26th Sep 2006 07:00
International Nuclear Solutions PLC26 September 2006 International Nuclear Solutions plc Interim Results for the six months ended 30 June 2006 International Nuclear Solutions plc (INS) is one of the largest nuclearengineering companies in the UK and is involved in waste and nuclear materialshandling, processing and storage, and support in clean-up and decommissioningprogrammes. INS also provides support for plant asset care and maintenance ofredundant facilities and the commercial operating of facilities associated withfuel fabrication and spent fuel reprocessing activities at Sellafield. 6 months ended 6 months ended 12 months ended 30/6/06 30/6/05 31/12/05 £'000 £'000 £'000 Turnover 12,577 14,087 24,610 Operating Profit* 1,021 1,113 2,237 Profit before taxation 192 1,123 2,252Adjusted Earnings per share* 1.39p 1.56p 3.13pOperating Cash Inflow/(Outflow) 3,458 (274) 260Net cash 822 1,884 414 * Before exceptional item relating to costs of the demerger from RoboticTechnology Systems PLC and admission to AIM KEY POINTS • Order book increased from £9.2m at the beginning of the year to £11.4m in June and has increased further subsequently. • 11% rise in staff numbers to meet significant increase in activity in the UK Nuclear Industry. • New project office opened at Birchwood in Warrington • Successful completion of prestigious project for British Nuclear Group delivered early and under budget • Order intake and quotation activity provides an excellent basis for optimism for the remainder of this year and 2007. Chris Brown, Chairman of INS, said today: "Having successfully listed on AIM in May, the company has continued to grow itsorder book substantially and this will underpin the Group's activity for theremainder of this year and the start of 2007. We believe the outlook for theindustry is very positive and that we are well placed to continue to grow. 26 September 2006 Enquiries International Nuclear Solutions plc Tel: 0161 777 2043Chris Brown, ChairmanTony Moore, Chief Executive,Geoff Mellor, Finance Director College Hill Tel: 020 7457 2020Alex WaltersMatthew Smallwood International Nuclear Solutions plc Interim results for the six months ended 30 June 2006 Chairman's Statement Overview International Nuclear Solutions plc ("INS") successfully completed its demergerfrom Robotic Technology Systems PLC ("RTS") and the admission of its shares toAIM on 31st May 2006. In the six months to 30 June 2006, turnover was £12.6m (2005: £14.1m), in linewith our expectations at the time of the proposed admission of the Company'sshares on AIM. The order book at the end of June was £11.4m (2005: £6.7m) andthis has been increased further by significant orders since June (£15m for themonths of July and August), underpinning the remainder of 2006 and the start of2007. Orders have been received from Carillion, as previously announced, andalso from Edmund Nuttall for major 'new build' projects on the Sellafield site. There was strong operating cash flow in the period of £3.5m as compared to anoutflow of £0.3m in the comparable period of 2005. Profitability was in line with expectations and the comparable period for 2005with operating profit before exceptional item at 8.1% of turnover. Exceptionalcharges of £0.8m relate to the cost of the demerger and flotation of theCompany. There has been an increase in activity in the nuclear industry and INS staffinglevels increased by 11% in the first half of the year. This increase wasachieved in spite of significant pressure on staff recruitment and retention asa result of the buoyant demand for engineers and technicians not only in thenuclear sector but in the process, oil and gas and infrastructure sectors. Operational Review The order book increased from £9.2m at the beginning of the year to £11.4m atthe end of June and has been further increased as a result of the orders in Julyand August. The order book at the end of June 2006 was a record and an increaseof 70% on the comparable period for 2005 (June 2005: £6.7m). To cope with the 11% increase in staff numbers, a new project office has beenopened at Birchwood in Warrington near to our main customer's office whichprovides increased office capacity for the anticipated upturn in work load andalso enables us to offer local support to this customer on integrated projects.We have also relocated our Sellafield office to the West Lakes Science Park atSellafield which also allows for further expansion. This site is the premieroffice complex for companies operating on the Sellafield site and both theNuclear Decommissioning Authority ("NDA") and British Nuclear Group are locatedon the Science Park. INS has recently completed a significant project for British Nuclear Group whichwas critical to the continued operation of the Magnox reprocessing facility atSellafield. The project required a wide range of skills from the development ofthe engineering solution through to delivery of the system and the subsequentoperation of the system on the plant. INS was able to demonstrate its 'fulllifecycle' capability on this project with great success; the project wasdelivered early, under budget and with no safety incidents. Safety is the number one priority for the nuclear industry and INS has beenawarded two RoSPA Awards (Royal Society for the Prevention of Accidents), thefirst is a gold award for Occupational Safety and the second, a silver award, isfor the management of road risk. These awards demonstrate our continued highlevel commitment to safety. Financial Review Turnover for the six months to 30 June 2006 was £12.6m (2005: £14.1m). Activityhas steadily increased during the period, reflecting the improvement in theorder book which started in the last quarter of 2005 and has since gatheredmomentum. This is in contrast to last year which was impacted by the structuralchanges in the industry as a result of the NDA taking office, resulting in aslowdown in activity in the second and third quarters of last year. Operating profit before exceptional item of £1.0m has increased slightlyrelative to turnover from 7.9% to 8.1% despite the fact that the period to June2006 includes one month of central costs whereas the comparable figure for 2005excludes central costs. The exceptional cost of £0.8m represents the cost ofdemerger and admission to AIM. The basic earnings per share of 0.05p include demerger and flotation costs. Theadjusted basic earnings per share before demerger and flotation costs are 1.39p. The business has achieved excellent operational cash flow of £3.5m in the periodand a closing net cash balance of £0.8m. This was after a £2m demerger dividendand capital investment of £1m. As noted in the AIM Admission document, the Directors do not intend to paydividends in the near term but will instead seek to retain earnings in order tofinance growth. Subsequently however, the Board will examine the optionsavailable to it, including the payments of dividends, with a view to maximisingshareholder returns from excess cash generated by the business. Outlook Order intake and quotation activity continue to provide an excellent basis foroptimism both for the remainder of this year and for 2007. The order book is atrecord levels following further wins after the period end, in particular theconfirmation of the Carillion contract for an aggregate £15m, and INS iscontinuing to develop relationships with other major companies in the nuclearindustry. There is some cost pressure, notably on salaries for engineers, and capacityconstraints arising from the buoyant market place. However, INS has successfullymaintained margins and increased resource during the period. Recruitment is expected to continue for the remainder of the year in line withrising activity levels. Although there are a number of major political decisions that could affect thissector, the outlook is positive and there is increasing activity in the market. Chris Brown, Chairman 26 September 2006 Group Profit and Loss Account for the six months ended 30 June 2006 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) Notes £'000 £'000 £'000 Turnover 2 12,577 14,087 24,610 Cost of sales (10,126) (11,631) (19,823) Gross profit 2,451 2,456 4,787 Distribution costs and administrative expenses (1,430) (1,343) (2,550) Operating profit before exceptional item 1,021 1,113 2,237 Exceptional administrative expenses 3 (836) - - Operating profit on ordinary activities beforeinterest and taxation 185 1,113 2,237 Interest receivable and similar income 8 10 16Interest payable and similar expenses (1) - (1) 7 10 15 Profit on ordinary activities before taxation 192 1,123 2,252 Taxation on profit on ordinary activities 4 (159) (151) (303) Profit on ordinary activities after taxation 33 972 1,949 Basic earnings per share 5 0.05p 1.56p 3.13p Group Statement of Total Recognised Gains and Losses There were no recognised gains and losses in the period, or in the prior periodsshown, other than the results shown above. Group Balance Sheet at 30 June 2006 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) Notes £'000 £'000 £'000Fixed AssetsTangibles 1,078 78 66 Current assetsDebtors: amounts falling due within one year 7,386 7,451 10,872Cash at bank and in hand 822 1,884 414 8,208 9,335 11,286 Creditors: amounts falling due within one year (8,734) (5,909) (8,871) Net current (liabilities)/assets (526) 3,426 2,415 Net assets 552 3,504 2,481 Equity shareholders' funds 6 552 3,504 2,481 Group Cash Flow Statement for the six months ended 30 June 2006 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) Notes £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 7 3,458 (274) 260 Returns on investments and servicing of finance 8 7 10 15 Capital expenditure and financial investment 8 (1,093) (3) (12) Dividend paid 6 (1,964) - (2,000) Increase/(decrease) in cash in the period 408 (267) (1,737) Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in the period 408 (267) (1,737) Movement in net funds resulting from cashflows in theperiod 408 (267) (1,737) Opening net funds 414 2,151 2,151 Closing net funds 822 1,884 414 Notes to the financial information 1. Basis of preparation The transfer of RTS Innovation Limited on 30 May 2006 to International NuclearSolutions plc has been accounted for in accordance with the principles of mergeraccounting as set out in Financial Reporting Standard 6 "Acquisitions andMergers". The financial statements are therefore presented as if RTS InnovationLimited had been owned and controlled by International Nuclear Solutions plc forthe six months ended 30 June 2006. Comparatives have been prepared as if the continuing operations of InternationalNuclear Solutions plc were in existence for the whole of 2005. However, whilstthe profit and loss account and balance sheet of RTS Innovation Limited wereaudited at and for the year ended 31 December 2005, the respective consolidatedpro-forma profit and loss account, cash flow statement and balance sheet havenot been audited. The financial information set out in this report does not constitute statutoryaccounts as defined by the Companies Act 1985. This is the first initialstatutory accounting period for International Nuclear Solutions plc,consequently there are no statutory accounts available in respect of priorperiods. This interim report has been prepared using accounting policies that areconsistent with those set out in the Admission Document of the Company dated 5May 2006. 2. Turnover The turnover for the group is derived in the UK. 3. Exceptional item The profit on ordinary activities before taxation is stated after charging thefollowing exceptional item: 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Costs in connection with demerger from RTS and admission to AIM 836 - - 4. Taxation The taxation charge for the period ended 30 June 2006 is significantly higherthan the standard rate of UK corporation tax due to the demerger from RTS andthe tax treatment of certain costs in respect of the subsequent flotation of theCompany. 5. Earnings per share Earnings per ordinary share has been calculated using the weighted averagenumber of shares in issue during the relevant period. The calculation of basicearnings per share for the six months ended 30 June 2006 is based upon a profitafter tax of £33,000 (30 June 2005: £972,000; 31 December 2005: £1,949,000). Theweighted average number of shares used in the calculation of earnings per sharefor the current and comparative periods is 62,335,374. 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) Pence Pence Pence Basic earnings per share 0.05 1.56 3.13Adjusted basic earnings per share (see below) 1.39 1.56 3.13 There is no difference between basic and fully diluted earnings per share. Earnings per share before the exceptional item has been calculated using theadjusted profit after tax as follows: 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Profit after tax 33 972 1,949Exceptional item in administrative expenses (note 3) 836 - -Adjusted profit after tax 869 972 1,949 6. Reconciliation of movements in equity shareholders' funds 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Profit for the financial period 33 972 1,949Dividend paid (1,964) - (2,000)Movement on other reserves relating to share options 2 - -Net (reduction)/addition to shareholders' funds (1,929) 972 (51) Opening shareholders' funds 2,481 2,532 2,532Closing shareholders' funds 552 3,504 2,481 7. Reconciliation of operating profit to net cash inflow/(outflow) from operating activities 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Operating profit 185 1,113 2,237Depreciation 81 31 52Share option charge 2 - -Decrease in debtors 3,493 404 2,682Decrease in creditors (303) (1,822) (4,711)Net cash inflow/(outflow) from operating activities 3,458 (274) 260 8. Notes to the Cash Flow Statement 6 months 6 months 12 months ended ended ended 30/06/06 30/06/05 31/12/05 (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Return on investments and servicing of financeInterest received 8 10 16Interest paid (1) - (1) 7 10 15 Capital expenditure and financial investmentPayments to acquire tangible fixed assets (1,093) (3) (12) (1,093) (3) (12) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
INS.L