Final Results
Montpellier Group PLC
29 November 2005
Montpellier Group Plc
('Montpellier' or the 'Group')
Preliminary Results for the year ended 30 September 2005
Montpellier, the UK specialist construction services business, today announces a
return to profitability and dividend payments for the year and outlines its
future strategy.
HIGHLIGHTS
• Group turnover of £455m (2004: £459m)
• Group profit before tax of £1.2m (2004: loss of £6.9m)
• Earnings per share of 3.46p (2004: loss of 11.62p)
• Ongoing operational profit before exceptional items of £2.7m (2004 £0.3m)
• Financial position underpinned by £18m net cash inflow from sale of
Bullock
• Elimination of FRS 17 pension liability
• Appointment of Group Chief Executive
• Strategy in place to leverage extensive skills base within specialist
markets
• Dividend of 0.2p (2004: nil)
Roy Harrison, Chairman, commented:
'I am pleased to report a year of significant and positive change for the Group.
The sale of Bullock has transformed our financial position and after a
thorough review we have every confidence that the Group's legacy contract
exposures are a thing of the past.'
'The second half of the year has seen continued success from the Group's
strategy of focusing on the market sectors in which we have excellent skills and
experience. Brian May, the Group's new Chief Executive, is driving this
strategy to create an even greater focus on these strengths to take maximum
advantage of the strong markets in which our businesses operate. The Board
proposes to change the Group's name to Renew Group Plc reflecting this
strategy.'
'The Board is confident that the Group is now capable of delivering reliable and
growing cash backed profits going forward.'
29 November 2005
ENQUIRIES:
Montpellier Group Plc Tel: 020 7522 3200
Brian May, Chief Executive
Sandy McArthur, Group Financial Controller
College Hill Tel: 020 7457 2020
Matthew Gregorowski
Mark Garraway
The report and accounts will be posted to shareholders in due course and copies
of the preliminary announcement are available upon request from the Company
Secretary, 39 Cornhill, London, EC3V 3NU or via the company's website:
www.montpelliergroup.plc.uk
MONTPELLIER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report a year of significant and positive change for the Group.
As a result of the sale of Bullock Construction, which was approved by
shareholders on 16 September 2005, the Group has been able to underpin its
financial position. The total consideration was £42.2m, resulting in a net cash
inflow of £18m after the repayment of intra group balances. In June, Brian May
was appointed as the Group's new Chief Executive. Since his arrival he has
visited all of the Group's businesses and as part of these visits has completed,
with the support of the subsidiary company directors and the Board, a further
review of its legacy contract exposures. It is the Board's view that these
legacy contract issues have now been provided for consistent with the expected
level of cash recoveries from those contracts.
The Group's activities have been reorganised in line with its core skills base
and it is now operating from a much reduced overhead base. Actions have been
taken to reduce the Group's exposure to higher risk, lower margin contracts and
the Group's businesses are now winning new work through partnering agreements
with their key clients. With the successful introduction of the control
mechanisms which were noted in this report last year and which have now been
fully implemented, the Group's overall risk profile has been greatly reduced.
Group strategy and name change
The second half of the year has seen continued success from the Group's strategy
of focusing on the market sectors in which we have excellent skills and
extensive experience. Following the sale of Bullock, Brian May will look to
develop this strategy and create even greater focus on the Group's core
strengths in its specialist areas of activity. This is outlined in more detail
in the Chief Executive's review that follows.
The past year has been an incredibly difficult and challenging period for the
Group and there has been a great deal of change, including the sale and closure
of a number of the Group's businesses. Reflecting this more focused approach,
the Board is proposing to change the Group's name to Renew Group Plc. An EGM
will be held in January 2006 in order for shareholders to approve this name
change.
Results and dividend
Group turnover for the year ended 30 September 2005 was £455m (2004: £459m) and
profit before tax was £1.2m (2004: loss before tax of £6.9m). The resulting
earnings per share for the period was 3.46p compared to a loss per share last
year of 11.62p. Net assets on the Group balance sheet as at 30 September were
£4.7m with a cash balance of £13.6m and indebtedness of £12m.
Group turnover from ongoing operations was £330m (2004: £349m). Profit from
ongoing operations before exceptional items was £2.7m (2004: £0.3m). The total
provisions made during the year against legacy contracts in our ongoing
businesses, which were procured during 2002-2003 and all of which are now
nearing financial agreement with the client, was a further £15.4m. The
restructuring of ongoing businesses and other exceptional items amounted to
£4.4m.
The Board is recommending the payment of a dividend of 0.2p in the current year,
and having returned to the dividend list, it intends to pursue a progressive
dividend policy.
Lovell Pension Scheme
The Group adopted FRS17 with effect from 1 October 2003. The Group has again
this year implemented a number of pension transfer initiatives to both deferred
members and pensioners of the scheme that resulted in a reduction of the pension
scheme fund deficit of £3.7m with a total cost of £1.1m. The benefit of this
further reduction in deficit, along with an improved investment performance
after a review of investment strategy by the fund's Trustees, has resulted in
there being no FRS17 liability as at 30 September 2005. The resultant asset has
not been recognised in the Group balance sheet in accordance with the guidance
established by FRS17.
Property
The Group continues its strategy of realising value and cashflow from its
portfolio of UK and US property assets. These assets are being actively
managed, and during the year £1.3m was written off the value of two of the
Group's UK properties in order to facilitate their future sale. During the
year, the Group realised £2.6m (2004: £4.4m) from property sales.
Employees
This year has again been a difficult one for our employees and the Board
appreciates the continued hard work, commitment and loyalty they have
demonstrated throughout the period.
Board and Management
With the appointment of Brian May as Chief Executive, I have stepped down as
Executive Chairman and have taken up the role of Non Executive Chairman as from
1 October 2005.
Outlook
At 30 September 2005 the Group's order book stood at £193m (2004 comparative:
£217m). This accords with the Group's focus on the specialist areas of activity
that will form the core of its strategy going forward and on lower risk, higher
margin contracting. By continuing this focus and taking advantage of the strong
markets in which its businesses operate, the Board is confident that the Group
is now capable of delivering reliable and growing cash backed profits.
28 November 2005
Roy Harrison
Chairman
CHIEF EXECUTIVE'S REVIEW
In the period to the end of the financial year, and subsequently, I have visited
all of our subsidiary businesses, met our senior staff and visited a large
number of our projects. These visits have enabled me to undertake a detailed
assessment of the performance and prospects for each business. The majority of
the Group's businesses have been profitable for many years and trade under
well-respected and long-standing brand identities operating in selected markets,
defined by specialist activity, regional knowledge and experience.
This review process has enabled me to gain a full understanding of the Group's
businesses and agree with the Board a strategy for the Group going forward.
This is fundamentally a development of the Group strategy which was implemented
last year, focusing on the specialisms of our constituent brands which sets them
apart from others in the market. As mentioned in the Chairman's Statement it is
proposed to change the Group's name to Renew Group Plc to better reflect this
strategy.
The Group's specialist areas of activity are:
• Land remediation
• Nuclear decommissioning
• Social housing
• High quality residential
• Structural refurbishment
• Restoration
• Retail
• Science and Education
• Rail infrastructure
These markets have good future prospects and the Board will look to grow the
Group's operations in each while building on client relationships which have
been developed over many years. All the Group's businesses will continue
developing these relationships to ensure longer term working arrangements and
increased repeat and negotiated business.
Key to the Group's strategic objectives is having an effective and efficient
executive control in place. I have formed an Executive Management Committee
comprising the Managing Directors of the subsidiary businesses, who will all
report directly to me. This new committee will co-ordinate the strategy, across
the Group, sharing knowledge and best practice, and continue to implement key
processes to ensure that we effectively manage all our risks and safely deliver
high quality services.
In addition, control will be enhanced by regular visits to the individual
businesses by me and my senior financial and commercial colleagues to ensure
that all controls are being implemented and that Group policies are communicated
widely.
The specialist differentiators within the Group give us an excellent opportunity
to develop the business further and I am confident that we will deliver reliable
and growing profits in the years ahead.
MONTPELLIER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
GROUP PROFIT AND LOSS ACCOUNT
Note 2005 2004
£000 £000
Turnover: Group and share of joint ventures 457,750 461,695
Less share of joint ventures' turnover (2,714) (3,036)
Ongoing operations 330,113 349,485
Discontinuing operations 39,052 53,171
Total continuing operations 369,165 402,656
Discontinued operations 85,871 56,003
Group turnover 455,036 458,659
Cost of sales (including exceptional items - see note 1) (437,409) (442,534)
Gross profit 17,627 16,125
Administrative expenses (including exceptional items - see note 1) (37,689) (22,834)
Other operating income 53 2,098
Group operating loss (20,009) (4,611)
Income from joint ventures - -
Ongoing operations before exceptional items 2,687 272
Exceptional items 1 (19,845) 1,038
Ongoing operations after exceptional items (17,158) 1,310
Discontinuing operations (8,351) (10,378)
Total continuing operations (25,509) (9,068)
Discontinued operations 5,500 4,457
Total operating loss before interest, including share of joint ventures 1 (20,009) (4,611)
Profit/(Loss) on disposal of subsidiary companies 22,300 (495)
Profit / (Loss) on ordinary activities before interest 2,291 (5,106)
Bank interest receivable 921 2,280
Interest payable (1,597) (2,192)
Other finance charges - FRS17 pension (440) (1,921)
Profit / (Loss) on ordinary activities before taxation 1,175 (6,939)
Taxation receivable / (payable) on ordinary activities 2 899 (106)
Profit / (Loss) for the financial year 2,074 (7,045)
Dividends proposed 3 (120) -
Profit / (loss) transferred to / (from) reserves 1,954 (7,045)
Basic earnings / (loss) per Ordinary Share 4 3.46p (11.62p)
Diluted earnings / (loss) per Ordinary Share 4 3.46p (11.62p)
MONTPELLIER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2005 2004
£000 £000
Profit / (Loss) for the financial year 2,074 (7,045)
Exchange movements in reserves (171) 110
Surplus on revaluation of landfill assets - 416
Movements in defined benefit pension scheme (2,222) 2,351
Total recognised gains and losses for the year (319) (4,168)
Prior Year Adjustment - (21,712)
Total recognised gains and losses since the last annual report (319) (25,880)
MONTPELLIER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
GROUP BALANCE SHEET
2005 2004
£000 £000
Fixed assets
Intangible assets: Goodwill 4,602 4,905
Tangible assets 14,930 16,969
Investments - 30
Investments in joint ventures:
Loans to joint ventures 438 625
Share of gross assets 9,704 13,241
Share of gross liabilities (5,276) (8,105)
4,866 5,761
24,398 27,665
Current assets
Stocks and work in progress 9,573 8,641
Debtors: due after more than one year 5,751 10,160
Debtors: due within one year 72,836 94,500
Current asset investments 6,089 7,388
Cash at bank and in hand 13,590 18,068
107,839 138,757
Creditors: amounts falling due in less than one year (115,140) (145,383)
Net current liabilities (7,301) (6,626)
Total assets less current liabilities 17,097 21,039
Creditors: amounts falling due after more than one year
Long-term debt (8,363) (8,363)
Other creditors (4,058) (5,215)
Net assets excluding pension liability 4,676 7,461
Pension Liability - (2,346)
Net assets 4,676 5,115
Capital and reserves
Share capital 5,990 5,990
Share premium account 5,893 5,893
Capital redemption reserve 3,896 3,896
Revaluation reserve 73 489
Profit and loss account (11,176) (11,153)
Equity shareholders' funds 4,676 5,115
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
GROUP STATEMENT OF CASH FLOW
2005 2004
£000 £000
Net cash (outflow) / inflow from operating activities (25,338) 1,677
Returns on investments and servicing of finance
Interest received 921 2,279
Interest paid (1,597) (2,192)
(676) 87
Taxation
Net corporation tax received - 527
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (640) (682)
Payments to acquire current asset investments - (9,005)
Proceeds on sale of tangible fixed assets 225 2,681
Proceeds on sale of current asset investments - 150
Loans repaid by joint venture 200 1,053
(215) (5,803)
Acquisitions and disposals
Receipt from sale of subsidiaries 21,343 3,746
Receipt from sale of shared equity loans 1,894 -
Cash disposed on disposal of subsidiaries (3,380) (1,076)
19,857 2,670
Equity dividends paid to shareholders - (682)
Cash outflow before use of liquid resources and financing (6,372) (1,524)
Management of liquid resources
Decrease in liquid resources - -
Financing
Issue of share capital - 256
Acquisition of own shares - (192)
Movement in short-term borrowings 3,600 (1,103)
Finance lease payments (623) (360)
2,977 (1,399)
Decrease in cash during the year (3,395) (2,923)
Reconciliation of net cash flow to movement in net funds
Decrease in cash during the year (3,395) (2,923)
Movement in borrowings (2,977) 1,463
Movement in liquid resources - -
Changes in net funds arising from cash flows (6,372) (1,460)
Other non-cash movements (1,680) 4,776
Movement in net funds during the year (8,052) 3,316
Opening net funds 8,321 5,005
Closing net funds 269 8,321
MONTPELLIER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
NOTES TO THE PRELIMINARY STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2005
1. Operating loss
The total operating loss for this year includes the following amounts that the
Directors regard as exceptional items because of their value and nature but
which do not fall to be recorded as non-operating exceptional items under the
requirements of FRS 3
2005 2004
£000 £000
Ongoing activities:
Reduction in pension deficit following settlements of liabilities (a) 3,650 19,250
Cost of incentives to members connected to the settlements (a) (1,111) (4,959)
2,539 14,291
Contract losses on legacy contracts procured in 2002/2003 (b) (15,437) (10,754)
Impairment of fixed assets and current asset investments (1,749) (1,617)
Redundancy and reorganisation costs (454) (882)
Other non recurring costs (4,744) -
(19,845) 1,038
Loss on discontinuing items of £8.4m (2004: £10.4m) is after charging:
Contract losses on legacy contracts procured in 2002/2003 (b) (4,758) (10,660)
Redundancies (1,289) (260)
Closure Costs (259) -
(6,306) (10,920)
(a) In both years the Directors have made a number of offers to deferred
members of the Lovell Pension scheme to transfer their entitlements under
the scheme to a defined contribution arrangement and a number of offers to
pensioners of the scheme to buy out certain benefits attributable under the
scheme. The reduction in pension deficit recorded above shows the movement
on the FRS 17 actuarial deficit relating to these buy outs and transfers
and the cost of incentives reflect the sums paid to facilitate these
transfers.
(b) As noted in the Chairman's statement to these accounts, the Group suffered
significant losses on contracts procured in 2002/2003.
(c) The contract losses are included in cost of sales, the remaining
exceptional items are included in administration costs.
2. Taxation credit/(charge) on ordinary activities
Analysis of credit/(charge) in year
2005 2004
£000 £000
Current tax:
UK Corporation Tax on profits of the year - -
Adjustments in respect of previous periods 1 150
1 150
Foreign tax - 33
Total current tax 1 183
Deferred tax 898 (289)
Taxation credit/(charge) on profit/(loss) on ordinary activities 899 (106)
There is no UK Corporation Tax charge due to trading losses in this year. The
Group has available further unused tax losses to carry forward against future
taxable profits.
3. Dividends
2005 2004
Pence Pence
Interim dividend - -
Final dividend 0.2 -
Total dividend 0.2 -
£000 £000
Interim - -
Final 120 -
Total dividend 120 -
A final dividend of 0.2 pence per Ordinary Share will be paid to shareholders on
the register on 3 March 2006, payable on 28 March 2006. As there was no interim
dividend the total dividend for the year is 0.2 pence.
4. Earnings/(Loss) per Ordinary share
2005 2004
Earnings Weighted EPS Pence Restated Weighted EPS Pence
average number Earnings average number
of shares of shares
£000 000s £000 000s
FRS 14 Basis Basic 2,074 59,899 3.46 (7,045) 60,609 (11.62)
earnings/(loss)
per share
Dilutive Effect of - - - - - -
options
Diluted earnings/(loss) 2,074 59,899 3.46 (7,045) 60,609 (11.62)
per share
5. Preliminary Statement
This statement, which has been agreed with the auditors, was approved by the
board on 28 November 2005. It is not the Group's statutory accounts. The
statutory accounts for the year ended 30 September 2004 have been delivered to
the Registrar of Companies and received an audit report which was unqualified
and did not contain statements under s237(2) of the Companies act 1985. The
statutory accounts for the year ended 30 September 2005 have not yet been
approved, audited or filed.
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