TIDMISG
RNS Number : 5828O
Interior Services Group PLC
10 March 2009
?
Interior Services Group PLC
Interim results for the half year ended 31 December 2008
Interior Services Group plc is pleased to announce an excellent set of results,
delivered against an increasingly difficult economic environment in the UK and
overseas. Our strategy of diversifying the business by activity, sector and
geography thereby reducing our reliance on the London office sector, is now
proving to bear fruit.
Results
- Revenue up 11% to GBP562m (2007 - GBP505m)
- Adjusted profit before tax* increased 11% to GBP7.0m (2007 - GBP6.3m)
- Profit before tax increased 8% to GBP6.3m (2007 - GBP5.8m)
- Basic earnings per share stable at 15.63p (2007 - 15.61p)
- Adjusted basic earnings per share* increased by 3% to 17.40p (2007 -
16.87p)
-Interim dividend of 4.00p (2007 - 4.00p)
- Net cash as at end of December 2008 GBP26.8m (2007 - GBP22.1m) with
unutilised committed working capital facility of GBP10.0m
A diversified business
-Operating profits from businesses trading outside of London increased to 77%
-London decline offset by strong performances across other higher margin
businesses
-New wins, such as the 2012 Olympic Velodrome and data centres, demonstrate
ability to win
business in London outside the office sector
- Regional Construction order book continues to grow with 73% public sector
related
- Good ongoing visibility from our Retail frameworks, with growth in food
retail
and retail banking sectors
- European office market has slowed, offset by diversifying into other
sectors
- Retail demand in China continues to drive the growth of the Asia business
Order book
- Order book at 31 December was GBP950m (2007 - GBP968m), of which GBP494m
(2007 - GBP506m)
is for delivery in the current financial year and
GBP365m (2007 - GBP387m) for the next financial
year
David Lawther, Chief Executive, said:
"ISG's strategy remains focused on diversifying the group by activity, sector
and geography. In the UK we will continue to seek opportunities within London
outside the office sector and outside London towards the public sector. Overseas
we will continue to follow our core blue chip client base as they continue to
make strategic investments abroad.
The recent series of economic and political events in the world is having an
impact on our business. However the changes we have made to our business over
the last few years and our positive net cash position have made us more
resilient in the face of the current economic uncertainty."
10 March 2009
Enquiries
+------------------+---------------+
| Interior | |
| Services | |
| Group | |
| plc | |
+------------------+---------------+
| David | 020 7392 5250 |
| Lawther, | |
| Chief | |
| Executive | |
+------------------+---------------+
| Jonathan | |
| Houlton, | |
| Group | |
| Finance | |
| Director | |
+------------------+---------------+
| | |
+------------------+---------------+
| College | |
| Hill | |
+------------------+---------------+
| Matthew | 020 7457 2020 |
| Smallwood, | |
| Adam | |
| Aljewicz | |
+------------------+---------------+
| | |
+------------------+---------------+
| Numis | |
| Securities | |
| Ltd | |
+------------------+---------------+
| Nominated | 020 7260 1000 |
| Advisor: | |
| Michael | |
| Meade/Simon | |
| Blank | |
+------------------+---------------+
| Corporate | |
| Broking: | |
| Chris | |
| Wilkinson/Rupert | |
| Krefting | |
+------------------+---------------+
* before amortisation of intangible assets
CEO HALF YEAR STATEMENT
Overview
I am pleased to announce an excellent set of results, delivered against an
increasingly difficult economic environment in the UK and overseas.
The spread of our profits across our different activities underlines the group's
strategy of diversification with a much greater exposure to a broader range of
geographies, market sectors, clients and products. This has enabled the group to
offset the decline in the London office sector by our exposure to more resilient
sectors such as food retail, retail banking, technology and public sector
projects in education, defence and affordable housing.
We are now able to offer fit out and project management services to clients in
many of the major European, Middle Eastern and Asian cities; fit out,
refurbishment and new build services to food retail, retail banking and retail
fashion clients nationally across the UK; and new build and refurbishment
services to public and private sector clients across England and South Wales. In
addition, whilst maintaining our leading market position in the office sector,
we have broadened our offering in the London market where we offer fit out, new
build and refurbishment services to include public sector clients, as well as
the technology sector.
Results
For the six months to 31 December 2008, adjusted profit before tax* increased by
11% to GBP7.0m (2007 - GBP6.3m) on revenue that increased by 11% to GBP562m
(2007 - GBP505m). Adjusted earnings per share increased by 3% to 17.40p (2007 -
16.87p).
Net cash at the end of the period of GBP26.8m was slightly ahead of prior year
(2007 - GBP22.1m). In the six month period there was a small net cash outflow
from operating activities of GBP0.8m (2007 - inflow GBP4.4m), arising from
higher client advance payments at June 2008. The group continues to trade well
within its banking covenants and has no refinancing obligations as all
borrowings are term loans over five years. In addition, the group retains an
undrawn working capital revolving credit facility.
Dividends
The board has maintained an interim dividend of 4.00p (2007 - 4.00p). The
dividend will be paid on 17 April 2009 to those shareholders on the register as
at 20 March 2009. The ex-dividend date will be 18 March 2009. The closing date
for elections for the Dividend Re-Investment Plan is 23 March 2009
* before amortisation of intangible assets.
Trading
The following is a summary of the revenue, forward order book and fee income.
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| | REVENUE | | FORWARD ORDER | | FEE INCOME** |
| | | | BOOK | | |
+-----------------------+-----------------+--+----------------+--+----------------+
| 6 months to 31 | 2008 | | 2007 | | 2008 | | 2007 | | 2008 | | 2007 |
| December | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| London | | | | | | | | | | | |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| * Fit out | 106 | | 161 | | 205 | | 182 | | 16.8 | | 16.5 |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| * Build | 115 | | 127 | | 281 | | 376 | | 11.8 | | 12.9 |
| | | | | | | | | | | | |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| Regional Construction | 178 | | 135 | | 311 | | 285 | | 23.7 | | 17.4 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| Retail | 113 | | 44 | | 108 | | 88 | | 16.0 | | 8.8 |
| | | | | | | | | | | | |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| Overseas | | | | | | | | | | | |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| * Asia | 31 | | 29 | | 34 | | 22 | | 9.0 | | 7.0 |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| * Middle East | 2 | | 1 | | 2 | | - | | 0.4 | | - |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| * Europe | 18 | | 8 | | 9 | | 15 | | 3.9 | | 1.8 |
| | | | | | | | | | | | |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
| Total | 562 | | 505 | | 950 | | 968 | | 81.6 | | 64.4 |
+-----------------------+-------+--+------+--+------+--+------+--+------+--+------+
With group revenue increasing in the period by 11%, adjusted group operating
profit* has increased by 12% to GBP7.4m (2007 - GBP6.7m) resulting in an
operating margin on revenue of 1.3% (2007 - 1.3%). The improvement in
performance has been driven by a combination of organic and acquisition growth.
With the decline in revenue in London, operating profits also fell to GBP2.2m
(2007 - GBP3.7m) and now represent 23% (2007 - 47%) of group trading operating
profit. The operating profit of our Regional Construction businesses increased
to GBP1.3m (2007 - GBP0.8m) representing 14% (2007 - 11%) of group trading
operating profit and includes a full six month contribution from Pearce
Construction (2007 - seven weeks).
Our Retail operations generated operating profits of GBP3.9m (2007 - GBP1.7m)
representing 41% (2007 - 22%) of group trading operating profit which includes a
full six month contribution from Pearce Retail (2007 - seven weeks). Our
overseas businesses generated operating profits of GBP2.3m (2007 - GBP1.6m)
representing 24% (2007 - 21%) of group trading operating profit and includes a
full six month contribution from Europe (2007 - three months).
In respect of the order book of GBP950m at the end of December 2008, only 28% of
the activity relates to the corporate office sector (2007 - 46%) with 41%
relating to education, affordable housing and government sectors (2007 - 19%)
and 20% to the retail and leisure sector (2007 - 22%).
London
In our Annual Report for 2008, we anticipated a slow down in the office market
and reduced the volume target for our London businesses in the current year by
20%. The businesses are currently trading in line with this target. Revenue in
the period declined by 23% to GBP221m (2007 - GBP288m). Operating profit
decreased by 41% to GBP2.2m (2007 - GBP3.7m) resulting in an operating margin on
revenue of 1.0% (2007 - 1.3%). The decline in profitability is not only due to
the reduction in revenue but also in the current climate a conservative
commercial view being taken on a number of completed projects.
* before amortisation of intangible assets
**definition for fee income is given in note 4
London Fit out
London Fit out revenue has declined 34% to GBP106m (2007 - GBP161m). Notable
project delivery successes were the completion of the fit out of the common
areas of the new St Pancras Eurostar terminal, the new London offices for the
Financial Services Authority and Mayer Brown International, new offices for
Unilever in Leatherhead and the second phase of the refit of Shell House on the
South Bank. In addition, we started work on a GBP75m data centre fit out in the
North East of England and we have also been working on the pre-construction
phase of the circa GBP50m fit out of KPMG's new UK headquarters building in
Canary Wharf, which will start on site in May 2009.
With an order book of GBP205m as at December 2008 (2007 - GBP182m), of which
GBP76m is to be delivered in 2009/10, the business has secured its target for
the year ended 30 June 2009. With the continuing decline in the pipeline of
major fit out opportunities and the highly competitive nature of the smaller
office fit out market we anticipate revenue in 2009/10 to decline from 2008/09
levels. Our resource levels are being reduced to reflect this lower level of
activity.
London Build
As expected, revenue in London Build has declined by 9% to GBP115m (2007 -
GBP127m) due to the reduced demand for new build and refurbishment of office
space in the City of London. We are making good progress on Nido Spitalfields 32
story student accommodation tower for Blackstone which is due for completion in
August 2010. In February 2009 we started on site on the Velodrome for the London
2012 Olympics and continue to pursue further related works.
With an order book of GBP281m (2007 - GBP376m), of which GBP110m is to be
delivered in 2009/10 and GBP67m thereafter, the business has secured fully its
target for the year ended 30 June 2009. With the decline in the pipeline of
office new build and refurbishment opportunities, we would anticipate revenue in
2009/10 to be lower than 2008/09 levels.
Regional Construction
Our Regional Construction businesses which include the activities of our offices
based in Manchester, Bradford, Birmingham, Bristol, Ipswich and Maidstone,
performed well despite the reduction in private sector work. Revenue in the
period increased by 32% to GBP178m (2007 - GBP135m). The results include a full
six month contribution from Pearce Construction (2007 - seven weeks). On a like
for like basis, revenue for the Regional Construction businesses grew by 5%.
Operating profit increased by 53% to GBP1.3m (2007 - GBP0.8m), resulting in an
operating margin on revenue of 0.7% (2007 - 0.6%).
During the period, 59% of revenue related to public sector clients (2007 - 35%),
half of which was on education projects including Gateway College in
Leicestershire, St John's School in Marlborough, St Brendan's College in Bristol
and Sir John Deane's College in Cheshire. Across our Regional Construction
businesses we now have the benefit of 22 public sector frameworks covering
affordable housing, local authorities and prisons. These delivered a quarter of
the revenue related to public sector clients.
As at 31 December 2008, the order book for the Regional Construction businesses
stands at GBP311m (2007 - GBP285m), of which 73% relates to public sector
works. Since the half year, the order book has increased to GBP350m. Of the
order book, GBP135m is for delivery in the next financial year, of which the
largest project is the GBP50m South West Ipswich and South Suffolk Sixth Form
Centre which started on site in December 2008, with completion scheduled for
summer 2010.
Retail
Overall our Retail operations, Pearce Retail and ISG Cathedral, performed ahead
of expectations during the period, with revenue increasing by 154% to GBP113m
(2007 - GBP44m). The results include a full six month contribution from Pearce
Retail (2007 - seven weeks). On a like for like basis the revenue for our Retail
operations grew by 23% year on year.
Operating profit increased by 122% to GBP3.9m (2007 - GBP1.7m), resulting in an
operating margin on revenue of 3.4% (2007 - 3.9%).
During the period Pearce Retail, which focuses primarily on major food retail
clients, undertook a total of 33 projects comprising new builds, shell fit outs,
extensions and refurbishments for Tesco, Asda, Marks & Spencer, Sainsbury's and
Morrisons.
For the calendar year 2009, Pearce Retail has already been allocated by its
major food retail clients contracts totalling approximately GBP140m across 40
different locations including extensions and refurbishing existing units as well
as new build work. Based on these successful allocations, revenue for the
financial year ending 30 June 2009 is anticipated to be approximately 20% higher
than the previous year.
During the period ISG Cathedral focused primarily on bank branch roll-out
frameworks undertaking 70 projects for Lloyds TSB, RBS, HSBC, HBOS and Barclays
Bank, including Barclays' flagship branch projects in Manchester and London
Piccadilly. It has recently been successfully appointed to a new four year
framework agreement with Barclays.
In addition it undertook seven projects for high street fashion retail clients
at Westfield, White City including Tiffany & Co, La Senza and Monsoon, completed
its 100th store for T-Mobile in the period and undertook refurbishment works on
two hotel projects for The Doyle Collection.
For the calendar year 2009, ISG Cathedral has already been allocated 50 projects
by HSBC and Barclays.In addition, following successful completion of the 2008
programme for Lloyds TSB, further important allocations are expected.
Overall our Retail operations have an order book as at 31 December 2008 of
GBP108m (2007 - GBP88m), of which GBP41m is for delivery in the next financial
year. With recent allocations from our major food retail clients and bank branch
roll-out framework clients, we are confident of maintaining current activity
levels throughout 2009. Typically, as a result of the pre-Christmas peak
delivery period, we anticipate profits being weighted towards the first half of
the financial year.
Asia
In our Asia operations, revenue increased by 5% to GBP31m (2007 - GBP29m). The
business contributed an operating profit of GBP1.0m (2007 - GBP0.8m),
representing 11% (2007 - 10%) of group trading operating profit, resulting in an
operating margin on revenue of 3.2% (2007 - 2.7%).
During the period the business enjoyed higher activity levels from its offices
in China (Beijing, Tianjin and Shanghai) with revenue up 47%, a higher
proportion of project management work in Hong Kong and a growing commissioning
management activity. These factors partially offset the reduced activity levels
in Singapore, due to the timing of large fit out opportunities. Overall this
resulted in a decline in revenue in local currency terms of 10%.
In the period the business provided consultancy services and delivered projects
for a broad range of clients in the retail, financial and corporate sectors
including Apple, Emporio Armani, UGG, Mandarin Oriental, Swire Properties,
Standard Chartered Bank, Bohai Bank, Morgan Stanley, JP Morgan, Fidelity,
Merrill Lynch, Shell, ExxonMobil and Deloitte.
With an order book of GBP34m as at December 2008 (2007 - GBP22m) and the
securing of two fit out opportunities totalling GBP12m in Singapore since period
end, we anticipate a similar level of activity in the second half of the year.
Middle East
During the period we have continued to resource the joint venture with Al
Habtoor Leighton Group (HLG) which is to provide fit out and joinery services
across the Middle East. We anticipate completing the joint venture by April
2009, and it making a positive contribution in the first half of the next
financial year on the back of providing fit out services across the region to
projects already secured in HLG's GBP6bn order book and to our multinational
clients investing in the region.
Europe
With the acquisition of the remaining 80% of our European operations in
September 2007, its contribution to the group's results increased substantially,
with revenue increasing by 121% to GBP18m (2007 - GBP8m). On a like for like
basis in local currency terms the business showed a growth in revenue in the
period of 15%. The business contributed an operating profit of GBP1.4m (2007 -
GBP0.8m), representing 15% (2007 - 11%) of group trading operating profit,
resulting in an operating margin on revenue of 7.8% (2007 - 10.6%). The lower
margin reflects a trend towards larger projects and increased investment in the
business's infrastructure.
In the period the business delivered projects for RBS, the Accor Group and Iron
Mountain in Paris; Cardinal Health, Yahoo and Ace Insurance in Geneva; Adobe in
Koln and Google and General Reinsurance in Milan. In addition to its existing
offices in Paris, Frankfurt, Milan and Zurich, the business is now delivering a
number of projects in Eastern Europe in Moscow and Bulgaria for international
clients, and has opened an office in Amsterdam.
As at December 2008, the business has a reduced order book of GBP9m (2007 -
GBP15m) reflecting the quieter commercial office market in Paris and the
completion of a number of projects in Geneva. Since the period end the business
has agreed a strategic partnership with a leading international petrochemical
client, where we anticipate working on five projects totalling GBP20m in the
next twelve months in Europe and the Middle East.
Outlook
At the end of December 2008, our total order book was GBP950m (2007 - GBP968m),
of which GBP494m (2007 - GBP506m) is for delivery in the current financial year
and GBP365m (2007 - GBP387m) for the next financial year. The business continues
to position itself towards more resilient regions and sectors.
In the UK we will continue to seek opportunities within London outside the
office sector and outside London towards the public sector. Where we anticipate
a decrease in demand, we are being proactive in keeping our resource base in
line.
Our Retail frameworks continue to give us visibility through the calendar year,
where our clients are committed to maintaining their current capital investment
programs in both the food and retail banking sectors.
In our Asia business demand continues to be driven from China. In the Middle
East our joint venture partner's existing order book across the Middle East will
enable the business to grow in the longer term. In Europe we are making progress
in diversifying into other sectors offsetting the decline in the financial
services office sector, with core clients in the petrochemical and technology
sectors continuing to make strategic investments.
The recent series of economic and political events in the world are having an
impact on our business. Many of our corporate clients have become more cautious
in their decision making and this has led to some projects being delayed or
cancelled. However the changes we have made to our business over the last few
years have made us more resilient in the face of the current economic
uncertainty. We now have a well established track record serving a number of
more resilient sectors and blue chip clients.
We anticipate that with the exception of our first half weighted Retail
operations, current activity levels will be maintained in the second half of the
year.
David Lawther
Chief Executive
10 March 2009
+--------------------------------------+-------+---------------+--+---------------+---+---+---+-------------+
| CONDENSED CONSOLIDATED INCOME STATEMENT |
+-----------------------------------------------------------------------------------------------------------+
| for the 6 months to 31 December 2008 | | | | | | |
+--------------------------------------+-------+---------------+--+-------------------+-------+-------------+
| | | Unaudited | | Unaudited | | Audited |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | 6 months to | | 6 months to | | Year to |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | 31 December | | 31 December | | 30 June |
| | | 2008 | | 2007 | | 2008 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | Notes | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Gross value of work performed | 4 | 573,881 | | 521,091 | | 1,110,333 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Less: relating to construction | | (11,164) | | (13,509) | | (18,356) |
| management | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Less: share of associates' and joint | | (332) | | (2,211) | | (1,901) |
| ventures' revenue | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Revenue | 4 | 562,385 | | 505,371 | | 1,090,076 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Cost of sales | | (529,480) | | (478,534) | | (1,025,692) |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Gross profit | | 32,905 | | 26,837 | | 64,384 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Share of profits of associates and | | 16 | | 156 | | 227 |
| joint ventures | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Amortisation of intangibles | 9 | (712) | | (455) | | (1,448) |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Administrative expenses | | (25,497) | | (20,291) | | (49,479) |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Operating profit | 4 | 6,712 | | 6,247 | | 13,684 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Finance income | | 805 | | 584 | | 1,346 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Finance costs | | (1,235) | | (996) | | (2,405) |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Profit before tax | 4 | 6,282 | | 5,835 | | 12,625 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Taxation | 5 | (1,853) | | (1,634) | | (2,641) |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Profit for the period | | 4,429 | | 4,201 | | 9,984 |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Basic earnings per share | 7 | 15.63p | | 15.61p | | 36.44p |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| Diluted earnings per share | 7 | 15.63p | | 15.41p | | 36.06p |
+--------------------------------------+-------+---------------+--+---------------+-------+-----------------+
| | | | | | | |
+--------------------------------------+-------+---------------+--+---------------+---+---+---+-------------+
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| CONDENSED CONSOLIDATED BALANCE SHEET |
+-----------------------------------------------------------------------------------------------------+
| as at 31 December 2008 | | | | Restated | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | Unaudited | | Unaudited | | Audited |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | As at | | As at | | As at |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | 31 December | | 31 December | | 30 June |
| | | 2008 | | 2007 | | 2008 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | Notes | GBP'000 | | GBP'000 | | GBP'000 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Non-current assets | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Goodwill | 8 | 82,146 | | 76,958 | | 77,982 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Other intangible assets | 9 | 9,147 | | 10,254 | | 9,402 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Property, plant and equipment | | 8,353 | | 7,038 | | 8,014 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Investment in associates and joint | | 68 | | (67) | | 121 |
| ventures | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Deferred tax assets | | 728 | | - | | 782 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Trade and other receivables | | 5,578 | | 4,277 | | 4,412 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | 106,020 | | 98,460 | | 100,713 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Current assets | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Inventories | | 3,897 | | 4,127 | | 4,240 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Trade and other receivables | | 202,588 | | 195,965 | | 237,407 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Cash and cash equivalents | 10 | 50,831 | | 48,690 | | 60,259 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | 257,316 | | 248,782 | | 301,906 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Total assets | | 363,336 | | 347,242 | | 402,619 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Non-current liabilities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Borrowings | 11 | (17,376) | | (21,757) | | (19,086) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Deferred tax liabilities | | (2,287) | | (5,592) | | (2,544) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Trade and other payables | | (5,907) | | (2,093) | | (7,112) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | (25,570) | | (29,442) | | (28,742) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Current liabilities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Borrowings | 11 | (6,668) | | (4,857) | | (5,909) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Trade and other payables | | (281,015) | | (279,685) | | (329,161) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Provision | | (417) | | (285) | | (383) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Current tax liabilities | | (2,273) | | (2,822) | | (1,382) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | (290,373) | | (287,649) | | (336,835) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Total liabilities | | (315,943) | | (317,091) | | (365,577) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| TOTAL NET ASSETS | | 47,393 | | 30,151 | | 37,042 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Equity | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Called up share capital | 12 | 304 | | 294 | | 295 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Share premium account | 12 | 19,226 | | 17,458 | | 17,481 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Reserves | 12 | 8,675 | | 234 | | 1,755 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Investment in own shares | 12 | (3,679) | | (3,550) | | (3,634) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Retained earnings | 12 | 22,867 | | 15,715 | | 21,145 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| TOTAL EQUITY | | 47,393 | | 30,151 | | 37,042 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE |
+-----------------------------------------------------------------------------------------------------+
| for the 6 months ended 31 December | | | | | | |
| 2008 | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Exchange differences arising on | 12 | (119) | | 190 | | 2,752 |
| translation of foreign operations | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Net income recognised directly in | | (119) | | 190 | | 2,752 |
| equity | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Profit for the year | | 4,429 | | 4,201 | | 9,984 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Total recognised income and expense | | 4,310 | | 4,391 | | 12,736 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT |
+-----------------------------------------------------------------------------------------------------+
| for the 6 months to 31 December 2008 | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | Unaudited | | Unaudited | | Audited |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | 6 months to | | 6 months to | | Year to |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | | 31 December | | 31 December | | 30 June 2008 |
| | | 2008 | | 2007 | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| | Notes | GBP'000 | | GBP'000 | | GBP'000 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Cash flows from operating activities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Operating profit | | 6,712 | | 6,247 | | 13,684 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Share of profits of associates and | | (16) | | (156) | | (227) |
| joint ventures | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Amortisation of intangibles | 9 | 712 | | 455 | | 1,448 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Depreciation on property, plant and | | 1,666 | | 915 | | 2,076 |
| equipment | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Loss / (gain) on disposal of | | 10 | | 12 | | (32) |
| property, plant and equipment | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Adjustment for share options | 12 | 60 | | 42 | | 86 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Movements in working capital: | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Decrease / (increase) in inventories | | 343 | | (1,617) | | (1,830) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Decrease / (increase) in trade and | | 33,653 | | 2,954 | | (21,026) |
| other receivables | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| (Decrease) / increase in trade and | | (42,602) | | (3,244) | | 27,448 |
| other payables | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Cash generated from operations | | 538 | | 5,608 | | 21,627 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Taxation | | (1,310) | | (1,219) | | (1,183) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Net cash outflow / inflow from | | (772) | | 4,389 | | 20,444 |
| operating activities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Cash flows from investing activities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Interest received | | 805 | | 584 | | 1,346 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Interest paid | | (1,235) | | (996) | | (2,405) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Dividends received from associates | | 343 | | 367 | | 209 |
| and joint ventures | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Payments for property, plant and | | (1,804) | | (848) | | (2,926) |
| equipment | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Proceeds from disposal of property, | | - | | - | | 79 |
| plant and equipment | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Acquisition of subsidiaries | | (2,961) | | (19,593) | | (19,629) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Net cash acquired with subsidiaries | | - | | 19,682 | | 20,139 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Net cash outflow from investing | | (4,852) | | (804) | | (3,187) |
| activities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Cash flows from financing activities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Payments for own shares | 12 | (45) | | (920) | | (1,004) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Dividends paid | 6 | (2,648) | | (2,414) | | (3,434) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Issue of shares (net) | | 29 | | - | | - |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Payments for hire purchase contracts | | (51) | | (77) | | (138) |
| principals | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Proceeds from borrowings | | - | | 12,126 | | 9,960 |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Repayment of borrowings | | (970) | | (3,926) | | (3,387) |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Net cash (outflow) / inflow from | | (3,685) | | 4,789 | | 1,997 |
| financing activities | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Net (decrease) / increase in cash and | | (9,309) | | 8,374 | | 19,254 |
| cash equivalents | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Cash and cash equivalents at the | 10 | 60,259 | | 40,290 | | 40,290 |
| beginning of the period | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Effects of exchange rate changes on | 12 | (119) | | 26 | | 715 |
| the balance of cash held in foreign | | | | | | |
| currencies | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
| Cash and cash equivalents at the end | 10 | 50,831 | | 48,690 | | 60,259 |
| of the period | | | | | | |
+---------------------------------------+-------+---------------+--+---------------+--+---------------+
+----------------------------------------------------------------------------------+
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
+----------------------------------------------------------------------------------+
1. Basis of preparation and significant accounting policies
General information
The results for the half years ended 31 December 2007 and 2008 and the balance
sheets as at those dates have not been audited and do not constitute statutory
accounts. The financial information for the year ended 30 June 2008 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. A copy of the statutory accounts for that year has been delivered to the
Registrar of Companies. The auditor's report on those accounts was not
qualified, did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying the audit report, and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
Statement of compliance
The condensed set of financial statements included in this interim report has
been prepared in accordance with International Accounting Standard (IAS) 34
'Interim Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the Financial Services Authority.
Accounting policies
The same accounting polices and methods of consolidation are followed in this
condensed set of financial statements as applied in the group's latest annual
report and accounts for the year ended 30 June 2008.
At the date of authorisation of these financial statements, International
Financial Reporting Standards (IFRS) 8 'Operating Segments' was in issue but not
yet effective and has not been applied in these interim financial statements.
The directors anticipate that the adoption of this standard in future periods
will have no material impact on the financial statements of the group except for
additional disclosures in relation to IFRS 8.
2. Restatement of comparative balances
As was stated in note 33 on page 75 of the 2008 annual report and accounts, the
fair value adjustments arising on the acquisition of IASA Holding SAS (IASA) and
Pearce Group Limited were provisional, which was in accordance with IFRS 3
'Business Combinations'.The fair value exercise has now been completed and the
final acquisition balance sheet and related fair value adjustments are
consolidated in the balance sheet of these financial statements.
In accordance with IFRS 3 'Business Combinations' the affected financial
statement balances have been restated. None of the restatements have had an
impact on gross profit or profit from operations. There was no impact on
recognised income or expense as stated.
3. Seasonality
The group's activities are generally not subject to significant seasonal
variation, with the exception of our Retail operations whose activity is
weighted towards the first half of the financial year.
+----------------------------------------------------------------------------------+
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) |
+----------------------------------------------------------------------------------+
4. Business and geographical segments
a. Business segments
For management purposes, the group is organised into six operating divisions -
London, Regional Construction, Retail, Asia, Middle East and Europe. These
divisions are the basis on which the group reports its primary segment
information.
Principal activities of each of these divisions are as follows:
+------------------+---------------------------------------------------------------+
| London | - provision of new build, refurbishment and fit out services |
| | in London. |
+------------------+---------------------------------------------------------------+
| Regional | - provision of new build, refurbishment and fit out services |
| Construction | in UK outside London. |
+------------------+---------------------------------------------------------------+
| Retail | - provision of retail and leisure fit out and refurbishment |
| | services in UK. |
+------------------+---------------------------------------------------------------+
| Asia | - provision of fit out and project management services in |
| | Asia. |
+------------------+---------------------------------------------------------------+
| Middle East | - provision of fit out and project management services in the |
| | Middle East. |
+------------------+---------------------------------------------------------------+
| Europe | - provision of specialist fit out services in Europe, mainly |
| | France and Germany. |
+------------------+---------------------------------------------------------------+
Gross value of work performed ("GVWP" or "Volumes"), includes revenue of the
group plus volumes undertaken on construction management contracts and the
group's share of associates' and joint ventures' revenue. GVWP, revenue,
operating profit and profit before taxation may be analysed as follows:
+------------------------+---------+---+-----+---+-----+---+---+---+---+---+-------+---+---+-------+---+
| | Unaudited | Unaudited | Audited |
+------------------------+-----------------------+---------------------+-------------------------------+
| | 6 months to | 6 months to | Year to |
+------------------------+-----------------------+---------------------+-------------------------------+
| | 31 December 2008 | 31 December 2007 | 30 June 2008 |
+------------------------+-----------------------+---------------------+-------------------------------+
| | GVWP | Revenue | GVWP | Revenue | GVWP | Revenue |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| London | 232,523 | 221,359 | 301,214 | 287,705 | 587,895 | 569,539 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| Regional Construction | 178,394 | 178,394 | 135,372 | 135,372 | 301,635 | 301,635 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| Retail | 112,613 | 112,613 | 44,336 | 44,336 | 137,103 | 137,103 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| Asia | 30,958 | 30,626 | 29,600 | 29,147 | 51,227 | 50,678 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| Middle East | 1,690 | 1,690 | 473 | 473 | 1,044 | 1,044 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| Europe | 17,703 | 17,703 | 9,766 | 8,008 | 31,411 | 30,059 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| Other | - | - | 330 | 330 | 18 | 18 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| Total of all segments | 573,881 | 562,385 | 521,091 | 505,371 | 1,110,333 | 1,090,076 |
+------------------------+-------------+---------+---------+-----------+-------------------+-----------+
| | | | | | | |
+------------------------+---------+---------+---------+-----------+---------------+---------------+
| | Unaudited | Unaudited | Audited |
+------------------------+-----------------------+-------------------------+---------------------------+
| | 6 months to | 6 months to | Year to |
+------------------------+-----------------------+-------------------------+---------------------------+
| | 31 December 2008 | 31 December 2007 | 30 June 2008 |
+------------------------+-----------------------+-------------------------+---------------------------+
| | Operating | Profit | Operating | Profit | Operating | Profit |
| | profit | before | profit | before | profit | before |
| | | tax | | tax | | tax |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| London | 2,167 | 2,945 | 3,664 | 4,631 | 7,926 | 9,329 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Regional Construction | 1,288 | 1,559 | 842 | 878 | 2,258 | 2,830 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Retail | 3,875 | 4,116 | 1,747 | 1,901 | 3,936 | 4,350 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Asia | 993 | 995 | 775 | 775 | 1,726 | 1,788 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Middle East | (114) | (114) | 6 | 6 | 47 | 47 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Europe | 1,377 | 1,556 | 847 | 885 | 3,086 | 3,218 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Other | (208) | (256) | - | (23) | (422) | (402) |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Segment total "Group | 9,378 | 10,801 | 7,881 | 9,053 | 18,557 | 21,160 |
| Trading" | | | | | | |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Group activities | (1,954) | (2,620) | (1,179) | (1,776) | (3,425) | (4,885) |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Cost of acquisition | - | (1,187) | - | (987) | - | (2,202) |
| finance | | | | | | |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Adjusted | 7,424 | 6,994 | 6,702 | 6,290 | 15,132 | 14,073 |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Amortisation of | (712) | (712) | (455) | (455) | (1,448) | (1,448) |
| intangibles | | | | | | |
+------------------------+-------------+---------+-------------+-----------+-----------+---------------+
| Consolidated | 6,712 | 6,282 | 6,247 | 5,835 | 13,684 | 12,625 |
+------------------------+---------+---+-----+---+-----+---+---+---+---+---+-------+---+---+-------+---+
+----------------------------------------------------------------------------------+
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) |
+----------------------------------------------------------------------------------+
4. Business and geographical segments (continued)
b. Geographical segments
GVWP, revenue, operating profit and profit before tax may be analysed as
follows:
+------------------------+----------+-+----------+-+--------+-+----------+-+----------+-----------+
| | Unaudited | Unaudited | Audited |
+------------------------+-----------------------+-----------------------+------------------------+
| | 6 months to | 6 months to | Year to |
+------------------------+-----------------------+-----------------------+------------------------+
| | 31 December 2008 | 31 December 2007 | 30 June 2008 |
+------------------------+-----------------------+-----------------------+------------------------+
| | GVWP | Revenue | GVWP | Revenue | GVWP | Revenue |
+------------------------+------------+----------+------------+----------+------------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| United Kingdom | 523,530 | 512,366 | 481,252 | 467,743 | 1,026,651 | 1,008,295 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Asia | 30,958 | 30,626 | 29,600 | 29,147 | 51,227 | 50,678 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Middle East | 1,690 | 1,690 | 473 | 473 | 1,044 | 1,044 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Europe | 17,703 | 17,703 | 9,766 | 8,008 | 31,411 | 30,059 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Total of all segments | 573,881 | 562,385 | 521,091 | 505,371 | 1,110,333 | 1,090,076 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| | | | | | | |
+------------------------+----------+--------------+--------+--------------+----------+-----------+
| | Unaudited | Unaudited | Audited |
+------------------------+-----------------------+-----------------------+------------------------+
| | 6 months to | 6 months to | Year to |
+------------------------+-----------------------+-----------------------+------------------------+
| | 31 December 2008 | 31 December 2007 | 30 June 2008 |
+------------------------+-----------------------+-----------------------+------------------------+
| | Operating | Profit | Operating | Profit | Operating | Profit |
| | profit | before | profit | before | profit | before |
| | | tax | | tax | | tax |
+------------------------+------------+----------+------------+----------+------------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| United Kingdom | 7,122 | 8,364 | 6,253 | 7,387 | 13,698 | 16,107 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Asia | 993 | 995 | 775 | 775 | 1,726 | 1,788 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Middle East | (114) | (114) | 6 | 6 | 47 | 47 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Europe | 1,377 | 1,556 | 847 | 885 | 3,086 | 3,218 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Segment total "Group | 9,378 | 10,801 | 7,881 | 9,053 | 18,557 | 21,160 |
| Trading" | | | | | | |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Group activities | (1,954) | (2,620) | (1,179) | (1,776) | (3,425) | (4,885) |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Cost of acquisition | - | (1,187) | - | (987) | - | (2,202) |
| finance | | | | | | |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Adjusted | 7,424 | 6,994 | 6,702 | 6,290 | 15,132 | 14,073 |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Amortisation of | (712) | (712) | (455) | (455) | (1,448) | (1,448) |
| intangibles | | | | | | |
+------------------------+------------+----------+------------+----------+------------+-----------+
| Consolidated | 6,712 | 6,282 | 6,247 | 5,835 | 13,684 | 12,625 |
+------------------------+----------+-+----------+-+--------+-+----------+-+----------+-----------+
Fee income, which is considered to be a key indicator, is derived as follows:
+---------------------------+------+---------------+--+---------------+--+---------------+
| | | Unaudited | | Unaudited | | Audited |
+---------------------------+------+---------------+--+---------------+--+---------------+
| | | 6 months to | | 6 months to | | Year to |
+---------------------------+------+---------------+--+---------------+--+---------------+
| | | 31 December | | 31 December | | 30 June |
| | | 2008 | | 2007 | | 2008 |
+---------------------------+------+---------------+--+---------------+--+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+---------------------------+------+---------------+--+---------------+--+---------------+
| Revenue | | 562,385 | | 505,371 | | 1,090,076 |
+---------------------------+------+---------------+--+---------------+--+---------------+
| Trade contractor costs | | (480,835) | | (440,923) | | (939,810) |
| recharged | | | | | | |
+---------------------------+------+---------------+--+---------------+--+---------------+
| Fee income | | 81,550 | | 64,448 | | 150,266 |
+---------------------------+------+---------------+--+---------------+--+---------------+
Fee income represents monies that are received from clients for the construction
and project management services that the group provides and excludes the amounts
paid to trade contractors and suppliers.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Income tax expense
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | Unaudited | | Unaudited | | Audited |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 6 months to | | 6 months to | | Year to |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 31 December | | 31 December | | 30 June |
| | | 2008 | | 2007 | | 2008 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Current tax expense | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| UK corporation tax | | 1,282 | | 1,173 | | 2,675 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Foreign current tax | | 742 | | 637 | | 1,573 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Adjustment in respect of | | 32 | | - | | (1,082) |
| prior years | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 2,056 | | 1,810 | | 3,166 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Deferred tax expense | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Current year | | (203) | | (176) | | (525) |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Total income tax expense | | 1,853 | | 1,634 | | 2,641 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
Income tax for the six month period is charged at 29% (2008 - 28%), being the
estimated annual effective tax rate expected for the full financial year,
applied to the profit before income tax expense excluding the share of net
profit/loss of equity accounted joint ventures for the six month period (which
are stated net of income tax).
6. Dividends
+--------------------------------+--+--------------+--+---------------+--+---------------+
| | | Unaudited | | Unaudited | | Audited |
+--------------------------------+--+--------------+--+---------------+--+---------------+
| | | As at | | As at | | As at |
+--------------------------------+--+--------------+--+---------------+--+---------------+
| | | 31 December | | 31 December | | 30 June 2008 |
| | | 2008 | | 2007 | | |
+--------------------------------+--+--------------+--+---------------+--+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------------------+--+--------------+--+---------------+--+---------------+
| 2008 Final paid - 9.20p | | 2,648 | | 2,253 | | 2,253 |
| per ordinary share (2007 - | | | | | | |
| 8.20p) | | | | | | |
+--------------------------------+--+--------------+--+---------------+--+---------------+
| | | | | | | |
+--------------------------------+--+--------------+--+---------------+--+---------------+
| 2009 Interim dividend - | | 1,216 | | 1,122 | | 2,700 |
| 4.00p per ordinary share (2008 | | | | | | |
| - 4.00p) | | | | | | |
+--------------------------------+--+--------------+--+---------------+--+---------------+
In accordance with IAS 10, dividends are accounted for in the period in which
they are paid. Accordingly the interim dividend due in respect of the half year
ended 31 December 2008 has not been included as a liability as at 31 December
2008.
+----------------------------------------------------------------------------------+
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) |
+----------------------------------------------------------------------------------+
7. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares during
the period.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares. The group has only one category of dilutive
potential ordinary shares, being share options granted where the exercise price
is less than the average price of the company's ordinary shares during the
period.
Adjusted basic earnings per share is calculated by dividing the earnings
attributed to ordinary shareholders, pre-intangible asset charges and before
gain / loss on disposal of associates and subsidiaries, by the weighted average
number of ordinary shares during the period.
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | Unaudited | | Restated | | Audited |
| | | | | Unaudited | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | As at | | As at | | As at |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 31 December | | 31 December | | 30 June |
| | | 2008 | | 2007 | | 2008 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Profit for the period | | 4,429 | | 4,201 | | 9,984 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Basic and diluted earnings | | 4,429 | | 4,201 | | 9,984 |
| attributable to ordinary | | | | | | |
| shareholders | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Post-tax amortisation of | | 502 | | 341 | | 1,021 |
| intangible assets | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Adjustment relating to | | - | | - | | (1,082) |
| release of prior-year UK | | | | | | |
| corporation tax provision | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Adjusted earnings | | 4,931 | | 4,542 | | 9,923 |
| attributable to ordinary | | | | | | |
| shareholders | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | Number | | Number | | Number |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Weighted average number of | | 28,337,212 | | 26,916,118 | | 27,398,773 |
| ordinary shares for the | | | | | | |
| purpose of basic earnings per | | | | | | |
| share | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Dilutive share options | | 8,759 | | 340,265 | | 287,496 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Weighted average number of | | 28,345,971 | | 27,256,383 | | 27,686,269 |
| ordinary shares for the | | | | | | |
| purpose of diluted earnings | | | | | | |
| per share | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | Pence per | | Pence per | | Pence per |
| | | share | | share | | share |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Basic earnings per ordinary | | 15.63 | | 15.61 | | 36.44 |
| share | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Diluted earnings per ordinary | | 15.63 | | 15.41 | | 36.06 |
| share | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Adjusted basic earnings per | | 17.40 | | 16.87 | | 36.22 |
| ordinary share | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Adjusted diluted earnings per | | 17.40 | | 16.66 | | 35.84 |
| ordinary share | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Goodwill
+--------------------------------+----------------------------------+---------------+
| | | Goodwill |
+--------------------------------+----------------------------------+---------------+
| | | GBP'000 |
+--------------------------------+----------------------------------+---------------+
| Cost | | |
+--------------------------------+----------------------------------+---------------+
| Balance at 1 July 2007 | | 48,895 |
+--------------------------------+----------------------------------+---------------+
| Acquisitions through business | | 27,417 |
| combinations | | |
+--------------------------------+----------------------------------+---------------+
| Net foreign currency exchange | | 723 |
| differences | | |
+--------------------------------+----------------------------------+---------------+
| Adjustment in respect of prior | | (77) |
| period | | |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| Balance at 31 December 2007 | | 76,958 |
+--------------------------------+----------------------------------+---------------+
| Net foreign currency exchange | | 1,018 |
| differences | | |
+--------------------------------+----------------------------------+---------------+
| Adjustment in respect of prior | | 6 |
| period | | |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| Balance at 30 June 2008 | | 77,982 |
+--------------------------------+----------------------------------+---------------+
| Net foreign currency exchange | | 3,626 |
| differences | | |
+--------------------------------+----------------------------------+---------------+
| Adjustment in respect of prior | | 538 |
| period | | |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| Balance at 31 December 2008 | | 82,146 |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| Carrying amount | | |
+--------------------------------+----------------------------------+---------------+
| As at 31 December 2007 | | 76,958 |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| As at 30 June 2008 | | 77,982 |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
| As at 31 December 2008 | | 82,146 |
+--------------------------------+----------------------------------+---------------+
| | | |
+--------------------------------+----------------------------------+---------------+
Adjustment in respect of prior period represents the fair value adjustments
arising on the acquisition of IASA and Pearce Group Limited, finalised in
accordance with IFRS 3 'Business Combinations'. The fair value exercise has now
been completed and the final acquisition balance sheet and related fair value
adjustments are consolidated in the balance sheet of these financial statements.
Goodwill has been allocated for impairment testing purposes to five groups of
cash-generating units ("CGUs"), being London, Regional Construction, Retail,
Asia and Europe. The allocation of goodwill is dependent on the CGU that is
expected to benefit from the business combination.
The group tests goodwill bi-annually for impairment or more frequently if there
are indications that goodwill might be impaired. The recoverable amounts of the
CGUs are determined from value in use calculations. The key assumptions for the
value in use calculations are those regarding the discount rates and growth
rates for the period. Management estimates discount rates using pre-tax rates
that reflect current market assessments of the time value of money and the risks
specific to the CGUs, which range from 10-12%. The growth rates are based on
industry growth forecasts and long-term growth in gross domestic product.
The group prepares cash flow forecasts derived from the most recent financial
budgets approved by management for the next period and extrapolates cash flows
for the following five periods based on estimated growth rates of between 2% and
5%. The rates do not exceed the average long-term growth rate for the relevant
markets. The rates used to discount the cash flows in both 2008 and 2007 for all
CGUs have been based on the group's weighted average cost of capital.
At 31 December 2008, 30 June 2008 and 31 December 2007, the carrying amounts of
goodwill for CGUs were impairment tested and deemed not to be impaired.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Other intangible assets
+----------------------------------+------+---------------+--+------------+--+------------+
| | | Customer | | Customer | | Total |
| | | Relationships | | Contracts | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Cost | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 1 July 2007 | | 3,063 | | 580 | | 3,643 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Acquisitions through business | | 7,226 | | 376 | | 7,602 |
| combinations | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Net foreign currency exchange | | 163 | | - | | 163 |
| differences | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 31 December 2007 | | 10,452 | | 956 | | 11,408 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Net foreign currency exchange | | 141 | | | | 141 |
| differences | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 30 June 2008 | | 10,593 | | 956 | | 11,549 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Net foreign currency exchange | | 950 | | - | | 950 |
| differences | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 31 December 2008 | | 11,543 | | 956 | | 12,499 |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Accumulated depreciation | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 1 July 2007 | | 119 | | 580 | | 699 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Charge for the period | | 360 | | 95 | | 455 |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 31 December 2007 | | 479 | | 675 | | 1,154 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Charge for the period | | 712 | | 281 | | 993 |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 30 June 2008 | | 1,191 | | 956 | | 2,147 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Charge for the period | | 712 | | - | | 712 |
+----------------------------------+------+---------------+--+------------+--+------------+
| Net foreign currency exchange | | 493 | | - | | 493 |
| difference | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Balance at 31 December 2008 | | 2,396 | | 956 | | 3,352 |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| Carrying amount | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| As at 31 December 2007 | | 9,973 | | 281 | | 10,254 |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| As at 30 June 2008 | | 9,402 | | - | | 9,402 |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
| As at 31 December 2008 | | 9,147 | | - | | 9,147 |
+----------------------------------+------+---------------+--+------------+--+------------+
| | | | | | | |
+----------------------------------+------+---------------+--+------------+--+------------+
+-------------------------------+--+---------------+---+---+-------+---+---+---+---+--------------+
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) |
+-------------------------------------------------------------------------------------------------+
| 10. Analysis of net cash | | | | |
+------------------------------------------------------+-----------+-------+-------+--------------+
| | | Unaudited | | Unaudited | | Audited |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| | | As at | | As at | | As at |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| | | 31 December | | 31 | | 30 June |
| | | 2008 | | December | | 2008 |
| | | | | 2007 | | |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| Cash and cash equivalents as | | 50,831 | | 48,690 | | 60,259 |
| per balance sheet | | | | | | |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| Cash and cash equivalents per | | 50,831 | | 48,690 | | 60,259 |
| the cash flow statement | | | | | | |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| Bank loans | | (23,035) | | (24,019) | | (23,935) |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| Loan notes | | (968) | | (2,442) | | (968) |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| Obligation under hire | | (41) | | (153) | | (92) |
| purchase contracts | | | | | | |
+-------------------------------+--+---------------+-------+-----------+-------+------------------+
| Net cash | | 26,787 | | 22,076 | | 35,264 |
+-------------------------------+--+---------------+---+---+-------+---+---+---+---+--------------+
11. Borrowings
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | Unaudited | | Unaudited | | Audited |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 6 months to | | 6 months to | | Year to |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 31 December | | 31 December | | 30 June |
| | | 2008 | | 2007 | | 2008 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Non-current | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Bank loans 1 | | 17,607 | | 20,609 | | 18,213 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Unamortised cost of debt | | (232) | | (337) | | (105) |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Loan notes 2 | | - | | 1,478 | | 968 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Obligations under hire | | 1 | | 7 | | 10 |
| purchase contracts | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 17,376 | | 21,757 | | 19,086 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Current | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Bank loans 1 | | 5,765 | | 3,852 | | 6,111 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Unamortised cost of debt | | (105) | | (105) | | (284) |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Loan notes 2 | | 968 | | 964 | | - |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| Obligations under hire | | 40 | | 146 | | 82 |
| purchase contracts | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | 6,668 | | 4,857 | | 5,909 |
+-------------------------------+--+---------------+--+---------------+--+---------------+
| | | | | | | |
+-------------------------------+--+---------------+--+---------------+--+---------------+
1 The group has two principal bank loans:
(a) a loan of GBP3.4m (2008 - GBP4.4m). The loan was taken out on 28
September 2005. Repayments commenced on 28 December 2005 and will continue until
28 September 2010. The loan carries a variable interest rate of 3.46% as at 31
December 2008.
(b) a loan of GBP20.0m (2008 - GBP20.0m), which was drawn down between May
2007 and May 2008. Repayments commenced on 22 February 2009 and are scheduled to
continue until 24 May 2013. The loan carries a variable interest rate of 3.46%
as at 31 December 2008.
Bank covenants include total interest cover, net debt to earnings before
interest, tax, depreciation and amortisation and total debtors to total
utilisation. There have been no breaches of bank covenants during all periods.
The bank loans are guaranteed by material subsidiaries of the group. The group
does not have any of its property and equipment pledged as security over bank
loans.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Borrowings (continued)
Undrawn facilities comprise a joint revolving credit facility of GBP10.0m with
Bank of Scotland and The Royal Bank of Scotland plc (2008 - GBP10.0m). The
facility bears a floating interest rate (with reference to LIBOR) and remained
undrawn throughout the current period and the prior year. This facility expires
on 24 May 2013.
2 Of the GBP968,000 loan notes, GBP950,000 (2008 - GBP950,000) are payable to
the vendors of ISG Cathedral and may be redeemed semi-annually at the company's
option, up to July 2009 when the remaining balance is payable. Interest is
payable semi-annually at a fixed rate of 7%. The GBP18,000 loan notes are
payable to certain vendors of Pearce and may be redeemed semi-annually at the
holders' option, up to November 2009 when the remaining balance is payable.
Interest is payable semi-annually at a variable base rate of 2% at 31 December
2008.
12. Reconciliation of movements in equity
+----------------------------+---------+---------+----------+------------+----------+---------+
| | Share | Share | Foreign | Investment | Retained | Total |
| | capital | premium | currency | in own | earnings | GBP'000 |
| | GBP'000 | GBP'000 | reserve | shares | GBP'000 | |
| | | | GBP'000 | GBP'000 | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Balance as at 1 July 2007 | 277 | 12,513 | (290) | (2,630) | 13,912 | 23,782 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Profit for the period | - | - | - | - | 4,201 | 4,201 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Payment of dividends | - | - | - | - | (2,414) | (2,414) |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Issue of shares | 17 | 4,945 | - | - | - | 4,962 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Recognition of investment | - | - | - | (920) | - | (920) |
| in own shares | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Recognition of share based | - | - | - | - | 42 | 42 |
| payments | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Exchange differences | - | - | 524 | - | (26) | 498 |
| arising on translation of | | | | | | |
| foreign operations | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Balance as at 31 December | 294 | 17,458 | 234 | (3,550) | 15,715 | 30,151 |
| 2007 | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Profit for the period | - | - | - | - | 5,783 | 5,783 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Payment of dividends | - | - | - | - | (1,020) | (1,020) |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Issue of shares | 1 | 23 | - | - | - | 24 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Recognition of investment | - | - | - | (84) | - | (84) |
| in own shares | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Recognition of share-based | - | - | - | - | 44 | 44 |
| payments | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Exchange differences | - | - | 1,521 | - | 623 | 2,144 |
| arising on translation of | | | | | | |
| foreign operations | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Balance as at 30 June 2008 | 295 | 17,481 | 1,755 | (3,634) | 21,145 | 37,042 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Profit for the period | - | - | - | - | 4,429 | 4,429 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Payment of dividends | - | - | - | - | (2,648) | (2,648) |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Issue of shares | 9 | 1,745 | - | - | - | 1,754 |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Recognition of investment | - | - | - | (45) | - | (45) |
| in own shares | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Recognition of share-based | - | - | - | - | 60 | 60 |
| payments | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Exchange differences | - | - | 6,920 | - | (119) | 6,801 |
| arising on translation of | | | | | | |
| foreign operations | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
| Balance as at 31 December | 304 | 19,226 | 8,675 | (3,679) | 22,867 | 47,393 |
| 2008 | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+---------+
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Contingent liabilities
There are group cross guarantees from the company for all monies due to certain
of the group's banks and surety lenders. In the normal course of business there
are contingent liabilities including the provision of bonds in respect of
completed and uncompleted contracts.
As reported in last year's financial statements, in March 2006 the Office of
Fair Trading ("OFT") visited the offices of Totty Construction, a subsidiary of
the Propencity Group, along with many other construction companies, in relation
to potential breaches of competition law in earlier years prior to ISG's
ownership. The Propencity Group has entered into a leniency agreement with the
OFT in respect of the alleged infringements and in June 2008 submitted a
response to the OFT's Statement of Objections. The group remains unable to
estimate the size of any potential liability and as a result no provision has
been made in these accounts.
Similarly Pearce Construction (Midlands) Limited, a subsidiary of the Pearce
Group, has been issued with a Statement of Objections by the OFT. The business
is defending its position and the group has received an indemnity from the
vendors of the Pearce Group, which will serve to mitigate risk in this matter.
14. Related party transactions
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. There have been no material transactions between the group and its
associates or joint ventures during the year.
15. Principal risk and uncertainties
The weaknesses emerging in some of the world's major economies which have
occurred during the first half of the year have increased uncertainties, which
have affected some of the group's businesses. These macro economic trends,
together with liquidity issues arising from the "credit crunch" will increase
pressure on some of the group's customers and its supply chain.
Other than the risks referred to above, the Directors consider that the nature
of the principal risks and uncertainties which may have a material effect on the
group's performance in the second half of the year is unchanged from those
identified on page 27 of the Directors' Report and Accounts 2008. These include
the impact of the external business environment including government policy and
customer risks; strategic risks over tendering, acquisitions and investments;
organisational and management risks including information technology and human
resources; and delivery and operational risks encompassing asset and service
delivery risk, supply chain risk and health, safety and environmental risks.
16. Approval of interim accounts
The Interim Accounts were approved by the Board of Directors on 10 March 2009.
Responsibility Statement
We confirm that to the best of our knowledge:
* the condensed group financial statements have been prepared in accordance with
IAS 34 Interim Financial Reporting;
* the interim management report includes a fair review of important events during
the first six months of their impact on the condensed group financial statements
and a description of the principal risks and uncertainties for the remaining six
months of the year, as required by the Disclosure and Transparency Rule 4.2.7R;
and
* the interim management report includes a fair review of related parties'
transactions and changes therein, as required by the Disclosure and Transparency
Rule 4.2.8R.
On behalf of the Board
+----------------------------------------+---------------------------------------+
| S D Lawther | J C B Houlton |
+----------------------------------------+---------------------------------------+
| Chief Executive | Finance Director |
+----------------------------------------+---------------------------------------+
10 March 2009
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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