RNS Number : 6532F
Castle Support Services PLC
13 October 2008
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Monday, 13 October 2008
Castle Support Services Plc
("Castle" or the "Company")
Final Results for the year ended 30 June 2008
Strong Performance benefiting from DMTS's Global Experience and Expertise
Highlights: 12 months 10 months
2008 2007
* Revenue �116m �87m
* Operating profit* �15.4m �10.6m
* Profit before tax �18.5m �17.6m
* Significant cash generation of �11.9m in the period
* Strong balance sheet; net cash available for potential expansion and investments
* Strategic acquisition in the Middle East completed in January 2008 and producing encouraging results
* pre-pension settlement and profit on disposal
These results clearly demonstrate:
* the strong market position held by DMTS and its experience and expertise established over many years in the UK, USA and
Australasia; and
* the considerable demand for our services in the key international sectors of energy generation, oil, gas, petrochemicals,
resources, and shipping as well as the wider industrial base.
"The group continues to experience encouraging levels of activity. We are well placed to benefit from increasing demand for inspection,
maintenance, and repair services for generators, motors and ancillary equipment and the ever increasing demand for energy and energy
efficiency. We therefore expect to make further progress during the course of this year."
Christopher Mills, Non-executive Chairman
FULL PRESS RELEASE ATTACHED
Enquiries:
Castle Support Services plc
Christopher Mills, Non-executive Chairman +44 (0) 207 747 5601
Tudor Davies, Director +44 (0) 121 766 6161
Tim Barrett, Finance Director +44 (0) 121 766 6161
www.castlesupportservices.com
Ticker: AIM: CSU.L
Citigate Dewe Rogerson
Fiona Tooley +44 (0) 121 455 8370
Keith Gabriel +44 (0) 7785 703523 (FMT)
Strand Partners Limited
Matthew Chandler +44 (0) 207 409 3494
-2-
Castle Support Services Plc
STATEMENT BY THE CHAIRMAN, CHRISTOPHER MILLS
Introduction
I am pleased to report on the results for the year ended 30 June 2008 which include the first full year's trading for DM Technical
Services Limited ("DMTS") acquired on 19 June 2007.
The overall result is an excellent performance when compared with the pro-forma annualised 2007 results based on the ten-month period to
30 June 2007.
Revenue for the year is up by approximately 11% to �116.3m, whilst operating profit (before pension settlement and profit on disposals)
significantly improved by approximately 21% to �15.4m; profit before tax was �18.5m, and profit after tax and minority interest �12.7m
resulting in earnings per share of 10.04p.
These results clearly demonstrate the strong market position held by DMTS and its experience and expertise established over many years
in the UK, USA and Australasia which enables us to provide specialist inspection, repair and maintenance services for generators, motors and
ancillary rotating equipment.
The results are also a reflection of the considerable demand for our services in the key international sectors of energy generation,
oil, gas, petrochemicals, resources, and shipping as well as the wider industrial base. There are further opportunities for expansion and
growth both within and beyond our existing geographic operations.
In January 2008, we completed a strategic move into the Middle East region through the acquisition of a 50% shareholding in Intersel FZE
("Intersel") based in Dubai. In the short period of ownership to date we have been very encouraged by an improvement in its results and the
opportunities to transplant our specialist expertise into this important region.
Results
The group has adopted International Financial Reporting Standards ("IFRS") for the financial year ended 30 June 2008 in accordance with
the timeframe for all AIM quoted companies. The group previously applied United Kingdom Generally Accepted Accounting Practice ("UK GAAP").
A document titled "Transition to International Financial Reporting Standards" which explains the impact of the adoption of IFRS on the
group's results is available to download on the company's website (www.castlesupportservices.com) or on request from the company's head
office.
The results for the year ended 30 June 2008 show revenue of �116.3m, operating profit before profit on disposal of �15.4m, profit before
tax of �18.5m, and profit after tax and minority interest of �12.7m, resulting in earnings per share of 10.04p.
The minority interest of �0.2m relates to 50%, being the shares not owned by the group, of the post-acquisition profits of Intersel
acquired on 2 January 2008 for a total consideration, including acquisition costs, of �1.9m. The post-acquisition revenue and profits of
Intersel of �2.8m and �0.8m respectively on an annualised basis represent a significant improvement of over 53% in revenue and 78% in
profits when compared with the pre-acquisition results.
continued*
-3-
Group borrowings of �10.7m (net of cash balances of �12.9m) have reduced by �13.4m during the period. The group also has unutilised debt
facilities of circa �6m which, together with cash balances, represents circa �19m available for potential investment and expansion
opportunities.
We have made good progress in unlocking the inherent value in the Castle pension scheme. The assets and liabilities of DMTS's pension
scheme were transferred into Castle's pension scheme on 20 August 2007, and following the enhancement of the pensions of the members of the
John Holt Scheme there was approximately �15m available for the DMTS section. In common with all defined benefit schemes the pension
scheme's surplus has reduced during the course of the year with the fluctuations in equity markets, and the scheme's surplus on an IAS 19
basis as at 30 June 2008 was �7.3m(30 June 2007: �14.7m).
Strategy
When we acquired DMTS on 19 June 2007 we reported that our strategy was to grow the business to create value for shareholders; both
organically, by marketing more proactively existing and new services to its key target sectors/customers, and through complementary
acquisitions. This strategy envisaged the development of business in the Middle East and Far East as well as in each of the three Continents
where DMTS already has facilities, namely Europe, Australasia, and North America.
Since then, we have made good progress through the increase in profitability from existing facilities and also our first steps in our
plans for overseas expansion with the Dubai acquisition. Intersel provides us with facilities, an experienced workforce and a platform from
which to leverage the group's skills and experience plus benefit from the growth in the Middle East region.
As a market leader in a very fragmented marketplace with very few competitors with the scale or range of expertise of DMTS, there is
considerable scope for expansion and consolidation. In my interim report (dated 27 March 2008), I explained that the board had decided that
the opportunities were such that it should explore all available avenues to accelerate the considerable opportunities for growth, and that a
strategic review would include, but not be limited, to the possibility of alliances, joint ventures, mergers and acquisitions which could
also result in an offer being made by a third party for the company. This review is not yet complete and whilst it has confirmed the
opportunities for growth, the board has yet to consider how we could best accelerate the leverage of our considerable expertise into a range
of industrial sectors and geographic locations, both organically and by acquisition, for the benefit of the business, the employees and
shareholders.
Outlook
The group continues to experience encouraging levels of activity. We are well placed to benefit from increasing demand for inspection,
maintenance, and repair services for generators, motors and ancillary equipment and the ever increasing demand for energy and energy
efficiency. We therefore expect to make further progress during the course of this year and I look forward to updating shareholders in due
course.
Christopher Mills
Non-executive Chairman
10 October 2008
-4-
Consolidated Income Statement
for the year ended 30 June 2008
12 months 10 months
to 30 to 30
June 2008 June 2007
�'000 �'000
Revenue 116,270 87,173
Cost of sales (83,717) (62,764)
Gross profit 32,553 24,409
Selling and distribution costs (4,471) (3,536)
Administration expenses (12,704) (10,266)
Operating profit before pension settlement and profit 15,378 10,607
on
disposal
Gain on pension settlement - 3,488
Profit on disposal of property, plant and equipment 454 5,610
Operating profit 15,832 19,705
Net interest payable on bank overdrafts and loans (1,948) (949)
Net interest receivable on bank balances 453 739
Interest payable in respect of cumulative preference - (2,263)
shares of
subsidiary
Net gain realised from waiver of interest due on - 1,213
cumulative
preference shares
Interest rate swaps 787 (2,187)
Other finance income 3,371 1,346
Profit before tax 18,495 17,604
Income tax expense (5,643) (3,511)
Profit for the period 12,852 14,093
Profit attributable to minority interests 202 -
Profit attributable to equity shareholders 12,650 14,093
12,852 14,093
Earnings per share (EPS) - basic and diluted - pence 10.04 11.90
There are no discontinued operations.
-5-
Consolidated Balance Sheet
As at 30 June 2008
30 June 2008 30 June 2007
�'000 �'000
Assets
Non-current assets
Goodwill 17,032 15,110
Other intangible assets 67 90
Property, plant and equipment 24,604 23,430
Retirement benefit assets 7,306 14,650
Total non-current assets 49,009 53,280
Current assets
Inventories 10,333 8,610
Trade and other receivables 22,657 20,071
Cash and cash equivalents 12,886 5,387
Total current assets 45,876 34,068
Non-current assets held for sale - 1,862
Total assets 94,885 89,210
Liabilities
Current liabilities
Trade and other payables (7,651) (6,049)
Short-term liabilities (12,783) (9,485)
Tax liabilities (2,040) (852)
Bank loans and short term borrowings (1,612) (5,333)
Total current liabilities (24,086) (21,719)
Non-current liabilities
Long-term borrowings (21,770) (23,195)
Derivative financial instruments (175) (962)
Long-term provisions (4,280) (2,921)
Deferred tax liabilities (2,483) (4,364)
Total non-current liabilities (28,708) (31,442)
Total liabilities (52,794) (53,161)
Net assets 42,091 36,049
Shareholders' equity
Share capital 25,212 25,212
Reverse acquisition reserve (13,057) (13,057)
Foreign currency translation reserve 2,117 243
Other reserves (50) -
Profit and loss account 27,404 23,651
Equity shareholders' funds 41,626 36,049
Minority interests - equity 465 -
Total equity 42,091 36,049
-6-
Consolidated Statement of Recognised Income and Expense
for the year ended 30 June 2008
12 months 10 months
to 30 to 30
June 2008 June 2007
�'000 �'000
Retained profit for the period 12,852 14,093
Income/(expense) recognised directly in equity :
Currency translation differences arising in the period 1,874 243
Actuarial (loss)/gain on retirement benefit plan (12,345) 12,265
Taxation on actuarial (loss)/gain on retirement benefit 3,456 (3,434)
plan
Change in deferred tax rate from 30% to 28% - (319)
Total recognised income and expense for the period 5,837 22,848
Attributable to minority interests 202 -
Attributable to equity shareholders 5,635 22,848
5,837 22,848
-7-
Consolidated Cash Flow Statement
for the year ended 30 June 2008
12 months 10 months
to 30 to 30
June 2008 June 2007
�'000 �'000
Profit before tax 18,495 17,604
Adjustments for:
Depreciation, impairment, and amortisation 2,579 1,974
Profit on sale of property, plant and equipment (454) (5,149)
Actuarial gain on pension settlement - (5,405)
Interest payable on bank overdrafts and loans 1,948 949
Interest receivable on bank balances (453) (739)
Interest payable in respect of cumulative preference - 2,263
shares of
subsidiary
Net gain realised from waiver of interest due on - (1,213)
cumulative
preference shares
Interest rate swaps (787) 2,187
Other finance income (3,371) (1,346)
Increase in inventories (1,133) (1,396)
(Increase) / decrease in trade and other receivables (1,783) 1,243
Increase / (decrease) in trade and other payables 3,327 (1,013)
Increase / (decrease) in long term provisions 1,334 (198)
Contributions to pension schemes in excess of service (1,630) (1,437)
cost
Cash generated from operations 18,072 8,324
Interest paid (1,948) (949)
Income taxes paid (2,977) (934)
Net cash generated from operating activities 13,147 6,441
Cash flows from investing activities
Acquisition of businesses (1,826) (1,865)
Net (debt)/cash and (debt)/cash equivalents acquired (8) 1,050
with
businesses
Acquisition of preference shares in subsidiary - (29,700)
Purchase of property, plant and equipment (2,213) (1,574)
Sale of property, plant and equipment 2,386 14,808
Interest received 453 739
Dividends paid to minority interests (8) -
Net cash used in investing activities (1,216) (16,542)
Cash flows from financing activities
Buy-back of shares (50) -
New borrowings - 25,000
Repayments of amounts borrowed (1,500) (21,969)
Net cash (used in)/generated from financing activities (1,550) 3,031
Increase/(decrease) in cash and cash equivalents 10,381 (7,070)
Cash and cash equivalents at beginning of period 1,644 8,567
Translation differences 839 147
Cash and cash equivalents at end of period 12,864 1,644
-8-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2008
1. Financial Statements
The consolidated financial statements are for the twelve months ended 30 June 2008. They have been prepared in accordance with the
requirements of IFRS 1 "First-time Adoption of International Financial Reporting Standards".
They have been prepared under the historical cost convention, except for the revaluation of certain financial instruments, and in
accordance with the group's accounting policies which are based on the recognition and measurement principles of all IFRS and International
Financial Reporting Interpretations Committee interpretations ('IFRICs') issued, effective and adopted for use in the European Union at the
date of preparing this report. These IFRS and IFRICs are subject to ongoing review and possible amendment.
Castle Support Services plc's consolidated financial statements were prepared in accordance with United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice) until 30 June 2007. The date of transition to IFRS was 1 September 2006. The
comparative figures in respect of 30 June 2007 and the transition date balance sheet at 31 August 2006 have been restated to reflect changes
in accounting policies as a result of the adoption of IFRS.
2. Earnings Per Share
Basic earnings per share is calculated by dividing the retained profit attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the period.
12 months to 10 months to
30 June 2008 30 June 2007
�'000 �'000
Profit for the period 12,650 14,093
Weighted average number of ordinary shares in 126,031,043 118,465,774
issue
Basic and diluted earnings per share (EPS) - 10.04 11.90
pence
The weighted average number of ordinary shares in issue exclude treasury shares acquired during the year ended 30 June 2008.
There are no dilutive share arrangements in place.
continued*
-9-
3. Reconciliation of movement in net debt
12 months 10 months
to 30 to 30
June 2008 June 2007
�'000 �'000
Increase / (decrease) in cash and cash equivalents 10,381 (7,070)
Debt related cash flows from financing activities 1,500 (3,031)
Amortisation of facility fee (75) -
Translation differences 839 362
Movement in interest rate swaps 787 (2,187)
Preference shares eliminated on consolidation - 27,000
13,432 15,074
Net debt at beginning of period (24,103) (39,177)
Net debt at end of period (10,671) (24,103)
4. Availability of Report & Accounts
The Report & Accounts will be posted to all shareholders of the company shortly, and will be available to download on the Company's
website (www.castlesupportservices.com).
The Report & Accounts will also be available for inspection by the public at the registered office of the company during normal business
hours on any weekday. Further copies will be available on request from Castle Support Services plc, Camp Hill, Birmingham, B12 0JJ.
The financial information set out above does not constitute statutory accounts as defined in Section 240 of the UK Companies Act 1985.
The consolidated balance sheet at 30 June 2008, the consolidated income statement, the consolidated statement of recognised income and
expense, and the consolidated cash flow statement and associated notes for the year then ended have been extracted from the group's
statutory accounts for the year to 30 June 2008.
The statutory accounts for the period ended 30 June 2007 and the year ended 30 June 2008 received audit reports which were unqualified
and did not contain statements under Section 237(2) or Section 237(3) of the Companies Act 1985. The statutory accounts for the period ended
30 June 2007 have been delivered to the Registrar of Companies. The statutory accounts for the period ended 30 June 2008 were approved by
the Directors on 10 October 2008, but have not yet been delivered to the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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