Half-year Report

RNS Number : 3830S
TClarke PLC
14 July 2022
 

TClarke plc

Half year results for the six months ended 30 June 2022

TClarke posts record half year results as it closes in on £500m revenue target

 

TClarke plc ("the Group" or "TClarke"), the Building Services Group, announces its half year results for the period ended 30 June 2022.

Business Highlights:

· First half year revenues exceed £200m for the first time

· 2.9% operating margin achieved

· Interim dividend increased by 67%

· Full year 2022 revenues now expected to be circa £450m, ahead of market expectations

· Record forward order book of £586m as at 30 June 2022

· Bonding capacity increased to support £500m per annum revenues

· Bank facilities extended to August 2026

 

Financial Highlights:

 

 

 

 

 













 

 6 months to 30 June

 H1 2022

 H1 2021

 

 

Revenue

£206.2m

£138.2m

 

 

Operating profit (EBIT)

£6.0m

£2.4m

 

 

Operating margin

2.9%

1.7%

 

 

Profit before tax

£5.5m

£1.9m

 

 

Earnings per share (Basic)

10.24p

3.58p

 

 

Interim Dividend

1.25p

0.75p

 

 

Net Cash

£7.2m

£2.0m

 

 

Forward order book

£586m

£503m

 

 

Earnings per share is calculated by dividing profit after tax by the weighted average number of shares in issue

 

Trading

Trading has continued to be strong for the first six months of 2022 with revenue up 49% compared with the corresponding period last year. Revenue growth has been experienced by all regions but has been particularly strong in London where revenues at £125.1m are 72% higher than in 2021. This growth is expected to continue throughout the rest of 2022 with revenues for the full year now expected to be circa £450m.

The growth in revenues has been supported by maintaining our operating margin close to target levels at 2.9%; again driven by the London business. London's operating margin for the first six months of the current year is 4.6% (2021 1.4%), UK South operating margin is 2.8% (2021 3.7%) and UK North operating margin is 2.7% (2021 3.7%).  After deducting group costs of £2.0m the overall Group operating margin during the period is 2.9% (2021 1.7%).

Cash and Facilities

Good financial discipline is at the centre of our operations. Net cash is £7.2m as at 30 June 2022; an increase of £5.2m compared with 30 June 2021. Average month end net cash during H1 2022 is £3m.The principal cash movements are detailed in the banking facilities section of this report.

In support of our growth strategy we have now put in place banking facilities with NatWest comprising a £25m revolving credit facility (RCF) which extends to August 2026 and a £5m overdraft facility.

Many of our clients demand performance bonds to be in place as part of the contract requirements. Due to the strength of the business TClarke has at its disposal one of the largest bonding capacities when compared to our recognised peer group. This too has recently been increased to provide for a total bonding capacity of £65.1m.

Dividend

The Board proposes an interim dividend of 1.25p per share (2021: 0.75p per share) to be paid on 30 September 2022 to shareholders on the register at 2 September 2022. TClarke has a progressive dividend policy and is also rebalancing the split between the interim and final dividend. As a result the interim dividend now proposed has been increased by the full amount of the expected increase in total dividend for 2022.

Net Assets

Group net assets have increased by £8.6m in the six months to 30 June 2022 and now stand at £35.1m. This is principally due to the increase in retained earnings and the post-tax reduction in pension deficit.

Order Book

Our future confidence is underpinned with the success of the Group's forward order book which has been replenished and expanded and now stands at a new record of £586m. This is an £83m increase compared to the position at 30 June 2021. In addition, TClarke has many target projects and opportunities with our pipeline of current bids exceeding £1bn.The split of the order book is as follows:

 

Market Sector

30 June 2022

30 June 2021

 Increase


£m

£m

%

Infrastructure

141

93

52%

Technology

184

132

39%

Residential & Hotels

96

113

-15%

Engineering Services

151

153

-1%

Facilities Management

14

12

17%

Total

586

503

17%

 

Outlook

TClarke is moving rapidly towards achieving its 2023 £500m annual revenue target whilst maintaining its operating margin. The Board expects based upon the performance to date, revenues to exceed current expectations for 2022 at circa £450m for the full year.

 

 

Mark Lawrence, Chief Executive, commented

"With the current economic conditions, the business is rightly cautious, however the strategy we follow is of a disciplined tendering approach with early engagement with our supply chain partners and our clients which is ensuring we are not exposed to unnecessary risks. 

The record half year revenues and forward order book along with the current visibility of future workloads in our target revenue streams mean TClarke now expects to deliver £450m revenue in 2022 and achieve its £500m target in 2023."

-ends-

Date: 14 July 2022

 

For further information contact:

TClarke plc


Mark Lawrence


Chief Executive Officer

Trevor Mitchell

Finance Director

 


Tel: 020 7997 7400


www.tclarke.co.uk


Cenkos Securities plc (Corporate Broker)

 

Ben Jeynes (Corporate Finance)


Alex Pollen (Sales)


Tel: 020 7397 8900


www.cenkos.com

 

RMS Partners

Simon Courtenay

Tel: 020 3735 6551

 

 

 

 


Operational Review

The Group is managed in three operational areas, London, UK South and UK North, providing nationwide coverage from twenty locations across the UK.

We focus on repeat customers and framework contracts in the following key markets:  

· Infrastructure

· Residential & Hotels

· Facilities Management

· Engineering Services

· Technologies

 

TClarke - London

 


30 06 2022

£m

30 06 2021

£m

Revenue

125.1

72.8

Operating profit

5.8

1.0

Operating profit margin

4.6%

1.4%

Order book

3 81

346

 

London is the most significant of our three operating divisions and includes our combined engineering services London business, our London technology business and our off-site prefabrication facility at Stansted.

 

The growth in revenue has been primarily driven by our success of our data centre offering. Having successfully delivered a major data centre in the first half of the year, we expect to continue to deliver on the remaining (and larger) live data centre projects in the second half of the year.

 

Our core Engineering Services have also continued to perform strongly, delivering a number of high profile shell and core commercial and hotel developments, which is reflected in the 3.2% increase in operating margin from the same period of 2021.

 

TClarke - UK South

 


30 06 2022

£m

30 06 2021

£m

Revenue

43.6

35.4

Operating profit

1.2

1.3

Operating profit margin

2.8%

3.7%

Order book

86

57

 

UK South operates from our offices at Birmingham, Derby, Oxford, Kimbolton, Newport, Peterborough, Portishead, Plymouth and St Austell, and is able to target a vast range of construction and facilities management opportunities across the region.

The first half of the year has seen good revenue growth compared to 2021, with strong performances in both our Security and Climate divisions. Our new Oxford office is now fully operational having started to trade in the first half of the year and is expected to deliver a profit in its first full year. Our expectation is for margins to recover during the second half of 2022, back to the UK South's normal operating margin of circa 3.7%.

 



 

TClarke - UK North

 


30 06 2022 £m

30 06 2021  m

Revenue

37.5

30.0

Operating profit

1.0

1.1

Operating profit margin

2.7%

3.7%

Order book

1 19

100

 

The UK North division operates from five principal locations; Liverpool, Manchester, Leeds, Newcastle and Eurocentral Scotland.

The North West has made the most significant contribution to the £1.0m operating profit including the successful delivery of a major engineering services project in Manchester. The operating margin has decreased by 1% compared to 2021 due to the business mix in the first half of the year. Our expectation is for the UK North to maintain an operating margin of circa 2.7% in the second half of 2022.

 

Pension Obligations

 

In accordance with IAS 19 'Employee Benefits', an actuarial gain of £5.5m, net of tax, has been recognised in reserves during the period, with the pension scheme deficit decreasing to £15.9m (30th June 2021: £24.5m). The decrease in the deficit is largely the result of the discount rate increasing to 3.82% (30th June 2021: 2.0%), partially offset by the hedging strategy employed by the scheme. In accordance with the Group's agreed deficit reduction plan, described in detail in the most recent annual report, the annual deficit reduction contribution is set at £1.5m for the current year, and will remain at this amount until the review of the output of the triennial actuarial valuation of the scheme which is currently in progress.

 

The scheme is closed to new members and the Group continues to meet its ongoing obligations to the scheme.

 

Banking Facilities and Cash Flow

 

The Group has recently renewed its banking facilities, which now comprise a £5m overdraft facility (previously £10m), repayable on demand, and a £25m revolving credit facility ("RCF") (previously £15m) expiring 31st August 2026. At 30 June 2022 the Group had drawn down £5m (2021: £15m) of the RCF and the overdraft facility was unutilised. The gross cash balance was £11.9m, resulting in net cash of £7.2m. The Group therefore has up to £37.2m available to support the Group's working capital flows and funding demands during the course of the year. The Group has £65.1m bonding facilities in place of which £26.3m were utilised at 30 June 2022.

 

The net cash figure of £7.2m is £5.2m higher than at the same time in 2021 reflecting profit for the period and other non-operating cashflows, as set out below:

 


£m

Balance 1 July 2021

2.0

Profit after tax

9.2

Dividends

(2.1)

Pension deficit reduction

(1.5)

Employee Share Trust Share Purchase

(0.5)

Other

0.1

Balance at 30 June 2022

7.2

 

Net Assets and Capital Structure

 

The Group is funded by equity capital, retained reserves and bank facilities, and there are no plans to change this. Shareholders' equity is £35.1m; an increase of £16.1m compared to 30 June 2021.

 

 

 

Condensed consolidated income statement

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

 

6 Months to

 

6 Months to

 

12 Months to

 

 

 

 

 

30 06 2022

 

30 06 2021

 

31 12 2021

 

 

 

 

 

£m

 

£m

 

£m

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

206.2


138.2


327.1

Cost of sales

 

 

 

(181.5)


(123.0)


(286.6)

Gross profit

 

 

 

24.7


15.2


40.5

Administrative expenses

 

 

(18.7)


(12.8)


(31.7)

Operating profit

 

 

6.0


2.4


8.8

Finance costs

 

 

(0.5)


(0.5)


(1.0)

Profit before taxation

 

 

5.5


1.9


7.8

Taxation

 

 

 

 

(1.1)


(0.4)


(1.5)

Profit for the period

 

 

 

4.4


1.5


6.3

Earnings per share

 

 

 

 


 

 

 


Attributable to owners of TClarke plc

 

 






Basic

 

 

 

 

10.24p


3.58p


14.99p

Diluted

 

 

 

 

10.17p


3.38p


13.91p

 

 

 

 

 






 

 

Condensed consolidated statement of comprehensive income



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

 

6 Months to

 

6 Months to

 

12 Months to

 

 

 

 

 

30 06 2022

 

30 06 2021

 

31 12 2021

 

 

 

 

 

£m

 

£m

 

£m


 

 

 






Profit for the period

 

 

4.4


1.5


6.3


 






Other comprehensive income

Items that will not be reclassified to profit or loss

 


 

 

 

 

Actuarial gain on defined benefit pension scheme, net of tax

5.5


4.4


6.0

Other comprehensive income for the period, net of tax

5.5


4.4


6.0

 

Total comprehensive income for the period

 

9.9


5.9


12.3

 



 

Condensed consolidated statement of financial position

 

 

Unaudited

 

Unaudited

 

Audited

 

30 06 2022

 

30 06 2021

 

31 12 2021

 

£m

 

£m

 

£m

Non-current assets

 

 

 

 

 

Intangible assets

25.3


25.3


25.3

Property, plant and equipment

12.5


7.6


Deferred taxation

4.4


5.2


Trade and other receivables

4.9


3.2


4.9

Total non-current assets

47.1


41.3


44.1

 






Current assets






Inventories

0.4


0.4


0.4

Amounts due from customers under construction contracts

69.8


56.4


51.7

Trade and other receivables

39.9


37.3


52.5

Current tax receivables

0.2


0.6


0.2

Cash and cash equivalents

12.2


17.0


20.3

Total current assets

122.5


111.7


125.1

Total assets

169.6


153.0


169.2

 






Current liabilities






Borrowings

(5.0)


(15.0)


(15.0)

Amounts due to customers under construction contracts

(2.5)


(1.8)


(2.9)

Trade and other payables

(101.9)


(85.8)


(96.3)

Obligations under leases

(1.8)


(1.2)


(1.6)

Total current liabilities

(111.2)


(103.8)


(115.8)

 






Net current assets

11.3


7.9


9.3

 






Non-current liabilities






Obligations under leases

(5.7)


(2.0)


(1.3)

Deferred tax liabilities

-


(0.2)


-

Trade and other payables

(1.7)


(3.5)


(1.7)

Retirement benefit obligation

(15.9)


(24.5)


(23.9)

Total non-current liabilities

(23.3)


(30.2)


(26.9)

 






Total liabilities

(134.5)


(134.0)


(142.7)

 






Net assets

35.1


19.0


26.5

 

Equity attributable to owners of the parent


 

 

 

 

Share capital

4.4


4.3


4.4

Share premium

4.4


3.8


4.2

Revaluation reserve

0.7


0.9


0.7

Retained earnings

25.6


10.1


17.2

Total equity

35.1


19.0


26.5

 

 

 

 

 

Condensed consolidated statement of cash flows

 

 

Unaudited

Unaudited

 

Audited

 

6 Months to

6 Months to

 

12 Months to

 

30 06 2022

30 06 2021

 

31 12 2021

 

  £m

 

  £m

 

£m

 






Net cash generated by / (used in) operating activities (see note 5A)

5.3


(5.3)


(0.6)

Investing activities





 

Purchase of property, plant and equipment

(0.6)


(0.1)


(0.4)

Net cash used in investing activities

(0.6)


(0.1)


(0.4)

Financing activities






New shares issued

0.2




0.5

Facility fee

-


-


(0.1)

Repayment of bank borrowing

(10.0)


-


-

Equity dividends paid

(1.8)


(1.5)


(1.9)

Acquisition of shares by ESOT

(0.5)


(0.5)


(0.9)

Repayment of lease obligations

(0.7)


(0.8)


(1.5)

Net cash used in financing activities

(12.8)


(2.8)


(3.9)

Net decrease in cash and cash equivalents

(8.1)


(8.2)


(4.9)

Cash and cash equivalents at beginning of period

20.3


25.2


25.2

Cash and cash equivalents at end of period (see note 5)

12.2


17.0


20.3

 

 

 

Condensed consolidated statement of changes in equity

For the six months ended 30th June 2022

 

 

 

 

Share capital

 

Share premium

 

Revaluation reserve

 

Retained earnings

 

 

Total

 

£m

£m

 

£m

£m

£m

At 1st January 2022

4.4

4.2


0.7

17.2

26.5

Comprehensive income







Profit for the period

-

-


-

4.4

4.4

 

Other comprehensive income







 

Actuarial gain on retirement benefit obligation

 

-

-


-

 

7.5

7.5

 

Deferred income tax on actuarial gain on retirement benefit obligation

 

-

-


-

(2.0)

(2.0)

Total other comprehensive income

-

-


-

5.5

5.5

Total comprehensive income

-

-


-

9.9

9.9

 

Transactions with owners














Share based payment debit

-

-


-

0.8

0.8

Shares acquired by ESOT

-

-


-

(0.5)

(0.5)

Allotted in respect of share option schemes

-

0.2


-

-

0.2

Dividends paid

-

-


-

(1.8)

(1.8)

Total transactions with owners

-

-


-

(1.5)

(1.3)

 

At 30th June 2022

4.4

4.4


0.7

25.6

35.1

 



 

 

 

Condensed consolidated statement of changes in equity

For the six months ended 30th June 2021

 

 

 

 

 

Share capital

 

Share premium

Revaluation reserve

 

Retained earnings

 

 

Total

 

£m

£m

£m

£m

£m

At 1st January 2021

4.3

3.8

0.9

6.8

15.7

Comprehensive income






Profit for the period

-

-

-

1.5

1.5

 

Other comprehensive income






 

Actuarial gain on retirement benefit obligation

 

-

-

-

5.5

5.5

 

Deferred income tax on actuarial gain on retirement benefit obligation

 

-

-

-

(1.1)

(1.1)

Total other comprehensive income

-

-

-

4.4

4.4

Total comprehensive income

-

-

-

5.9

5.9

Total transactions with owners

-

-

-

(2.6)

(2.6)

 

At 30th June 2021

4.3

3.8

0.8

10.1

19.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of changes in equity

For the year ended 31st December 2021

 

 

 

 

Share capital

 

Share premium

Revaluation reserve

 

Retained earnings

 

 

Total

 

 

£m

£m

£m

£m

£m

 

At 1st January 2021

4.3

3.8

0.9

6.8

15.7

 

Comprehensive income






 

Profit for the year

-

-

-

6.3

6.3

 

 

Other comprehensive income






 

 

Actuarial gain on retirement benefit obligation

 

-

-

-

5.6

5.6

 

 

Deferred income tax on actuarial gain on retirement benefit obligation

 

-

-

-

0.4

0.4

 

Total other comprehensive income

-

-

-

6.0

6.0

 

Total comprehensive income

-

-

-

12.3

12.3

 

 

Transactions with owners






 

Transfer on depreciation of freehold properties

 

-

-

(0.1)

0.1

-

 

Share based payment credit

-

-

-

0.8

0.8

 

Shares acquired by ESOT

-

-

-

(0.9)

(0.9)

 

Allotted in respect of share option schemes

0.1

0.4


-

0.5

 

Dividends paid

-

-

-

(1.9)

(1.9)

 

Total transactions with owners

0.1

0.4

(0.1)

(1.9)

(1.5)

 

 

At 31st December 2021

4.4

4.2

0.7

17.2

26.5

 







 



Notes to the condensed consolidated financial statements for the six months to 30 June 2022

Note 1 - Basis of preparation

TClarke plc (the 'Company') is a company incorporated and domiciled in the United Kingdom.  The nature of the Group's operations and its principal activities are set out in Note 2 below and in the interim management report.  The consolidated interim financial statements comprise the condensed financial statements of the Company and its subsidiaries (together the 'Group'). 

These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  The statutory accounts for the year ended 31 December 2021 were approved by the Board of Directors on 08 March 2022 and have been delivered to the Registrar of Companies and a copy has been made available on the Company's website at www.tclarke.co.uk . The auditors' report on those accounts was unqualified and did not contain any statement under section 498 of the Companies Act 2006.

These condensed interim financial statements for the half year ended 30 June 2022 have been prepared in accordance with the UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. 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 31 December 2021.

The interim financial statements have not been audited or reviewed by the Company's auditors.

Accounting policies

Except as described below, the financial statements have been prepared using the accounting policies and presentation that were applied in the audited financial statements for the year ended 31 December 2021.

Taxes on income in the interim periods are accrued using the estimated effective tax rate that would be applicable to expected total annual earnings.

Estimates and financial risk management

The preparation of interim financial statements requires the Directors to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities at the reporting date and the amounts of revenue and expense incurred during the period that may not be readily apparent from other sources.  The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.  Actual results may differ from these estimates.

In preparing these interim financial statements, the significant judgements made by the Directors in applying the Group's accounting policies and the key sources of uncertainty together with the Group's financial risk management objectives and policies were the same as those that applied to the financial statements as at and for the year ended 31st December 2021. The principal risks and uncertainties continue to be those which are set out on pages 26-29 of the Group's annual report and accounts for the year ended 31st December 2021.

Going concern

The Group has recently renewed its banking facilities, which now comprise a £5m overdraft facility repayable on demand, and a £25m revolving credit facility ("RCF") expiring 31st August 2026. At 30 June 2022 the Group had drawn down £5m (2021: £15m) of the RCF and the overdraft facility was. The gross cash balance was £12.2m, resulting in net cash of £7.2m. The Group therefore has up to £37.2m available to support the Group's working capital flows and funding demands during the course of the year.

 

After making appropriate enquiries, the Directors are satisfied that the Company and Group have adequate resources to continue their operations for the foreseeable future.  Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.



 

 

Note 2 - Segmental information

The Group provides electrical and mechanical contracting and related services to the construction industry and end users.

For management and internal reporting purposes the Group is organised geographically into three regional divisions; London, UK South & UK North, reporting to the Chief Executive, who is the chief operating decision maker.

 

 

30 June 2022

London

UK South

UK North

Group costs and Unallocated

Total

£m

£m

£m

£m

£m

Revenue from contracts with customers

125.1

43.6

37.5

-

206.2

Operating profit

5.8

1.2

1.0

(2.0)

6.0

Finance costs

-

-

-

(0.5)

(0.5)

Profit/(loss) before tax

5.8

1.2

1.0

(2.5)

5.5

Taxation expense

-

-

-

(1.1)

(1.1)

Profit/(loss) for the period

5.8

1.2

1.0

(3.6)

4.4

 

 

 

 

 

 

 

 

London

£m

 

 

 

 

UK South

£m

 

 

 

 

UK North

£m

 

 

 

 

Total

£m

Business sector










Engineering

38.2

10.5

9.3

58.0

Facilities Management

1.5

9.7

5.8

17.0

Infrastructure

9.8

21.0

8.6

39.4

Residential

16.9

1.0

11.7

29.6

Technologies

58.7

1.4

2.1

62.2






Total revenue

125.1

43.6

37.5

206.2



 

30 June 2021

London

UK South

UK North

Group costs and Unallocated

Total

£m

£m

£m

£m

£m

Revenue from contracts with customers

72.8

35.4

30.0

-

138.2

Operating profit

1.0

1.3

1.1

(1.0)

2.4

Finance costs

-

-

-

(0.5)

(0.5)

Profit/(loss) before tax

1.0

1.3

1.1

(1.5)

1.9

Taxation expense

-

-

-

(0.4)

(0.4)

Profit/(loss) for the period

1.0

1.3

1.1

(1.9)

1.5

 

 

 

 

 

London

£m

 

 

 

 

UK South

£m

 

 

 

 

UK North

£m

 

 

 

 

Total

£m

 

Business sector





 






 

Facilities Management

1.0

1.1

4.4

6.5

 

Infrastructure

9.3

22.8

12.2

44.3

 

Engineering Services

37.2

6.0

1.8

45.0

 

Residential & Hotels

12.6

5.3

11.0

28.9

 






 

Total revenue

72.8

35.4

30.0

138.2

 

 

 

 

31 December 2021


London

UK South

UK North

Group costs and Unallocated

Total

 

 

£m

£m

£m

£m

£m

 

Revenue from contracts with customers


189.4

67.1

70.6

-

327.1

 








 

Operating profit/(loss)


6.2

2.6

3.0

(3.0)

8.8

 

Finance costs


-

-

-

(1.0)

 (1.0)

 

Profit/(loss) before tax


6.2

2.6

3.0

(4.0)

7.8

 

Taxation expense


-

-

-

(1.5)

(1.5)

 

Profit/(loss) for the year


6.2

2.6

3.0

(5.5)

6.3

 

 

 

 

 

 

London

£m

 

 

 

 

UK South

£m

 

 

 

 

UK North

£m

 

 

 

 

Total

£m

Business sector










Facilities Management

2.7

13.6

9.7

26.0

Infrastructure

15.1

34.4

29.3

78.8

Engineering Services

91.7

14.3

10.9

116.9

Residential & Hotels

31.5

4.8

19.6

55.9

Technologies

48.4

-

1.1

31.5






Total revenue

189.4

67.1

70.6

327.1

Note 3 - Taxation expense

 

The effective corporation tax rate applied for the period is 19.0% (30 June 2021: 19.0%).

 

 

Note 4 - Earnings per share

 

A.  Basic earnings per share

 

The earnings per share represent the profit for the period divided by the weighted average number of ordinary shares in issue. 


Unaudited

30 06 2022

£m

Unaudited

30 06 2021

£m

 

Audited

31 12 2021

£m

 

Earnings




Profit attributable to owners of the Company

4.4

1.5

6.3

Weighted average number of ordinary shares (000s)

42,988

41,898

42,284

Basic earnings per share

10.24p

3.58p

14.99p

 

 

B.  Diluted earnings per share

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.  The Company has two categories of dilutive potential ordinary shares: share options granted under the Company's SAYE schemes, and conditional share awards granted under the Long-Term Incentive Plan.  Further details of these schemes are given in note 18 of the 2021 annual report and financial statements .

 


Unaudited

30 06 2022

£m

Unaudited

30 06 2021

£m

 

Audited

31 12 2021

£m

 

Earnings




Profit attributable to owners of the Company

4.4

1.5

6.3


4.4

1.5

6.3

 

Weighted average number of ordinary shares in issue (000s)

42,988

41,898

42,284

Adjustments




SAYE Share Options (000s)

278

451

471

Long-Term Incentive Plan Conditional share awards (000s)

-

1,982

2,790

Weighted average number of ordinary shares for diluted earnings per share (000s)

43,266

44,331

45,545

Diluted earnings per share

10.17p

3.38p

13.91p

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 5 - Notes to the consolidated statement of cash flows

 

 

A. - Reconciliation of operating profit to net cash from operating activities

Unaudited

30 06 2022

£m

Unaudited

30 06 2021

£m

Audited

31 12 2021

£m

Operating profit

6.0

2.4

8.8

Depreciation charges

1.1

1.0

2.0

Equity settled share based payments

0.8

(0.6)

0.8

Additional pension contributions

(0.8)

(0.8)

(1.5)

Defined benefit pension scheme movement

0.2

0.2

0.4

Operating cash flows before movements in working capital

7.3

2.2

10.5

Increase in contract balances

(18.1)

(14.0)

(8.2)

Decrease / (Increase) in operating trade and other receivables

11.3

(2.4)

(18.8)

Increase in operating trade and other payables

5.0

9.2

16.4

Cash generated by / (used in) operating activities

5.5

(5.0)

(0.1)

Interest paid

(0.2)

(0.3)

(0.5)

Net cash generated by / (used in) operating activities

5.3

(5.3)

(0.6)

 

 

B. Cash and cash equivalents

 

Cash and cash equivalents comprise cash at bank less bank overdrafts.

 

 

Note 6 - Related party transactions

 

Transactions between the Company and its subsidiary undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Full disclosure of the Group's other related party transactions is given in Note 21 to the Group's financial statements for the year ended 31 December 2021. There have been no material changes in these relationships in the six months ended 30 June 2022 that have materially affected the financial position or performance of the Group during that period.

 



 

Note 7 - Pension commitments

The present value of the defined benefit retirement benefit scheme and the related past and current service costs were measured using the projected unit credit method. The amount included in the statement of financial position arising from the Group's obligations in respect of its defined benefit retirement benefit scheme is as follows:

 


Unaudited

30 06 2022

£m

Unaudited

30 06 2021

£m

Audited

31 12 2021

£m

Present value of defined benefit obligations

51.2

69.9

73.4

Fair value of scheme assets

(35.3)

(45.4)

(49.5)

Deficit in scheme recognised in the statement of financial position

15.9

24.5

23.9

 

Key assumptions used




Rate of increase in salaries

2.49%

2.90%

3.39%

Rate of increase of pensions in payment

3.11%

3.10%

3.15%

Discount rate

3.82%

2.00%

1.89%

Inflation assumption (RPI)

3.19%

3.20%

3.25%

Inflation assumption (CPI)

1.99%

2.40%

2.05%





 

 

Mortality assumptions (years)

 

Unaudited

30 06 2022

 

 

Unaudited

30 06 2021

 

 

Audited

31 12 2021

Life expectancy at age 65 for current pensioners:




  Men

21.2

21.8

21.5

  Women

23.2

24.1

23.4

Life expectancy at age 65 for future pensioners

(current age 45)




  Men

22.1

22.8

22.5

  Women

24.3

25.3

24.6

 

Statement of Directors' responsibilities

The Directors confirm that the condensed interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

· an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

· material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

 

 

On behalf of the Board

 

Iain McCusker - Chairman

Mark Lawrence - Chief Executive

Trevor Mitchell - Finance Director

14 July 2022

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