TIDMGCO
RNS Number : 0511W
Green Compliance PLC
20 December 2013
20 December 2013
Green Compliance plc
("Green Compliance" or "the Group")
Interim Results for the six months ended 30 September 2013
Green Compliance announces its interim results for the 6 months
ended 30 September 2013.
-- Revenue from continuing business of GBP6.6m (2012: GBP9.8m)
-- Operating loss (before exceptional items, share based
payments and amortisation of intangibles) of GBP0.8m (2012: profit
of GBP0.1m).
-- Net cash at bank of GBP0.2m versus net bank debt of GBP8.2m
at 31 March 2013 following successful refinancing of the Group
-- Net assets of GBP6.6m up from GBP1.4m in at year end March 31 2013.
-- Fire extinguisher maintenance and pest control businesses
sold for combined gross cash consideration of GBP6m on GBP7m of
combined annualised revenue
Commenting, Bob Holt, Chairman & CEO of Green Compliance,
said:
"These results mark the successful conclusion of an extremely
challenging year for the Group and I am very pleased with the
progress we have made in the last 12 months in our financial
turnaround.
Thanks to the tremendous support of our shareholders we have
managed to complete our refinancing allowing us clear all of our
bank debt. We have also managed to sell two of our loss making
divisions for very strong revenue multiples.
There is no doubt that the conditions that we had to operate in
during the period have had a significant impact on our performance
and this is reflected in the sales and profit figures. However, in
the months since the 30 September in our water hygiene and fire
suppression businesses we have seen positive signs of recovery with
significant new business wins, low terminations and an increase in
revenue due to increased working capital.
Green Compliance will enter 2014 as a well-financed and
sustainable player in the water hygiene and fire detection and
suppression markets and we are committed to building the best water
and fire suppression businesses in the UK. The last quarter of 2013
has shown great commitment within these divisions and I applaud the
efforts of everybody involved.
We look forward to the coming year as one where we can
concentrate on profitably growing our operations in these
sectors.
I would like to thank all of our staff for the huge effort that
they have put in throughout the year."
About Green Compliance www.greencomplianceplc.com ticker: GCO.L
GCO.LN
Green Compliance plc is an AIM-listed company providing
compliance-related business support services to a wide range of
clients in both the public and private sector in the UK.
Enquiries
Green Compliance plc
Bob Holt, Chairman and Chief Executive Tel: +44(0)7778 798 816
Richard Hodgson, Finance Director Tel: +44(0)7880 787 924
N+1 Singer (Nominated Adviser Tel: +44(0)20 7496 3000
and Broker)
Andrew Craig
Ben Wright
Gable Communications Limited Tel : +44(0) 20 7193 7463 or +44(0)
John Bick/Justine James 7872 061007
Email: gco@gablecommunications.com
OPERATIONAL AND FINANCIAL REVIEW
INTRODUCTION
In the six month period to 30 September 2013 regarding
continuing activities, the Group made an operating loss before
exceptional items, share based payments and amortisation of
intangibles of GBP858,000 (2012: profit GBP79,000) on revenue of
GBP6,636,000 (2011: GBP9,770,000).
FINANCING
Whilst the directors recognised the positive progress that had
been made as a result of the turnaround plan put in place at the
beginning of 2013 pressure continued to be placed upon the group's
cash flow and working capital.
This required the Director's, along with key stakeholders, to
re-evaluate the group's strategy and seek additional funding to
support the immediate working capital needs of the group. On 11
September 2013 the board announced a conditional Placing of
350,000,000 new Ordinary Shares at 1 pence each to raise GBP3.5
million before expenses. These funds were received by the Group on
27 September 2013.
As part of the turnaround plan, discussions were held with HSBC
to renegotiate the bank debt. At 31 March 2013, this comprised a
bank loan of GBP7.4m and an overdraft of GBP1.6m. As announced on
11 September 2013, HSBC agreed to accept GBP3.0m in settlement of
the outstanding debt, which at 30 September 2013 stood at
GBP7.4m.
The settlement amount comprised GBP2.75m in cash which was
raised from the Placing (see above) and the assignment of GBP250k
deferred consideration potentially recoverable from the sale of the
Fire Division (see note 7).
Subsequent to the repayment made to HSBC, the Group has secured
a working capital facility from ABN Amro Commercial Finance for
GBP1.5m and has an additional shareholder facility of GBP650k. Both
facilities are for 24 months from November 2013. These facilities
put the Group on a firm financial footing to progress the
business.
The debt waiver accepted by HSBC may give rise to a corporation
tax charge. Whilst the payment of this corporation tax liability
falls beyond 12 months from the signing of these financial
statements, the Directors are aware that this could place a
significant further strain on the Group's on-going working capital
needs. However, as a result of the operational improvements having
been made throughout the Group, the expectation that sales will
increase (partly on the back of new contracts already having been
secured) and a de-geared balance sheet, the Directors are confident
that this potential liability can be managed.
SALE OF FIRE PROTECTION AND PEST CONTROL DIVISIONS
Following a strategic review of the services that the group
provided we concluded that the provision of fire extinguisher and
fire alarm service and maintenance did not form a core part of the
future service provision. In addition we recognised that to achieve
sensible margins in this field would require further
investment.
On 5 July 2013 the majority of the trade and assets of the Fire
Division were sold to London Securities Limited for total
consideration of GBP2m (GBP1.5m in cash and GBP0.5m in deferred
consideration). Of the deferred consideration, up to GBP250k has
been assigned to HSBC as further settlement on net debt with the
remaining GBP250k attributable to the Group providing certain
performance conditions are met. The directors have considered the
fair value of this deferred consideration in accordance with IAS 39
and consider that it is not material to the Group Financial
Statements.
Following a further review the Board decided to concentrate all
the efforts of the Group on the most profitable and cash generative
divisions of water hygiene and fire suppression and agreed to sell
the pest control division to Rentokil Initial plc for a total
consideration of GBP4.0m in cash: GBP3.25m in initial
consideration, GBP0.15m payable within 3 months dependent on
agreement of completion accounts and GBP0.6m in deferred
consideration payable in 12 months' time dependent upon the
achievement of certain operational targets of the disposed
operations.
The business sold relates to the assets of the Company dealing
with pest control, eradication and prevention. In the year to March
2013 the business being sold had audited revenues of GBP5m, made a
loss before tax of GBP0.7m and had assets at 31 March 2013 of
GBP1.7m. As part of the Disposal, certain contracts, employees and
equipment will transfer across to Rentokil.
OPERATIONAL PERFORMANCE
There is no doubt that the conditions that we had to operate in
during the recent period have had a significant impact on our
performance and this is reflected in the sales and profit figures
above.
However in the months since the 30 September in the water and
fire suppression divisions we have seen positive signs of recovery
with significant new business wins, low terminations and an
increase in revenue due to increased working capital.
In these remaining businesses we now have the working capital,
systems, markets, products, customers and staff to continue our
recovery and this is the major focus for 2014 of the Group
unencumbered by bank debt.
COST REDUCTION
We have reduced annualised costs by GBP1m including a
significantly reduced head office structure. The full impact of
this is to significantly reduce our operating leverage.
We now have a scalable structure into which significant revenue
can be sold. Due to the fixed cost of this structure this
additional revenue has a positive impact on margin.
CURRENT TRADING AND OUTLOOK
Following the completion of the re financing and following a
period of significant reorganisation the group is well placed to
take advantage of opportunities that exist in the sectors in which
it operates.
Green Compliance will enter 2014 as a well-financed and
sustainable player in the water hygiene and fire detection and
suppression markets.
We look forward to the coming year as one where we can
concentrate on profitably growing our operations in these
sectors
Bob Holt
20 December 2013
Condensed Consolidated Interim Income Statement
for six months ended 30 September 2013
Note Unaudited Unaudited
6 months to 6 months to 12 months to
30 Sept 31 March
30 Sept 2013 2012 2012
Continuing
operations: GBP000 GBP000 GBP000
Revenue 2 6,636 9,770 16,060
Cost of sales (4,484) (5,590) (10,485)
------------------- ---------------------------------- --------------------------------
Gross profit 2,152 4,180 5,575
Administrative
expenses (4,120) (6,075) (12,908)
Operating
(loss)/profit
before exceptional
items 2 (858) 79 (1,005)
Share based
payments (89) (89) (78)
Amortisation of
intangibles (500) (1,578) (6,130)
Exceptional items 3 (520) (308) (120)
-------------------- ----- ------------------- ---------------------------------- --------------------------------
Operating
(loss)/profit (1,967) (1,895) (7,333)
Finance income 6 4,619 -
Finance costs (214) (151) (381)
------------------- ---------------------------------- --------------------------------
Profit/(loss) from
continuing
operations before
taxation 2,437 (2,046) (7,714)
Income tax credit 100 414 1,750
------------------- ---------------------------------- --------------------------------
Profit/(loss) after
taxation 2,537 (1,632) (5,964)
Discontinued
operations:
(Loss) for the
period from
discontinued
operations (599) (4) (6,008)
Profit/(loss) for
the period 1,938 (1,636) (11,972)
=================== ================================== ================================
Basic and diluted
earnings/(loss)
per share on all
activities 5 1.07 (4.49) (12.95)
Consolidated Statement of Changes in Shareholders' Equity
for six months ended 30 September
2013
Share Profit
and
Share Share Merger based Capital Capital (loss) Total
redemp-
Capital Premium Reserve payment tion Contribution reserve Equity
reserve reserve
GBP0 GBP0 GBP0 GBP0 GBP0 GBP0 GBP0 GBP0
Balance as
at 1 April
2012 18,204 4,070 898 431 1,380 900 (14,190) 11,693
Share based
payment - - - 89 - - - 89
------------ --------------- ------------- ------------- -------- ------------------- --------- ---------
Transactions
with owners - - - 89 - - - 89
Total
comprehensive
expense for
the period - - - - - - (1,636) (1,636)
------------ --------------- ------------- ------------- -------- ------------------- --------- ---------
Balance as
at 30
September
2012 18,204 4,070 898 520 1,380 900 (15,826) 10,146
============ =============== ============= ============= ======== =================== ========= =========
Issue of
shares 895 894 - - - - - 1,789
Share placing
costs - (191) - - - - - (191)
Share based
payment - - - (11) - - - (11)
------------ --------------- ------------- ------------- -------- ------------------- --------- ---------
Transactions
with owners 895 703 - (11) - - - 1,587
Total
comprehensive
expense for
the period - - - - - - (10,336) (10,336)
------------ --------------- ------------- ------------- -------- ------------------- --------- ---------
Balance as
at 31 March
2013 19,099 4,773 898 509 1,380 900 (26,162) 1,397
============ =============== ============= ============= ======== =================== ========= =========
Issue of
shares 3,500 - - - - - - 3,500
Share placing
costs - (321) - - - - - (321)
Share based
payment - - - 89 - - - 89
------------ --------------- ------------- ------------- -------- ------------------- --------- ---------
Transactions
with owners 3,500 (321) - 89 - - - 3,268
Total
comprehensive
income for
the period - - - - - - 1,938 1,938
------------ --------------- ------------- ------------- -------- ------------------- --------- ---------
Balance as
at 30
September
2013 22,599 4,452 898 598 1,380 900 (24,225) 6,602
============ =============== ============= ============= ======== =================== ========= =========
Condensed Consolidated Interim Statement of Financial Position
as at 30 September 2013
Unaudited Unaudited Audited
As at 30 As at 30 As at 31
September September March
Note 2013 2012 2013
GBP000 GBP000 GBP000
ASSETS
Non-current assets
Intangible assets 10,643 21,271 11,144
Property, plant and equipment 239 320 245
------------- ------ ------------ ---------------------
10,882 21,591 11,389
------------- ------ ------------ ---------------------
Current assets
Inventories 251 448 255
Trade and other receivables 2,890 4,952 3,630
Cash at bank and cash
equivalents 192 - 1,584
Total current assets 3,333 5,400 5,469
------------- ------ ------------ ---------------------
Assets held for sale 7 - - 1,680
------------- ------ ------------ ---------------------
Total assets 14,216 26,991 18,538
------------- ------ ------------ ---------------------
LIABILITIES
Current liabilities
Trade and other payables (5,638) (4,184) (4,973)
Deferred consideration (512) (1,071) (670)
Bank and other loans - (1,228) (887)
Taxation (531) (2,164) (55)
Total current liabilities (6,681) (8,647) (6,585)
------------- ------ ------------ ---------------------
Liabilities held for sale 7 - - (180)
Total assets less current
liabilities 7,535 17,594 11,773
Non-current liabilities
Bank and other loans (932) (8,198) (9,743)
Deferred consideration - - -
Deferred taxation - - (633)
Total non-current liabilities (932) (8,198) (10,376)
------------- ------ ------------ ---------------------
Net assets 6,602 10,146 1,397
------------- ------ ------------ ---------------------
Shareholders' equity
Called up share capital 22,599 18,204 19,099
Share premium account 4,452 4,070 4,773
Capital contribution 900 900 900
Capital redemption reserve 1,380 1,380 1,380
Merger reserve 898 898 898
Share based payment account 598 520 509
Profit and (loss) reserve (24,225) (15,826) (26,162)
Attributable to equity
holders of the company 6,602 10,146 1,397
------------- ------ ------------ ---------------------
Condensed Consolidated Interim Cashflow Statement
for six months ended 30 September
2013
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
Cash flows from operating activities
Continuing operations
Profit/(loss) for the period
before taxation 2,437 (2,046) (7,714)
Amortisation of intangible
assets 500 1,578 6,130
Depreciation of property, plant
and equipment 8 20 71
Share-based payment 89 89 78
Net finance costs recognised
in income statement 214 151 381
Decrease/(increase) in inventories 4 (71) 122
Decrease in trade and other
receivables 740 856 2,182
Increase/(decrease) in trade
and other payables 1,243 (608) 81
------------- -------------- -----------
Net cash generated from/ (used
by) continuing operations 5,235 (31) 1,331
Discontinued operations
Loss for the period (599) (4) (6,008)
Amortisation - - 690
Impairment of intangible assets - - 3,949
Decrease in trade and other
receivables - - (616)
------------- -------------- -----------
Net cash (used by) discontinued
operations (599) (4) (1,985)
------------- -------------- -----------
Net cash generated from/ (used
by) operations 4,637 (35) (654)
------------- -------------- -----------
Finance costs paid (214) (151) (381)
Finance income (Debt waiver) (4,619) - -
Income taxes paid (635) (128) (178)
------------- -------------- -----------
Net cash (used by)/generated
from operating activities (831) (314) (1,213)
------------- -------------- -----------
Condensed Consolidated Interim Cashflow Statement (continued)
for six months ended 30 September
2013
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
Cash flows from investing
activities
Deferred consideration paid (158) (284) (598)
Disposal of subsidiaries 1,500 - -
Purchase of software - (11) (11)
Purchase of property, plant
and equipment by disposal
group - - (20)
Purchase of property, plant
and equipment (2) - (1)
Proceeds on disposal of
property, plant and equipment - 10 -
-------------- -------------- -----------
Net cash generated by/(used
in) investing activities 1,340 (286) (630)
-------------- -------------- -----------
Cash flows from financing
activities
Gross proceeds from issue
of ordinary shares 3,500 - 1,789
Share placing costs (321) - (191)
Waiver of debt 4,619 - -
Increase in borrowings - 655 1,828
Repayments of borrowings (9,698) (96) (40)
-------------- -------------- -----------
Net cash generated from
financing activities (1,900) 558 3,386
-------------- -------------- -----------
Net (decrease)/increase
in cash and cash equivalents (1,391) (41) 1,543
Cash and cash equivalents
at beginning of the period 1,584 41 41
-------------- -------------- -----------
Cash and cash equivalents
at end of the period 192 - 1,584
-------------- -------------- -----------
Notes to the Unaudited Consolidated Condensed Interim
Statement
for the six months ended 30 September 2013
1. Basis of preparation
The Group's interim results for the six month period ended 30
September 2013 are prepared in accordance with the Group's
accounting policies which are based on the recognition and
measurement principles of International Financial Reporting
Standards ("IFRS") as adopted by the EU and effective, or expected
to be adopted and effective, at 31 March 2014.
As permitted, this interim report has been prepared in
accordance with the AIM rules and not in accordance with IAS34
"Interim financial reporting".
These interim results do not constitute full statutory accounts
as defined by the Companies Act 2006 and are unaudited. The
unaudited interim financial statements were approved by the Board
of Directors on 20 December 2013.
The statutory accounts for the year ended 31 March 2013, which
were prepared under IFRS, have been filed with the Registrar of
Companies. These statutory accounts carried an unqualified
auditor's report and did not contain a statement under either
Section 498 (2) or (3) of the Companies Act 2006.
2. Segmental information
Central &
Water Fire Pest Control other services Total
GBP000 GBP000 GBP000 GBP000 GBP000
6 months to 30 September
2013 (unaudited)
Revenue from external
customers 3,879 470 2,287 - 6,636
---------------------------- ------- ------- ------------- ---------------- --------
Operating profit/(loss)
before exceptional
items, share based
payments, management
fees and amortisation (251) 79 (264) (422) (858)
---------------------------- ------- ------- ------------- ---------------- --------
Exceptional items - - - (149) (149)
Amortisation - - - (500) (500)
Management fees (194) (86) (270) 550 -
Share based payments - - - (89) (89)
------- ------- ------------- ---------------- --------
Operating profit/(loss) (445) (7) (534) (610) (1,596)
Finance costs - - - 4,034 4,034
------- ------- ------------- ---------------- --------
Profit /(loss) for
the period before
taxation (445) (7) (534) 3,424 2,437
------- ------- ------------- ---------------- --------
6 months to 30 September
2012 (unaudited)
Revenue from external
customers 5,179 1,833 2,751 7 9,770
------- ------- ------------- ---------------- --------
Operating profit/(loss)
before exceptional
items, share based
payments and amortisation 467 130 26 (544) 79
Exceptional items (9) (81) (74) (144) (308)
Amortisation - - - (1,578) (1,578)
Share based payments - - - (89) (89)
------- ------- ------------- ---------------- --------
Operating profit/(loss) 458 49 (48) (2,355) (1,895)
Finance costs - (1) - (150) (151)
------- ------- ------------- ---------------- --------
Profit /(loss) for
the period before
taxation 458 48 (48) (2,505) (2,046)
------- ------- ------------- ---------------- --------
Notes to the Unaudited Consolidated Condensed Interim Statement
(continued)
for the six months ended 30 September 2013
3 Exceptional costs
Unaudited Audited
6 months 12 months
to to
30 September 31 March
2013 2013
GBP'000 GBP'000
Costs re waiver of bank debt 371 -
Acquisition & integration costs incurred 149 120
------------- -----------
520 120
------------- -----------
In the 6 months ended 30 September 2013 there were GBP149,000
(31 March 2013: GBP120,000) of costs incurred in respect of the
further integration of the companies acquired in the previous
years.
4 Taxation
The underlying tax charge is based on the expected effective tax
rate for the full year to 31 March 2013 and is calculated as 22% on
loss before tax.
Deferred tax liabilities arising from temporary differences
relate to the customer lists. Unrelieved tax losses of GBP2.5m
remain available to offset against future taxable trading
profits.
The debt waiver accepted by HSBC may give rise to a corporation
tax charge. Whilst the payment of this corporation tax liability
falls beyond 12 months from the signing of these financial
statements, the Directors are aware that this could place a
significant strain on the Group's on-going working capital needs.
However, as a result of the operational improvements having been
made throughout the Group, the expectation that sales will increase
(partly on the back of new contracts already having been secured)
and a de-geared balance sheet, the Directors are confident that
this potential liability can be managed.
5 Loss per share
A normalised EPS is disclosed in order to show performance
undistorted by amortisation of intangibles, and non-recurring
exceptional operating items. The profit/(loss) attributable to the
shareholders before and after adjustments for basic and diluted EPS
is as follows:
Unaudited Audited Unaudited
September March September
2013 2013 2012
GBP000 GBP000 GBP000
Attributable to the owners of the Company 1,938 (11,972) (1,636)
Normalised EPS
Loss on continuing activities 2,437 (7,714) (2,046)
Amortisation of intangible assets 500 6,130 1,578
Exceptional finance income (4,248) - -
Exceptional items (see note 3) 149 120 308
Normalised tax (charge)/credit (302) (381) 41
Normalised profit/(loss) for the year (1,464) (1,845) (115)
5 Loss per share (continued)
Weighted Average number of shares 181,773,461 92,425,381 36,408,000
Loss per share (basic and diluted)
on all activities 1.07p (12.95p) (4.49p)
Normalised (loss) per share (basic) (0.81p) (2.00p) (0.32p)
6 Finance income
6 months 12 months
to to
30 September 31 March
2013 2013
GBP'000 GBP'000
HSBC waiver 4,248 -
------------- ----------
As announced on 11 September 2013, HSBC agreed to accept GBP3.0m
in settlement of the outstanding debt, which at 30 September 2013
stood at GBP7.4m. The settlement amount comprises GBP2.75m in cash
which has been raised from the Placing and the assignment of
GBP250k deferred consideration potentially recoverable from the
sale of the Fire Division (see note 7).
7 Disposal
On 5 July 2013 the majority of the trade and assets of the Fire
Division were sold to London Securities Limited for total
consideration of GBP2m (GBP1.5m in cash and GBP0.5m in deferred
consideration). Of the deferred consideration, up to GBP250k has
been assigned to HSBC as further settlement on net debt with the
remaining GBP250k attributable to the Group providing certain
performance conditions are met. The directors have considered the
fair value of this deferred consideration in accordance with IAS 39
and consider that it is not material to the Group Financial
Statements.
The operating (loss) of the disposed group is shown below:
Unaudited
30 September
2013
GBP000
Revenue 508
Cost of sales (389)
--------------
Gross profit 119
Administrative expenses (718)
--------------
Operating loss (599)
Finance costs -
--------------
Loss before taxation (599)
--------------
7 Disposal (continued)
The fair value of assets and liabilities disposed of are as
follows:
Audited
31 March 2013
GBP000
Non - Current assets
Goodwill -
Intangible assets 849
Property, plant and equipment 56
Current assets
Inventories 80
Trade and other receivables 695
Cash and cash equivalents -
Assets classified as held for sale 1,680
---------------
Current liabilities
Trade and other payables (180)
Liabilities classified as held for sale (180)
---------------
The directors consider that movements between the 31 March 2013
and the date of sale are immaterial.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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