Key Features
· Group moves back into profit
· Connaught has another strong year
· MBG shows the benefits of the overhaul of its business.
· Both businesses looking strong for 2016.
§ Turnover: £13.033m (2014: £11.802m)
§ Operating profit: £203,895 (2014: £74,385)
§ EBITDA: £218,314 (2014: £89,557)
§ PBT: £177,117 (2014: PBT (Excluding impairment) £50,244)
§ Earnings per share: 0.046p (2014: (1.53p))
2015 was a year of major positive change for Mountfield Group Plc LON:MOGP. Connaught Access Flooring Limited (“CAF”) 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. The significantly rationalised Mountfield Building Group Limited (including its subsidiary MBG Construction Limited) (“MBG”) showed that it is on a sustainable and profitable path to recovery in 2016 and onwards.
The Group’s operating profit was increased from £74,385 in 2014 to £203,895 in 2015 with CAF continuing to be the principal driver of the Group’s revenue and profits (with a PBT of £467,428 against £240,885 in 2014) and continues to be a leader in its field.
MBG’s transformation, which followed the extensive rationalisation that was completed in April 2015, 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. It is now trading profitably and has excellent prospects and it was only the effect of two legacy contracts that were taken on in 2013 and 2014 under the previous strategy that prevented it from recording a profit in 2015. Excluding these two legacy contracts MBG would have produced an operating profit of £400,285 in 2015.
So far in 2016 MBG and secured works totaling £3m and is involved in negotiations on a number of other works including those for its long standing client base.
The Group’s highlight was clearly CAF’s contract to supply and install 70,000 m2 of flooring at a new City of London HQ. The contract has proceeded well and is likely on completion to have produced revenue of £4m in 2015, with an additional £1.5m expected in 2016. In addition the Company has complimented the larger contracts by further developing its special works division, which produces strong margins. Combined with its core business CAF produced a turnover of £7.5m in 2015.
Outlook
The outlook for CAF continues to be strong into 2016/17 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 associated with CAF’s core activities, the Board believes that the prospects for CAF are increasingly bright for a number of years.
Due to the significant progress made by the Group Companies in 2015 and to date the Board is satisfied that both will perform strongly during the remainder of 2016 and in 2017. CAF is already involved in negotiations of large scale flooring contracts and MBG is trading profitably since the restructuring of its business.
AGM Resolutions – Loan Notes
At the AGM it is proposed that resolutions that provide for the conversion of outstanding Loan Notes (originally issued in October 2008 to Andy Collins and Graham Read) into Founder Shares. These Founder Shares will not be quoted on any exchange or carry a right to vote or to receive a dividend. The shares will carry the right to receive, collectively the first £2.3m of the amount by which the consideration arising on a sale by shareholders in Group attributable to CAF and/or MBG exceeds £20m.
