REG - Clarke(T.) PLC - Final Results <Origin Href="QuoteRef">CTO.L</Origin> <Origin Href="QuoteRef">JLIF.L</Origin> <Origin Href="QuoteRef">MIX.L</Origin> - Part 2
24/03/2015 07:01
- Part 2: For the preceding part double click ID:nRSX2445Ia
been allocated where there has been no impairment
or reversal of impairment of the related CGU. Furthermore, the amendments
introduce additional disclosure requirements applicable to when the
recoverable amount of an asset or CGU is measured at fair value less costs of
disposal. These new disclosures include the fair value hierarchy, key
assumptions and valuation techniques used which are in line with the
disclosure required by IFRS 13 'Fair Value Measurements'. The application of
these amendments has had no material impact on the disclosures in the group's
consolidated financial statements.
· Amendments to IAS 32 'Offsetting Financial Assets and Liabilities'.
The group has applied the amendments to IAS 32' Offsetting Financial Assets
and Liabilities' for the first time in the current financial year. The
amendments to IAS 32 clarify the requirements relating to the offsetting of
financial assets and financial liabilities. Specifically the amendments
clarify the meaning of 'currently has a legally enforceable right of set-off'
and 'simultaneous realisation and settlement'. The amendments have been
applied retrospectively. The group has assessed whether certain of its
financial assets and financial liabilities qualify for offset based on the
criteria set out in the amendments and have concluded that the application of
the amendments has had no impact on the amounts recognised in the group's
consolidated financial statements.
Note 2 - Significant judgements and sources of estimation uncertainty
In the application of the group's accounting policies the directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities at the reporting date and the amounts of
revenue and expenses incurred during the period that may not be readily
apparent from other sources. The estimates and associated assumptions are
based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The estimates and assumptions that have the most significant impact are set
out below.
Revenue and margin
The recognition of revenue and profit on construction contracts is a key
source of estimation uncertainty due to the difficulty of forecasting the
final costs to be incurred on a contract in progress and the process whereby
applications are made during the course of the contract with variations, which
can be significant, often being agreed as part of the final account
negotiation. The directors also take into account the recoverability of
contract balances and trade receivables and allowances are made for those
balances which are considered to be impaired.
Non-underlying items
Non-underlying items are items of financial performance which the group
believes should be separately identified on the face of the income statement
to assist in understanding the underlying financial performance achieved by
the group. The quantification, disclosure and presentation in the financial
statements of the non-underlying items requires judgement.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value
in use of the cash generating unit giving rise to the goodwill, including the
estimation of the timing and amount of future cash flows generated by the cash
generating unit and a suitable discount rate.
Retirement benefit obligations
The costs, assets and liabilities of the defined benefit scheme operated by
the group are determined using methods relying on actuarial estimates and
assumptions, which are largely dependent on factors outside the control of the
group. Details of the key assumptions are set out in note 7 below, and include
the discount rate, expected return on assets, rate of inflation and mortality
rates. The group takes advice from independent actuaries relating to the
appropriateness of the assumptions. Changes in the assumptions used may have a
significant effect on the income statement, statement of comprehensive income
and the statement of financial position.
Note 3 - Segmental information
The group provides electrical and mechanical contracting and related services
to the construction industry and end users.
For management and internal reporting purposes the group is organised
geographically into three regional divisions; the South, the North and
Scotland, and an internal property division reporting to the Chief Executive,
who is the chief operating decision maker. The measurement basis used to
assess the performance of the divisions is underlying profit from operations,
stated before amortisation of intangible assets and non-recurring costs.
Non-recurring items for each segment are disclosed below.
All assets and liabilities of the group have been allocated to segments apart
from the retirement benefit obligation, and tax assets and liabilities.
All transactions between segments are undertaken on normal commercial terms.
All the group's operations are carried out within the United Kingdom, and
there is no significant difference between revenue based on the location of
assets and revenue based on location of customers.
Segment information about the group's continuing operations is presented
below:
Year ended 31st December 2014 South£m North£m Scotland£m Property£m Unallocated& Elimination£m Total£m
Total revenue 167.8 43.4 18.3 - - 229.5
Inter segment revenue (0.2) - (1.8) - - (2.0)
Revenue from external operations 167.6 43.4 16.5 - - 227.5
Underlying (loss) / profit from operations (1.1) 1.6 0.6 0.3 - 1.4
Amortisation of intangibles - (0.2) - - - (0.2)
Non-recurring costs:
Exceptional subcontractor claim costs (see below) (1.1) - (0.1) - - (1.2)
(Loss) / profit from operations (2.2) 1.4 0.5 0.3 - -
Finance income 0.1 0.1 - - (0.1) 0.1
Finance costs (0.9) - - - 0.1 (0.8)
(Loss) / profit before tax (3.0) 1.5 0.5 0.3 - (0.7)
Taxation expense 0.1
(Loss) / profit for the year from continuing operations (0.6)
Assets 70.4 22.7 7.9 4.1 (1.9) 103.2
Liabilities (57.8) (11.2) (4.1) (0.9) (10.3) (84.3)
Net assets 12.6 11.5 3.8 3.2 (12.2) 18.9
Year ended 31st December 2013 South£m North£m Scotland£m Property£m Unallocated& Elimination£m Total£m
Total revenue 172.6 37.9 13.6 - - 224.1
Inter segment revenue (0.4) (6.5) (0.1) - - (7.0)
Revenue from external operations 172.2 31.4 13.5 - - 217.1
Underlying profit from operations 1.0 1.8 0.2 0.2 - 3.2
Amortisation of intangibles - (0.3) - - - (0.3)
Non-recurring costs:
Exceptional subcontractor claim costs (see below) (0.5) - (0.1) - - (0.6)
Profit from operations 0.5 1.5 0.1 0.2 - 2.3
Finance income - 0.1 - - (0.1) -
Finance costs (0.7) - - - 0.1 (0.6)
(Loss) / profit before tax (0.2) 1.6 0.1 0.2 - 1.7
Taxation expense (0.6)
Profit for the year from continuing operations 1.1
Assets 60.2 19.0 8.2 4.2 (3.1) 88.5
Liabilities (43.1) (8.9) (4.4) (1.3) (6.1) (63.8)
Net assets 17.1 10.1 3.8 2.9 (9.2) 24.7
Non-recurring costs
A subsidiary company was one of a number of parties that were subject to a
substantial damages claim in respect of work carried out in 2007 before it was
acquired by the group. Damages were awarded against the company, which were
settled by the company's insurers. However, following an unsuccessful appeal
the apportionment of costs exceeded the insurance cover in place. The company
entered into constructive dialogue with the other parties to the claim, which
resulted in a negotiated settlement. The total cost to the group, including
costs, was £0.7m.
In 2013 the company settled a sub-contractor claim against the group for work
carried out in previous years, resulting in a cost to the group of £0.5m.
Further costs amounting to £0.4 m have been incurred during 2014 in seeking to
reach a settlement of costs and interest in respect of this claim, and a
potential counter claim by the company against the subcontractor. Proceedings
are ongoing in this matter, however the directors do not believe there will be
any significant additional costs to the group.
A subcontractor has over a period of time brought a number of adjudication
claims against a subsidiary in respect of a single contract. The company has
been successful so far in defending these claims, but has incurred costs of
£0.1m (2013: £0.1m) in doing so.
Note 4 - Taxation
2014£m 2013£m
Current tax expense
UK corporation tax payable on profits for the year (0.1) 0.6
Adjustment for under / (over) provision in prior years - 0.1
(0.1) 0.7
Deferred tax expense
Arising on: Origination and reversal of temporary differences - (0.1)
Effect of change in tax rate - -
- (0.1)
Total income tax expense (0.1) 0.6
Reconciliation of tax charge
Profit for the year (0.7) 1.7
Tax at standard UK tax rate of 21.5% (2012: 23.25%) (0.1) 0.4
Permanently disallowable items - 0.1
Adjustment for over provision in prior years - 0.1
Taxation expense (0.1) 0.6
Note 5 - (Loss) / earnings per share
A. Basic (loss) / earnings per share
Basic (loss) / earnings per share is calculated by dividing the profit
attributable to owners of the company by the weighted average number of
ordinary shares in issue during the year.
Earnings: 2014£m 2013£m
(Loss) / profit attributable to owners of the company (0.6) 1.1
Weighted average number of ordinary shares (000s) 41,402 41,402
B. Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The company has three categories of dilutive
potential ordinary shares: share options granted under the Savings Related
Share Option Scheme and conditional share awards and options granted under the
Equity Incentive Plan.
For the share options, a calculation is done to determine the number of shares
that could have been acquired at fair value (determined as the average annual
market share price of the company's shares) based on the monetary value of the
subscription rights attached to outstanding share options. The number of
shares calculated as above is compared with the number of shares that would
have been issued assuming the exercise of the share options.
The potential ordinary shares are considered to be non-dilutive for the year
ended 31st December 2014 as the group incurred a loss.
(Loss) / Earnings: 2014£m 2013£m
(Loss) / profit attributable to owners of the company (0.6) 1.1
Weighted average number of ordinary shares (000s) 41,402 41,402
Adjustments:
Savings Related Share Option Schemes (000s) 535
Equity Incentive Plan
- Conditional share awards (000s) 833
- Options (000s) 41
Weighted average number of ordinary shares for diluted earnings per share (000s) 42,811
C. Underlying earnings per share
Underlying earnings per share represents profit for the year from continuing
operations adjusted for amortisation of intangible assets and non-recurring
items and the tax effect of these items, divided by the weighted average
number of shares in issue. Underlying earnings is the basis on which the
performance of the operating divisions of the business is measured.
Underlying earnings per share 2014£m 2013£m
(Loss) / profit from continuing operations attributable to owners of the company (0.6) 1.1
Amortisation of intangible assets 0.2 0.3
Exceptional subcontractor claim costs 1.2 0.6
Tax effect of adjustments (0.3) (0.2)
Underlying profit from continuing operations 0.5 1.8
Weighted average number of ordinary shares (000s) 41,402 41,402
Adjustments:
Savings Related Share Option Schemes (000s) 825 535
Equity Incentive Plan
- Conditional share awards (000s) 968 833
- Options (000s) 71 41
Weighted average number of ordinary shares for diluted earnings per share (000s) 43,266 42,811
Underlying earnings per share 1.06p 4.14p
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