TIDMSID
RNS Number : 2357F
Silverdell PLC
13 June 2012
Silverdell Group PLC
("Silverdell" or the "Group")
Interim results for the half year ended 31 March 2012
Silverdell, the Specialist Environmental Support Services group,
which on 30 May 2012 announced the acquisition of EDS, reports
interim results for the half year ended 31 March 2012.
Operational Highlights
-- Revenue up 12% to GBP31.4m (2011: GBP27.9m)
-- Gross profit up 16% at GBP8.9m (2011: GBP7.7m)
-- Gross margin of 28.5% (2011: 27.6%)
-- Investment in long term growth has resulted in increased overheads for the period:
o Investment in senior operational management
o Merging of two previously autonomous UK operations
o Investment in scaffolding assets
-- Significant contract wins secured in the period:
o Inclusion on the GBP300m Magnox Framework contract
o GBP3m of cumulative work for major high street retailers
o GBP1.1m contract with a major energy supplier in the North of England
-- Record H1 order book GBP133m (2011: GBP67m) reflecting
strategic focus on large customers and
repeat business
-- Record March revenues of GBP7.0m
Acquisition of EDS Group ("EDS")
-- Post period end, announced transformational GBP18.6m
acquisition of EDS, will create an international Specialist
Environmental Support Services Group with a blue chip,
multi-national client base with combined revenues of more than
GBP100m world-wide.
-- Will accelerate planned expansion into Canada and
Australasia, providing immediate scale and track record
-- Forecast to be earnings accretive
Financial Highlights
Unaudited Unaudited
6 months 6 months Audited year
ended ended ended
31 March 31 March 30 September
2012 2011 2011
GBPm GBPm GBPm
Continuing operations:
Turnover 31.4 27.9 59.7
Gross Profit 8.9 7.7 16.3
Operating profit 0.6 1.3 3.0
Adjusted operating profit
* 1.4 1.4 3.6
Adjusted pre-tax profit* 1.1 1.2 3.0
Earnings per share Pence Pence Pence
Adjusted basic* 0.4 0.6 1.4
Basic 0.1 0.5 1.1
Diluted 0.1 0.5 1.0
*Before intangible assets amortisation, non-recurring items and
share-based payments
Commenting on the results, Chairman Stuart Doughty, said:
"This is a robust set of results achieved in challenging market
conditions, with revenues and gross profits up 12% and 16%
respectively.
"During the period the Board made the decision to invest in
taking on senior directors sufficient to enable it to manage a much
larger and more comprehensive business, and also to invest in
rationalising the current structure to improve efficiencies
throughout the Group.
Whilst market conditions were exceptionally difficult at the
start of the year, and remain challenging, record revenues in March
and strong revenues in April and May, allied to a record order
book, mean that we remain confident of achieving expectations for
the full year.
"I am delighted that after the period end we announced the
successful acquisition of EDS which transforms the Silverdell
business in terms of critical mass and positions it to take
advantage of the industrial regulated market both here and
overseas. This is fundamental to our objective of becoming a
leading international player in the specialist regulated
environmental and decommissioning market.
"In short, we now have the scale, capability and customer base
to go from strength to strength and we are about to embark on an
entirely new stage in Silverdell's growth. We are excited about the
future."
13 June 2012
ENQUIRIES:
Silverdell Plc Tel: + 44 20 7389 6827
Sean Nutley, Group Chief Executive
Ian Johnson, Chief Financial
Officer
FinnCap Tel: + 44 20 7220 0500
Marc Young (Corporate Finance)
Ben Thompson (Corporate Finance)
Victoria Bates (Corporate Broking)
College Hill Tel: + 44 20 7457 2020
Helen Tarbet
Mark Garraway
Chairman's Statement
I am pleased to report on an encouraging set of results for the
period ended 31 March 2012, which demonstrates the resilience of
our business in challenging economic conditions. We increased
turnover by 12% and improved gross profit by 16%. Operating profit
was affected by a series of non-recurring costs associated with
investment in the long-term growth of the business, details of
which I set out below. Our higher margin Consulting business has
performed exceptionally well with revenues up 89% compared to the
first half of 2011, due in large part to the success of the
acquisitions of AH Allen and RDS made in the second half of 2011.
Consulting now makes up 22% of our revenues and we expect the
strong performance of this business to continue.
During the period we invested in strengthening our operational
management structure to enhance our scale, reach and operating and
tendering capabilities, at a total cost of GBP0.4m. As part of our
drive to create a stronger and streamlined business, we have also
merged our two UK remediation businesses (Kitsons and Silverdell
UK) at a cost of GBP0.6m. We expect that this will result in
savings of approximately GBP1.4m per annum, through operating
efficiencies. Over the period we invested approximately GBP0.4m in
scaffolding assets as we seek to grow the specialist industrial
services side of our service offering to take advantage of the
opportunities that exist in this market. Whilst these investments
have affected operating profit for the period under review, we are
confident that they will have significant medium and long term
benefits and that they position Silverdell well for future
growth.
Immediately prior to announcing these interim results, and after
the period end, the Group undertook its most significant
acquisition to date with the purchase of EDS Group ("EDS"), a
specialist provider of decommissioning and dismantling services,
announced on 30 May 2012. This acquisition is transformational for
Silverdell and, we believe, lays the foundation for a period of
sustained and advanced growth. EDS operates in sectors which have
long been targets of Silverdell's, specifically the high hazard,
hard-to-enter chemical, pharmaceutical, gas, fuel & power
generation industries. The acquisition will also enable us to
accelerate our expansion into the highly attractive geographies of
Canada and Australia, providing immediate scale and track
record.
Silverdell has worked with EDS previously and we believe that
the businesses are well matched culturally. We welcome the Managing
Director of EDS, Darren Palin, and his management team, into the
Group.
The total maximum consideration of GBP18.6 million for EDS
comprises GBP15 million of initial consideration and a further
GBP3.6 million of deferred consideration subject to the achievement
of certain financial targets by EDS. To fund the acquisition of
EDS, Silverdell announced on 30 May a conditional placing of, in
aggregate, 80,101,466 new Ordinary Shares at a price of 11 pence
per share raising approximately GBP8.81 million (before
expenses).
The placing and acquisition are subject to approval of
shareholders at a General Meeting, which will be held at 11.00 a.m.
on 15 June at the offices of finnCap, 60 New Broad Street, London,
EC2M 1JJ. Subject to shareholder approval, admission of the placing
shares is expected to occur at 8.00 a.m. on 18 June 2012.
The fundamental market drivers behind our business remain the
same. The management and removal of hazardous waste is governed by
far reaching legislation and regulation. Our customers have a duty
to invest in managing hazardous waste, to protect life, health and
reputation; it does not form part of their discretionary spend. We
operate in a market which is fragmented, with high barriers to
entry due to the strict requirements for compliance with health and
safety regulation. Within this environment, we continue with our
strategy of focussing on large, blue chip customers in both the
public and private sectors, and providing those customers with a
broad service offering to meet all of their hazardous waste and
industrial service requirements. The acquisition of EDS will now
enable us to do this in more sectors, and on an increasingly
international scale.
As a result of our strategy, our investments and the
acquisition, we believe that we have created a robust business of
scale and international capability. This is due in no small part to
the talent and commitment of our staff, and the support of our
customers. I would like to thank them all for their continuing
support, as we look forward to the future with confidence.
Stuart Doughty Chairman
Chief Executive's Statement
Overview
The first half of our year has seen a robust performance, with
revenues up 12%, gross profit up 16% and gross margins maintained
at 28%. All our operations have performed well, with our Consulting
division becoming an ever greater part of our business mix. We have
continued to implement our stated strategy of broadening our
service offering, from on-site consulting to waste management and
remediation, across an increasing number of industry sectors. We
continue to benefit from our market leading position in an industry
which has high compliance requirements and therefore high barriers
to entry. All these factors have resulted in our securing a number
of significant contract wins during the period, including inclusion
on the GBP300m Magnox Framework contract for hazardous waste
remediation in the nuclear sector; GBP3m of cumulative work for
major high street retailers; and a GBP1.1m contract with a major
energy supplier in the North of England. These successes reflect
our ongoing strategy of seeking longer term contracts with large
blue chip clients, in high hazard, highly regulated markets.
Acquisition of EDS
Whilst the business has achieved a number of successes in the
first half, my overview must first draw attention to the
acquisition of EDS, announced on Wednesday 30 May 2012, after the
period end.
EDS is a specialist provider of decommissioning and dismantling
services to the power generation, chemical, oil & gas,
pharmaceutical, petrochemical and fuel industries, and has
previously won contracts in Argentina, the Philippines, Turkey,
Portugal, Italy and Finland. It has high levels of repeat business
for major customers including Shell, RioTinto, GSK GlaxoSmithKline,
ExxonMobil, Rolls Royce, Pfizer and Ineos. For the year ended 30
June 2011, on the basis of its existing accounting policies, EDS
achieved revenue of approximately GBP46m, adjusted EBITDA* of
approximately GBP2.8m and reported profit before tax of GBP1.4m.
For the year ending 30 June 2012, EDS has forecast adjusted
proforma EBITDA** of approximately GBP5.0m. EDS is an existing
partner of Silverdell; the companies tendered successfully together
for the Magnox Framework Contract; and we are confident that their
complementary cultures will ensure a smooth and speedy
integration.
This is a tremendously significant acquisition for us, not just
in terms of size, but in terms of the transformation it affords the
Group. The enlarged business now has genuine scale, operations on
the ground in Canada and Australia from which it can grow its
international offering and an enviable list of blue-chip customers
that brings considerable scope for cross-selling. It is my belief
that that this acquisition will provide both the platform and the
momentum for a period of accelerated growth.
Integration of EDS into the new enlarged group will commence
immediately as we seek to exploit the cross-selling opportunities
that exist, particularly in Canada and Australia. Key to this will
be enlarging the remediation and consulting capability in these two
territories and this will be a management priority. There are only
modest overhead synergies to be derived from the combination due to
the lack of overlap of operations in the UK; however, we will look
to combine back office functions within the first 12 months of the
transaction completion.
* Before intangible assets amortisation, non-recurring items and
share-based payments
** Adjusted proforma EBITDA also adds back elements of the
owner's total compensation which will not be incurred post
acquisition.
Investing in the Business
Our focus in this half has been on investing to position the
business for this new and more advanced phase of growth. We have
invested in a stronger operational management function, recruiting
a number of individuals with strong Industrial Services
credentials, giving us increased capabilities to win work in this
market. During the period we also undertook a restructuring of our
UK Remediation business, combining the previously autonomous
regional networks of Kitsons and Silverdell UK into a single group
under John Potts, who joined us in November 2011 from Hertel. The
combined businesses will benefit from greater operational
efficiencies, geographical reach and better cross-selling
opportunities. Whilst these investments have incurred a number of
exceptional costs they will result in substantial savings, and
enhanced capabilities, in the future. We have also invested
significantly in scaffolding assets over the past year as we
continue to broaden our service offering beyond our traditional
asbestos removal specialty and into the attractive industrial
services market.
Our Marketplace and Business Drivers
We operate in a market which demands high standards of legal and
regulatory compliance as well as reputational protection and risk
management. Recent rulings by the Supreme Court on compensation to
victims of asbestos related illness, and the updates to the UK's
Control of Asbestos Regulations in April 2012 are reinforcing this
trend, with our customers coming under ever more onerous legal
obligations to make asbestos management and related property
maintenance spending a priority. We continue to win new,
high-quality business blue-chip and public sector clients, with a
continued movement away from fixed price contracts towards
long-term maintenance relationships. Silverdell has a strong
competitive advantage compared to smaller companies in the
industry. We provide a full service offering, from on-site
consulting to removal and remediation. Clients are increasingly
seeking these "one stop shop" solutions as a way of controlling
costs.
Strategy for Growth
The key elements of the Group's strategy are as follows:
1. Focus on regulated, high hazard service sectors with high barriers to entry
2. Focus operations on the energy, construction, industrial and built environments
3. Build on our strong brand reputation and recognition in our markets
4. Target blue chip customers for long term and repeat business
5. Grow the higher margin Consulting side of our business
Medium Term Targets: Progress Update
During the period we continued to make significant progress
towards achieving our medium term targets, which were set by the
Board in June 2010. These targets were as follows:
1. To grow our order book ahead of organic revenue growth;
2. To drive revenue growth year on year ahead of market growth;
3. To grow the EBITDA margin to 10%;
4. To maintain working capital at not more than one month's revenue; and
5. To grow the Consulting business to 15% of Group revenues.
We remain on track to meet all of these targets, recording order
book and top line growth through the first half of 2012.
Summary and Outlook
These results, achieved in challenging market conditions, both
demonstrate the strength of our business model and reflect the
continued implementation of our strategy. Importantly, the
investment we have made in our business during the period, and the
transformational acquisition made after the period end, have
positioned us for a new phase of accelerated growth. We now have
scale, cross-industry capabilities and see considerable scope for
growth in overseas revenues. We also have a record forward order
book as at 31 March 2012 of GBP133m, 99% higher than in the
previous year. We have a healthy pipeline of work for the second
half of the year with GBP33m of revenues secured to date. If
current trading levels continue we are confident of meeting our
expectations for the full year, and we are very encouraged by the
Group's prospects for the future.
Business Review
Remediation Consulting
2012 2011 2012 2011
% % % %
Public Sector
Local Government 17 11 11 15
Defence 21 22 6 9
Health & Education 10 8 14 17
Sub-total - public
sector 48 41 31 41
Private Sector
Power, Utilities, Industrial 21 29 17 10
Construction 11 6 2 3
Retail, Rail, Commercial 20 24 50 46
Total 100 100 100 100
Public Sector: Local Government works
Public sector work comprises 48% (2011: 41%) of our Remediation
revenues and 31% (2011: 41%) of our Consulting revenues. The nature
of this spend is safety critical maintenance and is not
discretionary: the public estate requires more than GBP25 billion
of maintenance spending each year.
Our relationships with local councils and housing authorities
continue to be strong. Local Government revenues were 17% of our
Remediation revenues (2011: 11%) as we continue to support local
councils in remediating their infrastructure and property stock. A
major ongoing project is our work as a supply partner to Parkway
Green Housing Trust as it delivers first class community housing to
Wythenshawe in Manchester.
In our Consulting businesses, local government and housing
authority revenues fell to 11% of total revenues (2011: 15%),
although in absolute terms revenues in this sector rose by 34%. In
particular we have won significant repeat business with the Peabody
Group as it seeks to improve social housing provision across
London.
Public Sector: Defence
Silverdell continues to provide a large range of different
services in secure nuclear facilities, from small capital projects
to high risk decontamination services. We continue to build up very
strong credentials working within the constraints of high security
measures and rigid adherence to protocols and processes.
Remediation revenues in Defence as a share of total revenues
were 21% (2011: 22%). Consulting services to the Defence sector
were 6% of the total H1 2012 Consulting revenues (2011: 9%).
Public Sector: Health& Education
The Health & Education proportion of Remediation revenues
increased to 10% (2011: 8%). We continue to carry out a number of
framework contracts with universities to maintain their campus
fabric and have also generated significant revenues from the
refurbishment of a large hospital in South Wales. During the first
half of 2012, the Group also commenced two significant framework
contracts with Housing Associations in Yorkshire and South West
England, providing Remediation and Consulting services.
Health & Education continues to be a significant sector for
our Consulting division, representing 14% of total revenues (2011:
17%). Again, absolute revenues in this sector rose by 51% year on
year and we continue to see contract wins in this sector, both in
support of our Remediation services and the provision of standalone
Consulting services.
Private Sector: Power Generation, Utilities and Industrial
The Power Generation, Utilities and Industrial sector share of
Remediation revenues was 21% (2011: 29%) with the decline due to
the loss of some significant scaffolding and maintenance contracts
during 2011, including the Petroplus refinery at Coryton which
subsequently closed. In Consulting, Power Generation, Utilities and
Industrial revenues rose to 17% of the total (2011: 10%) largely
due to the beneficial impact of our acquisitions of RDS and AH
Allen during the second half of 2011.
Power Generation
We remained focused on the decommissioning of nuclear plants
with a significant asbestos legacy, such as Chapelcross, and are
currently bidding for four significant works packages under the
Magnox framework contract, which we announced in November 2011. We
won a number of new contracts in this area during the first half of
the period under review, including the provision of scaffolding
services to an onshore gas plant in the North West. We also won a
Consulting framework contract with a major energy supplier in the
North of England worth GBP1.1m.
Utilities and Industrial
The Group won a three year framework contract to provide
Remediation services to Gatwick Airport worth GBP1m per year. Our
Consulting division, via AH Allen, has continued to benefit from a
strong relationship with a North East water utility.
Private Sector: Construction
On the Remediation side, the share of total revenue from
Construction was 11% (2011: 6%). Overall the Construction sector
continues to be weak in the UK which justifies our strategic
decision to focus on winning more long term, framework style
contracts in resilient sectors over short term projects. During the
first half of 2012, we carried out a significant hazardous waste
removal contract for a major contractor at a site in the Midlands.
For Consulting, the share of total revenue from Construction fell
slightly to 2% (2011: 3%).
Private Sector: Retail, Rail and Commercial
Overall, Retail, Rail and Commercial revenues decreased as a
share of overall Remediation revenues to 20% (2011: 24%) but
represented 50% of Consulting revenues (2011: 46%).
Retail
We have maintained a strong position in the market, securing
projects with a number of leading high street retailers. The early
months of 2012 saw a number of retailers announce major
refurbishment plans which have already resulted in more than GBP1m
of orders so far. Just after the period end we won a three year
nationwide framework contract with a national retailer expected to
be worth more than GBP1m per year. The acquisition of RDS late in
2011 has given the Group much deeper penetration in consulting
services to this sector, particularly in the provision of survey
and management services in the High Street.
Rail
The Rail sector is the ongoing focus of much public and private
sector investment and so continues to present significant
opportunities. We perform Consulting and Remediation services on
underground networks across the UK and during the period also
secured a contract to assist with the upgrade of a number of
stations across a rail network in the South East.
Commercial
We have continued to carry out a major framework contract with a
national primary insurance provider to remove asbestos from
properties following accidental damage. The contract is now in its
second year and performing well.
Sean Nutley
Group Chief Executive
Financial Review
Revenue for the six months ended 31 March 2012 was up 12% at
GBP31.4m (2011: GBP27.9m). Gross margin was up 0.9 ppts on last
year at 28.5% (2011: 27.6%). Our Consulting business performed very
well once again and comprised 21.9% of the Group's gross revenues
during the first half (2011: 13.0%). Underlying Remediation gross
margin was broadly constant.
Administrative costs, excluding share-based payments, were
GBP7.6m (2011: GBP6.3m), up 20% due to our strategic investment in
the management capability, and specifically in the areas of
specialist industrial services such as scaffolding. Towards the end
of the first half of 2012 we completed a restructuring of our
regional office network as we combined the previously independent
regional structures of Kitsons and Silverdell UK under one
management team. This enabled us to reduce the number of office
locations by four and reduce our management and admin headcount by
22 staff. The total future annual saving from this restructuring
amounts to GBP1.4m. The related non-recurring expenses charged in
the first half of 2012 were GBP0.6m.
Adjusted* EBITDA was GBP1.7m (2011: GBP1.7m). Reported profit
before tax was GBP0.3m (2011: GBP1.1m).
Cash generated from operations for the six months ended 31 March
2012 was GBP0.2m (2011: GBP1.1m). Net debt at 31 March 2012 was
GBP6.7m (2011: GBP3.9m). Gearing at 31 March 2012 was 28% (2011:
20%).
The final account payment in respect of the significant fixed
price contract outlined in Note 18 of the Annual Report and
Accounts 2011 remains unsettled as at 31 March 2012, but we remain
confident of a satisfactory outcome.
Adjusted* basic earnings per share was 0.4 pence (2011: 0.6
pence).
On 30 May 2012, the Group announced the acquisition of EDS, a
specialist dismantling and decommissioning business based in
Sheffield.
The total maximum consideration of GBP18.6 million for EDS
comprises GBP15 million of initial consideration and a further
GBP3.6 million of deferred consideration subject to the achievement
of certain financial targets by EDS. To fund the acquisition of
EDS, Silverdell announced on 30 May a conditional placing of, in
aggregate, 80,101,466 new Ordinary Shares at a price of 11 pence
per share raising approximately GBP8.81 million (before
expenses).
With regard to the two acquisitions the Group made in the second
half of 2011, the first, AH Allen, is now fully integrated into
Redhills, while the integration of the latter acquisition, RDS, is
on track and progressing well.
On completion of the EDS acquisition, new banking facilities
will be put in place for a three year period on improved terms.
Ian Johnson
Chief Financial Officer
* Before intangible assets amortisation, non-recurring items,
and share-based payments
Condensed consolidated income statement
for the six months ended 31 March 2012
Before non-recurring Non-recurring
items and items and
amortisation amortisation
(see Note (see Note
2) 2)
6 months 6 months Year
6 months ended 6 months ended ended ended ended
31 March 31 March 31 March 31 March 30 September
2012 2012 2012 2011 2011
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unaudited Unaudited Unaudited Unaudited Audited
Revenue 3 31,428 - 31,428 27,928 59,696
Cost of sales (22,485) - (22,485) (20,216) (43,364)
Gross profit 8,943 - 8,943 7,712 16,332
Administrative
expenses (7,693) - (7,693) (6,404) (13,028)
------------------------------ ---- -------------------- -------------- --------- --------- -------------
- amortisation
of intangible assets - (80) (80) - (30)
- non-recurring
expenses - (614) (614) - (298)
Operating profit 1,250 (694) 556 1,308 2,976
Finance costs 4 (282) - (282) (243) (514)
Profit before tax 968 (694) 274 1,065 2,462
Taxation 6 (285) 204 (81) (239) (779)
Profit for the
period 683 (490) 193 826 1,683
Earnings per share
(Pence)
Basic earnings
per ordinary share 7 0.1 0.5 1.1
Diluted earnings
per ordinary share 7 0.1 0.5 1.0
Condensed consolidated statement of comprehensive income
for the six months ended 31 March 2012
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 March 31 March 30 September
2012 2011 2011
GBP'000 GBP'000 GBP'000
Profit for the period 193 826 1,683
Other comprehensive income
Cash flow hedges:
- gain arising during the period 16 125 40
- related tax charge taken direct
to equity (4) (34) (10)
12 91 30
Total comprehensive income 205 917 1,713
Condensed consolidated statement of changes in equity
for the six months ended 31 March 2012
Share Share Other Hedging Equity Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2011 1,808 2,456 4,135 (22) 721 14,573 23,671
Net profit for
the period - - - - - 193 193
Other comprehensive
income - - - 12 - - 12
Total comprehensive
income for the
period - - - 12 - 193 205
Share-based payments - - - - 125 - 125
At 31 March 2012 1,808 2,456 4,135 (10) 846 14,766 24,001
Condensed consolidated statement of changes in equity
for the six months ended 31 March 2012 (continued)
6 months ended 31 March 2011
Share Share Other Hedging Equity Capital Retained
capital premium reserve reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2010 1,516 17,813 16,635 (52) 464 3,749 (21,172) 18,953
Net profit for
the period - - - - - - 826 826
Other comprehensive
income - - - 91 - - - 91
Total comprehensive
income for the
period - - - 91 - - 826 917
Capital cancellation* - (17,813) (12,500) - - (3,749) 34,062 -
Share-based payments
including tax - - - - 151 - - 151
At 31 March 2011 1,516 - 4,135 39 615 - 13,716 20,021
Year ended 30 September 2011
Share Share Other Hedging Equity Capital Retained
capital premium reserve reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2010 1,516 17,813 16,635 (52) 464 3,749 (21,172) 18,953
Net profit for
the year - - - - - - 1,683 1,683
Other comprehensive
income - - - 30 - - - 30
Total comprehensive
income for the
year - - - 30 - - 1,683 1,713
Shares issued 292 2,456 - - - - - 2,748
Capital cancellation* - (17,813) (12,500) - - (3,749) 34,062 -
Share-based payments
including tax - - - - 257 - - 257
At 30 September
2011 1,808 2,456 4,135 (22) 721 - 14,573 23,671
*Following special resolutions of the Company which were
confirmed by the High Court on 16 February 2011, the Company
cancelled the share premium account and capital reserve and also
cancelled GBP12.5m of deferred shares from the other reserve, which
increased retained earnings by a total of GBP34.1m.
Condensed consolidated balance sheet
at 31 March 2012
Unaudited Unaudited Audited
31 March 31 March 30 September
2012 2011 2011
Note GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 5 17,921 16,156 17,761
Other intangible assets 373 - 453
Property, plant and equipment 3,080 1,948 2,652
Trade and other receivables 1,001 1,001 1,001
22,375 19,105 21,867
Current assets
Inventories and work-in-progress 3,729 1,495 3,064
Other financial assets - 1 -
Trade and other receivables 18,973 14,561 17,305
Cash and cash equivalents 1,660 3,264 2,567
24,362 19,321 22,936
Total assets 46,737 38,426 44,803
Non-current liabilities
Borrowings 5,571 4,713 4,038
Trade and other payables 1,001 1,001 1,001
Contingent consideration 161 - 109
Deferred tax liabilities 200 23 221
6,933 5,737 5,369
Current liabilities
Borrowings 2,756 2,494 3,793
Trade and other payables 12,020 9,780 10,864
Other financial liabilities 15 33 31
Contingent consideration 509 - 326
Current taxation liabilities 503 361 749
15,803 12,668 15,763
Total liabilities 22,736 18,405 21,132
Net assets 24,001 20,021 23,671
Equity
Share capital 1,808 1,516 1,808
Share premium account 2,456 - 2,456
Equity reserve 846 615 721
Hedging reserve (10) 39 (22)
Other reserve 4,135 4,135 4,135
Retained earnings 14,766 13,716 14,573
Total equity 24,001 20,021 23,671
Condensed consolidated cash flow statement
for the six months ended 31 March 2012
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 March 31 March 30 September
2012 2011 2011
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period 193 826 1,683
Income tax charge 81 239 779
Finance costs 282 243 514
Amortisation of intangibles 80 - 30
Profit on the sale of property,
plant and equipment - (28) (2)
Depreciation of property, plant
and equipment 339 256 525
Share-based payments 125 125 257
Movements in working capital:
Increase in inventories and work-in-progress (665) (497) (2,066)
Increase in trade and other receivables (1,603) (1,722) (3,599)
Increase in trade and other payables 1,370 1,666 2,114
Cash generated from operations 202 1,108 235
Income tax paid (347) (384) (628)
Net cash (outflow) / inflow from
operating activities (145) 724 (393)
Cash flows from investing activities
Payments for property, plant and
equipment (544) (156) (656)
Proceeds from sale of property,
plant and equipment 13 31 17
Acquisition of subsidiaries (net
of cash acquired) (157) - (1,348)
Net cash outflow from investing
activities (688) (125) (1,987)
Cash flows from financing activities
Interest paid (324) (215) (433)
Interest paid on finance leases (10) (6) (6)
Payments for hire purchase principals (73) (10) (53)
Proceeds from bank loans 1,000 - -
Repayments of bank loans - (400) (930)
Proceeds from issue of equity shares
(net) - - 2,198
Net cash inflow /(outflow) from
financing activities 593 (631) 776
Net decrease in cash and cash equivalents (240) (32) (1,604)
Cash and cash equivalents at beginning
of the period (318) 1,286 1,286
Cash and cash equivalents at end
of the period (558) 1,254 (318)
Notes to the condensed consolidated interim financial
statements
1. Basis of preparation
Silverdell Plc is a public limited company incorporated and
domiciled in the United Kingdom. The Company's ordinary shares are
traded on the AIM market of the London Stock Exchange.
The condensed interim financial statements for the six months
ended 31 March 2012 have been prepared in accordance with the
accounting policies expected to be applied to the full year
financial statements for the year ending 30 September 2012, which
are consistent with International Financial Reporting Standards
("IFRS") as adopted for use in the European Union (EU). The
directors have elected not to apply International Accounting
Standard 34, Interim Financial Reporting, which is not mandatory
for AIM-listed companies.
The interim financial statements are unaudited and do not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006. The financial information for the year
ended 30 September 2011 has been extracted from the audited annual
report and accounts which have been filed with the Registrar of
Companies. The auditors' report on the statutory accounts for the
year ended 30 September 2011 was unqualified and did not contain a
statement under section 498 of the Companies Act 2006.
The interim financial statements do not include all of the
information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
annual financial statements for the year ended 30 September 2011.
The figures for the six months ended 31 March 2011 have been
extracted from the interim results for that period.
Going concern
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly they
continue to adopt the Going Concern basis in preparing the interim
financial statements.
2. Non-recurring items and amortisation
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 March 31 March 30 September
2012 2011 2011
GBP'000 GBP'000 GBP'000
Remediation restructuring and
reorganisation 442 - -
Onerous property leases 127 - -
Acquisition and integration
costs 45 - 298
Non-recurring expenses 614 - 298
Amortisation of intangible assets 80 - 30
694 - 328
2. Non-recurring items and amortisation (continued)
Remediation restructuring and reorganisation costs relate to
expenses incurred in restructuring and merging the management
structures of Kitsons and Silverdell UK. Onerous property leases
arose from the related consolidation of the Group's property
portfolio. Acquisition and integration costs are associated with
the acquisition of AH Allen and RDS in 2011 and their subsequent
integration into the Group.
3. Segmental reporting
Management consider that the Group comprises two segments -
Remediation and Consulting- within the meaning of IFRS8, "Operating
segments".
6 months ended 31 March 2012
Remediation Consulting Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Total revenue 24,748 7,003 - 31,751
Less: between segments (213) (110) - (323)
External revenue 24,535 6,893 - 31,428
Result
Operating profit /(loss)
before amortisation and
non recurring expenses 1,242 899 (891) 1,250
Amortisation of intangible
assets - (80) - (80)
Non-recurring expenses (472) (87) (55) (614)
Finance costs (38) (13) (231) (282)
Profit/(loss) before tax 732 719 (1,177) 274
Taxation (216) (213) 348 (81)
Profit/(loss) for the period 516 506 (829) 193
Balance sheet
Total assets 31,526 15,006 205 46,737
Total liabilities 14,056 3,578 5,102 22,736
Other information
Capital expenditure 625 148 7 780
Depreciation 249 76 14 339
3. Segmental reporting (continued)
6 months ended 31 March 2011
Remediation Consulting Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Total revenue 24,476 3,869 - 28,345
Less: between segments (189) (228) - (417)
External revenue 24,287 3,641 - 27,928
Result
Operating profit /(loss)
before amortisation 1,436 635 (763) 1,308
Finance costs (10) (4) (229) (243)
Profit/(loss) before tax 1,426 631 (992) 1,065
Taxation (320) (142) 223 (239)
Profit/(loss) for the period 1,106 489 (769) 826
Balance sheet
Total assets 28,983 9,168 275 38,426
Total liabilities 13,064 1,537 3,804 18,405
Other information
Capital expenditure 138 65 5 208
Depreciation 212 35 9 256
3. Segmental reporting (continued)
Year ended 30 September 2011
Remediation Consulting Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Total revenue 53,889 8,805 - 62,694
Less: between segments (2,399) (599) - (2,998)
External revenue 51,490 8,206 - 59,696
Result
Operating profit before amortisation
and non-recurring items 3,554 1,252 (1,502) 3,304
Intangible assets amortisation - (30) - (30)
Non-recurring expenses (24) (50) (224) (298)
Finance costs (17) (5) (492) (514)
Profit / (loss) before tax 3,513 1,167 (2,218) 2,462
Taxation (1,111) (369) 701 (779)
Profit / (loss)for the year 2,402 798 (1,517) 1,683
Balance sheet
Total assets 32,206 12,446 151 44,803
Total liabilities 13,605 2,643 4,884 21,132
Other information
Capital expenditure 656 197 28 881
Depreciation 440 68 17 525
As the Group's activities are conducted almost entirely in the
UK no geographical segment analysis is required.
4. Finance costs
6 months
6 months ended ended Year ended
31 March 31 March 30 September
2012 2011 2011
GBP'000 GBP'000 GBP'000
Interest on bank loans and overdrafts 259 237 502
Interest on finance leases 10 6 6
Finance charge on contingent
consideration 13 - 6
282 243 514
5. Goodwill
The carrying amounts of goodwill relating to the Group's two
business segments are as follows:
31 March 31 March 30 September
2012 2011 2011
GBP'000 GBP'000 GBP'000
Remediation 10,869 10,869 10,869
Consulting 7,052 5,287 6,892
17,921 16,156 17,761
The increase in goodwill in 2012 resulted from a change in the
estimated contingent consideration payable on acquisitions made in
2011.
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired. Goodwill is allocated for impairment testing to Cash
Generating Units ("CGUs") which reflects how it is monitored for
internal management purposes. Value in use is calculated using
pre-tax cash flow projections based on the financial budgets and
business plans covering a three year period, which take into
account historical trends and market conditions, and which have
been approved by the Board. The key assumptions are those regarding
the discount rates and growth rates for the period. Management
estimates discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks
specific to the CGU's, equivalent to a real pre-tax discount rate
which averages 12%. The growth rates are based on industry growth
forecasts and long-term growth in gross domestic product.
The Group prepares cashflow forecasts derived from the most
recent financial budgets approved by management for the next three
years and extrapolates cash flows for the following years based on
the estimated annual growth rate. The rates do not exceed the
average long-term growth rate for the relevant markets. The rates
used to discount the cash flows for all CGUs have been based on the
Group's weighted average cost of capital.
The Group's impairment review is sensitive to changes in the key
assumptions used. The major assumptions that result in significant
sensitivities are the revenue growth and the discount rate. Given
the Group's sensitivity analysis, a reasonably possible change in a
single assumption will notresult in further impairments.
6. Taxation
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2012 2011 2011
GBP'000 GBP'000 GBP'000
Current tax
Corporation tax on profits for
the period 103 328 795
Adjustment in respect of prior
periods - (89) (89)
Total current tax 103 239 706
Deferred tax
Origination and reversal of temporary
differences (22) - (24)
Adjustment in respect of prior
periods - - 97
Total deferred tax (22) - 73
Total tax charge 81 239 779
The taxation charge for the six months ended 31 March 2012
comprises corporation tax on profits of the period based on the
expected effective tax rate for the full financial year.
7. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares during the period, determined in
accordance with the provisions of IAS 33 "Earnings per share".
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares in issue on the
assumption of conversion of all dilutive potential ordinary shares.
The Group has only one category of dilutive potential ordinary
shares, being share options granted where the exercise price is
less than the average price of the Company's ordinary shares during
the period.
Adjusted basic earnings per share is calculated by dividing the
earnings attributed to ordinary shareholders, before intangible
assets amortisation and share-based payment charges, by the
weighted average number of ordinary shares during the period.
7. Earnings per share (continued)
6 months 6 months Year
to to ended
31 March 31 March 30 September
2012 Basic Diluted 2011 Basic Diluted 2011 Basic Diluted
GBP'000 p p GBP'000 p p GBP'000 p p
Profit attributable
to ordinary
shareholders 193 0.1 0.1 826 0.5 0.5 1,683 1.1 1.0
Non-recurring
items, impairments,
amortisation
and share based
payments 615 0.3 0.3 125 0.1 0.1 453 0.3 0.3
Profit for adjusted
earnings per
share 808 0.4 0.4 951 0.6 0.6 2,136 1.4 1.3
The adjusted numbers have been reported in order that the impact
of the above charges against profit can be fully appreciated.
6 months Year
6 months ended ended ended
31 March 31 March 30 September
2012 2011 2011
Number Number* Number
Number of shares
Weighted average number of ordinary shares
used in calculation of basic earnings
per share 180,839,717 151,654,717 155,663,646
Effect of dilutive potential ordinary
shares:
Share options 2,882,270 5,834,160 2,087,492
Warrants 11,374,179 11,374,179 11,374,179
Weighted average number of ordinary shares
used in calculation of diluted earnings
per share 195,096,166 168,863,056 169,125,317
* The comparative for the 6 months ended 31 March 2011 has been
restated to be consistent with the inclusion of warrants held by
Barclays Bank Plc, which was reflected in the statutory accounts
for the year ended 30 September 2011. Other warrants are
anti-dilutive.
8. Net debt
6 months
ended 6 months ended Year ended
31 March 31 March 30 September
2012 2011 2011
GBP'000 GBP'000 GBP'000
Bank overdraft (2,218) (2,010) (2,885)
Cash at bank 1,660 3,264 2,567
Cash and cash equivalents (558) 1,254 (318)
Bank loans (5,713) (5,113) (4,713)
Obligations under finance leases (396) (84) (233)
Net debt (6,667) (3,943) (5,264)
9. Subsequent events
On 30 May 2012 the Group announced the acquisition of the entire
issued share capital of EDS Group for a maximum consideration of
GBP18.6m. The planned acquisition is to be partially funded by a
conditional placing of new equity shares, raising proceeds of
approximately GBP8.81m before expenses. Further details are
provided in the Chairman's Statement and Chief Executive's
Statement.
The Directors are responsible for the maintenance and integrity
of financial information on the Company's website. Legislation in
the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other
jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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