TIDMSERV
RNS Number : 2985Q
Servelec Group plc
11 September 2017
11 September 2017
Servelec Group PLC
("Servelec" or the "Group")
Half year results for the six months to 30 June 2017
Servelec Group plc ("Servelec" or the "Group"), the UK-based
technology group which provides software, hardware and services
predominantly to the UK Healthcare, Local Government, Oil &
Gas, Nuclear, Power and Utilities sectors, today announces its
results for the six months ended 30 June 2017.
FINANCIAL HIGHLIGHTS
Six months to 30 June
------------------------------------- -------------------------- -----------
2017 (GBPm) 2016 (GBPm) Change (%)
------------------------------------- ------------ ------------ -----------
Revenue 31.5 28.4 11%
------------------------------------- ------------ ------------ -----------
Underlying operating profit* 6.5 4.5 44%
------------------------------------- ------------ ------------ -----------
Operating profit from continuing
operations 4.4 1.8 144%
------------------------------------- ------------ ------------ -----------
Profit before tax from continuing
operations 4.3 1.7 153%
------------------------------------- ------------ ------------ -----------
Order entry** 34.7 37.4 (7)%
------------------------------------- ------------ ------------ -----------
Order Bank*** 77.4 73.2 6%
------------------------------------- ------------ ------------ -----------
Cash flow from operating activities 6.9 1.6 334%
------------------------------------- ------------ ------------ -----------
Net debt 6.0 13.0 (54)%
------------------------------------- ------------ ------------ -----------
Adjusted diluted earnings per
share**** 7.1p 4.9p 45%
------------------------------------- ------------ ------------ -----------
Basic earnings per share 5.0p 2.0p 150%
------------------------------------- ------------ ------------ -----------
Dividend per share 2.00p 1.65p 21%
------------------------------------- ------------ ------------ -----------
Notes: * after adding back exceptional costs, amortisation on
acquired intangibles and share based payments / expense.
** order entry is the total contract value of revenue from an order received in the period.
*** this is the total future revenue we expect from orders
received
****after adding back exceptional costs, amortisation on
acquired intangibles, share base payments and the related tax
adjustment
SUMMARY
Servelec Group reports a return to growth in revenue and profit
in the first half of the year. Cash conversion has returned to
anticipated levels and the Group is aiming to be debt free by the
year-end. There has been a deferment of orders in some areas of our
Automation business, which will reduce the anticipated growth for
the full year.
Alan Stubbs, Chief Executive Officer, Servelec Group Plc,
commented:
"The Board is pleased with the progress made in the first half
of 2017, particularly in Servelec HSC and Servelec Controls Oil
& Gas and this progression is expected to continue into H2 and
beyond. There are challenges in Servelec Controls Power &
Infrastructure and in Servelec Technologies where there has been a
deferment in customer demand. In Servelec Technologies, this is
particularly related to SCADA / Telemetry projects and Remote
Telemetry Unit (RTU) orders expected under AMP6 as budgets have
been reallocated to compensate for the overhang of 'Open
Water'1.
"The Board has carried out a thorough review of the Combined
Heat & Power project in Turkey, including the previously
advised debt position. We are concerned at the lack of progress
that has been made by the customer in resolving their funding
arrangements and the GBP2.6m related debt from 2015 remains unpaid.
If the Board considers there is still no demonstrable improvement
in progress by the customer at the year-end, the debt will be fully
provided for.
"Servelec HSC and Servelec Controls Oil & Gas are trading
well and whilst the deferment of customer spend in Servelec
Technologies is disappointing, we have market leading products in
Servelec Technologies and its global business is developing, The
Board remains positive about the longer term prospects for the
Group." (1) 'Open Water' is the opening up of the wholesale water
market for UK business' national water procurement. Launched in
April 2017, this new legislative requirement, which involves the
separating out of an independent, retail business including the IT
systems which our products interface with, has been a significant
corporate distraction for most UK Water companies.
http://www.open-water.org.uk
For further enquiries, please contact:
Servelec Group
plc
Alan Stubbs, Chief Executive Officer
Mike Cane, Chief Financial Officer
Pamela Weeks, Head of Corporate Communications +44 (0) 1246 437 400
Investec Bank plc
Andrew Pinder / Sebastian Lawrence
Patrick Robb / Matt Lewis +44 (0) 207 597 4000
Tulchan Group
James Macey White
Matt Low +44 (0) 20 7353 4200
Notes to Editors
Servelec Group plc is a UK-based technology group, with
significant intellectual property, providing software, hardware and
services predominantly to the UK healthcare, oil & gas,
nuclear, power, water, utilities, broadcast and rail sectors.
Servelec has two operating divisions; Servelec HSC and Servelec
Automation:
- Servelec HSC specialises in the design, development and
implementation of Electronic Patient Record (EPR) and Patient
Administration Systems (PAS), Social Care Case Management software
and early Years education software within secondary care and social
care and education in local government settings and is a market
leader in the Mental Health, Community Health and Social Care
sectors in England.
- Servelec Automation provides complex, mission-critical control
systems to large blue-chip companies mainly in the UK, focusing on
the oil & gas, nuclear, power, infrastructure, utilities,
broadcast and rail industries. Servelec Automation also provides
services from consultancy through to design, implementation,
delivery, installation and on-going customer support and
maintenance.
CHIEF EXECUTIVE OFFICER'S REVIEW
The Board is pleased to report a return to growth for Servelec
Group in the six months ended 30 June 2017. Underlying operating
profit has increased by 44% and organic profit growth (growth
excluding acquisitions) is up 20% against H1 2016.
Servelec HSC is the main driver for growth in the first half,
bolstered by the successful go-live of Oceano, our new Patient
Administration System for the acute market, at University Hospitals
Birmingham NHS Foundation Trust. Despite Social Care performance
being behind expectations, Synergy is performing exceptionally well
in the Children's Services market. In Servelec Automation, Servelec
Controls Oil & Gas is seeing a strong turnaround in
performance, offsetting a weaker performance in Power &
Infrastructure. Servelec Technologies continues to develop its
market opportunities albeit it is hampered by the continued slow
pace of the UK Remote Telemetry Unit market.
Overall, Group revenue increased by 11% to GBP31.5m (H1 2016:
GBP28.4m). Underlying operating profit rose 44% to GBP6.5m (H1
2016: GBP4.5m). Order entry reduced by 7% to GBP34.7m (H1 2016
GBP37.4m), predominantly in Automation. Cash generation from
operations increased to GBP6.9m (H1 2016: GBP1.6m) reducing the
overall net debt to GBP6.0m (H1: 2016 GBP13.0m).
Servelec HSC
H1 2017 (GBPm) H1 2016 (GBPm) Change (%)
Revenue: 17.5 15.0 17%
Operating profit: 6.0 4.2 42%
Order entry: 22.4 19.8 14%
Order bank: 62.2 56.7 10%
Servelec HSC performed well in the first half of the year.
However, performance was impacted by our Social Care business,
Corelogic, which did not convert as many sales as anticipated in
the period. Actions have been taken to improve our win-rate and
there is a strong pipeline in place, which continues to build.
Strong contribution from Synergy has mitigated Corelogic's sluggish
first half. Operating profit increased to GBP6.0m (H1 2016:
GBP4.2m). Revenue was ahead of prior year at GBP17.5m (H1 2016:
GBP15.0m). Order entry in the first half of the year was 14% ahead
of that in the corresponding period meaning our order bank
increased to GBP62.2m (H1 2016: GBP56.7m).
Healthcare
Our Healthcare business performed strongly, delivering a steady
performance in challenging market conditions. It has received a
recent boost with the successful go live of Oceano at our high
profile reference customer, University Hospitals Birmingham NHS
Foundation Trust (UHB). UHB will act as an excellent reference site
for us in the future and is one of 16 acute trusts selected by NHS
England as a Global Digital Exemplar (GDE). Servelec is the only
supplier with established customers on both the Acute GDE programme
and the Mental Health GDE programme, meaning the Group is well
placed to benefit as funding arrangements continue to unlock. Royal
Cornwall Hospitals NHS Trust will go live with Oceano in H1
2018.
The Healthcare business is a strong contributor of profit growth
due to the cost saving measures taken in 2016. Recurring revenues
increased slightly to 66% (from 64% H1 2016). We are also focusing
on account management sales with our existing installed base and
further investment in our products is generating customer
demand.
One area we are focusing our product development is mobile
product extensions to RiO and the delivery of modern, role-based
apps to support our customers in the delivery of improved patient
care. To expedite our route to market, we have launched an open
API, engendering interoperability, which will be first used by our
RiO mobile role-based apps. We have already signed up another third
party provider. Clinical testing of our first app, supporting
District Nurses in the delivery of patient-centred care, has been
successful, ensuring a robust product which is available to
customers now and is in-line with NHS Digital's endorsement of the
Royal College of Nursing's campaign to ensure 'every nurse is an
e-nurse'.
Our role-based apps will be delivered to customers on a Pay per
User per Month (PUPM) recurring revenue model resulting in good
margins and revenue share with the third party developers. The
market opportunity is significant, with a straightforward
implementation and strong customer demand. Our mobile offerings
will contribute to profits and revenues from Q4 2017 and
beyond.
Social Care
The Social Care market remains active with an existing
competitor announcing their exit from the market creating further
opportunity for 2018 onwards. However, after a very strong 2016 and
a much improved sales process of our only real competitor, Mosaic
sales are lagging expectations for the period. We are confident
about our product and our pricing and that issues identified in the
period have been addressed, are short term and relatively isolated.
Actions taken include revitalising our go-to-market strategy
through a further sharpening of our sales team, improved product
demonstrations and a focus on increasing the referencability of our
live customer sites. We maintain high visibility of the growing
pipeline and have a number of active opportunities with decisions
due in 2017, although related licences would be Q4 2017 weighted.
In addition to new sales opportunities, which remain strong, we are
focussing on more active account management of our existing
installed base.
We recently signed a deal to bring best-of-breed product
extensions in line with known customer demand, to deliver true
end-to-end portal product capability. This enhanced version of
Finestra, our portal extension for the Mosaic case-management
system, will transform the way people manage their own care (and
that of family members) through the transferral of service
selection to an online tool. Through a combination of in-house and
third party development, Servelec will deliver a market place for
care services enabling local authorities to manage invoicing,
reduce operating expenditure and improve efficiencies in the
delivery of care. The portal product extensions are available to
Mosaic customers now.
A decision to close our Indian development centre (in Cochin),
where the portal development work was being carried out, was
actioned in August 2017.
Children's Services
The Synergy business, acquired in April 2016, provides software
to Children's Services within local government, and continues to be
a strong performer for the Group. The business performed well in
the half year to 30 June 2017 and is a significant contributor of
revenue growth for Servelec HSC.
Market opportunities with local government customers remain
buoyant as the drive to reduce system maintenance expenditure
continues. Synergy continues to outperform its main competitors
within the market place maintaining a high win rate of available
contracts. We anticipate a strong contribution from Synergy at the
full year compared to 2016, which only included nine months from
Synergy.
Amongst a number of other significant wins for the Synergy
product suite, Royal Borough of Greenwich Council became the tenth
council to move its entire early years management system across to
Synergy in the last three years, confirming Synergy as the system
of choice in London with over 40% of London customers using Synergy
for admissions.
Integrated Care
The 44 locally based Sustainability and Transformation
Partnerships (STPs) announced by NHS England last year to transform
healthcare services, are aimed at bringing together NHS and local
authorities to share records and improve the delivery of integrated
and consistent care. Political events and funding challenges for
the delivery of the Local Digital Roadmaps, which support STPs,
have delayed IT investment. Servelec is well positioned to deliver
on the government's strategy and we are working closely with
customers in a number of STPs in Birmingham, London and Cornwall to
bring about the delivery of truly integrated care.
Servelec Automation
Overall, Servelec Automation has delivered an improved result on
H1 2016. Operating profits increased to GBP1.9m (H1 2016: GBP1.7m).
Revenue across the division is up 4% to GBP14.0m (H1 2016:
GBP13.4m). Servelec Controls Oil & Gas has recovered well.
Order entry and order bank have reduced due to
continued-sluggishness in the UK water industry's AMP6 RTU and
project spend together with a downturn in the Power &
Infrastructure part of Servelec Controls, which has continued from
H2 2016. We expect this trend to continue through the second half
of the year and into 2018.
Servelec Controls
H1 2017 (GBPm) H1 2016 (GBPm) Change (%)
Revenue: 5.7 5.4 6%
Operating profit: 0.6 0.4 34%
Order entry: 5.3 7.7 (30)%
Order bank: 4.3 5.7 (24)%
Servelec Controls operating profit is up 34% to GBP0.6m (H1
2016: GBP0.4m) and revenue is up 6% to GBP5.7m (H1 2016:
GBP5.4m).
Servelec Controls Oil & Gas has seen a significant
improvement, is ahead of forecast and is benefitting from a renewed
focus by the new management team, which incorporates a refreshed
sales team. The market is coming back to us, as customers continue
to look at best value solutions to keep platforms open for longer.
Large orders for our remote operations solution continue to come
through from Centrica. Following a joint presentation with Centrica
at the industry's leading event, Topsides UK, there is increased
interest from other operators for the innovative remote operations
solution. The business continues to benefit from a high win rate of
lower value but faster turnaround jobs as predicted.
In H2 2016 and H1 2017, our Power & Infrastructure business
has been under pressure due to both the stalling nuclear market and
proposed termination of coal-fired power production by 2025. We
have taken action in August 2017 to consolidate our offices and
engineering team around available pipeline and to reduce overheads.
Whilst we foresee this situation continuing into 2018, we believe
in the long-term demand for our skills and services and we are
confident the market will recover. We are also focusing our sales
team on available opportunities including those in complementary
verticals such as defence and infrastructure.
"The Board has carried out a thorough review of the Combined
Heat & Power project in Turkey, including the previously
advised debt position. We are concerned at the lack of progress
that has been made by the customer in resolving their funding
arrangements and the GBP2.6m related debt from 2015 remains unpaid.
If the Board considers there is still no demonstrable improvement
in progress by the customer at the year-end, the debt will be fully
provided for.
Servelec Technologies
H1 2017 (GBPm) H1 2016 (GBPm) Change (%)
Revenue: 8.3 8.0 3%
Operating profit: 1.4 1.3 6%
Order entry: 7.0 10.0 (30)%
Order bank: 10.9 10.8 1%
Servelec Technologies has delivered broadly flat revenue for the
first half of the year at GBP8.3m (H1 2016 GBP8.0m) with an
increase in profit of 6% to GBP1.4m (H1 2016 GBP1.3m). Order entry
is behind 2016 and order bank is similar to prior year.
Business Optimisation has shown an uptick in growth for the
period as UK water companies are looking to invest in opex and
leakage reduction.
During the first half of the year, we have won a major framework
contract with Severn Trent Water to supply Remote Telemetry Units
(RTUs). We are well positioned to succeed in the UK water industry,
having won six out of the eight framework contracts that have come
to market so far during AMP6. However, 2017 orders through these
frameworks for RTUs and SCADA / Telemetry projects have been
delayed owing to budget reallocation to cover the overhang of 'Open
Water' and water companies' increased costs of chemicals and
capital projects as a consequence of the fall in the value of
Sterling.
'Open Water' is the opening up of the wholesale water market for
UK business' national water procurement. Launched in April 2017,
this new legislative requirement, which involves the separating out
of an independent, retail business including the IT systems which
our products interface with, has been a significant corporate
distraction for most UK Water companies. We are confident this is a
timing issue due to budget constraints and that the structural
demand for our product remains and orders will start to build in
2018.
With the recent appointment of our Global Channel Director we
are improving our approach to our distribution network by changing
underperforming partners and capitalising on key geographies and
niche industries where our competitors are no longer focusing.
Globally, our focus is on optimising our channel partner network in
geographies including China, the Middle East and USA.
In the UK, our focus remains on developing closer relationships
with our existing customer base through improved account management
in order to deliver the full end-to-end product range where there
is demand and funding available. We continue to invest in
developing our range of products, specifically our Business
Optimisation suite as the market indicates towards trends best
served by these products, of operational efficiency and least-cost
production. The 'common RTU' (ensuring efficient production of an
enhanced RTU across our three RTU product ranges) the first variant
of which is on track for launch in early 2018 and we will have a
range of cloud based SaaS solutions across our software suite to
enable simpler international sales and delivery.
Servelec Group Outlook
The Group is in a robust financial position with a strong
balance sheet. Cash conversion has increased to 96% in the half
year and net debt has reduced by GBP3.6m in the period leaving a
net debt balance of GBP6.0m at the half year, which will reduce
further by the year-end.
In Servelec HSC, mobile and portal product extensions will
contribute to 2018 revenues alongside ongoing account management
sales to our existing installed base. In Servelec Automation, the
Servelec Controls business will benefit from the cost reductions
put in place in Q3 2017 and there is a building pipeline of
opportunities particularly in Oil & Gas, which will contribute
to full year performance and into 2018. Servelec Technologies
continues to expand its global customer base and business
optimisation opportunities. These will be developed whilst we await
the return of AMP6 RTU and project opportunities.
CHIEF FINANCIAL OFFICERS REVIEW
The Group has delivered a strong performance in the first half
of 2017 and returned to growth. Revenue increased by 11% to
GBP31.5m (H1 2016: GBP28.4m); organic revenue increased by 2%.
Underlying operating profit increased 44% to GBP6.5m (H1 2016:
GBP4.5m) with organic profit growth of 20%. Expensed R&D costs
increased to GBP3.4m (H1 2016: GBP2.8m) reflecting the continued
investment in our core products.
The effective tax rate for the period is 19% (H1 2016: 20%).
Adjusted diluted EPS has increased 45% to 7.1p (H1 2016: 4.9p),
see Note 6.
Cashflow in the first half of 2017 returned to anticipated
levels at GBP6.9m (H1:2016: GBP1.6m) with a cash conversion of 96%
(H1 2016: 38%) and is ahead of our target of 80% cash conversion
for the full year. Net debt at June 2017 is GBP6.0m, compared to a
net debt of GBP13.0 in H1 2016.
Capital expenditure was GBP0.4m (H1 2016: GBP0.9m) and reflects
continued investment in hosting and general IT equipment
refresh.
DIVID
The Board has declared an interim dividend of 2.00p per share to
be paid on 27 October 2017 to shareholders on the register at the
close of business on 22 September 2017.
RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties, which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the year ended 31 December 2016. A detailed explanation
of the risks summarised below, and how the Group seeks to mitigate
the risks, can be found on page 38 to 41 of the annual report which
is available at www.servelec-group.com
Regulatory
Changes to legislation may cause customers to divert their
spending on the Group's products.
Public Sector Healthcare Spending
A key driver of the Group's business is the level of UK
Government spending on IT relating to healthcare delivery. The rate
of growth in expenditure on healthcare related IT may reduce
significantly.
Competitor Activity
The Group may face significant competition from both domestic
and overseas competitors.
Operational
The Group's business involves providing customers with highly
reliable software and hardware. If the software or hardware contain
undetected defects, the Group may fail to meet its customer's
performance requirements or otherwise satisfy the contract
specifications.
Revenue recognition and Project Control
The Group recognises revenue on projects based on the percentage
complete of the individual project. A key element of this
calculation is the estimation of the costs to complete on
contracts, which is an inherent risk of project accounting.
People
The ability of the Group to retain and attract appropriately
qualified and experienced staff is key to the continued success of
the business.
Currency
The Group is exposed to translation foreign exchange risk from
its overseas operations and indirectly from impact on customer
budgets.
Information Technology
Loss of data from failure of systems or cyber-attack.
Oil Price
Following the reduction in the US Dollar price of oil in the
global market, it has now stabilised and so projects are starting
to be proposed.
Going Concern
As stated in note 2 to the condensed financial statements, the
directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of not
less than 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing the
condensed financial statements.
Servelec Group plc
Statement of directors' responsibilities
The directors confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the European Union;
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of interim financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the Group during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
The directors of Servelec Group plc are listed in the Annual
Report for the year ended 31 December 2016. A list of current
directors is maintained on the Group website at
www.servelec-group.com
By order of the Board
Alan Stubbs Mike Cane
Chief Executive Officer Chief Financial Officer
Servelec Group plc
Independent Review Report to Servelec Group plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2017 which comprises the Condensed
Consolidated Statement of Comprehensive Income, the Condensed
Consolidated Balance Sheet, the Condensed Consolidated Statement of
Changes in Shareholders' Equity, the Condensed Consolidated Cash
Flow Statement and the related notes 1 to 13. We have read the
other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2017 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Leeds
9 September 2017
Servelec Group plc
Condensed Group income statement
For the six months ended 30 June 2017
Year ended
30 Jun 2017 30 Jun 2016 31 Dec 2016
(Unaudited)
GBP'000
Note (Unaudited) GBP'000
GBP'000
Revenue 3 31,513 28,377 60,957
Cost of sales (16,994) (16,650) (32,374)
------------------------------------- ------ -------------- -------------- -------------
Gross profit 14,519 11,727 28,583
Selling and distribution expenses (2,437) (1,492) (3,441)
Administration and other expenses
before amortisation 4 (5,578) (5,730) (10,546)
------------------------------------- ------ -------------- -------------- -------------
Underlying operating profit 6,504 4,505 14,596
Non-recurring items - (943) (1,200)
Share-based payments (285) (346) (523)
------------------------------------- ------ -------------- -------------- -------------
EBITA* 6,219 3,216 12,873
------------------------------------- ------ -------------- -------------- -------------
Amortisation on acquired intangible
assets (1,778) (1,388) (3,090)
------------------------------------- ------ -------------- -------------- -------------
Operating profit from continuing
operations 4,441 1,828 9,783
Finance costs (158) (99) (285)
Finance income 1 2 17
------------------------------------- ------ -------------- -------------- -------------
Profit before taxation from
continuing operations 4,284 1,731 9,515
Income tax expense 8 (825) (346) (1,816)
------------------------------------- ------ -------------- -------------- -------------
Profit for the financial period
from continuing operations 3,459 1,385 7,699
------------------------------------- ------ -------------- -------------- -------------
Earnings per share: 6
Basic earnings per share for
continuing operations 5.0p 2.0p 11.1p
Diluted earnings per share
for continuing operations 4.8p 1.9p 10.8p
Adjusted diluted earnings
per share** 7.1p 4.9p 16.1p
* EBITA equals operating profit from continuing operations
excluding amortisation on acquired intangibles.
** After adding back exceptional costs, amortisation on acquired
intangibles, share based payments expense and the related tax
adjustment.
Servelec Group plc
Condensed Group statement of comprehensive income
For the six months ended 30 June 2017
30 Jun 2017 30 Jun 2016 Year ended
(Unaudited)
GBP'000
(Unaudited) 31 Dec 2016
Note GBP'000 GBP'000
Profit for the financial
period 3,459 1,385 7,699
Other comprehensive income
to be reclassified through
the income statement
Exchange differences on translation
of foreign operations 174 524 672
Total comprehensive income
for the financial period,
net of tax 3,633 1,909 8,371
---------------------------------------------- -------------- -------------- --------------
Servelec Group plc
Condensed Group statement of financial position
Year ended
30 Jun 2017 30 Jun 2016 31 Dec 2016
(Unaudited)
GBP'000
(Unaudited) GBP'000
Note GBP'000
ASSETS
Non-current assets
Property, plant and equipment 9 3,155 3,615 3,428
Intangible assets 13, 14 67,556 70,986 69,338
Deferred tax asset 244 77 244
------------------------------- ------- -------------- -------------- --------------
Total non-current assets 70,955 74,678 73,010
------------------------------- ------- -------------- -------------- --------------
Current assets
Inventories 1,743 1,682 1,684
Trade and other receivables 31,528 27,247 28,268
Cash and cash equivalents 9,115 2,154 5,555
------------------------------- ------- -------------- -------------- --------------
Total current assets 42,386 31,083 35,507
------------------------------- ------- -------------- -------------- --------------
TOTAL ASSETS 113,341 105,761 108,517
------------------------------- ------- -------------- -------------- --------------
EQUITY AND LIABILITIES
Current Liabilities
Trade and other payables 23,061 22,385 19,975
Loans and borrowings 10 15,113 15,113 15,113
Current corporation tax 443 - 235
------------------------------- ------- -------------- -------------- --------------
Total current liabilities 38,617 37,498 35,323
------------------------------- ------- -------------- -------------- --------------
Non-current liabilities
Provisions 208 195 201
Deferred tax liabilities 2,963 3,831 3,265
------------------------------- ------- -------------- -------------- --------------
Total non-current liabilities 3,171 4,026 3,466
------------------------------- ------- -------------- -------------- --------------
TOTAL LIABILITIES 41,788 41,524 38,789
------------------------------- ------- -------------- -------------- --------------
Equity shareholders' funds
Share capital 11 12,571 12,494 12,501
Share premium 11 4,302 3,614 3,675
Share based payment reserve 1,910 1,519 1,625
Currency translation reserve (223) (545) (397)
Retained earnings 52,993 47,155 52,324
------------------------------- ------- -------------- -------------- --------------
Total equity shareholders'
funds 71,553 64,237 69,728
------------------------------- ------- -------------- -------------- --------------
TOTAL EQUITY AND LIABILITIES 113,341 105,761 108,517
------------------------------- ------- -------------- -------------- --------------
Approved by the Board on 9 September 2017.
Servelec Group plc
Condensed Group statement of changes in equity
Share
based Currency
Share Share payment transaction Retained
capital premium reserve reserve Earnings Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Balance as at
1 January 2017 12,501 3,675 1,625 (397) 52,324 69,728
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Profit for the
period - - - - 3,459 3,459
Other comprehensive
income - - - 174 - 174
Share based
payments 12 - - 285 - - 285
Issue of share
capital 11 70 627 - - - 697
Deferred tax - - - - - -
on share based
payments
Dividends 7 - - - - (2,790) (2,790)
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Balance as at
30 June 2017
(Unaudited) 12,571 4,302 1,910 (223) 52,993 71,553
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Balance as at
1 January 2016 12,491 3,563 1,173 (1,069) 48,199 64,357
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Profit for the
period - - - - 1,385 1,385
Other comprehensive
income - - - 524 - 524
Share based
payments 12 - - 346 - - 346
Issue of share
Capital 11 3 51 - - - 54
Deferred tax - - - - - -
on share based
payments
Dividends 7 - - - - (2,429) (2,429)
Balance as at
30 June 2016
(Unaudited) 12,494 3,614 1,519 (545) 47,155 64,237
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Balance as at
1 January 2016 12,491 3,563 1,173 (1,069) 48,199 64,357
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Profit for the
year - - - - 7,699 7,699
Other comprehensive
income - - - 672 - 672
Share based
payments 12 - - 523 - - 523
Deferred tax
on share based
payments - - (71) - - (71)
Issue of shares 10 112 - - - 122
Dividends 7 - - - - (3,574) (3,574)
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Balance as at
31 December
2016 12,501 3,675 1,625 (397) 52,324 69,728
--------------------- ------- ---------- ---------- --------- -------------- ----------- ----------
Servelec Group plc
Condensed Group Cash flow statement
For the six months ended 30 June 2016
30 Jun 2017 30 Jun 2016 Year ended
(Unaudited)
GBP'000 (Unaudited) 31 Dec 2016
Note GBP'000 GBP'000
Profit before tax
Continuing operations 4,284 1,731 9,515
Operating activities
Profit before tax 4,284 1,731 9,515
Adjustments to reconcile
profit before tax to net
cash flows:
Depreciation of property,
plant and equipment 616 534 1,110
Share based payment expenses 12 285 346 523
Amortisation and impairment
of intangible assets (i) 1,817 1,432 3,181
Finance income (1) (2) (17)
Finance costs 158 99 285
Working capital adjustments:
Movement in provisions 7 6 12
(Increase)/decrease in trade
and other receivables and
prepayments (3,260) (3,127) (4,278)
(Increase) in inventories (59) (200) (202)
Increase/(decrease)/increase
in trade and other payables 3,022 765 (1,707)
-------------------------------------- -------- ------------- ------------- -------------
Cash flows from operating
activities 6,869 1,584 8,422
-------------------------------------- -------- ------------- ------------- -------------
Interest received 1 2 17
Interest paid (94) (81) (267)
Income tax paid (919) (752) (2,700)
-------------------------------------- -------- ------------- ------------- -------------
Net cash flows from operating
activities 5,857 753 5,472
-------------------------------------- -------- ------------- ------------- -------------
Investing activities
Purchase of property, plant
and equipment and intangibles (355) (873) (1,245)
Acquisition of subsidiary
undertaking net of cash
acquired 13,14 - (20,879) (20,879)
Net cash flows from investing
activities (355) (21,752) (22,124)
-------------------------------------- -------- ------------- ------------- -------------
Financing activities
Proceeds from loans and
borrowings 10 - 15,113 15,113
Proceeds from issue of share
capital 11 697 54 122
Dividends paid (2,790) (2,429) (3,574)
-------------------------------------- -------- ------------- ------------- -------------
Net cash flows from financing
activities (2,093) 12,738 11,661
-------------------------------------- -------- ------------- ------------- -------------
Net increase/(decrease)
in cash and cash equivalents 3,409 (8,261) (4,991)
Net foreign exchange difference 151 519 650
Cash and cash equivalents
at start of period 5,555 9,896 9,896
-------------------------------------- -------- ------------- ------------- -------------
Cash and cash equivalents
at end of period 9,115 2,154 5,555
-------------------------------------- -------- ------------- ------------- -------------
(i) GBP1,778,000 of amortisation in the period relates to
acquired intangible assets (H1 2016: GBP1,388,000. FY 2016
GBP3,090,000)
Servelec Group plc
Notes to the financial statements
1. Corporate Information
Servelec Group plc is a limited liability company, incorporated
and registered under the laws of England and Wales, whose shares
are publicly traded.
The condensed consolidated interim financial statements of the
Company for the six months ended 30 June 2016 comprise the Company
and its subsidiaries (together referred to as the "Group") were
approved by the Board on 7 September 2016. These statements have
not been audited but have been reviewed by the Group's auditor
pursuant to the Auditing Practices Board guidance on the Review of
Interim Financial Information.
These interim condensed consolidated financial statements do not
constitute statutory accounts of the Group within the meaning of
Section 434 of the Companies Act 2006. The statutory accounts for
the year ended 31 December 2015 have been filed with the Registrar
of Companies. The auditor's report on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under Section 498(2) or Section
498(3) of the Companies Act 2006.
New standards and interpretations
There are no accounting standards or interpretations that have
become effective in the current reporting period which have had a
material effect on the net assets, results and disclosures of the
Group. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Adoption of new and revised standards
The directors also considered the impact on the Group of other
new and revised accounting standards, interpretations or
amendments. The following revised and new accounting standards may
have a material impact on the Group are currently issued but not
yet effective for the year ended 31 December 2017:
-- IFRS 15, "Revenue from Contracts with Customers" (effective date 1 January 2018
-- IFRS 16, "Leases" (effective date 1 January 2019)
-- IFRS 9, "Financial Instruments" (effective date 1 January 2018)
The Group is in the process of assessing the impact that the
application of these standards will have on the Group's Financial
Statements.
The Group has made an assessment of IFRS 15 and concluded that
the impact of implementing the new standard will not have a
material impact on the results.
2. Accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2016 have been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Services
Authority and with IAS 34 "Interim Financial Reporting" as adopted
by the European Union. It does not include all the information and
disclosures required in the annual consolidated financial
statements, and should be read in conjunction with the Group's
annual consolidated financial statements for the year ended 31
December 2015.
The accounting policies, presentation and methods of computation
applied by the Group in these interim condensed consolidated
financial statements are the same as those applied in the Group's
latest audited annual consolidated financial statements for the
year ended 31 December 2015.
Going Concern
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed financial statements.
3. Segment information
For management purposes, the Group is organised into business
divisions according to the nature of the products and services. It
has two divisions and three reportable segments as follows:
-- The HSC division specialises in the design, development and
implementation of Electronic Patient Record (EPR) and Patient
Administration Systems (PAS) and Social Care Case Management
software within secondary care and social care settings and is a
market leader in the Mental Health, Community Health and Social
Care and Education sectors in the UK.
-- The Automation division is engaged in the provision of
complex, mission critical systems to the oil & gas, power,
nuclear and water industries. The division specialises in safety
systems, protection systems, control systems and wide area
telemetry control systems. The division also offers business
optimisation consultancy and remote telemetry units, which are
designed and manufactured in house.
The HSC division is made up of three operating segments,
Healthcare, Social Care and Children's Services, which have been
aggregated as the Board considers that they have similar economic
characteristics.
The Automation division is made up of two operating segments,
Controls and Technologies, both of which are reportable.
Management monitors the operating results of its business units
separately for the purposes of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss, which in certain
respects, as explained in the table below, is measured differently
from operating profit or loss in the consolidated financial
statements. This measurement basis excludes the effect of central
services, non-recurring expenditure, amortisation, share based
payments and group financing costs which are not allocated to
operating segments.
Transfer prices between operating segments are on an arm's
length basis in a manner similar to transactions with third
parties.
The following tables present revenue and profit information for
continuing operations regarding the Group's business segments for
the six months ended 30 June 2017, 30 June 2016 and the year ended
31 December 2016.
Servelec Servelec Automation
Health
& Social
Care
GBP'000
----------------------------
Servelec Servelec
Controls Technologies Central Total
GBP'000 GBP'000 GBP'000 GBP'000
Six months ended
30 June 2017
(Unaudited)
Segment revenue
from customers 17,503 5,721 8,289 - 31,513
Cost of sales (8,999) (4,081) (3,914) - (16,994)
------------------------- ---------- ----------- --------------- --------- ---------
Gross profit 8,504 1,640 4,375 - 14,519
Overheads (2,496) (1,095) (3,023) (1,401) (8,015)
Non-recurring items - - - - -
Share based payments - - - (285) (285)
Amortisation on
acquired intangibles - - - (1,778) (1,778)
------------------------- ---------- ----------- --------------- --------- ---------
Segment operating
profit from continuing
operations 6,008 545 1,352 (3,464) 4,441
------------------------- ---------- ----------- --------------- --------- ---------
Servelec Servelec Automation
Health
& Social
Care
GBP'000
----------------------------
Servelec Servelec
Controls Technologies Central Total
GBP'000 GBP'000 GBP'000 GBP'000
Six months ended
30 June 2016
(Unaudited)
Segment revenue
from customers 14,951 5,397 8,029 - 28,377
Cost of sales (8,490) (3,988) (4,172) - (16,650)
------------------------- ---------- ----------- --------------- --------- ---------
Gross profit 6,461 1,409 3,857 - 11,727
Overheads (2,290) (1,002) (2,586) (1,344) (7,222)
Non-recurring items - - - (943) (943)
Share based payments - - - (346) (346)
Amortisation on
acquired intangibles - - - (1,388) (1,388)
------------------------- ---------- ----------- --------------- --------- ---------
Segment operating
profit from continuing
operations 4,171 407 1,271 (4,021) 1,828
------------------------- ---------- ----------- --------------- --------- ---------
Servelec Servelec Automation
Health
& Social
Care
GBP'000
----------------------------
Servelec Servelec
Controls Technologies Central Total
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31
December 2016
Segment revenue
from customers 33,081 10,776 17,100 - 60,957
Cost of sales (16,543) (7,222) (8,609) - (32,374)
------------------------ ---------- ----------- --------------- --------- ---------
Gross profit 16,538 3,554 8,491 - 28,583
Overheads (4,832) (2,020) (4,407) (2,728) (13,987)
Non-recurring
items (629) 328 (250) (649) (1,200)
Share based
payments - - - (523) (523)
Amortisation
on acquired
intangibles - - - (3,090) (3,090)
------------------------ ---------- ----------- --------------- --------- ---------
Segment operating
profit from
continuing operations 11,077 1,862 3,834 (6,990) 9,783
------------------------ ---------- ----------- --------------- --------- ---------
Operating assets and liability information are measured on a
Group basis and so have not been disclosed at segment level.
Adjustments and eliminations
Segment profit for each operating segment excludes net finance
costs of GBP157,000 (H1 2016: costs of GBP97,000).
4. Non-recurring items
30 Jun 30 Jun Year ended
2017 2016 31 Dec
(Unaudited) (Unaudited) 2016
GBP'000 GBP'000 GBP'000
Recognised in arriving at operating
profit from continuing operations:
Acquisition costs - 558 559
Aborted acquisition costs - 90 90
Research and development expenditure
credits - - (376)
Restructuring costs - 295 927
-------------------------------------- ------------- ------------ -----------
Total non-recurring items - 943 1,200
-------------------------------------- ------------- ------------ -----------
The aborted acquisition costs represent the professional fees
incurred during a potential acquisition process which the Group's
management decided to terminate before completion.
The restructuring costs relate mainly to redundancy costs
incurred during the restructuring processes within the Health and
Social Care and Technologies divisions during the period.
5. Research and Development costs
30 Jun 30 Jun Year ended
2017 2016 31 Dec
(Unaudited) (Unaudited) 2016
GBP'000 GBP'000 GBP'000
Research and development costs
expensed 3,377 2,811 5,151
-------------------------------- ------------ ------------ -----------
6. Earnings per share
Basic earnings per share amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the year. The following reflects the income and
share data used in the basic earnings per share computation:
30 Jun 30 Jun Year ended
2017 2016 31 Dec
(Unaudited) (Unaudited) 2016
GBP'000 GBP'000 GBP'000
Profit attributable to
ordinary equity holders
of the parent 3,459 1,385 7,699
----------------------------- ------------ ------------ -----------
Thousands Thousands Thousands
Basic weighted average
number of shares 69,680 69,410 69,429
Dilutive potential ordinary
shares 2,099 2,415 1,919
----------------------------- ------------ ------------ -----------
Diluted weighted average
number of shares 71,779 71,825 71,348
----------------------------- ------------ ------------ -----------
Basic earnings per share
from continuing operations 5.0p 2.0p 11.1p
Diluted earnings per share
from continuing operations 4.8p 1.9p 10.8p
Adjusted earnings per share
Year
30 Jun 30 Jun ended
2017 2016 31 Dec
(Unaudited) (Unaudited) 2016
GBP'000 GBP'000 GBP'000
Profit before taxation attributable
to ordinary equity holders of the
parent 4,284 1,731 9,515
Amortisation of intangible assets 1,778 1,388 3,090
Share based payments 285 346 523
Exceptional items - 943 1,200
Taxation (1,222) (881) (2,866)
------------ ------------ --------
5,125 3,527 11,462
------------ ------------ --------
Adjusted diluted earnings per share 7.1p 4.9p 16.1p
7. Dividends paid and proposed
Year
30 Jun 30 Jun ended
2017 2016 31 Dec
(Unaudited) (Unaudited) 2016
GBP'000 GBP'000 GBP'000
Declared and paid during the
period
Final Dividend for 2016: 4.0p
(2015: 3.5p) 2,790 2,429 2,429
Interim Dividend for 2016:
1.65p per share - - 1,145
------------------------------- ------------ ------------ --------
Dividends Paid 2,790 2,429 3,574
Based on weighted average number of shares.
GBP'000
--------------------------------- --------
Proposed interim dividend
for the year ended 31 December
2017 of 2.00p per share 1,397
(2016: 1.65p) -
--------------------------------- --------
The proposed interim dividend of 2.00p was approved by the Board
on 11 September 2017 and has not been included as a liability as at
30 June 2017.
8. Income tax expense
The tax charge on continuing operations for the period is based
on an effective rate of 19.25% (2016: 20.0%) to reflect the current
rate of tax.
Tax rate changes that were substantially enacted at the balance
sheet date have been factored into the calculation of the effective
tax rates.
9. Property, Plant and Equipment
During the six months ended 30 June 2017, the Group acquired
assets with a cost of GBP355,000 (six months to 30 June 2016:
GBP873,000).
10. Loans and borrowings
30 Jun 2017 30 Jun 2016 31 Dec
2016
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ --------
Revolving credit facility 15,113 15,113 15,113
--------------------------- ------------ ------------ --------
The revolving credit facility agreement has a three year
duration with amounts drawn falling due for repayment or rollover
every three months. Accordingly, the amount drawn at 30 June 2017
has been categorised within current liabilities.
Interest is charged quarterly based on LIBOR plus a margin of
between 1.00% and 1.95%, depending on the Group's leverage ratio
for the relevant period.
11. Issued capital and reserves
Authorised shares
31 Dec
30 Jun 2017 30 Jun 2016 2016
(Unaudited) (Unaudited)
Thousands Thousands Thousands
-------------------- ------------ -------------- ------------------
Ordinary shares of
18 pence each 69,837 69,413 69,448
-------------------- ------------ -------------- ------------------
Ordinary shares issued and fully paid
30 Jun 30 Jun 30 Jun 30 Jun 31 Dec 31 Dec
2017 2017 2016 2016 2016 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Thousands GBP'000 Thousands GBP'000 Thousands GBP'000
--------------- ------------ ------------ ------------ ------------ ---------- ---------
Share capital
Shares
at the
beginning
of the
period 69,448 12,501 69,394 12,491 69,394 12,491
Shares
issued 389 70 19 3 54 10
Shares
at the
end of
the period 69,837 12,571 69,413 12,494 69,448 12,501
--------------- ------------ ------------ ------------ ------------ ---------- ---------
30 Jun 2017 30 Jun 2016 31 Dec
2016
(Unaudited) (Unaudited)
Share premium GBP'000 GBP'000 GBP'000
Shares at the beginning of
the period 3,675 3,563 3,563
Shares issued during the period 627 51 112
Shares at the end of the period 4,302 3,614 3,675
12. Share based payments
Group executive share option plan (ESOP)
Share options were granted to employees, as determined by the
Remuneration Committee. The exercise price of the options is equal
to the market price of the shares on the date of grant. The options
only vest in accordance with the performance conditions for each
executive as determined by the Remuneration Committee. Conditions
are based on operating profit targets for the year to 31 December
2017, provided the employee remains in the group's employment for 3
years. The options cannot be exercised within 3 years and have a
maximum life of 10 years. The option will be settled by the issue
of new shares and there are no cash settlement alternatives.
Save-as-you-earn (SAYE) scheme
The Company has an all-employee Save As You Earn share option
plan whereby employees may enter into a savings contract under
which they agree to save up to a maximum of GBP500 per month (or
such limited as may be permitted by the tax legislation governing
SAYE schemes from time to time) for 3 to 5 years.
Deferred share bonus plan (DSBP)
No share awards were granted to senior executives during the
current period. During the prior period, share awards were granted
to senior executives as determined by the Remuneration Committee.
The exercise price of the awards is nil. Awards will be subject to
time pro-rating.
Long term incentive plan (LTIP)
Share options were granted to senior executives, as determined
by the Remuneration Committee. The exercise price of the options is
nil. The options only vest in accordance with the performance
conditions for each executive as determined by the Remuneration
Committee provided the employee remains in in the group's
employment for 3 years. The options cannot be exercised within 3
years and have a maximum life of 10 years. The option will be
settled by the issue of new shares and there are no cash settlement
alternatives.
Further details of the vesting conditions are in the
Remuneration Committee report on pages 60 to 73 of the Annual
Report for the year ended 31 December 2016 and the clarification
RNS issued on 6 April 2017.
Vesting Expiry
Number Exercise Period Period
Date Granted Granted Price Years Years
Options granted
during the period:
18 April
LTIP 2017 265,700 Nil 3 10
18 April
ESOP 2017 655,000 GBP2.58 3 10
The following tables summarise the number and weighted average
exercise prices (WAEP) of and movements in, share options during
the period.
Number
of Shares
WAEP
Share options ESOP SAYE DSBP LTIP Total GBP
Outstanding
at 1 January
2017 764,013 818,270 33,430 471,053 2,086,766 1.51
Granted 655,000 - - 265,700 920,700 1.84
Exercised (82,124) (293,409) - - (375,533) 1.79
Expired (11,481) (41,170) - - (52,651) 2.55
--------------- ---------- ----------- ------- -------- ---------- -----
Outstanding
at 30 June
2017 1,325,408 483,691 33,430 736,753 2,579,282 1.56
--------------- ---------- ----------- ------- -------- ---------- -----
The expired options relate to options where performance
conditions have not been met and leavers.
Number
of Shares
DSBP WAEP
Share options ESOP SAYE LTIP Total GBP
Outstanding
at 1 January
2016 778,631 718,239 13,608 552,074 2,062,552 1.51
----------------- ---------- ----------- ------- ---------- ---------- -----
Granted 450,000 - 19,822 118,701 588,523 2.94
Performance
conditions
expired (203,086) - - - (203,086) 2.55
----------------- ---------- ----------- ------- ---------- ---------- -----
Outstanding
at 30 June
2016 1,025,545 718,239 33,430 670,775 2,447,989 1.85
Granted - 307,307 - - 307,307 2.14
Exercised (27,934) (9,969) - - (37,903) 1.79
Performance
conditions
expired (233,598) (197,307) - (199,722) (630,627) 3.24
----------------- ---------- ----------- ------- ---------- ---------- -----
Outstanding
at 31 December
2016 764,013 818,270 33,430 471,053 2,086,766 1.51
----------------- ---------- ----------- ------- ---------- ---------- -----
The fair value of the options granted and the assumptions used
in the model are set out below.
ESOP LTIP ESOP LTIP
Six months Six months Six months DSBP Six months
to to to Six months to
30 Jun 30 Jun 2017 30 Jun to 30 Jun 30 Jun
2017 2016 2016 2016
18 Apr 18 Apr 2017 8 Apr 2016 8 Apr
Grant date 2017 8 Apr 2016 2016
Share price
at date
of grant 2.58 2.58 3.85 3.85 3.85
Exercise
price 2.58 Nil 3.85 Nil Nil
Vesting
period (years) 3 3 3 2 3
Option life
(years) 10 10 10 10 10
Annual volatility 30% 30% 30% 30% 30%
Dividend
yield 2.0% 2.0% 1.5% 1.5% 1.5%
Risk free
rate 0.63% 0.18% 1.37% 0.25% 0.34%
Early exercise
multiple 2.0 n/a 2.0 n/a n/a
Fair value 3.68 &
per option 0.61 2.43 1.15 3.74 1.88
The fair value of the share options is measured at the grant
date taking into account the terms and conditions upon which the
instruments were granted. The cost of the options is recognised
over expected vesting period. Until the liability is settled it is
re-measured at each reporting date with changes in fair value
recognised in profit or loss.
The expense recognised during the six months to 30 June 2017 is
GBP285,000 (six months to 30 June 2016 GBP346,000).
13. Post Balance Sheet Event
In August 2017, the Group announced the closure of its Power
& Infrastructure office in Glasgow and its HSC offshore
development office in Cochin, India.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LMMJTMBABBTR
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