7th Jun 2016 10:34
LONDON (Alliance News) - Construction company Mountfield Group PLC on Tuesday said it swung to profit in 2015, after having transformed its building group arm business during the year, and said it will be holding a vote over whether to convert its outstanding loan notes to new "founder shares" in anticipation of a proposed swap of loan notes for equity.
Shares in Mountfield were up 20% at 1.65 pence on Tuesday, having hit a high of 1.85p earlier in the day.
Mountfield posted pretax profit of GBP177,177 for the year ended December 31, compared with the GBP3.9 million loss it reported a year earlier, after it incurred no impairment in 2015, compared to the GBP3.9 million impairment of goodwill in 2014.
Mountfield is engaged in two main types of business: Mountfield Building Group Ltd (MBG), which had been a specialist in the installation of data centres; and Connaught Access Flooring Ltd (CAF), which installs flooring to commercial offices and data centre installations.
A year earlier, Mountfield had incurred the large goodwill impairment due to "the overall poor performance of MBG when viewed over the last four years", following which Mountfield said it would review the business.
Since then, Mountfield said it has transformed MBG into a construction company with a "substantially reduced cost structure and a business strategy that limited its choice of contracts to those where consistent margins are paired with low risk". Mountfield said, following this restructuring, MBG is now trading profitably.
The company said MBG has "excellent prospects", having so far in 2016 secured works totalling GBP3.0 million and become involved in negotiations on a number of other works including those for its long-standing client base.
During the year, group revenue rose to GBP13.0 million, from GBP11.8 million a year earlier, of which GBP7.5 million came from its CAF company. Mountfield said the contract won by CAF to install new flooring at the City of London HQ is "likely on completion to have produced revenue of GBP4.0 million in 2015".
The CAF business "continued to perform extremely well and further strengthened its position among the small number of companies able to compete for the largest commercial flooring contracts," Mountfield said.
The company said the outlook for CAF looked "strong" for 2016 and 2017, and based on the volume of high-quality tenders for large commercial flooring contracts combined with expected developments into the supply and installation of new products, the prospects for CAF "look increasingly bright" for a number of years.
Elsewhere, Mountfield said it will propose a resolution at its annual general meeting on June 29 to give the company and the directors authority to convert the loan notes in the company into "founder shares" of GBP1.00 each, in anticipation of a proposed swap of the loan notes for equity.
The loan notes, which have a face value of around GBP3.0 million, were issued in October 2008 to current Chief Executive Andy Collins and former Chief Executive and Executive Director Graham Read, Mountfield said.
In 2015, Mountfield said it intended to cancel the loan notes, but on Tuesday said it has since taken advice from specialist advisors and is satisfied the conversion to founder shares will not have an adverse effect on shareholders.
The founder shares will not be quoted on any exchange and will not carry a right to vote or to receive a dividend, Mountfield said, but will carry the right to receive a payment on a sale of Mountfield or on the disposal of substantially all of Mountfield's assets and businesses, where the aggregate consideration exceeds GBP20.0 million. At this point, the founder shareholders will receive the first GBP2.3 million of the consideration.
Both Collins and Read will vote in favour of the proposal. Together the pair hold a 45.55% stake in Mountfield.
By Hannah Boland; [email protected]; @Hannaheboland
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