HELLENIC DYNAMICS PLC

Earnings Release • Jun 11, 2018

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RNS Number : 8514Q

Mountfield Group plc

11 June 2018

Mountfield Group Plc ("Group") 

and its subsidiary Connaught Access Flooring Limited ("CAF") and Mountfield Building Group Limited ("MBG")

Final Results for the Year Ended 31 December 2017

The Directors of Mountfield Group Plc are pleased to announce its Final Results for the year ended 31 December 2017 ("Final Results").

The Group also announces that its Annual General Meeting will be held at 10 a.m. on 4 July 2018 at the offices of DAC Beachcroft LLP at 100 Fetter Lane, London EC4A 1BN.

The Annual Report and Accounts for the year ended 31 December 2017, together with the Notice of Annual General Meeting will be posted to shareholders and will be uploaded today to the Group's website on: www.mountfieldgroupplc.com .

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, please contact: 

Mountfield Group Plc Peter Jay, Chairman	07500 558235
Cairn Financial Advisers LLP (Nominated Adviser) Jo Turner / Tony Rawlinson	020 7213 0880

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2017

CHAIRMAN'S REPORT

Key Features 

·     Group annual PBT rises by 95% to £864,372 (2016: £442,544)  

·     Group's secured order book at a record high of £16.2m

·     Turnover: £12.7m (2016: £9.6m)

·     Operating profit: £902,282 (2016: £469,820)

·     EBITDA: £913,877 (2016: £483,336)

·     Earnings per share: 0.254p (2016: 0.131p)

·     Net cash position £520,301 (2016 - £(20,247))

·     Gross Margin 17.5% (2016: 19.2%)

·     Operating Margin 7.1% (2016: 4.9%)

·     Board believes outlook for 2018 is for continued strong performance.

The Board is extremely pleased to report an excellent performance by the Group. By trading with reduced operating costs and securing record levels of new business it has achieved increases in its profit before tax from 2017 against 2016 of 95% and from 2017 against 2015 of 388%.

Another key feature has been the extent by which both Companies have been able to win new business; the Group's secured order book currently stands at £16.2m with CAF having won contracts valued at £8.5m and with MBG having won contracts worth £7.7m. These figures point to strong potential performances in 2018 and 2019.

The increase in turnover reflects the significant new contracts that have been won but the more competitive nature of these large contracts has been responsible for the fall in the gross margin. However, because of the lower reflected cost bases of the business operating margin has increased.

The year has seen both subsidiary companies, Connaught Access Flooring Limited ("CAF") and Mountfield Building Group Limited ("MBG") trade strongly with increased profitability.

CAF

CAF's turnover was £8.4m (2016 - £5.3m) and its profit before tax £568,651 (2016 - £306,565).

For CAF, the year's main feature was the backbone provided by two significant projects, each to supply and fit flooring for new offices and the wholesale refurbishment for major banks in the City of London and Canary Wharf, respectively. The tail end of the year was further enhanced by winning (announced on 9 October 2017) of a major contract to supply and install flooring to a substantial new City HQ office building and in addition, securing the third phase of the Canary Wharf refurbishment project. These works which are ongoing are likely to have a value on completion in excess of £8m, the bulk of which will be completed in 2018.

The Company's other significant instructions have predominantly been in respect of new or re-furbished offices also in the City although interspersed with them have been a large number of smaller contracts carried out by its Special Works team countrywide which enables the Company to maintain a consistent workflow.

CAF is a market leader and one of the very small number of companies able to compete for the largest raised access/commercial flooring market and is regularly asked to tender for new work in an increasingly active market.

MBG

MBG's turnover in 2017 was £4.3m (2016 - £4.3m) and its profit before tax was £288,622 (2016- £229,198).

The Company's efforts during 2017 were focused on the development of a new business platform to replace the contract work that it had ceased to undertake following its strategic review.

The results of the strategy have been impressive: When MBG learnt that an existing telecoms client intended to upgrade its security infrastructure across its extensive property estate it set up a team specifically to enter competitive tenders for the contracts. As a result of targeting this area of the client's work MBG has built a closer relationship with the client and, to date, MBG has won seven significant contracts with an aggregate value of £6.6m via a competitive tender process. The client's programme is expected to extend for at least the next three years.

In addition MBG has seen a return of the type of data centre work it specialised in when the Group was admitted to AIM in 2008. Valuable contracts have been won including a large data centre complex in Stockley Park which has rolled out to the second phase. Further contracts are expected to become available in the short and medium term.

Outlook

The Board believes that both CAF and MBG are now, with the benefit of low cost structures, excellent client bases and record high levels of secured work able to perform strongly on a regular and sustainable basis.

The outlook for CAF continues to be strong into 2018/19 and based on the demand for high quality, large commercial flooring contracts, its leading position in its market place and the proposed expansion of its business into the supply and installation of new products associated with CAF's core activities. In addition, the increase in Data Centre activity has seen a welcome return to working in Scandinavia to a market in which CAF excels through their attention to detail and understanding of the different processes required in this field. The Board believes that the outlook for CAF will remain increasingly bright for a number of years with strong demand for its services both in the UK and overseas. 

The Board takes a similar view of MBG's prospects and notes the major change in its financial performance that followed from the reduction of its cost base and the change to a strategy of pursuing lower risk contracts predominantly direct to the Client and is satisfied that MBG's performance will show significant improvement during 2018 and 2019.

Peter Jay

Non-Executive Chairman

Date: 8 June 2018

CEO's REPORT

The Group Board currently comprises:

Peter Jay - Non-Executive Chairman - in addition to being Group Chairman Peter also manages the Group's relationships with our professional advisers.  Peter was formerly a corporate lawyer and a partner in DAC Beachcroft LLP.

Andrew Collins - Group Chief Executive - Andy is responsible for managing the business of the Group and also that of its subsidiary, CAF, a specialist supplier and installer of flooring for commercial properties whose business and reputation he has developed significantly since appointment in 2004. Before joining the Group, Andy was a Divisional Financial Director at ISG Plc.

Graham Read - Managing Director of MBG - Graham founded the business of MBG in 1986 and has had over 40 years' experience in the construction industry.

The Board is supported by Andy May, a partner in the firm of Barnes Roffe LLP. Andy attends meetings of the Group's Board in an advisory-only capacity and also assists the Board in overseeing the Group's accounting and finance functions.

The Board is also supported by Chris Adlam, a director of JDC Corporate Finance. Chris (who was appointed in February 2017) attends meetings of the Group's Board in an advisory-only capacity to provide advice on business finance and aspects of corporate finance.

Group Companies

The Group is comprised of two principal trading companies, Connaught Access Flooring Limited ("CAF") and Mountfield Building Group Limited ("MBG").

CAF is one of the leading suppliers and installers of raised access flooring systems to main contractors and corporate end users for office and data centre installations.

It has established itself as one of the few recognised specialists for the flooring elements of fitting out contracts in new and refurbished commercial office space and for the Data Centre market. These projects are undertaken both direct with the end user and for leading Construction companies.

The current demand for construction of high quality, high tech banking and office HQ buildings plays to CAF's strengths as it enables the Company to present its professionalism and credentials and compete on quality of service, expertise and experience, rather than simply on price.

MBG comprises the construction division of the Group and in addition to its extensive experience of undertaking work for the data centre sector MBG also undertakes specialist construction work for end user clients.

2017 saw MBG continue to develop its long term relationship undertaking building fabric repair and maintenance works on a nationwide basis for a large proportion of the property portfolio of a leading telecoms operator.

Finance

The Group is financed from the cash it generates from its operations, with the support of a bank overdraft facility of £250,000 and a term loan of £191,190.

The construction market

The Group continues to experience extremely strong levels of activity in terms of enquiries and tenders and the Board is confident as to the strength and sustainability of the current strong demand for services provided by the Group.

Group's strategy

The Board strategy is for the Group to become a highly profitable, mid-sized operation that provides specialist construction and flooring services in a number of diverse but related areas but with a particular focus on the fit-out sector. The Group's reputation has been built on its ability to undertake and to manage specialist construction services to a high level of quality and to deliver the completed project to the client on time. This will remain at the core of its strategy.

Principal risks                                     

The principal risks and uncertainties facing the Group relate to:

Attraction and retention of key employees

The Group's future success is substantially dependent on the continued services and performance of its directors, senior management and other key personnel and its ability to continue to attract and retain highly skilled and qualified personnel. 

The senior executive directors of the business all have significant shareholdings in the parent company and are all permanent employees.

Economic downturn and other macroeconomic factors

The Group's success is substantially dependent on the general level of economic activity and economic conditions in the United Kingdom.

Many of the Group's contracts, including renewals or extensions of previous contracts, are awarded through competitive bidding processes. Any downturn in the economy, or any other macroeconomic factor, either in the UK or globally, may reduce the number of contracts coming up for bidding.

The competitive bidding processes present a number of additional risks, including the incurrence of substantial cost and managerial time to prepare bids and proposals for contracts that the Group may not ultimately win.  The Group may face additional competition in the bidding process either from existing competitors or new market entrants.

The Company is seeking to mitigate its exposure to the sectors in which it currently operates by diversifying its client base and in particular expanding into closely aligned areas of activity.

Reliance on key customers and clients

The business of the Group is dependent upon the continuing contracts that it has, and relationships that it has developed, with certain customers.

Whilst signed contracts are in place with key customers, the successful completion and timing of contracted projects are not guaranteed and are susceptible to external factors outside of the control of the Group. Similarly, contracted projects may in some circumstances be susceptible to delays or variation by customers or be affected by unforeseen changes in circumstances relating to the market, technology, legislation, economic or other business factors. This may affect the cash flow and subsequent performance of the Group.

The Group works with a well-established client base and the performance of individual projects is monitored on at least a monthly basis by board members to identify any issues with specific projects.  

Reliance on Subcontractors

The Group utilises subcontractors on a project-by-project basis to meet contractual obligations. Such projects will rely on the subcontractors performing their duties and obligations, not only in terms of timely delivery but also in terms of their performance obligations. Any such non-performance may result in time and cost over-runs on the Group's projects and reduce the value of its returns.

Subcontractors are vetted by senior management and normally engaged to work on closely defined and managed aspects of contracts. Most subcontractors have a long standing trading history with the Group.

Health and safety

The Group undertakes Construction activities, often working within difficult conditions and with heavy machinery which if improperly used could result in personal injury or in extreme cases, fatalities.

The Group takes the health and safety of its employees and clients very seriously and employs Health and Safety advisors on all significant contracts. It also has a firm of Health and Safety Advisors with whom it consults on a regular basis.

Key performance indicators

The Directors use a number of performance indicators which are used to manage the business but, as with most businesses the focus in the Statement of Comprehensive Income at the top level is on sales, margins, and profit before tax. In the Statement of Financial Position the focus is on managing working capital. The key performance indicators are disclosed in the Strategic Report.

Financial instruments

Details of the Group's financial risk management objectives and policies are included in note 19 to the financial statements.

Andrew Collins

Chief Executive Officer

Date: 8 June 2018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2017

				2017		2016
				£		£
Revenue				12,692,126		9,634,979
Cost of sales				(10,467,673)		(7,787,965)
Gross profit				2,224,453		1,847,014
Administrative expenses				(1,322,171)		(1,377,194)
Operating profit				902,282		469,820
Net finance costs				(37,910)		(27,276)
Profit before income tax				864,372		442,544
Income tax expense				(218,999)		(108,805)
Profit for the year and total comprehensive income				645,373		333,739
Earnings per share

Basic earnings per share		0.254p		0.131p
Diluted earnings per share		0.254p		0.131p

There are no recognised gains and losses other than those passing through the Statement of Comprehensive Income.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017

				2017		2016
				£		£
ASSETS
Non-current assets
Intangible assets				6,874,308		6,874,308
Property, plant and equipment				80,434		90,956
Deferred income tax assets				199,330		295,268
				7,154,072		7,260,532
Current assets
Inventories				88,301		88,272
Trade and other receivables				3,651,516		1,776,611
Cash and cash equivalents				520,301		-
				4,260,118		1,864,883
TOTAL ASSETS				11,414,190		9,125,415
EQUITY AND LIABILITIES
Issued share capital				2,524,426		2,524,426
Share premium				1,490,682		1,490,682
Share based payments reserve				-		68,871
Capital redemption reserve				7,500		7,500
Merger reserve				4,051,967		4,051,967
Reverse acquisition reserve				(2,856,756)		(2,856,756)
Retained earnings				135,058		(579,186)
TOTAL EQUITY				5,352,877		4,707,504
Current liabilities
Trade and other payables				4,836,562		2,952,209
Short-term borrowings				958,020		897,579
Finance lease liabilities				-		583
				5,794,582		3,850,371
Non-current liabilities
Loan notes				200,000		393,857
Bank loan				66,731		173,683
				6,061,313		4,417,911
TOTAL EQUITY AND LIABILITIES				11,414,190		9,125,415

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2017

				2017		2016
				£		£
Cash flows from operating activities
Operating profit				902,282		469,820
Adjusted for:
Depreciation				11,595		13,516
Profit on Disposal				(1,294)		-
Increase in inventories				(29)		(15,437)
Decrease/(increase) trade and other receivables				(1,874,903)		569,187
Increase/(Decrease) in trade and other payables				1,508,009		(614,007)
Cash generated in operations				545,660		423,079
Finance costs				(37,910)		(27,276)
Taxation paid				(56,782)		-
Net cash inflow from operating activities				450,968		395,803
Cash flows from investing activities
Purchases of property, plant and equipment				(3,782)		(2,259)
Proceeds from sale of property, plant and equipment				4,003
Net cash used in investing activities				221		(2,259)
Cash flows from financing activities
Finance lease rentals				(583)		(3,564)
Repayment of non-convertible loan notes				(190,901)		(283,381)
Movement on supplier invoicing facility				387,795		-
Repayment of short-term loans				(106,952)		(51,858)
New loan facility				-		350,000
Net cash flows (used in)/generated from financing activities				89,359		11,197
Net cash increase in cash and cash equivalents				540,548		404,741
Cash and cash equivalents brought forward				(20,247)		(424,988)
Cash and cash equivalents carried forward				520,301		(20,247)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2017

	Share capital		Share premium		Share based payment reserve		Capital redemption  reserve		Merger reserve		Reverse acquisition reserve		Retained earnings		Total
	£		£		£		£		£		£		£		£
At 1 January 2016	254,244		1,490,682		68,871		7,500		12,951,180		(2,856,756)		(9,812,138)		2,103,583
Total comprehensive income for the year	-		-		-		-		-		-		333,739		333,739
Conversion of loan notes	2,270,182		-		-		-		-		-		-		2,270,182
Transfer	-		-		-		-		(8,899,213)		-		8,899,213		-
At 31 December 2016	2,524,426		1,490,682		68,871		7,500		4,051,967		(2,856,756)		(579,186)		4,707,504
Total comprehensive income for the year	-		-		-		-		-		-		645,373		645,373
Transfer	-		-		(68,871)								68,871
At 31 December 2017	2,524,426		1,490,682		-		7,500		4,051,967		(2,856,756)		135,058		5,352,877

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

1          General information                                                               

Mountfield Group plc is a public company incorporated in England and Wales. The registered number of the Company is 06374598. The address of its registered office is 3C Sopwith Crescent, Wickford Business Park, Wickford, Essex SS11 8YU.

2          Earnings per share                 

The basic earnings per share is calculated by dividing the earnings attributable to equity shareholders by the weighted average number of shares in issue. The diluted earnings per share is calculated by dividing the earnings attributable to equity shareholders by the weighted average number of shares in issue plus the number of warrants and share options. The share options are not considered dilutive as the shares would be issued for greater than the average market price of the ordinary shares in 2017 and 2016.                           

						2017		2016
Basic earnings per share						£		£
Profit for the financial year						645,373		333,739
Weighted average number of shares						254,244,454		254,339,045
						2017		2016
Diluted earnings per share						£		£
Profit for the financial year						645,373		333,739
Number of shares						254,244,454		254,339,045

3          Availability of Report and Accounts and Notice of Annual General Meeting

The Group will post the Annual Report and Accounts for the year ended 31 December 2017 and Notice of Annual General Meeting to shareholders. The Annual General Meeting will be held at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN on 4 July 2018 at 10 a.m. A copy of the Annual Report and Accounts for the year ended 31 December 2017 and Notice of Annual General Meeting will be available to be downloaded today from the Group's website at www.mountfieldgroupplc.com.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

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