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entu (UK) plc   -  ENTU   

Half-year Report

Released 07:00 25-Jul-2017

RNS Number : 9817L
entu (UK) plc
25 July 2017
 

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

 

ENTU (UK) PLC

("Entu" or the "Group")

 

Results for the Six Months Ended 30 April 2017

  

Entu (UK) plc, the home improvements group providing energy efficiency products and services to homeowners and businesses across the UK, announces its results for the six months ended 30 April 2017 which are in line with the Group's trading announcement on 14 June 2017.

 

Highlights

 

·     Operational and supply chain issues result in lower first half revenues of £36.5m (2016: £42.2m).

 

·     LBITDA in line with expectations at £2.3m (2016: earnings of £1.3m).

 

·     Operational improvements made in the early part of H2 already yielding results.

 

·     Further restructuring exercise implemented with expected savings of £0.8m a year.

 

·     Executive Team strengthened further to drive efficiency savings across the Group's activities and improve working capital. 

 

Half Year Ended 30 April

Unaudited

2017

 

£m

2016

Restated

£m

 

 

 

Continuing Operations

 

 

Revenue

36.5

42.2

Gross profit

10.0

13.8

(LBITDA)/EBITDA before exceptional items

(2.3)

1.3

Operating (loss)/profit before exceptional items

(2.4)

1.2

Operating (loss)/profit after exceptional items

(3.0)

1.1

 

 

 

Overall Results

 

 

(Loss)/profit for the period

(2.6)

0.5

Basic (loss)/profit per share (pence)

(4.0)

0.8

Cash used in operations

(7.3)

(2.3)

Net decrease in cash and cash equivalents

(7.3)

(2.3)

Net debt

(6.6)

(0.9)

 

 

 

 

Strategic Review and Going Concern

 

·     Strategic review announced 6 July 2017 - assisted by KPMG.

 

·     Aim to secure new long-term financing to address cash and borrowing requirements.

 

·     Interest being expressed by a number of parties in a number of possible solutions.

 

·     Group's lenders remain supportive whilst this process continues.

 

·     Initial offers are expected shortly for consideration by the Board and the Group's lenders.

 

Chief Executive, Ian Blackhurst, commented:

 

"Whilst implementing our five-point improvement plan, the complexity of issues in our operations and supply chain meant that we were unable to move ahead as quickly as we would have wished.  However, our strengthened Executive Team is already delivering tangible results and we hope that the strategic review exercise that we announced on 6 July 2017 will stabilise the Group's financial position to allow the wider management team to deliver the improvement plan and return the business to profitable growth in the next financial year."

 

For further information, please contact:

  

Entu

 

Ian Blackhurst, Chief Executive Officer    

020 7457 2020

Neill Skinner, Chief Financial Officer

 

 

 

Zeus Capital Limited (Broker and Nominated Adviser)

 

John Goold

020 3829 5000

Dominic King

 

Andrew Jones

 

 

 

Instinctif Partners (Public Relations)

 

Helen Tarbet

020 7457 2020

James Gray

 

 

Notes to Editors

 

Entu (UK) plc (AIM: ENTU) is a leading home improvement group providing energy efficiency products and services to homeowners and businesses in the UK.

 

Headquartered in Cheshire, Entu has national presence through a network of strong regional brands such as Weatherseal, Penicuik and Zenith. The Group operates three business segments: home improvement products, energy generation and energy saving products and repairs and renewals services.

 

Entu operates in a growing marketplace with myriad opportunities. Entu's primary strategy is to focus on driving organic growth from its diversified, fully integrated product portfolio, and also, over time, through the development of new product and service offerings, in particular, energy efficiency products and services.

 

The Group was admitted to AIM in October 2014. 

 

 

 

CHIEF EXECUTIVE'S STATEMENT

 

Business Review

 

Sales in the core Home Improvements business held up well throughout the first quarter.  However, as operations were scaled up to meet peak seasonal demand in late March and April, it became clear that the operational and supply chain difficulties outlined in the full-year results statement on 29 March 2017 were more complex and further reaching than expected. 

 

Driving up fit capacity to meet peak demand in the last weeks of the first half of the year whilst implementing actions to address these complex operational and supply chain issues would have created an unsustainable position and been counter-productive.   The Group, therefore, made the difficult decision to hold fit capacity at a lower level during this peak period and bring sales into line, in order to protect levels of customer service until the operational and supply chain issues had been resolved. 

 

Following the sale of Astley Façades in October 2015, the Energy Saving and Generation Division was a considerably smaller operation in the first half.  However, the Division did see some growth in its emerging LED installation business with several major warehouse conversion projects undertaken for a number of leading manufacturing and distribution businesses, and the ECO-funded insulation business secured a 15-month extension to its contract with a major utility company. 

 

The loss of fit capacity during these critical weeks had a significant impact on first half revenues.  Group revenues from continuing operations for the six months ended 30 April 2017 were down 13.5% at £36.5m (2016: £42.2m) and, with the loss of revenue being concentrated in the peak period, gross margins fell to 27.4% (2016: 32.7%) resulting in a gross profit of £10.0m (2016: £13.8m). 

 

Loss before interest, tax, depreciation and amortisation ("LBITDA") on continuing operations before exceptional items for the six months ended 30 April 2017 was in line with our latest expectations at £2.3m (2016: positive earnings of £1.3m), and the operating loss before exceptional items was £2.4m (2016: profit of £1.2m). 

 

The overall loss for the half year, after exceptional items of £0.6m (2016: £0.1m) relating to restructuring costs, was £2.6m (2016: profit of £0.5m).  Net debt at 30 April 2017 was £6.6m (2016: £0.9m).

 

Divisional Results (Continuing Operations)

 

Six months ended

30 April 2017

Unaudited

Home Improvements

 

Energy Generation and Saving

 

Repairs and Renewals Service Agreements

 

Group

 

2017

£m

2016

£m

 

2017

£m

2016

£m

 

2017

£m

2016

£m

 

2017

£m

2016

£m

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

32.9

39.1

 

2.3

1.8

 

1.3

1.3

 

36.5

42.2

(LBITDA)/EBITDA1

(3.4)

0.3

 

0.2

0.1

 

0.9

0.9

 

(2.3)

1.3

Operating (loss)/profit1

(3.5)

-

 

0.2

0.1

 

0.9

1.0

 

(2.4)

1.2

Operating (loss)/profit2

(4.1)

-

 

0.2

0.1

 

0.9

1.0

 

(3.0)

1.1

 

 

 

 

 

 

 

 

 

 

 

 

1 Before exceptional items.

2 After exceptional items.

 

 

 

 

Home Improvements

 

The significant loss of fit capacity during late March and April caused revenues in the core Home Improvements Division to fall 15.8% to £32.9m (2016: £39.1m).  As noted above, the concentration around a few weeks at the end of the first half had a disproportionate impact on gross margin and, as a result, the Division reported an operating loss before exceptional items of £3.5m (2016: nil).

 

Intense competition in the non-core boilers and energy-switching businesses resulted in a loss of £0.2m in the first half and, following a review in May, the Group decided to close these businesses and focus on its core glazing products.

 

Energy Generation and Saving

 

Revenues grew 27.8% to £2.3m (2016: £1.8m) due to growth in the Group's emerging LED installations business, whilst the ECO-funded insulation business continued to trade in line with expectations.  The Division generated an operating profit of £0.2m (2016: £0.1m).

 

Repairs and Renewals Service Agreements ("RRSA")

 

The RRSA Division continued to deliver a stable revenue and profit stream.  Revenues were in line with the previous half year at £1.3m (2016: £1.3m) and represented 4.0% of Home Improvement revenues (2016: 3.3%).  Operating profit was £0.9m (2016: £1.0m).

 

Strategic Review and Going Concern

 

The losses incurred in the period and the pressure on working capital and debt collection resulting from the operational and supply chain issues referred to above have pushed cash and borrowing requirements into uncomfortable territory. As a result, on 6 July 2017, the Group announced that it had, with the assistance of KPMG, commenced a strategic review with the aim of securing new long-term financing and strengthening the balance sheet.   The process has attracted interest across the various options being considered, namely new debt funding, debt and equity structures and expressions of interest in certain parts of the Group.  Initial offers of interest have been requested to be submitted shortly and an update will be provided once the various offers have been evaluated by the Board in conjunction with the Group's lenders.

 

Appropriate bank support continues to remain in place whilst this process is completed. Based on the current level of interest, the Board hopes that the Group will be able to secure new long-term finance facilities.  However, should the Group's banks withdraw their support or should the process fail to provide options that will stabilise the Group's financial position, then the Group's ability to continue as a going concern may be at risk.  This is discussed in more detail in Note 1 to the Consolidated Financial Statements.

 

Dividend

 

In light of the results for the six months ended 30 April 2017 and the current financial position of the Group, the Board is not recommending an interim dividend.

 

Trading Outlook

 

The outcome of the strategic review will have a bearing upon the trading outlook for the Group.  In the meantime, the Group continues to implement its detailed action plan to reduce costs, improve operational efficiency, leverage its supply chain, improve cash collection and strengthen controls. 

 

A significant number of operational improvements have been made since the appointment of a new Group Operations Director in April, and performance in the second half of the year is improving as these measures take effect.  A further restructuring exercise was implemented in July which is expected to yield savings of £0.8m a year, and the Executive Team has been strengthened with a number of experienced interim managers to drive further efficiency savings across the Group's activities and improve working capital. 

 

As noted in the Trading Update announced on 14 June 2017, the intention is to hold fit capacity at current levels throughout the second half of the year and to bring sales into line.  Furthermore, the LED business and other commercial revenue streams will be scaled back in the short-term in order to focus resources on the core Home Improvements business.  Whilst the actions noted above will yield some benefit in the current financial year, the Group still expects the full-year loss before interest, tax, depreciation and amortisation on continuing operations before exceptional items to be in the range of £1.2m-£2.2m subject to the outcome of the strategic review.

 

Ian Blackhurst

Chief Executive

25 July 2017

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

Half Year to

30 April 2017 Unaudited

Half Year to

30 April 2016 Unaudited

Restated

Year to

31 October 2016 Audited

 

 

Notes

£000's

£000's

£000's

 

 

 

 

 

Continuing operations

 

 

 

 

Revenue                                            

4

36,501

42,162

87,745

Cost of sales

 

(26,503)

(28,326)

(60,284)

 

 

 

 

 

Gross profit

 

9,998

13,836

27,461

 

 

 

 

 

Administrative expenses

 

(12,397)

(12,647)

(24,994)

 

 

 

 

 

Operating (loss)/profit before exceptional items

 

(2,399)

1,189

2,467

 

 

 

 

 

Exceptional items

5

(601)

(90)

(4,581)

 

 

 

 

 

Operating loss after exceptional items  

 

(3,000)

1,099

(2,114)

 

 

 

 

 

Finance costs

 

(194)

(92)

(219)

 

 

 

 

 

Loss before taxation

 

(3,194)

1,007

(2,333)

 

 

 

 

 

Taxation credit/(charge)

7

567

(88)

512

 

 

 

 

 

Loss for the period from continuing operations

 

(2,627)

919

(1,821)

 

 

 

 

 

Discontinued operations

 

 

 

 

Loss for the period from discontinued operations

6

-

(414)

(3,801)

 

 

 

 

 

Loss for the period

 

(2,627)

505

(5,622)

 

 

 

 

 

 

 

 

 

 

Continuing basic (loss)/profit per share (pence)

9

(4.0)

1.4

(2.8)

 

 

 

 

 

Discontinued basic (loss)/profit per share (pence):

9

-

(0.6)

(5.8)

 

 

 

 

 

Total basic (loss)/profit per share (pence)

9

(4.0)

0.8

(8.6)

 

 

 

 

 

Diluted continuing operations (loss)/profit per share (pence)

 

9

 

(4.0)

 

1.4

 

(2.8)

 

Adjusted earnings per share is shown in note 9 to the accounts.

 

The notes 1 to 15 are an integral part of these Consolidated Financial Statements.

 

There are no other items of comprehensive income for the period other than the loss for the period attributable to the equity holders.

 

 

 

 

CONSOLIDATED BALANCE SHEET

 

 

 

As at 30 April 2017

Unaudited

 

As at 30 April 2016

Unaudited

Restated

As at 31 October 2016

Audited

 

 

Notes

£000's

£000's

£000's

 

 

 

 

 

Assets

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

 

1,141

1,496

1,141

Property, plant and equipment

 

360

879

481

Deferred tax asset

 

418

-

418

 

 

1,919

2,375

2,040

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

1,704

2,002

1,267

Trade and other receivables

10

10,785

15,864

8,103

Current taxation receivable

 

1,347

-

-

Cash and cash equivalents

11

-

-

768

 

 

13,836

17,866

10,138

 

 

 

 

 

Total assets

 

15,755

20,241

12,178

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

50

50

50

Accumulated losses

 

(10,983)

(1,900)

(8,356)

Total shareholders' deficit

 

(10,933)

(1,850)

(8,306)

 

 

 

 

 

Liabilities

 

 

 

 

Non-current liabilities

 

 

 

 

Deferred taxation liabilities

 

-

60

-

Provisions

 

403

1,318

403

 

 

403

1,378

403

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

12

18,348

18,302

18,465

Borrowings

13

6,553

891

-

Current taxation liabilities

 

-

620

54

Provisions

 

1,384

900

1,562

 

 

26,285

20,713

20,081

 

 

 

 

 

Total liabilities

 

26,688

22,091

20,484

 

 

 

 

 

Total shareholders' deficit and liabilities

 

15,755

20,241

12,178

 

The notes 1 to 15 are an integral part of these Consolidated Financial Statements.

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

Share

Capital

Unaudited

Accumulated

Losses

Unaudited

Total Shareholders'

Deficit

Unaudited

 

Notes

£000's

£000's

£000's

 

 

 

 

 

At 1 November 2015 (restated)

 

50

(655)

(605)

 

 

 

 

 

Loss for the period

 

-

505

505

 

 

 

 

 

Transactions with owners:

 

 

 

 

Dividends

8

-

(1,750)

(1,750)

Total transactions with owners recognised directly in equity

 

-

(1,750)

(1,750)

 

 

 

 

 

At 30 April 2016 (restated)

 

50

(1,900)

(1,850)

 

 

 

 

 

Loss for the period

 

-

(6,127)

(6,127)

 

 

 

 

 

Transactions with owners:

 

 

 

 

Dividends

8

-

(329)

(329)

Total transactions with owners recognised directly in equity

 

-

(329)

(329)

 

 

 

 

 

At 31 October 2016

 

50

(8,356)

(8,306)

 

 

 

 

 

Loss for the period

 

-

(2,627)

(2,627)

 

 

 

 

 

At 30 April 2017

 

50

(10,983)

(10,933)

 

Share capital

 

The share capital account includes the nominal value for all shares issued and outstanding.

 

Accumulated losses

 

The 'Accumulated Losses' column in the Statement of Changes in Equity includes the accumulated profits and losses arising from the Consolidated Income Statement and certain items from the Consolidated Statement of Changes in Equity attributable to equity shareholders, net of distributions to shareholders.

 

The notes 1 to 15 are an integral part of these Financial Statements.

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

 

Half Year to 30 April 2017

Unaudited

Half Year to 30 April 2016

Unaudited

Restated

Year to 31 October 2016 Audited

 

 

Notes

£000's

£000's

£000's

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Cash generated from/(used in) operations

 

14

(7,101)

(2,168)

1,382

Taxation paid

 

 

-

-

(12)

Interest paid

 

 

(194)

(92)

(232)

Net cash generated from/(used in) operating activities

 

 

(7,295)

(2,260)

1,138

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(26)

(66)

(189)

Proceeds from disposal of property plant and equipment

 

 

-

-

463

 

 

 

 

 

 

Net cash generated from/(used in) investing activities

 

 

(26)

(66)

274

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Dividends paid to equity shareholders

 

 

-

-

(2,079)

Net cash used in financing activities

 

 

-

-

(2,079)

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(7,321)

(2,326)

(667)

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

 

768

1,435

1,435

 

 

 

 

 

 

Cash and cash equivalents at the end of the year

 

 

(6,553)

(891)

768

 

The notes 1 to 15 are an integral part of these Financial Statements.

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

Interim announcement

 

While the financial information included in this interim announcement has been computed in accordance with IFRS, the announcement does not itself contain sufficient information to comply with IFRS. The accounting policies used are consistent with those in the Group's Statutory Financial Statements for the year ended 31 October 2016.  The key accounting policies applied by the Group have been set out below.

 

General information

 

Entu (UK) plc ('the Company') and its subsidiaries (together "the Group") principal activity during the period was the sale of replacement windows, double glazing, entrance doors, patio doors and exterior improvement products within the United Kingdom. Other activities, included within discontinued operations were solar home improvement products and within the Astley Facades UK group of companies, the provision of façade facilities for both new build construction and refurbishment products.

 

The Company is incorporated and domiciled in the UK. The Company's registered number is 08957339. The address of its registered office is 7 Road One, Winsford Industrial Estate, Winsford, Cheshire CW7 3PZ.

 

The Company is a public limited company and has its primary listing on the AIM division of the London Stock Exchange.

 

1. Accounting policies

 

The principal accounting policies applied in the preparation of these Interim Financial Statements are consistent with those of the annual financial statements for the year ended 31 October 2016.

 

Basis of preparation

 

The Consolidated Interim Financial Statements for the six months ended 30 April 2017, which have not been reviewed or audited, have been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority and in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union (EU). They should be read in conjunction with the audited annual financial statements for the year ended 31 October 2016 which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS as adopted by the EU), IFRS Interpretations Committee (IFRS IC) Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

 

The interim financial statements for the period ended 30 April 2017 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

Then financial information set out in this statement relating to the year ended 31 October 2016 does not constitute statutory accounts for that year. Full audited accounts in respect of that year were approved by the Board of Directors on 28 March 2017 and have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under section 498 of the Companies Act 2006.

 

The preparation of Interim Financial Statements requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group's accounting policies. In preparing these Interim Financial Statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty continue to be reviewed and applied on a consistent basis. There have been no material changes since 31 October 2016 as set out in the Group's Annual Report and Accounts.

 

Going concern

 

On 6 July 2017, the Group announced that it was undertaking a strategic review and that the Directors were exploring options for new long-term finance facilities. KPMG have since been engaged to assist with this ongoing process and appropriate bank support continues to remain in place whilst the process is completed. The ability of the Group to continue to trade is dependent on the ultimate success of the process as, in the event that appropriate new long-term financing arrangements are not secured, the ability of the Group to continue to trade as a going concern is uncertain as it may be unable to realise its assets and discharge its liabilities in the normal course of business. The Directors presently remain confident that, given the level of interest expressed by interested parties, there is a reasonable expectation that the Group will be able to successfully secure appropriate new long-term financing facilities.  Therefore, the Directors have concluded that it is appropriate to continue to prepare the Group's financial statements on a going concern basis.

 

 

 

2. Prior year adjustments

 

During the year ended 31 October 2016, the Directors undertook a review of the Group's revenue recognition policies and the application of those policies. As a result of this review, the Directors took the decision to change their accounting policies for certain revenue streams to better reflect industry practices and to align policies more consistently across the Group. The impact of the changes in accounting policies is disclosed in the Annual Report and Accounts for the year ended 31 October 2016.

 

In accordance with IAS 8, the change in accounting policies has been applied retrospectively and the comparative financial information has been restated. The table below sets out the impact of the changes in accounting policies on both the profit for the period ended 30 April 2016 and the equity of the Group as at that date.

 

Impact of prior year adjustments on the Consolidated Income Statement of the Group

 

Period ended 30 April 2016

 

 

 

 

 

 

£000's

 

 

 

 

Profit after tax as previously reported

 

 

431

Change in RRSA revenue recognition (i)

 

 

29

Change in other home improvements revenue recognition (ii)

 

 

   192

Change in finance commission revenue recognition (iii)

 

 

     (48)

Change in application of deferred commission accounting policy (iv)

 

 

   (118)

Adjustment to tax in respect of changes to income recognition (v)

 

 

       19

Restated profit after tax

 

 

505

 

(i)    Historically the Group recognised revenue in relation to the RRSA programme on a cash received basis. However, as the RRSA programme results in a 12-month commitment to customers the Directors have determined that it would be appropriate to spread the revenue over the 12-month contract period.

(ii)   On review of recognition of revenue across the Group's businesses it was concluded that for certain types of installations in certain subsidiaries, there was a different interpretation of the point of completion of installation. In some cases, revenue was being recognised prior to the substantial completion of the installations. The Directors have determined that the revenue should be recognised when the Group has substantially completed the installation and the substantial risks and rewards of ownership are deemed to have transferred.

(iii) Historically the Group recognised finance commissions on receipt from finance providers. There has been limited history of non-collection of commissions and, therefore, the Directors think it more appropriate to recognise finance commissions in line with the revenue recognition policy to which the product associated with the finance commission relates.

(iv)  The Group defers sales commissions costs incurred in a financial year which are considered to be directly related to revenue transactions which are not recognised until subsequent financial years. As part of the review of the Group's revenue recognition policy the Group aligned policies on deferred commissions across the Group. This has resulted in certain costs being required to be recognised earlier than previously recognised.  The current and prior years cost of sales numbers have been restated in this respect.

(v)    Taxation charges have been adjusted in respected of changes to income recognition and deferred commissions.

 

 

 

Impact of prior year adjustments on the Consolidated Balance Sheet of the Group

 

At 30 April 2016

As reported

previously

Change in RRSA

Change in other revenue recognition

Change in finance commission

Change in deferred commission

Change

In taxation

Restated

 

 

(i)

(ii)

(iii)

(iv)

(v)

 

 

£000's

£000's

£000's

£000's

£000's

£000's

£000's

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Intangible assets

1,496

-

-

-

-

-

1,496

Property, plant and equipment

879

-

-

-

-

-

879

 

2,375

-

-

-

-

-

2,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Inventories

2,002

-

-

-

-

-

2,002

Trade and other receivables

16,787

-

(554)

76

(445)

-

15,864

Cash and cash equivalents

-

-

-

-

-

-

-

 

18,789

-

(554)

76

(445)

-

17,866

 

 

 

 

 

 

 

 

Total assets

21,164

-

(554)

76

(445)

-

20,241

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

Share capital

50

-

-

-

-

-

50

Retained earnings/ (accumulated losses)

(411)

(1,187)

(353)

76

(445)

420

(1,900)

Total shareholders' equity/(deficit)

(361)

(1,187)

(353)

76

(445)

420

(1,850)

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Deferred taxation liabilities

60

-

-

-

-

-

60

Provisions

1,318

-

-

-

-

-

1,318

 

1,378

-

-

-

-

-

1,378

 

 

 

 

 

 

-

 

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

17,316

1,187

(201)

-

-

-

18,302

Borrowings

891

-

-

-

-

-

891

Current taxation liabilities

1,040

-

-

-

-

(420)

620

Provisions

900

-

-

-

-

-

900

 

20,147

1,187

(201)

-

-

(420)

20,713

 

 

 

 

 

 

 

 

Total liabilities

21,525

1,187

(201)

-

-

(420)

22,091

 

 

 

 

 

 

 

 

Total shareholders' equity/(deficit) and liabilities

21,164

-

(554)

76

(445)

-

20,241

 

(i)    Changes in accounting policies for RRSA resulted in increased deferred income, which is included in trade and other payables category of liabilities.

(ii)   Changes in accounting policies for other revenue recognition had the impact of reducing trade receivables, prepayments, accrued income and other receivables within the trade and other receivables category of asset. 

(iii) Changes in accounting policies for finance commission had the impact of increasing the trade and other receivables category of asset.

(iv)  Changes in the accounting for deferred commission had the impact of decreasing the trade and other receivables category of asset.

(v)    The current taxation liability has been adjusted in respect of the reduction to tax charges as a consequence of the above adjustments.

 

 

3. Accounting policies

 

The accounting policies are consistent with those of the Annual Report and Accounts for the year ended 31 October 2016 which are prepared in accordance with IFRS as adopted by the European Union, except as disclosed below:

 

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

 

There are no new IFRSs or IFRICs that are effective for the first time in this interim period that would be expected to have a material impact on the group.

 

4. Segmental analysis

 

The Chief Operating Decision Maker (CODM) has been identified as the Executive Board which comprises the two Executive Directors.

 

The CODM reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports which include an allocation of central costs as appropriate.

 

The CODM considers the business from an operating perspective, with Home Improvements, Energy Generation and Saving, Repair and Renewal Service Agreements being the three reporting segments.  The CODM assesses the performance based on operating profit before exceptional items. Other information provided to the CODM, except as noted below, is measured in a manner consistent with that of the Financial Statements.

 

All revenue, profit and assets of the Group and all segments arise in the Group's country of domicile, being the United Kingdom.

 

Half year ended 30 April 2017

Unaudited

Home

Improvements

Energy Generation and Savings

Repair and Renewal Service Agreements

Total

 

£000's

£000's

£000's

£000's

 

 

 

 

 

Revenue

32,913

2,275

1,313

36,501

 

 

 

 

 

Operating (loss)/profit before exceptional items

(3,502)

167

936

(2,399)

Exceptional items

(586)

(15)

-

(601)

Operating (loss)/profit

(4,088)

152

936

(3,000)

Finance costs

(194)

-

-

(194)

(Loss)/profit before taxation-continuing operations

(4,282)

152

936

(3,194)

 

 

 

 

 

 

There was no material inter-segment revenue in the half year ended 30 April 2017.

 

 

Half year ended 30 April 2016

Restated

Unaudited

Home

Improvements

Energy Generation and Savings

Repair and Renewal Service Agreements

Total

 

£000's

£000's

£000's

£000's

 

 

 

 

 

Revenue

39,084

1,776

1,302

42,162

 

 

 

 

 

Operating profit before exceptional items

130

82

977

1,189

Exceptional items

(90)

-

-

(90)

Operating (loss)/ profit

40

82

977

1,099

Finance costs

(92)

-

-

(92)

(Loss)/profit before taxation - continuing operations

(52)

82

977

1,007

 

 

 

 

 

Loss for the year from discontinued operations

-

(414)

-

(414)

 

There was no material inter-segment revenue in the half year ended 30 April 2016.

 

 

Year ended 31 October 2016

 

Home

Improvements

Energy Generation and Savings

Repair and Renewal Service Agreements

Total

 

£000's

£000's

£000's

£000's

 

 

 

 

 

Revenue

77,113

8,017

2,615

87,745

 

 

 

 

 

Operating profit before exceptional items

193

38

2,236

2,467

Exceptional items

 (4,146)

(435)

-

(4,581)

Operating (loss)/ profit

(3,953)

(397)

2,236

                 (2,114)

Finance costs

(219)

-

-

(219)

(Loss)/profit before taxation-continuing operations

(4,172)

(397)

2,236

(2,333)

 

 

 

 

 

Loss for the year from discontinued operations*

(2,258)

(1,543)

-

 (3,801)

 

*Loss before tax from discontinued operations was £4,196,000.  A tax credit of £395,000 was utilised in arriving at the loss after tax of £3,801,000.

 

There was no material inter-segment revenue in the year ended 31 October 2016.

 

5. Exceptional items

 

Half year ended 30 April

Unaudited

 

 

2017

2016

 

 

 

 

£000's

£000's

 

 

 

 

 

Restructuring

 

 

601

90

   

 

 

601

90

 

 

 

 

 

 

Restructuring

 

Restructuring costs relate to the on-going restructuring of the group. Costs relate primarily to redundancy/other employee related costs arising from headcount reduction.

 

 

6. Discontinued Operations

 

During 2016, the Group took the strategic decision to sell the Astley Facades (UK) Limited business (Astley) as well as close its loss making Europlas operations in the South East of England. The Directors consider both businesses to be separate major lines of business and as such the results of both businesses have been presented in discontinued operations in the prior period to 30 April 2016 and year to 31 October 2016.

 

 

7. Taxation

 

 

 

 

Half year ended 30 April 2017

Unaudited

Half year ended 30 April 2016 Unaudited

Restated

Year ended 31

 October 2016

Audited

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

UK corporation tax credit/(charge)

 

 

567

(88)

512

 

Taxation is recognised based on management's best estimate of the weighted average annual tax rate expected for the full financial year. The estimated annual tax rate used for the period ended 30 April 2017 is 19% (30 April 2016: 20%, 31 October 2016: 20%).

 

 

 

8. Dividends

 

 

 

 

Half year ended 30 April 2017

Unaudited

Half year ended 30 April 2016 Unaudited

Year ended 31

 October 2016

Audited

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

Dividends paid

 

 

-

329

2,079

 

 

In the light of the changes in the financial position of the Group, the Directors have concluded that no interim dividend will be declared.

 

9. Earnings per share

 

Basic earnings per share and diluted earnings per share are calculated by dividing the loss or profit for the period attributable to equity holders by the weighted average number of shares in issue.

 

 

 

 

Half year ended 30 April 2017

Unaudited

Half year ended 30 April 2016 Unaudited

Year ended 31

 October 2016

Audited

 

 

 

Number

Number

Number

 

 

 

 

 

 

Basic weighted average

 

 

65,600,000

65,600,000

65,600,000

 

 

 

 

 

 

Diluted weighted average

 

 

65,600,000

65,600,000

65,600,000

 

The weighted average number of shares used to calculate earnings per share is consistent with the number of ordinary shares in issue as at the year end and this has been applied consistently for all years reported within these Financial Statements. As a result of the formation of the Group and the Company's capital structure the application of the closing number of ordinary shares has been deemed to give the most relevant and comparable calculation of earnings per share in the financial years reported.

 

Deferred shares have been excluded from the basic and diluted number of shares as deferred shares carry no voting right and no rights to any distributions to be made by the Group.

 

 

 

 

Half year ended 30 April 2017

Unaudited

Half year ended 30 April 2016 Unaudited

Restated

Year ended 31

 October 2016

Audited

 

 

 

Pence

Pence

Pence

 

 

 

 

 

 

Basic (loss)/profit per share

 

 

(4.0)

0.8

(8.6)

Exceptional items

 

 

0.9

0.1

7.0

Discontinued operations

 

 

-

0.6

5.8

Adjusted basic (loss)/earnings per share

 

 

(3.1)

1.5

4.2

 

 

 

 

 

 

Adjusted diluted (loss)/earnings per share

 

 

(3.1)

1.5

4.2

 

Adjustments to earnings per share

 

Adjusted basic and diluted earnings per share figures are calculated by dividing adjusted loss after tax for the year by the weighted average number of shares in issue (as above). The adjusted loss after tax for the year is as follows:

 

 

 

 

Half year ended 30 April 2017

Unaudited

Half year ended 30 April 2016 Unaudited

Restated

Year ended 31

 October 2016

Audited

 

 

 

Pence

Pence

Pence

 

 

 

 

 

 

(Loss)/profit attributable to owners of the Parent Company

 

 

(2,627)

505

(5,622)

Exceptional items

 

 

601

90

4,581

Discontinued operations

 

 

-

414

3,801

Adjusted (loss)/profit after tax

 

 

(2,026)

1,009

2,760

 

 

 

 

Half year ended 30 April 2017

Unaudited

Half year ended 30 April 2016 Unaudited

Restated

Year ended 31

 October 2016

Audited

 

 

 

Pence

Pence

Pence

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

Continuing operations (loss)/profit per share

 

 

(4.0)

1.4

(2.8)

Discontinued operations (loss)/profit per share

 

 

-

                       (0.6)

(5.8)

Total basic (loss)/profit per share

 

 

(4.0)

0.8

(8.6)

 

 

There is no material difference between diluted earnings per share and basic earnings per share for continuing and discontinued operations.

 

10. Trade and other receivables

 

 

 

 

At 30 April 2017

At 30 April 2016

Restated

At 31 October 2016

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

Trade receivables

 

 

5,929

6,873

5,498

Provision for impairment of trade receivables

 

 

(1,655)

(585)

(1,424)

Net trade receivables

 

 

4,274

6,288

4,074

Other receivables

 

 

605

646

675

Prepayments and accrued income

 

 

5,906

8,930

3,354

 

 

 

10,785

15,864

8,103

 

The fair value of trade and other receivables has been considered to be consistent with the book value given their short term nature.

 

11. Cash and cash equivalents

 

 

 

 

At 30 April 2017

At 30 April 2016

Restated

At 31 October 2016

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

Cash at bank and in hand

 

 

-

-

768

Cash and cash equivalents

 

 

-

-

768

 

The Group's banking facility is operated and managed as an integrated facility both internally and externally. Although individual bank accounts may have positive or negative cash balances, the interest calculated is on the net position of the banking balances within the Group facility. The cash at bank and in hand position shown in the above table represents the net position of the Group as bank overdrafts have been offset against cash at bank and in hand as the Group has an enforceable right to offset positive and negative individual bank account positions, and receives or pays interest on its net cash position.  

 

12. Trade and other payables

 

 

 

 

At 30 April 2017

At 30 April 2016

Restated

At 31 October 2016

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

Trade payables

 

 

8,033

10,920

7,539

Payments on account

 

 

870

2,228

870

Other taxation and social security

 

 

357

429

1,875

Accruals

 

 

3,267

3,739

1,937

Deferred income and advance payments

 

 

5,821

986

6,244

 

 

 

18,348

18,302

18,465

 

 

 

13. Borrowings

 

 

 

 

At 30 April 2017

At 30 April 2016

Restated

At 31 October 2016

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

Borrowings

 

 

6,553

891

-

 

During March 2017, the Group extended its facilities with Barclays Bank plc, with the renewal of its £4m revolving credit facility for 12 months alongside the Group's existing variable overdraft facility.

 

 

14. Reconciliation of (loss)/profit before tax to cash generated from operations

 

 

 

 

Half year ended 30 April 2017

Unaudited

Half year ended 30 April 2016 Unaudited

Year ended 31

 October 2016

Audited

 

 

 

£000's

£000's

£000's

 

 

 

 

 

 

(Loss)/profit before tax including discontinued operations

 

 

(3,194)

593

(6,529)

Finance costs

 

 

194

92

232

Depreciation of property, plant and equipment

 

 

135

134

250

Profit on disposal of property

 

 

-

-

(213)

Goodwill impairment charge

 

 

-

-

355

Other non-cash movements including write downs of fixed assets

 

 

-

-

28

Loss on disposal of Astley group of companies

 

 

-

-

1,740

Operating cash flows before movements in working capital

 

 

(2,865)

819

(4,137)

Movements in working capital:

 

 

 

 

 

Decrease/(increase) in inventories

 

 

(437)

(163)

469

Decrease/(increase) in trade and other receivables

 

 

(2,682)

(786)

1,767

Increase/(decrease) in trade and other payables

 

 

(939)

(1,913)

2,891

Increase/(decrease) in provisions

 

 

(178)

(125)

392

Cash generated from/(used in) operations

 

 

(7,101)

(2,168)

1,382

 

The impact of the disposal of Astley Facades group of companies is adjusted in the movements in working capital in the above note.

 

The profit on sale of freehold property of £213,000 relates to sales proceeds of £463,000 less net book value of £250,000 eliminated on disposal.

 

15. Related party transactions

 

Sale of freehold property

 

As reported in the annual report, at the end of October 2016 a freehold property was sold to the Chief Executive Officer. The sale price of £463,000, and the future rental charge, were determined by independent valuers on an arm's length basis and were approved by the Non-Executive Directors in advance of the transaction.  The Group generated a profit of £213,000 as a result of this transaction.

 

Key management personnel

 

Darren Cornwall resigned as a director on 15 April 2016 and has subsequently undertaken consultancy work for the Group. For the period ended 30 April 2017, he received £51,517 in respect of these services on an arm's length basis.

 

 

 


This information is provided by RNS
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Half-year Report - RNS