TIDMSUR
RNS Number : 9872N
Sureserve Group PLC
27 May 2020
27 May 2020
Sureserve Group plc
("Sureserve" or the "Group")
Unaudited Interim Results for the six months ended 31 March 2020
(H1 FY20)
Building profitable market share
Sureserve, the compliance and energy services Group, is pleased
to announce its interim results for the six month period ended 31
March 2020.
Chairman's statement
Bob Holt, Chairman of Sureserve Group commented
"Despite the very difficult economic circumstances facing the
United Kingdom, the six months ended 31(st) March 2020 showed
continued growth and an impressive improvement in profits from our
businesses.
The results include the latter part of March where the country
and our Scottish, Welsh and Smart Metering businesses were in
lockdown as a result of the Covid-19 crisis.
All of our gas, water and electrical service businesses,
classified as "key worker" status, carrying out predominantly
emergency testing services, continue to operate to agreed protocols
with key clients. We maintain open communications with our clients
to ensure we are able to minimize the risks to our employees and
position us to participate fully when we return to more normal work
streams.
Our Scottish and Welsh operations in Energy Services, where we
manage the Emerging Fuel Poverty programme for both governments and
smart metering installation working for Big 6 energy companies, saw
an immediate shut down in March.
Like most other businesses, it was with deep regret that we
furloughed those employees who were not required to provide front
line services. I would also like to thank those frontline employees
for their commitment to deliver the emergency services in difficult
conditions which our clients expect of us. I believe the team
effort from the most junior to senior members of staff will hold
the Group in good stead as we emerge from lockdown.
The Board felt it right and proper that it reduce its
compensation for the period during which we have been receiving
government support for the business by 20%.
I would also like to thank Peter Smith, our new Chief Financial
Officer, and his team for their excellent work managing our working
capital and thereby reducing our debt from GBP12.9m at the end of
March 2019 to GBP3.5m at March 2020. Furthermore, at the time of
writing, the Group is debt free with a modest net cash balance.
The Group has implemented a clear procedure for ensuring that
all of our premises have undertaken a comprehensive risk assessment
enabling all divisions of the group to recommence trading when the
government determines it as safe to do so.
Our risk assessments have been created in consultation with our
teams and clearly established control measures which we have put in
place. Due to the nature of our organization and its various
geographical locations, each business has undertaken this risk
assessment in the desired format and all assessments have been
reviewed and approved by the senior management teams and our SHEQ
managers.
Looking to the future
We are a business which is heavily dependent on government and
local authority expenditure. It is still too early to evaluate the
long-term impact of the massive government deficits that are being
incurred and what effect this will have on us over the medium
term.
Our businesses are, however, market leaders providing critical
services to the public sector offering, we believe, competitive
pricing and meeting the high standards of performance expected by
our clients.
We also take comfort that we have a strong order book of
GBP323.7m. The Group's financial position is now better than it has
been for many years and we believe that, with a highly competitive
cost basis, we can gain market share as we emerge out of what has
been a most difficult time for the UK economy.
Traditionally the profitability of the Group is heavily weighted
towards the second half of the trading year. Sadly, our Welsh and
Scottish operations remain closed and there is as yet no indication
from the Scottish and Welsh governments when they will resume.
England, on the other hand, is coming out of furlough so whilst
our results will fall short of our original expectations for the
year, we believe that the second half will show further
progress."
Financial overview
-- Revenue up 7% to GBP109.6m (H1 2019: GBP102.5m)
-- EBITA*(1) up 27% to GBP3.9m (H1 2019: GBP3.1m)
-- Profit before tax up 129% to GBP2.6m (H1 2019: GBP1.1m)
-- Profit before tax before exceptional items and amortisation
of acquisition intangibles up 35% to GBP3.4m (H1 2019: GBP2.5m)
-- Earnings per Share (EPS) from continuing operations up 117% to 1.3p (H1 2019: 0.6p)
-- EPS excluding amortisation of acquisition intangibles and
share based payments up 29% to 1.8p (H1 2019: 1.4p)
-- Operating cash conversion*(2) of 88% (H1 2019: 51%)
-- Net debt*(3) reduced to GBP3.5m (31 March 2019: GBP12.9m)
-- Order book of GBP323.7m providing visibility of earnings with circa 90% covered in FY20
*(1) EBITA is defined as operating profit before exceptional
items and amortisation of acquisition intangibles. EBITA excludes
the profit from Discontinued Operations.
*(2) Operating cash conversion is calculated before the effect
of IFRS16
*(3) Net debt is calculated before the effect of IFRS16
Operational overview
-- Core divisions of Compliance and Energy Services both delivered strong performances, with demand for services
remaining solid. Continued reputation for delivery of quality services and market-leading positions in the
highly-regulated public sector gas testing and energy management sectors
-- Outstanding record of contract wins worth GBP124m during the period strengthening our position across the UK
Outlook
-- Well-placed to deliver a clear growth strategy in our market-leading gas services division
-- 90% of FY2020 forecast revenue covered by the order book worth GBP323.7m, providing good visibility of
non-volatile revenue streams. The nature of our work and clients is such that while we may see delays, we do not
expect work to be cancelled
-- The Group is well-positioned for further organic growth in a fragmented and regional market
-- Despite the challenges of Covid-19, we expect the continuation of strong trading in FY20 maintaining the
Group's momentum. The work we do on behalf of our clients is such that this will continue well into the future
-- Increased opportunities to look for further growth from the current crisis, both with existing and future
clients.
Enquiries
Sureserve Group
Bob Holt OBE, Chairman
07778 798 816
Peter Smith, Chief Financial Officer 07590 929 431
Shore Capital (Nominated Adviser and Broker)
020 7408 4050
Antonio Bossi
Mark Brown
Fiona Conroy
Camarco (Financial Public Relations)
Ginny Pulbrook 020 3757 4992
Ollie Head
Notes to editors
Sureserve is a leading compliance and energy services group that
performs critical functions in homes, public and commercial
buildings, with a focus on clients in the UK public sector and
regulated markets. Services are delivered through two divisions:
Compliance and Energy Services.
The Group was founded in 1988 and is headquartered in Basildon
and currently employs some 2,116 staff.
OPERATIONAL REVIEW
The unprecedented situation presented by the Covid-19 pandemic
and associated Government response has resulted in challenges for
the Sureserve group and our operations, as with many others. The
safety of our employees and customers has and will always be our
absolute priority. Our focus has been the implementation of
numerous measures to ensure that we can serve our customers in a
completely safe manner while protecting the wellbeing of colleagues
and minimising virus spread risk. Throughout this period we have
witnessed many encouraging examples of voluntary support and
assistance by our key workers to communities and the individuals
within them.
Compliance (66% of Group revenue / H1 FY19: 63%)
Compliance: six months ended Unaudited Unaudited Change
31 March 6 months 6 months
to 31 March to 31 March
2020 2019
Revenue (GBPm) *(1) 73.4 65.7 11.6%
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EBITA (GBPm) *(2) 3.7 2.6 40.2%
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EBITA margin 5.0% 4.0% 1.0ppts
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*(1) Division revenue figures include revenue from intercompany
trading which accounts for a total across both divisions of GBP1.1m
in 2020 and GBP1.3m in 2019.
*(2) EBITA is defined as operating profit before exceptional
items and amortisation of acquisition intangibles. EBITA excludes
the profit from Discontinued Operations.
The Compliance division provides planned and responsive
maintenance, installation and repair services predominantly to
local authority and housing association clients, in the areas of
domestic and commercial gas, fire and electrical, water and air
hygiene, and lifts. These services cover clients' social housing
and public building assets, as well as industrial and commercial
properties. Gas services comprise around three quarters of the
division and we believe we remain the largest player in this
fragmented and typically localised market.
We are predominantly paid for service and repair work on a fixed
price basis evenly through the year. The gas businesses (which as
noted above encompass the majority of the division's revenues) have
more call-outs during colder months, resulting in higher labour and
materials costs, with this seasonality driving higher levels of
profitability and cash generation in the warmer months when
call-out rates are lower and a proportion of our engineers can be
redeployed to jobs that yield further income. As a result,
historically a significant proportion of the division's annual
profit arises during the second half of the financial year, making
the strong results in this current period even more pleasing.
Revenue growth combined with a move to our targeted EBITA margin
levels of 5% has seen a considerable step forward in our
profits.
The division repeated previous strong period-on-period revenue
growth of 11.6% to GBP73.4m (H1 FY19: GBP65.7m), driven by
continued new contract wins and extensions in addition to ongoing
regulatory pressures in the sector and growth within our fire
protection business, demonstrating a continued improvement
following work delivered by that team. Installation works again
exceeded expectations in the first half of the year, which by
adding to our improved contractual client base further strengthened
our position. EBITA increased by 40.2% to GBP3.7m (H1 FY19:
GBP2.6m). The additional profitability has been driven by a
combination of two factors; increased revenues in comparison to the
same period last year, with both gas and non-gas businesses showing
consistent growth in revenue, and further positive EBITA
performance driven from margins which arises from work mix
including more commercial works in addition to efficiencies gained
by the experienced management teams as scale continues to
increase.
The division continued its excellent track record on new wins
during the period with particular success within our Aaron Services
business, including GBP8.4m of work over three years for gas boiler
upgrades and electrical testing with Hinckley and Bosworth council,
a repair and testing contract with Stonewater worth GBP4.0m and in
addition significant framework acceptances with Efficiency East
Midlands (up to GBP4.2m) and Fusion 21 (up to GBP5.0m, with the
other gas businesses also on the framework) for a range of gas and
electrical works. Other significant wins in the division include
GBP4.9m for Southern Housing and GBP3.9m with Your Housing for gas
service and testing works, along with numerous other wins across
the full range of workstreams.
We believe the medium and long-term outlook for our Compliance
businesses remains strong, underpinned by high levels of long-term
contracts and frameworks for which the division has continued to
see high appointment levels. This is combined with an ongoing trend
towards regulatory services and our client base largely of local
authorities and housing associations provides us both continuity
moving forward along with clients whom we regard as blue chip with
minimal debtor risk.
In the short-term we, like many others, are experiencing
uncertainty caused by the Covid-19 pandemic. The nature of our
Compliance businesses is of core services including vital emergency
repair and testing cover to our local authority and housing
association customers, to ensure compliance with gas, electricity
and building testing regulations. It is therefore crucial they
continue to perform their essential services and this is why the
Government has recognised many of our employees within their "key
worker" classification.
The division is experiencing some delays in accessing certain
residential and communal properties to undertake work as a result
of the Government measures and guidance given in response to the
Covid-19 outbreak, including social distancing and travel
restrictions. Some local authority customers have, where work is
considered of a lower priority or not essential, chosen to defer
certain elements. We believe that following the temporary
uncertainty and disruption to the market our mix of customer and
services remains strong and longer-term the demand for these works
and underlying fundamentals will underpin our future prospects when
conditions recover. As a market leader in gas testing we believe
the opportunities will be forthcoming as a result of other failing
contractors.
Energy Services (34% of Group revenue / H1 FY19: 37%)
Energy Services: six months Unaudited Unaudited Change
ended 31 March 6 months 6 months
to 31 March to 31 March
2020 2019
Revenue (GBPm) *(1) 37.3 38.0 (2.0%)
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EBITA (GBPm) *(2) 1.9 1.9 1.6%
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EBITA margin 5.2% 5.0% 0.2ppts
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*(1) Division revenue figures include revenue from intercompany
trading which accounts for a total across both divisions of GBP1.1m
in 2020 and GBP1.3m in 2019.
*(2) EBITA is defined as operating profit before exceptional
items and amortisation of acquisition intangibles. EBITA excludes
the profit from Discontinued Operations.
Energy Services undertakes a range of energy efficiency services
for social housing and private homes through two businesses:
-- Everwarm delivering insulation and heating, energy efficient
technologies including electrical vehicle charging points, battery
storage and solar PV, including works within non-domestic
properties. Everwarm combines these services with providing carbon
emissions savings for energy companies, enabling them to meet their
legislative targets. The insulation operations are driven by
seasonal influences, as we are unable to render or use fixing glue
necessary for insulation at lower temperatures. As a result, we
typically experience a far larger number of productive working days
in summer, compared to winter months, with the result that this
business also sees higher revenues and margins in H2 each year.
-- Providor, a leading national installer of smart meters
(operating as a meter asset manager and meter operator), working
for several "Big 6" and challenger utilities, who are required to
install smart meters in every home in England, Wales and Scotland.
The business is experienced in the ongoing UK-wide government
roll-out, previously beset by delays and technology challenges
around deployment of newer "SMETS2" meter assets. As we have
previously advised it was announced that the deadline for
installation had been extended to 2024 to allow a more realistic
timeframe for delivery. While an expected impact is that overall
roll-out costs for the industry may continue to rise, we believe a
benefit from this revised timetable will be seen in more consistent
volumes to allow more deliverable and sustainable installation
levels in coming years. Approximately one third of the 55m total
meters within the roll-out have now been installed as smart, with a
significant market opportunity remaining.
The division showed period-on-period revenue reduction of 2.0%
to GBP37.3m (H1 FY19: GBP38.0m), reflecting some revenue reductions
within the Everwarm business partly offset by an increase in smart
meter installation work in Providor reflecting previous contract
wins and consistency in delivery as mentioned in previous updates.
EBITA margin improved to 5.2% on the lower revenues (H1 FY19:
5.0%). Results included operational improvements from the prior
interim period with continued positive performance in smart
metering, which had a profitable H1 trading position for the first
time, in addition to a small profit within our Welsh Arbed joint
venture (prior year had been a mobilisation phase as previously
advised). An overall decrease in profitability of the Everwarm
business, due to a combination of the reduction in revenues, some
impact from mix of works and a shortfall from the Covid-19 impact
on March trading, offset those benefits. We saw relative
consistency in the Scottish Warmworks joint venture trading
performance.
The largest win for the division has seen extension of our
services to the central belt of Scotland (SPOW) region with
Scottish Power, offering further smart metering installation
services with estimated total contract value of up to GBP24m.
Further significant awards were within the Everwarm business and
included GBP5.4m of air source heat pump installation works for
E.ON, up to GBP10.7m with Argyll Community Housing Association for
a mix of external wall insulation and air source heat pump
installation in addition to a GBP1.9m award with Waverley Housing
Association for a mix of improvement measures including insulation.
The Everwarm business was also placed on the Fusion 21 framework,
which is believed to represent a significant opportunity for future
energy efficiency works.
Providor remains focused on existing contract delivery; and
following the clarity now provided on the Government smart meter
roll-out extension, had signaled our intent to review new contract
opportunities. This represents an opportunity to strengthen
further, particularly following commencement of SMETS2 meter
technology installations, with consistency generally expected
within volumes up to 2024. Previously awarded agreements and an
evaluation of existing contracts and potential extensions give us
confidence over future delivery. We have been working well with
Scottish Power as a key client in both the sector and across the
division for a number of years and are delighted this strong
relationship has resulted in extending our service offering to
include their SPOW region. This is also geographically attractive
to the Sureserve Group given the pre-existing base in Bathgate
within established Energy Services operations. We consider this a
key demonstration of our ongoing service delivery to extend reach
with an existing customer.
Within Everwarm, carbon prices remained largely stable during
the period however volumes remain impacted by the transition to
"ECO3" which has proven challenging due to changes in measure types
and qualifying property. We continue to work through this period
and believe we are well-placed to deliver on behalf of our Utility
partners despite the ongoing challenges, particularly given the
volumes are now becoming more consistent.
Our Warmworks joint venture delivering the Warmer Homes Scotland
initiative for the Scottish Government saw ongoing operationally
strong performance and client delivery. The Scottish Government's
flagship Home Energy Efficiency Programme for Scotland ("HEEPS")
continued to perform well in the first half, bringing a diversified
installation portfolio, focusing on central heating, boiler
improvements and other energy efficiency installation measures.
The Arbed 3 programme for the Welsh Government via our joint
venture with the Energy Saving Trust, focused on improvements to
households likely to be living in severe fuel poverty, is ongoing.
In the reporting period the contract moved to the delivery of more
regular monthly installation performance, and while timings for
specific schemes remain variable, contributed a positive six months
of performance comparing favourably to the mobilisation period in
the comparable results last year.
Whilst our Energy business remains strong with an extremely
positive future outlook, as evidenced by both trading performance
and recent wins, the short-term has seen impacts from Government
action to address the impact of the Covid-19 outbreak. The Energy
division has not been afforded the same "key worker" status as seen
in our Compliance businesses due to a combination of our services
delivered and devolved government approaches around continuation of
works, particularly in Scotland. This has resulted in what we
believe to be a short-term reduction in trade within both Energy
businesses and joint ventures for which we are navigating through a
range of measures. These include the application for appropriate
government support, customer and supplier negotiations and the
implementation of any necessary cost control procedures to best
mitigate the impact of the situation.
New wins and order book
The Board is encouraged that high bidding success rates continue
to be achieved by the Group. Contract wins in the period totalled
GBP124m, contributing to a period-end order book of GBP323.7m. This
represented a 7.7% decrease on the comparative period (31 March
2019: GBP350.5m). The order book is consistent with our previously
stated view around our targeted efforts on long term contracts that
provide opportunities to deliver profitably in our core areas. We
believe our order book remains strong across the group and given
the timing of award, the figures stated do not include Scottish
Power smart metering win as mentioned above. We continue to focus
on securing contracts with long term visibility and robust value
and this is an area we intend to invest in going forward.
FINANCIAL REVIEW
The Group had a strong half year posting an EBITA of GBP3.9m (H1
2019: GBP3.1m).
During the six months to 31 March 2020, the Group adopted
IFRS16, using the modified retrospective approach which means that
comparatives are not required to be restated. The impact on the
income statement are noted in the table below, with comparability
to H1 2019.
Whilst Group revenue and cash are unaffected by the adoption of
IFRS16, the following areas are impacted:
-- Operating profit before exceptional and other items has
increased by GBP0.1m. Lease payments are now reflected as a
reduction in the lease liabilities. Conversely there is an increase
in depreciation, and interest on finance lease obligations
-- Operating expenses (lease costs) have decreased by GBP2.3m
-- Depreciation charges increased by GBP2.2m
-- Finance costs increased by GBP0.15m such that the overall
impact on profit before tax of adopting IFRS16 has been a decrease
of GBP0.1m
-- The statement of financial position recognises GBP8.3m right
of use assets and GBP8.3m lease liabilities on transition.
-- Total indebtedness therefore increases, although this does
not have an impact on the Group's covenants, which are measured on
an historic GAAP basis
A reconciliation of EBITA and adjusted EBITA pre-IFRS16 to
profit before tax for the period is provided below:
Unaudited
six months
Unaudited six months ended ended 31
31 March 2020 March 2019
IFRS16
As reported impact Pre IFRS16
GBP'000 GBP'000 GBP'000 GBP'000
Operating profit before exceptional
items and amortisation of
acquisition intangibles 3,932 89 3,843 3,095
Amortisation of acquisition
intangibles (800) - (800) (1,367)
Operating profit 3,132 89 3,043 1,728
Finance expense (614) (148) (466) (609)
Investment income 39 - 39 -
Profit before tax 2,557 (59) 2,616 1,119
============ ======== =========== =============
Group revenue increased by 6.9% to GBP109.6m (H1 2019:
GBP102.5m), mainly reflecting an increase in revenues in the
Compliance division, whose revenues increased by 11.6% to GBP73.4m
(H1 2019: GBP65.7m). Revenues in Energy Services decreased by 2.0%
to GBP37.3m (H1 2019: GBP38.0m). These divisional revenue figures
include revenue from intercompany trading which accounts for a
total of GBP1.1m (H1 2019: GBP1.3m).
Group EBITA increased by 27.0% to GBP3.9m (H1 2019: GBP3.1m),
reflecting an increase in EBITA in the Compliance division of 40.2%
to GBP3.7m (H1 2019: GBP2.6m) and an increase in EBITA in Energy
Services of 1.6% to GBP1.9m (H1 2019: GBP1.9m). Central costs were
GBP1.7m (H1 2019: GBP1.4m).
We reported an operating profit of GBP3.1m (H1 2019: GBP1.7m),
after GBP0.8m of amortisation charges for acquisition intangibles
(H1 2019: GBP1.4m). The reduction in amortisation reflected the
fact that we have taken amortisation charges in prior periods,
meaning we are amortising a reduced base of intangible assets.
Net interest expense was GBP0.6m (H1 2019: GBP0.6m), which
represented the interest charged on our debt facilities (net of
finance income), together with the amortisation of debt issue
costs, which totaled GBP0.4m (H1 2019: GBP0.6m). The H1 2020
figures includes GBP0.15m interest in relation to the adoption of
IFRS16 (H1 2019: GBPnil).
Discontinued operations
Profits from discontinued operations amounted to GBP0.1m (H1
2019: GBPnil)
Discontinued activities represent the Group's Construction and
Property Services divisions which were sold on 17 August 2018 and
Orchard (Holdings) UK Limited which was sold in September 2017. The
profits for the six-month period to 31 March 2020 on disposal of
discontinued operations comprise:
-- GBP0.1m profit on sale of Orchard (Holdings) UK Limited from
reassessment of the fair value of consideration receivable
On 20 December 2019, Mapps Group Limited, the acquirer of
Lakehouse Contracts Limited and Foster Property Maintenance
Limited, went into liquidation. We are in active dialogue with the
liquidators and our advisors, in the hope of securing an early
resolution.
Tax
The effective tax rate for the period was 19%, compared with a
statutory rate of corporation tax of 19%. We expect a full year
effective tax rate of 19%.
Earnings per share
Basic earnings per share from continuing operations were 1.3
pence (H1 2019: 0.6 pence), based on profit after tax from
continuing operations of GBP2.1m (H1 2019: GBP0.9m).
Adjusted earnings per share from continuing operations excluding
amortisation of acquisition intangibles and share based payments
were 1.8 pence (H1 2019: 1.4 pence), based on adjusted profit after
tax from continuing operations excluding amortisation of
acquisition intangibles and share based payments of GBP2.9m (H1
2019: GBP2.3m).
Our statutory profit for the period was GBP2.2m (H1 2019:
GBP0.9m). Based on the weighted average number of shares in issue
during the year of 158.9m, this resulted in basic earnings per
share of 1.4 pence (H1 2019: 0.6 pence).
Cash flow performance
Our adjusted operating cash flow (see note 11), before the
IFRS16 adjustment, for the period was an inflow of GBP3.4m (H1
2019: GBP1.6m), reflecting an operating cash conversion of 88% (H1
2019: 51%). We calculate operating cash conversion as cash
generated from continuing operations, excluding the cash impact of
exceptional items and amortisation of acquisition intangibles,
divided by operating profit before exceptional items and
amortisation of acquisition intangibles. We believe this measure
provides a consistent basis for comparing cash generation
consistently over time.
On a statutory basis, including the effect of IFRS16, we saw an
operating cash inflow of GBP6.3m (H1 2019: outflow of GBP1.8m),
representing a cash conversion of 160% inflow (H1 2019: outflow of
57%).
As we highlighted last year, the timing of revenues, method of
contract delivery and customer contractual terms can all have an
impact on working capital and, consequently, cash conversion.
The management of working capital is a continueddavid focus.
This includes accrued income, debtors and creditors. We manage
these balances within our banking facilities. However, we recognise
the importance of supporting our supply chain. We have ensured that
we have paid our suppliers as normal.
Net debt
At 31 March 2020, the Group had net debt excluding the effect of
IFRS16 of GBP3.5m (31 March 2019: GBP12.9m). However, this
represents a snapshot in time and the weighted average revolving
credit facility drawdown in the period was GBP9.7m (H1 2019:
GBP15.3m).
The total n et debt including the effect of IFRS16 is GBP9.9m,
this is based upon a GBP6.4m adjustment for IFRS16.
Banking arrangements
We had drawn GBP10.0m at 31 March 2020 (31 March 2019: GBP14.5m)
under our revolving credit facility (excluding borrowing costs). At
the date of issuing this report we had drawn GBP6.5m (excluding
borrowing costs), with a net cash, before finance lease liability
of GBP4.3m; National Westminster Bank ('NatWest') continues to be
an excellent and supportive partner.
In December 2018, the Group renewed its bank facilities to
provide an overdraft facility of GBP5,000,000 together with a
revolving credit facility of GBP25,000,000, which runs to 31
January 2022.
We are confident that our banking facilities provide sufficient
support in managing our corporate affairs and provide sufficient
capacity to plan for future growth, particularly in bidding with
confidence on new contracts.
Statement of financial position
The principal items in our balance sheet are goodwill,
borrowings and working capital.
There was a reduction of GBP0.8m in goodwill and other
intangibles, mainly due to GBP0.8m amortisation charge of
acquisition intangibles.
Net current assets (excluding cash, borrowings and lease
liabilities) stood at GBP7.1m at 31 March 2020 (31 March 2019:
GBP8.2m). Net current assets stood at GBP10.1m at 31 March 2020 (31
March 2019: GBP9.6m).
The principal movements in working capital are noted below;
Working capital Unaudited Unaudited Audited
31 March 31 March 30 September
2020 2019 2019
GBP'000 GBP'000 GBP'000
Trade receivables 28.3 23.3 17.9
Accrued income 9.6 15.1 17.6
Trade payables (23.6) (23.7) (21.1)
Accruals (7.6) (7.8) (8.0)
=========== =========== ==============
Risks
The Board considers strategic, financial and operational risks
and identifies actions to mitigate those risks. Key risks and their
mitigation were disclosed on pages 29 to 31 of the Annual Report
for the year ended 30 September 2019.
We continue to manage a number of potential risks and
uncertainties, including claims and disputes which are common to
other similar businesses which could have a material impact on
short and longer term performance. The Board remains focused on the
outcome of a number of contract settlements on which there is a
range of outcomes for the Group in terms of both cash flow and
impact on the consolidated statement of comprehensive income.
The Group have implemented a clear procedure for ensuring that
all of our premises have undertaken a comprehensive Risk Assessment
in line with returning to work.
By adhering to Government Guidance and the steps we, as a
responsible collective Group have proactively taken, we advocate
that all our colleagues stay alert by:-
-- Maintaining social distancing measures at all times - 2 metres apart where possible;
-- Ensuring they thoroughly wash/clean their hands regularly -
adequate hand washing facilities and/or sanitising products are
made available to all colleagues;
-- By agreement with Line Manager and HR Department, work from home where appropriate;
-- Limiting contact with other people, where at all possible;
-- Office rotas are in place to prevent too many people from being in small spaces;
-- Phased working time and/or hours;
-- One-way systems around our larger offices with different entry/exit points;
-- Wearing a face covering when they are in an enclosed space
where it is difficult to socially distance e.g., on public
transport
Our Risk Assessments have been created in consultation with our
colleagues and clearly establish the control measures we have put
in place. Due to the nature of our organisation and its various
geographical locations, each Business has undertaken this Risk
Assessment in the desired format - however all assessments have
been reviewed and approved by the Senior Management Teams and our
SHEQ Managers.
Going Concern statement
The Directors acknowledge the Financial Reporting Council's
'Guidance on the going concern basis of accounting and reporting on
solvency and liquidity risks' issued in April 2016. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the Financial Review.
In assessing the Group and Company's ability to continue as a
going concern, the Board reviews and approves the annual budget,
three-year plan and a rolling 12 month forecast, including
forecasts of cash flows, borrowing requirements and covenant
headroom. The Board reviews the Group's sources of available funds
and the level of headroom available against its committed borrowing
facilities and associated covenants. The Group's financial
forecasts, taking into account possible sensitivities in trading
performance including the potential impact of Covid-19, indicate
that the Group will be able to operate within the level of its
committed borrowing facilities and within the requirements of the
associated covenants for the foreseeable future. NatWest remains
supportive of the Group and in December 2018, the Group renewed its
banking facilities to provide an overdraft facility of GBP5,000,000
together with a revolving credit facility of GBP25,000,000, which
runs to 31 January 2022. The Directors have a reasonable
expectation that the Group and Company have adequate resources to
continue their operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis of
accounting in preparing the Interim report.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 March 2020
Unaudited Unaudited Audited
six months six months year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
Notes GBP'000 GBP'000 GBP'000
Revenue 2 109,551 102,476 212,066
Cost of sales (92,029) (88,130) (179,188)
Gross profit 17,522 14,346 32,878
Other operating expenses (13,736) (11,622) (23,953)
Share of results of joint venture 146 371 429
Operating profit before exceptional
items and amortisation of acquisition
intangibles 2 3,932 3,095 9,354
Exceptional costs 3 - - (225)
Amortisation of acquisition intangibles (800) (1,367) (2,735)
---------------
Operating profit 3,132 1,728 6,394
Finance expense (614) (609) (1,051)
Investment income 39 - -
Profit before tax from continuing
operations 2 2,557 1,119 5,343
Taxation 4 (498) (218) (1,154)
Profit for the period attributable
to the equity holders of the Group
from continuing operations 2,059 901 4,189
------------- ------------- ---------------
Discontinued operations
Profit for the period from discontinued
operations 128 - 848
------------- ------------- ---------------
Profit for the period attributable
to the equity holders of the Group 2,187 901 5,037
============= ============= ===============
Earnings per share from continuing
operations
Basic 6 1.3p 0.6p 2.7p
Diluted 6 1.3p 0.6p 2.6p
===== ===== =====
Earnings per share from continuing
operations and discontinued operations
Basic 6 1.4p 0.6p 3.2p
Diluted 6 1.4p 0.6p 3.2p
===== ===== =====
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 March 2020
Unaudited Unaudited Audited
As at 31 As at 31 As at 30
March 2020 March 2019 September
2019
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 42,357 42,406 42,357
Other intangible assets 1,416 3,701 2,171
Property, plant and equipment 1,302 1,483 1,344
Right-of-use assets 7 6,296 - -
Interest in joint venture 614 675 732
Deferred tax asset 603 195 467
52,588 48,460 47,071
------------- ------------- ------------
Current assets
Inventories 3,276 3,034 3,059
Trade and other receivables 45,015 45,846 42,068
Cash and cash equivalents 9 6,273 1,407 2,452
------------- ------------- ------------
54,564 50,287 47,579
------------- ------------- ------------
Total assets 107,152 98,747 94,650
------------- ------------- ------------
Current liabilities
Trade and other payables 40,045 38,902 36,698
Lease liabilities 9 3,279 53 54
Provisions 10 465 1,549 415
Income tax payable 634 192 242
------------- ------------- ------------
44,423 40,696 37,409
------------- ------------- ------------
Net current assets 10,141 9,591 10,170
------------- ------------- ------------
Non-current liabilities
Loans and borrowings 8,9 9,810 14,199 9,755
Lease liabilities 9 3,106 34 -
Provisions 10 3,287 3,813 3,195
16,203 18,046 12,950
------------- ------------- ------------
Total liabilities 60,626 58,742 50,359
------------- ------------- ------------
Net assets 46,526 40,005 44,291
============= ============= ============
Equity
Called up share capital 15,895 15,754 15,895
Share premium account 25,318 25,318 25,318
Share-based payment reserve 586 776 538
Own shares (290) (290) (290)
Merger reserve 20,067 20,067 20,067
Retained earnings (15,050) (21,620) (17,237)
Equity attributable to equity holders
of the Group 46,526 40,005 44,291
============= ============= ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 March 2020
Share-based
Share payment
Share premium reserve Own shares Merger Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2017
(audited) 15,753 25,314 776 (290) 20,067 (11,378) 50,242
Loss for the period - - - - - (12,154) (12,154)
At 31 March 2018
(unaudited) 15,753 25,314 776 (290) 20,067 (23,532) 38,088
Profit for the period - - - - - 1,799 1,799
Dividends paid (note
5) - - - - - (788) (788)
At 30 September 2018
(audited) 15,753 25,314 776 (290) 20,067 (22,521) 39,099
---------- ---------- ------------ ------------- ---------- ----------- ---------
Issue of shares (exercise
of options) 1 4 - - - - 5
Profit for the period - - - - - 901 901
---------- ---------- ------------ ------------- ---------- ----------- ---------
At 31 March 2019
(unaudited) 15,754 25,318 776 (290) 20,067 (21,620) 40,005
---------- ---------- ------------ ------------- ---------- ----------- ---------
Issue of shares (exercise
of options) 141 - - - - (141) -
Profit for the period - - - - - 4,136 4,136
Dividends paid - - - - - (394) (394)
Share based payments - - 544 - - - 544
Reserve transfer - - (782) - - 782 -
---------- ---------- ------------ ------------- ---------- ----------- ---------
At 30 September 2019
(audited) 15,895 25,318 538 (290) 20,067 (17,237) 44,291
========== ========== ============ ============= ========== =========== =========
Profit for the period - - - - - 2,187 2,187
Share based payments - - 48 - - - 48
At 31 March 2020
(unaudited) 15,895 25,318 586 (290) 20,067 (15,050) 46,526
======= ======= ==== ====== ======= ========= =======
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 March 2020
Unaudited Unaudited Audited
six months six months year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
(post IFRS16
adjustment)
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from / (used in)
operations 11 6,292 (1,752) 5,539
Interest paid (540) (467) (914)
Interest received 39 - -
Taxation (242) 511 (34)
Net cash generated from / (used
in) operating activities 5,549 (1,708) 4,591
--------------- ------------- ---------------
Cash flows from investing activities
Receipt of deferred consideration
on prior period disposals 930 916 910
Purchase of property, plant and
equipment (283) (334) (631)
Purchase of intangible assets (232) (300) (403)
Sale of property, plant and equipment 3 13 86
Net cash generated from / (used
in) investing activities 418 295 (38)
--------------- ------------- ---------------
Cash flows from financing activities
Proceeds from Issue of Shares - - 5
Dividend paid to shareholders - - (394)
Proceeds from bank borrowings - 1,500 -
Repayment of bank borrowings - - (3,000)
Lease payments (2,146) (57) (89)
Finance issue costs - (328) (328)
Net cash (used in) / generated from
financing activities (2,146) 1,115 (3,806)
--------------- ------------- ---------------
Net increase / (decrease) in cash
and cash equivalents 3,821 (298) 747
Cash and cash equivalents at beginning
of year 2,452 1,705 1,705
Cash and cash equivalents at end
of year 6,273 1,407 2,452
=============== ============= ===============
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 March 2020
1. Basis of preparation
The results presented in this report are unaudited and they have
been prepared in accordance with the recognition and measurement of
International Financial Reporting Standards (`IFRS') as adopted by
the EU that are expected to be applicable to the financial
statements for the year ending 30 September 2020 and on the basis
of the accounting policies to be used in those financial
statements. The figures for the year ended 30 September 2019 are
extracted from the statutory accounts of the group for that period
The condensed consolidated financial statements do not include all
the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
annual financial statements, being the statutory financial
statements for Sureserve Group plc, as at 30 September 2019, which
have been prepared in accordance with IFRS as adopted by the
European Union.
The condensed consolidated financial statements for the six
months ended 31 March 2020 do not comprise statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 30 September 2019 have been
approved by the Board of Directors and delivered to the Registrar
of Companies. These accounts, which contained an unqualified audit
report under Section 495, did not include a reference to any
matters to which the auditor drew attention by way of emphasis of
matter and did not contain a statement under Section 498 (2) or (3)
of the Companies Act 2006.
Significant accounting policies
The accounting policies adopted in the preparation of the
condensed consolidated financial statements are consistent with
those followed in the preparation of the Group's annual financial
statements for the year ended 30 September 2019, with the exception
of those noted below;
IFRS 16
IFRS 16 'Leases' was issued in January 2016 and is effective for
accounting periods beginning on or after 1 January 2019. It has
been applied by the Group from 1 October 2019 under the modified
retrospective approach, applying the short term and low value lease
exemption.
Under IFRS 16, leases have been recognised as a lease liability
and a right of use asset. These lease liabilities were measured at
the present value of the remaining lease payments based on a range
of values approximating the Group's incremental borrowing rate as
at 1 October 2019 of 4.01%. The range that is being used is between
3.01% and 4.51% depending on the type of asset. The associated
right of use assets for all leases were measured at the amount
equal to the lease liability.
This has had a material impact on the Group's consolidated
statement of financial position, as can be seen from the extract
below:
Unaudited
six months
Unaudited six months ended ended 31
31 March 2020 March 2019
IFRS16
As reported impact Pre IFRS16
GBP'000 GBP'000 GBP'000 GBP'000
Right-of-use assets 6,296 6,296 - -
Lease liabilities (current) (3,279) (3,249) (30) (53)
Lease liabilities (non-current) (3,106) (3,106) - (34)
Income tax payable (634) 12 (646) (192)
Net assets 46,526 (47) 46,573 40,005
============ ======== =========== =============
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 March 2020
1. Basis of preparation (continued)
The effect on operating profit before exceptional and other
items has increased by GBP0.1m. Lease payments are now reflected as
a reduction in lease liabilities. Conversely there is an increase
in depreciation and interest on lease obligations .
A reconciliation of EBITA and adjusted EBITA pre-IFRS16 to
profit before tax for the period is provided below:
Unaudited
six months
Unaudited six months ended ended 31
31 March 2020 March 2019
IFRS16
As reported impact Pre IFRS16
GBP'000 GBP'000 GBP'000 GBP'000
Operating profit before exceptional
items and amortisation of
acquisition intangibles 3,932 89 3,843 3,095
Amortisation of acquisition
intangibles (800) - (800) (1,367)
Operating profit 3,132 89 3,043 1,728
Finance expense (614) (148) (466) (609)
Investment income 39 - 39 -
Profit before tax 2,557 (59) 2,616 1,119
============ ======== =========== =============
Cash is unaffected by the adoption of IFRS16, but as noted on
the extract of the Statement of Cash Flows below, cash generated
from operating activities has increased being offset by a decrease
in the cash used in financing activities:
Unaudited
six months
Unaudited six months ended ended 31
31 March 2020 March 2019
IFRS16
As reported impact Pre IFRS16
GBP'000 GBP'000 GBP'000 GBP'000
Net cash generated from /
(used in) operating activities 5,549 2,122 3,427 (1,708)
Net cash generated from investing
activities 418 - 418 295
Net cash (used in) / generated
from financing activities (2,146) (2,122) (24) 1,115
------------ -------- ----------- -------------
Net increase / (decrease)
in cash and cash equivalents 3,821 - 3,821 (298)
Cash and cash equivalents
at beginning of year 2,452 - 2,452 1,705
Cash and cash equivalents
at end of year 6,273 - 6,273 1,407
============ ======== =========== =============
The debt covenants on the Group's borrowing facility will be
unaffected by the application of IFRS16 as the covenant
calculations are based on the accounting principles in place at the
date the agreement was entered into.
Seasonality
The Group has seasonal influences in specific areas. The
Compliance division experiences higher activity levels in Gas and
Lift services in colder weather, leading to higher working capital
requirements and lower profitability in winter, and the opposite in
the summer. Within Energy Services it is not possible to render
walls or use fixing glue at temperatures below three degrees
centigrade, nor perform cladding work in high winds. As such,
weather has an influence on this business, meaning that the Group
has to plan to increase capacity during warmer and more settled
periods to compensate for time lost during colder ones.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2020
2. Operating segments
The Group's chief operating decision maker is considered to be
the Board of Directors ('the Board'). The Group's operating
segments are determined with reference to the information provided
to the Board in order for it to allocate the Group's resources and
to monitor the performance of the Group.
The Board has determined an operating management structure
aligned around the two core activities of the Group, with the
following operating segments applicable:
-- Compliance: focused on gas, fire, electrics, air, water and
lifts where we contract predominantly under framework agreements.
Services comprise the following:
- Installation, maintenance and repair-on-demand of gas appliances and central heating systems
- Compliance services in the areas of fire protection and building electrics
- Air and water hygiene solutions
- Service, repair and installation of lifts
-- Energy Services: we offer a range of services in the energy
efficiency sector, including external, internal and cavity wall
insulation, loft insulation, gas central heating, boiler upgrades
and other renewable technologies. The services are offered under
various energy saving initiatives including Energy Company
Obligations ("ECO"), Green Deal and the Scottish Government's HEEPs
("Home Energy Efficiency Programme") Affordable Warmth programme.
Clients include housing associations, social landlords, local
authorities and private householders and we have trading
relationships with all of the "big six" utility suppliers and many
of the leading utility challengers. We also provide metering
services involving the installation, servicing and administration
of devices and associated data.
The accounting policies of the reportable segments are the same
as those described in the accounting policies section.
All revenue and profit are derived from operations in the United
Kingdom only.
The profit measure the Board used to evaluate performance is
operating profit before exceptional items and other items, as
outlined in Note 3 and on the face of the income statement.
The Group accounts for inter-segment trading on an arm's length
basis. All inter-segment trading is eliminated on
consolidation.
The following is an analysis of the Group's revenue and
operating profit before exceptional items and amortisation of
acquisition intangibles by reportable segment:
Unaudited Unaudited Audited
six months six months year ended
ended ended 30 September
31 March 31 March 2019
2020 2019
GBP'000 GBP'000 GBP'000
Revenue
Compliance 73,351 65,743 133,051
Energy Services 37,250 38,002 82,081
Total segment revenue 110,601 103,745 215,132
Inter-segment elimination (1,050) (1,269) (3,066)
------------- ------------- ---------------
Total revenue 109,551 102,476 212,066
------------- ------------- ---------------
Reconciliation of operating profit before exceptional items and
amortisation of acquisition intangibles to profit before
taxation
Unaudited Unaudited Audited
six months six months year ended
ended ended 30 September
31 March 31 March 2019
2020 2019
GBP'000 GBP'000 GBP'000
Operating profit before exceptional
items and amortisation of acquisition
intangibles by segment
Compliance 3,701 2,640 8,470
Energy Services 1,926 1,896 4,341
Central (1,695) (1,441) (3,457)
------------- ------------- ---------------
Total operating profit before exceptional
items and amortisation of acquisition
intangibles 3,932 3,095 9,354
Exceptional costs - - (225)
Amortisation of acquisition intangibles (800) (1,367) (2,735)
Finance costs (614) (609) (1,051)
Investment income 39 - -
Profit before taxation from continuing
operations 2,557 1,119 5,343
============= ============= ===============
Only the Group consolidated statement of financial position is
regularly reviewed by the chief operating decision maker and
consequently no segment assets or liabilities are disclosed here
under IFRS 8.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2020
3. Exceptional items
Unaudited Unaudited Audited
six months six months year ended
ended 31 ended 31 30 September
March 2020 March 2019 2019
GBP'000 GBP'000 GBP'000
Restructuring costs - - 225
--------------- --------------- ---------------
Total exceptional costs - - 225
=============== =============== ===============
Exceptional items are considered non-trading because they are
not part of the underlying trade of the Group.
4. Taxation
The income tax charge for the six months ended 31 March 2020 is
calculated based upon the effective tax rates expected to apply to
the Group for the period of 19%.
5. Dividends
The proposed final dividend for the year ended 30 September 2019
of 0.5 pence per share amounting to GBP0.8m and representing a
total dividend of 0.5 pence for the full year (2018: 0.25 pence per
share), was paid on 30 April 2020 to the shareholders on the
register at the close of business on 31 January 2020.
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Unaudited Unaudited Audited
six months six months year ended
ended 31 ended 30 September
March 2020 31 March 2019
2019
Number Number Number
Weighted average number of ordinary
shares for the purposes of basic earnings
per share 158,947,467 157,541,890 158,049,310
Diluted
Effect of dilutive potential ordinary
shares:
Share options 1,840,747 189,136 595,869
------------- ------------- -----------------
Weighted average number of ordinary
shares for the purposes of diluted earnings
per share 160,788,214 157,731,026 158,645,179
============= ============= =================
Earnings for the purpose of basic and
diluted earnings per share from continuing
operations being net earnings attributable
to the owners of the Company from continuing
operations (GBP'000) 2,059 901 4,189
Basic earnings per share from continuing
operations 1.3p 0.6p 2.7p
Diluted earnings per share from continuing
operations 1.3p 0.6p 2.6p
Earnings for the purpose of basic and
diluted earnings per share being net
profit after tax attributable to the
owners of the Company from continuing
and discontinued operations (GBP'000's) 2,187 901 5,037
Basic earnings per share 1.4p 0.6p 3.2p
Diluted earnings per share 1.4p 0.6p 3.2p
============= ============= =================
The number of shares in issue at 31 March 2020 was
158,947,467.
The weighted average number of Ordinary shares in issue during
the year excludes those accounted for in the own shares
reserve.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2020
7. Right-of-use assets
On 1 October 2019 following adoption of the leasing standard
IFRS16, assets in relation to leases which had previously been
classified as operating leases were recognised, along with the
reclassification of finance-leased assets held within tangible
assets to right-of-use assets - see note 1 for details.
Right-of-use
property Right-of-use
assets motor vehicles Total
GBP'000 GBP'000 GBP'000
Cost
At 30 September 2019 - - -
Change in accounting policy 3,159 5,171 8,330
------------ --------------- -------
At 1 October 2019 3,159 5,171 8,330
Additions - 314 314
Disposals - (332) (332)
------------ --------------- -------
At 31 March 2020 3,159 5,153 8,312
------------ --------------- -------
Depreciation
At 30 September 2019 - - -
Change in accounting policy - - -
------------ --------------- -------
At 1 October 2019 - - -
Charge for the year 597 1,585 2,182
Disposals - (166) (166)
------------ --------------- -------
At 31 March 2020 597 1,419 2,016
------------ --------------- -------
Net book value
At 31 March 2020 2,562 3,734 6,296
============ =============== =======
At 30 September 2019 - - -
============ =============== =======
8. Loans and borrowings
Unaudited Unaudited Audited
31 31 30 September
March March 2019
2020 2019
GBP'000 GBP'000 GBP'000
Bank loans and credit facilities at
amortised cost:
Current - - -
Non-current 9,810 14,199 9,755
---------- ---------- --------------
9,810 14,199 9,755
Maturity analysis of bank loans and
credit facilities falling due:
In one year or less, or on demand - - -
Between one and two years 9,810 - -
Between two and five years - 14,199 9,755
9,810 14,199 9,755
---------- ---------- --------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2020
9. Net debt
Unaudited Unaudited Audited
31 31 30 September
March March 2019
2020 2019
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 6,273 1,407 2,452
Bank loans and credit facilities (9,810) (14,199) (9,755)
Finance lease obligations - (87) (54)
------------ ------------- --------------
Pre IFRS16 net debt (3,537) (12,879) (7,357)
Lease liabilities (6,385) - -
------------ ------------- --------------
Total net debt (9,922) (12,879) (7,357)
============ ============= ==============
10. Provisions
Legal and
other
GBP'000
At 1 April 2019 (unaudited) 5,362
Additional provision 172
Utilised in the period (1,924)
At 30 September 2019 (audited) 3,610
Additional provision 237
Utilised in the period (95)
---------
At 31 March 2020 (unaudited) 3,752
=========
Current provisions 465
=========
Non-current provisions 3,287
=========
Legal and other
Other costs relate to property dilapidation obligations,
potential contract settlement costs and other potential legal
settlement costs. These are expected to result in an outflow of
economic benefit over the next one to three years.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2020
11. Cash used in operations
Using consistent accounting
policies
Audited
Unaudited Unaudited Unaudited year ended
six months six months six months 30 September
ended 31 ended 31 ended 31 2019
March 2020 March 2020 March 2019
(post IFRS16 (pre IFRS16
adjustment) adjustment)
GBP'000 GBP'000 GBP'000 GBP'000
Operating profit 3,132 3,043 1,728 6,394
Adjustments for:
Depreciation 2,515 333 327 693
Amortisation of intangible assets 978 978 1,524 3,159
Share-based payments 48 48 - 544
Profit on disposal of property,
plant and equipment (3) (3) (13) (40)
Changes in working capital:
Inventories (240) (240) 1,188 1,157
Trade and other receivables (3,455) (3,455) (3,976) 199
Trade and other payables 3,175 3,176 (197) (2,491)
Provisions 142 142 (2,333) (4,076)
6,292 4,022 (1,752) 5,539
Cash generated from / (used in)
operations 2 2
--------------- -------------- ------------- --------------
Adjusted operating cash conversion
calculation
Cash generated from / (used in)
operations 6,292 4,022 (1,752) 5,539
Impact of exceptional and other
costs in the period (656) (656) 3,331 4,364
Adjusted cash generated from operations 5,636 3,366 1,579 9,903
Operating profit before exceptional
items and amortisation of acquisition
intangibles 3,932 3,843 3,095 9,354
Operating cash conversion % 143% 88% 51% 106%
--------------- -------------- ------------- --------------
Statutory operating cash conversion
calculation
Cash generated from / (used in)
operations 6,292 4,022 (1,752) 5,539
Operating profit before exceptional
items and amortisation of acquisition
intangibles 3,932 3,843 3,095 9,354
--------------- -------------- ------------- --------------
Statutory operating cash conversion
% 160% 105% (57%) 59%
--------------
12. Related party transactions
There have been no material changes to the related party
balances disclosed in the Group's Annual Report and Accounts 2019
and there have been no related party transactions that have
materially affected the financial position or performance of the
Group in the six months to 31 March 2020.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FLFSRELIRFII
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