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Silverdell PLC Final Results

Date : 12/05/2012 @ 2:01AM
Source : UK Regulatory (RNS & others)
Stock : Silverdell (SID)
Quote : 12.75  0.0 (0.00%) @ 12:00AM
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Silverdell PLC Final Results

TIDMSID

RNS Number : 7480S

Silverdell PLC

05 December 2012

Silverdell Group PLC

("Silverdell" or the "Group")

Preliminary results for the year ended 30 September 2012

Silverdell plc (AIM: SID), the Specialist Environmental Support Services group reports preliminary results for the full year ended 30 September 2012.

Financial Highlights

   --      Revenue up 38% to GBP82.5m (2011: GBP59.7m) 
   --      Gross profit up 27% at GBP20.4m (2011: GBP16.1m**) 
   --      Adjusted EBITDA* up 51% to GBP6.2m (2011: GBP4.1m) 
   --      Adjusted pre-tax profit* up 43% at GBP4.3m (2011: GBP3.0m) 
   --      Adjusted EPS* up 7% at 1.5p (2011: 1.4p) 
   --      Net senior debt (excluding lease finance) down GBP0.5m to GBP4.5m (2011: GBP5.0m) 
   --      Recommendation of  maiden dividend of 0.175 pence per share to be paid in March 2013 
   *   Before non-recurring items, impairment charges, amortisation and share based payments. 

** As restated for the reclassification of certain depreciation charges previously classified as administrative expenses

Operational Highlights

   --      Transformational acquisition of EDS and associated equity fundraising of GBP8.5m 
   --      Group is now a provider of end-to-end decommissioning services with world-wide reach 
   --      Contracts secured during the period include: 

o Decommissioning / disinvestment contract worth approx. GBP10.7m in Ontario, Canada

o Dismantling contract worth approx. GBP2.2m in Quebec

o GBP0.5m of major retail infrastructure works in the UK

   --      Commencement of the Magnox framework contract with an initial order for works worth GBP3.2m 

-- Streamlined Group structure, delivering operational efficiencies and savings of GBP1.2m per annum

-- Order book up 105% to GBP219m at 31(st) October 2012 (31(st) October 2011: GBP107m), GBP97m of which is scheduled to fall in 2013.

-- Current trading is in line with the Board's expectations and current level of tendering activity is high

-- Q4 trading particularly strong with combined August and September revenues of GBP24.8m (August and September 2011: GBP11.6m).

Commenting on the results, Chairman Stuart Doughty said:

"This has been a transformational year for Silverdell. We have acquired and are in the process of integrating EDS, secured significant new contracts, and streamlined and strengthened our management structure to give us an international platform for the future.

"We have in place a sound strategy for growth supported by clear and achievable KPIs. Our belief in the excellent long term prospects for the Group is underlined by our recommendation of a maiden dividend. Current trading is encouraging and our focus now is on delivery. Mindful always of challenging global economic conditions, we look forward to the future with confidence."

ENQUIRIES:

 
Silverdell Group PLC                     Tel: 020 7004 2741 
Sean Nutley, Chief Executive 
Ian Johnson, Finance Director 
 
 
College Hill (Public Relations)          Tel: 020 7457 2020 
 
Mark Garraway 
Helen Tarbet 
 
 
finnCap (Broker & Nominated Advisor)     Tel. 020 7220 0500 
Marc Young/ Ben Thompson (Corporate 
 finance) 
Simon Johnson/Victoria Bates (Corporate 
 broking) 
 

CHAIRMAN'S STATEMENT

Overview

I am pleased to report a positive set of results for the year ended 30th September 2012; a year which has seen Silverdell become a specialist environmental support services group with global reach. On 18th June 2012 we acquired decommissioning and dismantling provider EDS Group Holdings Ltd ("EDS") for an initial consideration of GBP15m funded by the issue of shares and a successful share placing of GBP8.5m. At the same time we negotiated new, extended banking facilities with HSBC. The acquisition of EDS has given Silverdell immediate scale, global reach and a platform from which to leverage significant future growth. The acquisition has proved immediately earnings enhancing and the enlarged group has already secured significant international contract wins with a healthy pipeline of further opportunities.

Strategy

Alongside its traditional environmental services offering, Silverdell is now a unique provider of end-to-end decommissioning, dismantling and remediation services, with global reach, and a particularly strong presence in the UK, Canada and Australia. These markets have stringent legislation and regulation governing the management and disposal of hazardous materials in both the heavy industrial and the built environment, and this is the key driver for our business. Our customers are predominantly blue-chip, multinational groups operating in the power generation, chemical, oil & gas, pharmaceutical, petrochemical and fuel industries as well as large retailers and public sector organisations. They need safe, compliant and highly specialised solutions for the decommissioning of their industrial legacy, and Silverdell is one of the few companies worldwide offering our particular suite of services to deal with these often complex and dangerous legacy assets.

As well as maximising the opportunities we have to offer a broader range of services to our enhanced blue chip customer base, we see further opportunities to expand our presence organically further into Canada and Australia, and to develop new services such as a discrete Consulting business in Canada. In the UK, in addition to our asbestos remediation services, we are growing our capability as a supplier of high hazard industrial maintenance and support services to our existing client base within a number of framework contracts. We also see exciting opportunities in Continental Europe as various governments outline plans to decommission first and second generation nuclear power stations and replace them with conventional energy generation facilities. Further detail on our growth plans is set out in the Chief Executive's Strategic Review.

Economic conditions are challenging and are expected to remain so, as clients increasingly seek more value for money from their suppliers. Despite this, we are confident that our reputation for excellence, coupled with the increasingly stringent regulatory and legislative imperatives regarding the management and disposal of hazardous materials, will continue to drive our business and provide us with opportunities for growth.

Results

Revenues for the year ended 30 September 2012 were GBP82.5m (2011: GBP59.7m) with adjusted EBITDA* of GBP6.2m (2011: GBP4.1m). Operating profit was GBP1.3m and adjusted pre-tax profit** was GBP4.3m (2011: GBP3.0m), impacted in part by the deferral of certain shutdown and refurbishment works and by some lower margin work undertaken in our Consulting division. As at 31st October 2012 the order book was GBP219m (31st October 2011: GBP107m), with GBP97m scheduled to fall in 2013. Adjusted basic earnings per share were 1.5 pence (2011: 1.4 pence). At the year end, the Company's net senior debt was GBP4.5m (2011: GBP5.0m) with an additional GBP6m (2011: GBP0.2m) of asset-backed finance. During the period we re-financed the Group with a new, more competitive, three-year term with HSBC, affording the Group reduced overall financing costs, improved covenant terms and a global banking relationship.

Dividend

We are today recommending a maiden dividend of 0.175 pence per share, which will be paid on 22 March 2013 to shareholders on the register at the close of business on 13 March 2013 and is subject to approval by shareholders at the Company's Annual General Meeting which will be held on 7 March 2013. The Corresponding record date for the dividend will be 15 March 2013.

Board & People

During the period under review we enhanced our Group structure and management team to reflect the new size and scale of the business and position it for further growth.

The Group structure now comprises three divisions: Remediation, Decommissioning, including the EDS operations, and Consulting, which we aim to grow into a global operation.

As a result of combining our two UK asbestos Remediation businesses (Silverdell UK and Kitsons Environmental Europe) we now have a single Remediation division, Silverdell, under a single management team, delivering significant operational efficiencies and savings of GBP1.2m per year.

Darren Palin, Managing Director of EDS Group, is now Managing Director of our Decommissioning division and John Potts, who was appointed in November 2011, is Managing Director of Silverdell, whilst our Consulting division Redhills is led by Matt Griggs. All three Managing Directors have an impressive depth and breadth of knowledge and experience in their sectors and we are confident that under their leadership, our divisions will continue to thrive.

We remain a direct employer of our workforce, ensuring that their specialist skills are maintained and developed within the business providing an excellent basis for the training and development of future management, and enabling us to maintain our licenses to operate. This helps the Group maintain its high standards of quality and safety, protecting its own operating license and the interests and reputation of its customers.

On behalf of the Board, I would like to express our gratitude to everyone in the Group for their hard work, dedication and commitment during the past year, without which our success would not have been possible.

Summary

This has been a transformational year for Silverdell. We have acquired and are in the process of integrating EDS, secured significant new contracts, and streamlined and strengthened our management structure to give us a platform for the future. We have in place a sound strategy for growth supported by clear and achievable KPIs. Our belief in the excellent long term prospects for the Group is underlined by our recommendation of a maiden dividend. Current trading is encouraging and our focus now is on delivery. Mindful always of challenging global economic conditions, we look forward to the future with confidence.

Stuart Doughty

Non-Executive Chairman

*Earnings before interest, tax, depreciation and amortisation and also before impairment charges, share-based payments and non-recurring items

** Adjusted to exclude intangibles amortisation, impairment charges, non-recurring items and share-based payments

CHIEF EXECUTIVE'S STATEMENT

Overview

Silverdell operates in two distinct markets worldwide: the general domestic refurbishment and construction related market and the larger industrial support services market predominantly involved in the power generation, chemical, oil & gas, pharmaceutical, petrochemical and fuel sectors. All of these require a high degree of regulatory control. The skills, processes and, importantly, the highly complementary cultures that our operating teams have developed in both our traditional and our newly acquired businesses are well suited to the handling and management of all types of hazardous materials and assets in a safe and compliant manner.

Due to our proven track record of delivering services in hazardous environments, we are a trusted and long-standing supplier to multinational blue chip customers in these sectors, and now as an enlarged Group we are able to provide a fully comprehensive suite of decommissioning, dismantling and remediation services to these customers around the world. Our focus is on growing the business organically in our targeted global markets.

Performance against historic Strategic KPIs

30(th) September 2012 marked the end of our previous strategic period. We have set out below the actual performance over that period in relation to the key strategic objectives we set ourselves.

 
 Strategic KPI                     Achievement 
--------------------------------  ---------------------------------------------- 
 Grow order book ahead of          2009-12 non-acquired order book has grown 
  organic growth                    by GBP99m or 173% 
--------------------------------  ---------------------------------------------- 
 To drive organic revenue          Underlying Remediation and Consulting 
  growth year on year ahead         revenues have been held broadly flat 
  of market growth                  2009-12. UK Construction industry declined 
                                    by 11.6% in 12 months to August 2012 
                                    (Source: ONS) 
--------------------------------  ---------------------------------------------- 
 To grow the EBITDA margin         Achieved as a run-rate in Q4 2012 and 
  to 10%                            per 2013 consensus 
--------------------------------  ---------------------------------------------- 
 To maintain working capital       Generally operated at over 4 weeks through 
  at not more than 1 month's        the period due to customers demanding 
  revenue                           extended terms. As predicted, the beneficial 
                                    impact of the EDS acquisition meant that 
                                    at September 2012 group working capital 
                                    had fallen to 1 month's run-rate revenues. 
--------------------------------  ---------------------------------------------- 
 To grow the Consulting business   Achieved prior to EDS acquisition. Consulting 
  to 15% of Group revenues          revenues as a percentage of Group total 
                                    revenues in 2012 is 17% 
--------------------------------  ---------------------------------------------- 
 

Strategic Review

Our strategic focus is on achieving organic growth in our targeted global markets, underpinned by driving step changes in our industry expertise and our culture. Specifically, we aim to grow organically in the UK, Australia and Canada, by expanding further into markets in which we have a strong presence or a foothold, and by exporting proven business streams and services from one geography into another.

Our strategy is called "Changing the Landscape", reflecting both the transformation that Silverdell is undergoing as well as the beneficial impact that our activities have on the built and natural environments.

Our three particular areas of focus can be summarised as follows:

1. Increasing our Capability: Growing our geographic and product footprint organically, particularly in Canada and Australia, through enhancing our management teams and operational scope to drive commercial excellence and enable us to harness opportunities. As a part of this we will focus on expanding our Consulting offering in the UK, and aim to build organically a Consulting offering in Canada.

2. Expanding our Knowledge: Continuing to improve our industry knowledge and market intelligence both to enhance our competitive edge and to anticipate and respond to the changing demands of our customers. As part of this we are enhancing our business identification systems and our tendering processes.

3. Enhancing our Culture: Through training, development and enabling effective leadership, to develop a culture which fosters innovation and initiative combined with the responsible, safe and compliant approach for which we are known. We will continue to streamline our businesses under a more unified brand structure to establish a coherent position in the market place, ensuring minimal operational overlap and maximising operational efficiency.

To help us demonstrate progress, we have set the following medium term KPIs:

   1.         Achieve 15% year on year revenue growth 

2. Achieve and maintain a robust and highly visible order book totalling two years or more of revenues

   3.         Achieve sustainable 10% adjusted EBITDA margins 
   4.         Achieve and maintain a progressive dividend policy 

We will continue to update investors on our progress in meeting our strategic goals and achieving our stated KPIs.

Operational Review

Divisional Revenue Split

Following the acquisition of EDS the Group now reports its results in three strategic segments, Remediation, Consulting and Decommissioning, with the latter comprising the EDS Group.

 
                             Remediation     Decommissioning        Consulting 
                           2012      2011         2012   2011     2012     2011 
Public Sector 
 Local Authorities 
  & Housing                 17%       12%           0%     0%      13%      14% 
 Defence                    18%       21%           0%     0%       6%       9% 
 Health & Education         12%       11%           0%     0%      14%      15% 
                            47%       44%           0%     0%      33%      38% 
 
Private Sector 
 Utilities, Power 
  & Industrial              29%       27%         100%   100%      14%      18% 
 Construction                8%        8%           0%     0%       2%       1% 
 Retail, Commercial 
  & Rail                    16%       21%           0%     0%      51%      43% 
                            53%       56%         100%   100%      67%      62% 
                           100%      100%         100%   100%     100%     100% 
 

In 2012 external Remediation revenues were GBP49.4m (2011: GBP51.5m). Adjusted operating profit* margins in this segment were 5.7% (2011: 6.9%). Decommissioning activities (undertaken by EDS) amounted to GBP18.9m in revenues in 2012 (2011: GBPnil) at operating profit* margins of 11.4% (2011: nil).

Consulting has had a strong year, with the two acquisitions completed in the second half of 2011 performing ahead of expectations. External Consulting revenues were GBP14.3m (2011: GBP8.2m), however included in this is GBP3m of sub-contract revenues relating to managed refurbishment projects which are typically lower margin and have served to dilute operating margins overall. Accordingly, the operating profit* margin fell to 10.8% (2011: 15.3%); stripping out sub-contract revenues, margins were broadly maintained.

* Excluding amortisation, impairment charges, share-based payments and non-recurring items.

Public Sector

There is a substantial asbestos legacy across the whole range of the public sector property portfolio, including local government buildings and social housing, schools, colleges and hospitals as well as defence establishments. The public sector spend on maintenance and refurbishment projects exceeds GBP20bn per year and this is driven by regulatory requirements.

Total revenues from the Public Sector rose in the year by GBP1.5m to GBP24.5m (2011: GBP23.0m) although as a percentage of total revenues the proportion fell due to the much greater increase in industrial revenues. The share of total Remediation revenues generated by public sector work were 47% in 2012 (2011: 44%) whilst the share of Consulting revenues was 33% (2011: 38%). Underlying public sector revenues in Consulting increased by GBP1.4m in absolute terms year on year despite comprising a lower percentage of total Consulting revenues due to the additional volume of retail work delivered through RDS, the specialist retail consultancy acquired in August 2011.

Local Authorities and Housing

Local Authorities and Housing revenues comprised 17% of Remediation revenues in 2012 (2011:12%). We work with a number of Housing Authorities and Registered Social Landlords across the United Kingdom to remove the asbestos legacy within their estate portfolio.

However, with more significant revenue growth in other areas, Local Authority revenues fell to 13% of our total Consulting revenues (2011: 14%) despite an increase in absolute revenues of GBP0.7m as we continued to win a number of large housing framework contracts across the UK.

Defence

The Defence share of revenues for Remediation for the year was 18% (2011: 21%). During 2012 the Group undertook a lower volume of work under the Regional Prime Contracts relationship for MoD housing. This has been a long-standing relationship which has seen the Group upgrade more than 190 MoD properties and over 7km of insulated pipework in the last five years. We continue to develop our relationship with the Atomic Weapons Establishment to whom we now offer a number of services, in addition to asbestos removal.

Consulting defence revenues represented 6% (2011: 9%) of the total as revenues were flat year on year.

Health and Education

Health and Education comprised 12% (2011: 11%) of our total Remediation revenues, with an absolute increase of GBP0.7m in revenues in this sector. We have worked successfully with a number of PCTs and Russell Group universities as they upgrade and refurbish their campuses to meet the needs of today's patient and student populations.

Health and Education work made up 14% of Consulting revenues (2011: 15%) reflecting an additional GBP0.7m of revenues compared to 2011. The Group won several projects with Russell Group universities to provide survey and management services across their entire university estates.

Private Sector

Utilities, Power and Industrial

EDS operates exclusively in this sector, working with a number of multinational industrial customers in the oil and gas, pharmaceutical and textile manufacturing, mining and commodities sectors as well as in power generation and brewing. EDS has an enviable track record in all of these sectors: it is the world's leading refinery decommissioning specialist and is frequently invited to new territories to undertake pioneering works in the field of high hazard industrial decommissioning. During the year EDS has commenced work in Adelaide, Australia on that country's first oil refinery decommissioning project. We also commenced the decommissioning of an ore production plant in Canada: this project involves the decontamination of mercury, asbestos and hydrocarbon hazards on a 380,000 sq ft site which will see over 50,000 tonnes of steel recycled.

Utilities, Power and Industrial customers represented 29% of Remediation segment revenues in 2012 (2011: 27%). Within our traditional service offerings of asbestos, insulation and scaffolding, we have secured a number of additional contracts this year, including the provision of scaffolding support and thermal insulation works at a gas terminal in the North West of England; a significant shut-down contract at an oil refinery in South Wales and the provision of specialist scaffolding support to a cement manufacturer in the Midlands. The late starting contracts referred to above, which impacted our Remediation revenues, included the GBP304 million Magnox Framework Contract for nuclear decommissioning, which Silverdell announced in November 2011 and for which works were expected to commence during the Group's financial year 2012. The Group is pleased to announce that it has now received a GBP3.2m order for works to commence immediately at the Magnox site at Chapelcross, with further works expected to commence in 2013.

In our Consulting business, Utilities, Power and Industrial customers contributed 14% (2011:18%) of total revenues, which represents an increase in revenues in this sector of GBP0.6m year on year. Our long-standing framework contract with a large water utility in the North East is the mainstay of our industrial and utilities work and our Utilities relationships during the year have delivered resilient revenue streams. We continue to win a significant amount of new business from Remediation customers in this sector as a result of our strong relationships with customers such as National Grid and Magnox.

Construction

Construction's share of total Remediation revenues in 2012 was 8% (2011:8%), with absolute revenues rising by GBP0.5m. The most significant contract secured in this segment during the period was a ground remediation contract for a large development site in Staffordshire, which saw us dig out and remove over 3,500 tonnes of contaminated soil. However, the outlook for the Construction sector remains weak over the medium term.

Consulting's Construction share of total revenues was 2% (2011: 1%).

Retail, Commercial and Rail

This sector comprised 16% (2011: 21%) of Remediation revenues and 51% of Consulting revenues (2011: 43%).

The Remediation business saw a number of retail contracts deferred into FY 2013, as well as fewer rail infrastructure works. The volume of insurance-related work has also declined as the industry has altered the way it responds to household asbestos claims. Nevertheless, Silverdell continues to have strong relationships with all the major retailers and is considered a market leader in the sector.

The retail, rail and commercial sector comprised 51% (2011: 43%) of Consulting's total revenues which represents a year-on-year increase in sales of GBP3.6m. We are now the leading provider of asbestos consulting services to the retail sector with a customer list that includes many household names and in addition, we are performing increasing numbers of full service project management contracts in which we oversee the entire asbestos element of store refurbishment projects.

Current Trading and Outlook

This is a positive set of results which demonstrates the robustness of our business model and our market leading positions. Thanks to the dedication of its people and the support of its shareholders, the Group has delivered significant growth, both organically and by acquisition, and encouragingly, has ended the year particularly strongly with combined August and September revenues of GBP24.8m (August and September 2011: GBP11.6m). Current trading is encouraging and in line with management's expectations and we are in the process of tendering for several large contracts in Australia, Canada, the UK and mainland Europe. Whilst remaining mindful of challenging economic conditions, we believe we have the scale, the momentum and the opportunity to grow strongly over the next twelve months, and we look forward to the future with confidence.

Sean Nutley

Chief Executive Officer

FINANCIAL REVIEW

Group turnover increased by 38% to GBP82.5m (2011: GBP59.7m), primarily as a result of the acquisition of EDS Group Holdings Ltd ("EDS") at the end of the third quarter. EDS contributed GBP18.9m in revenues while RDS, the Consulting acquisition completed in early September 2011, recorded revenues of GBP4.7m. Overall the incremental revenue effect of acquisitions in the year was GBP23.6m. Gross profit was increased to GBP20.4m (2011: GBP16.0m**) at a gross margin percentage of 24.7% (2011: 26.9%**). EDS gross profit was GBP3.5m at a gross margin of 16.4%, which is the key driver of the margin dilution experienced at the consolidated group level. It should be noted that gross profit is now quoted including plant and equipment depreciation, whereas previously depreciation was wholly charged as an administrative cost. The incremental effect of the Consulting acquisitions on 2011 gross profit was GBP1.5m at an average gross margin of 31%.

Administrative expenses increased to GBP15.8m (2011: GBP12.7m**). Administrative expenses as a percentage of revenue were 19.1% (2011: 21.3%). Of the overall increase in administrative costs of GBP3.1m, the incremental impact of the acquisition of EDS was GBP0.9m. Adjusted operating profit* increased by GBP1.7m to GBP4.8m (2011: GBP3.6m).

As a result of the EDS acquisitions, integration costs related to the Consulting acquisitions and the integration of Silverdell UK and Kitsons Environment Europe Limited into one operating entity, we incurred additional non-recurring administrative expenses of GBP2.2m (2011:GBP0.3m).

Finance charges were GBP0.8m (2011: GBP0.5m): the increase is due to GBP0.3m of non-recurring finance costs relating to the legal and break costs associated with the refinancing carried out in June 2012. Adjusted profit before tax* was up GBP1.3m at GBP4.3m (2011: GBP3.0m). Statutory profit before tax decreased to GBP0.5m (2011: GBP2.5m) as a result of the non-recurring charges and amortisation of intangible assets arising from the EDS acquisition. The tax charge for the year was GBP0.4m (2011: GBP0.8m). The effective corporation tax rate is 81% (2011: 32%), the high rate reflecting non-recurring disallowable expenses related to the EDS acquisition. Adjusted profit after tax* was GBP3.2m (2011: GBP2.1m) and adjusted earnings per share* was 1.5 pence (2011: 1.4 pence). Statutory profit after tax was GBP0.1m (2011: GBP1.7m). The Directors are recommending the payment of a maiden dividend of 0.175 pence per share in March 2013. Net senior debt at 30 September 2012 was GBP4.5m (2011: GBP5.0m). In addition, obligations under finance leases amounted to GBP6.0m (2011:GBP0.2m) with gearing (including finance leases) at 29% (2011: 22%). The net working capital cash outflow was GBP3.0m (2011: GBP3.6m outflow). This arose as a result of the volume growth, particularly during Q4 2012, which resulted in trade receivables being disproportionately higher than at the same point last year. We also have, included in receivables, amounts recoverable under contracts of GBP3.2m which we expect to recover during the first half of 2013. After the year-end, the Group's term loan facility was extended by GBP2.5m to GBP5.5m, to be used as additional working capital to support the recent divestment contract win in Canada.

The order book grew substantially as a result of the EDS acquisition and at 31 October 2012 stands at GBP219m (31 October 2011: GBP107m). Of this, GBP97m (2011: GBP36m) is scheduled to fall in the next financial year.

We completed the acquisition of EDS in June 2012 for a total consideration of GBP18.6m, which included GBP3.6m (before discounting) of estimated contingent consideration. This acquisition also included issuing a total of 132.4 m shares, which comprised 80.1m shares to investors participating in the Placing in June 2012 and 52.3m to the vendors of RDS as part of the total consideration. As a result the number of issued, allotted and fully paid up shares increased to end the year at 313.2m (2011: 180.8m).

* Adjusted to exclude intangibles amortisation, impairment charges, non-recurring items and share-based payments

** As restated for the reclassification of certain depreciation charges previously classified as administrative expenses

Ian Johnson

Chief Financial Officer

Consolidated Income Statement

For the year ended 30 September 2012

 
                                                           Before 
                                                    non-recurring   Non-recurring 
                                                        items and       items and 
                                                     amortisation    amortisation 
                                                        (see Note       (see Note 
                                                              10)             10) 
                                                  ---------------  --------------  -------- 
                                                                                                     2011 
                                                             2012            2012      2012   (Restated)* 
                                           Notes          GBP'000         GBP'000   GBP'000       GBP'000 
 
Continuing operations 
Revenue                                        5           82,521               -    82,521        59,696 
Cost of sales                                            (62,138)               -  (62,138)      (43,644) 
 
Gross profit                                               20,383               -    20,383        16,052 
 
Administrative expenses                                  (15,815)               -  (15,815)      (12,748) 
-----------------------------------------  -----  ---------------  --------------  --------  ------------ 
 
  *    amortisation of intangible assets                        -         (1,073)   (1,073)          (30) 
 
  *    non-recurring expenses                                   -         (2,176)   (2,176)         (298) 
 
Total administrative expenses                            (15,815)         (3,249)  (19,064)      (13,076) 
 
Operating profit                               6            4,568         (3,249)     1,319         2,976 
Finance costs                                  8            (504)           (283)     (787)         (514) 
 
Profit before tax                                           4,064         (3,532)       532         2,462 
Income taxation charge                         9          (1,138)             709     (429)         (779) 
 
Profit for the year                                         2,926         (2,823)       103         1,683 
 
Earnings per share (Pence) 
 
  Basic earnings per ordinary 
  share                                       11                                        0.0           1.1 
 
 
Diluted earnings per ordinary 
 share                                        11                                        0.0           1.0 
 
 

* During 2012 the Directors decided to classify depreciation charges on plant and machinery as Cost of Sales rather than Administrative Expenses. The comparative figures for 2011 have been reclassified to ensure consistency, with Cost of Sales for 2011 increasing and Administrative Expenses decreasing by GBP280,000.

 
 
 
 
 
 
Consolidated statement of comprehensive 
 income                                          2012      2011 
 For the year ended 30th September 2012       GBP'000   GBP'000 
 
  Profit for the year                             103     1,683 
 
       Other comprehensive income 
       Cash flow hedges: 
        *    gain arising during the year           -        40 
 
        *    related tax charge                     -      (10) 
 
                                                    -        30 
 
Foreign currency translation gain                   6         - 
 
Total comprehensive income for the year           109     1,713 
 
 

Consolidated balance sheet

At 30 September 2012

 
                                              2012      2011 
                                   Notes   GBP'000   GBP'000 
Assets 
Non-current assets 
Goodwill                              12   26,420    17,761 
Other intangible assets               13   7,216      453 
Deferred tax asset                     9    713        - 
Property, plant and equipment         15   11,350    2,652 
Trade and other receivables           18   1,724     1,001 
 
                                           47,423    21,867 
 
Current assets 
Inventories and work in progress      16   4,903     3,064 
Trade and other receivables           18   34,646    17,305 
Cash and cash equivalents                  4,456     2,567 
 
                                           44,005    22,936 
 
Total assets                               91,428    44,803 
 
Non-current liabilities 
Borrowings                            20   11,386    4,038 
Trade and other payables              23   1,724     1,001 
Contingent consideration              21   1,704      109 
Deferred tax liabilities               9   1,884      221 
 
                                           16,698    5,369 
 
Liabilities 
Current liabilities 
Borrowings                            20   4,296     3,793 
Trade and other payables              23   29,083    10,864 
Other financial liabilities           17     -         31 
Contingent consideration              21   1,643      326 
Current tax liabilities                    1,510      749 
 
                                           36,532    15,763 
 
Total liabilities                          53,230    21,132 
 
Net assets                                 38,198    23,671 
 
Equity 
Share capital                         24   3,132     1,808 
Share premium account                      15,283    2,456 
Equity reserve                              788       721 
Hedging reserve                              -        (22) 
Foreign currency translation 
 reserve                                     6         - 
Other reserve                              4,135     4,135 
Retained earnings                          14,854    14,573 
 
Total equity                               38,198    23,671 
 
 

These financial statements were approved by the Board of Directors on 4 December 2012.

Signed on behalf of the Board of Directors:

Ian Johnson

Director

Consolidated statement of changes in equity

At 30 September 2011

 
                                                                                     Foreign 
                          Share     Share     Other    Equity   Hedging   Capital   exchange   Retained 
                        capital   premium   reserve   reserve   reserve   reserve    reserve   earnings     Total 
                        GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000    GBP'000    GBP'000    GBP'000 
 
At 1st October 
 2010                     1,516    17,813    16,635       464      (52)     3,749          -   (21,172)       18,953 
           Net profit 
             for year         -         -         -         -         -         -          -      1,683        1,683 
  Other comprehensive 
               income         -         -         -         -        30         -          -          -           30 
 
  Total comprehensive 
           income for 
             the year         -         -         -         -        30         -          -      1,683        1,713 
Shares issued               292     2,456         -         -         -         -          -          -        2,748 
Capital cancellation*         -  (17,813)  (12,500)         -         -   (3,749)          -     34,062            - 
Share based 
 payment charge               -         -         -       257         -         -          -          -          257 
 
At 1(st) October 
 2011                     1,808     2,456     4,135       721      (22)         -          -     14,573       23,671 
 Net profit 
  for year                    -         -         -         -         -         -          -        103     103 
 Other comprehensive 
  income                      -         -         -         -         -         -          6          -       6 
 
 Total comprehensive 
  income for 
  the year                    -         -         -         -         -         -          6        103     109 
Shares issued             1,324    13,236         -         -         -         -          -          -       14,560 
Expenses of 
 share issue                  -     (409)         -         -         -         -          -          -      (409) 
Share based 
 payment charge               -         -         -       267         -         -          -          -     267 
Transfers                     -         -         -     (200)        22         -          -        178            - 
 
At 30th September 
 2012                   3,132     15,283    4,135      788        -         -          6       14,854         38,198 
 
 

* Following special resolutions of the Company which were confirmed by the High Court on 16(th) February 2011, the Company cancelled the share premium account and capital reserve and also cancelled GBP12.5m of deferred shares from the other reserve, which increased retained earnings by a total of GBP34.1m.

The Other Reserve is non-distributable and represents the remaining balance of the premiums arising on the issuance of certain warrants and of shares issued in order to acquire Group companies.

 
                                                            2012      2011 
                                                Notes    GBP'000   GBP'000 
Cash flows from operating activities 
Profit for the year                                          103   1,683 
Income taxation charge                              9        429    779 
Finance costs (net)                                 8        787    514 
Amortisation of intangibles                        13      1,073     30 
Depreciation on property, plant 
 and equipment                                     15      1,364    525 
Profit on disposal of property, 
 plant and equipment                                        (73)    (2) 
Share based payments                               26        267    257 
Movements in working capital: 
    - Increase in inventories                            (1,219)  (2,066) 
    - Increase in trade and other receivables            (8,031)  (3,599) 
    - Increase in trade and other payables                 6,254   2,114 
 
Cash generated from operations                               954    235 
 
Income tax paid                                            (555)   (628) 
 
Net cash inflow / (outflow) from 
 operating activities                                        399   (393) 
 
Cash flows from investing activities 
Purchase of property, plant and 
 equipment                                                 (138)   (656) 
Proceeds from sale of property, 
 plant and equipment                                         375     17 
Acquisition of subsidiaries (net 
 of cash acquired)                                       (6,784)  (1,348) 
 
Net cash outflow from investing 
 activities                                              (6,547)  (1,987) 
 
Cash flows from financing activities 
Interest paid                                              (630)   (433) 
Interest paid on finance leases                             (92)    (6) 
Payments for hire purchase contracts 
 principals                                                (990)    (53) 
Proceeds from bank loans                                   3,737     - 
Repayments of bank loans                                       -   (930) 
Proceeds from issue of equity shares 
 (net)                                                     8,401   2,198 
 
Net cash inflow from financing activities                 10,426    776 
 
Net increase / (decrease) in cash 
 and cash equivalents                                      4,278  (1,604) 
 
Cash and cash equivalents at the 
 beginning of the year                                     (318)   1,286 
 
Cash and cash equivalents at the 
 end of the year                                           3,960   (318) 
 
Cash and cash equivalents comprises: 
 Cash at bank and in hand                          19      4,456   2,567 
Bank overdrafts                                    19      (496)  (2,885) 
 
                                                           3,960   (318) 
 
 

Note to the financial statements

   1.       General information 

Silverdell PLC is a company incorporated in Great Britain under the Companies Act 2006. The address of the registered office is 20 Buckingham Street, London WC2N 6EF. The nature of the Group's operations and its principal activities are set out in the Directors' Report on pages 26 to 31.

   2.       Basis of preparation 

The annual consolidated financial statements of the Group have been prepared in accordance with International Reporting Standards (IFRS) as adopted by the European Union (EU) (IFRS as adopted by the EU).

Going Concern

As at 30(th) September 2012, the Directors have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing these financial statements.

   3.1     Adoption of new and revised IFRS 

The Group has adopted all new and amended standards and interpretations effective for these financial statements. Their adoption did not have a material impact on the amounts reported in the financial statements, but could impact the accounting for future transactions and arrangements. For those standards in issue but not yet effective at the date of approval of these financial statements, the Directors do not consider these will have a material impact on the Group's future financial statements.

   3.2    Accounting policies 

Basis of accounting

The consolidated financial information has been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation.

The consolidated financial information has been prepared on the historical cost basis except for the revaluation of certain financial instruments measured at fair value. The principal accounting policies adopted are set out below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30th September each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

Separately identifiable intangible assets are recognised on acquisition where appropriate and amortised over their useful economic life.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

Profit is recognised on long-term contracts if the final outcome can be assessed with reasonable certainty by including in the income statement revenue and related costs as contract activity progresses. Revenue is calculated by reference to the value of work performed to date as a proportion of total contract value.

An accrued revenue asset is recognised where contract revenues are expected to be recovered through the sale of metals or production assets which have been made available for re-sale.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease.

The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

Borrowing costs

Borrowing costs are recognised in profit or loss in the period in which they are incurred.

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on onsolidation, are translated to the Group's presentational currency, Sterling, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions.

Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve.

Taxation

The tax expense represents the sum of the tax currently payable and the movements in deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets, other than land and assets under construction, over their estimated useful lives, on the following bases:

   Freehold property            4% on cost 
   Leasehold property           10% on cost 
   Plant and machinery         10% on cost 
   Office equipment              16.6%-25% on cost 
   Motor vehicles                 25% on reducing balance 

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.

Inventories and work in progress

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Work in progress on service contracts is stated at cost plus, where the outcome can be assessed with reasonable certainty, estimated profits attributable to the stage of completion less provision for any expected losses and progress payments received on account. Bid expenses on successful tenders are capitalised as work in progress and written down over the contract term. Amounts recoverable on long term service contracts, which are included in trade and other receivables, are stated at the net sales value of the work done less progress payments received on account. Excess progress payments are included on trade and other payables. Cumulative costs incurred, less amounts transferred to cost of sales, less provision for contingencies and expected future losses on service contracts, are included as long-term service contract balances in inventories.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial instruments are classified into the following categories: financial assets at fair value through profit and loss "FVTPL" (held for trading), 'loans and receivables' at amortised cost, financial liabilities - derivatives designated as cash flow hedges, and financial liabilities at amortised cost.

The classification depends on the nature and purpose of the financial instruments.

Trade and other receivables

Trade and other receivables are measured at initial recognition at fair value. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Also included in trade and other receivables are accrued revenues arising on decommissioning and divestment contracts where contract revenues are expected to be realised in the form of metal or other second-hand assets made available for re-sale.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Bank borrowings

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade payables

Trade payables are initially measured at fair value.

Derivative financial instruments and hedge accounting

The Group's activities expose it primarily to the financial risk of changes in interest rates and foreign exchange rates. The Group has used interest rate swap contracts to hedge its interest rate exposure. The Group does not use derivative financial instruments for speculative purposes.

The use of financial derivatives is governed by the Group's policies approved by the Board of directors, which provide written principles on the use of financial derivatives.

Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised in other comprehensive income and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in other comprehensive income are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in other comprehensive income are recognised in the income statement in the same period in which the hedged item affects net profit or loss.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are classified as FVTPL (held for trading), and the gains and losses are recognised in the income statement as they arise. These are classified as held for trading as they have not been hedge accounted, and have not been "designated" as FVTPL.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in other comprehensive income is retained there until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in other comprehensive income is transferred to the income statement for the period.

Investments

Investments in subsidiaries are stated at cost, less provision for any impairment.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

Share-based payments

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period and is recognised as an employee expense with a corresponding increase in equity, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured by use of the Black-Scholes model or the binomial method as appropriate. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

Intangible assets

Customer relationships

Customer relationships are measured as the present value of cash flows attributable to the relationship after deduction of appropriate contributory assets charged. The relationship is amortised over its expected useful life, typically three years.

Order book

Order book is the value of confirmed orders on the date of acquisition after appropriate costs have been deducted. The order book is amortised over the period in which it is expected to unwind.

   4.       Critical accounting judgements and key sources of estimation uncertainty 

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions about the carrying amount of assets and liabilities and the amount of income and revenue recognised in the period. Actual results may differ from these estimates.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Revenue and profit/margin recognition

The Group's revenue recognition, turnover and long term contracts policies are set out in the notes above. Management exercises judgement to estimate the total expected contract costs and determine the percentage of completion in order to recognise the appropriate revenue and profit in the period. The assessment of profitability and recognition is assessed on an ongoing basis, which ensures adequate controls are in place that appropriate amounts are calculated.

Recognition and measurement of intangible assets under IFRS 3 'Business Combinations'

In order to determine the value of the separately identifiable intangible assets on the acquisition of a business combination, management are required to make estimates on secured customer contracts, other contracts and customer relationships and goodwill. The Group engaged outside independent parties to perform these calculations and determine the fair value and estimated useful lives of these assets.

Impairment of goodwill and other intangible assets

There are a number of assumptions management have considered in performing impairment reviews of goodwill and intangible assets. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Note 12 details the assumptions that have been applied for goodwill.

   5.       Segmental information 

Strategic segments

The Group has three reportable segments, as described below, which are the Group's strategic divisions. The strategic divisions offer different services and are managed separately because they have some differences in their operational risks and business models. For each of the strategic divisions, the Group's CEO (the chief operating decision maker) reviews internal management reports on at least a monthly basis. The following summary describes the operations in each of the Group's reportable segments;

Remediation - provides services related to the direct remediation and removal of environmental risks, the principal two group companies in this segment being Silverdell UK and Kitsons.

Decommissioning - provides decommissioning solutions, asset recovery, demolition and dismantling services, the principal group companies in this segment being Euro Dismantling Services Ltd and its related companies in Canada and Australia.

Consulting - provides environmental survey, monitoring and project management services, the principal company in this segment being Redhill Analysts and its subsidiary RDS.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax as included in the internal management reports that are reviewed by the Group's CEO. Segment profit is used to measure performance as management believes such information is the most relevant in evaluating the results of certain segments relative

to other entities that operate within these industries.

 
                        Remediation  Decommissioning  Consulting  Unallocated     Group 
2012                        GBP'000          GBP'000     GBP'000      GBP'000   GBP'000 
 
For the year ended 
 30th September 2012 
 
Revenue 
Total revenue             51,243         18,852         14,594         -        84,689 
Inter-segment revenue     (1,833)           -           (335)          -       (2,168) 
 
External revenue          49,410         18,852         14,259         -        82,521 
 
 

Inter-segment revenue is charged at prevailing market prices.

 
                                Remediation   Decommissioning  Consulting  Unallocated     Group 
  2012                              GBP'000           GBP'000     GBP'000      GBP'000   GBP'000 
 
For the year ended 
 30 September 2012 
 
Result 
Operating profit 
 before amortisation 
 and non-recurring 
 items                            2,792           2,151          1,535       (1,910)     4,568 
Intangible assets 
 amortisation                       -             (912)          (161)          -       (1,073) 
Non-recurring administrative 
 expenses                         (699)            (83)          (190)       (1,204)    (2,176) 
Non-recurring finance 
 costs                              -               -             (13)        (270)      (283) 
Finance costs (net)                (68)            (73)           (10)        (353)      (504) 
 
Profit / (loss) before 
 tax                              2,025           1,083          1,161       (3,737)      532 
Taxation                          (353)           (297)           (94)         315       (429) 
 
Profit / (loss)for 
 the year                         1,672            786           1,067       (3,422)         103 
 
 
 
At 30th September 
 2012 
Balance sheet 
 
Total assets          32,895  43,539  14,542     452  91,428 
 
Total liabilities     12,557  24,177   3,146  13,350  53,230 
 
Other information 
 
Capital expenditure      967  2,131      229      39   3,366 
Depreciation             554   599       180      31   1,364 
 
 
 
                                      Remediation  Consulting  Unallocated     Group 
   2011                                   GBP'000     GBP'000      GBP'000   GBP'000 
 
 For the year ended 30th September 
  2011 
 
 Revenue 
 Total revenue                             53,889       8,805            -    62,694 
 Inter-segment revenue                    (2,399)       (599)            -   (2,998) 
 
 External revenue                          51,490       8,206            -    59,696 
 
 

Inter-segment revenue is charged at prevailing market prices.

 
                                          Remediation  Consulting  Unallocated     Group 
  2011                                        GBP'000     GBP'000      GBP'000   GBP'000 
 
For the year ended 30th September 
 2011 
 
Result 
Operating profit before amortisation 
 and non-recurring items                   3,554            1,252      (1,502)     3,304 
Intangible assets amortisation               -               (30)            -      (30) 
Non-recurring expenses                           (24)        (50)        (224)     (298) 
Finance costs                                    (17)         (5)        (492)     (514) 
 
Profit / (loss) before tax                      3,513       1,167      (2,218)     2,462 
Taxation                                      (1,111)       (369)          701     (779) 
 
Profit / (loss) for the year                    2,402         798      (1,517)     1,683 
 
 
 
At 30th September 2011 
Balance sheet 
 
Total assets                               32,206          12,446          151    44,803 
 
Total liabilities                          13,605           2,643        4,884    21,132 
 
Other information 
 
Capital expenditure                               656         197           28       881 
Depreciation                                      440          68           17       525 
 
 
 

Unallocated costs relate principally to head office costs and interest charges on bank borrowings of the Group's holding company. Unallocated assets and liabilities represent the assets and liabilities of the holding company, including bank borrowings.

Geographical segments

An analysis of the Group's 2012 results by geographical segment is presented below. Substantially all the activities outside the United Kingdom related to the Decommissioning strategic segment. In 2011 substantially all the Group's results arose in the United Kingdom, so no geographical analysis was required.

 
                                     United Kingdom    Canada  Australia     Other     Group 
  2012                                      GBP'000   GBP'000    GBP'000   GBP'000   GBP'000 
 
  For the year ended 30th 
   September 2012 
 
  Revenue 
  Total revenue                              69,700    10,050      2,771         -    82,521 
  Inter-segment revenue                           -         -          -         -         - 
 
  External revenue                           69,700    10,050      2,771         -    82,521 
 
 
 
   For the year ended 30th 
    September 2012 
 
   Result 
   Operating profit before 
    amortisation and non-recurring 
    items                                     2,764     1,657        147         -     4,568 
   Intangible assets amortisation           (1,073)         -          -         -   (1,073) 
   Non-recurring administrative 
    expenses                                (2,149)      (26)        (1)         -   (2,176) 
   Non-recurring finance 
    costs                                     (283)         -          -         -     (283) 
   Finance costs (net)                        (449)      (31)       (24)         -     (504) 
 
   (Loss) / profit before 
    tax                                     (1,190)     1,600        122         -       532 
   Taxation                                      83     (473)       (39)               (429) 
 
   (Loss) / profit for the 
    year                                    (1,107)     1,127         83         -       103 
 
 
 
 
  At 30th September 
   2012 
  Balance sheet 
 
  Total assets          82,835  7,050  1,396  147  91,428 
 
  Total liabilities     49,900  3,013  (184)  501  53,230 
 
  Other information 
 
  Capital expenditure    2,372     44    950    -   3,366 
  Depreciation           1,051    261     52    -   1,364 
 
 
   6.       Operating profit 
 
                                                                       2012               2011 
                                                                    GBP'000            GBP'000 
  Operating profit is stated after charging/ (crediting): 
  Share based payment charge (see Note 26)                              267                257 
  Amortisation of intangible assets (see Note 13)                     1,073                 30 
  Depreciation of: 
  - owned assets                                                        889                450 
  - assets held under finance leases                                    475                 75 
         Auditors' remuneration (see below)                             145                 87 
  Hire of plant and machinery                                         3,052              1,422 
  Operating lease rentals - land and buildings                          640                574 
  Profit on disposal of fixed assets                                   (73)                (2) 
 
 
 
                                                           2012      2011 
   Analysis of auditors' remuneration                   GBP'000   GBP'000 
  Audit services 
  - audit of Company's annual accounts                       22        17 
  - audit of Company's subsidiaries, pursuant to 
  legislation                                               103        57 
 
                                                            125        74 
  Other services 
  - other services relating to tax compliance                20        13 
 
  Auditors' remuneration                                    145        87 
 
 
   7.       Staff costs including directors' remuneration 

Directors' remuneration and transactions

 
                      Salary   Benefits   Performance   Total emoluments   Pension contributions      Total      Total 
                    and fees    GBP'000         bonus            GBP'000                 GBP'000       2012       2011 
                     GBP'000                  GBP'000                                               GBP'000    GBP'000 
 
 Non-Executive 
  Directors: 
 Stuart Doughty           75          -           117                192                       -        192         75 
 Mark Watts               30          -             -                 30                       -         30         30 
 
 Executive 
  Directors: 
 Sean Nutley             242          3             -                245                      81        326        262 
 Ian Johnson             208          3             -                211                      61        272        221 
 
 Total                   555          6           117                678                     142        820        588 
 
 

The whole of the bonus paid to Stuart Doughty in 2012, GBP70,000 (2011: GBPnil) of the pension contributions for Sean Nutley and GBP42,000 (2011: GBPnil) of the pension contributions for Ian Johnson were exclusively related to the successful completion of the EDS acquisition and were wholly used to buy shares in the Company in the associated placing. The Directors did not receive any bonus in either year in respect of the Group's financial performance.

The pension contributions disclosed above were all in respect of money purchase arrangements.

Options over ordinary shares

The Directors' interests in share options are disclosed in the Directors' report on pages 26 to 31.

Staff costs

 
                                                2012    2011 
  Employees                                   Number  Number 
  Average number of persons (including Directors) 
   employed by the Group in the year: 
  Operational, sales and other                   764     693 
  Administrative                                 225     167 
 
                                                 989     860 
 
 

The payroll costs in respect of the employees included in the table above were:

 
                                         2012      2011 
                                      GBP'000   GBP'000 
 
  Salaries and wages                   37,300    29,944 
  Social security costs                 3,671     3,167 
  Pension costs                           458       284 
  Share based payment charge (Note 
   26)                                    267       257 
 
                                       41,696    33,652 
 
 

Certain subsidiary undertakings of the Group operate defined contribution pension schemes. The assets of the schemes are held separately from those of the Group by independently administered funds.

Remuneration of key management personnel

In accordance with IAS 24 Related Party Disclosures, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any Director (Executive and Non-Executive) of the Group.

The remuneration of these key personnel is set out below.

 
                                      2012      2011 
                                   GBP'000   GBP'000 
 
  Short-term employee benefits         989       917 
  Post-employment benefits             166        77 
 
 

Key management personnel comprise the members of the Board and the Managing Directors of each of the Group's strategic segment

   8.       Finance costs (net) 
 
                                                         2012      2011 
                                                      GBP'000   GBP'000 
 
  Interest on bank overdrafts and loans                   432       502 
  Bank interest receivable                               (20)         - 
  Interest on obligations under finance leases             92         6 
  Non-recurring finance costs (see Note 10)               198         - 
  Finance charge on contingent consideration (see 
   Note 10)                                                85         6 
 
  Total finance costs (net)                               787       514 
 
 
   9.       Tax on profit on ordinary activities 

Income tax recognised in profit or loss

 
                                                        2012      2011 
                                                     GBP'000   GBP'000 
  Tax charge comprises: 
  United Kingdom corporation tax based on 
   the profit for the year                               436       795 
  Overseas corporation tax                               508         - 
  Adjustment in respect of previous years              (146)      (89) 
 
  Total current tax expense                              798       706 
 
  Deferred tax income relating to the origination 
   and reversal of temporary differences               (369)      (24) 
  Adjustment in respect of previous years                  -        97 
 
  Total deferred tax (credit) / expense                (369)        73 
 
  Total tax expense                                      429       779 
 
 

The charge for the year can be reconciled to the profit per the income statement as follows:

 
                                            2012    2012       2011  2011 
                                         GBP'000       %    GBP'000     % 
 
  Profit before tax                          532              2,462 
 
  Income tax expense calculated at 
   the standard rate of 25% (2011: 
   27%)                                      133      25        665    27 
Share based payment charge                    67      13         25     1 
  Non-deductible expenses                    288      54         81     4 
  Impact of overseas profits subject 
   to higher tax rates                        87      16          -     - 
  Prior year adjustment                    (146)    (27)          8     - 
 
  Income tax charge recognised in 
   profit or loss                            429      81        779    32 
 
 
 
The Group's planned level of capital investment 
 is expected to remain at similar levels. 
 Therefore, it expects to be able to claim 
 allowances in excess of depreciation in 
 future years, at a similar level to the 
 current year. 
 The movement in deferred tax was as follows:         Asset  Liability 
                                                    GBP'000    GBP'000 
 
  At 1st October 2010                                     -       (15) 
  Charged to income statement                             -       (73) 
  Charged to hedging reserve                              -       (10) 
  Acquired with subsidiary undertakings                   -      (123) 
 
  At 30th September 2011                                  -      (221) 
 
  (Charged) / credited to income statement              (3)        372 
  Acquired with subsidiary undertaking (see 
   Note 14)                                             716    (2,035) 
 
  At 30th September 2012                                713    (1,884) 
 
                                                       2012       2011 
      The deferred tax asset comprises:             GBP'000    GBP'000 
 
  Unrelieved trading losses                             477          - 
  Share-based payments                                   56          - 
  Other short-term timing differences                   180          - 
 
                                                        713          - 
 
        The deferred tax liability comprises: 
 
  Accelerated tax depreciation                          (3)      (132) 
  Intangible assets                                 (1,881)      (123) 
  Other                                                   -         34 
 
                                                    (1,884)      (221) 
 
 

There was a potential deferred tax asset of GBP550,000 (2011: GBPnil) relating to tax losses carried forward. Management have assessed the future recovery of the losses and do not consider there to be sufficient probability of utilisation.

   10.       Non-recurring expenses and amortisation 

Non-recurring items, impairments and amortisation are shown separately on the face of the income statement in order to reflect the Group's underlying financial performance. The items comprise the following:

 
                                                     2012      2011 
                                                  GBP'000   GBP'000 
 
  Amortisation of intangible assets (see Note 
   13)                                              1,073        30 
  Non-recurring expenses - administrative 
   expenses                                         2,176       298 
  Non-recurring expenses - finance costs              283         6 
 
                                                    3,532       334 
  Related income tax credit                         (709)      (89) 
 
                                                    2,823       245 
 
 

Administrative expenses

The non-recurring administrative expenses of GBP2,176,000 (2011: GBP298,000) can be analysed further as follows.

Business acquisition costs of GBP1,275,000 (2011: GBP70,000) comprise costs of the acquisition and subsequent integration of subsidiary undertakings.

Internal restructuring costs of GBP832,000 (2011: GBP52,000) represent severance, property and other costs incurred principally in the reorganisation of the Group's Remediation segment.

Other non-recurring costs of GBP69,000 (2011: GBP68,000) were incurred on overseas business development. In 2011 there were additional non-recurring costs of GBP57,000 for corporate rebranding and GBP51,000 of fees arising on the capital restructuring.

Finance costs

Non-recurring finance costs of GBP198,000 (2011: GBPNil) arose from the renegotiation of the Group's banking facilities during the year. The finance charge arising on contingent consideration of GBP85,000 (2011: GBP6,000) is also included here as it is an acquisition-related cost.

   11.     Earnings per share 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares during the year, determined in accordance with the provisions of IAS 33 "Earnings per share".

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all dilutive potential ordinary shares.

Adjusted basic earnings per share is calculated by dividing the earnings attributed to ordinary shareholders, before intangible assets amortisation, share-based payment charges, non-recurring expenses and finance charges on deferred consideration, by the weighted average number of ordinary shares during the year.

 
                                                           2012                           2011 
                                                       earnings                       Earnings 
                                                      per share                      per share 
                                                          basic  diluted                 basic  diluted 
                                          --------  -----------  -------  --------  ----------  ------- 
            Earnings                       GBP'000        pence    pence   GBP'000       pence    pence 
 
 
           Profit attributable to 
            ordinary shareholders            103         0.0       0.0      1,683       1.1       1.0 
           Non-recurring items, 
            impairments, amortisation 
            and share based payments       3,090        1.5        1.3      453        0.3        0.3 
 
           Profit for adjusted earnings 
            per share                      3,193        1.5        1.3     2,136       1.4        1.3 
 
 

The adjusted numbers have been reported in order that the impact of the above charges against reported profit can be fully appreciated.

Number of shares

 
 
                                                         2012         2011 
                                                          No.          No. 
  Weighted average number of ordinary shares 
   used in calculation of basic earnings per 
   share                                          218,557,295  155,663,646 
 
  Effect of dilutive potential ordinary shares: 
  Share options                                   14,310,730    2,087,492 
  Warrants held by Barclays Bank PLC              11,374,179   11,374,179 
 
  Weighted average number of ordinary shares 
   used in calculation of diluted earnings 
   per share                                      244,242,204  169,125,317 
 
 

The weighted average number of ordinary shares for the basic earnings per share differs from the closing number of shares at 30 September 2012 as a result of the issue of 132,374,193 new shares on 18(th) June 2012 (see Note 24).

Details of all warrants are disclosed in Note 24. Only the warrants held by Barclays Bank PLC are considered to be anti-dilutive.

   12.       Goodwill 
 
                                                     GBP'000 
  Cost 
  At 30th September 2010                              35,611 
  Acquisition of A H Allen                               478 
  Acquisition of RDS                                   1,127 
 
  At 30th September 2011                              37,216 
 
  Acquisition of EDS (see Note 14)                     8,659 
 
 
  At 30th September 2012                              45,875 
 
                                                     GBP'000 
  Accumulated impairment losses 
  At 30th September 2010, 30th September 2011 and 
   30th September 2012                              (19,455) 
 
  Carrying amount 
  At 30th September 2012                              26,420 
 
  At 30th September 2011                              17,761 
 
 

The carrying amount of goodwill relates to the Group's three strategic business segments as follows:

 
                         2012      2011 
                      GBP'000   GBP'000 
  Remediation          10,869    10,869 
  Decommissioning       8,659         - 
  Consulting            6,892     6,892 
 
                       26,420    17,761 
 
 

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. Goodwill is allocated for impairment testing to cash generating units (CGU) which reflects how it is monitored for internal management purposes. The recoverable amounts of the CGUs are determined from value in use calculations. Value in use is calculated using pre-tax cashflow projections based on the financial budgets and business plans covering a three year period, which take into account historical trends and market conditions, which have been approved by the Board. The key assumptions for the value in use calculations are those regarding the discount rates and growth rates for the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs, equivalent to a real pre-tax discount rate which average 12% (2011: 12%). The growth rates are based on industry growth forecasts and long-term growth in gross domestic product.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next three years and extrapolates cash flows for the following years based on an estimated annual growth rate of 1%. The rates do not exceed the average long-term growth rate for the relevant markets. The rates used to discount the cash flows in both 2012 and 2011 for all CGUs have been based on the Group's adjusted weighted average cost of capital, because the CGUs do not have significantly differing risk profiles.

The Group's assumptions disclosed above in respect of the key sensitive areas of future revenue growth and discount rate, are considered to be sufficiently prudent to address any risk of material mis-statement.

At 30th September 2012, goodwill was allocated to the Remediation CGU (comprising Kitsons and Silverdell UK, the Consulting CGU (comprising Redhills and RDS) and the Decommissioning CGU (comprising the EDS Group).

As a result of impairment reviews in previous years, the goodwill relating to these CGUs was reduced to its recoverable amount by recognising accumulated impairment losses as follows:

 
 
                  GBP'000 
 
  Remediation      18,356 
  Consulting        1,099 
 
                   19,455 
 
 
   13.       Other intangible assets 
 
                                        Order    Customer 
                                      Backlog   Contracts   Total 
  Cost 
 
  At 30th September 2010                1,480       5,434   6,914 
  Acquisition of A H Allen                  -         122     122 
  Acquisition of RDS                        -         361     361 
 
  At 30th September 2011                1,480       5,917   7,397 
  Acquisition of EDS (see Note 14)      6,184       1,652   7,836 
 
  At 30th September 2012                7,664       7,569  15,233 
 
  Accumulated amortisation 
 
  At 30th September 2010                1,480       5,434   6,914 
  Amortisation charge                       -          30      30 
 
  At 30th September 2011                1,480       5,464   6,944 
  Amortisation charge                     802         271   1,073 
 
  At 30th September 2012                2,282       5,735   8,017 
 
  Carrying amount 
  At 30th September 2012                5,382       1,834   7,216 
 
  At 30th September 2011                    -         453     453 
 
 

All amortisation charges in the year have been included in administrative expenses.

   14.     Acquisition 

The Group acquired 100% of the issued share capital of EDS Group Holdings Ltd ("EDS") on 18th June 2012. The fair values of the assets and liabilities acquired are set out in the table below.

 
                                                   Fair value 
                                     Book value   adjustments  Fair value 
                                        GBP'000       GBP'000     GBP'000 
 
  Intangible assets                           -         7,836       7,836 
  Property, plant and equipment           7,144             -       7,144 
  Deferred tax asset                      1,496         (780)         716 
  Inventories and work in progress          620             -         620 
  Trade and other receivables             9,214           725       9,939 
  Cash and cash equivalents               3,118             -       3,118 
  Trade and other payables             (11,919)         (759)    (12,678) 
  Bank overdraft                        (1,189)             -     (1,189) 
  Current tax liabilities                     -         (578)       (578) 
  Finance lease obligations             (3,512)             -     (3,512) 
  Deferred tax liabilities                    -       (2,035)     (2,035) 
 
 
  Net assets acquired                     4,972         4,409       9,381 
 
  Consideration paid: 
 
 
 
  Cash payable                                8,500 
  Shares issued to vendors                    5,750 
  Contingent consideration - nominal amount   3,600 
  Consideration - discounting                 (560) 
  Loan note payable                            750 
 
  Fair value of consideration                 18,040 
 
  Goodwill arising                            8,659 
 
 

The fair value adjustments related to the recognition of intangible assets on acquisition in respect of the order backlog and key customer relationships, together with the related deferred tax liabilities. Adjustments were also made to deferred taxation on unrelieved trading losses, based on expected recoverability against future profits. Further provision was made in other payables for liabilities which are covered by indemnities from the vendors, with a corresponding asset recognised in other receivables.

Details of the contingent consideration are provided in Note 21.

EDS contributed revenue of GBP18,852,000 and operating profit before amortisation and non-recurring items of GBP2,151,000 to the Group results in the year ended 30th September 2012. The results of the EDS group represent the Decommissioning division in the segmental analysis in Note 5.

If the acquisition has occurred on 1(st) October 2011, management estimate that consolidated revenues would have been GBP114.8m and consolidated losses would have been GBP1.5m. In determining these amounts, management have assumed that the fair value adjustments determined provisionally that arose on the acquisition date would have been the same if the acquisition had occurred on 1(st) October 2011.

   15.       Property, plant and equipment 
 
                                      Freehold 
                                 and leasehold                                     Plant and 
                                      property  Motor vehicles  Office equipment   machinery     Total 
                                       GBP'000         GBP'000           GBP'000     GBP'000   GBP'000 
  Cost 
  At 1st October 2010                      689             784               932       2,989     5,394 
  Additions                                 19             156               107         599       881 
  Acquisitions                             219              18                 -          77       314 
  Disposals                                  -           (281)                 -           -     (281) 
 
 
  At 30 September2011                      927             677             1,039       3,665     6,308 
  Additions                                  1              88               187       3,090     3,366 
  Acquisitions (see Note 14)                 -             448                32       6,664     7,144 
  Disposals                                  -            (19)              (47)       (941)   (1,007) 
 
  At 30th September 2012                   928           1,194             1,211      12,478    15,811 
 
  Accumulated depreciation 
  At 1st October 2010                      146             615               746       1,888     3,395 
  Depreciation charge for the 
   year                                     21              99                56         349       525 
  Disposals                                  -           (264)                 -           -     (264) 
 
 
  At 30th September 2011                   167             450               802       2,237     3,656 
  Depreciation charge for the 
   year                                     31             182               152         999     1,364 
  Disposals                                  -            (19)              (45)       (495)     (559) 
 
  At 30th September 2012                   198             613               909       2,741     4,461 
 
  Carrying amount 
  At 30th September 2012                   730             581               302       9,737    11,350 
 
  At 30th September 2011                   760             227               237       1,428     2,652 
 
 

The net book value of assets held under finance leases is GBP6,457,000 (2011: GBP372,000).

The book value of freehold land not depreciated is GBP269,000 (2011: GBP269,000).

   16.       Inventories 
 
                                       2012      2011 
                                    GBP'000   GBP'000 
 
  Raw materials and consumables         152       220 
  Work in progress                    4,239     2,844 
  Finished goods                        512         - 
 
                                      4,903     3,064 
 
 

The cost of inventories recognised as an expense and included in 'cost of sales' amounted to GBP3,912,000 (2011: GBP4,300,000), which represents the purchase of materials used in the delivery of services to customers. The Directors consider that the carrying amount of inventories approximates to their fair value.

   17.       Derivative financial liabilities 
 
                                2012      2011 
                             GBP'000   GBP'000 
 
     Interest rate swaps           -        31 
 
 

The interest rate swap was terminated during 2012. The notional principal amount of the outstanding interest rate swap contracts at 30th September 2011 was GBP2,250,000. At 30th September 2011, GBP1,500,000 was subject to a fixed interest rate of 2.1% and GBP750,000 was subject to a fixed interest rate of 5.8%. The main floating rates were GBP LIBOR.

   18.     Trade and other receivables 
 
                                                     2012      2011 
                                                  GBP'000   GBP'000 
  Non-current 
  Other receivables (see Note 23)                   1,724     1,001 
 
  Total Non-Current                                 1,724     1,001 
 
 
  Current 
  Trade receivables                                17,445    13,401 
  Less: provision for impairment (see 
   Note 22c )                                       (543)     (226) 
 
  Trade receivables net                            16,902    13,175 
 
  Prepayments and accrued income                   17,340     1,482 
   Due from customers for contract 
    work                                              404     2,648 
 
  Total Current                                    34,646    17,305 
 
  Total                                            36,370    18,306 
 
 

The average credit period taken on sales is 40 days (2011: 67 days). The Group has different provision policies for its various divisions which have been determined by reference to past default experience and specific provisions are raised after taking an individual view to the debtor's recoverability.

Due to the nature of the Group's operations, it is common practice for customers to hold retentions in respect of contracts completed. Retentions held by customers as at 30th September 2012 were GBP682,000 (2011: GBP646,000).The Group's exposure to credit risk and impairment losses related to trade and other receivables are disclosed in Note 22.

Under the normal course of the business, the Group does not charge interest on its overdue receivables. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

Included in trade and other receivables are costs incurred in respect of a significant customer contract totalling GBP3.2m (2011: GBP2.9m). The Group is in the process of validating and negotiating its final account with the main contractor. The opinion of the Directors is that as negotiations are at an advanced stage no provision is required against this debtor.

   19.     Analysis of net debt position 
 
                                                  2011    Cash flow  Other non-cash changes                2012 
                                               GBP'000      GBP'000                 GBP'000             GBP'000 
 
  Cash at bank and in hand                       2,567      (1,229)                   3,118               4,456 
 
 
 
  Bank loans                                   (4,713)      (3,737)                       -             (8,450) 
  Bank overdraft                               (2,885)        3,578                 (1,189)               (496) 
  Obligations under finance lease contracts      (233)          990                 (6,743)             (5,986) 
  Loan notes                                         -            -                   (750)               (750) 
 
                                               (5,264)        (398)                 (5,564)            (11,226) 
 
 

The Group's exposure to interest rate risks and foreign exchange risk and a sensitivity analysis for financial assets and liabilities is disclosed in Note 22.

   20.       Borrowings 
 
                                         2012      2011 
                                      GBP'000   GBP'000 
  Non-current 
  Bank loans                            7,550     3,913 
  Obligations under finance lease 
   contracts                            3,086       125 
  Loan notes                              750         - 
 
                                       11,386     4,038 
 
  Current 
  Bank loans and overdrafts             1,396     3,685 
  Obligations under finance lease 
   contracts                            2,900       108 
 
                                        4,296     3,793 
 
 
  Total                                15,682     7,831 
 
 

Further information on the maturity of the Group's borrowings is set out in Note 22.

The Group's bank overdraft and loan facilities are secured by debentures over the assets of the Group. The debenture agreement includes a fixed and floating charge over the assets of the Group. Finance lease liabilities are secured on the assets to which the contracts relate.

The bank loans at 30th September 2012 comprise a term loan of GBP3,000,000 and a revolving credit facility of GBP5,450,000. The term loan is repayable by regular quarterly instalments of GBP225,000 with the final quarterly instalment plus a terminal payment of GBP750,000 payable in June 2015. Both the term loan and the revolving facility expire in June 2015. The bank loans are at variable rates of interest based on LIBOR. In the prior year, the Group's bank borrowings were partially covered by hedging, with GBP750,000 subject to an interest rate swap and GBP1,477,500 subject to an interest rate cap. These hedging arrangements were discontinued during the year when the Group refinanced its borrowings as the new variable rates of interest were substantially lower and the new facilities have no requirement for interest rate hedging. The net overdraft facility available as at 30th September 2012 was GBP1,000,000 (2011: GBP2,750,000) and the headroom available at the year-end was GBP3,927,000 (2011: GBP2,432,000). There were no other unutilised borrowing facilities.

The loan notes were issued to the vendors of EDS as part of the consideration for the acquisition of that company. They bear interest at a fixed rate of 8.5% per annum and are repayable in full in 2015.

The non-current obligations under finance leases are all repayable between one and five years. The present value of future minimum lease payments is not materially different from the carrying amounts of the obligations under finance leases.

   21.       Contingent consideration 
 
                     2012      2011 
                  GBP'000   GBP'000 
  Non-current       1,704       109 
 
  Current           1,643       326 
 
  Total             3,347       435 
 
 

The contingent consideration relates to the acquisitions of AH Allen and RDS in 2011 and EDS in 2012 (see Note 14). These acquisitions provide for contingent consideration to become payable based on the performance of the businesses in the two years immediately following acquisition by the Group, with Gross Profit and Earnings Before Interest Tax Depreciation and Amortisation being the key target measures. These amount have been discounted from the respective acquisition dates. Since the dates of acquisition the discounts have unwound and will continue to unwind for the following two years.

   22.       Financial instruments 
   (a)     Financial risk management 

All companies are exposed to capital and market risk, but the Board considers the Group's key elements of financial risk to be:

   --   Credit risk 
   --   Liquidity risk 
   --   Interest rate risk 
   --   Foreign currency risk 

This note presents information about the Group's exposure to each of the above risks, the Group's management of capital, and the Group's objectives, policies and procedures for measuring and managing risk.

Capital risk management

The Board is responsible for overall Group strategy, acquisition and divestment policy, approval of major capital expenditure projects and consideration of significant financing matters. The Board manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders as well as sustaining the future development of the business. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note 20, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as set out in the Statement of Changes in Equity.

Market risk

Market risk is the risk that changes in the market prices, such as foreign exchange rates and interest rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

The Group's activities expose it mainly to the financial risks of changes in interest rates. The Board reviews and agrees the policy for managing interest rate risk and foreign currency risk and the potential impact of any significant economic changes are discussed at monthly Board meetings.

The Group reviews its treasury position daily, placing any surplus cash on short-term deposits.

   (b)     Categories of financial instruments 

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3 to the financial statements.

 
                                       2012      2011 
                                    GBP'000   GBP'000 
  Financial assets(1) 
  At amortised cost: 
      Loans and receivables          16,902    13,175 
      Cash and cash equivalents       4,456     2,567 
 
  Total financial assets             21,358    15,742 
 
 

(1) Financial assets exclude prepayments, amounts due under long-term contracts, other receivables and other non-current receivables.

 
                                                     2012      2011 
                                                  GBP'000   GBP'000 
  Financial liabilities(2) 
  At amortised cost: 
             Trade and other payables              21,685     8,766 
             Obligations under finance leases       5,986       233 
             Other borrowings and overdrafts        9,696     7,598 
             Contingent consideration               3,347       435 
         Derivatives - designated as cash 
          flow hedges                                   -        31 
 
  Total financial liabilities                      40,714    17,063 
 
 

(2) Financial liabilities exclude tax and social security, deferred income and other non-current payables.

   (c)     Credit risk 

The Group's principal financial assets are cash and cash equivalents and trade receivables, which represent the Group's maximum exposure to credit risk in relation to financial assets.

The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the consolidated balance sheet are net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and their assessment of the current economic environment.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risk.

The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved financial institutions.

Trade receivables

Trade receivables consist of a large number of customers, spread across diverse areas within the UK and the Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group's customer base, including default risk of the industry and country, in which the customers operate, has less of an influence on credit risk.

The Directors consider that the carrying amount of trade receivables, which are non-interest bearing, approximates to their fair value.

The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The Group defines counterparties as having

similar characteristics if they are related entities.

Before accepting any new customer, the Group runs credit checks to assess the potential customer's credit quality. The Group monitors exposure to individual clients and all customers are subject to standard terms of payment for each division which are, on average, 30 days.

The analysis of trade receivables in excess of 30 days old but not impaired is as follows:

 
 
                           2012          2011 
                        GBP'000       GBP'000 
 
  31 - 60 days            5,855         3,084 
  61 - 90 days            1,229         1,176 
  91-120 days               603           517 
  More than 120 days        646         1,200 
 
                          8,333         5,977 
 
                                    ========= 
                       ========  ============ 
 

The above analysis split by business segment is set out below:

At 30th September 2012

 
                       Remediation  Decommissioning  Consulting               Total 
                              2012             2012        2012                2012 
                           GBP'000          GBP'000     GBP'000             GBP'000 
 
 
  31 - 60 days               2,895            1,038       1,922               5,855 
  61 - 90 days                 767               39         423               1,229 
  91-120 days                  244              188         171                 603 
  More than 120 days           472               66         108                 646 
 
                             4,378            1,331       2,624               8,333 
 
 

At 30th September 2011

 
                        Remediation  Decommissioning    Consulting       Total 
                               2011             2011          2011        2011 
                            GBP'000          GBP'000       GBP'000     GBP'000 
 
 
  31 - 60 days                2,135                -           949       3,084 
  61 - 90 days                  843                -           333       1,176 
  91-120 days                   390                -           127         517 
  More than 120 days            772                -           428       1,200 
 
 
                              4,140                -         1,837       5,977 
 
 
 

The analysis split by geographical segment is set out below.

At 30th September 2012

 
                             United Kingdom        Canada  Australia     Total 
                                       2012          2012       2012      2012 
                                    GBP'000       GBP'000    GBP'000   GBP'000 
 
 
  31 - 60 days                        4,661           965        229     5,855 
  61 - 90 days                        1,176            53          -     1,229 
  91-120 days                           577            26          -       603 
  More than 120 days                    594            52          -       646 
 
 
                                      7,008         1,096        229     8,333 
 
 
 

At 30th September 2011

 
                             United Kingdom        Canada  Australia     Total 
                                       2012          2012       2012      2012 
                                    GBP'000       GBP'000    GBP'000   GBP'000 
 
 
  31 - 60 days                        3,084             -          -     3,084 
  61 - 90 days                        1,176             -          -     1,176 
  91-120 days                           517             -          -       517 
  More than 120 days                  1,200             -          -     1,200 
 
 
                                      5,977             -          -   5,977 
 
 
 

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments when there is objective evidence that the asset is impaired. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined by references to past default experience and historical data of payment statistics for similar financial assets.

Movement in the provision for impairment:

 
                                                      2012      2011 
                                                   GBP'000   GBP'000 
 
  Balance at beginning of the year                     226       243 
  Increase / (decrease) in impairment provision 
   recognised                                           93      (11) 
  Acquired with subsidiary undertakings                336       135 
  Receivables written back                           (112)     (141) 
 
                                                       543       226 
 
 

The creation and release of provisions for impaired receivables has been included in 'administrative expenses' in the income statement.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the above amount.

   (d)     Liquidity risk 

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring bank covenant compliance, forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk are disclosed in Note 20.

Liquidity and interest risk tables

The following tables detail the Group's expected maturity for its financial assets and liabilities. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets and liabilities. No material interest is expected to accrue on the interest bearing assets, which represent cash deposits.

 
                                Book    Undiscounted Cashflows 
                               Value 
                           ---------  ------------------------------------------------------------------------- 
  30th September 2012                      Less            1 - 3     3 months   1-5 years        5 +      Total 
                                           than    monthsGBP'000    to 1 year     GBP'000      years    GBP'000 
                             GBP'000    1 month                       GBP'000                GBP'000 
                                        GBP'000 
 
  Financial assets 
 
    Non-interest bearing      16,902     16,902                -            -           -          -     16,902 
 
 
 
   Variable interest 
   rate instruments            4,456      4,456                -            -           -          -      4,456 
 
                              21,358     21,358                -            -           -          -     21,358 
 
 
  Financial liabilities 
 
    Non-interest bearing      25,032     21,749                -        1,579       1,704          -     25,032 
 
 
    Variable interest 
    rate instruments          15,682        738              950        2,608      11,386          -     15,682 
 
                              40,714     22,487              950        4,187      13,090          -     40,714 
 
 
                                           Less            1 - 3     3 months       1 - 5        5 +      Total 
    30th September 2011      GBP'000       than    monthsGBP'000    to 1 year       years      years    GBP'000 
                                        1 month                       GBP'000     GBP'000    GBP'000 
                                        GBP'000 
 
  Financial assets 
 
    Non-interest bearing      13,175     13,175                -            -           -          -     13,175 
 
 
    Variable interest 
    rate instruments           2,567      2,567                -            -           -          -      2,567 
                                                                                                          _____ 
                           ---------  ---------  ---------------  -----------  ----------  ---------  --------- 
                              15,742     15,742                -            -           -          -     15,742 
                                                                                                          _____ 
                           ---------  ---------  ---------------  -----------  ----------  ---------  --------- 
 
  Financial liabilities 
 
    Non-interest bearing       9,232      8,797                -          326         109          -      9,232 
 
 
    Variable interest 
    rate instruments           7,831      2,894              227          672       4,038          -      7,831 
 
                              17,063     11,691              227          998       4,147          -     17,063 
 
 
        (e)    Interest rate risk 

Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument, will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates.

The Group is exposed to interest rate risk primarily though borrowing funds at floating interest rates. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group manages interest rate risk on borrowings by ensuring access to diverse funding and through monitoring interest rate movements with weekly reports.

Interest rate risk is reviewed on a regular basis and if considered necessary a strategy to minimise any potential risk through interest rate swaps will be discussed and implemented.

The Group's exposures to interest rates on financial assets and financial liabilities are detailed below.

Interest rate sensitivity analysis

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group's profit for the year would increase or decrease by GBP157,000 (2011: GBP45,000) in respect to exposure to the Group's borrowings and cash and cash equivalents. For floating rate liabilities the analysis is prepared assuming the amount of the liability at the balance sheet date was outstanding for the whole period.

   (f)     Foreign currency risk 

The Group's exposure to foreign currency risk at 30(th) September 2012 is as follows. This is based on the carrying amount for monetary financial instruments.

 
                              Canadian  Australian        US  Argentine 
                                Dollar      Dollar    Dollar       Peso  Sterling     Total 
                               GBP'000     GBP'000   GBP'000    GBP'000   GBP'000   GBP'000 
 
  Trade receivables              1,530         229         -          -    15,143    16,902 
 
  Cash and cash equivalents      1,337         116        67         62     2,874     4,456 
  Obligations under 
   finance lease contracts     (2,844)       (853)         -          -   (2,289)   (5,986) 
  Trade and other payables     (4,198)     (1,833)         -          -  (15,654)  (21,685) 
  Other borrowings 
   and overdrafts                    -           -         -          -   (9,696)   (9,696) 
 
  Contingent consideration           -           -         -          -   (3,347)   (3,347) 
 
 
 
  Net exposure                 (4,175)     (2,341)        67         62  (12,969)  (19,356) 
 
 

All exposures detailed above relate to EDS which was acquired during 2012. There was no significant foreign currency risk exposure at 30(th) September 2011.

The following significant exchange rates were applied during the year ended 30th September 2012:

 
 
                                     Reporting 
                                          date 
                      Average rate   spot rate 
 
  Canadian Dollar             1.59        1.59 
  Australian Dollar           1.54        1.55 
  US Dollar                      -        1.62 
  Argentine Peso                 -        7.58 
 
 

A strengthening / (weakening) of the Canadian Dollar, Australian Dollar, US Dollar and Argentinian Peso against all other currencies at 30th September 2012 would have affected the measurement of financial instruments denominated in foreign currency and increased / (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remains constant and ignores any impact of forecast sales and purchases.

 
                                                                          Profit or 
                                                Equity                         loss 
 
                             Strengthening   Weakening    Strengthening   Weakening 
At 30th September 2012             GBP'000     GBP'000          GBP'000     GBP'000 
 
Canadian Dollar (10% 
 movement)                           (837)         837             110        (110) 
Australian Dollar (10% 
 movement)                           (440)         440               9          (9) 
US Dollar (10% movement)                 7         (7)               -            - 
Argentine Peso (10% 
 movement)                               6         (6)               -            - 
 
 
 
   (g)     Fair value of financial instruments 

The fair value of interest rate swaps is calculated at the present value of the estimated future cash flows.

The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate to their fair values due to the short maturity of the instruments or because they bear interest at rates approximate to the market.

   23.       Trade and other payables 
 
                       2012      2011 
                    GBP'000   GBP'000 
  Non-current 
  Other payables      1,724     1,001 
 
 

In 2006, the Group recorded a provision of GBP1.0m in respect of a liability arising on the acquisition of Silverdell UK. The Group has a corresponding asset relating to the indemnities from the vendors of Silverdell UK in respect of this provision. A similar potential liability of GBP0.7m was recorded in 2012 arising on the acquisition of EDS, with the corresponding indemnification asset included within non-current trade and other receivables. These non-current other payables relate to pre-acquisition taxation matters.

 
                                           2012      2011 
                                        GBP'000   GBP'000 
  Current 
  Trade payables                         14,189     6,031 
  Other taxation and social security      6,066     2,098 
  Other payables                          7,496     2,735 
  Payments received in account            1,332         - 
 
                                         29,083    10,864 
 
 

An analysis of the maturity of debt is given in Note 22(d).

The Directors consider that the carrying amount of trade payables approximates to their fair value.

The Group's policy is to fix payment terms when agreeing the terms of each transaction. It is the Group's general policy to pay suppliers according to the agreed terms and conditions, provided that the supplier has complied with those terms.

Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing cost and they include retention amounts held over defect liability periods. The average credit period taken for trade purchases is 67 days (2011: 69 days) for the Group. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

There are no suppliers who represent more than 10% of the total balance of trade creditors in either 2012 or 2011.

The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. Therefore, under the normal course of business, the Group is not charged interest on overdue payables.

   24.     Share capital 
 
                                                2012                   2011 
 
                                               No.   GBP'000          No.    GBP'000 
 
    Allotted, called up and fully 
    paid 
  Ordinary shares of 1p each           313,213,910     3,132  180,839,717      1,808 
 
 
    Movement in issued share capital 
  At 1st October - 1p ordinary 
   shares                              180,839,717     1,808  151,654,717      1,516 
  Shares issued in the year            132,374,193     1,324   29,185,000        292 
 
  At 30th September                    313,213,910     3,132  180,839,717      1,808 
 
 
 

On 18 June 2012 the Company issued 52,272,727 new shares to the vendors of EDS as part of the consideration for that acquisition. The price paid was 11.0p per share, providing consideration of GBP5,750,000 and giving rise to a share premium of GBP5,227,000. On the same date and at the same price 80,101,466 new shares were issued as part of placing. The placing yielded consideration of GBP8,811,000 and gave rise to a share premium of GBP8,010,000 before expenses.

Barclays Bank PLC holds 11,374,179 (2011: 11,374,179) warrants valid until 2017 to subscribe for ordinary shares in the Company at 5p (2011: 5p) per ordinary share. Marwyn Neptune Fund LP holds warrants valid until 2013 to acquire up to 3,220,105 (2011: 3,220,105) ordinary shares in the Company at 75p (2011: 75p) per ordinary share. Details of options over the Company's share capital are disclosed in Note 26.

   25.     Other financial commitments 

Capital commitments

At 30th September 2012, the Group had capital commitments for capital expenditure contracted for but not provided totalling GBP2,671,000 (2011:GBPNil).

Operating lease commitments

The Group had outstanding total commitments under non-cancellable operating leases at 30th September which fall due as follows:

 
                                     2012                   2011 
                               Land and               Land and 
                              buildings      Other   buildings      Other 
                                GBP'000    GBP'000     GBP'000    GBP'000 
 
  Within one year                   914        956         331        715 
  Within two to five years        1,970        500         730        734 
  After five years                  322          -         159          2 
 
                                  3,206      1,456       1,220      1,451 
 
 
   26.    Employee share schemes 

The Group has adopted share incentive arrangement plans as set out below.

Equity-settled share option scheme

The Group has a share option scheme for certain employees of the Group. Options are exercisable at a price equal to the average quoted market price of the Company's shares on the date of grant. The vesting period is three years. If the options remain unexercised after a period of five years from the date of grant, the options expire. Options are forfeited if the employee leaves the Group before the options vest.

Details of the share options outstanding during the year are as follows:

 
                                                 2012                     2011 
                                                        Weighted               Weighted 
                                                         average                average 
                                                        exercise      Number   exercise 
                                          Number of        price    of share      price 
                                      share options          GBP     options        GBP 
 
  Outstanding at beginning of year     15,056,266       0.090     13,225,247    0.087 
  Granted during the year              10,000,000       0.120     2,190,190     0.115 
  Forfeited during the year           (1,283,854)      (0.090)    (359,171)    (0.090) 
  Lapsed during the year              (4,800,000)      (0.090)        -           - 
 
  Outstanding at the end of the 
   year                                18,972,412       0.100     15,056,266    0.090 
 
  Exercisable at the end of the 
   year                                6,782,221           0.090      -           - 
 
 

The options outstanding at 30th September 2012 had a weighted average remaining contractual life of 9.0 years (2011: 8 years). In 2012, options over 10,000,000 shares were granted on 30th September 2012. The aggregate of the estimated fair values of the options granted on that date is GBP724,000.

All the options outstanding at 30th September 2012 have non market-based performance conditions, being dependent on the Company's future adjusted earnings per share.

The inputs into the valuation models used for options granted each year are as follows:

 
                                        2012       2011 
 
  Weighted average share price      GBP0.131   GBP0.105 
  Weighted average exercise price   GBP0.120   GBP0.115 
  Expected volatility                    70%        77% 
  Expected life                      6 years  6.5 years 
  Risk-free rate                       0.94%      3.50% 
  Expected dividend yield                 2%         0% 
 
 

Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous 1.5 years. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. The risk free rate of return is the yield on zero coupon UK government bonds with a term similar to the expected life of the option.

The charge in the income statement relating to the above share-based payments was GBP267,000 (2011: GBP257,000).

   27.     Contingent liabilities 

There are Group cross guarantees from the Company for all monies due to certain of the Group's banks and surety lenders. The total potential exposure to the Group's banks under such guarantees was GBP5,523,000 (2011: GBP5,031,000). No monies were outstanding at 30th September 2012 (2011: GBPnil). In the normal course of business there are contingent liabilities including the provision of bonds in respect of completed and uncompleted contracts.

   28.       Related party transactions 

During the year to 30th September 2012, the Group paid GBP30,000 (2011: GBP30,000) to Marwyn Capital LLP for Directors' fees and GBP112,000 (2011: GBP90,000) to Marwyn Partners Ltd for rent and other office services. At the end of that year GBP31,000 (2011: GBPNil) remained outstanding.

Mark Watts is a partner in Marwyn Capital LLP and Marwyn Investment Management LLP and a shareholder in Marwyn Investments Group Ltd, which owns 100% of Marwyn Partners Ltd. Marwyn Neptune Fund LP is managed by Marwyn Investment Management LLP and beneficially owns shares and warrants in the Group.

During the year to 30th September 2012, Kalistar LLP, a partnership of certain of the Executive Directors of Silverdell (UK) Ltd, charged GBP48,000 (2011: GBP48,000) for the provision of cars used by some of the Directors of Silverdell (UK) Ltd. At the end of that year GBPNil (2011: GBP14,000) remained outstanding.

One property occupied by Silverdell (UK) Ltd is owned by the pension fund in which Sean Nutley has an interest. The property is subject to a market rent of GBP35,000 (2011: GBP29,000) per annum and GBP9,000 (2011: GBPnil) remained outstanding at the year-end.

Loan notes of GBP750,000 (2011: GBPNil) were payable to vendors of EDS who are now shareholders of Silverdell PLC and the interest charged in respect of these was GBP18,000 (2011: GBPNil). The Group also paid consulting fees of GBP38,000 to Andrew Routledge who was a major shareholder in the Company.

Parent Company Balance Sheet

As at 30(th) September 2012

Company number: 5755897

 
                                                                 2012      2011 
                                            Notes             GBP'000   GBP'000 
Fixed assets 
Investments                                    31              42,331    24,121 
Tangible assets                                32                  57        49 
 
                                                               42,388    24,170 
 
Current assets 
Debtors: amounts falling due 
 within one year                               33                 554     6,087 
 
 
Creditors: amounts falling due within 
 one year                                      34             (5,204)   (9,582) 
 
Net current liabilities                                       (4,650)   (3,495) 
 
Total assets less current liabilities                          37,738    20,675 
 
Creditors: amounts falling due 
 after one year                                34             (9,856)   (3,913) 
 
 
Total net assets                                               27,882    16,762 
 
Capital and reserves 
Called up share capital                        24               3,132     1,808 
Share premium account                          35              15,283     2,456 
Equity reserve                                 35                 788       721 
Other reserve                                  35               4,135     4,135 
Profit and loss account                        35               4,544     7,642 
 
Total shareholders' funds                                      27,882    16,762 
 
 
 

The financial statements were approved by the Board of Directors and authorised for issue on 4 December 2012.

They were signed on behalf of the Board of Directors.

Ian Johnson

Director

   29.    Significant accounting policies 

The separate financial statements of the Company have been prepared on the historical cost basis and under the going concern assumption. The accounting policies are summarised below and have been applied consistently throughout the year and the preceding year. The separate financial statements are presented as required by the Companies Act 2006. The Company has elected to prepare its Parent Company financial statements in accordance with UK GAAP.

Taxation

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items which are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred taxation is provided in full on all timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, subject to the recoverability of deferred tax assets. Deferred tax assets and liabilities are not discounted.

Share-based payments

The Company makes equity settled share-based payments to the Directors, which are measured at fair value at the date of grant. The fair value of share options issued with non-market vesting conditions has been calculated using the Black Scholes model. For all other share awards, the fair value is determined by reference to the market value of the share at the date of grant. For all share schemes with non-market related vesting conditions, the likelihood of vesting has been taken into account when determining the associated charge. Vesting assumptions are reviewed during each reporting period to ensure they reflect current expectations.

The Company also makes equity settled share-based payments to certain employees of certain subsidiary undertakings. Equity settled share-based payments that are made to employees of the Company's subsidiaries are treated as increases in equity over the vesting period of the award, with a corresponding increase in the Company's investments in subsidiaries, based on an estimate of the number of shares that will eventually vest.

Any payments received from subsidiaries are applied to reduce the related increases in investments in subsidiaries.

Accounting for share-based payments is the same as under IFRS 2 and details on the schemes and option pricing models relevant to the charge included in the Company financial statements are set out in Note 26 to the consolidated financial statements of the Group for the year ended 30th September 2012.

Investments

Investments represent equity holdings in subsidiaries, joint ventures and associates and are held at cost less provision for impairment.

Tangible fixed assets and depreciation

Tangible fixed assets are stated at historic purchase cost net of accumulated depreciation and any provision for impairment. Cost comprises the original purchase price of the asset and the cost attributable to bringing the asset to its working condition for its intended use. Depreciation is provided on all tangible fixed assets, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line basis over its expected useful life, as follows:

Computer equipment 33% on cost

Impairments in the value of fixed assets are charged to the profit and loss account.

   30.       Parent Company profit and loss account 

The Company has taken advantage of the exemption afforded by the Companies Act 2006 and has not presented its own profit and loss account. The loss for the year dealt with in the financial statements of the Parent Company is GBP3,298,000 (2011: GBP1,711,000).

   31.       Investments 
 
                                                       2012 
                                                    GBP'000 
  Cost 
 
  At 1(st) October 2011                              40,841 
  Capital contributions to subsidiaries arising 
   from share based payments                            170 
  Acquisition of EDS Group Holdings Ltd              18,040 
 
  At 30th September 2012                             59,051 
 
 
 
  Impairment 
  At 1st October 2011 and 30th September 
   2012                                    (16,720) 
 
  Carrying amount 
  At 30th September 2012                     42,331 
 
  At 30th September 2011                     24,121 
 
 

Details of the principal subsidiary undertakings are as follows:

 
                                                     Proportion 
                                   Country of       of ordinary 
  Company                           incorporation   shares held    Principal activity 
 
  Silverdell (UK) Ltd              England and                   Asbestos and environmental 
                                    Wales                  100%   services 
  Redhill Analysts Ltd             England and 
                                    Wales                  100%  Consulting services 
  Kitsons Group Ltd                England and                   Asbestos and environmental 
                                    Wales                  100%   services 
  RDS Asbestos Management          England and 
   Consultants [UK] Ltd*            Wales                  100%  Consulting services 
  EDS Group Holdings Ltd           England and 
                                    Wales                  100%  Holding company 
  Euro Dismantling Services                                      Provision of dismantling, 
   Ltd**                           England and                    demolition, industrial 
                                    Wales                  100%   services and asset recovery 
  EDS Commissioning Canada         Canada                        Provision of dismantling, 
   Inc**                                                          demolition, industrial 
                                                           100%   services and asset recovery 
  EDS Australia Pty Ltd            Australia                     Provision of dismantling, 
                                                                  demolition, industrial 
                                                           100%   services and asset recovery 
  Toplam Muhendislik ve            Turkey                        Dismantling, demolition, 
   Taahhut Ithalat Ihracat                                        decommissioning and 
   Limited Sirketi**                                       100%   asset recovery 
  EDS Plant Solutions Ltd**        England and 
                                    Wales                  100%  Hire services 
  Process Plant Solutions          England and 
   Ltd**                            Wales                  100%  Asset recovery 
  Waste Recycling and Destruction  England and                   Waste disposal and recycling 
   Ltd**                            Wales                  100%   services 
 
 

* Held via Redhill Analysts Ltd

** Held via EDS Group Holdings Ltd

   32.       Tangible fixed assets 

The Company acquired owned computer equipment with a cost of GBP 39,000 (2011: GBP30,000) during the year and incurred a depreciation charge on these assets of GBP 31,000 (2011: GBP19,000). The closing net book value of tangible fixed assets was GBP57,000 (2011: GBP49,000).

   33.       Debtors 

Amounts falling due within one year:

 
                                            2012      2011 
                                         GBP'000   GBP'000 
 
  Other debtors and prepayments              103       169 
  Amounts due from group undertakings        234     5,917 
  Corporation tax recoverable                217         - 
  Deferred tax asset                           -         1 
 
                                             554     6,087 
 
 

The deferred tax asset at 30(th) September 2011 related to timing differences on tangible fixed assets and the amount charged to the profit and loss account for the year was GBP1,000 (2011: GBP14,000).

   34.       Creditors 

Amounts falling due within one year

 
                                                2012      2011 
                                             GBP'000   GBP'000 
 
  Trade creditors                                503         - 
  Bank overdraft (secured)                       395     2,072 
  Bank loans (secured)                           900       800 
  Other creditors and accruals                   427       465 
  Amounts due to subsidiary undertakings       1,423     6,245 
  Contingent consideration payable             1,556         - 
 
                                               5,204     9,582 
 
 

The carrying amount of trade payables approximates to their fair value.

Amounts falling due after more than one year

 
                                          2012      2011 
                                       GBP'000   GBP'000 
 
  Bank loans (secured)                   7,550     3,913 
  Loan notes                               750         - 
  Contingent consideration payable       1,556         - 
 
                                         9,856     3,913 
 
 

Full details of the Company's bank loans are disclosed in Notes 20 and 22 to the Group financial statements.

Full details of the contingent consideration payable are disclosed in Note 21 to the Group financial statements.

   35.     Share premium account and reserves 
 
                             Share premium                               Profit 
                                   account    Equity                   and loss 
                                   GBP'000   reserve  Other reserves    account     Total 
                                             GBP'000         GBP'000    GBP'000   GBP'000 
 
At At 1st October 2011               2,456       721           4,135      7,642    14,954 
Share-based payment credit 
 in the year                             -       267               -          -       267 
Retained loss for the year               -         -               -    (3,298)   (3,298) 
Shares issued                       13,236         -               -          -    13,236 
Expenses of share issue              (409)         -               -          -     (409) 
Transfer                                 -     (200)               -        200         - 
 
At 30th September 2012              15,283       788           4,135      4,544    24,750 
 
 

The remaining balance in other reserves is not distributable and relates to the premium arising on shares issued as consideration for the acquisition of subsidiary companies and warrants issued to Marwyn Neptune Fund LP in consideration for their participation in placing of shares on 19 July 2006.

   36.     Related parties 

The Company has taken advantage of the exemption available under FRS 8 Related Party Disclosures not to disclose details of transactions between wholly owned Group companies.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR FMMGZLDMGZZM

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