HELLENIC DYNAMICS PLC

Interim / Quarterly Report • Sep 30, 2014

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RNS Number : 9278S

Mountfield Group plc

30 September 2014

30 September 2014

Mountfield Group Plc

(the "Company" or the "Group")

Half-yearly report to 30 June2014

Mountfield Group plc (the "Group"), the AIM listed construction company specialising in building, fitting out and refurbishing commercial buildings and, in particular, data centres, announces its half-yearly report to 30 June 2014.

·      Gross profit of £0.8m (2013: £1.0m) on revenue of £5.6m (£5.2m).

·      Group margins decreased from 19.6% to 15.0%.

·      Mountfield Building Group Limited ("Mountfield") revenues reduced by 14% to £2.2m due to contract starts delayed into H2. Margins fell from 18.6% to 4.3% due to less payment than anticipated being received on a major contract and also extra staff costs of employees recruited to increase the number of contracts that the Group is able to process.

·      Connaught Access Flooring Limited ("Connaught") revenues increased by 20% to £3.4m with a improvement in margins from 19.9% to 22.1%.

·      Cash used in operations was £430k against cash generated from operations of £197k in the corresponding period of 2013.

·      Administrative expenses increased to £0.82m (£0.76m)

·      Pre-tax profits decreased to £4k from £236k.

·      Group pipeline and level of activity remain high.

·      Directors confident for Group's prospects for 2014 and beyond.

Graham Read, Chief Executive Officer,said:

"Demand for the Group's services remaining strong in the first half of 2014 but as a result of margins coming under pressure (in particular on one of Mountfield's contracts) and starts being deferred on some others, pre-tax profits during the period were reduced to a level (£4k) below those achieved in the same period of 2013 (£236k). This reduction does not reflect a general weakening in the Group's business or of its prospects as the change in strategy for Mountfield that put increased emphasis on fit-out and building fabric repair work is producing additional work, contacts and opportunities and demand for its services in the data centre construction area remain strong. It does however reflect a lower than expected payment being received from the main contractor on a major contract.

In addition Connaught has made another strong contribution to the Group's performance.

The Directors do not believe that the problems that affected the Group profits in the first half of 2014 will impact on the Group in the longer term. The Group is currently in late stage negotiations on a number of significant contracts which, if concluded as expected, will result in a satisfactory performance for the year as a whole."

Mountfield Group Plc Peter Jay, Chairman Graham Read, Chief Executive Officer	+44 (0)1268 561 516
WH Ireland (Nominated Adviser) Chris Fielding	+44 (0)20 7220 1666

Chairman and CEO's Statement

The reduction in the Group's pre-tax profits in the first half of 2014 from £236k (2013) to £4k despite revenue increasing to £5.6m from £5.3m (2013) was caused principally by the reduction in projected margin on a major contract that was undertaken by Mountfield referred to above and the delayed start on certain of its other contracts.

The composition of the Group's construction activities continues to change as it makes increased efforts to acquire business in the areas of fit-out of office, industrial and leisure premises and on building fabric repair work. These efforts have led in recent weeks to Mountfield being awarded contracts for work with an aggregate value of £1.5m. In addition demand for the Group's services, both in terms of construction (Mountfield) and flooring (Connaught) in the data centre field, remain high. With the Group's pipeline remaining at high levels the prospects for the second half of the year remain extremely encouraging.

The first half of the year saw Group margins slip back to the figure last seen in 2012 (15.0%) but an improvement is anticipated in the second half of the year as the Group's undertakes more higher margin work.

The first half of 2014 has seen another strong performance by Connaught. Its reputation for completing large flooring projects has produced contracts in respect of major new office developments with new ones being already under negotiation.

The Directors do not believe that the problems that affected the Group profits in the first half of 2014 will impact on the Group in the longer term. The Group is currently in late stage negotiations on a number of significant contracts which, if concluded as expected, will result in a satisfactory performance for the year as a whole."

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2014

		6 months to     30 June 2014		6 months to      30 June 2013		12 months to       31 December 2013
		(unaudited)		(unaudited)		(audited)
	Note	£		£		£
Revenue		5,608,294		5,227,055		12,312,140
Cost of sales		(4,765,697)		(4,203,485)		(9,865,759)
Gross profit		842,598		1,023,570		2,446,381
Administrative expenses		(824,105)		(756,566)		(1,601,870)
Operating Profit		18,493		267,004		844,512
Net finance (costs)/income		(14,102)		(31,169)		(79,173)
Profit before income tax		4,391		235,835		765,339
Income tax expense	3	(7,481)		(57,756)		(262,279)
Total comprehensive (loss)/profit for the period		(3,090)		178,079		502,760
Earnings per share	4
Basic & diluted		(0.001)p		0.08p		0.22p
There are no recognized gains and losses other than those passing through the Statement of Comprehensive Income

Condensed consolidated statement of financial position

As at 30 June 2014

		30 June 2014 (Unaudited)	30 June 2013 (Unaudited)	31 December 2013 (audited)
		£	£	£
ASSETS
Non-current assets
Intangible assets		10,788,521	10,788,521	10,788,521
Property, plant and equipment		111,672	121,814	114,384
Deferred income tax assets		428,756	599,986	428,756
		11,328,949	11,510,321	11,331,661
Current assets
Inventories		79,474	78,588	80,488
Trade and other receivables		2,688,090	2,851,689	3,243,910
Cash and cash equivalents		678,567	195,038	313,675
		3,446,131	3,125,314	3,638,073
TOTAL ASSETS		14,775,081	14,635,636	14,969,734
EQUITY AND LIABILITIES
Share capital and reserves
Issued share capital		254,244	216,744	254,244
Share premium		1,490,682	1,120,432	1,490,682
Share based payments reserve		342,779	329,771	337,279
Merger reserve		12,951,180	12,951,180	12,951,180
Reverse acquisition reserve		(2,856,755)	(2,856,756)	(2,856,756)
Retained earnings		(6,326,064)	(6,654,170)	(6,322,974)
TOTAL EQUITY		5,856,066	5,107,201	5,853,656
Current liabilities
Trade and other payables		3,538,910	4,181,966	4,557,390
Short-term borrowings		2,114,600	1,718,892	1,087,665
Finance lease liabilities		8,735	5,439	6,917
Current tax payable		98,831	64,478	91,350
		5,761,076	5,970,775	5,743,322
Non-current liabilities
Loan notes		3,152,893	3,553,475	3,363,029
Finance lease liabilities		5,046	4,184	9,727
TOTAL LIABILITES		8,919,015	9,528,435	9,116,078
TOTAL EQUITY & LIABILITIES		14,775,081	14,635,636	14,969,734

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2014

	Share capital £	Share premium £	Other reserves £	Capital redemption reserve             £	Reverse Acquisition reserve £	Merger reserve £	Retained earnings £	Total £
Balance at 1 January 2013	216,744	1,120,432	320,960	-	(2,856,755)	12,951,180	(6,832,250)	4,920,310
Total comprehensive income	-	-	-	-	-	-	178,079	178,079
Share based payments	-	-	8,811	-	-	-	-	8,811
Balance at 30 June 2013	216,744	1,120,432	329,771	-	(2,856,755)	12,951,180	(6,654,171)	5,107,201
Balance at 1 July 2013	216,744	1,120.432	329,771	-	(2,856,755)	12,951,180	(6,654,171)	5,107,201
Total comprehensive income	-	-	-	-	-	-	324,681	324,681
Shares issued  in period	45,000	405,000	-	-	-	-	-	450,000
Share cancelled in period	(7,500)	-	-	7,500	-	-	-	-
Cost of shares issued	-	(34,750)	-	-	-	-	-	(34,750)
Share based payments	-	-	6,524	-	-	-	-	6,524
Cancelled share options	-	-	(6,516)	-	-	-	6,516	-
Balance at 31 December 2013	254,244	1,490,682	329,779	7,500	(2,856,755)	12,951,180	(6,322,974)	5,853,656
Balance at 1 January 2014	254,244	1,490,682	329,779	7,500	(2,856,755)	12,951,180	(6,322,974)	5,853,656
Total comprehensive loss	-	-	-	-	-	-	(3,090)	(3,090)
Share based payment	-	-	5,500	-	-	-	-	5,500
Balance at 30 June 2014	254,244	1,490,682	335,279	7,500	(2,856,755)	12,951,180	(6,326,064)	5,856,066

Condensed consolidated cash flow statement

For the six months ended 30 June 2014

		6 months to 30 June 2014 (unaudited)	6 months to 30 June 2013 (unaudited)	12 months to 31 December 2013  (audited)
		£	£	£
Cash from operating activities:
Operating profit		18,493	267,004	844,512
Adjusted for:
Depreciation		7,248	8,299	18,042
Loss on disposal of property, plant and equipment		-	-	-
Share based payment provision		5,500	8,810	15,335
(Increase)/ decrease in inventories		1,014	(3,021)	1,517
(Increase)/ decrease in trade and other receivables		555,820	(623,205)	(1,015,430)
(Decrease)/ increase in trade and other payables		(1,018,480)	570,540	1,114,529
Cash (used in)/ generated by operations		(430,405)	228,427	978,505
Finance costs		(17,565)	(34,850)	(86,393)
Finance income		3,463	3,681	7,220
Taxation paid		-	-	(6,692)
Net cash (outflow)/inflow from operating activities		(444,507)	197,257	892,640
Cash flows from investing activities
Purchase of equipment		(4,538)	(13,679)	(15,994)
Proceeds from sale of equipment		-	-	-
Net cash flows from used in investing activities		(4,538)	(13,679)	(15,994)
Cash flows from financing activities:
Proceeds from issue of shares		-	-	450,000
Costs of shares issued		-	-	(34,750)
Finance lease rentals		(2,863)	(6,205)	816
Repayment of non-convertible loan notes		(219,636)	(165,446)	(351,392)
Proceeds from short-term loans		200,000	150,000	30,904
Net cash flows from financing activities		(22,499)	(21,651)	95,578
Net (decrease)/increase in cash and cash equivalents		(471,544)	161,927	972,224
Cash and cash equivalents brought forward		214,006	(758,219)	(758,218)
Cash and cash equivalents carried forward		(257,538)	(596,292)	214,006

For the purposes of the cash flow statement, cash and cash equivalents comprise the following:

	As at 30 June 2014	As at 30 June 2013	As at 31 December 2013
	£	£	£
Cash at bank and in hand	678,567	195,038	313,675
Bank overdraft	(936,10)	(791,330)	(99,669)
	(257,538)	(596,292)	(214,006)

1.     Notes to theInterim Report

Basis of preparation

The Group's interim financial statements for the six months ended 30 June 2014 were authorised for issue by the directors on 30 September 2014.

The consolidated interim financial statements, which are unaudited, do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2013 have been filed with the registrar of companies at Companies House. The audit report on the statutory accounts for the year ended 31 December 2013 was unqualified and did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006.

The annual financial statements of Mountfield Group Plc for the year ended 31 December 2014 will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU ("IFRS"). Accordingly, these interim financial statements have been prepared using accounting policies consistent with those which will be adopted by the Group in the financial statements and in compliance with IAS 34 "Interim financial reporting".

The consolidated interim financial statements have been prepared in accordance with the accounting policies set out in theannual financial statements for the year ended 31 December 2013.

Basis of consolidation

The Group financial information consolidates that of the company and its subsidiaries.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

2.     Segmental reporting

Segment information is presented in respect of the Group's business segments, which are based on the Group's management and internal reporting structure. 

The chief operating decision-maker has been identified as the Board of Directors (the Board). The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Management have determined the operating segments based on these reports and on the internal report's structure.

Segment performance is evaluated by the Board based on revenue and profit before tax ("PBT"). Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis, such as centrally managed costs relating to individual segments and costs relating to land used in more than one individual segment.

Given that income taxes and certain corporate costs are managed on a centralised basis, these items are not allocated between operating segments for the purposes of the information presented to the Board and are accordingly omitted from the analysis below.

The Group comprises the following segments:

Mountfield

Direct contracting and trade contracting services to bothmain contractors and corporate end users.

Connaught

Providing raised flooring systems to bothmain contractors and corporateend users.

Land sourcing

Sourcing land and enhancing value.

Segmental operating performance

	Six months to 30 June 2014		Six months to 30 June 2013		Twelve months to 31 December 2013
	Segmental revenue	PBT	Segmental revenue	PBT	Segmental revenue	PBT
	£'000	£'000	£'000	£'000	£'000	£'000
Construction	2,244	(413)	2,606	14	6,681	(15)
Fit -out	3,371	546	2,714	359	5,791	365
Land sourcing	-	-	-	-	-	-
			5,320	373	12,472	350
Inter-segmental revenue and unallocated costs	(7)	(129)	(93)	(138)	(160)	415
	5,608	4	5,227	236	12,312	765

Business segments assets and liabilities

	Six months to 30 June 2014		Six months to 30 June 2013		Twelve months to 31 December 2013
	Segment assets	Segment liabilities	Segment assets	Segment liabilities	Segment assets	Segment liabilities
	£'000	£'000	£'000	£'000	£'000	£'000
Construction	1,764	3,681	1,456	3,935	2,388	4,195
Fit-out	2,151	1,385	2,311	1,543	1,764	1,059
Land sourcing	-	2	-	2	-	2
	3,915	5,068	3,767	5,480	4,152	5,254
Goodwill - Construction	5,914	-	5,914	-	5,914	-
Goodwill - Fit-out	4,874	-	4,874	-	4,874	-
Goodwill - Land sourcing	-	-	-	-	-	-
Other unallocated assets & liabilities	72	3,844	81	4,048	30	3,862
	14,775	8,912	14,636	9,528	14,970	9,116

Unallocated assets consist of deferred tax, trade and other receivables and cash held by the Parent Company. Unallocated liabilities consist of trade and other payables and interest bearing loans owed by the Parent Company.

Revenue by geographical destination

	6 months to       30 June 2014	6 months to       30 June 2013	12 months to           31 December 2013
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
United Kingdom	5,431	3,624	9,092
Other EU	177	1,603	3,220
	5,608	5,227	12,312

Total assets including property, plant and equipment and intangible assets are all held in the UK.

3.                Income tax (expense)/credit (continuing operations)

	6 months to       30 June 2014	6 months to       30 June 2013	12 months to           31 December 2013
	(unaudited)	(unaudited)	(audited)
	£	£	£
Current tax on income for the period	(7,481)	(57,756)	(91,350)
Deferred tax (expense)/credit	-	-	(171,229)
Income tax (expense)/credit in the income statement	(7,481)	(57,756)	(262,579)

4.           Earnings per share

The basic earnings per share is calculated by dividing the earnings attributable to equity shareholders by theweighted average number of shares in issue. In calculating the diluted earnings per share, share options outstanding have been taken into account where the impact of these is dilutive.

The weighted average number of shares in the period was:

		6 months to 30 June 2014		6 Months to 30 June 2013		12 months to 31 December 2013
		(unaudited)		(unaudited)		(audited)
		number		number		number
Basic ordinary shares of 0.1p each		254,244,454		216,744,454		231,169,112
Dilutive ordinary shares from warrants & options		-		-		-
Total diluted		254,244,454		216,744,454		231,169,112

In the six months to 30 June 2014, the exercise price of the options and warrants exceeded the average market price of ordinary shares in the period, thus there is no dilutive effect on the weighted average number of ordinary shares or the diluted earnings per share.

Earning attributable to equity shareholders of the parent

		6 months to 30 June 2014		6 Months to 30 June 2013		12 months to 31 December 2013
		(unaudited)		(unaudited)		(audited)
Continuing operations
Basic earnings / (loss) per share		(0.001)p		0.08p		0.22p
Diluted earnings / (loss) per share		(0.001)p		0.08p		0.22p

This information is provided by RNS

The company news service from the London Stock Exchange

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