RNS Number:1761Q
Conder Environmental PLC
26 January 2007
CONDER ENVIRONMENTAL PLC
Interim Results for 31 October 2006
Chairman's statement for the half year to 31 October 2006
Financial overview
The Group suffered a loss before tax in the first half of #0.76m (2005: profit
#0.11m). Before Group costs, Conder Products achieved a #0.18m profit (2005:
profit #0.24m), Vikoma broke even (2005: profit #0.26m), while Hydroserve made a
loss of #0.15m (2005: profit #0.02m). The trading of all of the companies was
severely affected by the lack of free working capital in the Group, a direct
result of the Hydroserve Limited administration during June 2006.
Disposals
The Board is pleased to announce that, as part of the continuing restructuring
process, on 25 January 2007 the disposal of Vikoma International Limited and its
subsidiaries was completed for #2.3m in cash. This comprises an initial
consideration of #2.0m, with a further #0.3m due within the next 12 months. The
cash received from this disposal will significantly mitigate the working capital
pressure under which the Group has operated over the past year.
On 30 September 2006 the business and assets of Cerva, were sold for a
consideration and profit of #0.1m after having acquired the minority
shareholding in the company.
Conder
The performance of Conder Products, which designs and manufactures oil/water
separators, packaged sewage treatment plants, pump stations and similar
products, has been severely hampered by the working capital constraints referred
to above. A significant number of orders has been lost through the inability of
Conder to fund the procurement of materials in the timescales required.
However, despite these issues, Conder has continued to make profits throughout
this difficult period.
The company continues to roll out its improved product ranges; following the
success of the new Separator range in May, Conder launched the "ASP" (Activated
Sludge Plant), its new domestic packaged sewage treatment plant. To date, sales
have been encouraging and the ASP looks set to become a strong entry level
product into this market, and is being stocked by a number of new merchant
distributors.
Hydroserve
The Service division of Conder Products has retained the Hydroserve name. The
Clean Water contracts were all exited during the first half and Hydroserve now
concentrates on the service of the OEM product range. To this end, Hydroserve
is continuing to service oil/water separators on new product sales and is
growing the service of sewage treatment plants and pump stations. Of all the
businesses affected by the Administration, the Service division has suffered the
most. Supplier confidence was badly affected and this has made the delivery of
an optimal service to our existing customer base very difficult. The working
capital improvement following the sale of Vikoma will help to resolve these
problems.
Vikoma
During the first half Vikoma was restructured and with the closure of the
Southampton offices the company has been consolidated into the manufacturing
site on the Isle of Wight. The company, which is a world leader in the design
and manufacture of oil spill recovery equipment, achieved a breakeven position
in the first half before the allocation of Group costs. Following the
restructuring the Board accepted an offer for the company which the Directors
believe to be in the long term best interest of the Group as it will reduce the
volatility of earnings and working capital requirements. The disposal was
completed on 25 January 2007.
Discontinued Operations
The net operating loss before Group costs, for discontinued operations,
comprises a profit in Vikoma of #0.02m, a profit from Cerva Ltd of #0.20m and a
loss relating to the administration of Hydroserve Ltd of #0.30m.
Financing
The major challenge for the Group has been the management of the severely
depleted working capital, resulting from the Hydroserve administration. An
increased working capital facility was raised in June 2006 primarily through
invoice discounting. The Group has managed to operate within this, through
strong management in each business and with the support of the supplier base.
The sale of Vikoma will resolve the immediate working capital constraints.
No interim dividend is proposed. The Board will review whether or not it is
appropriate to pay a dividend following the year end.
Board
As reported in the 2006 Report and Accounts, the number of directors has been
reduced to reflect the smaller scale of the Group. In July 2006, Paul Herbert,
Group Operations Director, left the Group and Robert Turner, Group Commercial
Director, left the Board and now has a senior operational role within Conder
Products.
People
This has been a particularly difficult time for all our staff and I am pleased
to say they have all risen to the challenges they have faced. On behalf of the
Board and our shareholders I thank our staff for their commitment and resolve.
Outlook
Following the disposal of Vikoma in January the Group comprises the
manufacturing and service divisions of Conder Products. We continue to reduce
central costs to reflect the smaller scale of operations.
The Group should have recovered a significant proportion of the first half loss
by the year-end and be cash generative in the second half. The Board expects
that the Group will be both profitable and cash generative in 2007/08.
Mike Killingley
25 January 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the half year ended 31 October 2006
Unaudited Unaudited Unaudited
half year half year year
ended ended ended
31 October 31 October 30 April
2006 2005 2006
Restated Restated
Note #'000 #'000 #'000
Turnover 1
Continuing operations 6,319 6,540 13,524
Discontinued operations 5,374 7,593 18,076
11,693 14,133 31,600
Operating costs
Continuing operations (6,926) (6,412) (13,048)
Discontinued operations (5,454) (7,561) (22,188)
(12,380) (13,973) (35,236)
Operating (loss)/profit
Continuing operations (607) 128 476
Discontinued operations (80) 32 (4,112)
(687) 160 (3,636)
Profit on disposal of business 39 - -
Interest receivable 3 1 2
Interest payable and similar charges (117) (44) (118)
(Loss)/profit on ordinary activities before taxation 2 (762) 117 (3,752)
Tax on (loss)/profit on ordinary activities - - 36
(Loss)/profit on ordinary activities after taxation (762) 117 (3,716)
Minority interest - equity (9) (11) (6)
Retained (loss)/profit for the period (771) 106 (3,722)
Basic (loss)/earnings per share - continuing operations 3 (1.2p) 0.2p 0.9p
Basic (loss)/earnings per share - discontinued operations (0.1p) 0.1p (9.3p)
Total basic (loss)/earnings per share (1.3p) 0.3p (8.4p)
Diluted (loss)/earnings per share - continuing operations 3 (1.2p) 0.2p 0.9p
Diluted (loss)/earnings per share - discontinued operations (0.1p) 0.1p (9.3p)
Total diluted (loss)/earnings per share 3 (1.3p) 0.3p (8.4p)
No note of historical cost profits and losses has been presented since reported
profits do not differ from historical profits and losses.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the half year ended 31 October 2006
Unaudited Unaudited Unaudited
At At At
31 October 31 October 30 April
2006 2005 2006
Restated Restated
#'000 #'000 #'000
(Loss)/profit for the period and total recognised gains and 106 (3,722)
losses relating to the year (771)
Prior year adjustment: equity settled share based expense (40)
Total gains and losses recognised since last annual report (811)
CONSOLIDATED BALANCE SHEET
at 31 October 2006
Unaudited Unaudited Unaudited
As at As at As at
31 October 31 October 30 April
2006 2005 2006
#'000 #'000 #'000
Fixed assets
Intangible 1,826 1,785 1,863
Tangible 1,294 1,597 1,427
3,120 3,382 3,290
Current assets
Stocks 1,817 2,116 2,328
Debtors 4,844 7,270 6,753
Cash at bank and in hand - - -
6,661 9,386 9,081
Creditors: amounts falling due within one year (7,220) (7,771) (9,182)
Net (liabilities)/assets (559) 1,615 (101)
Total assets less current liabilities 2,561 4,997 3,189
Creditors: amounts falling due after more than (135) (21) (32)
one year
Net assets 2,426 4,976 3,157
Capital and reserves
Called up share capital 5,725 3,725 5,725
Share premium account 3,902 3,897 3,902
Merger account (644) (644) (644)
Profit and loss account (6,557) (1,975) (5,794)
Equity shareholders' funds 2,426 5,003 3,189
Minority interest - (27) (32)
2,426 4,976 3,157
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
for the half year ended 31 October 2006
Unaudited Unaudited Unaudited
half year half year year ended
ended ended
31 October 2006 31 October 30 April
2005 2006
Restated Restated
#'000 #'000 #'000
(Loss)/profit for the financial period (771) 106 (3,722)
New share capital subscribed - - 2,100
Cost of placing - - (95)
Equity settled share based payment credit 8 8 17
Net reduction in shareholders' funds (763) 114 (1,700)
Opening shareholders' funds 3,189 4,889 4,889
Closing shareholders' funds 2,426 5,003 3,189
CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 31 October 2006
Unaudited Unaudited Unaudited
half year half year year ended
ended ended
31 October 2006 31 October 2005 30 April 2006
#'000 #'000 #'000
Net cash inflow/(outflow) from operating activities 1 (1,247) (2,482)
Returns on investments and servicing of finance (145) (37) (91)
Taxation refunds - 78 77
Capital expenditure (65) (94) (266)
Acquisitions and disposals 60 (187) (235)
Cash (outflow)/inflow before financing (149) (1,487) (2,997)
Financing (271) 478 2,465
(Decrease)/increase in cash in the period (420) (1,009) (532)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the half year ended 31 October 2006
Unaudited Unaudited Unaudited
half year half year year ended
ended ended
31 October 31 October 2005 30 Apri
2006 2006
#'000 #'000 #'000
Decrease in cash in the period (420) (1,009) (532)
Cash inflow from increase in debt and lease financing (315) (566) (570)
Repayment of bank loans and capital element of finance 586 88 110
leases
Change in net debt resulting from cash flows (149) (1,487) (992)
Loan acquired with subsidiary - (35) (37)
Movement in net debt in the period (149) (1,522) (1,029)
Net debt at the beginning of the period (1,677) (648) (648)
Net debt at the end of the period (1,826) (2,170) (1,677)
RECONCILIATION OF OPERATING (LOSS)/PROFIT TO OPERATING CASH FLOWS
for the half year ended 31 October 2006
Unaudited Unaudited Unaudited
half year half year year ended
ended ended
31 October 2006 31 October 2005 30 April 2006
Restated Restated
#'000 #'000 #'000
Operating (loss)/profit (687) 160 (3,636)
Equity settled share based payment expense 8 8 17
Depreciation and amortisation 235 234 413
Impairment of fixed assets - - 137
Movements in stocks 511 4 (308)
Movement in debtors 1,909 (54) 428
Movement in creditors (1,975) (1,599) 367
Net cash inflow/(outflow) from operating activities 1 (1,247) (2,482)
ANALYSIS OF NET DEBT
for the half year ended 31 October 2006
Unaudited Cash Flow Other Unaudited
non-cash
At 30 April flows At 31 October 2006
2006
#'000 #'000 #'000 #'000
Cash at bank and in hand 909 (565) - 344
Overdrafts (1,996) 145 - (1,851)
(1,087) (420) - (1,507)
Debt due within one year (558) 271 103 (184)
Debt due after more than one year (32) - (103) (135)
Total (1,677) (149) - (1,826)
Notes to the financial statements
1a.Turnover
Turnover represents the amounts (excluding value added tax) derived from the
sale of environmental products to third party customers.
All turnover arose in the United Kingdom and Sweden and is analysed by
destination as follows:
Unaudited Unaudited Unaudited
half year half year year ended
ended ended
31 October 2006 31 October 2005 30 April 2006
#'000 #'000 #'000
Arising in the United
Kingdom:
United Kingdom 6,642 9,130 18,833
Continental Europe 1,024 316 1,050
North America 3 637 821
Middle East and North 1,001 889 1,806
Africa
Former Soviet Union 1,167 1,858 6,271
South America 51 42 200
Rest of World 1,500 985 1,863
11,388 13,857 30,844
Arising in Sweden:
Continental Europe 305 276 756
11,693 14,133 31,600
1b. Segmental analysis
The table below sets out information for each of the Group's industry segments,
including discontinued operations.
Vikoma Conder Products, Hydroserve and Total
Cerva
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
half year half year year half year half year year half year half year year
ended ended ended ended ended ended ended ended ended
31 October 31 October 30 April 31 October 31 October 30 April 31 October 31 October 30 April
2006 2005 2006 2006 2005 2006 2006 2005 2006
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Turnover 4,703 5,034 12,384 6,990 9,099 19,216 11,693 14,133 31,600
Profit/(loss)
before tax
Segment 29 9 (87) (431) 151 (3,549) (402) 160 (3,636)
operating
profit/(loss)
Group (246) - -
exceptionals
Net interest (114) (43) (116)
Group profit/ (762) 117 (3,752)
(loss) before
taxation
Net assets
Segment net 1,963 2,595 1,900 3,555 3,659 2,247 5,518 6,254 4,147
assets
Unallocated (3,092) (1,278) (990)
net
liabilities
Total net 2,426 4,976 3,157
assets
All turnover represents sales to third parties.
The net assets of segments exclude intercompany balances.
Unallocated net liabilities include the holding company and dormant
subsidiaries.
Whilst Vikoma operates in a global market, the remaining trade is based in the
UK, therefore a separate geographical market analysis would not be meaningful
and has not been presented.
Vikoma and Cerva are reported as discontinued businesses.
2. Profit/(loss) on ordinary activities before taxation
Profit/(loss) on ordinary activities before taxation is stated after charging:
Unaudited half Unaudited half year Unaudited year
year ended ended ended
31 October 2006 31 October 2005 30 April 2006
#'000 #'000 #'000
Depreciation on tangible fixed assets 198 204 409
Amortisation of intangible assets 59 67 143
Receipt against negative goodwill - (37) (38)
Exceptional items - continuing operations
Restructuring 8 - -
Compensation for loss of office 150 - -
Exceptional items - discontinued operations
Amortisation of negative goodwill (22) - (178)
Restructuring 120
Profit on disposal of business (39) - -
Write-offs resulting from the 216 - 233
administration of Hydroserve Ltd
3. (Loss)/earnings per ordinary share
The basic loss for the period has been calculated based upon the weighted
average number of ordinary shares in issue for the period of 57,254,309 (2005:
37,254,309), a continuing loss after taxation and minority interest of #730,000
(2005: profit of #74,000, as restated for FRS 20) and a discontinued loss after
taxation and minority interests of #41,000 (2005: profit of #32,000).
Throughout the six month period to 31 October 2006 the price on all unexercised
options was greater than the average market price and therefore the options are
not dilutive. The diluted loss per share for the half year ended 31 October
2006 is restricted to 1.3p as it is not permitted to exceed basic loss per
share.
The (loss)/earnings per share before charging exceptional items for continuing
operations totals 1.0p (2005: profit of 0.2p) and the profit before charging
exceptional items for discontinued operations totals 0.4p (2005: 0.1p).
Unaudited profit Unaudited loss Audited loss
for the period for the period for the year ended
ended ended
31 October 2006 31 October 2005 30 April 2006
Restated Restated
#'000 #'000 #'000
Continuing operations
As for basic earnings/(loss) per (730) 74 390
share
Net Exceptional items 158 - -
As for adjusted basic earnings/(loss) (572) 74 390
per share
Discontinued operations
As for basic earnings/(loss) per share (41) 32 (4,112)
Net Exceptional items 275 - 17
As for adjusted basic earnings/(loss) 234 32 (4,095)
per share
4. Preparation of interim financial statements
These unaudited interim financial statements have been prepared on the basis of
the accounting policies set out in the Group's 30 April 2006 statutory financial
statements, with the addition of the application of FRS20/IFRS2. The
comparative information has been restated in accordance with FRS20, with a prior
year adjustment made in respect of periods prior to 1 May 2006. The effect of
applying FRS20 - Share Based Payment for the first time was that #40,000 would
have been charged to the Profit and Loss Account in the periods prior to 1 May
2006 and #40,000 would have been credited to the Profit and Loss Reserve.
The figures for the year ended 30 April 2006 have been extracted from the
financial statements for that year, which have been filed with the Registrar of
Companies. The auditors' report on those financial statements was qualified in
respect of insufficient evidence concerning the analysis of the results of
Hydroserve Limited presented as discontinued operations in the consolidated
profit and loss account.
5. Copies of the interim financial statements
Copies of the interim financial statements will be sent to shareholders. Further
copies will be available from the Company's head office at Chandlers House,
Ganders Business Park, Kingsley, Bordon, Hampshire GU35 9LU.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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