Final Results

RNS Number : 0702O

Mavinwood PLC

23 June 2010

 

Mavinwood plc

("Mavinwood" or "The Company")

Preliminary Results for the 12 months ending 31 December 2009

FINANCIAL SUMMARY

			2009		Restated 2008
Continuing  operations
Revenue			£27.0m		£31.5m
EBITA (#)			£1.5m		£3.9m
Operating loss			£(3.8)m		£(0.7)m
Loss before tax			£(7.8)m		£(3.9)m
Basic loss per share from continuing operations			(1.64)p		(0.86)p
Basic loss per share			(2.15)p		(7.52)p
Adjusted (loss)/profit after tax (*)			£(0.4)m		£0.7m
Adjusted fully diluted (loss)/earnings per share (*)			(0.08)p		0.14p
Net bank debt(**)			£11.6m		£35.1m

# Earnings before interest, tax, exceptional items, amortisation and impairment of intangible assets and share based payments credit

* before discontinued operations, exceptional items, amortisation and impairment of intangible assets, share based payments credit and notional interest on contingent consideration

**Before subordinated loans of £10m of which £8m has been converted to equity since the year-end

Key Corporate Developments

· New Board in place since June 2009

· Significant reduction in the net debt position of the Company through partial debt to equity conversion and asset disposals

· Ansa Holdings and Independent Inspections Holdings sold

· Ansa Building Services closed

· Restore and Wansdyke merged

· Management changes at Document Control Services and Peter Cox

· Head office costs reduced by £1m pa

· £8m equity raising from Geraldton Services Inc

· Proposed name change from Mavinwood plc to Restore plc

Commenting on the results Charles Skinner, Chief Executive of Mavinwood, said:

"Over the last 12 months we have successfully disposed of three businesses, significantly reduced debt and financially restructured the company to create a more robust operating group for shareholders.  The Group now includes document storage, which falls under the Restore brand and has exceptional quality of earnings, document scanning under the Document Control Services brand.  The data handling division has a strong customer base, with long term relationships built up over many years. The third arm to the Group is Peter Cox, a leading UK specialist in damp-proofing and timber treatment.

I believe that the company is now stable and presents shareholders with an exciting growth platform in both data management and other business-to-business support services. This growth is expected to be generated both organically and by acquisitions."

A resolution will be tabled to shareholders at the Company's AGM which has been called for 10:00am on 22 July 2010 at Marble Arch Tower, 55 Bryanston Street, London W1H 7AA to change the Company's name to Restore plc in line with the Group reorganisation. It is expected that this will become effective on or around 28 July 2010 and the Company's ticker will be changed thereafter to RST.

The Notice of AGM also includes a proposal to consolidate the share capital of the Company.  The effect of the proposed share consolidation will be that shareholders on the Register at the close of business on 22 July 2010 will, on the implementation of the share consolidation, exchange 50 existing ordinary shares in the capital of the Company for 1 new ordinary share in the capital of the Company and in that proportion for any other number of existing ordinary shares then held. The proportion of the issued share capital of the Company held by each shareholder following the share consolidation will, save for fractional entitlements, remain unchanged. Apart from having a different nominal value, each new ordinary share will carry the same rights as set out in the Company's articles of association that currently attach to an existing ordinary share.  Following the consolidation the Company will operate under a new ISIN, GB00B5NR1S72.

For further information, please contact:

Mavinwood
Charles Skinner, Chief Executive	Tel: [phone]
Cenkos Securities
Nicholas Wells / Elizabeth Bowman	Tel: [phone]
Threadneedle Communications
John Coles	Tel: [phone]

CHAIRMAN'S STATEMENT

Background

All of the current board was appointed in June 2009 to reorganise the Group which had been created through seven acquisitions of support services companies, in Emergency Repair and Document Handling. Since our appointment, two companies (Ansa Group and Independent Inspections) have been sold, one (Ansa Building Services: 'ABS') has been closed, two have been operationally merged (Restore and Wansdyke) and management changes have been made in the remaining two (Document Control Services and Peter Cox). We now have a data handling division, comprising document storage under the Restore brand, and document scanning under the Document Control Services brand. We also have Peter Cox, the leading UK specialist in damp-proofing and timber treatment.

Over the last 12 months, the company has been financially restructured with a new bank facility put in place in July 2009, an equity investment of £8m (converted from subordinated debt in April 2010) from Geraldton Services, our majority shareholder, and a subordinated loan from Geraldton Services of £2.3m. Head office has been downsized and relocated to Marble Arch from St James's Square in London. It is proposed that the company's name is changed from Mavinwood plc to Restore plc at the AGM.

I firmly believe that the company is now stable and represents an exciting growth platform in both data management and other business-to-business support services.

Results

The results set out in these accounts reflect the many changes undergone over the last year. These have involved complex accounting treatments which do not make these accounts easy to understand. Your board believes that the status of our current trading businesses and our underlying strategic goals are more important than the historic figures in understanding the prospects for your company. 

For the year to 31^st December 2009, the Group recorded an operating loss of £3.8m (2008: £0.7m) on revenue from continuing operations of £27.0m (2008: £31.5m). The operating loss was after a £5.0m impairment charge on goodwill, £1.2m of exceptional items, and a credit of £1.1m on the reduction in share-based payment charges. There was £4.0m of finance costs of which £2.0m were exceptional, producing a loss before tax of £7.8m (2008: £3.9m).

Trading

Our document handling division recorded an operating profit of £3.1m (2008: £4.7m) on revenue of £12.8m (2008: £14.7m). Our document storage businesses, Restore SE and SW, continued to perform robustly. Our document scanning business experienced a sharp fall in revenue and profit as much of its project-driven activities were postponed by customers looking to reduce short-term cash outflow.

Peter Cox, the damp-proofing and timber treatment business, recorded an operating loss of £0.3m (2008: profit £0.8m) reflecting the downturn in the construction market and the weakness in housing transactions.

Head office costs were £1.3m (2008: £1.6m). The Business Review gives a fuller assessment of our businesses' performance and prospects.

Corporate transactions

In June 2009, the company sold Ansa Group and Independent Inspections for £18.1m which was applied to the reduction of group debt. The loss-making insurance-related operations of Ansa Building Services were closed at the end of the year.

Balance sheet

Net debt at the year-end was £21.6m (2008 restated: £35.1m). Debt has reduced further since the year-end following the conversion into equity of £8.0m of subordinated loans from Geraldton Services, our majority shareholder.

Board

The board in its entirety was changed between June and July 2009. Charles Skinner, Andrew Wilson and I were appointed to the board at the beginning of June. The previous non-executive directors, Philip Reid and Bob Guthrie, resigned on our appointment. Steve Watkins resigned on the sale of Ansa at the end of June. Kevin Mahoney and Mike Vincent resigned at the end of July.

People

The two years up to 31^st December 2009 have been a difficult time for many of the people working in our businesses. The poor performance of the Group over this period did not reflect any lack of commitment or ability amongst them. I thank them for their hard work and dedication and look forward to them sharing in the future success of the companies.

Strategy

The bulk of our continuing business is in data management.  This is a very exciting area, particularly given the fact that the amount of electronic data in the world has doubled in the last year. Our largest and most profitable business is in hard copy storage, where we have many years of storing, organising and retrieving documents for over 1,000 customers. This is undertaken by Restore, with which we have merged our Wansdyke storage business. We also have scope to increase our storage capacity through our secure, 70-acre underground facility in Wiltshire, in addition to our above-ground facilities in Surrey, Kent and Cornwall.

Through DCS, our scanning business, we have many years experience in turning hard copy documents into electronic data. This business has sophisticated technology and experience to organise and index data which our customers can access in many different ways, including through Sapaview, our on-line browsing facility. We also use optical character recognition and off-shore manual copying to enable customers to manipulate and search scanned documents.

Our skill, experience and strong relationships with our customers' data management teams puts us in an excellent position to help our customers manage both their hard and soft copy data more efficiently. We will be developing this capability aggressively over the next year, while still continuing to support our customers in our existing, highly cash-generative current activities.

The Group's senior management has particular skills in the UK business-to-business support services sector. We intend in due course to develop the Group's activities in this space, beyond our current core business in data management.

Outlook

Our Restore business has continued to perform strongly in the current year, with both revenue and profit showing year-on-year improvement. DCS has continued to struggle to convert much of its strong pipeline into orders but we are confident that this will happen in due course. Peter Cox is showing year-on-year improvement and can be expected to operate profitably this year.

Head Office costs will show a further sharp year-on-year decline. Interest charges will fall steeply following the reduction in group debt, including the conversion of most of the subordinated debt into equity completed in April of this year. We still have several empty properties from discontinued activities but these have been fully provided against. Accordingly, the company's current year performance can be expected to bear little resemblance to the preceding two years.

We currently have three well-positioned businesses with excellent products, people and prospects. We have a sensible balance sheet and the strong support of our majority shareholder. I am greatly looking forward to the exciting and profitable development of our company. 

Sir William Wells

Chairman                                                                                                                                               23^rd June 2010

BUSINESS REVIEW

STRUCTURE

At the start of the year the Mavinwood Group comprised two divisions, Document Handling and Emergency Repair. On 26 June 2009 the company sold two of its Emergency Repair businesses, Ansa Holdings Limited and Independent Inspections Limited; the results of those businesses have been shown as discontinued as well as Ansa Building Services which ceased to trade on 31 December 2009.  The Document Handling division has been classified as continuing operations. The continuing operation referred to in these results as Emergency Repair relates only to Peter Cox Limited. 

KEY PERFORMANCE FIGURES

	Revenue 2009	Revenue 2008	Operating* Profit 2009	Operating* Profit 2008	Capital Employed at 31st December 2009
Restore	£9.9m	£10.1m	£2.8m	£3.5m	£13.7m
DCS	£2.9m	£4.6m	£0.3m	£1.2m	£1.7m
Document Handling	£12.8m	£14.7m	£3.1m	£4.7m	£15.4m
Peter Cox	£14.2m	£16.8m	(£0.3m)	£0.8m	£2.3m
Head Office Costs	-	-	(£1.3m)	(£1.6m)
Total	£27.0m	£31.5m	£1.5m	£3.9m

*before amortisation of intangible assets

These are the key results from the ongoing businesses which are included in the fuller statement set out under 'Loss Before Tax' below.

DOCUMENT HANDLING

Restore

The activities of our two document storage activities, Restore and Wansdyke have now been operationally merged and trade under the Restore brand.

The majority of Restore's sales are the storage and retrieval of hard copy documents, typically stored in cardboard boxes at locations in Surrey, Kent, Wiltshire and Cornwall. Restore also stores and retrieves individual files, magnetic data (typically for emergency back-up), film and other materials. It also offers retrieval of documents by scanning. It derives additional service income from reorganisation of customer documents, document restoration, and the shredding of documents no longer required by customers. Additional products include file-tracking services enabling customers to locate documents within their own buildings.

Restore services a broad range of customers, predominantly across Southern England and South Wales reflecting the geographical location of its storage sites. Our largest customer sector are law firms who are probably the most demanding and sophisticated users of storage services; this ensures Restore is at the cutting edge of developments in physical document storage and monitors closely the developments in electronic data management.  Most other commercial, industrial and public sectors are represented amongst Restore's customer base, with particular strengths in financial services, larger corporates, councils and health trusts. These represent an excellent channel to market for other data management services.

Restore operates from both freehold and leasehold sites. Our main freehold property is our high-security underground facility near Bath, where we estimate we have enough spare space available for development for the medium term expansion of Restore through to 2014.

Trading at Restore was steady in 2009, despite the downturn in overall UK economic activity. This reflects Restore's robust business model which combines high visibility, excellent cash-flow and steadiness of income to produce excellent quality of earnings. The small drop in year-on-year revenue  reflected lower retrieval activity and a reduction in the amount of project income (both reflecting the tough economic environment), together with the Group's new management's more prudent approach within our existing revenue recognition policy to earnings recognition. This fed through to Restore's year-on-year profitability but current trading indicates that Restore's long-term trajectory of steadily increasing revenue and profit in its core business will continue for the foreseeable future.

Document Control Services (DCS)

DCS is our Peterborough-based scanning business. Its main function is the conversion of hard-copy documents into electronic data. As part of this service, it organises and indexes the electronic versions, enabling its customers to identify and locate their data more efficiently. Its optical character recognition (OCR) technology enables scanned documents to be manipulated and searched. It often uses off-shore technicians to facilitate this where OCR technology is not sufficiently developed, typically on complex engineering plans. It has developed its own online browser enabling customers to view their data online.

DCS's origins lie in the engineering sector where it has many specialist products such as Pipetracker, its own technology for tracking materials used in the construction of oil pipelines. A large percentage of its customers are still in the infrastructure sector, including Network Rail and the Highways Agency. It is well-represented in the public sector with customers including The Crown Estates, health and local authorities. Recent capital investment in a high-speed scanner has enabled it to offer a high-volume service, particularly for customers whose more complex needs can also be serviced.

DCS suffered in 2009 from the postponement of many large projects from customers seeking to conserve cash in the short term. This is understandable as much of DCS's activities are for project work which can be deferred. The impact of this was a 37% decline in revenue. Costs have been cut, including the redundancy of two of the four executive directors, enabling DCS to continue to operate profitably. Both Group and DCS management are confident that DCS will recover rapidly, particularly as it retains strong relationships with its customers who have indicated that the deferred projects remain a medium-term requirement for their operations.

DCS is in a particularly interesting space in the data management market as it is at the cross-roads between the increasingly integrated hard and soft document needs of organisations. Given the sophistication of its technology, its strong customer relationships and its understanding of data movement within many different types of customers, the Group views DCS as a business at an interesting point of development, where its recent weak financial performance can be expected to be reversed rapidly.

Document Handling Summary

These activities now form our Data Management division. We expect Restore and DCS to work increasingly closely together. The financial dynamics of the businesses are different: Restore's remarkable quality of earnings compares to DCS's more project-driven and thus lumpier earnings streams. Nevertheless, they share similar channels to market and give the Group a wealth of expertise and experience in understanding the data management needs of customers. We believe that their combined strengths will enable us to broaden our value-added data management services for both our existing customers and the wider UK market.

EMERGENCY REPAIR

Peter Cox is the only company remaining in what was this division. Peter Cox operates 12 branches nationwide and is the UK's leading provider of damp control, timber preservation and masonry services to private, public sector and commercial property, principally housing.

Unlike our Data Management activities, over a third of Peter Cox's business is outside the business-to-business service sector. Indeed, it is probably best-known for its services to home-owners for the last 50 years as the leading supplier of damp-proofing and timber preservation services, often used at the time of purchasing a new home. Nevertheless, the bulk of its work is providing services to local authorities (often as a subcontractor to facilities managers who rely on Peter Cox for its specialist skills) and commercial developers.

2009 was a difficult year for Peter Cox, with the slowdown in residential property transactions reducing the need for surveys and subsequent remedial work. The even sharper drop-off in commercial development compounded the problems it faced. Further, Peter Cox's extrication from the rest of our Emergency Recovery activities was complex and distracting for management. Against this background, the 15% decline in revenue was understandable albeit disappointing. The loss of £0.3m compared to a reported profit in 2008 of £0.8m overstated the decline in profitability as the treatment of certain internal charges flattered the 2008 performance.

Peter Cox provides an excellent service. It has a well-known brand and a great reputation, as reflected in its gross margins which exceed 40%. Following the recent appointment of a new Executive Chairman, we are confident that the business will return to profitable performance. We also believe that its brand and skilled technician base can be expanded into providing additional services to those it currently supplies.  

ABS

ABS operated an insurance building fabric contract in the North West. This contract was  terminated on 31 December 2009 and the company ceased to trade.

DEBT AND INTEREST

Net interest payable pre exceptional finance costs amounted to £1,984,000 (2008 restated: £3,119,000). Included within the finance cost is £nil (2008: £121,000) representing the notional interest on contingent consideration due on the acquisitions of Peter Cox and DCS in 2008. The discount rate applied in this calculation was 7.9%.

Net debt at the year-end was £21.6m (2008: £35.1m). Debt has reduced further since the year-end following the conversion into equity of £8.0m of subordinated loans from Geraldton Services, our majority shareholder.

TAXATION

The amortisation and impairment of intangible assets, the notional interest on the contingent consideration and the share based payments charge do not attract any tax relief. However, the underlying tax rate during 2009 was 28.0%, as a percentage of adjusted profit before taxation (2008: 28.5%).

LOSS BEFORE TAX

The loss before tax for the year ended 31 December 2009 for continuing operations was £7,790,000 (2008 restated: £3,852,000). However, the Directors believe that an adjusted measure of (loss)/profit before tax and earnings per share provides shareholders with a more appropriate representation of the underlying earnings derived from the Mavinwood Group's business. The items adjusted for in arriving at that underlying level are as follows:

	2009		Restated 2008
	£'000		£'000
Continuing operations
Emergency Repair	(345)		796
Document Handling	3,146		4,736
	2,801		5,532
Central costs	(1,339)		(1,671)
Share based payments credit	1,147		539
Impairment of intangible assets	(5,000)		(4,893)
Exceptional items	(1,183)		-
Amortisation of intangible assets	(257)		(240)
Operating (loss)	(3,831)		(733)
Net finance costs	(1,984)		(3,119)
Exceptional finance costs	(1,975)		-
Loss before tax	(7,790)		(3,852)
Share based payments (credit)/charge	(1,147)		(539)
Impairment of intangible assets	5,000		4,893
Exceptional items	3,158		-
Amortisation of intangible assets	257		240
Notional interest on contingent consideration	-		121
Adjusted (loss)/profit before tax - continuing operations	(522)		863

The key performance indicators of the business which the board regularly reviews are:

	2009		2008
	£'000		£'000
Adjusted (loss)/profit before tax - continuing operations	(522)		863
Operating cash flow generated before financing costs and tax	5,155		6,634

The non financial indicators that are monitored are customer satisfaction and retention and staff turnover ratios.

EARNINGS PER SHARE (EPS)

					Year ended 31 December 2009		Restated Year ended 31 December 2008
Loss per share from continuing operations (pence)
Basic					(1.64)p		(0.86)p
Diluted					(1.64)p		(0.86)p
Adjusted (loss) earnings per share from continuing operations (pence)
Basic					(0.08)p		0.15p
Diluted					(0.08)p		0.14p

Basic EPS is (2.15)p, which compares with (7.52)p in 2008. Basic EPS adjusted as above was (0.08)p (2008: 0.15p). Assuming the exercise of all options and awards under the LTIP in 2009 at an average price of 1.79p plus the conversion of the convertible A shares (2008: 11.4p), the fully diluted adjusted EPS becomes (0.08)p (2008:0.14p).

STATEMENT OF FINANCIAL POSITION

Net assets decreased to £4m mainly as a result of the disposal of Ansa and Independent Inspections and impairment of Document Control services Limited as described earlier and also reflecting the loss for the year. Goodwill and intangibles on the retained business at 31 December 2009 was £18.6m (2008: retained business £21.8m).

Property, plant and equipment totalled £11.5m (2008: £10.9m) principally comprising the freehold underground storage facilities at Restore SW, but also computer systems, storage racking and vehicles.

Operating working capital from continuing operations (excluding cash) amounted to a net £5.2m at 31 December 2009.  Net debt at 31 December 2009 totalled £21.6m (2008: £35.1m) after deferred financing costs of £nil (2008: £0.3m). 

CASH FLOW

The net cash inflow from continuing operations before capital expenditure was £5.2m (2008 restated: £6.6m). Capital expenditure on the continuing business totalled £2.0m (2008 restated: £2.7m) compared to depreciation of £0.6m (2008 restated: £0.5m).  Significant expenditure comprised the fitting out of empty space in the underground storage areas at Restore SW and installing new racking at Restore SE and SW.

RISK MANAGEMENT

The significant financial risks the Group faces have been considered and policies have been implemented to best deal with each risk. The three most significant risks are considered to be liquidity risk, finance cost risk and customer relationship risk. The Group is wholly based in the United Kingdom so the direct exposure to exchange risk is considered to be small.

Liquidity risk

The year end net debt was £21.6 million, which consisted of £26.2 million of interest bearing loans and borrowings less £4.6 million of cash and short term deposits. This was reduced in April 2010 by the conversion into equity of £8 million of Geraldton Services subordinated debt.

Finance cost risk

The Group pays finance costs on its bank facilities and finance leases. The bank facilities finance cost is a variable cost linked to LIBOR plus a margin. In 2009 an interest rate collar at between 2% and 4% on principal of £7 million was taken for 3 years. The cap cost £nil and at 31 December 2009 £(75,000) was charged to the Income Statement. The average finance cost for the Group in 2009 was 4.5% (2008: 7.7%).

Customer relationships

The Group has commercial relationships with over 1,000 business customers. The largest of these accounts for less than 5% of Group revenue.

Charles Skinner   

Chief Executive                                                                                                                                     23rd June 2010

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2009

		Year ended 31 December 2009				Restated Year ended 31 December 2008
		Before exceptional items £'000	Exceptional items £'000	After exceptional items £'000		Before exceptional items £'000	Exceptional items £'000	After exceptional items £'000
REVENUE		26,977	-	26,977		31,478	-	31,478
Cost of sales		(14,523)	-	(14,523)		(16,164)	-	(16,164)
Gross profit		12,454	-	12,454		15,314	-	15,314
Administrative expenses		(11,249)	(1,183)	(12,432)		(11,693)	-	(11,693)
Share based payments credit		-	1,147	1,147		-	539	539
Impairment of intangible assets		-	(5,000)	(5,000)		-	(4,893)	(4,893)
OPERATING PROFIT/(LOSS)		1,205	(5,036)	(3,831)		3,621	(4,354)	(733)
Finance income		6	-	6		6	-	6
Finance costs		(1,990)	(1,975)	(3,965)		(3,125)	-	(3,125)
(LOSS)/PROFIT BEFORE TAX		(779)	(7,011)	(7,790)		502	(4,354)	(3,852)
Income tax credit/(expense)		49	115	164		(163)	-	(163)
(LOSS)/PROFIT  FOR THE YEAR		(730)	(6,896)	(7,626)		339	(4,354)	(4,015)
Loss from discontinued operations		(2,405)	-	(2,405)		(30,921)	-	(30,921)
Loss for the year attributable to owners of the parent		(3,135)	(6,896)	(10,031)		(30,582)	(4,354)	(34,936)
Total Comprehensive income for the year attributable to owners  of the parent		(3,135)	(6,896)	(10,031)		(30,582)	(4,354)	(34,936)
Loss per share (pence)
Basic		(0.67)p	(1.48)p	(2.15)p		(6.58)p	(0.94)p	(7.52)p
Diluted		(0.67)p	(1.48)p	(2.15)p		(6.58)p	(0.94)p	(7.52)p
(Loss)/earnings per share from continuing operations (pence)
Basic		(0.16)p	(1.48)p	(1.64)p		0.07p	(0.93)p	(0.86)p
Diluted		(0.16)p	(1.48)p	(1.64)p		0.07p	(0.93)p	(0.86)p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2009

Attributable to owners of the parent

	Share capital		Share premium		Share based payments reserve		Retained earnings/ (deficit)		Total Equity
	£'000		£'000		£'000		£'000		£'000
Balance at 1 January 2008	512		41,951		2,994		5,156		50,613
Loss for the year	-		-		-		(34,936)		(34,936)
Total Comprehensive income for the year	512		41,951		2,994		(29,780)		15,677
Issue of shares during the year	4		483		-		-		487
Issue costs	-		(38)		-		-		(38)
Transactions with owners	4		445		-		-		449
Share based payments credit	-		-		(839)		-		(839)
Awards under the LTIP exercised	-		-		(86)		-		(86)
Balance at 31 December 2008	516		42,396		2,069		(29,780)		15,201
Balance at 1 January 2009	516		42,396		2,069		(29,780)		15,201
Loss for the year	-		-		-		(10,031)		(10,031)
Total Comprehensive income for the year	516		42,396		2,069		(39,811)		5,170
Transactions with owners	-		-		-		-		-
Share based payments credit	-		-		(1,166)		-		(1,166)
Transfer in respect of lapsed options	-		-		(693)		693		-
Balance at 31 December 2009	516		42,396		210		(39,118)		4,004

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2009

				31 December 2009		31 December 2008
				£'000		£'000
ASSETS
NON-CURRENT ASSETS
Intangible assets				18,637		21,846
Property, plant and equipment				11,508		10,864
Investments				-		-
Deferred tax asset				343		21
				30,488		32,731
CURRENT ASSETS
Inventories				117		131
Trade and other receivables				7,756		7,529
Cash and cash equivalents				4,599		575
				12,472		8,235
Assets held for sale				-		35,115
TOTAL ASSETS				42,960		76,081
LIABILITIES
CURRENT LIABILITIES
Trade and other payables				(7,168)		(4,939)
Bank loans and overdrafts				(10,191)		(11,006)
Other financial liabilities				-		(3)
Current tax liabilities				-		(20)
Provisions				(313)		(171)
				(17,672)		(16,139)
Liabilities directly associated with assets classified as held for sale				-		(15,981)
NON-CURRENT LIABILITIES
Bank loans and overdrafts				(15,980)		(24,708)
Deferred tax liability				(3,750)		(3,338)
Provisions				(1,554)		(714)
				(21,284)		(28,760)
TOTAL LIABILITIES				(38,956)		(60,880)
NET ASSETS				4,004		15,201
EQUITY
Share capital				516		516
Share premium account				42,396		42,396
Share based payments reserve				210		2,069
Retained deficit				(39,118)		(29,780)
CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE PARENT				4,004		15,201

CONSOLIDATED STATEMENT OF CASHFLOWS

For the year ended 31 December 2009

				Year ended		Restated Year ended
				31 December 2009		31 December 2008
				£'000		£'000
NET CASH GENERATED FROM OPERATIONS				5,155		6,634
	Net finance costs			(2,538)		(3,049)
	Income taxes refunded/( paid)			268		(1,547)
NET CASH GENERATED FROM OPERATING ACTIVITIES				2,885		2,038
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of property, plant and equipment and applications software			(1,977)		(2,726)
	Contingent consideration			(61)		(3,102)
	Cash consideration			-		(400)
	Loan note receipts			-		150
	Disposal of subsidiary, net of cash disposed and costs			12,474		-
CASH FLOWS GENERATED /(USED) IN INVESTING ACTIVITIES				10,436		(6,078)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from share issues			-		449
	Repayment of borrowings			(19,456)		(4,000)
	Drawdown of indebtedness			10,000		8,000
	Deferred financing costs			(23)		(106)
	Increase in bank overdrafts			185		138
	Finance lease principal repayments			(3)		(102)
NET CASH (USED)/ GENERATED IN FINANCING ACTIVITIES				(9,297)		4,379
NET INCREASE IN CASH AND CASH EQUIVALENTS				4,024		339
	CASH AND CASH EQUIVALENTS AT START OF YEAR			575		1,108
	Less: Net cash and  cash equivalents included in discontinued operations			-		(872)
CASH AND CASH EQUIVALENTS AT THE END OF YEAR				4,599		575

Notes to the preliminary financial information for the year ended 31 December 2009

1              BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial information attached has been extracted from the audited financial statements for the year ended 31 December 2009, and has been prepared in accordance with international financial reporting standards (IFRS) as adopted by the EU and international financial reporting interpretations committee (IFRIC) interpretations issued and effective at the time of preparing those financial statements.

The financial information for the years ended 31 December 2009 and 31 December 2008 does not constitute statutory financial information as defined in Section 434 of the Companies Act 2006. The annual report and financial statements for the year ended 31 December 2009 were approved by the Board of Directors on 23 June 2010, together with this announcement, but have not yet been delivered to the Registrar of Companies. The auditor's report on the financial statements for both years was unqualified, and did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain a statement under either Section 498 (2) or 498 (3) of the Companies Act 2006 or Section 237(2) or 237(3) of the Companies Act 1985. The financial statements for the year ended 31 December 2008 have been delivered to the Registrar.

2              SEGMENTAL ANALYSIS

The Group is organised into two main operating segments, Emergency Repair and Document Handling and operates one service per segment as described in the business review.  All trading of the Group is undertaken within the United Kingdom and the Company has no foreign operations. Segment assets include intangibles, property, plant and equipment, inventories, receivables and operating cash. Central assets include investments, deferred tax and head office assets. Segment liabilities comprise operating liabilities. Central liabilities include income tax and deferred tax, corporate borrowings and head office liabilities. Capital expenditure comprises additions to computer software, property, plant and equipment and includes additions resulting from acquisitions through business combinations. Segment assets and liabilities are allocated between segments on an actual basis.

			Year ended		Year ended
			31 December 2009		31 December 2008
			£'000		£'000
REVENUE
The revenue was derived from the Group's principal activities in the UK as follows:
Emergency Repair - Peter Cox			14,217		16,748
Document Handling			12,760		14,730
Segment revenue from external customers attributable to the country's country of domicile			26,977		31,478
RESULTS
Continuing operations
The loss after tax was derived from the Group's principal activities in the UK as follows:
Emergency Repair			(345)		796
Document Handling			3,146		4,736
			2,801		5,532
Central costs			(1,339)		(1,671)
Share based payments credit			1,147		539
Impairment of intangible fixed assets			(5,000)		(4,893)
Exceptional items			(1,183)		-
Amortisation of intangible assets			(257)		(240)
Operating loss			(3,831)		(733)
Net finance cost			(1,984)		(3,119)
Exceptional financing costs			(1,975)		-
Loss before tax			(7,790)		(3,852)
Income tax credit/(expense)			164		(163)
Loss after tax			(7,626)		(4,015)

In 2009, of the £1,147,000 share based payments credit shown above, a charge of £4,000 (2008: £4,000) has been allocated to the Emergency Repair division and a charge of £20,000 (2008: £13,000) has been allocated to the Document Handling division, the remainder of this credit is allocated to central costs. 

The exceptional items of £1,183,000 relate to costs of a strategic review of £270,000 and redundancy costs of £763,000 following the sale of Ansa Holdings Limited and Independent Inspections Limited. The impairment of intangible assets is in respect of Document Control Services Limited and is comprised of goodwill impairment of £5,000,000 (2008: £4,893,000 Peter Cox Limited).

Major Customers

For the years ended 31 December 2009 and 2008 no customers accounted for more than 10% of the Group's total revenue.

			Year ended		Year ended
			31 December 2009		31 December 2008
RESULTS			£'000		£'000
Discontinued operations
Emergency Repair			(1,706)		(9)
Share based payments credit			19		300
Impairment of intangible assets			-		(29,493)
Exceptional items			-		(824)
Amortisation of intangible assets			(63)		(78)
Provision for loss on disposal of operations			-		(318)
Loss on disposal of operations			(463)		(1,563)
Operating loss			(2,213)		(31,985)
Net finance (expense)/ income			(192)		138
Loss before tax			(2,405)		(31,847)
Income tax expense			-		926
Loss for the year from discontinued operations			(2,405)		(30,921)

The exceptional item in 2008 relates to a provision for onerous lease costs.

			2009		2008
			£'000		£'000
Segmental assets:
Emergency Repair			1,761		3,163
Document Handling			26,975		38,018
Central			16,252		(215)
Discontinued operations			(2,028)		35,115
Total			42,960		76,081
Segmental liabilities:
Emergency Repair			(2,215)		(3,307)
Document Handling			(6,692)		(4,900)
Central			(29,855)		(36,692)
Discontinued operations			(194)		(15,981)
Total			(38,956)		(60,880)
Property, plant and equipment and software additions
Emergency Repair			614		1,670
Document Handling			1,363		1,035
Depreciation of property, plant and equipment
Emergency Repair			134		655
Document Handling			456		436
Amortisation of intangible assets
Emergency Repair			30		91
Document Handling			227		227

All assets are located in the Company's country of domicile.

3    TAX

The underlying tax charge is based on the expected effective tax rate for the full year to 31 December 2009 and is calculated as 28.0% on profit before tax.

4   EARNINGS PER ORDINARY SHARE

Basic earnings per share have been calculated on the (loss)/profit for the year after taxation and the weighted average number of ordinary shares in issue during the year.

Adjusted earnings per share which are before amortisation and impairment of intangible assets, exceptional items, share based payments credit and notional interest on contingent consideration have been presented in addition to the basic earnings per share since, in the opinion of the directors, this provides shareholders with a more appropriate representation of the underlying earnings derived from the Group's businesses.

	Year ended		Year ended
	31 December 2009		31 December 2008
	No. of shares		No. of shares
Weighted average number of shares in issue	466,271,145		464,794,897
	£'000		£'000
Loss for the year	(10,031)		(34,936)
Total basic loss per ordinary share	(2.15)p		(7.52)p
Loss for the year - continuing operations	(7,626)		(4,015)
Basic loss per ordinary share - continuing operations	(1.64)p		(0.86)p
Adjustments
Amortisation of intangible assets	257		240
Impairment of intangible assets	5,000		4,893
Exceptional items	3,158		-
Share based payments credit	(1,147)		(539)
Notional interest on contingent consideration	-		121
Adjusted (loss)/profit - continuing operations	(358)		700
Adjusted basic (loss)/earnings per ordinary share (before amortisation and impairment of intangible assets, exceptional items, share based payments credit and notional interest on contingent consideration	(0.08)p		0.15p
Adjusted fully diluted (loss)/earnings per ordinary share (before amortisation and impairment of intangible assets, exceptional items, share based payments credit and notional interest on contingent consideration)	(0.08)p		0.14p
Loss after taxation on ordinary activities - discontinuing operations	(2,405)		(30,921)
Basic loss per ordinary share - discontinuing operations	(0.52)p		(6.65)p
	No. of shares		No. of shares
Weighted average number of shares in issue	466,271,145		464,794,897
Convertible 'A' Shares	-		6,608,752
Share options and awards under the LTIP	37,768		44,254,618
Weighted average fully diluted number of shares in issue	466,308,913		515,658,267
Total fully diluted loss per ordinary share from continuing and discontinuing operations	(2.15)p		(7.52)p
Fully diluted loss per ordinary share - continuing operations	(1.64)p		(0.86)p
Fully diluted loss per ordinary share - discontinuing operations	(0.52)p		(6.65)p

The diluted earnings per share are the basic earnings per share adjusted for the dilutive effect of the conversion into fully paid shares of the outstanding share options and awards under the LTIP. There is no dilution due to the loss in the year.

5   PROVISIONS

		Onerous lease provision	Remedial provision	Contingent consideration	Total
		£'000	£'000	£'000	£'000
1 January 2009		824	-	61	885
Transferred from assets held for sale		-	579	-	579
New provisions		952	-	-	952
Charge/(credit) to income for the year		(476)	(12)	-	(488)
Settlement of DCS contingent consideration		-	-	(61)	(61)
31 December 2009		1,300	567	-	1,867

The onerous leases provision relates to future payments on onerous leases as required in the lease agreements. The movement during the year is in respect leases of taken on as a result of the disposal of Ansa less property costs incurred. £313k of costs are expected to be incurred within one year and the balance over the next 7 years.

The remedial provision relates to 25 year guarantees that Peter Cox has issued to its customers in respect of damp proofing work.

Provisions are analysed as follows:

		2009		2008
		£'000		£'000
Current		313		171
Non current		1,554		714
Total		1,867		885

6   CASH INFLOW FROM OPERATING ACTIVITIES

					Year ended		Restated Year ended
					31 December 2009		31 December 2008
					£'000		£'000
Continuing operations
	Loss for the year				(7,626)		(4,015)
	Depreciation of property, plant and equipment				590		460
	Amortisation of intangible assets				257		240
	Impairment of intangible assets				5,000		4,893
	Finance costs recognised in profit and loss				3,959		3,119
	Income tax (credit)/expense recognised in profit and loss				(164)		163
	Share based payments credit				(1,147)		(539)
	Exceptional items				1,084		-
	Loss on sale of disposal of property, plant and equipment				1		1
	Movements in working capital
	Change in inventories				83		(114)
	Change in trade and other receivables				3,909		(2,980)
	Change in trade and other payables				1,149		1,759
CASH GENERATED FROM CONTINUING OPERATIONS					7,095		2,987
Discontinued operations
	Loss for the year				(2,405)		(30,921)
	Depreciation of property, plant and equipment				34		631
	Amortisation of intangible assets				63		78
	Impairment of intangible assets				-		29,493
	Finance costs recognised in profit and loss				192		(51)
	Income tax credit recognised in profit and loss				-		(927)
	Share based payments credit				(19)		(312)
	Exceptional items				-		824
	Loss on disposal of division				463		318
	Gain on sale of disposal of property, plant and equipment				-		(34)
	Movement in working capital
	Change in inventories				12		142
	Change in trade and other receivables				(1,771)		1,315
	Change in trade and other payables				1,491		3,091
	CASH (USED IN)/GENERATED FROM DISCONTINUED OPERATIONS				(1,940)		3,647
	NET CASH GENERATED FROM OPERATIONS				5,155		6,634

7   DISCONTINUED OPERATIONS

The Group sold Ansa Group Limited and Independent Inspections on 26 June 2009 for £18.05 million.  A further £1.5 million was paid into an escrow account, but was not released to Mavinwood plc as the EBITA performance target of the businesses sold for the year ended 31 December 2009 was not met.  The results of these businesses are also shown as discontinued operations.

The insurance related operations of Ansa Building Services Limited were terminated on 31 December 2009 and have been shown as discontinuing operations.

Peter Cox Limited which was classified as assets held for sale at 31 December 2008, this business has been retained by the group and has been reclassified from discontinued operations to continuing operations.

The results for the year attributable to discontinued operations were as follows:

		Year ended		Year ended
		31 December 2009		31 December 2008
		£'000		£'000
Revenue		15,644		38,278
Operating (loss)/profit		(2,194)		291
Loss before tax for the year		(1,942)		(473)
Taxation		-		926
Provision for loss on disposal of division		-		(318)
Loss on disposal of division		(463)		-
Impairment of intangible assets		-		(29,493)
Loss on disposal of Mono Services Limited (includes disposal  of goodwill of  £335,000)		-		(1,563)
		(2,405)		(30,921)

During the year under review, Ansa Building Services Limited and the disposed Emergency Repair division used cash flows from operating activities of £1.7 million, used cash flows from investing activities of £2.8 million and from financing activities of £1.2 million.

An analysis of the net assets held for resale at 31 December 2008 is as follows:

			£'000
Intangible assets Property, plant and equipment			13,374 2,582
Investments			406
Deferred tax asset			383
Inventories			222
Trade and other receivables			17,276
Cash and cash equivalents			872
Assets held for sale			35,115
Trade and other payables			(10,491)
Bank loans and overdrafts			(193)
Current tax liabilities			345
Provisions			(579)
Long term liabilities			(3,887)
Deferred tax liabilities			(1,176)
Liabilities held for sale			(15,981)
Net assets classified as held for resale			19,134

ENDS

 

END

 

 

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