TIDMMOGP
RNS Number : 4749H
Mountfield Group plc
08 June 2017
Mountfield Group Plc
("Mountfield", the "Group" or the "Company")
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2016
Mountfield, the AIM listed construction company is pleased to
announce its Final Results for the year ended 31 December 2016
("Final Results").
The Company also announces that its AGM will be held at 11:30 am
on 30 June 2017 at the offices of DAC Beachcroft LLP at 100 Fetter
Lane, London EC4A 1BN.
The Final Results and Notice of AGM have been posted to
shareholders and will be posted to the Company's website on:
www.mountfieldgroupplc.com .
Contacts:
Mountfield Group Plc 07500 558 235
Peter Jay, Executive Chairman
WH Ireland Limited (Nominated
adviser) 0207 220 1666
Paul Shackleton
STRATEGIC REPORT FOR THE YEARED 31 DECEMBER 2016
CHAIRMAN'S REPORT
Key Features
-- Group annual PBT rises by 150%.
-- Connaught continues to strengthen its market position.
-- MBG's profitability rises again from higher quality turnover
and restructured, lower cost operation.
-- Secured and potential business for both businesses indicates good prospects for 2017.
-- Turnover: GBP9.63m (2015: GBP13.033m)
-- Operating profit: GBP469,820 (2015: GBP203,895)
-- EBITDA: GBP483,336 (2015: GBP218,314)
-- PBT: GBP442,544 (2015: PBT GBP177,117)
-- Earnings per share: 0.131p (2015: 0.046p)
-- Margin 19.2% (2015: 14.4%)
-- Majority of remaining loan notes converted into unlisted
non-voting shares without right to receive dividend.
That the strong increase in Group PBT to GBP442,544 (2015 -
GBP177,117) was earned on a turnover reduced by over GBP3million
demonstrates the success of the Mountfield Group Plc's ("Group")
strategy for Mountfield Building Group Limited ("MBG") of
concentrating on higher margin, lower risk work.
For Connaught Access Flooring Limited ("CAF"), the main feature
of the year was the completion of its GBP5.8m contract for flooring
at a new City HQ office building. As a result of the hiatus in the
construction industry that followed the Referendum the signing and
start of work on a new contract (announced on 7 March 2017 but
negotiated over the previous year) was postponed until early this
year and this resulted in income that the Board had expected CAF to
earn in the latter part of 2016 being deferred to 2017.
These delayed starts are the principal reason for CAF's PBT in
2016 being GBP306,565 as against GBP467,428 in 2015.
CAF has become a market leader and one of the small number of
companies able to compete for the largest raised access/commercial
flooring market and is regularly asked to tender for new work in an
increasingly active market. The Directors note the negotiations it
is currently involved in and anticipate that it will show a strong
performance in 2017.
The significantly rationalised MBG (including its subsidiary MBG
Construction Limited) showed that it is on a sustainable and
profitable path to recovery in 2016 and onwards.
The group balance sheet was strengthened by the conversion of
GBP2.3m loan notes into unlisted founder shares which do not carry
the right to vote or to receive a dividend.
Outlook
The outlook for CAF continues to be strong into 2017/18 and
based on the demand for high quality, large commercial flooring
contracts, its leading position in its market place and the
proposed expansion of its business into the supply and installation
of new products associated with CAF's core activities. The Board
believes that the prospects for CAF will remain increasingly bright
for a number of years.
The Board takes a similar view of MBG's prospects and notes the
major change in its financial performance that followed from the
reduction of its cost base and the change to a strategy of pursuing
higher margin, lower risk contracts and is satisfied that both will
perform strongly during 2017 and 2018
Peter Jay
Executive Chairman
7 June 2017
CEO's REPORT
The Group Board currently comprises:
Peter Jay - Executive Chairman - in addition to being Group
Chairman Peter also manages the Group's relationships with its
nomad, brokers and professional advisers. Peter was formerly a
corporate lawyer and a partner in DAC Beachcroft LLP.
Andrew Collins - Group Chief Executive - Andy is responsible for
managing the business of the Group and also that of its subsidiary,
CAF, a specialist supplier and installer of flooring for commercial
properties whose business and reputation he has developed
significantly since appointment in 2004. Before joining the Group,
Andy was a Divisional Financial Director at ISG Plc.
Graham Read - Managing Director of MBG - Graham founded the
business of MBG in 1986 and has had over 20 years' experience in
the construction industry.
The Board is supported by Andy May, a partner in the firm of
Barnes Roffe LLP. Andy attends meetings of the Group's Board in an
advisory-only capacity and also assists the Board in overseeing the
Group's accounting and finance functions.
The Board is also supported by Chris Adlam, a director of JDC
Corporate Finance. Chris (who was appointed in February 2017)
attends meetings of the Group's Board in an advisory-only capacity
to provide advice on business finance and aspects of corporate
finance.
Group Companies
The Group is comprised of two principal trading companies, MBG
and CAF.
CAF is one of the leading suppliers and installers of raised
access flooring systems to main contractors and corporate end users
for office and data centre installations.
It has established itself as one of the few recognised
specialists for the flooring elements of fitting out contracts in
commercial office space for new build and refurbishment projects
for corporate end users such as BP, HP, Linklaters, Merrill Lynch,
Reed Smith, BBC, Standard Chartered Bank, Henderson Global, Lockton
and Unilever.
The current demand for construction of high quality, high tech
banking and office HQ buildings plays to CAF's strengths as it
enables the Company to present its professionalism and credentials
and compete on quality of service, expertise and experience, rather
than simply on price.
MBG comprises the construction division of the Group and in
addition to its extensive experience of undertaking work for the
data centre sector MBG also undertakes specialist construction work
for end used clients in areas such as the conversion of office
premises to residential units, property fabric repair and
maintenance, property renovation, fit-out of office, retail and
leisure premises and construction management services for clients
including architectural practices.
In addition, MBG is retained to undertake building fabric repair
and maintenance works on a nationwide basis for a large proportion
of the property portfolio of a leading telecoms operator.
Finance
The Group is financed from the cash it generates from its
operations, with the support of a bank overdraft facility of
GBP250,000 and a term loan of GBP298,142.
The construction market
The Group continues to experience extremely strong levels of
activity in terms of enquiries and tenders and the Board is
confident as to the strength and sustainability of the current
strong demand for services provided by the Group.
Group's strategy
The Board strategy is for the Group to become a highly
profitable, mid-sized operation that provides specialist
construction and flooring services in a number of diverse but
related areas but with a particular focus on the fit-out sector.
The Group's reputation has been built on its ability to undertake
and to manage specialist construction services to a high level of
quality and to deliver the completed project to the client on time.
This will remain at the core of its strategy.
Principal risks
The principal risks and uncertainties facing the Group relate
to:
Attraction and retention of key employees
The Group's future success is substantially dependent on the
continued services and performance of its directors, senior
management and other key personnel and its ability to continue to
attract and retain highly skilled and qualified personnel.
The senior executive directors of the business all have
significant shareholdings in the parent company and are all
permanent employees. The other senior management and key personnel,
most of whom have been with the Company for a long time, are
participating in the Company's share option scheme which was
introduced in 2012.
Economic downturn and other macroeconomic factors
The Group's success is substantially dependent on the general
level of economic activity and economic conditions in the United
Kingdom.
Many of the Group's contracts, including renewals or extensions
of previous contracts, are awarded through competitive bidding
processes. Any downturn in the economy, or any other macroeconomic
factor, either in the UK or globally, may reduce the number of
contracts coming up for bidding.
The competitive bidding processes present a number of additional
risks, including the incurrence of substantial cost and managerial
time to prepare bids and proposals for contracts that the Group may
not ultimately win. The Group may face additional competition in
the bidding process either from existing competitors or new market
entrants.
The Company is seeking to mitigate its exposure to the sectors
in which it currently operates by diversifying its client base and
in particular expanding into closely aligned areas of activity. It
is also seeking to diversify by modest investment in new businesses
in the same sector.
Reliance on key customers and clients
The business of the Group is dependent upon the continuing
contracts that it has, and relationships that it has developed,
with certain customers.
Whilst signed contracts are in place with key customers, the
successful completion and timing of contracted projects are not
guaranteed and are susceptible to external factors outside of the
control of the Group. Similarly, contracted projects may in some
circumstances be susceptible to delays or variation by customers or
be affected by unforeseen changes in circumstances relating to the
market, technology, legislation, economic or other business
factors. This may affect the cash flow and subsequent performance
of the Group.
The Group works with a well-established client base and the
performance of individual projects is monitored on at least a
monthly basis by board members to identify any issues with specific
projects.
Reliance on Subcontractors
The Group utilises subcontractors on a project-by-project basis
to meet contractual obligations. Such projects will rely on the
subcontractors performing their duties and obligations, not only in
terms of timely delivery but also in terms of their performance
obligations. Any such non-performance may result in time and cost
over-runs on the Group's projects and reduce the value of its
returns.
Subcontractors are vetted by senior management and normally
engaged to work on closely defined and managed aspects of
contracts. Most subcontractors have a long standing trading history
with the Group.
Health and safety
The Group undertakes Construction activities, often working
within difficult conditions and with heavy machinery which if
improperly used could result in personal injury or in extreme
cases, fatalities.
The Group takes the health and safety of its employees and
clients very seriously and employs Health and Safety advisors on
all significant contracts. It also has a firm of Health and Safety
Advisors with whom it consults on a regular basis.
Key performance indicators
The Directors use a number of performance indicators which are
used to manage the business but, as with most businesses the focus
in the Statement of Comprehensive Income at the top level is on
sales, margins, staff numbers and overheads compared to budget and
the prior year. In the Statement of Financial Position the focus is
on managing working capital. The key performance indicators are
disclosed in the Strategic Report.
Financial instruments
Details of the Group's financial risk management objectives and
policies are included in note 19 to the financial statements.
Andrew Collins
Chief Executive Officer
7 June 2017
DIRECTORS' REPORT FOR THE YEARED 31 DECEMBER 2016
The directors present their annual report and audited financial
statements for the year ended 31 December 2016.
Principal activities
The principal activities of the Group are the supply of fit-out
services (and, in particular the supply and installation of
flooring systems) to data centres, office, retail and other
commercial premises and of specialist construction services
including those related to property fabric repair and
refurbishment.
Review of business
A detailed review of the development of the business is
contained in the Chairman's and Chief Executive's Statement, which
are included in the Strategic Report.
Results
The Group made a pre-tax operating profit from continuing
operations of GBP442,544 (2015: 177,117) for the year ended 31
December 2016 on turnover of GBP9,634,979 (2015:
GBP13,033,039).
At 31 December 2016 the Group had net assets of GBP4,707,504
(2015: GBP2,103,583).
Dividends
The Directors do not propose payment of any dividends for the
year ended 31 December 2016.
Directors
The Directors who served during the year were:
P H Jay
G J Read
A J Collins
A J Sainsbury (resigned 30 June 2016)
Charitable Donations
During the year the Group made charitable donations totalling
GBP1,452 (2015: GBP1,520).
Substantial Shareholdings
So far as the Directors are aware the parties who are directly
or indirectly interested in 3% or more of the nominal value of the
company's share capital at 31 December 2016 are as follows:
Number of shares % Ordinary share
issued capital
Peter Jay 23,500,000 9.24%
Graham Read 83,520,000 32.85%
Andy Collins 32,300,000 12.70%
In addition, the directors are aware of the following nominee
shareholdings as at 31 December 2016:
Number of shares % Ordinary share
issued capital
Barclayshare Nominees
Limited 10,686,056 4.20%
Hargreaves Lansdown
(Nominees) Limited 8,032,073 3.16%
HBSC Global Custody
Nominee (UK) Limited 11,911,728 4.69%
Creditor payment policy
The Group's current policy concerning the payment of trade
creditors is to:
a) Settle the terms of payment with suppliers when agreeing the
terms of each transaction;
b) Ensure that suppliers are made aware of the terms of payment
by inclusion of the relevant terms in contracts; and
c) Pay in accordance with the Group's contractual and other
legal obligations.
At the year end trade creditors represented 86 days'
expenses.
Corporate Governance
The Board is committed to good corporate governance and so far
as appropriate given the Group's size and constitution of the
Board, intends to comply with the QCA guidelines on corporate
governance.
Going Concern
The Directors have prepared and reviewed financial forecasts and
the cash flow requirements to meet the Group and the Company's
financial objectives. The Directors are satisfied that, taking into
account the current cash resources and facilities available to the
business and its future cash requirements, it is appropriate to
prepare accounts on a going concern basis.
Disclosure of information to auditors
Each of the Directors who are in office at the date when this
report is approved has confirmed that, as far as they are aware,
there is no relevant audit information of which the auditors are
unaware. Each of the Directors have confirmed that they have taken
all the steps that they ought to have taken as directors to make
themselves aware of any relevant audit information and to establish
that the auditors are aware of such information.
Auditors
A resolution proposing the re-appointing of Adler Shine LLP as
auditor will be put to the members at the next Annual General
Meeting.
On behalf of the Board
Andrew Collins
Director
7 June 2017
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. The Directors have chosen to
prepare the financial statements for the Group and the Company in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
International Accounting Standards requires that financial
statements present fairly for each financial year the company's
financial position, financial performance and cash flows. This
requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities,
income and expenses set out in the International Accounting
Standards Board's "Framework for the preparation and presentation
of financial statements". In virtually all circumstances a fair
presentation will be achieved by compliance with all applicable
IFRSs. A fair presentation also requires directors to:
-- consistently select and apply appropriate accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information; and
-- provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF MOUNTFIELD GROUP
PLC
We have audited the financial statements of Mountfield Group plc
for the year ended 31 December 2016 which comprise the Group and
Parent Company Statement of Financial Position, the Group Statement
of Comprehensive Income, the Group and Parent Company Statements of
Cash Flow, the Group and Parent Company Statement of Changes in
Equity and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and, as regards the Parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors'
Responsibilities set out on page 9, the Directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board's Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's and Parent Company's circumstances and
have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
Directors; and the overall presentation of the financial
statements. In addition, we read all the financial and
non-financial information in the annual report and financial
statements to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and the Parent Company's affairs as at 31
December 2016 and of the Group's profit for the year then
ended;
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union; and
-- the Parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the group Strategic
Report and Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the Parent Company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Christopher Taylor FCA (Senior statutory auditor)
for and on behalf of Adler Shine LLP Aston House, Cornwall
Avenue
Chartered Accountants London N3 1LF
Statutory Auditor 7 June 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2016
2016 2015
Note GBP GBP
Revenue 3 9,634,979 13,033,039
Cost of sales 4 (7,787,965) (11,155,909)
------------ -------------
Gross profit 1,847,014 1,877,130
Administrative expenses 5 (1,377,194) (1,673,235)
------------ -------------
Operating profit 469,820 203,895
Net finance costs 5 (27,276) (26,778)
------------ -------------
Profit before income
tax 442,544 177,117
Income tax expense 6 (108,805) (60,728)
Profit for the year and
total comprehensive income 333,739 116,389
Earnings per share 7
Basic earnings per share 0.131p 0.046p
Diluted earnings per share 0.131p 0.046p
======= =======
There are no recognised gains and losses other than those
passing through the Statement of Comprehensive Income.
As permitted by Section 408 of the Companies Act 2006, no
separate Statement of Comprehensive Income is presented in respect
of Mountfield Group Plc. Its loss for the year ended 31 December
2016 was GBP93,217 (2015: GBP69,490 profit).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
2016 2015
Note GBP GBP
ASSETS
Non-current assets
Intangible assets 8 6,874,308 6,874,308
Property, plant and
equipment 9 90,956 102,213
Deferred income tax
assets 16 295,268 346,304
------------ ------------
7,260,532 7,322,825
------------ ------------
Current assets
Inventories 10 88,272 72,835
Trade and other receivables 11 1,776,611 2,345,797
Cash and cash equivalents 12 - 350,232
------------ ------------
1,864,883 2,768,864
------------ ------------
TOTAL ASSETS 9,125,415 10,091,689
============ ============
EQUITY AND LIABILITIES
Issued share capital 13 2,524,426 254,244
Share premium 1,490,682 1,490,682
Share based payments
reserve 68,871 68,871
Capital redemption reserve 7,500 7,500
Merger reserve 4,051,967 12,951,180
Reverse acquisition
reserve (2,856,756) (2,856,756)
Retained earnings (579,186) (9,812,138)
------------ ------------
TOTAL EQUITY 4,707,504 2,103,583
------------ ------------
Current liabilities
Trade and other payables 14 2,952,209 3,532,971
Short-term borrowings 15 897,579 1,403,568
Finance lease liabilities 15 583 4,147
3,850,371 4,940,686
Non-current liabilities
Loan notes 15 393,857 3,047,420
Bank loan 15 173,683 -
4,417,911 7,988,106
------------ ------------
TOTAL EQUITY AND LIABILITIES 9,125,415 10,091,689
============ ============
The financial statements were approved by the board on 7 June
2017.
Andrew Collins
Director
COMPANY REGISTRATION NO. 06374598
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2016
2016 2015
Note GBP GBP
Cash flows from operating
activities
Operating profit 469,820 203,895
Adjusted for:
Depreciation 13,516 14,418
Share-based payment charge - 2,787
Decrease/(increase) in
inventories (15,437) 9,464
Decrease/(increase) trade
and other receivables 569,187 1,076,972
(Decrease) in trade and
other payables (614,007) (707,481)
---------- -----------
Cash generated in operations 423,079 600,055
Finance costs (27,276) (33,993)
Finance income - 7,215
Taxation paid - (13,881)
---------- -----------
Net cash inflow from operating
activities 395,803 559,396
---------- -----------
Cash flows from investing
activities
Purchases of property,
plant and equipment (2,259) (7,667)
Net cash used in investing
activities (2,259) (7,667)
---------- -----------
Cash flows from financing
activities
Finance lease rentals (3,564) (6,768)
Repayment of non-convertible
loan notes (283,381) (305,790)
Repayment of short-term
loans (51,858) (161,419)
New facility loan 350,000 -
---------- -----------
Net cash flows (used in)/generated
from financing activities 11,197 (473,977)
---------- -----------
Net cash increase in cash
and cash equivalents 404,741 77,752
Cash and cash equivalents
brought forward (424,988) (502,740)
---------- -----------
Cash and cash equivalents
carried forward 12 (20,247) (424,988)
========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2016
Share
based Capital Reverse
Share Share payment redemption Merger acquisition Retained
capital premium reserve reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2015 254,244 1,490,682 66,084 7,500 12,951,180 (2,856,756) (9,928,527) 1,984,407
Total
comprehensive
income
for the
year - - - - - - 116,389 116,389
Share
based
payment
charge - - 2,787 - - - - 2,787
Cancelled
share
options
Lapsed
Warrants
At 31
December
2015 254,244 1,490,682 68,871 7,500 12,951,180 (2,856,756) (9,812,138) 2,103,583
Total
comprehensive
income
for the
year - - - - - - 333,739 333,739
Share
based
payment
charge
Conversion
of loan - - - - - - - -
notes 2,270,182 - - - - - - 2,270,182
Transfer - - - - (8,899,213) - 8,899,213 -
At 31
December
2016 2,524,426 1,490,682 68,871 7,500 4,051,967 (2,856,756) (579,186) 4,707,504
========================== ================== ================== ================== ================== =================================== =================== ============
Merger Reserve
The merger reserve exists as a result of the acquisitions of
Mountfield Building Group Limited, MBG Construction Limited,
Connaught Access Flooring Holdings Limited and Mountfield Land
Limited where the consideration included the issue of new shares by
the Company, thereby attracting merger relief under the Companies
Act 2006. The merger reserve represents the difference between the
nominal value of the share capital issued by the Company and the
fair value of those shares at the date of acquisition.
A transfer has been made from the merger reserve to retained
earnings to reflect amounts that have become realised through
impairment write downs in previous accounting periods.
Reverse Acquisition Reserve
The reverse acquisition reserve exists as a result of the method
of accounting for the acquisition of Mountfield Building Group
Limited and MBG Construction Ltd (note 1.5).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2016
1 Accounting policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below.
1.1 General information
Mountfield Group plc is a public company incorporated in England
and Wales. The registered number of the Company is 06374598. The
address of its registered office is 3C Sopwith Crescent, Wickford
Business Park, Wickford, Essex SS11 8YU.
1.2 Going concern
The group has agreed facilities with its bank in March 2017.
Based on the current working capital forecast, the Group is
unlikely to need additional funds within twelve months of the date
of approval of these financial statements in order to maintain its
proposed work levels of expenditure providing contracts progress as
planned, new contracts are secured and the Group is able to
continue successfully managing its cash resources. After making
enquiries and considering the assumptions upon which the forecasts
have been based, the directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. For these reasons, they
continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
1.3 IFRS compliance and adoption
Statement of compliance with IFRS
These financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRSs), IFRIC Interpretations and with those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS.
The adoption of these standards has not resulted in any changes
to the Group's accounting policies and has not affected amounts
reported in prior years.
The financial statements have been prepared under the historical
cost basis.
Sources of estimation uncertainty
The preparation of financial statements under IFRS requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and reported amounts
of assets, liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates. Estimates and assumptions are reviewed on an ongoing
basis and any revision to estimates or assumptions are recognised
in the period in which they are revised and in future periods
affected.
Significant judgements
The material areas in which estimates and judgements are applied
are as follows:
Goodwill
Determining whether goodwill is impaired requires an estimation
of the value in use of the cash-generating units to which the
goodwill has been allocated. The value in use calculation requires
the Company to estimate future cashflows expected to arise from the
cash-generating unit and a suitable discount rate in order to
calculate present value. Details regarding the goodwill carrying
value and assumptions used in carrying out the impairment reviews
are provided in note 8.
Receivables
The Group reviews the net recoverable value of its accounts
receivables on a periodic basis to provide assurance that recorded
accounts receivables are stated net of any required provision for
impairment. Factors that could impact recoverability include the
financial propriety of customers and related economic trends.
Changes in these factors that differ from managements estimates can
result in an adjustment to the carrying value and amounts charged
to income in specific periods. More details on gross balances and
provisions made are included in note 11.
Accounting for construction contracts
In accordance with IAS 11 "Construction Contracts", management
is required to estimate total expected contract costs and the
percentage of contract completion in determining the appropriate
revenue and profit to recognise in the period. The Group uses the
work of expert professional Chartered Surveyors to determine
accurately the level of work that has been completed by the
year-end. The Group also has appropriate control procedures to
ensure that all estimates are determined on a consistent basis and
are subject to appropriate review and authorisation.
Share-based payments
The estimates of share-based payments costs require that
management selects an appropriate valuation model and makes
decisions on various inputs into the model, including the
volatility of its own share price, the probable life of the options
before exercise and behavioral consideration of employees.
Deferred taxation
The Group provides for deferred taxation using the liability
method. Deferred tax assets are recognised in respect of tax losses
where the Directors believe that it is probable that future profits
will be relieved by the benefit of tax losses brought forward. The
Board considers the likely utilisation of such losses by reviewing
budgets and medium term plans for each taxable entity within the
Group. If the actual profits earned by the Group's taxable entities
differ from the budgets and forecasts used then the value of such
deferred tax assets may differ from that shown in these financial
statements.
Presentation and functional currency
The financial statements are presented in pounds sterling, which
is the Group's functional currency.
1.4 Standards and interpretations
At the date of authorisation of these financial statements the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
Effective date
(period beginning
on or after)
IAS 7 Amendments as a result of the 1 January
disclosure initiative 2017
IFRS 9 Finalised version, incorporating 1 January
requirements for classification 2018
and measurement, impairment,
general hedge accounting and
de-recognition
IFRS 1 Amendments removing short term 1 January
exemptions 2018
IFRS 2 Amendments to clarify the classification 1 January
and measurement of share based 2018
payment transactions
IAS 12 Amendments regarding the recognition
of deferred tax assets for unrealised 1 January
losses 2017
IFRS 12 Amendments resulting from annual 1 January
improvements (clarifying scope) 2017
IFRS 15 Revenue and contracts with customers 1 January
2018
IFRS 4 Amendments regarding the interaction 1 January
of IFRS 4 and IFRS 9 2018
IAS 28 Amendments regarding clarifying 1 January
certain fair value measurements 2018
IFRS 16 Leases 1 January
2019
IFRS 17 Insurance contracts 1 January
2021
1.5 Basis of consolidation
Subsidiaries
The Group financial statements consolidate the financial
statements of the Company and all its subsidiaries. Subsidiaries
include all entities over which the Group has the power to govern
financial and operating policies. The existence and effect of
potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are consolidated from the
date on which control commences until the date that control ceases.
Intra-group transactions are eliminated in preparing the
Consolidated Financial Statements.
A list of the significant investments in subsidiaries, including
the name, country of incorporation and proportion of ownership
interest is given in note 2 to the Company's separate financial
statements.
Business combinations and goodwill
On 16 October 2008, Mountfield Group plc ("the Company")
acquired the entire issued share capital of Mountfield Building
Group Limited, which has one wholly owned subsidiary, MBG
Construction Limited (the "MBG Group") acquired in August 2008. The
consideration of GBP7,622,000 was satisfied by the issue of
51,220,000 Ordinary Shares of 0.1p each at a price of 10p per share
and by the issue of GBP2,500,000 unsecured non-convertible loan
notes.
As a result of these transactions, the former shareholders of
MBG Group became the majority shareholders in the Company.
Accordingly, the substance of the transaction was that MBG Group
acquired the Company in a reverse acquisition.
Under IFRS 3 'Business Combinations', the acquisition of MBG
Group has been accounted for as a reverse acquisition.
The acquisitions of Connaught Access Flooring Limited, MBG
Construction Limited and Mountfield Land Limited are 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 plus any costs directly attributable to the business
combination.
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of
the cost of acquisition over the fair value of the Group's share of
the net identifiable assets and contingent liabilities acquired.
Identifiable assets are those which can be sold separately or which
arise from legal rights regardless of whether those rights are
separable. Goodwill on acquisition of subsidiaries is included in
intangible assets. Goodwill is not amortised but tested annually
for impairment or when trigger events occur, and is carried at cost
less accumulated impairment losses.
1.6 Revenue recognition
Revenue is stated exclusive of VAT and consists of sales of
services to third parties.
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Retentions are recognised throughout the life of
a contract and are deducted from the sales invoice.
Revenue relating to contracts includes the amount initially
agreed in the contract plus any variations in contract work to the
extent that it is probable they will result in revenue and can be
reliably measured. As soon as the outcome of the contract can be
measured reliably, revenue and expense is recognised in the
statement of comprehensive income on a stage of completion basis.
The stage of completion is determined by reference to a survey of
work performed. Any losses are recognised immediately in the
statement of comprehensive income as soon as they are foreseen.
1.7 Contract work in progress
Revenue from fixed price construction contracts is recognised on
the percentage of completion method, measured by reference to the
percentage of contract costs incurred for work performed to date to
the estimated total contract costs or the proportion of the value
of work done to the total value of work under the contract, except
where these would not be representative of the stage of completion.
Full provision is made for all known or expected losses on
individual contracts immediately once such losses are foreseen.
1.8 Amounts recoverable on long term contracts
Profit on long term contracts is taken as the work is carried
out if the final outcome can be assessed with reasonable certainty.
The profit included is calculated on a prudent basis to reflect the
proportion of the work carried out at the year end, by recording
turnover and related costs as contract activity progresses.
Turnover is calculated as that proportion of total contract value
which costs incurred to date bear to total expected costs for that
contract. Revenues derived from variations on contracts are
recognised only when they have been accepted by the customer. Full
provision is made for losses on all contracts in the year in which
they are first foreseen. Amounts which are recoverable on long-term
contracts are shown within debtors under the heading 'Amounts
Recoverable on Contracts' which have not yet been invoiced and are
stated net of discounts allowed.
1.9 Share-based payments
The Group makes equity-settled share-based payments to its
employees and directors. The fair value of options and warrants
granted is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and
spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the
options and warrants granted is measured based on the Black-Scholes
framework, taking into account the terms and conditions upon which
the instruments were granted. At each balance sheet date, the
Company revises its estimate of the number of options and warrants
that are expected to become exercisable.
1.10 Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are
charged to the statement of comprehensive income in the year to
which they relate.
1.11 Impairment
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. Assets that have an
indefinite useful life, for example goodwill, are not subject to
amortisation and are tested annually for impairment. Assets that
are subject to amortisation or depreciation are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units).
Non-financial assets that suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.
1.12 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation.
Property, plant and equipment is depreciated over the estimated
useful life of the asset, as follows:
Freehold land Not depreciated
Freehold buildings 2% per annum straight line
Leasehold improvements Over the period of the lease
Fixtures, fittings and equipment 10% per annum reducing balance
Plant and equipment 20% - 25% per annum straight line
Motor vehicles 20% - 25% per annum straight line
1.13 Leasing
A lease is classified as a finance lease if it transfers
substantially all the risks and rewards of ownership. All other
leases are classified as operating leases. Classification is made
at the inception of the lease.
Assets obtained under finance leases are capitalised as
property, plant and equipment and depreciated over the shorter of
the lease term and their useful lives. Obligations under such
arrangements are included in payables net of the finance charge
allocated to future periods. The finance element of the rental
payment is charged to the statement of comprehensive income so as
to produce constant periodic rates of charge on the net obligations
outstanding in each period.
Rentals paid under operating leases are charged to the statement
of comprehensive income as incurred on a straight line basis over
the lease term.
1.14 Inventories
Inventories are valued at the lower of cost and net realisable
value after making due allowance for obsolete and slow-moving
items. Cost includes direct materials, direct labour and those
overheads that have been incurred in bringing the inventory to its
present location and condition.
1.15 Financial instruments
Financial assets and financial liabilities are recognised in the
consolidated statement of financial position when the Group becomes
a party to the contractual provisions of the instrument.
The financial instruments, which excludes current receivables
and payables, comprise cash or overdrafts and unsecured
non-convertible loan notes. The Directors consider the fair value
not to be materially different to the carrying value for the
financial instruments. During the year under review, the Group did
not enter into derivative transactions and did not undertake
trading in any financial instruments.
1.16 Trade and other receivables
Trade receivables are recognised at fair value less any
provision for impairment. A provision for impairment is made when
collection of the full amount is no longer probable. Bad debts are
written off when identified. The fair value of trade and other
receivables are equivalent to their book values as set out in the
financial information.
1.17 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at
bank and in hand, demand deposits and other short-term highly
liquid investments that is readily convertible to a known amount of
cash and is subject to an insignificant risk of change in
value.
For the purpose of the cash flow statement, cash and cash
equivalents consist of cash and cash equivalents net of outstanding
bank overdrafts.
1.18 Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities.
1.19 Share capital
The Company has one class of ordinary share, which carries no
rights to fixed income. All ordinary shares are entitled to receive
dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company. All shares rank equally
with regard to the Company's residual assets.
Ordinary shares issued by the Company are classified as equity
and recorded at fair value on initial recognition received, net of
direct issue costs.
1.20 Trade and other payables
Trade payables are initially recognised at fair value and
subsequently at amortised cost. The fair value of the trade and
other payables are equivalent to their book values as set out in
the financial information.
1.21 Taxation
The taxation charge represents the sum of current tax and
deferred tax.
The current tax charge is based on the taxable profit/loss for
the period using the tax rates that have been enacted or
substantially enacted by the balance sheet date. Taxable profit
differs from the net profit as reported in the statement of
comprehensive income 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.
Deferred tax is provided using the liability method, in respect
of temporary differences between the carrying amount of the assets
and liabilities and their tax base. Deferred tax is recognised in
the statement of comprehensive income, except when the tax relates
to items charged or credited directly in equity, in which case the
tax is also recognised in equity.
Deferred tax assets are recognised only when it can be regarded
as probable that there will be suitable taxable profits in the
foreseeable future against which the deductible temporary
difference can be utilised. Deferred tax is determined using tax
rates that are expected to apply in the periods in which the asset
is realised or liability settled, based on tax rates and laws that
have been enacted or substantially enacted by the balance sheet
date.
2 Segmental reporting
Segmental information is presented in respect of the Group's
business segments, which are based on the Group's management and
internal reporting structure as at 31 December 2016. The chief
operating decision-maker has been identified as the Board of
Directors (the Board). The Board reviews the Group's internal
reporting in order to assess performance and allocate resources.
Management has determined the operating segments based on these
reports and on the internal report's structure.
Segment performance is evaluated by the Board based on revenue
and profit before tax (PBT). Segment results include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis, such as centrally managed costs relating to
individual segments and costs relating to land used in more than
one individual segment.
Given that income taxes and certain corporate costs are managed
on a centralised basis, these items are not allocated between
operating segments for the purposes of the information presented to
the Board and are accordingly omitted from the analysis below.
The Group comprises the following segments:
Construction
Direct contracting and trade contracting services to both main
contractors and corporate end users.
Fit-out
Providing raised flooring systems to both main contractors and
corporate end users.
Segmental operating performance
2016 2015
------------------ --------------------
Profit Profit
before before
Revenue tax Revenue tax
GBP'000 GBP'000 GBP'000 GBP'000
Construction 4,346 232 5,918 (420)
Fit-out 5,321 307 7,517 467
-------- -------- --------- ---------
9,667 539 13,435 47
Inter-segmental revenue
and unallocated (32) (97) (402) 130
-------- -------- --------- ---------
9,635 442 13,033 177
======== ======== ========= =========
Business segments assets and liabilities
2016 2015
----------------------- ------------------------
Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000
Construction 713 2,599 1,380 3,300
Fit-out 1,223 594 1,838 1,314
-------- -------------
1,936 3,193 3,218 4,614
Goodwill - Construction 2,000 - 2,000 -
Goodwill - Fit-out 4,874 - 4,874 -
Other unallocated assets
& liabilities 315 1,225 - 3,374
-------- ------------- --------- -------------
9,125 4,418 10,092 7,988
======== ============= ========= =============
Unallocated assets consist of deferred tax, trade and other
receivables and cash held by the Parent Company. Unallocated
liabilities consist of trade and other payables and interest
bearing loans owed by the Parent Company.
Other segment information
2016 2015
GBP'000 GBP'000
Depreciation included in segment
results
Construction 5 6
Fit-out 8 8
-------- --------
13 14
======== ========
Revenue by geographical destination
Revenue is attributable to the United Kingdom of GBP9,622,565
(2015 - GBP12,996,264) and other EU of GBP12,414 (2015 - GBP36,775)
markets.
Total assets including property, plant and equipment and
intangible assets are all held in the United Kingdom.
3 Construction contracts
2016 2015
GBP GBP
Contract revenue recognised
in relation to construction
contracts in the year and
retentions 9,634,979 13,033,039
========== ===========
For contracts in progress
at the balance sheet date:
Aggregate cost incurred
to date 3,188,330 8,413,522
Recognised profit to date 903,008 2,375,900
Retentions due 65,429 62,293
========== ===========
Major customers
Total group revenue to four customers all relating to
construction and fit-out, totalled GBP4,996,871 (2015 -
GBP9,111,870) split as follows:
Construction 2016 2015
GBP GBP
Customer 1 1,368,804 1,528,038
Customer 2 - 1,828,443
Customer 3 1,107,377 -
2,476,181 3,356,481
========== ==========
Fit-out 2016 2015
GBP GBP
Customer 1 767,572 1,533,962
Customer 2 1,753,118 4,221,427
2,520,690 5,755,389
========== ==========
4 Cost of sales 2016 2015
GBP GBP
Direct costs 7,787,965 11,155,909
Total cost of sales 7,787,965 11,155,909
========== ===========
5 Other income and expenses
2016 2015
GBP GBP
Finance expenses
Interest on finance leases (783) (913)
Other interest (1,212) (4,160)
Bank interest (25,281) (28,920)
-------------- ---------
Interest paid (27,276) (33,993)
Finance income
Bank interest received - -
Other interest received - 7,215
-------------- ---------
Net finance costs (27,276) (26,778)
============== =========
Administrative expenses include:
2016 2015
GBP GBP
Depreciation of property, plant
and equipment
- owned by the Group 10,794 11,697
- held under finance leases 2,722 2,722
Operating lease rentals - other 47,842 51,675
Auditors remuneration
Fees payable to the company's
auditor for the audits of the
parent company, consolidated
financial statements and the
subsidiaries 38,000 37,000
======= =======
Average number of employees
The average number of employees (including executive Directors)
was:
2016 2015
No. No.
Administration 7 8
Cost of sales 12 17
Management 6 11
----- -----
25 36
===== =====
Wages and salaries
2016 2015
GBP GBP
Wages and salaries 1,138,897 1,722,879
Social security costs 115,063 188,415
Post-employment benefits 44,708 43,424
---------- ----------
1,298,668 1,954,718
========== ==========
Key management personnel compensation
2016 2015
GBP GBP
Short-term employee
benefits 11,707 11,329
Post-employment
benefits 42,000 42,000
------- -------
53,707 53,329
======= =======
Directors' remuneration
2016 2015
Post-employment
Salaries and fees Benefits in kind benefit Total Total
GBP GBP GBP GBP GBP
G Read - - - - -
A Collins 7,956 3,751 42,000 53,707 53,329
P Jay 50,000 - - 50,000 50,000
A Sainsbury 6,000 - - 6,000 12,000
------------------ ----------------- ---------------- -------- --------
63,956 3,751 42,000 109,707 115,329
================== ================= ================ ======== ========
The number of Directors for whom retirement benefits are
accruing under money purchase pension schemes was 1 (2015:1).
6 Income tax expense
2016 2015
GBP GBP
Current tax
UK corporation tax 57,769 -
--------- --------------
Total current tax -
Deferred tax
Deferred tax debit - continuing
operations 51,036 60,728
--------- --------------
Income tax expense 108,805 60,728
========= ==============
Factors affecting tax charge
Profit before income tax
-continuing operations 442,544 177,117
--------- --------------
Profit before income tax
multiplied by effective
rate of UK corporation tax
of 20% (2015: 20.25%) 88,509 35,866
Effects of:
Expenses not deductible
for tax purposes 23,676 35,573
Depreciation for period
in excess of capital allowances 1,699 (2,765)
Tax losses not utilised
and carried forward 830 (8,853)
Other adjustments (56,945) (59,821)
Current tax charge 57,769 -
========= ==============
In July 2015 the UK Government announced its intention to reduce
the standard corporation tax rate to 18% by 2020. The measure to
reduce the rate to 19% for the financial year beginning 1 April
2017 and to 18% for the financial year beginning 1 April 2020 were
substantively enacted on 26 October 2015.
7 Earnings per share
The basic earnings per share is calculated by dividing the
earnings attributable to equity shareholders by the weighted
average number of shares in issue. The diluted earnings per share
is calculated by dividing the earnings attributable to equity
shareholders by the weighted average number of shares in issue plus
the number of warrants and share options.
2016 2015
Basic earnings per
share GBP GBP
Profit for the financial
year 333,739 116,389
Weighted average number
of shares 254,339,045 254,244,454
============ ============
2016 2015
Diluted earnings per
share GBP GBP
Profit for the financial
year 333,739 116,389
Number of shares 254,339,045 254,244,454
============ ============
8 Intangible assets
The carrying amount of goodwill relates to the construction and
fit-out segments of the business.
Goodwill
GBP
Cost
At 1 January 2015 15,816,529
Additions -
-----------------
At 31 December 2015 15,816,529
Additions -
-----------------
At 31 December 2016 15,816,529
-----------------
Amortisation and impairment
At 1 January 2015 8,942,221
Impairment -
-----------------
Balance at 31 December
2016 8,942,221
-----------------
Net book value
At 31 December 2016 6,874,308
=================
At 31 December 2015 6,874,308
=================
The previous accounts included an incorrect figure for cost and
impairment of GBP10,788,521 and GBP3,914,213 respectively, however
the net book value was correct. Cost and impairment have now been
corrected to the figures as shown above.
Impairment of goodwill
Goodwill has been allocated for impairment testing to two groups
of cash - generating units ('CGU') identified according to
operating segments being Construction and Fit-out as disclosed in
Note 2.
For the purposes of impairment testing of goodwill the carrying
value of the CGUs (including goodwill) are compared to the
recoverable amount of the CGUs and any deficits are provided. The
carrying value of the CGUs includes only those assets that can be
attributed directly, or allocated on a reasonable and consistent
basis.
The recoverable amount of a CGU is determined based on
value-in-use calculations. These calculations use pre-tax cash flow
projections based on three year financial budgets approved by
management. Cash flows beyond the three year period are
extrapolated using the estimated growth rates stated below.
The key assumptions used in the value-in-use calculations for
each CGU are as follows:
-- Terminal value based on 2% future growth in cash flows
-- Discount rate of 7.37%
Revenue was based upon actual amounts measured in prior periods
which were projected forward in accordance with expected
trends.
Based on the assumptions above, no impairment of goodwill is
deemed necessary.
9 Property, plant and equipment
Fixtures
Freehold and and Plant
leasehold fittings and equipment Motor vehicles Total
GBP GBP GBP GBP GBP
Cost
At 1 January
2015 183,418 50,072 51,314 63,565 348,369
Additions - 6,483 1,185 - 7,668
At 31 December
2015 183,418 56,555 52,499 63,565 356,037
Additions
- 2,259 - - 2,259
-------------- --------------------------------------- ------------------------- --------------- -----------------------
At 31 December
2016 183,418 58,814 52,499 63,565 358,296
-------------- --------------------------------------- ------------------------- --------------- -----------------------
Depreciation
At 1 January
2015 128,327 45,018 25,185 40,875 239,405
Charge for the
year 1,657 3,303 2,732 6,727 14,419
At 31 December
2015 129,984 48,321 27,917 47,602 253,824
Charge for the
year 1,657 3,628 2,255 5,976 13,516
At 31 December
2016 131,641 51,949 30,172 53,578 267,340
-------------- --------------------------------------- ------------------------- --------------- -----------------------
Net book
value
At 31 December
2016 51,777 6,865 22,327 9,987 90,956
============== ======================================= ========================= =============== =======================
At 31 December
2015 53,434 8,234 24,582 15,963 102,213
============== ======================================= ========================= =============== =======================
The net book value of property, plant and equipment includes an
amount of GBP2,722 (2015: GBP5,444) in respect of assets held under
finance leases.
The net book value of freehold and leasehold property includes
an amount of GBP2,580 (2015: GBP3,636) in respect of leasehold
improvements to a property leased by Connaught Access Flooring
Limited.
10 Inventories
2016 2015
GBP GBP
Materials and finished
goods 88,272 72,835
======= =======
The amount of inventories recognised as expense during the year
was GBP43,887 (2015 - GBP9,464).
11 Trade and other receivables
2016 2015
GBP GBP
Trade receivables 223,866 74,357
Contract retentions 437,881 570,214
Other receivables 52,374 27,357
Prepayments 75,132 33,163
Amounts recoverable on long
term contracts 987,358 1,640,706
Total trade and other receivables 1,776,611 2,345,797
========== ==========
Based on prior experience and an assessment of the current
economic environment, management believes there is no further
credit risk provision required in excess of the normal provision
for impairment of trade receivables.
The average credit period taken on sales is 4 days. No interest
is charged on overdue receivables. There is no material difference
between the fair value of receivables and their book value.
Amounts recoverable on long-term contracts are stated net of
discounts allowed of GBP16,103 (2015: GBP30,213).
The movement in the provision for impairment of trade
receivables is as follows:
2016 2015
GBP GBP
Balance at 1 January 12,000 12,000
Charge/(credit) to the statement
of comprehensive income - -
------- ----------
Balance at 31 December 12,000 12,000
======= ==========
The Group's trade and other receivables that were past due date
but not impaired relate to a number of individual customers for
whom there is no reason to believe that the debt is not
recoverable. The ageing of these trade receivables and contract
retentions is as follows:
2016 2015
GBP GBP
Trade receivables
Three to six months 29,733 9,271
Six to nine months 12,910 -
Nine to twelve months 14,296 11,000
More than twelve months 62,171 24,390
-------- --------
119,110 44,661
======== ========
Contract retentions
Three to six months 19,240 10,109
Six to nine months 6,826 4,874
Nine to twelve months 9,036 6,758
More than twelve months 122,916 126,147
-------- --------
158,018 147,888
======== ========
12 Cash and cash equivalents
2016 2015
GBP GBP
Cash at bank and in
hand - 350,232
==== ========
Cash at bank and in hand earns interest at floating rates based
on daily bank deposit rates.
At the balance sheet date the Group had a bank overdraft
facility of GBP250,000 and a term loan of GBP298,142 with Barclays
Bank Plc, secured by a fixed charge over the book debts and
property of the Group and a floating charge over all other assets
of the Group. The directors have provided limited guarantees.
Please see Note 21 for further details.
For the purpose of the cash flow statement, cash and cash
equivalents comprise the following at 31 December 2016:
2016 2015
GBP GBP
Cash at bank and in
hand - 350,232
Bank overdraft (20,247) (775,220)
--------- ----------
(20,247) (424,988)
========= ==========
13 Share capital
2016 2015
------------------------ ----------------------
Number GBP Number GBP
Allotted, called
up and fully paid
Ordinary shares
of 0.1p each 254,244,454 254,244 254,244,454 254,244
Founder shares
of GBP1 each 2,270,182 2,270,182 - -
---------- --------
2,524,426 254,244
========== ========
2,270,182 Founder shares were issued during the year. The
founder shares are not quoted and do not carry a right to vote or
to receive a dividend. The shares carry the right to receive the
first GBP2.3m of the amount by which the consideration arising on a
sale by shareholders in the group attributable to Connaught Access
Flooring Limited or Mountfield Building Group Limited exceeds
GBP20m.
Share Options
At 31 December 2016, outstanding awards to subscribe for
ordinary shares of 0.10p each in the Company were as follows:
Number Weighted Weighted
average average
remaining exercise
contractual price
life (years) (pence)
Brought forward 21,166,662 1.51 3.00
Granted -
Cancelled (17,166,662)
Lapsed -
Carried forward 4,000,000 1.19 3.00
============= ============== ==========
The fair value of the remaining share options has been
calculated using the Black-Scholes model. The assumptions used in
the calculation of the fair value of the share options outstanding
during the year are as follows:
Grant Date 10 December 1 June
2013 2014
Exercise period December June 2015
2014 - - June
December 2018
2017
Share price
at date of grant 2.7p 2.7p
Exercise price 3.0p 3.0p
Shares under
option 2,000,000 2,000,000
Expected volatility 69% 69%
Expected life
(years) 2.5 2.5
Risk free rate 1.02% 1.02%
Expected dividend
yield 0% 0%
Fair value per
option 0.8p 0.08p
Volatility was determined by reference to the standard deviation
of expected share price returns based on a statistical analysis of
monthly share prices over a 3 year period to grant date. All of the
above options are equity settled and the charge for the year is
GBPNil (2015: GBP2,787).
14 Trade and other payables (current)
2016 2015
GBP GBP
Trade payables 2,199,552 2,679,245
Other payables 79,465 65,678
Corporation tax 57,769 -
Accruals 297,540 393,283
Other taxes and social
security costs 317,883 394,765
---------- ----------
2,952,209 3,532,971
========== ==========
The average credit taken for trade purchases is 119 days. The
directors consider that the carrying amount of trade payables
approximate their fair value.
15 Borrowings
2016 2015
GBP GBP
Current
Bank overdrafts 20,247 775,220
Net obligations under finance
leases 583 4,147
Bank loan 124,459 -
Short-term unsecured loan
from Director 472,873 448,348
Unsecured non-convertible
loan notes 280,000 180,000
-------- ----------
898,162 1,407,715
-------- ----------
Non - current
Unsecured non-convertible
loan notes 393,857 3,047,420
Bank loan 173,683 -
---------- ----------
567,540 3,047,420
---------- ----------
Total borrowings 1,465,702 4,455,135
========== ==========
The loan notes are non-transferrable and carry interest at a
rate of 2 per cent above the base rate of Barclays Bank plc per
annum.
During the year, interest of GBP74,607 on the loan notes was
waived.
The short-term unsecured loan from a Director accrues interest
at 6% pa but all interest to 31 December 2016 was waived.
2016 2015
GBP GBP
Non-current borrowings
Analysis
Repayable between one and
two years 318,315 180,000
Repayable between two and
five years 249,225 2,867,420
567,540 3,047,420
======== ============
2016 2015
GBP GBP
Net obligations under finance
leases
Analysis
Repayable within one year 583 4,147
Repayable between one and
five years - -
583 4,147
Included in current liabilities (583) (4,147)
------ --------
- -
====== ========
16 Deferred taxation
2016 2015
GBP GBP
Deferred tax analysis:
Deferred tax losses (295,268) (346,304)
Deferred tax expense relating
to origination and reversal
of temporary differences - -
(295,268) (346,304)
========== ==========
2016 2015
GBP GBP
Movement in deferred tax
during the year
At 1 January (346,304) (407,032)
Debit for the year 51,036 60,728
---------- ----------
At 31 December (295,268) (346,304)
========== ==========
Deferred income tax assets are recognised for tax losses carried
forward to the extent that the realisation of the tax benefit
through future taxable profits is probable.
17 Capital commitments
There were no capital commitments at the year-end date.
18 Operating lease commitments
Commitments under non-cancellable operating leases in respect of
property leases expiring:
2016 2015
GBP GBP
Less than one year 16,938 4,400
Between two and five years - 36,159
------- -------
16,938 40,559
======= =======
19 Financial instruments
Capital risk management
The Group manages its capital to ensure its ability to continue
as a going concern and to maintain an optimal capital structure to
reduce cost of capital. The capital structure of the Group
comprises equity attributable to equity holders of the Company
consisting of issued ordinary share capital, reserves and retained
earnings as disclosed in Consolidated Statement of Changes in
Equity and cash and cash equivalents as disclosed in Note 12.
The Group maintains or adjusts its capital structure through the
payment of dividends to shareholders, issue of new shares and
buy-back of existing shares.
Categories of financial instruments
2016 2015
GBP GBP
Financial assets
Loans and receivables at
amortised cost including
cash and cash equivalents:
Cash and cash equivalents 469,341 350,232
Trade and other receivables 1,776,611 2,447,938
------------ ------------
Total 2,245,952 2,798,170
------------ ------------
Financial liabilities
Trade and other payables 3,425,082 4,172,379
Unsecured non-convertible
loan notes 673,857 3,227,420
Secured borrowings 318,972 779,367
------------ ------------
4,417,911 8,179,166
------------ ------------
Net (2,171,959) (5,380,996)
============ ============
Cash and cash equivalents
This comprises cash and short-term deposits held by the Group.
The carrying amount of these assets approximates their fair
value.
General risk management principles
The Group's activities expose it to a variety of risks including
market risk (interest rate risk), credit risk and liquidity risk.
The Group manages these risks through an effective risk management
programme and through this programme, the Board seeks to minimise
potential adverse effects on the Group's financial performance. The
Directors have an overall responsibility for the establishment of
the Group's risk management framework. A formal risk assessment and
management framework for assessing, monitoring and managing the
strategic operational and financial risks of the Group is in place
to ensure appropriate risk management of its operations.
The following represent the key financial risks that the Group
faces:
Market risk
The Group's activities expose it primarily to the financial risk
of interest rates.
Interest rate risk
The Group's interest rate exposure arises mainly from its
interest bearing borrowings. Contractual agreements entered into at
floating rates expose the entity to cash flow risk. Interest rate
risk also arises on the Group's cash and cash equivalents. The
Group does not enter into derivative transactions in order to hedge
against its exposure to interest rate fluctuations.
Credit risk
The Group's principal financial assets are trade and other
receivables and bank balances and cash.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by
international credit-rating agencies.
The Group's credit risk is primarily attributable to trade
receivables and amounts recoverable on contracts. The Group has a
policy of assessing credit worthiness of potential and existing
customers before entering into transactions. There is ongoing
credit evaluation on the financial condition of accounts receivable
using independent ratings where available or by assessment of the
customer's credit quality based on its financial position, past
experience and other factors. The Group manages the collection of
its receivables through its post completion project monitoring
procedures and ongoing contact with customers so as to ensure that
any potential issues that could result in non-payment of the
amounts due are addressed as soon as identified.
The maximum exposure to credit risk in respect of the above at
31 December 2016 is the carrying value of financial assets recorded
in the financial statements.
Liquidity risk
The Group closely monitors its access to bank and other credit
facilities in comparison to its outstanding commitments on a
regular basis to ensure that it has sufficient funds to meet the
obligations of the Group as they fall due.
The Board receives regular forecasts which estimate cash flows
over the next eighteen months, so that management can ensure that
sufficient funding is in place as it is required.
Fair value of financial assets and liabilities
The Directors consider that there is no significant difference
between the book value and fair value of the Group's financial
assets and liabilities.
20 Pension costs
The Group operates a defined contribution pension scheme in
respect of the directors and employees. The assets of the scheme
are held separately from those of the company in an independently
administered fund. The pension cost charge represents contributions
payable by the Group to the fund and amounted to GBP44,708 (2015:
GBP43,424).
21 Directors' guarantees
Andrew Collins and Graham Read have given a guarantee limited to
GBP100,000 in respect of the overdraft facility for Connaught
Access Flooring Limited. Andrew Collins, Graham Read and Peter Jay
have given a guarantee limited to GBP800,000 in respect of
Mountfield Group Plc's overdraft facility.
22 Related party transactions
The Company repaid loans of GBP345,000 (2015: GBP24,892 loan
made) to Mountfield Building Group Limited, a subsidiary
undertaking. At 31 December 2016, GBP1,326,316 (2015: GBP1,513,047)
was owed to Mountfield Building Group Limited in respect of these
transactions and expenses of GBP158,269 (2015: GBP132,205) were
paid on behalf of the Company by Mountfield Building Group
Limited.
During the year Connaught Access Flooring Limited, a subsidiary
undertaking, paid expenses of GBP461,432 (2015: GBP556,246) on
behalf of the Company. The Company made sales of GBP200,000 (2015:
GBP331,388) to Connaught Access Flooring Limited. At 31 December
2016, GBP1,209,052 (2015: GBP947,620) was owed to Connaught Access
Flooring Limited.
At 31 December 2016, the Company owed GBP34,750 (2015:
GBP34,200) to MBG Construction Limited.
As at 31 December 2016, balances remaining unpaid on the
unsecured non-convertible loan notes to Graham Read and Andrew
Collins amounted to GBP400,000 (2015: GBP2,730,182) and GBP273,857
(2015: GBP492,238) respectively. Interest for the year has been
waived and interest in respect of prior periods has also been
waived.
During the year, the Group repaid GBPNil to Graham Read (2015:
GBP80,789). The balance outstanding on the short term unsecured
loan at 31 December was GBP472,873 (2015: GBP448,348). Interest is
charged at 6% per annum on this loan but has been waived for
2016.
During the year, Zeme Limited invoiced GBP45,833 (2015:
GBP33,333) for the services of Peter Jay as a director of
Mountfield Group Plc. As at 31 December 2016, GBP46,432 (2015:
GBP61,332) was due to Zeme Limited, a company controlled by Peter
Jay.
During the year, the Group was invoiced GBPNil (2015: GBP1,210)
for accountancy and bookkeeping services by Read & Co, a
Chartered accountancy practice controlled by Graham Read's brother.
As at 31 December 2016 the balance owed by Read & Co was
GBP9,390 (2015: GBP8,028).
During the year ended 31 December 2016 Connaught Access Flooring
Limited made sales of GBP8,842 (2015 - GBP9,173) to and purchases
of GBP4,314 (2015 - GBP4,738) from Corinthian Ceramics Limited, a
company of which Andrew Collins is a director. At 31 December 2016,
GBP1,291 (2015 - GBP2,415) was owed by Corinthian Ceramics Limited
in respect of these transactions.
23 Post Balance Sheet Event
There were no events after the balance sheet date to note.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Company no. 06374598
2016 2015
Note GBP GBP
ASSETS
Non-current assets
Investments 2 6,874,000 6,874,000
------------ -------------
Current assets 5,918 -
Other receivables 3 2,684 -
------------ -------------
Cash and cash equivalents 4 8,602 -
------------ -------------
6,882,602 6,874,000
============ =============
TOTAL ASSETS
EQUITY AND LIABILITIES 2,524,426 254,244
Issued share capital 5 1,490,682 1,490,682
Share premium 68,869 68,869
Share based payments
reserve 7,500 7,500
Capital redemption
reserve 1,579,436 12,951,180
Merger reserve (2,563,070) (13,841,597)
------------ -------------
Retained losses 3,107,843 930,878
------------ -------------
TOTAL EQUITY
Current liabilities 2,802,760 2,692,361
Trade and other payables 6 124,459 9,460
Short-term borrowings 7 280,000 180,000
Loan notes 7 - 13,881
------------ -------------
Income tax 3,207,219 2,895,702
Non-current liabilities 393,857 3,047,420
Loan notes 7 173,683 -
Bank loan 7 3,774,759 5,943,122
------------ -------------
6,882,602 6,874,000
============ =============
TOTAL EQUITY AND LIABILITIES
The financial statements were approved by the board on 7 June 2017. .
Andrew Collins
Director
COMPANY CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2016
Notes 2016 2015
GBP GBP
Cash flows from operating
activities
Operating profit/(loss) (93,217) 69,490
Adjusted for:
Share-based payment charge - 2,787
(Increase)/decrease in
trade and other receivables (5,918) 6,404
Increase in trade and other
payables 6,266 85,813
------------ ------------
Cash generated in operations (92,869) 164,494
Taxation paid (13,881) -
------------ ------------
Net cash (outflow)/inflow
from operating activities (106,750) 164,494
------------ ------------
Cash flows from financing
activities
New term loan 350,000 -
Loan repayments (51,858) -
-Loans received/(repaid)
by subsidiary undertakings 104,131 (3,087)
Repayment of non-convertible
loan notes (283,381) (161,419)
Net cash flows used in
from financing activities 118,892 (164,506)
------------ ------------
Net cash increase/(decrease)
in cash and cash equivalents 12,142 (12)
Cash and cash equivalents
brought forward (9,460) (9,448)
------------ ------------
Cash and cash equivalents
carried forward 4 2,682 (9,460)
============ ============
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2016
Share
based Capital
Share Share payment redempt'n Merger Retained
capital premium reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP GBP
At 1 January
2015 254,244 1,490,682 66,084 7,500 12,951,180 (13,911,088) 858,602
Total
comprehensive
income
for the
year - - - - - 69,491 69,491
Cost of
shares
issued - - 2,785 - - - 2,785
Lapsed
Warrants - - - - - - -
---------------------- ----------------------------- --------------------------- ----------------------- ----------------------- ------------- ----------
At 31
December
2015 254,244 1,490,682 68,869 7,500 12,951,180 (13,841,597) 930,878
Total
comprehensive
income
for the
year - - - - - (93,217) (93,217)
Conversion
of loan
notes 2,270,182 - - - - - 2,270,182
Transfer - - - - (11,371,744) 11,371,744 -
At 31
December
2016 2,524,426 1,490,682 69,869 7,500 1,579,436 (2,563,070) 3,107,843
====================== ============================= =========================== ======================= ======================= ============= ==========
Merger reserve
The merger reserve exists as a result of the acquisitions of
Mountfield Building Group Limited, MBG Construction Limited,
Connaught Access Flooring Holdings Limited and Mountfield Land
Limited where the consideration included the issue of new shares by
the Company, thereby attracting merger relief under the Companies
Act 2006. The merger reserve represents the difference between the
nominal value of the share capital issued by the Company and the
fair value of those shares at the date of acquisition.
A transfer has been made from the merger reserve to retained
earnings to reflect amounts that have become realised through
impairment write downs in previous accounting periods.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2016
1 ACCOUNTING POLICIES
The accounting policies of the Company are shown in the
Consolidated Financial Statements on pages 16 to 21.
1.1 Investment in subsidiaries
Investments in subsidiaries are stated at cost less any
provision for impairment.
2 Investment in subsidiary undertakings
Shares
in subsidiary
undertakings
Cost GBP
At 1 January 2015 19,365,817
Additions -
---------------
At 31 December 2015 19,365,817
Additions
---------------
At 31 December 2016 19,365,817
---------------
Accumulated Impairment
provisions
At 1 January 2015 12,491,817
Impairment provision -
---------------
At 31 December 2015 12,491,817
Impairment provision
---------------
Balance at 31 December
2016 12,491,817
---------------
Net book value
At 31 December 2016 6,874,000
===============
At 31 December 2015 6,874,000
---------------
The following companies are the principal subsidiary
undertakings at 31 December 2016 and are all consolidated:
Percentage
Country of Class of shares
Subsidiary undertakings incorporation of share held
Mountfield Building England and
Group Limited Wales Ordinary 100%
MBG Construction Limited England and
* Wales Ordinary 100%
Connaught Access Flooring England and
Holdings Limited Wales Ordinary 100%
Connaught Access Flooring England and
Limited ** Wales Ordinary 100%
England and
Mountfield Land Limited Wales Ordinary 100%
* Interest held indirectly by Mountfield Building Group
Limited.
** Interest held indirectly by Connaught Access Flooring
Holdings Limited.
The principal activity of these undertakings for the last
relevant financial year was as follows:
Subsidiary undertakings Principal activity
Mountfield Building Refurbishment and fitting
Group Limited out contracting services
Construction and refurbishment
MBG Construction Limited contractors
Connaught Access Flooring
Holdings Limited Intermediate holding company
Connaught Access Flooring
Limited Specialist flooring contractor
Mountfield Land Limited Dormant
The following was an associate of the group at the year end and
its results for the year ended 31 May 2016 are shown below.
Percentage
Country Class of shares
Associates of incorporation of share held
England
Hub (UK) Limited and Wales Ordinary 20%
The principal activity of Hub (UK) Limited is general
construction consultant and contractor.
Associates
Aggregate Loss
of capitalised for the
reserves Year
GBP GBP
Hub (UK) Limited (145,230) (2,963)
================ =========
3 Trade and other receivables
2016 2015
GBP GBP
Prepayments 5,918 -
====== =====
4 Cash and cash equivalents
2016 2015
GBP GBP
Cash at bank 2,684 -
====== ==================
For the purpose of the cash flow statement, cash and cash
equivalents comprise the following at 31 December 2016:
2016 2015
GBP GBP
Bank overdraft - (9,460)
========
5 Share capital
2016 2015
------------------------ ---------------------------
Number GBP Number GBP
Allotted, called up and fully paid
Ordinary shares of 0.1p each 254,244,454 254,244 254,244,454 254,244
Founder shares of GBP1 each 2,270,182 2,270,182 - -
---------- -------------
2,524,426 254,244
========== =============
Details of changes in share capital are included at note 13 to
the Consolidated Financial Statements.
6 Trade and other payables
2016 2015
GBP GBP
Trade payables 227,676 185,969
Amounts owed to subsidiary
undertakings 2,570,118 2,465,987
Accruals 18,509 34,668
Other tax and social
security costs (13,543) 5,736
---------- ----------
2,802,760 2,692,360
========== ==========
7 Borrowings
2016 2015
GBP GBP
Current liabilities
Bank loans and overdraft 124,459 9,460
Unsecured non-convertible
loan notes 280,000 180,000
---------- ------------
404,459 189,460
---------- ------------
Non-current liabilities
Unsecured non-convertible
loan notes 393,857 3,047,420
Bank loans 173,683 -
---------- ------------
567,540 3,047,420
---------- ------------
971,999 3,236,880
========== ============
Details of the loan notes are included at Note 15 to the
Consolidated Financial Statements.
8 Capital Commitments
There were no capital commitments at the year end.
9 Contingent liabilities
Under the terms of the Group's banking facilities, the Company
has provided a cross guarantee to the Group's bankers. At the year
end, the net balance due to the Group's bankers in respect of the
guarantee was GBP20,247 (2015: net balance in Group's bank accounts
was GBP424,988).
10 Key management personnel compensation
Key management personnel expenses are disclosed in Note 5 to the
Consolidated Financial Statements.
11 Directors' guarantees
Directors' benefits - advances, credits and guarantees are
disclosed at Note 21 to the Consolidated Financial Statements.
12 Related party disclosures
Related party disclosures are detailed at Note 22 to the
Consolidated Financial Statements.
13 Financial instruments
Details of key risks are included at Note 19 to the Consolidated
Financial Statements.
Categories of financial instruments
2016 2015
GBP GBP
Financial assets
Cash and cash equivalents 2,684 -
Loans and receivables at amortised cost - -
2,684 -
------------ ------------
Financial liabilities
Trade and other payables 2,802,760 2,692,360
Secured borrowings 298,142 9,460
Unsecured non-convertible loan notes 673,857 3,227,420
------------ ------------
3,774,759 5,929,240
------------ ------------
(3,772,075) (5,929,240)
============ ============
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DDLFBDQFFBBB
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