RNS Number:5691K
High-Point Rendel Group PLC
30 April 2003
High-Point Rendel Group plc
30 April 2003
Interim Results for the six months ended 31 January 2003
Overview
In the first six months of the year High-Point Rendel has continued the
programme of restructuring of the non-fee earning cost base referred to in my
statement with our results to 31st July 2002. That restructuring is now
virtually complete and management can concentrate their efforts in building
trading through our respected consultancy businesses.
Progress has been made on establishing significant additional fee entitlements
on certain long term contracts but no payments have been received in the period.
Results
In the 6 months to 31st January 2003, the Group made an operating profit of
#152,000 (2002 #852,000) on a turnover of #11,509,000 (2002 #13,956,000). These
results are after charging certain non-recurring costs of #412,000, mainly
related to the restructuring, and amortisation of goodwill of #43,000 (2002
#43,000).
Dividend
The directors do not recommend paying an interim dividend as a result of the
exceptional costs incurred in the period in relation to the programme of
restructuring.
Trading
Turnover was down 18% on the previous year. Of this reduction 5% was accounted
for by currency depreciation and no income from the closed US operation. We
have secured major assignments in China, Denmark, Italy, Qatar, Taiwan and
Thailand, each with international customers of significant repute and standing.
The amount of repeat orders from customers has again increased.
Banking
On 28th February 2003 our overdraft facilities were renewed for a further 12
months and #1.4m of the overdraft facility was converted into a loan repayable
by 31st May 2003 or upon settlement of additional fee entitlements on certain
long term contracts. The reduction of the Group's borrowings remains our
fundamental priority.
Pension
The preliminary valuation of the Pension Scheme as at 1st March 2003 shows a
Minimum Funding Requirement ("MFR") shortfall of #3,980,000, which represents a
MFR solvency of 82%. Negotiations will commence shortly with the Trustees of
the Pension Scheme to agree an increased contribution schedule to eliminate this
deficit.
Corporate Activity
Your Board is still in negotiations with a third party financial institution
which would back executive management to continue to run the business. There is
nothing further to report at this stage.
Summary
Whilst the level of debt, ongoing restructuring and delay in closing out
additional fee entitlements have constrained development of business, the work
that we are securing remains of the highest quality and with first class
customers. We will persist with our strategy of ensuring that we remain at the
very forefront of service delivery. In times of economic uncertainty I believe
this is crucial to achieving a solid sustainable consultancy.
Tony Palmer
Chairman
April 2003
INDEPENDENT REVIEW REPORT TO HIGH-POINT RENDEL GROUP PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 January 2003 which comprises the Group Profit and Loss
Account, Group Balance Sheet, Group Statement of Cash Flows, Reconciliation of
Net Cash Flow to Movement in Net Debt, Group Statement of Total Recognised Gains
and Losses, Reconciliation of Shareholders' Funds and the related notes 1 to 7.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by the 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 interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Fundamental uncertainty
In arriving at our review conclusion, we have considered the adequacy of the
disclosures made in note 1 to the interim financial information concerning the
recovery of amounts recoverable on contracts. Negotiations are in progress for
final settlement of these contracts and it is therefore not possible to
determine with certainty the amounts and timing of the eventual receipts.
Depending on the outcome of these negotiations, there could be a material effect
on the results and the financial position disclosed in this interim financial
information. In view of the significance of this uncertainty, we consider that
it should be drawn to your attention but our review conclusion is not qualified
in this respect.
Going Concern
In arriving at our review conclusion, we have considered the adequacy of the
disclosures made in note 1 to the interim financial information concerning the
uncertainty as to the continuation of the group's overdraft and loan facilities.
The interim financial information is prepared on the going concern basis, the
validity of which depends on the group's ability to operate within the agreed
facilities and the continuing support of its bank. In view of the significance
of this uncertainty, we consider that it should be drawn to your attention but
our review conclusion is not qualified in this respect.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 January 2003.
Ernst & Young LLP
Birmingham
30 April 2003
High-Point Rendel Group plc
GROUP PROFIT & LOSS ACCOUNT
Unaudited Audited
Six months to Year to
31 January 31 January 31 July
2003 2002 2002
Note #000 #000 #000
Turnover: Group and share of joint venture's turnover 2
Continuing operations 11,509 13,533 25,078
Discontinued operations - 423 162
Less: share of joint venture's turnover - - (65)
Group turnover 11,509 13,956 25,175
Operating costs (11,357) (13,104) (27,228)
Operating profit/(loss): 2,3
Continuing operations 149 852 (1,376)
Discontinued operations 3 - (677)
Group operating profit/(loss) 152 852 (2,053)
Share of operating loss in joint venture (74) (59) (160)
Total operating profit/(loss): Group and share of Joint 78 793 (2,213)
venture
Interest (193) (123) (288)
(Loss)/profit on ordinary activities before taxation (115) 670 (2,501)
Taxation 4 7 (41) (236)
(Loss)/profit on ordinary activities after taxation (108) 629 (2,737)
Dividends - (219) (219)
Retained (loss)/profit for the period (108) 410 (2,956)
Earnings per share - basic (0.4p) 2.3p (10.0p)
Earnings per share - diluted n/a 2.3p n/a
Dividends per ordinary share 0.0p 0.8p 0.8p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Unaudited Audited
Six months to Year to
31 January 31 January 31 July
2003 2002 2002
#000 #000 #000
(Loss)/profit attributable to shareholders (108) 629 (2,737)
Surplus on revaluation of investment - 318 -
Exchange difference on retranslation of net assets of
subsidiary undertakings (172) 56 (306)
Total recognised gains and losses for the period (280) 1,003 (3,043)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Unaudited Audited
Six months to Year to
31 January 31 January 31 July
2003 2002 2002
#000 #000 #000
Opening shareholders' funds
As originally stated 5,269 8,215 8,215
Prior period adjustment - 312 312
As restated 5,269 8,527 8,527
Total recognised gains and losses (280) 1,003 (3,043)
Dividends - (219) (219)
New shares issues - - 4
Closing shareholders' funds 4,989 9,311 5,269
High-Point Rendel Group plc
GROUP BALANCE SHEET
Unaudited Audited
31 January 31 January 31 July
2003 2002 2002
#000 #000 #000
Fixed assets
Intangible assets 1,492 1,577 1,534
Tangible assets 950 917 947
Investments 561 1,008 654
3,003 3,502 3,135
Current assets
Amounts recoverable on contracts 5,143 5,967 4,577
Debtors 8,073 9,711 7,264
Cash at bank and in hand 572 1,137 1,740
13,788 16,815 13,581
Creditors
Amounts falling due within one year (11,239) (10,489) (10,825)
Net current assets 2,549 6,326 2,756
Total assets less current liabilities 5,552 9,828 5,891
Creditors
Amounts falling due after more than one year (144) (53) (183)
Provision for liabilities and charges (419) (464) (439)
4,989 9,311 5,269
Capital and reserves
Share capital 274 274 274
Reserves 4,715 9,037 4,995
Equity shareholders' funds 4,989 9,311 5,269
High-Point Rendel Group plc
GROUP STATEMENT OF CASH FLOWS
Unaudited Audited
Six months to Year to
31 January 31 January 31 July
2003 2002 2002
Note #000 #000 #000
Net cash (outflow)/inflow from operating activities 5 (1,031) 522 438
Returns on investments and servicing of finance (193) (123) (288)
Taxation (38) (19) (91)
Capital expenditure and financial investment (226) (152) (301)
Dividends paid - - (219)
Net cash flow before financing (1,488) 228 (461)
Financing (78) (82) (215)
(Decrease)/increase in cash (1,566) 146 (676)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)
Unaudited Audited
Six months to Year to
31 January 31 January 31 July
2003 2002 2002
#000 #000 #000
(Decrease)/increase in cash (1,566) 146 (676)
Repayment of capital element of finance lease rentals 78 82 215
Changes in net debt resulting from cash flows (1,488) 228 (461)
Inception of new finance lease obligations - (31) (331)
Movement in net (debt) (1,488) 197 (792)
Opening net (debt) (4,489) (3,697) (3,697)
Closing net (debt) (5,977) (3,500) (4,489)
High-Point Rendel Group plc
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
at 31 January 2003
1 Basis of preparation of interim financial information
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year ended
31 July 2002. The taxation charge is calculated by applying the directors' best
estimate of the annual tax rate to the profit for the period. Other expenses
are accrued in accordance with the same principles used in the preparation of
the annual accounts.
Fundamental accounting concept - Going concern and Fundamental uncertainty
The interim financial information is prepared on the going concern basis because
the directors consider there will be sufficient funds available to enable it to
continue operating and meet its liabilities as they fall due. The group is
dependent on its overdraft facilities and loan facilities totalling #3m and
#2.9m respectively, in order to meet its day-to-day working capital
requirements. The former is repayable on demand, though the facility is granted
until 28 February 2004. The latter is repayable not later than 31 May 2003. At
the date of approval of this interim financial information, it has an overdraft
of #2.9m and has drawn down all of its loan facility.
Receipt of a debtor relating to a contract in the Middle East, the uncertainties
over which are referred to below, will be applied to repayment of the loan,
which is secured on this.
The nature of the Group's business is such that there can be considerable
unpredictable variation in the timing of cash inflows. In particular, there is
uncertainty over the timing and final amount of the cash receipts from contracts
in the UK, Middle East and Far East. Amounts recoverable on contracts of #5.1m
include claims made by the group for additional work over and above the original
contracts. Having considered the nature and strength of each claim, and the
extent of acceptance by the clients, the directors have determined that it is
prudent only to include the costs incurred under the contracts, and not to
recognise a profit element. The negotiations with the relevant clients are
progressing in accordance with pre-agreed procedures but have not yet been
finalised. Accordingly, these amounts do not represent the full extent of
claims made by the Group nor the amounts at which the Group anticipates it will
settle. However, the amounts that will eventually be settled may be greater or
less than the amounts included in the interim financial information.
The directors have prepared projected cash flow information for the period
ending 31 July 2004.
On the basis of these cash flow forecasts, the directors consider that the Group
will continue to operate within the facilities currently agreed and expected to
be renewed at current levels.
However, the margin of current and expected future facilities over requirements
is not large, and inherently there can be no certainty as to whether the group
will be able to continue to operate within these facilities, or that the bank
will continue to support the group, including, if necessary the bank's
willingness to make available additional facilities from 31 May 2003 when the
loan is repayable.
Should the group not be able to secure sufficient funds to enable it to continue
operating and to meet its liabilities as they fall due, then adjustments would
be necessary to provide for any impairments of fixed assets, to reclassify fixed
assets and long term liabilities as current assets and current liabilities, and
to provide for any further liabilities that might arise.
2 Segmental Turnover Operating profit/(loss)
analysis
Six months to Year to Six months to Year to
31 January 31 January 31 July 31 January 31 January 31 July
2003 2002 2002 2003 2002 2002
By class of business #000 #000 #000 #000 #000 #000
Capital project delivery 6,952 7,541 14,090 487 635 (543)
Business and management services 4,557 6,415 11,085 (335) 217 (1,510)
Total 11,509 13,956 25,175 152 852 (2,053)
By geographic origin
Continuing operations:
Europe, Africa and Middle East 8,478 9,543 17,667 226 788 (1,118)
Asia and Pacific 3,031 3,990 7,346 (77) 64 (258)
Rim
11,509 13,533 25,013 149 852 (1,376)
Discontinued operations:
Americas - 423 162 3 - (677)
Total 11,509 13,956 25,175 152 852 (2,053)
By geographic market
Europe, Africa and Middle East 8,049 9,111 16,977
Indian 429 412 690
Sub-Continent
Asia and Pacific 3,031 4,010 7,346
Rim
Americas - 423 162
11,509 13,956 25,175
3 Exceptional items
Six months to Year to
Recognised before operating profit/(loss): 31 January 31 January 31 July
2003 2002 2002
#000 #000 #000
Specific bad debt provision release - (308) (308)
Restructuring costs - 195 1,595
Net exceptional (profit)/loss - (113) 1,287
4 Taxation
Six months to Year to
31 January 31 January 31 July
2003 2002 2002
#000 #000 #000
The charge for taxation includes the following:
Current year charge UK corporation tax - 146 -
Overseas tax 10 11 81
Prior year adjustments UK corporation tax - - -
Overseas tax - (81) (81)
Deferred taxation (17) (35) (236)
(7) 41 (236)
5 Reconciliation of operating profit/(loss) to net cash (outflow)/inflow from operating
activities
Six months to Year to
31 January 31 January 31 July
2003 2002 2002
#000 #000 #000
Operating profit/(loss) 152 852 (2,053)
Depreciation 191 183 419
Amortisation of goodwill 43 43 86
(Profit)/loss on sale of tangible fixed assets - (6) 7
Movements in working capital and other non-cash items (1,417) (550) 1,979
Net cash (outflow)/inflow from operating activities (1,031) 522 438
6 Publication of non-statutory accounts
The financial information contained in this interim statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the full preceding year is based on the
statutory accounts for the financial year ended 31 July 2002. Whilst the
auditors issued an unqualified opinion in respect of those accounts, their audit
report drew attention to matters of 'fundamental uncertainty' and 'going
concern'. These accounts have been delivered to the Registrar of Companies.
7 Copies of this statement will be sent to all shareholders and will be
available to the public at the company's registered office, 61 Southwark Street,
London SE1 1SA.
This information is provided by RNS
The company news service from the London Stock Exchange
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