Financial Review

Turnover and Operating Profit
Turnover for the half year increased by 9% to £100m (2005: £92m).  The Regional companies contributed £58m to turnover (58%) compared with £43m (47%) in 2005.

 
Group operating profit improved by 13% to £4.1m (2005: £3.6m) and the margin improved slightly from 3.96% to 4.09%.  The group administrative costs increased by £1.8m but this included an unusually high bad debt experience (£0.34m 2005: £0.14m) and one off staff costs that will result in lower costs in the future.

 
Profit Before Tax
Profit before tax of £4.0m for the half year was 10% better than at the same period last year (£3.6m) and included a net finance charge of £69,000 (2005: net investment income £26,000).

 
Profit After Tax
Profit after tax was £2.70m (2005: £2.45m) reflecting a tax charge of £1.33m (2005: £1.20m) giving an effective tax rate of 33% (2005 33%).

 
Earnings Per Share and Dividends
Earnings per share went from 6.14p to 6.76p an increase of 10%.  The interim dividend will be 3.675% up 5% on last year (2005: 3.5p).

 
Cash Flow
The net cash absorbed by operating activities was £0.5m compared with a net cash generation of £2.3m in 2005.  After the final dividend payment of £2.8m (2005: £2.7m), no expenditure on acquisitions (2005: £4.7m) net capital expenditure of £0.3m (2005: £0.3m) and payments for tax and finance costs there was a net decrease of cash and cash equivalents of £2.8m (2005: £5.6m).  The increased difficulty in collecting debtor monies particularly in the regions which resulted in an increase of net debtors and work in progress of £4.54m (2005: £2.16m) was a major influence on the group cash performance.  However, the indications are still that this position will improve strongly during the remainder of the year.

 
Pension Obligations
The movement in the discount rate in recent months has been a significant factor in the actuarial gain in the defined benefit pension scheme of £1.9m, net £1.3m after deferred tax (2005: £0.033m loss and £0.024m loss).  This improvement is reflected in the net assets on the balance sheet.