RNS Number : 3851D
Metnor Group PLC
15 September 2008
Metnor Group plc
Interim results for the six months ended 30 June 2008
Metnor Group plc ("Metnor" or "the group"), the North East based property development and construction company, announces interim
results for the six months ended 30 June 2008.
Financial highlights include:
Unaudited Unaudited
6 months ended 6 months ended
30 June 2008 30 June 2007 Change
Revenue �44.5 million �38.3 million + 16.2%
Operating profit �0.97 million �0.81 million + 19.8%
Profit before income tax �1.11 million �1.03 million + 7.8%
Basic earnings per share from 5.2 p 4.8 p + 8.3%
continuing operations
Commenting on the results, Stephen Rankin, Chief Executive, said:
"I am pleased to report a positive set of results with increased revenue and profits across most of our trading divisions in the first
half of the year. This is a particularly pleasing achievement given the current difficulties in the property sector and set against a
background of economic downturn.
In view of current adverse market conditions, we are adopting a cautious approach to our development pipeline for the remainder of the
year and do not anticipate any significant completions in the period".
Enquiries please contact:
Metnor Group plc
Stephen Rankin, Chief Executive 0191 2684000
Keith Atkinson, Finance Director 0191 2684000
Landsbanki Securities (UK) Limited
Nominated Advisor and Broker
Gareth Price / Simon Brown 0207 426 9000
Chairman and Chief Executive's Statement
Against a backdrop of economic uncertainty and continued turbulence in the property sector, we are pleased to report an encouraging
performance in the first half of 2008. Trading across the majority of the group's core activities has been in line with expectations with a
particularly strong performance from our construction division.
Results
Revenue in the six months ended 30 June 2008 was up by 16.2 % at �44.5 million (2007: �38.3 million) and operating profits were �0.97
million (2007: �0.81 million) an increase of 19.8 %. Profit before tax at �1.11 million was up by 7.8 % on the same period last year (2007:
�1.03 million).
Basic earnings per share in the period increased by 126 % from 2.3 p to 5.2 p as the prior year figure included a loss from discontinued
operations of �0.39 million. Excluding the effect of this loss, earnings per share from continuing operations increased by 8.3 % to 5.2p
(2007: 4.8p).
Gross cash balances at 30 June 2008 stood at �3.1 million (2007: �3.0 million) whilst borrowings were �13.4 million compared with �11.1
million at the same stage in 2007. The additional borrowings comprise funds drawn down on a specific loan facility for the development of a
care home site which is due to be completed at the end of the year.
The Board believes that the group should conserve cash within the business whilst the economic outlook remains uncertain and is not
proposing an interim dividend.
Trading Review
The group continues to operate in the core areas of property development, Mechanical and Electrical ('M&E') contracting and construction
and overall each of these divisions has performed well in the period under review.
In our property division, as noted in our 2007 Annual Report, we have completed the disposal of our troublesome student accommodation
site in Newcastle for a gross consideration of �5.8 million and this has enabled us to progress with some of our other property sites. We
are at an advanced stage in the development of a large care home site for a publicly quoted operator which should be completed by the end of
the year. At the same time we are progressing on the development of a major extension to an office investment which we already own and this
will be completed in first half of 2009.
Given the current state of the property market, we have scaled back our search for new development sites and our principal focus is to
secure planning permissions for our existing sites.
Our M&E contracting division has had a mixed performance with strong trade in the Southern region from our Maidenhead office but a
weakening performance in the Northern region. Our workload for the remainder of 2008 is secure and we are now focusing our efforts on
securing work for 2009 in our traditional retail, pharmaceutical and office markets.
Our construction arm has produced a very strong first half performance across both its timber frame and traditional divisions. We are at
varying stages of construction on four care home sites using our timber frame method of construction. We are also progressing a number of
hotel sites using traditional construction techniques. These latter sites should be completed by the end of the year.
We should be able to maintain a strong order book throughout 2009 and beyond for our construction division assuming that the anticipated
flow of planning permissions in the pipeline are achieved.
Finally, the group's specialist pressure testing division continues to trade very well in both the Aberdeen and Great Yarmouth markets.
Outlook
The wider economy continues to deteriorate and the property market in which we operate is particularly badly affected at present. This
will have a short term impact on the company's results as there will be inevitable timing delays and we may only be able to secure the true
value of certain of our property development sites when confidence in the market is restored.
We believe that the current difficulties in the UK economy will persist well into 2009. This will inevitably impact on all companies in
our sector, but we believe that through the prudent control of the group's development program with an emphasis on cash conservation, we
will be in a strong position to take advantage of future opportunities which will inevitably arise as conditions improve.
Peter Cussins Stephen Rankin
Chairman Chief Executive
15 September 2008
Consolidated Income Statement
for the six months ended 30 June 2008
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
2008 2007 December
2007
Note �000 �000 �000
Revenue 3 44,461 38,271 84,049
Cost of sales (40,419) (34,281) (74,654)
Gross profit 4,042 3,990 9,395
Administrative expenses (3,072) (3,183) (6,473)
Operating profit 3 970 807 2,922
Financial income 128 288 518
Financial expenses (154) (146) (353)
Share of profit of jointly controlled 164 78 8
entities (net of income tax)
Profit before income tax 1,108 1,027 3,095
Income tax expense 4 (310) (285) (848)
Profit from continuing operations 798 742 2,247
Loss from discontinued operations - (394) (493)
(net of income tax)
Profit for the period attributable to
equity holders of the parent 3 798 348 1,754
Basic earnings/(loss) per share 5
Continuing operations 5.2 p 4.8 p 14.5 p
Discontinued operations - p (2.5)p (3.2)p
5.2 p 2.3 p 11.3 p
Diluted earnings/(loss) per share 5
Continuing operations 5.2 p 4.6 p 14.2 p
Discontinued operations - p (2.4)p (3.1)p
5.2 p 2.2 p 11.1 p
Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2008
Unaudited Unaudited Audited
6 months 6 months 12
ended ended months
30 June 30 June ended
2008 2007 31
Decembe
r
2007
Note �000 �000 �000
Profit for the period 798 348 1,754
Dividends on equity shares 8 (433) (1,161) (1,594)
Issue of ordinary shares - 195 195
Own treasury shares acquired 6 (61) - -
Equity settled share-based payments 74 124 85
Net increase/(decrease) in total 378 (494) 440
equity
Total equity at start of period 31,372 30,932 30,932
Total equity at end of period 31,750 30,438 31,372
Consolidated Balance Sheet
at 30 June 2008
Unaudited Unaudited Audited
Note As at As at As at
30 June 30 June 31 December
2008 2007 2007
�000 �000 �000
Non-current assets
Investment properties 4,004 - 4,004
Property, plant and equipment 6,645 4,686 4,092
Goodwill 3,875 3,875 3,875
Investments in jointly 1,994 1,736 2,523
controlled entities
Derivative financial - 173 -
instruments
Deferred tax assets 137 32 137
16,655 10,502 14,631
Current assets
Inventories 26,563 29,826 23,459
Trade and other receivables 15,201 17,240 20,036
Cash and cash equivalents 3,050 3,155 2,823
Assets classified as held for - 217 -
re-sale
Derivative financial 10 - 48
instruments
44,824 50,438 46,366
Total assets 61,479 60,940 60,997
Non-current liabilities
Interest-bearing loans and (13,448) (11,110) (10,246)
borrowings
Current liabilities
Trade and other payables (16,030) (19,198) (19,221)
Income tax payable (251) (42) (158)
Liabilities classified as held - (152) -
for re-sale
(16,281) (19,392) (19,379)
Total liabilities (29,729) (30,502) (29,625)
Net assets 31,750 30,438 31,372
Equity attributable to equity
holders of the parent
Share capital 155 155 155
Share premium 2,818 2,818 2,818
Merger reserve 2,477 2,477 2,477
Retained earnings 26,300 24,988 25,922
Total equity 31,750 30,438 31,372
Consolidated Cash Flow Statement
for the six month period ended 30 June 2008
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
2008 2007 December
2007
Note �000 �000 �000
Net cash absorbed by operating 7 (557) (13,565) (8,816)
activities
Cash flows from investing
activities
Interest received 122 210 414
Proceeds from sale of property, 53 35 169
plant and equipment
Disposal of discontinued operation, - - 577
net of cash disposed of
Acquisition of property, plant and (2,883) (1,881) (1,621)
equipment
Acquisition of investment - - (4,004)
properties
Loans to jointly controlled (297) (53) (1,073)
entities
Loans repaid by jointly controlled 1,081 - 260
entities
Net cash outflow from investing (1,924) (1,689) (5,278)
activities
Cash flows from financing
activities
Proceeds from the issue of share - 195 195
capital
Proceeds from new bank loan 6,152 4,952 4,088
Repayment of borrowings (2,950) - -
Own treasury shares purchased 6 (61) - -
Dividends paid 8 (433) (1,161) (1,594)
Net cash inflow from financing 2,708 3,986 2,689
activities
Net increase/(decrease) in cash and 227 (11,268) (11,405)
cash equivalents
Cash and cash equivalents at start 2,823 14,228 14,228
of period
Cash and cash equivalents at end of * 3,050 2,960 2,823
period
*
Balance sheet analysis of cash and
cash equivalents
Included in cash and cash 3,050 3,155 2,823
equivalents
Included in assets held for resale - (195) -
3,050 2,960 2,823
Notes
(forming part of the interim financial statements)
1 General
Metnor Group plc ("the company") is a company incorporated in the United Kingdom. The address of its registered office and principal
place of business is Metnor House, Mylord Crescent, Killingworth, Newcastle upon Tyne, NE12 5YD.
The interim financial information set out in this statement for the six months ended 30th June 2008 and the comparative figures for the
six months ended 30th June 2007 are unaudited. This financial information does not constitute statutory accounts as defined in Section 240
of the Companies Act 1985.
The comparative figures for the financial year ended 31 December 2007 are not the company's statutory accounts for that financial year.
Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was
(i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying
their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
The financial information set out in this statement is presented in pounds sterling and has been rounded to the nearest thousand pounds.
The financial information comprises the consolidated financial information for the company and its subsidiaries (together "the group").
2 Basis of preparation
These interim financial statements have been prepared in accordance with the measurement and recognition criteria of Adopted IFRSs. They
do not include all the information required for the full annual financial statements, and should be read in conjunction with the financial
statements of the group as at and for the year ended 31st December 2007.
The accounting policies applied in preparing these interim financial statements are the same as those applied in the preparation of the
annual financial statements for the year ended 31st December 2007, as described in those financial statements. The Board approved these
interim financial statements on 15 September 2008.
3 Segmental information
The group's main business segments comprise the following:
* Mechanical and Electrical ("M&E") contracting
* Construction and building operations
* Property development and investment
* Central costs and other activities
In 2007 the group closed its telecoms division which was treated as a separate segment and which is shown in the comparative figures as
a discontinued activity.
All of the group's activities are undertaken in the United Kingdom and accordingly the group has only one geographical segment.
3 Segmental information (continued)
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2008 2007 2007
�000 �000 �000
Revenue
M&E contracting activities 20,271 23,607 52,252
Construction activities 18,276 13,142 29,892
Property activities 6,680 154 363
Central costs and other 1,650 1,528 3,201
activities
Discontinued activities - 657 902
46,877 39,088 86,610
Less: inter segment revenue (2,416) (160) (1,659)
External revenue 44,461 38,928 84,951
Less: discontinued activities - (657) (902)
Revenue from continuing 44,461 38,271 84,049
operations
Operating profit
M&E contracting activities 292 887 2,705
Construction activities 319 140 960
Property activities 266 (116) (936)
Central costs and other 93 (104) 193
activities
Operating profit from continuing 970 807 2,922
operations
Finance income 128 288 518
Finance expenses (154) (146) (353)
Share of profit of jointly 164 78 8
controlled entities (net of tax)
Income tax expense (310) (285) (848)
Profit from continuing operations 798 742 2,247
Discontinued activities - (394) (493)
Profit for the period 798 348 1,754
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2008 2008 2008
Assets
M&E contracting activities 12,301 18,610 17,688
Construction activities 8,462 6,994 7,267
Property activities 31,889 29,298 28,158
Central costs and other 8,827 5,821 7,884
activities
Discontinued activities - 217 -
61,479 60,940 60,997
Liabilities
M&E contracting activities 6,734 12,613 12,704
Construction activities 7,805 5,145 5,502
Property activities 13,770 11,904 10,072
Central costs and other 1,420 688 1,347
activities
Discontinued activities - 152 -
29,729 30,502 29,625
4 Income Tax
The taxation charge for the six months ended 30 June 2008 and 30 June 2007 is calculated by applying the Directors' best estimate of the
annual effective tax rate to the profit for the period.
5 Earnings per share
The calculation of earnings per share is based on the profit for the period and on the weighted average number of ordinary shares in
issue and ranking for dividend in the period.
Unaudited Unaudited
6 months 6 months Audited
ended ended Year
30 June 30 June ended
2008 2007 31
December
2007
Basic earnings per share
Profit for the period (�000) 798 348 1,754
Analysed as:
Continuing operations (�000) 798 742 2,247
Discontinued operations (�000) - (394) (493)
Weighted average number of ordinary shares 15,467 15,444 15,461
('000)
Earnings per share
on continuing operations 5.2 p 4.8 p 14.5 p
on discontinued operations - p (2.5)p (3.2)p
5.2 p 2.3 p 11.3 p
The calculation of diluted earnings per share uses the same profit figures as above but uses a weighted average number of shares to
reflect the dilutive effect of share options in existence at the period end as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
2008 2007 December
2007
Diluted earnings per share
Weighted average number of ordinary shares 15,474 16,033 15,821
('000)
Earnings per share
on continuing operations 5.2 p 4.6 p 14.2 p
on discontinued operations - p (2.4)p (3.1)p
5.2 p 2.2 p 11.1 p
6 Purchase of own shares
On 7 May 2008, the company purchased 37,000 of its own 1p Ordinary shares for a total consideration, including costs, of �61,000. These
shares are held as treasury shares and have been excluded from the company's issued share capital for the purposes of calculating the
earnings per share figure from the date acquired by the company in accordance with IAS 33.
The cost of acquiring these treasury shares has been deducted from retained earnings in accordance with the requirements of IAS 32.
7 Reconciliation of profit for the period to net cash absorbed by operations
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
2008 2007 December
2007
�000 �000 �000
Profit for the period 798 348 1,754
Adjustments for:
Depreciation 363 288 762
Share of profit of jointly controlled (164) (78) (8)
entities
Gain on sale of property, plant and (34) (18) (34)
equipment
Loss on sale of discontinued operations - - 36
Movement in unrealised profit on sales to (41) (65) (67)
jointly controlled entities
Equity-settled share-based payment 74 124 85
expenses
Finance income (128) (288) (518)
Finance expenses 154 146 353
Income tax expense from continuing 310 284 848
operations
Income tax expense from discontinued - (139) (196)
operations
Operating cash flow before movements in 1,332 602 3,015
working capital
Change in inventories (3,088) (13,869) (7,314)
Change in trade and other receivables 4,829 (51) (3,101)
Change in trade and other payables (3,214) 584 450
Cash absorbed by operations (141) (12,734) (6,950)
Interest paid (199) (146) (686)
Income tax paid (217) (685) (1,180)
Net cash absorbed by operating activities (557) (13,565) (8,816)
8 Dividends
The following dividends were recognised during the period:
6 months 6 months Year
ended ended ended
30 June 30 June 31
2008 2007 December
2007
�000 �000 �000
Final paid 2007: 2.8 p (2006: 7.5 p) 433 1,161 1,161
per ordinary share
Interim paid 2007: 2.8 p per ordinary - - 433
share
433 1,161 1,594
9 Interim results
Copies of the interim financial statements will be sent to shareholders on or around 26 September 2008. Further copies will be available
from the Company's registered office at Metnor House, Mylord Crescent, Killingworth, Newcastle upon Tyne, NE12 5YD and are also available on
our website at www.metnor.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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