TIDMMOGP
RNS Number : 8514Q
Mountfield Group plc
11 June 2018
Mountfield Group Plc ("Group")
and its subsidiary Connaught Access Flooring Limited ("CAF") and
Mountfield Building Group Limited ("MBG")
Final Results for the Year Ended 31 December 2017
The Directors of Mountfield Group Plc are pleased to announce
its Final Results for the year ended 31 December 2017 ("Final
Results").
The Group also announces that its Annual General Meeting will be
held at 10 a.m. on 4 July 2018 at the offices of DAC Beachcroft LLP
at 100 Fetter Lane, London EC4A 1BN.
The Annual Report and Accounts for the year ended 31 December
2017, together with the Notice of Annual General Meeting will be
posted to shareholders and will be uploaded today to the Group's
website on: www.mountfieldgroupplc.com .
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, please contact:
Mountfield Group Plc
Peter Jay, Chairman 07500 558235
Cairn Financial Advisers LLP (Nominated
Adviser)
Jo Turner / Tony Rawlinson 020 7213 0880
STRATEGIC REPORT
FOR THE YEARED 31 DECEMBER 2017
CHAIRMAN'S REPORT
Key Features
-- Group annual PBT rises by 95% to GBP864,372 (2016: GBP442,544)
-- Group's secured order book at a record high of GBP16.2m
-- Turnover: GBP12.7m (2016: GBP9.6m)
-- Operating profit: GBP902,282 (2016: GBP469,820)
-- EBITDA: GBP913,877 (2016: GBP483,336)
-- Earnings per share: 0.254p (2016: 0.131p)
-- Net cash position GBP520,301 (2016 - GBP(20,247))
-- Gross Margin 17.5% (2016: 19.2%)
-- Operating Margin 7.1% (2016: 4.9%)
-- Board believes outlook for 2018 is for continued strong performance.
The Board is extremely pleased to report an excellent
performance by the Group. By trading with reduced operating costs
and securing record levels of new business it has achieved
increases in its profit before tax from 2017 against 2016 of 95%
and from 2017 against 2015 of 388%.
Another key feature has been the extent by which both Companies
have been able to win new business; the Group's secured order book
currently stands at GBP16.2m with CAF having won contracts valued
at GBP8.5m and with MBG having won contracts worth GBP7.7m. These
figures point to strong potential performances in 2018 and
2019.
The increase in turnover reflects the significant new contracts
that have been won but the more competitive nature of these large
contracts has been responsible for the fall in the gross margin.
However, because of the lower reflected cost bases of the business
operating margin has increased.
The year has seen both subsidiary companies, Connaught Access
Flooring Limited ("CAF") and Mountfield Building Group Limited
("MBG") trade strongly with increased profitability.
CAF
CAF's turnover was GBP8.4m (2016 - GBP5.3m) and its profit
before tax GBP568,651 (2016 - GBP306,565).
For CAF, the year's main feature was the backbone provided by
two significant projects, each to supply and fit flooring for new
offices and the wholesale refurbishment for major banks in the City
of London and Canary Wharf, respectively. The tail end of the year
was further enhanced by winning (announced on 9 October 2017) of a
major contract to supply and install flooring to a substantial new
City HQ office building and in addition, securing the third phase
of the Canary Wharf refurbishment project. These works which are
ongoing are likely to have a value on completion in excess of
GBP8m, the bulk of which will be completed in 2018.
The Company's other significant instructions have predominantly
been in respect of new or re-furbished offices also in the City
although interspersed with them have been a large number of smaller
contracts carried out by its Special Works team countrywide which
enables the Company to maintain a consistent workflow.
CAF is a market leader and one of the very small number of
companies able to compete for the largest raised access/commercial
flooring market and is regularly asked to tender for new work in an
increasingly active market.
MBG
MBG's turnover in 2017 was GBP4.3m (2016 - GBP4.3m) and its
profit before tax was GBP288,622 (2016- GBP229,198).
The Company's efforts during 2017 were focused on the
development of a new business platform to replace the contract work
that it had ceased to undertake following its strategic review.
The results of the strategy have been impressive: When MBG
learnt that an existing telecoms client intended to upgrade its
security infrastructure across its extensive property estate it set
up a team specifically to enter competitive tenders for the
contracts. As a result of targeting this area of the client's work
MBG has built a closer relationship with the client and, to date,
MBG has won seven significant contracts with an aggregate value of
GBP6.6m via a competitive tender process. The client's programme is
expected to extend for at least the next three years.
In addition MBG has seen a return of the type of data centre
work it specialised in when the Group was admitted to AIM in 2008.
Valuable contracts have been won including a large data centre
complex in Stockley Park which has rolled out to the second phase.
Further contracts are expected to become available in the short and
medium term.
Outlook
The Board believes that both CAF and MBG are now, with the
benefit of low cost structures, excellent client bases and record
high levels of secured work able to perform strongly on a regular
and sustainable basis.
The outlook for CAF continues to be strong into 2018/19 and
based on the demand for high quality, large commercial flooring
contracts, its leading position in its market place and the
proposed expansion of its business into the supply and installation
of new products associated with CAF's core activities. In addition,
the increase in Data Centre activity has seen a welcome return to
working in Scandinavia to a market in which CAF excels through
their attention to detail and understanding of the different
processes required in this field. The Board believes that the
outlook for CAF will remain increasingly bright for a number of
years with strong demand for its services both in the UK and
overseas.
The Board takes a similar view of MBG's prospects and notes the
major change in its financial performance that followed from the
reduction of its cost base and the change to a strategy of pursuing
lower risk contracts predominantly direct to the Client and is
satisfied that MBG's performance will show significant improvement
during 2018 and 2019.
Peter Jay
Non-Executive Chairman
Date: 8 June 2018
CEO's REPORT
The Group Board currently comprises:
Peter Jay - Non-Executive Chairman - in addition to being Group
Chairman Peter also manages the Group's relationships with our
professional advisers. Peter was formerly a corporate lawyer and a
partner in DAC Beachcroft LLP.
Andrew Collins - Group Chief Executive - Andy is responsible for
managing the business of the Group and also that of its subsidiary,
CAF, a specialist supplier and installer of flooring for commercial
properties whose business and reputation he has developed
significantly since appointment in 2004. Before joining the Group,
Andy was a Divisional Financial Director at ISG Plc.
Graham Read - Managing Director of MBG - Graham founded the
business of MBG in 1986 and has had over 40 years' experience in
the construction industry.
The Board is supported by Andy May, a partner in the firm of
Barnes Roffe LLP. Andy attends meetings of the Group's Board in an
advisory-only capacity and also assists the Board in overseeing the
Group's accounting and finance functions.
The Board is also supported by Chris Adlam, a director of JDC
Corporate Finance. Chris (who was appointed in February 2017)
attends meetings of the Group's Board in an advisory-only capacity
to provide advice on business finance and aspects of corporate
finance.
Group Companies
The Group is comprised of two principal trading companies,
Connaught Access Flooring Limited ("CAF") and Mountfield Building
Group Limited ("MBG").
CAF is one of the leading suppliers and installers of raised
access flooring systems to main contractors and corporate end users
for office and data centre installations.
It has established itself as one of the few recognised
specialists for the flooring elements of fitting out contracts in
new and refurbished commercial office space and for the Data Centre
market. These projects are undertaken both direct with the end user
and for leading Construction companies.
The current demand for construction of high quality, high tech
banking and office HQ buildings plays to CAF's strengths as it
enables the Company to present its professionalism and credentials
and compete on quality of service, expertise and experience, rather
than simply on price.
MBG comprises the construction division of the Group and in
addition to its extensive experience of undertaking work for the
data centre sector MBG also undertakes specialist construction work
for end user clients.
2017 saw MBG continue to develop its long term relationship
undertaking building fabric repair and maintenance works on a
nationwide basis for a large proportion of the property portfolio
of a leading telecoms operator.
Finance
The Group is financed from the cash it generates from its
operations, with the support of a bank overdraft facility of
GBP250,000 and a term loan of GBP191,190.
The construction market
The Group continues to experience extremely strong levels of
activity in terms of enquiries and tenders and the Board is
confident as to the strength and sustainability of the current
strong demand for services provided by the Group.
Group's strategy
The Board strategy is for the Group to become a highly
profitable, mid-sized operation that provides specialist
construction and flooring services in a number of diverse but
related areas but with a particular focus on the fit-out sector.
The Group's reputation has been built on its ability to undertake
and to manage specialist construction services to a high level of
quality and to deliver the completed project to the client on time.
This will remain at the core of its strategy.
Principal risks
The principal risks and uncertainties facing the Group relate
to:
Attraction and retention of key employees
The Group's future success is substantially dependent on the
continued services and performance of its directors, senior
management and other key personnel and its ability to continue to
attract and retain highly skilled and qualified personnel.
The senior executive directors of the business all have
significant shareholdings in the parent company and are all
permanent employees.
Economic downturn and other macroeconomic factors
The Group's success is substantially dependent on the general
level of economic activity and economic conditions in the United
Kingdom.
Many of the Group's contracts, including renewals or extensions
of previous contracts, are awarded through competitive bidding
processes. Any downturn in the economy, or any other macroeconomic
factor, either in the UK or globally, may reduce the number of
contracts coming up for bidding.
The competitive bidding processes present a number of additional
risks, including the incurrence of substantial cost and managerial
time to prepare bids and proposals for contracts that the Group may
not ultimately win. The Group may face additional competition in
the bidding process either from existing competitors or new market
entrants.
The Company is seeking to mitigate its exposure to the sectors
in which it currently operates by diversifying its client base and
in particular expanding into closely aligned areas of activity.
Reliance on key customers and clients
The business of the Group is dependent upon the continuing
contracts that it has, and relationships that it has developed,
with certain customers.
Whilst signed contracts are in place with key customers, the
successful completion and timing of contracted projects are not
guaranteed and are susceptible to external factors outside of the
control of the Group. Similarly, contracted projects may in some
circumstances be susceptible to delays or variation by customers or
be affected by unforeseen changes in circumstances relating to the
market, technology, legislation, economic or other business
factors. This may affect the cash flow and subsequent performance
of the Group.
The Group works with a well-established client base and the
performance of individual projects is monitored on at least a
monthly basis by board members to identify any issues with specific
projects.
Reliance on Subcontractors
The Group utilises subcontractors on a project-by-project basis
to meet contractual obligations. Such projects will rely on the
subcontractors performing their duties and obligations, not only in
terms of timely delivery but also in terms of their performance
obligations. Any such non-performance may result in time and cost
over-runs on the Group's projects and reduce the value of its
returns.
Subcontractors are vetted by senior management and normally
engaged to work on closely defined and managed aspects of
contracts. Most subcontractors have a long standing trading history
with the Group.
Health and safety
The Group undertakes Construction activities, often working
within difficult conditions and with heavy machinery which if
improperly used could result in personal injury or in extreme
cases, fatalities.
The Group takes the health and safety of its employees and
clients very seriously and employs Health and Safety advisors on
all significant contracts. It also has a firm of Health and Safety
Advisors with whom it consults on a regular basis.
Key performance indicators
The Directors use a number of performance indicators which are
used to manage the business but, as with most businesses the focus
in the Statement of Comprehensive Income at the top level is on
sales, margins, and profit before tax. In the Statement of
Financial Position the focus is on managing working capital. The
key performance indicators are disclosed in the Strategic
Report.
Financial instruments
Details of the Group's financial risk management objectives and
policies are included in note 19 to the financial statements.
Andrew Collins
Chief Executive Officer
Date: 8 June 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2017
2017 2016
GBP GBP
Revenue 12,692,126 9,634,979
Cost of sales (10,467,673) (7,787,965)
-------------- ------------
Gross profit 2,224,453 1,847,014
Administrative expenses (1,322,171) (1,377,194)
-------------- ------------
Operating profit 902,282 469,820
Net finance costs (37,910) (27,276)
-------------- ------------
Profit before income tax 864,372 442,544
Income tax expense (218,999) (108,805)
Profit for the year and total
comprehensive income 645,373 333,739
Earnings per share
Basic earnings per share 0.254p 0.131p
Diluted earnings per share 0.254p 0.131p
======= =======
There are no recognised gains and losses other than those
passing through the Statement of Comprehensive Income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
2017 2016
GBP GBP
ASSETS
Non-current assets
Intangible assets 6,874,308 6,874,308
Property, plant and equipment 80,434 90,956
Deferred income tax assets 199,330 295,268
------------ ------------
7,154,072 7,260,532
------------ ------------
Current assets
Inventories 88,301 88,272
Trade and other receivables 3,651,516 1,776,611
Cash and cash equivalents 520,301 -
------------ ------------
4,260,118 1,864,883
------------ ------------
TOTAL ASSETS 11,414,190 9,125,415
============ ============
EQUITY AND LIABILITIES
Issued share capital 2,524,426 2,524,426
Share premium 1,490,682 1,490,682
Share based payments reserve - 68,871
Capital redemption reserve 7,500 7,500
Merger reserve 4,051,967 4,051,967
Reverse acquisition reserve (2,856,756) (2,856,756)
Retained earnings 135,058 (579,186)
------------ ------------
TOTAL EQUITY 5,352,877 4,707,504
------------ ------------
Current liabilities
Trade and other payables 4,836,562 2,952,209
Short-term borrowings 958,020 897,579
Finance lease liabilities - 583
5,794,582 3,850,371
Non-current liabilities
Loan notes 200,000 393,857
Bank loan 66,731 173,683
6,061,313 4,417,911
------------ ------------
TOTAL EQUITY AND LIABILITIES 11,414,190 9,125,415
============ ============
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2017
2017 2016
GBP GBP
Cash flows from operating activities
Operating profit 902,282 469,820
Adjusted for:
Depreciation 11,595 13,516
Profit on Disposal (1,294) -
Increase in inventories (29) (15,437)
Decrease/(increase) trade and
other receivables (1,874,903) 569,187
Increase/(Decrease) in trade
and other payables 1,508,009 (614,007)
-------------- ----------
Cash generated in operations 545,660 423,079
Finance costs (37,910) (27,276)
Taxation paid (56,782) -
-------------- ----------
Net cash inflow from operating
activities 450,968 395,803
-------------- ----------
Cash flows from investing activities
Purchases of property, plant
and equipment (3,782) (2,259)
Proceeds from sale of property,
plant and equipment 4,003
-------------- ----------
Net cash used in investing activities 221 (2,259)
-------------- ----------
Cash flows from financing activities
Finance lease rentals (583) (3,564)
Repayment of non-convertible
loan notes (190,901) (283,381)
Movement on supplier invoicing
facility 387,795 -
Repayment of short-term loans (106,952) (51,858)
New loan facility - 350,000
-------------- ----------
Net cash flows (used in)/generated
from financing activities 89,359 11,197
-------------- ----------
Net cash increase in cash and
cash equivalents 540,548 404,741
Cash and cash equivalents brought
forward (20,247) (424,988)
-------------- ----------
Cash and cash equivalents carried
forward 520,301 (20,247)
============== ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Share
based Capital Reverse
Share Share payment redemption Merger acquisition Retained
capital premium reserve reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2016 254,244 1,490,682 68,871 7,500 12,951,180 (2,856,756) (9,812,138) 2,103,583
Total
comprehensive
income for
the year - - - - - - 333,739 333,739
Conversion
of loan notes 2,270,182 - - - - - - 2,270,182
Transfer - - - - (8,899,213) - 8,899,213 -
-------------------------- ------------------ ------------------ ------------------ ------------------ -------------------------------------- ------------------- --------------------------
At 31 December
2016 2,524,426 1,490,682 68,871 7,500 4,051,967 (2,856,756) (579,186) 4,707,504
========================== ================== ================== ================== ================== ====================================== =================== ==========================
Total
comprehensive
income for
the year - - - - - - 645,373 645,373
Transfer - - (68,871) 68,871
-------------------------- ------------------ ------------------ ------------------ ------------------ -------------------------------------- ------------------- --------------------------
At 31 December
2017 2,524,426 1,490,682 - 7,500 4,051,967 (2,856,756) 135,058 5,352,877
========================== ================== ================== ================== ================== ====================================== =================== ==========================
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
1 General information
Mountfield Group plc is a public company incorporated in England
and Wales. The registered number of the Company is 06374598. The
address of its registered office is 3C Sopwith Crescent, Wickford
Business Park, Wickford, Essex SS11 8YU.
2 Earnings per share
The basic earnings per share is calculated by dividing the
earnings attributable to equity shareholders by the weighted
average number of shares in issue. The diluted earnings per share
is calculated by dividing the earnings attributable to equity
shareholders by the weighted average number of shares in issue plus
the number of warrants and share options. The share options are not
considered dilutive as the shares would be issued for greater than
the average market price of the ordinary shares in 2017 and
2016.
2017 2016
Basic earnings per share GBP GBP
Profit for the financial
year 645,373 333,739
Weighted average number of
shares 254,244,454 254,339,045
============ ============
2017 2016
Diluted earnings per share GBP GBP
Profit for the financial
year 645,373 333,739
Number of shares 254,244,454 254,339,045
============ ============
3 Availability of Report and Accounts and Notice of Annual General Meeting
The Group will post the Annual Report and Accounts for the year
ended 31 December 2017 and Notice of Annual General Meeting to
shareholders. The Annual General Meeting will be held at the
offices of DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN on
4 July 2018 at 10 a.m. A copy of the Annual Report and Accounts for
the year ended 31 December 2017 and Notice of Annual General
Meeting will be available to be downloaded today from the Group's
website at www.mountfieldgroupplc.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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