REG-Mouchel Grp plc Preliminary results - Part 3
Released: 06/10/2009
Part 3 : For preceding part double-click [nRn2F2758A]
2009 £000 2008 £000
(Loss)/profit for the year (12,991) 19,552
Adjustments for:
- Income tax (credit)/expense (515) 6,761
- Depreciation 8,406 7,731
- Gross (profit)/loss on disposal of property, plant and equipment (5,516) 4
- Amortisation of intangible assets - arising from business combinations 7,361 5,651
- software and other acquired intangibles 4,231 4,039
- Impairment of goodwill and intangible assets arising from business combinations 17,141 -
- Other exceptional costs 34,576 6,799
- Interest receivable (1,565) (4,756)
- Finance costs 8,834 7,708
Changes in working capital
- Increase in trade and other receivables including unbilled revenue (before exceptional impairment charges)
(32,512) (16,915)
- Increase in trade and other payables 5,351 1,421
Cash generated from operations before exceptional items 32,801 37,995
Exceptional items (7,585) (6,799)
Cash generated from operations 25,216 31,196
12 Cash and cash equivalents
2009 £000 2008 £000
Cash and cash equivalents 52,426 51,792
Of the above cash balances £22,874,000 is restricted by virtue of it being held
within our joint ventures and captive insurance company (31 July 2008:
£18,057,000).
The Group has an unsecured bank overdraft facility of up to £5,000,000 with the
Royal Bank of Scotland and overseas facilities of AED 1,500,000 with HSBC and
AED 1,000,000 with Standard Chartered. Within the Group's joint ventures there
is also an overdraft facility of £500,000 with the Royal Bank of Scotland.
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
13 Retirement benefit obligations
The Group operates several occupational pension schemes for its employees. These
schemes are a combination of defined benefit, defined contribution and third
party defined benefit schemes.
a Schemes accounted for on a defined contribution basis
The Legal and General GPP Scheme, Parkman Defined Contribution Scheme and the
Parkman Ireland Pension Scheme (DC section) are defined contribution schemes.
Upon the acquisition of HBS Business Services Group Limited (MBS) and Hedra plc,
the Group became responsible for their defined contribution schemes.
Some employees who transferred to the Group under the Transfer of Undertakings
(Protection of Employment) Regulations (1981) as amended (TUPE) remain members
of their previous schemes, which are pre-funded defined benefit schemes. Where,
under the terms of the contracts, the defined benefit liability remains with the
relevant council, the Group accounts for these schemes as defined contribution
schemes. Cash contributions are recognised as pension costs and no asset or
liability is shown on the balance sheet.
b Schemes accounted for on a defined benefit basis
The HBS Business Services Group Limited Pension Scheme (renamed Mouchel Business
Services Limited Pension Scheme), the Mouchel Superannuation Fund (MSF) and the
Mouchel Staff Pension Scheme (MSPS) are funded defined benefit schemes and are
disclosed as Group schemes in the tables below. In addition, MBS has admitted
body status in the Teesside pre-funded defined benefit scheme as employees of
MBS who were previously employed by the local council remain members of the
Teesside Pension Fund. The assets and liabilities of this scheme are identified
under retirement benefit obligations on the balance sheet and disclosed as third
party schemes below.
Movements in the present value of the defined benefit obligation are as
follows:
Group Third party
schemes schemes Total £000
£000 £000
Retirement benefit obligation at 1 August 2008 (27,762) (6,799) (34,561)
Service cost (6,076) (1,658) (7,734)
Net interest income 435 211 646
Company contributions 13,955 1,443 15,398
Actuarial (loss)/gain (35,443) 1,407 (34,036)
Retirement benefit obligation at 31 July 2009 (54,891) (5,396) (60,287)
Current liability (857) - (857)
Non-current liability (54,034) (5,396) (59,430)
Total liability in the balance sheet as above (54,891) (5,396) (60,287)
The amounts recognised in the income statement are as follows:
2009 2008
£000 £000
Current service cost 7,734 8,120
Interest cost 20,559 17,419
Expected return on plan assets (21,205) (20,337)
Total recognised in the income statement 7,088 5,202
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
13 Retirement benefit obligations (continued)
b Schemes accounted for on a defined benefit basis (continued)
Of the amount recognised in the income statement, £767,000 (31 July 2008:
£805,000) has been included in administrative expenses and £6,967,000 (31 July
2008: £7,315,000) has been included in cost of sales. The net amount of interest
income of £21,205,000 (31 July 2008: £20,337,000) and interest cost of
£20,559,000 (31 July 2008: £17,419,000) has been included in finance income.
Actuarial gains and losses recognised in the statement of recognised income and
expense are as follows:
Group Third party schemes
schemes £000 Total £000
£000
Actual return less expected return on pension scheme (27,430) (8,127) (35,557)
assets
Effect of changes in assumptions on the present value (8,013) 9,534 1,521
of scheme liabilities
Deferred tax on movement in scheme deficits 7,596 (393) 7,203
Total recognised in the statement of recognised income (27,847) 1,014 (26,833)
and expense
For the three principal defined benefit schemes the future liabilities for
benefits are provided for by the accumulation of assets held externally to the
Group in separate, trustee administered funds. The cost of these schemes is
determined in accordance with the advice of independent, professionally
qualified actuaries on the basis of formal actuarial valuations using the
projected unit credit method. In line with normal business practice these
valuations are undertaken on a triennial basis.
All schemes are closed to new entrants except for employees transferring to the
Group under TUPE, where the Group is required to provide benefits which are
broadly comparable to those provided under the Local Government Pension Scheme
or another defined benefit scheme provided by the transferring employer.
Given the membership of the schemes, under the projected unit credit method, the
current service cost would be expected to increase as the members of the scheme
approach retirement.
The date of the most recent full actuarial valuations for all of the schemes was
March 2007.
The key assumptions used in valuing the retirement benefit obligation at the end
of the period were:
2009 2008
% %
Discount rate 6.0/6.0 6.6/6.5
Expected rate of increase in pensionable salaries 3.0/3.3 5.6/5.3
Expected rate of increase in pensions in payment 3.2/3.3 3.6/3.8
Expected rate of price inflation 3.3/3.3 3.6/3.8
Note: data for Group schemes is given first, followed
by data for third party schemes
2009 2008
Years Years
Life expectancy at age 65:
Current pensioners: male 87.0/87.0 87.0/87.0
female 89.9/89.9 89.8/89.8
Future pensioners: male 88.1/88.1 88.1/88.1
female 90.9/90.9 90.9/90.9
Note: data for Group schemes is given first, followed by data for third party
schemes
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
13 Retirement benefit obligations (continued)
b Schemes accounted for on a defined benefit basis (continued)
The expected return for the scheme assets in the forthcoming year is as
follows:
%
Equities 8.8/8.8
Bonds, gilts and cash 4.9/3.0
Property 6.8/6.8
Note: data for Group schemes is given first, followed
by data for third party schemes
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
14 Consolidated statement of changes in equity
Share Share Other Retained Total £000
capital £000 premium £000 reserves £000 earnings £000
Balance at 1 August 2007 274 26,464 12,845 70,725 110,308
Loss on sale of own shares held in employee share trusts - - - (284) (284)
Tax relief on shares issued to employees - - - 196 196
Actuarial loss on pension scheme valuations - - - (23,372) (23,372)
Deferred tax on pension scheme valuations - - - 6,586 6,586
Changes in fair value of cash flow hedges - - 337 - 337
Currency translation differences - - 318 - 318
Net income/(expense) recognised directly in equity - - 655 (16,874) (16,219)
Profit for the year - - - 19,552 19,552
Total recognised income and expense - - 655 2,678 3,333
Employee share option schemes:
- proceeds from shares issued - 716 - - 716
- sale of own shares by employee share trusts - - 593 - 593
Share based payments - - - 1,415 1,415
Equity consideration issued 5 - 8,286 - 8,291
Dividends - - - (5,766) (5,766)
Balance at 31 July 2008 279 27,180 22,379 69,052 118,890
Balance at 1 August 2008 279 27,180 22,379 69,052 118,890
Loss on sale of own shares held in employee share trusts - - - (78) (78)
Actuarial loss on pension scheme valuations - - - (34,036) (34,036)
Deferred tax on pension scheme valuations - - - 7,203 7,203
Changes in fair value of cash flow hedges - - (4,699) - (4,699)
Currency translation differences - - (1,350) - (1,350)
Net expense recognised directly in equity - - (6,049) (26,911) (32,960)
Loss for the year - - - (12,991) (12,991)
Total recognised income and expense - - (6,049) (39,902) (45,951)
Employee share option schemes:
- proceeds from shares issued 1 673 - - 674
- sale of own shares by employee share trusts - - 96 - 96
Share based payments - - - 686 686
Release of revaluation reserve on sale of property - - (3,212) 3,212 -
Dividends - - - (7,184) (7,184)
Balance at 31 July 2009 280 27,853 13,214 25,864 67,211
Notes to the preliminary financial statements (unaudited)
For the year ended 31 July 2009
15 Contingent liabilities
Contingent liabilities at 31 July 2009 in respect of guarantees and indemnities
in the normal course of business totalled £26,997,000 (31 July 2008:
£24,080,000).
In addition, bank overdrafts of subsidiaries were guaranteed up to £5,907,000
(31 July 2008: £5,709,000); the amount overdrawn at that time being £nil (31
July 2008: £nil).
The Company and several of its subsidiaries are, from time to time, parties to
legal proceedings and claims which arise in the ordinary course of business.
Provisions are maintained by the Group having regard to the size and nature of
the claims and the Group's best estimate of the likely settlement. The Directors
do not believe that the outcome of these proceedings, actions and claims, either
individually or in aggregate, will have a materially adverse affect upon the
Group's financial position.
16 Post balance sheet events
The Directors are proposing a final dividend post year end, details of which can
be found in note 5.
17 Related party transactions
The following transactions were undertaken with the joint venture entities to
which the Group is party:
2009 2008
£000 £000
Sales to joint ventures 16,778 15,708
Purchases from joint ventures 222 1,863
Net amount due to the Group at the year end 8,468 7,502
Loans to related parties:
2009 2008
£000 £000
Balance at 1 August 1,144 1,479
Loans advanced during the year 2,846 3,580
Loan repayments received (2,991) (3,926)
Interest charged on loans 4 11
Balance at the end of the year 1,003 1,144
The loans to related parties are to joint venture companies.
The Group made contributions (including deficit funding) of £15,398,000 to the
defined benefit pension schemes during the year (31 July 2008: £25,452,000).
Compensation paid to key management of the Group was £2,310,000 for the year (31
July 2008: £2,197,000).
This information is provided by RNS
The company news service from the London Stock Exchange
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