Investor relations |
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Financial overview Chairman’s statement Introduction Adjusted profit before tax (before exceptional items and share based payments) grew 6.0% to £705,000 (2009: £665,000), on turnover of £15.9 million, (2009: £15.6 million) a 1.9% increase. On the same basis, adjusted earnings per share from continuing operations increased by 4.2% to 2.5p per share (2009: 2.4p). Cash management, one of our key performance indicators, remains particularly strong, with a reduction in net bank debt to £9.1 million (2009: £10.1 million), in spite of suffering a write-off of £165,000 following the administration of Connaught plc. Throughout the period, our Board has reviewed any under-performing businesses; this has resulted in the disposal of DJ McGough, a loss‑making business, in September of this year. These results give us a firm foundation for future growth. Furthermore, a number of specific opportunities are beginning to present themselves as the terrain shifts following the Comprehensive Spending Review last month and the demise of a number of our competitors. Trading The trading environment during the six months to 30 September 2010, while continuing to be challenging, has certainly improved upon the previous year. Turnover has increased by 1.9% to £15.9 million (2009: £15.6 million) and gross margins have been maintained at 27%. We continue to manage our cost base, while at the same time remaining focussed on responding to opportunities as they arise. The disposal of DJ McGough demonstrates that your Board is able to respond and adapt to changing market conditions in a very clear and focussed manner. It also indicates that the Board is prepared to take tough and decisive action in dealing with under-performing businesses. The portfolio of businesses within the Group continues to be monitored closely by the Board. Cash Flow The cash performance of the Group remains very strong, with a reduction in net bank debt to £9.1 million (2009: £10.1 million). Our main lender continues to be extremely supportive in terms of agreeing covenants and capital repayment scheduling, despite the difficult trading conditions of the past two years. Our working capital management continues to improve, resulting in our period end trade receivables balance falling to £6.8 million (2009: £8.0 million). This is particularly important in the current environment, as highlighted by one of our largest customers, Connaught plc, falling into administration, as referred to above. Dividend At the time of our preliminary results for the year ended 31 March 2010, I indicated a wish to return to the paying of a dividend at the earliest possible opportunity. While the reinstatement of a dividend remains firmly on the agenda, the timing is still uncertain and is dependent on the macro-economic recovery. In this regard, we must remain prudent and have therefore decided that there will be no interim dividend paid. Strategy / Outlook Throughout the last six months, the Board has implemented a strategy to review any under-performing businesses. As previously stated, this has resulted in the disposal of DJ McGough and may lead to similar action being taken in the future should the situation arise. Cash management is at the forefront of all Board decisions and the cost base of the business continues to be closely monitored. Having taken these difficult decisions, there are now a number of very positive opportunities which the Board has begun to investigate. We are working more closely with regional local authorities and will, over the course of the next few months, be applying for main contractor status, which the Board believes will enable the Group to maximise revenue generating opportunities. Furthermore, we have been approached on a number of specific projects; currently we are completing an exercise on energy management within social housing. We look forward to updating shareholders as the Group takes advantage of further opportunities in the coming months. People The key relationships in each of our businesses remain fundamental to our continued success. I am delighted to report that these remain very strong and this, together with the commitment of our senior management, is testament to the robust nature of our business model. I am very proud of all of our employees, and their continued efforts provide me with optimism for the future. Howard Gold 24 November 2010 |
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