2nd Sep 2008 07:00
Newcourt Group plc 2008 First Half Results Ticker: NEW.I Newcourt Group plc ("Newcourt", the "Group" or the "Company"), a leading Irishsupport and outsourced service group, with businesses in the security,recruitment, student accommodation and other related sectors, today announcesits results for the six months ended 30 June 2008. \* T Six months ended Six months ended 30 June 2008 Change 30 June 2007 EUR '000 % EUR '000 Unaudited Unaudited Revenue 88,152 +34% 65,780 Gross profit 14,630 -1.4% 14,835 Trading profit 7,225 -5% 7,610 Adjusted EBITDA* 6,960 -7.9% 7,557 cents centsAdjusted diluted earnings per share* 4.88 -15% 5.74\* T * adjusted for share option and warrant costs, the amortisation of intangibleassets and non-trading costs 2008 First Half Performance -- First half revenue increased by EUR 22.4m (34%) on the same period in 2007. The most significant growth was in the support services sector which increased by 51% from EUR 41.3 to EUR 62.3m -- Trading profit, analysis, for the first half: \* T 2008 2007 % change Support Services 3,001 2,813 7%Student Accommodation 2,679 2,953 -9%Recruitment 1,557 1,571 -Aviation Outsourcing (12) 273 -104% --------- ------- 7,225 7,610 ========= =======\* T Foreign exchange impact - The weakening of sterling against the euro hasnegatively impacted the profit for the 6 months to June 2008 by circa EUR 220k(accounting for a 3% reduction in EBITDA) compared to the same period in 2007. Support Services - Despite revenue growth of 51%, significant margin pressureimpacted trading profit growth. Several large security contracts were retenderedin the period. The majority of these contracts were retained, but at a reducedmargin. In the current economic climate the performance of the support servicesdivision has to be seen as extremely satisfactory. Student Accommodation - Trading profits are 9% less compared to the first halfof 2007 due to timing differences. Profits in student accommodation are largelytransaction led and are, therefore, dependent on the timing of the closing oftransactions. Recruitment - Despite the challenging market our Recruitment business hasequalled its performance for the first half of 2007. We are very pleased withthis performance in the current environment. Aviation Outsourcing - The decrease in the performance of this business in 2008is attributable to investment in our U.K. Aviation Outsourcing operation. -- Exceptional items - As required, the board have reviewed the carrying values of the assets included in Inventories against their estimated net realisable values. Following this review, there has been no impairment to the values of student accommodation assets. However, Valuers are concerned that, owing to the changing economic conditions, there may be an impairment to the carrying value of the Group's healthcare site, the Aldborough Clinic. While the Company is currently exploring a number of options in relation to this development, we believe it prudent to recognise that there may be some reduction in the value of this asset in the prevailing market conditions and have provided accordingly. Newcourt | Contacts \* TTed O'Neill / Damien Murray Mark Kenny/Jonathan NeilanNewcourt Group K Capital Source Mobile: +353 86 8214467 / +353 86 1730417 Tel: +353 1 631 5500Email: [email protected] Email: [email protected] [email protected] -----------------------------------------------------------------------------------------------------\* T Special Note regarding forward-looking statements The announcement includes forward-looking statements, including statementsconcerning expectations about future financial performance, economic and marketconditions, etc. These statements are neither promises nor guarantees, but aresubject to risks and uncertainties that could cause actual results to differmaterially from those anticipated. Performance Review and Outlook We are pleased to report a steady trading performance for the first six monthsof 2008 despite the difficult economic conditions prevalent in the Irisheconomy. Results Revenue in the period was EUR 88m, an increase of 34% over the same period lastyear. EBITDA of EUR 6.96m compares with EBITDA of EUR 7.55m in the six months to June2007, representing a 7.9% decline year-on-year. The decline in profitability isattributable to a number of factors including: -- Margin erosion in the man-guarding security sector; -- The timing of transactions in the student accommodation business; -- Investment in the U.K. Aviation business; and -- The weakening of sterling versus the euro which has negatively impacted the profit for the 6 months to June 2008 by circa EUR 220k (accounting for a 3% reduction in EBITDA) compared to the same period in 2007. Personnel During the period John Barry retired as a Director, having served on the boardsince November 2005. We would like to thank John for his very valuablecontribution during his time as a member of the Board. Outlook Given the unprecedented economic uncertainty in Ireland and the U.K., it remainsdifficult, at this stage, to accurately predict the full year outcome. However,Newcourt continues to perform satisfactorily across all business divisionsagainst this backdrop of weak economic conditions. \* TGroup Income Statementfor the 6 month period ended 30 June 2008 6 months ended 30 June 2008 6 months ended 30 June 2007 Before Amortisation Before Amortisation amortisation and amortisation and and other other and other other costs costs Total costs costs Total EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 Unaudited Unaudited Revenue 88,152 - 88,152 65,780 - 65,780 Cost of sales (73,522) - (73,522) (50,945) - (50,945) ------------ ------------ -------- ------------ ------------ --------Gross profit 14,630 - 14,630 14,835 14,835 Administration expenses (7,405) - (7,405) (7,225) - (7,225) ------------ ------------ -------- ------------ ------------ -------- Trading profit 7,225 - 7,225 7,610 - 7,610 Non-trading costs / exceptional items - (2,462) (2,462) - (190) (190)Share options and warrants - (85) (85) - (150) (150)Group overhead - (961) (961) - (736) (736)Amortisation of intangible assets - (760) (760) - (452) (452) ------------ ------------ -------- ------------ ------------ -------- Operating profit 7,225 (4,268) 2,957 7,610 (1,528) 6,082 Finance costs (1,287) (890)Finance income 91 50 -------- -------- (1,196) (840) Profit before tax 1,761 5,242 Income tax expense (532) (876) -------- -------- Profit after tax for the period 1,229 4,366 -------- -------- Attributable to:Equity holders of the Company 1,229 4,366Minority interest - - -------- -------- 1,229 4,366 -------- -------- All activities were in respect of continuing operations. Basic earnings per share 1.32 5.01 -------- --------Diluted earnings per share 1.32 4.86 -------- --------Adjusted basic earnings per share 4.89 5.92 -------- --------Adjusted diluted earnings per share 4.88 5.74 -------- --------\* T \* TGroup Balance Sheetat 30 June 2008 30 June 31 December 30 June 2008 2007 2007 EUR '000 EUR '000 EUR '000 Unaudited Audited UnauditedAssetsNon current assetsProperty, plant and equipment 5,759 6,070 5,347Goodwill 77,105 71,554 68,803Intangible assets 4,321 4,653 3,459Investment property 18,171 864 800 --------- ----------- ---------Total non-current assets 105,356 83,141 78,409 --------- ----------- ---------Current assetsInventories 34,503 27,575 18,491Trade and other receivables 41,158 39,866 29,080Cash and cash equivalents 9,020 10,772 12,338 --------- ----------- ---------Total current assets 84,681 78,213 59,909 --------- ----------- ---------Total assets 190,037 161,354 138,318 --------- ----------- ---------EquityShare capital 23,191 23,191 22,508Share premium 33,053 33,053 31,859Share options / warrants reserve 370 285 360Foreign exchange reserve (580) (457) (96)Retained earnings 16,378 15,140 11,194 --------- ----------- ---------Total equity 72,412 71,212 65,825 --------- ----------- --------- LiabilitiesNon current liabilitiesInterest bearing liabilities 57,904 18,721 17,755Trade and other payables 3,304 2,516 2,558Deferred tax liabilities 576 584 491Deferred consideration on acquisitions 2,977 3,007 2,618 --------- ----------- ---------Total non-current liabilities 64,761 24,828 23,422 --------- ----------- ---------Current liabilitiesInterest bearing liabilities 20,519 25,192 17,487Trade and other payables 28,401 34,751 26,768Corporation tax payable 421 384 317Deferred consideration on acquisitions 3,523 4,987 4,499 --------- ----------- ---------Total current liabilities 52,864 65,314 49,071 --------- ----------- ---------Total liabilities 117,625 90,142 72,493 --------- ----------- ---------Total equity and liabilities 190,037 161,354 138,318 --------- ----------- ---------\* T \* TGroup Cash Flow Statementfor the period ended 30 June 2008 6 months ended 6 months ended 30 June 2008 30 June 2007 EUR 000 EUR 000 Unaudited UnauditedCash flows from operating activitiesProfit for the financial year 1,229 4,366Adjustments for:Depreciation 695 683Amortisation of intangible assets 760 452Share options and warrants 85 150Profit on sale of property, plant and equipment - (6)Finance income (91) (50)Finance cost 1,287 890Income tax expense 532 876 -------------- -------------- 4,497 7,361Movement in inventories (1,531) (1,194)Movement in trade and other receivables (2,078) 571Movement in trade and other payables (9,898) 1,634 -------------- --------------Cash generated from operations (9,010) 8,372Interest paid (1,287) (868)Interest element of finance lease payments - (22)Income tax paid (495) (573) -------------- --------------Net cash flows from operating activities (10,792) 6,909 -------------- --------------Cash flows from investing activitiesInterest received 91 50Proceeds from sale of property, plant and equipment - 59Acquisition of subsidiary, net of cash acquired (5,114) (1,860)Payments in respect of deferred consideration (1,494) (3,687)Acquisition of property, plant and equipment (385) (590)Payments in respect of assets under construction - (38)Acquisition of investment property (7,915) - -------------- --------------Net cash used in investing activities (14,817) (6,066) -------------- --------------Cash flows from financing activitiesProceeds from issue of share capital - -Drawdown of loans 20,983 4,372Drawdown of finance leases 68 (22) -------------- --------------Net cash flows from (used in) financing activities 21,051 4,350 -------------- --------------Net increase (decrease) in cash and cash equivalents (4,558 ) 5,193Cash and cash equivalents at beginning of period 2,931 3,536 -------------- --------------Cash and cash equivalents at end of period* (1,627) 8,729 ============== ==============\* T *Cash and cash equivalents per the cashflow is the net of cash at bank,overdrafts and invoice discounting facilities \* TGroup Statement of Recognised Income and Expensefor the period ended 30 June 2008 6 months ended 6 months ended 30 June 30 June 2008 2007 EUR '000 EUR '000 Items of income / (expense) recognised directly within equity: Foreign currency translation differences for foreign operations (252) - Group profit for the period 1,229 4,366 -------------- -------------- Total recognised income and expense for the period 977 4,366 ============== ============== Attributable to:Equity holders of the Company 977 4,366Minority interest - - -------------- -------------- Total recognised income and expense for the period 977 4,366 ============== ==============\* T Notes to the Interim Results for the period ended 30 June 2008 1. International Financial Reporting Standards Basis of Preparation The consolidated interim financial information of the Group has been prepared inaccordance with the recognition and measurement principles of InternationalFinancial Reporting Standards (IFRS), including interpretations issued by theInternational Accounting Standards Board (IASB) and its committees and endorsedby the European Commission. The Group's first consolidated financial statementsprepared in accordance with IFRS were prepared for the year ended 31 December2007. The figures for the half year ended 30 June 2008 are unaudited. The comparativefigures for the half year ended 30 June 2007 are also unaudited. The amounts forthe year ended 31 December 2007 represent an audited abbreviated version of theGroup's statutory financial statements under IFRS, as adopted by the EU. Thesestatutory financial statements were audited and the auditor issued anunqualified report thereon. The preparation of financial information in conformity with IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis of making judgementsabout the carrying values of assets and liabilities that are not readilyapparent from other sources. 2. Segmental reporting \* T 6 months ended 6 months ended 30 June 30 June 2008 2007 EUR '000 EUR '000 Revenue by segmentSupport services 62,369 41,325Student accommodation 6,964 6,915Recruitment and aviation outsourcing 18,819 17,540 -------------- -------------- 88,152 65,780 ============== ============== Trading profit by segmentSupport services 3,001 2,813Student accommodation 2,679 2,953Recruitment and aviation outsourcing 1,545 1,844 -------------- -------------- 7,225 7,610 -------------- -------------- Intangible amortisation & other costs (4,268) (1,528) -------------- --------------Operating profit from continuing operations 2,957 6,082 ============== ==============\* T 3. Exceptional item As required, the board has reviewed the carrying value of inventories againstnet realisable value. Following this review, there has been no impairment ofstudent accommodation assets. However, Valuers are concerned that, owing to thechanging economic conditions there may be an impairment to the carrying value ofthe Group's healthcare site, the Aldborough Clinic. One of the assets held by Ely Property [Plc] when it was acquired by Newcourtwas a 25% interest in the Aldborough Clinic. The remaining 75% of this site thatthe group did not already own was purchased in June 2007 at a market value ofEUR 12m. This was funded by way of a share issue (2,778,615 shares at EUR 1.61)and the Group took over EUR 6m of debt secured on the asset. While management are currently exploring a number of options in relation to thisdevelopment, we believe it prudent at this time to write the value of this assetdown by EUR 2m to recognise the impact of the downturn in the Irish propertymarket over recent months. 4. Earnings per Share and Adjusted Earnings per Share \* T 6 months ended 6 months ended 30 June 30 June 2008 2007 EUR '000 EUR '000 Earnings as reported 1,229 4,366Adjustment for once off non-trading costs 2,462 190Adjustment for share options and warrants 85 150Adjustment for intangible asset amortisation 760 452 -------------- --------------Earnings Adjustment 4,536 5,158 ============== ============== Weighted average number of shares 92,763,087 87,122,473 Dilutive potential shares:Employee warrants to purchase shares - 1,207,216Employee share option 122,013 1,506,698 Diluted weighted average number of shares 92,885,100 89,836,387\* T 4. Earnings per Share and Adjusted Earnings per Share (contd) \* T 6 months ended 6 months ended 30 June 30 June 2008 2007 cent centBasic earnings per share Basic earnings per share 1.32 5.01 Adjusted basic earnings per share 4.89* 5.92 Diluted earnings per share Diluted earnings per share 1.32 4.86 Adjusted diluted earnings per share 4.88* 5.74\* T The basic earnings per share figure is calculated by dividing the profitattributable to equity shareholders of the company by the weighted averagenumber of shares in issue during the period, excluding share options andwarrants. The diluted earnings per share figure is calculated by adjusting for theweighted average number of shares outstanding assuming the issue of all dilutiveordinary shares. Options and warrants granted under Employee Share OptionSchemes dilute the earnings per share by increasing the weighted average numberof shares without changing the net profit. * adjusted to exclude share options and warrant costs, amortisation ofintangible asset, and non trading costs. 5. Analysis of net debt \* T 6 months ended Year ended 6 months ended 30 June 2008 31 December 2007 30 June 2007 EUR '000 EUR '000 EUR '000 Non-current assets:Cash and cash equivalents - - - -------------- ----------------- -------------- Current assets:Cash and cash equivalents 9,020 10,772 12,338 -------------- ----------------- -------------- Non-current liabilities:Borrowings and lease liabilities* (57,904)* (18,721) (17,755) -------------- ----------------- -------------- (57,904) (18,721) (17,755) -------------- ----------------- --------------Current liabilitiesBorrowings and lease liabilities* (20,519) (25,192) (17,487) -------------- ----------------- -------------- (20,519) (25,192) (17,487) -------------- ----------------- -------------- Net debt (69,403) (33,141) (22,904) ============== ================= ==============\* T * includes an amount of EUR 36,824k (June 2007:EUR 10,430k) specificallyrelating to student accommodation and healthcare developments. 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