176
Current liabilities
Borrowings (2,153) (1,165)
Trade and other payables (128,509) (119,061)
Current tax liabilities (8,909) (12,857)
Retirement benefit obligations 13 (857) (636)
(140,428) (133,719)
Net current assets 95,031 85,457
Non-current liabilities
Borrowings 9 (150,764) (134,827)
Trade and other payables (1,404) (2,126)
Financial instruments 9 (4,362) -
Provisions for liabilities and charges 10 (23,298) (10,533)
Deferred tax liabilities 8 (12,325) (15,122)
Retirement benefit obligations 13 (59,430) (33,925)
(251,583) (196,533)
Net assets 67,211 118,890
EQUITY
Share capital 280 279
Share premium 27,853 27,180
Other reserves 13,214 22,379
Retained earnings 25,864 69,052
Total equity 14 67,211 118,890
Consolidated cash flow statement (unaudited)
For the year ended 31 July 2009
Notes
2009 2008
£000 £000
Cash flows from operating activities
Cash generated from operations before exceptional costs 11 37,995
32,801
Exceptional costs
(7,585) (6,799)
Cash generated from operations 11 31,196
25,216
Interest element of finance lease payments
(46) (70)
Interest element of other loan repayments (193) (276)
Taxation paid (net) (4,192) (1,804)
Net cash from operating activities 20,785 29,046
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired) - (71,770)
Investment in joint venture entities (20) (250)
Proceeds from sale of property, plant and equipment 7 9,500 412
Purchase of property, plant and equipment (14,953) (9,590)
Purchase of intangible assets - software and assets in the course of construction (10,344) (4,744)
Special contributions to defined benefit pension schemes (8,310) (20,250)
Interest received 1,565 2,430
Finance costs paid (7,856) (3,707)
Net cash used in investing activities (30,418) (107,469)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 14 674 716
Sale of own shares by employee share trusts 18 309
Dividends paid to shareholders 5 (7,184) (5,766)
Loan facility drawn down, net of loan issue costs 17,656 132,647
Other loan payments (1,172) (806)
Loan to related party 95 321
Finance lease principal payments (153) (159)
Net cash generated from financing activities 9,934 127,262
Effect of exchange rate changes 333 122
Net increase in cash and cash equivalents net of bank 634 48,961
overdrafts
Cash and cash equivalents net of bank overdrafts at 1 August 51,792 2,831
Cash and cash equivalents net of bank overdrafts at 31 July 12 52,426 51,792
Consolidated statement of recognised income and expense (unaudited)
For the year ended 31 July 2009
Notes
2009 2008
£000 £000
(Loss)/profit for the year (12,991) 19,552
Differences on exchange (1,350) 318
Loss on sale of own shares held in employee share trusts (78) (284)
Tax relief on shares issued to employees - 196
Changes in fair value of cash flow hedges (4,699) 337
Actuarial loss on pension scheme valuations 13 (34,036) (23,372)
Deferred tax on movement in pension scheme valuations 8 7,203 6,586
Net losses not recognised in Income Statement (32,960) (16,219)
Total recognised (loss)/incomefor the year (45,951) 3,333
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
1 Basis of preparation
This consolidated preliminary financial information, which is unaudited for the
year ended 31 July 2009, has been prepared in accordance with the Listing Rules
of the Financial Services Authority. It has also been prepared in accordance
with the accounting policies the Group is adopting in its 2009 Annual Report and
unless stated are consistent with those adopted in the consolidated financial
statements for the year ended 31 July 2008. These accounting policies are based
on the EU-adopted International Financial Reporting Standards (IFRSs) and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations adopted by the Group for the year ended 31 July 2009.
The accounting standard IAS23, Borrowing Costs was early adopted by the Group in
the year. Adoption of this standard resulted in £445,000 of capitalised interest
cost.
This consolidated preliminary financial information is not audited and does not
constitute statutory financial statements as defined in Section 240 of the
Companies Act 1985. Comparative figures for the year ended 31 July 2008 have
been extracted from the Group Report and Accounts, on which the auditors gave an
unqualified opinion and did not include a statement under section 237(2) or (3)
of the Companies Act 1985 (section 498 of the Companies Act 2006). The Group
Report and Accounts for the year ended 31 July 2008 have been filed with the
Registrar of Companies.
The consolidated preliminary financial information has been prepared under the
historical cost convention except for the following items: land and buildings
are valued at deemed cost and share based payments, cash flow hedges and
retirement benefit obligations are fair valued.
2 Segmental analysis
Primary segment information - business segments
Analysis of results by business segment is as follows:
2009 Government Services Regulated Industries Highways Total
£000 £000 £000 Group £000
Total revenue 310,853 209,913 292,935 813,701
Inter-segment revenue (7,052) (28,988) (37,111) (73,151)
Total external revenue 303,801 180,925 255,824 740,550
Underlying operating profit 14,545 12,956 19,824 47,325
Restructuring costs and asset impairment charges (4,740) (28,134) - (32,874)
Amortisation of intangible assets arising from business (4,686) (512) (2,163) (7,361)
combinations
combinations
Impairment of goodwill and intangible assets arising on - (17,141) - (17,141)
business combinations
Segment operating profit/(loss) 5,119 (32,831) 17,661 (10,051)
Net gain on disposal of freehold property 3,814
Operating loss (6,237)
Interest receivable 1,565
Finance costs (8,834)
Loss before tax (13,506)
Taxation 515
Loss for the year (12,991)
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
2 Segmental analysis (continued)
Primary segment information - business segments (continued)
2008 Government Services Regulated Industries Highways Total
£000 £000 £000 Group £000
Total revenue 273,635 192,148 255,971 721,754
Inter-segment revenue (6,563) (23,715) (34,733) (65,011)
Total external revenue 267,072 168,433 221,238 656,743
Underlying operating profit 14,428 10,720 16,567 41,715
Amortisation of intangible assets arising from business (1,876) (1,668) (2,107) (5,651)
combinations
combinations
Segment operating profit 12,552 9,052 14,460 36,064
Other exceptional items - Group (6,799)
Operating profit 29,265
Interest receivable 4,756
Finance costs (7,708)
Profit before tax 26,313
Taxation (6,761)
Profit for the year 19,552
Secondary segment information - geographical segments
The table below represents revenue by geographical origin (the analysis by
geographical destination is not materially different to that by origin). The
analysis in the table below is based on the location of the customer, which is
not materially different from the location where the order was received.
Analysis of revenue by geographical segment is as follows:
2009 2008
£000 £000
United Kingdom 667,466 621,271
Middle East 68,648 32,084
Ireland and other overseas 4,436 3,388
Total revenue 740,550 656,743
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
3 Exceptional items
2009 2008
£000 £000
Restructuring costs and asset impairment charges in the (21,008) -
Middle East1
Restructuring costs and asset impairment charges in (4,740) -
management consulting2
Restructuring costs and asset impairment charges in (24,267) -
rail3
Net profit on disposal of freehold property4 3,814 -
Integration and transition costs5 - (5,811)
Other costs - (988)
Amortisation of intangible assets arising from business (7,361) (5,651)
combinations6
Total exceptional items (53,562) (12,450)
Management use underlying profit to measure and manage the financial performance
of the Group on a day to day basis. Underlying profit excludes material income
and charges considered to be one off or non-recurring in nature. Underlying
profit also excludes the amortisation of intangible assets arising from business
combinations. The Group presents these items as exceptional in a separate column
in the income statement so that the underlying and statutory performance can be
seen clearly.
During the second half of 2009 the Group has been impacted by a small number of
significant events which have resulted in one off or non-recurring items:
1 The economic slow down in Dubai required the Group to significantly reduce its
presence in the region. As a result, the Group incurred restructuring charges of
£6.0m, mainly in respect of redundancies and surplus property provisions. The
Group has also recorded asset impairment charges of £15.0m to reduce the value
of contract receivables to the amounts the Group believes it should be able to
collect.
2 Restructuring costs and asset impairment charges were incurred in the second
half of 2009 to better align demand and supply for the Group's management
consulting services in the current environment.
3 During 2009 the Group decided to substantially withdraw from the rail sector.
The Group has incurred restructuring charges of £7.2m, mainly in respect of
redundancies and surplus property provisions, and has impaired in full the
intangible assets (mainly goodwill and customer relationships) associated with
the rail business of £17.1m.
4 The Group completed the sale of its freehold property and relocated staff and
equipment prior to completion to new leasehold premises in Woking.
5 The integration and transition costs arose as a result of the acquisition of
HBS Business Services Group Limited (renamed Mouchel Business Services Limited
(MBS)) and Hedra plc (renamed Mouchel Management Consulting Limited (MMCL)). The
integration of MBS and MMCL has resulted in a small number of staff
redundancies, the closure of a loss making business and other transition costs.
6 In line with market practice, the Group does not consider the amortisation of
intangibles assets arising from business combinations to be part of the
underlying business performance and therefore treats them as exceptional costs.
The tax effect of the exceptional items above is a credit of £10,916,000 in the
Income Statement.
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
4 Taxation
a Analysis of tax charge for the year
2009 2008
£000 £000
Corporation tax for the year (1,414) (5,225)
Over/(under) provision of tax in prior years 1,125 (21)
Current tax (289) (5,246)
Deferred tax credit/(charge) for the year 1,895 (1,515)
Deferred tax - under provision of tax in prior years (1,091) -
Total deferred tax credit/(charge) 804 (1,515)
Tax credit/(charge) for the year 515 (6,761)
b Factors affecting the tax charge for the year
The tax charge for each year is different to the standard rate of corporation
tax in the UK of 28% (2008: 29.33%1 ). The differences are explained below:
2009 2008
£000 £000
(Loss)/profit before tax (13,506) 26,313
(Loss)/profit multiplied by the standard rate of corporation 3,782 (7,718)
tax in the UK of 28%(2008: 29.33%1)
Effects of:
Permanent differences (2,895) 1,070
Change in tax rate - 213
Adjustment in respect of prior years 34 (21)
Losses (406) (305)
Tax credit/(charge) for the year 515 (6,761)
1 Due to the change in tax rate in the prior year, the blended rate for 2008 is
29.33%. The rate to 31 March 2008 was 30% and from 1 April 2008 the rate was
28%.
c Tax on items credited/(charged) to equity
2009 2008 £000
£000
Movement in pension scheme valuations 6,586
7,203
Adjustments to estimated recoverable deferred tax assets (359) 75
Deferred tax on items credited to equity 6,844 6,661
Deferred tax on items credited/(charged) to the income 804 (1,515)
statement
Total deferred tax credit 7,648 5,146
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
5 Dividends
Amounts recognised as distributions to ordinary shareholders in the year:
2009 2008
£000 £000
Final paid in respect of the previous year 4.25p (2008: 4,774 3,796
3.45p)
Interim paid in respect of the current year 2.25p (2008: 2,528 2,074
1.85p)
Less: dividend waived by employee share ownership trusts (118) (104)
Total dividends paid 7,184 5,766
In addition, the Directors are proposing a final dividend for the year ended 31
July 2009 of 3.85p (2008: 4.25p) per share which will absorb an estimated
£4,300,000 (2008: £4,700,000) of shareholders' funds. It will be paid on 18
December 2009 to shareholders who are on the register of members as at 23
October 2009.
6 (Loss)/ earnings per share
2009 2008
Basic (loss)/earnings per share (11.7)p 17.9p
Diluted (loss)/earnings per share (11.7)p 17.7p
Adjusted earnings per share 26.4p 25.7p
2009 £000 2008 £000
(Loss)/profit for the year (12,991) 19,552
(Loss)/ earnings for basic and diluted earnings per (12,991) 19,552
share
Adjustments:
Other exceptional costs (net of taxation) 20,205 4,804
Impairment of goodwill and intangible assets arising on business combinations (net of 17,141 -
taxation)
Amortisation of intangible assets arising from business 5,300 4,069
combinations (net of taxation)
Earnings for adjusted earnings per share 29,655 28,425
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
6 (Loss)/ earnings per share (continued)
2009 2008
Number Number
000s 000s
Weighted average number of ordinary shares 111,156 109,418
Dilutive share options - 620
Dilutive Save As You Earn schemes - 233
Diluted weighted average number of ordinary shares 111,156 110,271
Weighted average number of ordinary shares 111,156 109,418
Average number of shares held by the employee share 1,709 1,953
trusts
Share options (shares held in the employee share trusts) (520) (559)
matured in respect of executive share option schemes
Adjusted weighted average number of ordinary shares 112,345 110,812
Basic (loss)/earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of shares
during the period.
Diluted (loss)/earnings per share is calculated by adjusting the weighted
average number of ordinary shares in issue on the assumption of conversion of
all dilutive share options in issue and shares under Save As You Earn Schemes.
The share price used to calculate diluted earnings per share is based on a
weighted average price of 296.47p (31 July 2008: 428.13p). Potential ordinary
shares are not treated as dilutive when their conversion would increase earnings
per share or decrease loss per share from continuing operations. As the Group
reported a loss for the year the effects of 493,000 anti-dilutive share options
were ignored when calculating diluted earnings per share for 2009.
Adjusted earnings per share is calculated after adding back shares held by the
employee share trusts to the weighted average number of shares. Earnings are
adjusted to exclude amortisation of intangible assets arising from business
combinations and other exceptional items (net of taxation). The Directors
believe that this additional measure provides a better indicator of the
underlying trends in the business.
7 Assets held for sale
In the prior year the Group agreed to sell its freehold property, and completion
took place in March 2009. The sale proceeds of
£9.5 million exceeded the carrying value. The net gain has been included within
exceptional items detailed in note 3.
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
8 Deferred tax
Deferred tax assets
Losses and provisions Employee benefits Share based payments Accelerated) capital) allowances) Retirement)benefit) obligations) Total)
£000 £000 £000 £000) £000) £000)
At 1 August 2008 5,638) 699) 4,158) 294) 11,137) 21,926)
Capital allowances in excess of depreciation -) -) -) (294) -) (294)
Saleof freehold property (holdover relief) (982) -) -) -) -) (982)
Special contributions to retirement benefit schemes -) -) -) -) (1,852) (1,852)
Actuarial loss on pension scheme valuations -) -) -) -) 7,203) 7,203)
Losses 3,337) -) -) -) -) 3,337)
Share based payments -) -) (599)) -) ) -) (599)
At 31 July 2009 7,993) 699) 3,559) -) 16,488) 28,739)
Deferred tax liabilities
Accelerated)capital)allowances) Intangibles) ESOP Freehold) Total)
£000) £000) £000 property) £000)
£000)
At 1 August 2008 - (14,469) (112) (541) (15,122)
Amortisation of intangible assets - 2,061 - - 2,061
Impairment of intangible assets - 1,961 - - 1,961
Depreciation in excess of capital allowances (1,148) - - - (1,148)
Saleof freehold property - - - (77) (77)
At 31 July 2009 (1,148) (10,447) (112) (618) (12,325)
9 Borrowings
The Group has credit facilities totalling £190 million with the Royal Bank of
Scotland, Lloyds TSB and Barclays. Of the £190 million, £125 million is in the
form of revolving credit facilities, which reduce by £10 million in March each
year, commencing March 2010, with the remaining balances of £30 million expiring
on 1 August 2012, and £65 million expiring on 31 October 2012. The balance of
£65 million is in the form of a term loan which also falls due for repayment on
31 October 2012. Between 2 August 2007 and 31 July 2009 amounts totalling
£153.74 million were drawn down. Also drawn against the facility are bonds and
guarantees of £27.0m.
Interest is being charged at LIBOR plus a margin on the ratio of net borrowings
to earnings before interest, taxation, depreciation and amortisation. The
interest margin on the £60m of the revolving credit facilities expiring in
August 2012 was kept at 0.5% to 1.35%, depending on gearing. The interest margin
on the balance of the facilities is 2.0% to 3.5% depending on gearing.
In addition there are two secured loans totalling £2.0 million at 31 July 2009
which are repayable in instalments until October 2011. Interest is charged at
6.84% on the first loan and 7.44% on the second loan per annum.
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
9 Borrowings (continued)
Loans are repayable as follows:
2009 2008
£000 £000
Obligations due within one year 2,153 1,165
Obligations due between one and two years 10,839 48,671
Obligations due between two and five years 142,758 87,079
Total loans due 155,750 136,915
Loan issue costs incurred (3,437) (1,093)
Amortisation of loan issue costs 604 170
Total borrowings 152,917 135,992
Non bank borrowings and issue costs 823 (2,252)
Cash and cash equivalents net of bank overdrafts (note (52,426) (51,792)
12)
Net bank borrowings 101,314 81,948
Loan issue costs of £3,437,000 have been capitalised and are being amortised
over the life of the loan.
The Group has entered into agreements to partially hedge against the interest
rate risk on the revolving credit facility above. At 31 July 2009, the total
fair value of derivatives designated as cash flow hedges was a liability of
£4,362,000 (31 July 2008: asset of £337,000).
The Group has complied with its banking facility covenants during the year under
review.
10 Provisions for liabilities and charges
Restructuring provisions £000 Insurance Dilapidation provisions £000 Onerous Total £000
provisions £000 contracts £000
At 1 August 2008 - 3,438 1,666 5,429 10,533
Amounts provided for during the year 5,069 2,337 1,876 4,961 14,243
Amounts utilised during the year - (435) - (1,043) (1,478)
Total provisions for liabilities and charges at 31 July 5,069 5,340 3,542 9,347 23,298
2009
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
11 Cash generated from operations
More to follow, for following part double-click [nRn3F2758A]
|