Van Elle Holdings (LON:VANL)

Van Elle Holdings (LON:VANL)


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Van Elle Holdings RNS Release

Half-year Report


RNS Number : 1971N
Van Elle Holdings PLC
16 January 2019
 

 

Van Elle Holdings plc

16 January 2019

Interim results for the six months ended 31 October 2018

 

Van Elle Holdings plc ("Van Elle", the "Company" or the "Group"), the leading geotechnical engineering company offering a wide range of ground engineering techniques and services to customers in a variety of UK construction end markets, announces its interim results for the six months ended 31 October 2018.

 

Highlights

 

6 months ended 31 Oct 2018

6 months ended 31 Oct 2017

Growth %

Revenue (£m)

42.9

52.6

(18.4)

Underlying* EBITDA (£m)

5.2

8.4

(38.1)

Reported EBITDA (£m)

4.8

8.3

(42.2)

Underlying* operating profit (£m)

3.0

5.7

(47.4)

Reported operating profit (£m)

2.6

5.6

(53.6)

Underlying* profit before taxation (£m)

2.8

5.4

(48.1)

Reported profit before taxation (£m)

2.4

5.3

(54.7)

Underlying* earnings per share (p)

2.8

5.4

(48.2)

Reported earnings per share (p)

2.4

5.3

(54.7)

Dividend per share (p)

1.0

1.4

 

Operating cash conversion **(%)

100.3%

86.9%

 

Return on capital employed*** (%)

6.4%

25.8%

 

* before share-based payments and exceptional costs

**  defined as cash generated from operations divided by EBITDA less profit on sale of fixed assets

*** Return on capital employed calculated as underlying operating profit over net assets less cash and excluding loans and borrowings

Summary highlights

·      Trading in H1 was in line with revised expectations at £42.9m (H1 2018: £52.6m) and reflected the quiet first quarter

·      Underlying operating profit reduced 47.4% to £3.0m (H1 2018: £5.7m), largely reflecting lower overhead recovery despite gross margins improving slightly to 32.8% (H1 2018: 31.7%)

·     The new CEO, Mark Cutler, joined in August 2018 and has implemented a full review of the business as part of a three-phase transformation programme.  Steps already taken include:

 

simplification of the divisional structure and associated overhead improvements

strategic customer engagement

initial improvements to operational project delivery and work winning performance

initial strengthening of the leadership team with two key senior appointments, being John Foster as Commercial Director and Peter Handley as Business Improvement Director

 

·      Good cash performance with net debt of £5.6m (H1 2018: £4.6m) reduced from the year end position, (FY 2018: £5.9m)

·      An interim dividend of 1.0 pence per share (H1 2018: 1.4 pence per share), reflecting first half performance and outlook for the Group

Current trading and outlook

·      Contract margin performance in the General Piling division during the third quarter has been weaker than anticipated:

The causes have been identified and action taken to resolve the issues, including a change of divisional management

Poor profitability in Q3 but expected to return to normal margin levels by the start of Q4

 

·     The Company saw strong demand for its Specialist Services division over the Christmas period, particularly in the rail sector, however several contracts across the Group have had contract start dates delayed in December and January

The Orderbook at the start of January 2019 is at similar levels to last year and, based on current enquiry levels and order conversion rates, the Board continues to expect Q4 activity to be strong;

In light of the delays to contract start dates experienced in Q3, the Board has re-assessed workload forecasts for H2 and believes it is prudent to reduce its revenue expectation for the current year

·     Despite these setbacks in Q3, the Board continues to expect the Group to deliver a stronger performance in H2 than H1 albeit for the reasons set out above, this will still result in a full year performance significantly below its previous expectations

·      Longer term the board remains positive regarding sustainable, profitable growth.

 

 

Mark Cutler, Chief Executive, commented:                

 

"First half results were in line with our revised expectations and reflected the improved performance in the second quarter after a quiet start to the year.

 

 "This is a transitional year for the business and since my arrival in August 2018, I have been undertaking a full review of the business. As part of this process I have been taking action to refine the Group's commercial approach, streamline operations, strengthen the leadership team and re-focus on our key customers. This is already creating a strong platform from which to pursue our growth strategy. 

 

"The third quarter has been more challenging than we anticipated, with a disappointing performance in General Piling and several project delays. As a result and despite good momentum being carried in from the first half, we don't believe we will be able to deliver the significant step up in performance during the second half that we anticipated at the time of our trading statement in December 2018.

 

"These challenges have been frustrating, but it is pleasing to see outlook for the final quarter remaining robust and with a strong pipeline of target projects providing good forward visibility.

 

"Whilst we are mindful of the wider market environment, we are confident that the initiatives we are taking will develop a strong platform for future strong, profitable growth."

 

For further information please contact:

 

Instinctif Partners (Financial Public Relations)

Tel: 020 7457 2020

Mark Garraway

James Gray

Rosie Driscoll

 

 

 

Peel Hunt LLP (Nominated Adviser and corporate broker)

Tel: 020 7418 8900

Charles Batten

Mike Bell

Justin Jones

 

 

 

This announcement contains inside information that qualified, or may have qualified, as inside information for the purposes of Article 17 of the Market Abuse Regulation (EU) 596/2014 (MAR). For the purposes of MAR and Article 2 of commission Implementing Regulation (EU) 2016/1055, this announcement is made by Paul Pearson, Chief Financial Officer, for Van Elle Holdings plc.

 

Van Elle Holdings plc - Interim Report to 31 October 2018

 

Strategic overview

This is a transitional year for the business, in which we expect to increase resilience to external market factors affecting the wider sector, while transforming business performance and setting the platform for future growth under a new CEO and strengthened leadership team. 

The Group remains a leader in the UK geotechnical engineering services market and our strategy is continues to be focused on:

1.   Enhancing the performance and profitability of the business through a range of business improvement activities; and  

2.   Accelerating growth by increasing our market share in our targeted sectors, maximising our integrated solutions offering, broadening our range of products and services and extending our geographical footprint into high growth markets across the UK.

Since joining the Group, Mark has reviewed the business in detail and identified opportunities to enhance performance both in terms of operational performance and commercial development. A transformation plan has been initiated and, whilst this is in its early stages, a range of immediate actions have already been undertaken, supported by key senior management appointments to help deliver these improvements. The initial actions undertaken include:

 

·      Streamlining of the divisional structure;

·      Strategic customer engagement;

·      Re-focused work winning approach and replacement business development team; and

·      Operational performance review and introduction of strengthened commercial processes.

 

These actions are aimed at improving the Group's commercial effectiveness by bringing it closer to key customers and enabling it to target more actively and selectively, new opportunities. This is already beginning to generate opportunities and the Group has a strong pipeline of target opportunities, particularly larger projects with an increasingly strategic customer base which integrate several of its specialist capabilities and enable early involvement. Alongside this, the Group has strengthened senior leadership team with the appointment of John Foster as Commercial Director and Peter Handley as Business Improvement Director. 

 

Strengthened commercial processes should support consistent contract margin delivery and the streamlined divisional structure is expected reduce unnecessary complexity in the Group as well as reducing overhead costs. A charge of £0.3m in respect of these actions has been incurred in the first half. Further efficiency and cost reduction initiatives will be rolled out over the second half, including consolidation of the Group's two largest operations into a single site. The early signs from the transformation plan have been encouraging and the Board believes more significant performance benefits should begin to be realised for FY 2020, including annualised cost savings of over £1.0m.

 

The first half also saw a planned slowdown in rig fleet expansion with capital expenditure of £0.6m (H1 2018: £2.7m). Investment in fixed assets over the last three and a half years now stands at over £38m and we continue to believe that this has positioned Van Elle with the broadest and most modern range of specialist piling rigs in the UK market. After five rig disposals, our fleet now consists of 119 rigs. 

Whilst there remains significant scope to improve performance, we will continue to consider niche, bolt-on acquisition opportunities where appropriate, balanced with a clearer view of selective future plant investment to support organic growth in key markets.  We believe that our strong financial position will enable us to act swiftly where we feel an opportunity will bring value to the Group.

 

 

 

Trading review in the period

As set out in our trading update of 10 December 2018, the first quarter of the current year was relatively quiet as a result of subdued UK market conditions following a challenging period for the UK construction markets in early 2018.  Market conditions were more supportive in the second quarter and the Group saw a progressive improvement in performance during the latter part of the first half. As a result, for the six months ended 31 October 2018, revenue decreased by 18.4% to £42.9m (H1 2018: £52.6m), against a strong comparative period in the previous. In terms of end market performance, sales to the housebuilding sector continue to make up the majority of Group revenues at 50.8% (H1 2018: 50.0%) but decreased in the period by 17.1% to £21.8m (H1 2018: £26.3m). Infrastructure sector sales also decreased, by 22.8%, to £12.2m (H1 2018: £15.8m) with sales to the Commercial & Industrial sector increasing slightly to £8.3m (H1 2018: £8.2m).

Despite the subdued market conditions, the gross margin increased in the period to 32.8% (H1 2018:31.7%). This improvement reflected several strong contract completions in the Specialist Piling division during the first half as compared to the adverse impact of poor commercial parameters on two electrification contracts undertaken in the comparative period. Additionally, gross margin has also been enhanced this year following a review and revision to asset lives and residual values for plant and machinery depreciation rates which is reported in cost of sales.

As a result of the reduced activity, particularly the resulting impact on utilisation of larger rigs in the General and Specialist Piling divisions, underlying operating profit decreased by 47.4% to £3.0m (H1 2018: £5.7m), representing an underlying operating margin of 7.1%. Underlying profit before tax was £2.8m, a decrease of 48.1% on the same period last year (H1 2018: £5.4m) and underlying earnings per share were 2.8p, a decrease of 48.1% on the prior year (H1 2018: 5.4p).

The first half of this year generated operating cash flows of £4.8m (H1 2018: £7.1m) representing an operating cash conversion* of 100.3% (H1 2018: 86.9%). Net assets have increased by 5.6% to £41.5m (31 October 2017: £39.2m). The good cash performance has contributed to a reduction in net debt in the first half to £5.6m at 31 October 2018, compared to £5.9m at 30 April 2018,

*  defined as cash generated from operations divided by EBITDA less profit on sale of fixed assets

Operating performance in the period

General Piling

The General Piling division has suffered the most from the challenging market conditions, with new housing sector revenues down 23% and infrastructure down 42% on prior year.  The subdued markets have resulted in low utilisation of our large diameter piling rigs that not only supressed revenue, but also impacted on gross margin performance as these techniques command higher gross margins.  As a result, divisional revenues have fallen £5.5m (24%) against the comparative period last year, resulting in operating profit of £0.4m (H1 2018: £3.5m).

Specialist Piling

Specialist Piling generated revenue of £12.8m (H1 2018: £14.1m) a decrease of 9% compared to the same period last year. Rail turnover was marginally up on prior year, with low rig utilisation in the Specialist Piling operating unit accountable for the decrease as a result of a quiet first quarter in infrastructure work.   Operating margin has however increased to 16.7%, (H1 2018: 7.7%), primarily from several strong contract completions in the Rail operating unit in H1 2019, and conversely, an erosion in margins in the prior year, resulting from poor commercial performance on two electrification contracts.

Ground Engineering Services

In Ground Engineering Services, revenues are down 28% to £6.3m (H1 2018: £8.7m).  Following the streamlining of the operational structure, ground stabilisation work will now be performed by the Specialist Piling division and contract bidding is done on a much more selective basis to minimise potential risk inherent in lump sum contracts. In H1, revenues are down in ground stabilisation work and Geotechnical has had a slow first half of the year with Scotland faring better with revenues relatively flat on the comparative period.  Consequently, operating margin for H1 2019 was down to 1.5% (H1 2018 4.5%).

 

 

Ground Engineering Products

In Ground Engineering Products, demand for the Group's proprietary Smartfoot© foundation system continues, albeit revenues of £6.5m this half year are down 5.8% (H1 2018 £6.9m) reflecting the quiet Q1 seen in housebuilding, with operating margins at 6.6% (H1 2018 9.8%).  The in-house manufacturing facilities have marginally increased production levels on a like for like basis, with some pre-cast pile products having been sold to the external market.

Board news

This year is an important one of transition for the Group, with our new CEO Mark Cutler, having joined the Board in August 2018 following the retirement of Jon Fenton in May 2018 (and the intervening period with Steve Prendergast as interim CEO).

Dividend

Being cognisant of the first half performance, greater second half weighting of profits and with confidence in the long-term prospects of the Group, the Board is declaring an interim dividend of 1.0 pence per share (H1 2018: 1.4 pence per share).  The interim dividend will be paid on 6 March 2019 to shareholders on the register on 15 February 2019.  The shares will trade ex-dividend on 14 February 2019.

Current trading and outlook

Whilst enquiry and order conversion rates have remained encouraging, performance in Q3 to date has been below the Board's expectations. 

Performance in the General Piling division in Q3 has been below anticipated profit levels.  A detailed review of this division has identified operational and commercial shortcomings which have resulted in the Group undertaking several contracts which are expected to deliver poor margins. Decisive action has been taken including the appointment of new divisional leadership, and the underperforming contracts are now largely complete. The issues in Q3 are expected to have an adverse profit impact on the Group, but margin performance in the division is expected to return to forecast levels by the start of Q4.    

In addition, whilst Van Elle saw strong demand in its Specialist Services division over the Christmas period, particularly in the rail sector, a number of contracts across the Group have had start dates delayed in December and early January. As a result the Board has re-assessed workload forecast for H2 and considers that it would be prudent to reduce its full year revenue expectations.   

As a result of the above, although the Board expects the Group to deliver a stronger performance in H2 than H1, it also expects the full year performance to be significantly below previous expectations.

Whilst these setbacks in Q3 have been disappointing, the orderbook at the beginning of January 2019 (which is at a similar level to January 2018), current enquiry levels and order conversion rates are encouraging. The Board continues to monitor market conditions closely, but is optimistic about the Group's prospects for Q4.  The Board continues to believe that the long-term opportunities for profitable growth for the Group remain significant.

 

Consolidated statement of comprehensive income

For the 6 months ended 31 October 2018

 

Note

6 months to     31 Oct 2018 (unaudited)

6 months to 31 Oct 2017 (unaudited)

12 months to 30 Apr 2018

(audited)

 

 

£'000

£'000

£'000

 

 

 

 

 

Revenue

2

42,921

52,642

103,872

 

Cost of sales

 

(28,841)

(35,965)

(69,480)

Gross profit

 

14,080

16,677

34,392

Administrative expenses

 

(11,042)

(11,013)

(23,295)

Operating profit before exceptional costs and share-based payment expense

 

3,038

5,664

11,097

Share-based payment expense

3

(80)

(80)

(148)

Carillion bad debt write-off

3

-

-

(956)

Exceptional costs

3

(331)

-

(283)

Operating profit

 

2,627

5,584

9,710

Finance expense

 

(297)

(268)

(561)

Finance income

 

25

9

25

Profit before tax

 

2,355

5,325

9,174

Total comprehensive income for the year

 

1,884

4,244

7,339

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

Basic

4

2.4

5.3

9.2

Diluted

4

2.4

5.3

9.2

 

 

 

 

 

Underlying earnings per share (pence)

 

 

 

 

Basic

4

2.8

5.4

10.6

Diluted

4

2.8

5.4

10.6

 

All amounts relate to continuing operations. There was no other comprehensive income in either the current or preceding period/ year.

 

 

 

 

Consolidated statement of financial position                                 

As at 31 October 2018

 

 

31 Oct 2018 (unaudited)

31 Oct 2017 (unaudited)

30 Apr 2018 (audited)

 

 

£'000

£'000

£'000

 

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

39,038

37,369

39,502

Intangible assets

 

2,303

2,318

2,324

 

 

41,341

39,687

41,826

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

2,372

2,450

2,565

Trade and other receivables

 

19,946

21,049

22,225

Cash and cash equivalents

 

9,384

12,042

10,880

 

 

31,702

35,541

35,670

Total assets

 

73,043

75,228

77,496

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

14,830

17,248

17,353

Loans and borrowings

 

5,071

5,422

5,580

Corporation tax payable

 

438

1,067

753

 

 

20,339

23,737

23,686

 

 

 

 

 

Non-current liabilities

 

 

 

 

Loans and borrowings

 

9,945

11,206

11,205

Provisions

 

253

342

270

Deferred tax

 

1,016

778

969

 

 

11,214

12,326

12,444

Total liabilities

 

31,553

36,063

36,130

Net assets

 

41,490

39,165

41,366

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

1,600

1,600

1,600

Share premium

 

8,633

8,633

8,633

Retained earnings

 

31,239

28,914

31,115

Non-controlling interest

 

18

18

18

Total equity

 

41,490

39,165

41,366

 

 

 

 

 

The unaudited interim consolidated statement was approved by the Board of Directors on 15 January 2019.

 

 

 

Consolidated statement of cash flows

For the 6 months ended 31 October 2018

 

Note

6 months to 31 Oct 2018 (unaudited)

6 months to 31 Oct 2017 (unaudited)

12 months to 30 Apr 2018 (audited)

 

 

£'000

£'000

£'000

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Cash generated from operations

5

4,786

7,111

13,244

Interest received

 

25

9

25

Interest paid

 

(297)

(268)

(561)

Income tax paid

 

(740)

(892)

(1,768)

Net cash generated from operating activities

 

3,774

5,960

10,940

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchases of property, plant and equipment

 

(735)

(2,967)

(5,053)

Disposal of property, plant and equipment

 

323

230

321

Net cash absorbed in investing activities

 

(412)

(2,737)

(4,732)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Repayment of bank borrowings

 

(75)

(75)

(150)

Repayments of Invest to Grow loan

 

(47)

(48)

(95)

Payments to finance lease creditors

 

(2,896)

(2,516)

(5,421)

Dividends paid

 

(1,840)

(1,400)

(2,520)

Net cash absorbed in financing activities

 

(4,858)

(4,039)

(8,186)

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(1,496)

(816)

(1,978)

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

10,880

12,858

12,858

Cash and cash equivalents at end of period

6

9,384

12,042

10,880

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

For the 6 months ended 31 October 2018

 

 

Share capital

 

Share premium

Non-controlling interest

 

Retained earnings

 

Total equity

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Balance at 1 May 2017 (audited)

1,600

8,633

18

26,070

36,321

 

 

 

 

 

 

Total comprehensive income

-

-

-

4,244

4,244

Dividend payment

-

-

-

(1,400)

(1,400)

 

-

-

-

2,844

2,844

Balance at 31 October 2017 (unaudited)

1,600

8,633

18

28,914

39,165

 

 

 

 

 

 

Total comprehensive income

-

-

-

3,096

3,096

Share-based payment expense

-

-

-

225

225

Dividend payment

-

-

-

(1,120)

(1,120)

 

-

-

-

2,201

2,201

Balance at 30 April 2018 (audited)

1,600

8,633

18

31,115

41,366

 

 

 

 

 

 

Total comprehensive income

-

-

-

1,884

1,884

Share-based payment expense

-

-

-

80

80

Dividend payment

-

-

-

(1,840)

(1,840)

 

-

-

-

124

124

Balance at 31 October 2018 (unaudited)

1,600

8,633

18

31,239

41,490

 

 

 

 

Notes to the interim results

For the 6 months ended 31 October 2018

1.    Basis of preparation

 

The unaudited interim consolidated statement of Van Elle Holdings plc is for the six months ended 31 October 2018 and do not comprise statutory accounts within the meaning of section 435 of the Companies Act 2006.  These consolidated financial statements have been prepared in compliance with the recognition and measurement requirement of International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) as adopted by the EU.  They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the group's annual report.  The unaudited interim consolidated statement has been prepared in accordance with the accounting policies that are expected to be applied in the report and accounts for the year ending 30 April 2019.

The comparative figures for the year ended 30 April 2018 do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006, but they have been derived from the audited financial statements for that year, which have been filed with the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006 not a reference to any matters which the auditor drew attention by way of emphasis of matter without qualifying their report.

IFRS 9 Financial Instruments

 

The Group has initially adopted IFRS 9 Financial Instruments from 1 May 2018. IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement and specifies how an entity should classify and measure financial assets, financial liabilities, and some contracts to buy or sell non-financial items.

The most significant area of change which could potentially impact the Group's reported results is the introduction of an "expected loss" model for impairment provisioning, which now also includes contract assets recognised under the adoption of IFRS 15 Revenue from Contracts with Customers.

Based on an assessment of historic credit losses and the likelihood of the occurrence of future credit losses on existing financial assets, the Directors consider that there are no further material impairment losses to be recognised against the Group's financial assets as a result of the transition to IFRS 9.

In line with the below amended accounting policy, the financial assets and liabilities held by the Group at 31 October 2018 are classified at amortised cost under IFRS 9 which is in line with treatment under IAS 39. As the basis of measurement has not changed there have been no changes to the carrying amount of the financial instruments as a result of the transition from IAS 39 to IFRS 9. In addition, there have been no modifications to loans that have to be reconsidered as a result of adopting IFRS 9.                                                                                         

The details of the new significant accounting policies and the nature of the changes to previous accounting policies in relation to the Group's adoption of IFRS 9 Financial Instruments are set out below.

 

 

 

 

FY18 Accounting Policy

Amended accounting policy

Nature of change in accounting policy

 

 

Financial assets

 

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity.

The Group's accounting policy for each category is as follows:

Fair value through profit or loss

The Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

Loans and receivables

These arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the customer or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable and for trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

Cash and cash equivalents include cash in hand, deposits held at call with banks, and, for the statement of cash flows, bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.

The Group's accounting policy for each category is as follows:

Fair value through profit or loss

The Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss.

Other financial liabilities

Other financial liabilities include the following items:

Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

 

On initial recognition, a financial asset is classified as measured at amortised cost, Fair Value through Other Comprehensive Income ("FVOCI") or Fair Value Through Profit or Loss ("FVTPL"). Financial liabilities are measured at amortised cost or FVTPL.

The classification of financial assets is based on the way a financial asset is managed and its contractual cash flow characteristics.

Financial assets are measured at amortised cost if both of the following conditions are met and the financial asset or liability is not designated as at FVTPL:

-     the financial asset is held with the objective of collecting or remitting contractual cash flows; and

-     its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

-     the financial asset is held with the objectives of collecting contractual cash flows and selling the financial asset; and

-     its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.

The Group's principal financial instruments comprise cash and cash equivalents, trade receivables, trade payables and interest-bearing borrowings. Based on the way these financial instruments are managed and their contractual cash flow characteristics, all the Group's financial instruments are measured at amortised cost using the effective interest method.

The amortised cost of financial assets is reduced by impairment losses as described below. Interest income, foreign exchange gains and losses, impairments and gains or losses on derecognition are recognised through the Statement of Comprehensive Income

Trade receivables, and trade payables are held at their original invoiced value, as the interest that would be recognised from discounting future cash flows over the short credit period is not considered to be material.

Cash equivalents comprise short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. An investment with a maturity of three months or less is normally classified as being short term. Cash and cash equivalents do not include other financial assets.

 

Impairment losses against financial assets carried at amortised cost are recognised by reference to any expected credit losses against those assets. The simplified approach for calculating impairment of financial assets has been used. Lifetime expected credit losses are calculated by considering, on a discounted basis, the cash shortfalls that would be incurred in various default scenarios over the remaining lives of the assets and multiplying the shortfalls by the probability of each scenario occurring. The allowance is the sum of these probability weighted outcomes.

 

 

IFRS 9 removes the previous IAS 39 categories for financial assets of held to maturity and loans and receivables and available for sale. These are replaced by the categories noted in the amended accounting policy for financial instruments.

IFRS 9 retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, trade receivables, and retentions held by customers for contract work were previously classified as loans and receivables under IAS 39 and were measured at amortised cost. Trade payables and interest-bearing borrowings were previously classified as "other financial liabilities" under IAS 39 and were measured at amortised cost. These financial instruments are now classified as financial assets and liabilities at amortised cost under IFRS 9.

The adoption of IFRS 9 has therefore not had any impact on the measurement of the Group's financial assets and liabilities.

 

IFRS 9 replaces the incurred loss model in IAS 39 with the expected credit loss model, which requires that future events are considered when calculating impairments to financial assets.

Based on an assessment of historic credit losses on the Group's financial assets and the likelihood of the occurrence of future credit losses on existing financial assets, the Directors consider that any increase in impairment provision to be recognised against the Group's financial assets on transition to IFRS 9 is immaterial.

 

 

 

 

IFRS 15 Revenue from Contracts with Customers

 

The Group has initially adopted IFRS 15 Revenue from Contracts with Customers from 1 May 2018 and this has not been applied retrospectively. The cumulative effect method has been used to calculate any required adjustment as at 1 May 2018. The Group has elected to apply IFRS 15 retrospectively only to contracts that are not completed contracts at the date of initial application.

For all contract modifications that occur before the date of initial application, the Group has applied the following expedient:

·      for contracts that were modified before the beginning of the earliest period presented, an entity need not retrospectively restate the contract for those contract modifications in accordance with IFRS 15 paragraphs 20-21. Instead, an entity shall reflect the aggregate effect of all of the modifications that occur before the beginning of the earliest period presented.

·      for all reporting periods presented before the date of initial application, the Group has not disclosed the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the entity expects to recognise that amount as revenue

 

identifying the satisfied and unsatisfied performance obligations;

determining the transaction price; and

allocating the transaction price to the satisfied and unsatisfied performance obligations.

 

 

 

The only significant change, which could result in a transitional adjustment, in adopting IFRS 15 is that revenue relating to mobilisation of rig equipment to the customer site is now recognised over time. Under the previous accounting policy this revenue was recognised at the time of mobilisation. Costs relating to mobilisation under IFRS 15 are now capitalised and amortised over time at the same rate as revenue is recognised. Management has performed a detailed review of relevant contracts and calculated the required adjustments and concluded that no material transitional adjustment is required.

IFRS 15 provides a single, principles-based five-step model to be applied to all sales contracts, based on the transfer of control of goods and services to customers. It replaces the separate models for goods, services and construction contracts previously included in IAS 11 Construction Contracts.

The following details the amended accounting policy.

FY2018 Revenue Accounting Policy

Amended Revenue Accounting Policy

Nature of Change in Accounting Policy

Turnover represents the total amounts receivable by the Group for goods supplied and services provided, excluding value added tax

and trade discounts. The Group's turnover arises in the UK.

 

 

 

 

 

 

 

In the case of contracts, when the outcome can be assessed reliably, contract revenue is recognised by reference to the stage of completion of the contract activity at the statement of financial position date.

 

The stage of completion of the contract at the statement of financial position date is assessed regarding the costs incurred to date as a

percentage of the total expected costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industry practice is to assess the estimated outcome of each contract and recognise the revenue and margin based upon the stage of completion of the contract at the statement of financial position date. The assessment of the outcome of each contract is determined by regular review of the revenues and costs to complete that contract. Consistent contract review procedures are in place in respect of contract forecasting. Revenue is recognised up to the level of the costs which are deemed to be recoverable under the contract.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The gross amount receivable from customers for contract work is presented as an asset for all contracts in progress for which costs incurred, plus recognised profits (or less recognised losses), exceed progress billings.

 

 

 

 

The gross amount repayable to or paid in advance by customers for

contract work is presented as a liability for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses). Full provision is made for losses on all contracts in the year in which the loss is first foreseen.

 

Margin associated with contract variations is only recognised when the outcome of the contract negotiations can be reliably estimated.

 

Costs relating to contract variations are recognised as incurred.

 

 

Revenue represents the total amounts receivable by the Group for goods supplied and services provided, excluding value added tax and trade discounts. The Group's turnover arises in the UK.

 

In line with IFRS 15 Revenue from Contracts with Customers the Group recognises revenue based on the application of a principle-based 'five-step' model. Only when the five steps are satisfied is revenue recognised.

 

General and Specialist Piling

 

The performance obligations and transaction price are defined within signed contracts between the customer and the Group.

 

Each performance obligation represents a series of distinct goods that are substantially the same and that have the same pattern of transfer to the customer. This is classified as a series as each distinct good in the series meets the definition of a performance obligation satisfied over time and the same method would be used to measure the entity's progress towards complete satisfaction of the performance obligation as to transfer each good to the customer.

 

Mobilisation (moving the piling rig equipment to the customer site) does not represent a separate performance obligation. Mobilisation revenue is included within the transaction price of the related performance obligation and recognised over time.

 

The revenue for each performance obligation is recognised over time because each pile enhances an asset that the customer controls.

 

Revenue is recognised as progress towards complete satisfaction of that performance obligation over time occurs using the output method. Progress is determined by completed pile logs.

 

Ground Engineering Services

 

The performance obligations and transaction price are defined within signed contracts between the customer and the Group. Each individual service is not considered a separate performance obligation.

 

For performance obligations where the customer does not simultaneously receive and consume the benefits (e.g. interpretive reports and testing) the work performed by the Group does not create or enhance an asset that the customer controls. Revenue for these performance obligations is recognised at a point in time (e.g. on delivery of report). Costs relating to these performance obligations are capitalised and fully amortised at the point in time when the performance obligation is fully satisfied.

 

Contracts may also contain a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer (e.g. bore hole drilling). This is classified as a series as an asset is enhanced that the customer controls, each distinct good in the series meets the definition of a performance obligation satisfied over time and the same method would be used to measure the entity's progress towards complete satisfaction of the performance obligation as to transfer each good to the customer.

 

The revenue for each performance obligation is recognised over time because each good enhances an asset that the customer controls.

 

Revenue is recognised as progress towards complete satisfaction of that performance obligation over time using the output method. Progress is determined by completed logs.

 

Ground Engineering Products

 

Each performance obligation represents a series of distinct goods that are substantially the same and that have the same pattern of transfer to the customer.

 

Mobilisation (moving the piling rig equipment to the customer site) does not represent a separate performance obligation. Mobilisation revenue is included within the transaction price of the related performance obligation and recognised over time.

 

The revenue for each performance obligations is recognised over time because each pile enhances an asset that the customer controls.

 

Revenue is recognised as progress towards complete satisfaction of that performance obligation over time using the output method. Progress is determined by completed pile logs.

 

 

Variable Consideration

 

The following types of income are variable consideration and are only recognised when management determines them to be highly probable:

 

Liquidated Damages (LADs)

 

These are included in the contract for both parties.

 

The customer can reduce the amount paid to the Group if it is deemed the Group has caused unnecessary delays or additional work. The Group is also able to claim LADs where it can be proved that the Customer has caused unnecessary delays or disruption. The method for claiming this revenue is to include it within the application to the customer, or for the Customer to include or exclude in the application certificate returned to the Group.

 

At the point of making an application for LADs the additional revenue or the reduction in revenue is only recognised when it is highly probable that it will occur.

 

Standing time 

 

Within the contracts a penalty charge can be made where work is delayed, and the Group assets must stand idle. These charges can be disputed by the Customer where blame may not be clear. The revenue for these charges is not recognised until it is highly probable that it will be received.

 

Adjustments to invoiced variable consideration

 

Where revenue relating to variable consideration is invoiced to the customer, revenue is adjusted to remove revenue that is not highly probable. This is subsequently recognised only once it becomes highly probable.

 

 

Trade receivables

 

Trade receivables includes applications to the extent that there is an unconditional right to payment and the amount has been certified by the customer.

 

Contract assets

 

The recoverable amount of applications that have not been certified and other amounts that have not been applied for but represent the recoverable value of work carried out at the balance sheet date are recognised as contract assets within trade and other receivables on the balance sheet.

 

Contract liabilities

 

Any payments received in advance of completing the work are recognised within contract liabilities.

 

 

 

 

 

 

 

The amended accounting policy complies with the 'five-step' model required by IFRS 15.

 

 

 

 

The Group's contracts with customers as defined under IFRS 15 correspond in almost all circumstances to construction contracts as previously defined under IAS 11 Construction Contracts.

 

The transaction price under the amended accounting policy corresponds to the value of contract revenue as measured under the previous accounting policy.

The previous accounting policy used a percentage completion method, based on cost. The new accounting policy looks at the performance obligations within each contract type.

 

Under the previous accounting policy revenue relating to mobilisation was recognised at the time of mobilisation. Under IFRS 15 this is not a separate performance obligation. This revenue is now split between the different performance obligations and recognised over time. This change has not resulted in any transitional adjustments.

 

Under the previous accounting policy, where the outcome of a construction contract could be estimated reliably, revenue and costs were recognised by reference to the stage of completion of activity at the balance sheet date. This was normally measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs (the "cost to cost" input method).

 

Where the outcome of a construction contract could not be estimated reliably, contract revenue was recognised to the extent of contract costs incurred that it is probable would be recoverable.

 

Due to the nature of the Group's contracts there is a direct correlation between costs being incurred and a series of performance obligations being satisfied. There is no financial impact associated with adopting the output method to calculate progress under IFRS 15.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Under IAS 37 variable consideration was recognised when probable. Under IFRS 15 the requirement is for revenue to be highly probable. For the Group the move from probable to highly probable does not create a material change in the timing of revenue recognition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The amended accounting policy reflects the requirement under IFRS 15 to recognise all contract balances as contract assets or contract liabilities, other than any unconditional rights to consideration which are presented as receivables. Consequently, this has led to the creation of a new category of asset ("contract assets") within trade and other receivables and a new category of liability ("contract liabilities") within trade and other payables, which includes amounts previously held as trade receivables or payables. Both new categories include amounts previously held as trade receivables or payables on the balance sheet.

 

 

IFRS 16 Leases

 

IFRS 16, as adopted by the European Union, becomes effective for accounting periods beginning on or after 1 January 2019.

Adoption of IFRS 16 Leases will result in the Group recognising right of use assets and lease liabilities for all contracts that are, or contain, a lease. For leases currently classified as operating leases, under current accounting requirements the Group does not recognise related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total commitment.

The Directors are performing a detailed analysis of the impact of adopting IFRS 16, as well as considering whether to adopt a full retrospective or a modified retrospective approach. This will be concluded prior to the end of FY2019 and the impact, both on the primary financial statements and on key performance indicators, will be disclosed in the financial statements for the year ended 30 April 2019.  

Functional currency

 

The unaudited interim consolidated statements are presented in Sterling, which is also the Group's functional currency.  Amounts are rounded to the nearest thousand, unless otherwise stated.

Accounting for fixed assets

 

The Group has made changes to the useful economic lives and residual values, effective from 1 May 2018, together with an associated refinement to the allocation of subsequent expenditure between repairs and capital enhancements.

 

Depreciation rates and residual values- change in accounting estimate

 

The Group has made the following changes to the depreciation rates, effective from 1 May 2018. Depreciation is calculated for plant and machinery, using the straight-line method, to write off their carrying value, less residual values, over the expected useful economic lives of 12 years, 8 years or 3-5 years respectively. Under the old accounting policy, a residual value was not applied to the carrying value and deprecation was calculated over an expected useful life of 10 years. The change has been applied prospectively and there has been no restatement of prior periods.

This change in estimates has reduced the depreciation charge reported for H1 FY 2019 and forecast for FY2019 as follows:

 

H1 FY 2019

FY2019 (forecast)

Using old depreciation rates

£2,685k

£5,369k

As reported

£2,131k

£4,262k

Variation

£(554)

£(1,107)

 

Expenditure on subsequent repairs and refurbishments

Also effective 1 May 2018, and consistent with the evidence considered in support of the revised useful lives and residual values of plant and machinery, the Group has reviewed the previous approach to allocating subsequent expenditure between repairs and enhancements to the existing assets. This review has identified that certain refurbishment costs which were historically added to the cost of the assets and depreciated over a 10 year period will, in future, be recognised as an expenses in the Income Statement as incurred, taking into account the revised assessment of useful economic lives and residual values, this expenditure does not enhance the value or extend the lives of the related assets. This change has been applied prospectively. In H1 FY2019 this change resulted in a charge of £48,000 to the Income Statement that would have previously been capitalised.

 

 

2.    Segment information

The Group evaluates segmental performance based on profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as goodwill impairment and the effects of share-based payments. Traditionally the second half of the year is stronger in turnover and operating performance than the first half of the year with work undertaken by the Specialist Piling division during the statutory holiday periods of Christmas and Easter. Loans and borrowings, insurances and head office central services' costs are allocated to the segments based on levels of turnover. All turnover and operations are based in the UK.

Operating segments - 6 months to 31 October 2018

 

 

 

General Piling

 

Specialist Piling

Ground Engineering Services

Ground Engineering Products

 

Head Office

 

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

 

 

 

 

 

 

Total revenue

19,009

12,752

6,902

7,892

-

46,555

Inter-segment revenue

(1,646)

-

(613)

(1,375)

-

(3,634)

Revenue

17,363

12,752

6,289

6,517

 

42,921

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

Underlying operating profit

391

2,125

95

427

-

3,038

Share-based payments

-

-

-

-

(80)

(80)

Exceptional item

-

-

-

-

(331)

(331)

Operating profit

391

2,125

95

427

(411)

2,627

 

 

 

 

 

 

 

Finance expense

-

-

-

-

(297)

(297)

Finance income

-

-

-

-

25

25

Profit before tax

391

2,125

95

427

(683)

2,355

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Property, plant & equipment

12,442

12,458

3,073

1,850

9,215

39,038

Inventories

415

415

116

1,426

-

2,372

Reportable segment assets

12,857

12,873

3,189

3,276

9,215

41,410

Intangible assets

-

-

-

-

2,303

2,303

Trade and other receivables

-

-

-

-

19,946

19,946

Cash and cash equivalents

-

-

-

-

9,384

9,384

Total assets

12,857

12,873

3,189

3,276

40,848

73,043

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loans and borrowings

-

-

-

-

15,016

15,016

Trade and other payables

-

-

-

-

15,268

15,268

Provisions

-

-

-

-

253

253

Deferred tax

-

-

-

-

1,016

1,016

Total liabilities

-

-

-

-

31,553

31,553

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Capital expenditure

113

367

85

1,062

359

1,986

Depreciation / amortisation

974

757

226

198

-

2,155

There are no individual customers accounting for more than 10% of Group revenue in either the current or preceding period/ year.

 

 

 

Operating segments - 6 months to 31 October 2017

 

 

 

General Piling

 

Specialist Piling

Ground Engineering Services

Ground Engineering Products

 

Head Office

 

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

 

 

 

 

 

 

Total revenue

24,426

14,237

9,313

8,417

-

56,393

Inter-segment revenue

(1,562)

(93)

(568)

(1,528)

-

(3,751)

Revenue

22,864

14,144

8,745

6,889

-

52,642

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

Underlying operating profit

3,495

1,096

396

677

-

5,664

Share-based payments

-

-

-

-

(80)

(80)

Exceptional item

-

-

-

-

-

-

Operating profit

3,495

1,096

396

677

(80)

5,584

 

 

 

 

 

 

 

Finance expense

-

-

-

-

(268)

(268)

Finance income

-

-

-

-

9

9

Profit before tax

3,495

1,096

396

677

(339)

5,325

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Property, plant & equipment

13,383

10,499

3,953

1,299

8,235

37,369

Inventories

347

403

222

1,478

-

2,450

Reportable segment assets

13,730

10,902

4,175

2,777

8,235

39,819

Intangible assets

-

-

-

-

2,318

2,318

Trade and other receivables

-

-

-

-

21,049

21,049

Cash and cash equivalents

-

-

-

-

12,042

12,042

Total assets

13,730

10,902

4,175

2,777

43,644

75,228

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loans and borrowings

-

-

-

-

16,628

16,628

Trade and other payables

-

-

-

-

18,315

18,315

Provisions

-

-

-

-

342

342

Deferred tax

-

-

-

-

778

778

Total liabilities

-

-

-

-

36,063

36,063

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Capital expenditure

3,854

1,807

1,425

104

198

7,388

Depreciation / amortisation

1,087

1,088

384

181

-

2,740

There are no individual customers accounting for more than 10% of Group revenue in either the current or preceding period/ year.

 

Operating segments - 12 months to 30 April 2018

 

 

 

General Piling

 

Specialist Piling

Ground Engineering Services

Ground Engineering Products

 

Head Office

 

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Revenue

 

 

 

 

 

 

Total revenue

46,066

30,299

18,677

16,384

-

111,426

Inter-segment revenue

(2,942)

(412)

(1,175)

(3,025)

-

(7,554)

Revenue

43,124

29,887

17,502

13,359

-

103,872

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

Underlying operating profit

5,693

4,073

306

1,025

-

11,097

Share-based payments

-

-

-

-

(148)

(148)

Exceptional item

-

(956)

-

-

(283)

(1,239)

Operating profit

5,693

3,117

306

1,025

(431)

9,710

 

 

 

 

 

 

 

Finance expense

-

-

-

-

(561)

(561)

Finance income

-

-

-

-

25

25

Profit before tax

5,693

3,117

306

1,025

(967)

9,174

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Property, plant & equipment

13,513

10,218

4,163

2,913

8,695

39,502

Inventories

297

420

156

1,693

-

2,566

Reportable segment assets

13,810

10,638

4,319

4,606

8,695

42,068

Intangible assets

-

-

-

-

2,324

2,324

Trade and other receivables

-

-

-

-

22,225

22,225

Cash and cash equivalents

-

-

-

-

10,880

10,880

Total assets

13,810

10,638

4,319

4,606

44,124

77,497

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loans and borrowings

-

-

-

-

16,785

16,785

Trade and other payables

-

-

-

-

18,106

18,106

Provisions

-

-

-

-

270

270

Deferred tax

-

-

-

-

969

969

Total liabilities

-

-

-

-

36,130

36,130

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

Capital expenditure

5,059

2,636

2,070

1,782

1,603

13,150

Depreciation / amortisation

2,002

2,114

685

242

662

5,705

There are no individual customers accounting for more than 10% of Group revenue in either the current or preceding period/ year.

 

 

3.     Exceptional costs                                                                                           

 

6 months to 31 Oct 2018 (unaudited)

6 months to 31 Oct 2017 (unaudited)

12 months to 30 Apr 2018 (audited)

 

£'000

£'000

£'000

 

 

 

 

Exceptional costs

331

-

1,239

 

Exceptional costs for the 6 months to 31 October 2018 are for restructuring costs as a result of consolidating the divisional structure.

The prior year other exceptional items relate to costs associated with an EGM held on 1 December 2017, due diligence fees for an aborted acquisition and a £956,000 Carillion bad debt write off.

 

 

 

4.       Earnings per share

          The calculation of basic and diluted earnings per share is based on the following data:          

      

6 months to 31 Oct 2018 (unaudited)

6 months to 31 Oct 2017 (unaudited)

12 months to 30 Apr 2018 (audited)

 

'000

'000

'000

Basic weighted average number of shares

80,000

80,000

80,000

 

Dilutive potential ordinary shares from share options

-

-

-

 

Diluted weighted average number of shares

80,000

80,000

80,000

 

 

 

 

 

 

 

£'000

£'000

£'000

 

Profit for the period/year

1,884

4,244

7,339

 

Add back / (deduct):

 

 

 

 

Share-based payments

80

80

148

 

Exceptional costs

331

-

1,239

 

Tax effect of the above

(63)

-

(210)

 

Underlying profit for the year

2,232

4,324

8,516

 

 

 

 

 

 

 

Pence

Pence

Pence

 

Earnings per share

 

 

 

 

Basic

2.4

5.3

9.2

 

Diluted

2.4

5.3

9.2

 

Basic - excluding exceptional costs and share-based payments

2.8

5.4

10.6

 

Diluted - excluding exceptional costs and share-based payments

2.8

5.4

10.6

 

         The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders and on 80,000,000 ordinary shares (6 months ended 31 Oct 2017: 80,000,000 and 12 months ended 30 Apr 2018: 80,000,000) being the weighted average number of ordinary shares.

         The underlying earnings per share is based on profit adjusted for exceptional operating costs and share-based payment charges, net of tax, and on the same weighted average number of shares used in the basic earnings per share calculation above.  The Directors consider that this measure provides an additional indicator of the underlying performance of the Group.

         There is no dilutive effect of the share options as performance conditions remain unsatisfied and the share price was below the exercise price.

 

         

         

 

 

 

5.     Cash generated from operations                                                                                  

      

6 months to 31 Oct 2018 (unaudited)

6 months to 31 Oct 2017 (unaudited)

12 months to 30 Apr 2018 (audited)

 

£'000

£'000

£'000

Operating profit

2,627

5,584

9,710

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

2,131

2,716

5,705

Amortisation of intangible assets

24

24

44

Profit on disposal of property, plant and equipment

(8)

(221)

(267)

Share-based payment expense

80

80

225

Operating cash flows before movement in working capital

4,854

8,183

15,417

Decrease/(Increase) in inventories

193

(27)

(142)

Decrease/(Increase) in trade and other receivables

2,279

(2,332)

(3,429)

(Decrease)/Increase in trade and other payables

(2,523)

1,287

1,470

Decrease in provisions

(17)

-

(72)

Cash generated from operations

4,786

7,111

13,244

 

6.     Analysis of cash and cash equivalents and reconciliation to net debt                          

      

31 Oct 2018 (unaudited)

31 Oct 2017 (unaudited)

30 Apr 2018 (audited)

 

£'000

£'000

£'000

Cash at bank

9,340

11,992

10,832

Cash in hand

44

50

48

Cash and cash equivalents

9,384

12,042

10,880

Bank loans secured

(1,050)

(1,200)

(1,125)

Other loans secured

(62)

(157)

(110)

Finance leases

(13,902)

(15,271)

(15,550)

Net debt

(5,630)

(4,586)

(5,905)

 

 

 

INDEPENDENT REVIEW REPORT TO VAN ELLE HOLDINGS PLC

Introduction

We have been engaged by the company to review the unaudited interim consolidated statement in the half-yearly financial report for the six months ended 31 October 2018 which comprises the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the unaudited interim consolidated statement.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the unaudited interim consolidated statement in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the unaudited interim consolidated statement in the half-yearly financial report for the six months ended 31 October 2018 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

 

BDO LLP

Chartered Accountants

Nottingham

 

 

15 January 2019

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 

 


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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