RNS Number:4515T
Conder Environmental PLC
19 December 2003
CONDER ENVIRONMENTAL PLC INTERIM FINANCIAL STATEMENTS FOR PERIOD
ENDING 31 OCTOBER 2003
Chairman's statement on half year to 31 October 2003
Trading results
After an exceptional year last year, Vikoma suffered from extended delays in
order intake in our first half, in common with other companies in the sector. We
believe this reduction to be linked to world events at the beginning of the year
and therefore temporary; we expect a substantially improved performance in the
second half.
As a result of this downturn, the group incurred a loss before exceptional costs
and taxation of #392,000 (2002: profit #12,000) on turnover of #8.24 million
(2002: #9.99 million).
The loss before tax, after exceptional costs of #128,000, was #520,000. The loss
per share was 1.4p (2002: profit 0.1p).
Vikoma
Since the end of the Iraq war there has been a marked slowdown in the number and
value of orders placed for oil spill containment and recovery equipment
throughout the world. There has also been a significant weakening of the US
dollar, the currency in which most sales are denominated, against the pound. In
consequence, Vikoma's turnover in this first half was over 30% lower than in the
equivalent period last year, and over 50% lower than in the 6 months to 30 April
2003.
There has, however, been no reduction in the level of enquiries, and Vikoma is
well placed to secure a number of high value orders during the next 6 to 12
months, from customers in a number of different countries.
It is particularly difficult to predict the timing of these contract awards.
While we remain very optimistic that Vikoma will be successful, it is more
difficult to say to what extent these contracts will benefit the current
financial year as opposed to the year to 30 April 2005.
Conder
Conder Products had its best trading result since the group's flotation in
December 2000 and was profitable in the first half. Major improvements have been
realised throughout the business, including production efficiencies and greater
effectiveness in our marketing. We believe that the continuous improvement
processes in place provide significant scope to build further on this progress.
During the period we consolidated the operations of Conder Sewage Technology
with those of Cerva under the name Hydroserve. The principal purpose of this
reorganisation, which gave rise to exceptional costs of #128,000, was to improve
the effectiveness of our service operations in both businesses. The critical
mass this gives us has enabled us to accelerate the opening of regional service
centres. Three are already open, and we plan to broaden coverage to the whole of
mainland Britain over the next twelve months.
Hydroserve, in conjunction with Conder Products, has introduced an exciting new
product range to serve the 35 to 500 population market. This broader range of
package sewage treatment plants is well designed, competitively priced and is
already having a positive impact in the market.
At the International Water Exhibition in November we also launched a new high
performance treatment plant using the latest membrane technology. This new
product, called the Clereflo XL, has been designed and manufactured in
partnership with membrane specialists and produces a treated waste that is
unmatched for cleanliness within the market it serves; the considerable interest
generated has already been converted into a number of orders.
Hydroserve is also now offering customers an installation service for sewage
treatment plants, and this turnkey approach is proving very effective in winning
new business.
The current level of enquiries and order intake give us confidence in the future
prospects for this business.
Finance
As a result of the loss, net borrowing has increased by #607,000 since the last
year end to #857,000, a gearing level of 15%.
As last year, the dividend will be considered in June in the light of the
performance for the full year and the outlook at that time.
Staff
The group's staff have worked tirelessly in often demanding trading conditions;
I thank them on behalf of the board and shareholders for their loyalty and hard
work.
Outlook
We expect a higher level of orders at Vikoma in the second half together with
sales growth from our improved range of waste water products. As a result we
believe that the second half will show a very significant improvement on the
first half, and that the group will be profitable for the year as a whole. It is
likely, however, that the poor first half will make it difficult to match last
year's level of profitability.
Looking forward to 2004/05, your board is optimistic that this better second
half performance will be sustained and built upon, with all parts of the group
contributing to earnings growth.
Mike Killingley
18 December 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the half year ended 31 October 2003
Unaudited Unaudited Audited
half year half year year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
Note #'000 #'000 #'000
Turnover 1 8,243 9,987 21,822
Operating costs 2 (8,724) (9,912) (21,150)
Operating (loss) / profit 2 (481) 75 672
Interest receivable 1 - 2
Interest payable and similar charges (40) (63) (114)
(Loss) / profit on ordinary activities before (520) 12 560
taxation
Tax on (loss) / profit on ordinary activities - (3) (201)
(Loss) / profit on ordinary activities after (520) 9 359
taxation
Minority interest - equity 2 31 36
(Loss) / profit for the financial period (518) 40 395
Dividends - - (186)
Retained (loss) / profit for the period (518) 40 209
Basic (loss) / profit per share 3 (1.4p) 0.1p 1.1p
Diluted (loss) / profit per share 3 (1.4p) 0.1p 1.1p
Adjusted basic (loss) / profit per share 3 (1.1p) 0.1p 1.1p
All amounts relate to continuing operations. There are no recognised gains and
losses other than those passing through the profit and loss account.
No note of historical cost profits and losses has been presented since reported
profits do not differ from historical profits and losses.
CONSOLIDATED BALANCE SHEET
At 31 October 2003
Unaudited Unaudited Audited
as at as at as at
31 October 31 October 30 April
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Intangible 2,027 2,224 2,113
Tangible 1,915 2,004 2,103
3,942 4,228 4,216
Current assets
Stocks 1,498 1,508 1,464
Debtors 3,750 4,231 5,064
Cash at bank and in hand - 414 488
5,248 6,153 7,016
Creditors: amounts falling due within one (3,345) (3,810) (4,625)
year
Net current assets 1,903 2,343 2,391
Total assets less current liabilities 5,845 6,571 6,607
Creditors: amounts falling due after more (197) (566) (439)
than one year
Provisions for liabilities and charges - (1) -
Net assets 5,648 6,004 6,168
Capital and reserves
Called up share capital 3,725 3,725 3,725
Share premium account 3,897 3,897 3,897
Merger account (644) (644) (644)
Profit and loss account (1,248) (899) (730)
Equity shareholders' funds 5,730 6,079 6,248
Minority interest (82) (75) (80)
5,648 6,004 6,168
CONSOLIDATED CASH FLOW STATEMENT
For the half year ended 31 October 2003
Unaudited Unaudited Audited
half year half year year ended
ended ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Net cash (outflow) / inflow from operating (264) 726 1,296
activities
Returns on investments and servicing of finance (39) (63) (112)
Taxation - - -
Capital expenditure (120) (329) (613)
Dividends paid (184) - -
Cash (outflow) / inflow before financing (607) 334 571
Financing (383) (158) (321)
(Decrease) / increase in cash in the period (990) 176 250
RECONCILIATION OF OPERATING (LOSS) / PROFIT TO OPERATING CASH FLOWS
For the half year ended 31 October 2003
Unaudited Unaudited Audited
half year half year year ended
ended ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Operating (loss) / profit (481) 75 672
Depreciation and amortisation 297 315 622
Movements in stocks (34) (90) (46)
Movement in debtors 1,314 (433) (1,266)
Movement in creditors (1,360) 859 1,314
Net cash (outflow) / inflow from operating (264) 726 1,296
activities
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
For the half year ended 31 October 2003
Unaudited Unaudited Audited
half year half year year ended
ended ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
(Decrease) / increase in cash in (990) 176 250
the period
Repayment of bank loans 348 123 250
Cash outflow from lease 35 35 71
financing
Change in net debt resulting (607) 334 571
from cash flows and
movement in net debt in the
period
Net debt at the beginning of the (250) (821) (821)
period
Net debt at the end of period (857) (487) (250)
ANALYSIS OF NET DEBT
For the half year ended 31 October 2003
At 30 April 2003 Cash Flow At 31 October 2003
#'000 #'000 #'000
Cash at bank and in hand 488 (990) (502)
488 (990) (502)
Debt due within one year (250) 106 (144)
Debt due after more than one (439) 242 (197)
year
Finance leases (49) 35 (14)
Total (250) (607) (857)
Notes to the financial statements
1.Turnover
Turnover represents the amounts (excluding value added tax) derived from the
sale of environmental products to third party customers.
All turnover arose in the United Kingdom and is analysed by destination as
follows:
Unaudited Unaudited Audited
half year half year year ended
ended ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
United Kingdom 4,681 4,324 8,394
Continental Europe 179 697 1,429
North America 73 1,245 799
South America 787 168 8,462
Rest of World 2,523 3,553 2,738
8,243 9,987 21,822
Segmental analysis
The table below sets out information for each group's industry segments.
Vikoma Conder Products and Cerva Total
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
half year half year year half year half year year half year half year year
ended ended ended ended ended ended ended ended ended
31 Oct 31 Oct 30 Apr 31 Oct 31 Oct 30 Apr 31 Oct 31 Oct 30 Apr
2003 2002 2003 2003 2002 2003 2003 2002 2003
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Turnover 3,762 5,461 13,766 4,481 4,526 8,056 8,243 9,987 21,822
Net assets
Segment net 1,053 2,110 1,953 4,584 4,865 5,625 5,637 6,975 7,578
assets
Unallocated net 11 (971) (1,410)
assets /
(liabilities)
Total net assets 5,648 6,004 6,168
All turnover represents sales to third parties.
The net assets of segments exclude intercompany balances.
Vikoma operates in a global market, whilst the remaining trade is based in the
UK, therefore a separate geographical market analysis would not be meaningful
and has not been presented.
Certain disclosures required by Statement of Standard Accounting Practice 25
(Segmental Reporting) have not been made, because in the opinion of the
directors, such disclosure would be seriously prejudicial to the interests of
the Group.
2. (Loss) / profit on ordinary activities before taxation
(Loss) / profit on ordinary activities before taxation is stated after charging:
Half year ended Half year ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Profit on disposal of fixed assets - - (9)
Amortisation of intangible assets 71 66 198
Restructuring 128 - -
3. (Loss) / earnings per ordinary share
Basic (loss) / earnings for the period has been calculated based upon the
weighted average number of ordinary shares in issue for the period of 37,254,309
(2002: 37,254,309) and the loss after taxation and minority interest of #518,000
(2002: profit #40,000).
The diluted loss per share is restricted to 1.4p, as it is not permitted to
exceed basic loss per share.
Loss per share before charging exceptional items totals 1.1p (2002: profit per
share 0.1p)
(Loss)/profit (Loss)/profit (Loss)/profit
for the period ended for the period ended for the year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
As for basic (loss) / earnings per share (518) 40 395
Exceptional items 128 - -
Tax effect of exceptional items (38) - -
90 - -
As for adjusted basic (loss) / earnings per share (428) 40 395
4. Preparation of interim financial statements
These unaudited interim financial statements have been prepared on the basis of
the accounting policies set out in the Group's 30 April 2003 statutory financial
statements. The figures for the year ended 30 April 2003 have been extracted
from the financial statements for that year, which have been filed with the
Registrar of Companies. The auditors' report on those financial statements was
unqualified and did not contain any statement under Section 237 (2) or (3) of
the Companies Act 1985.
5. Copies of the interim financial statements
Copies of the interim financial statements will be sent to shareholders and the
AIM team. Further copies will be available from the Company's head office at
21/22 Britannia Chambers, Town Quay, Southampton, SO14 2AQ.
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