Preliminary Results
Capita Group PLC
26 February 2004
26 February 2004
THE CAPITA GROUP PLC
Preliminary results for the year ended 31 December 2003
Financial Highlights
Year ended Year ended Change
31 December 2003 31 December 2002
Turnover £1,081m £898m +20%
Profit before tax* £121.2m £98.3m +23%
Earnings per share* 13.04p 10.47p +25%
Total dividend per share 4.0p 3.0p +33%
* Before amortising goodwill
Operating Highlights
• Strong operating cash flow of £158m (2002: £117m), representing operating
profit to cash conversion rate of 120%
• Post-tax return on average capital employed (including debt) over last 12
months of 14.6% (2002: 13.2%)
• Margins increased to 12.2%
• Capita ranked as the leading BPO company in the UK, with 24% market share of
the total value of contracts let
• £615m of major new contracts won in 2003 across public and private sectors
• Current live bid pipeline of £2.7bn
• 'Company of the year' - Royal Bank of Scotland/The Sunday Times Business
Awards 2003
• Strong start to 2004 - £125m contract signed 16 February to administer miners'
personal injury liability claims on behalf of the DTI
Rod Aldridge, Executive Chairman of The Capita Group Plc, commented:
'Capita continues to deliver strong growth in turnover, profits and cash flow
and is well positioned to maintain this performance. The Group occupies a
leading position in markets which are highly active, with high barriers to
entry, and which support long term growth. We already have significant visibility
of revenues and profits for 2004 and prospects for further growth remain excellent.'
For further information:
The Capita Group Plc Tel 020 7799 1525
Rod Aldridge, Executive Chairman Press Office 0870 2400 488
Paul Pindar, Chief Executive
Shona Nichols, Group Marketing Director
Finsbury Tel 020 7251 3801
Morgan Bone
Mark Harris
THE CAPITA GROUP PLC
Preliminary results for the year ended 31 December 2003
Chairman's Statement
Results
2003 has been a good year for Capita. We have strengthened our position as the
UK's market leader in providing business process outsourcing (BPO) services to
the public and private sectors and we have returned record results for the 15th
consecutive year as a public company.
In the year ending 31 December 2003, turnover increased by 20% to £1,081m
(2002: £898m), operating profits before goodwill amortisation rose by 22% to
£131.4m (2002: £107.3m), and net profits before taxation increased by 23% to
£121.2m (2002: £98.3m). Earnings per share before amortisation of goodwill grew
by 25% to 13.04p (2002: 10.47p). Operating cash flow remains strong, rising by
35% to £158m, and we have increased dividends by 33%.
Capita's strategy is to focus on its three core stakeholders: building value for
shareholders, delivering service excellence for customers and supporting and
creating opportunities for our employees.
1. Building value for shareholders
We believe that the UK BPO market will continue to develop in a structured and
orderly way over the coming years. Industry analysts are predicting 12% to 15%
compound growth until at least 2007. Capita's vision is to develop our competitive
advantage, building growth - both organically and through selective acquisition
- with the objective of achieving double digit compound growth in revenue and
profit over the next 5 years. In building and strengthening the platform to
deliver sustainable value for shareholders, we have a number of key measures of
our progress.
First, we are focused on achieving margins of 12% or above on both existing and
new business. This objective has again been met in 2003 with Group operating
margins increasing to 12.2% (2002: 12%). This is a reflection of internal
economies of scale, the continuous re-engineering of the cost of service delivery
and the Group's ability to add value on behalf of its customers.
Secondly, there is a strong focus on cash generation. The underlying financial
strength of the business is reflected by our excellent cash flow, with £158m
generated by operations in the year, representing an operating profit to cash
conversion rate of 120% (2002: 109%). Free cash flow increased from £25m in 2002
to £83m in 2003.
Thirdly, when allocating capital for investment, we seek to contain capital
expenditure to a level which is commensurate with the growth in the business.
Our target is to maintain the Group's capital expenditure at or below 4% of annual
revenue, although there may be rare occasions when we exceed this where the
financial strength of Capita can be used as a competitive advantage. In 2003,
we achieved this objective, with capital expenditure being 3.4% of annual revenue.
Fourthly, we will continue with the strategy of periodically acquiring small to
medium sized businesses which complement or extend our current service offering.
We focus on enhancing our competitive position within our core competencies and
providing platforms for further growth, both within single service lines and the
broader multi-service outsourcing contracts. We will be very selective, only
making acquisitions at a price that adds value to Capita's shareholders and that
is consistent with the objective of achieving an increasing return on capital
for the Group.
Fifthly, we intend to create shareholder value through a progressive dividend
policy. The Board is recommending a final dividend of 2.7p per ordinary share,
making a total of 4p (2002: 3p) for the year. This represents a 33% increase on
dividends paid in respect of the 2002 financial year. The total dividend for the
year is covered 3.3 times by the earnings per ordinary share before amortisation
of goodwill. The final dividend will be paid on 5 May 2004 to shareholders on
the register at the close of business on 2 April 2004. Capita's cash flow is
robust and predictable and it is therefore our intention to reduce dividend cover
to no more than 3 times within the next three years.
Sixthly, there may be circumstances when market conditions allow us to add
further value for shareholders through share buybacks, thus ensuring that we
have an efficient capital structure which will minimise our long term cost of
capital. During 2003, the Group bought back 5.2m shares (representing 0.8% of
the issued share capital) at an average price of £2.36. The Group has authority
to repurchase up to 10% of its issued share capital and we plan to seek renewal
of this authority at the AGM.
Finally, our activities should drive a steadily increasing return on capital,
which, in turn, should exceed the cost of capital. In 2003, the post tax return
on average capital employed (including debt) has improved again to 14.6%
(2002: 13.2%). This exceeds our cost of capital which is 8.5%.
2. Delivering service excellence and creating growth
Capita delivers BPO solutions and professional support services to eight key
markets, all of which are in the UK and Ireland. They are a mix of established
and emerging markets, being local government, central government, education,
transport, health, life & pensions, insurance and private sector & other
financial services.
The Group's service offering mirrors the back office of both public and private
sector bodies and spans many parts of an organisation's infrastructure. Our
services are predominantly provided in an integrated solution under long term
contract and include finance, IT and property, staff support and development,
back office administration services and front line customer services.
Capita has over 300 strategic customer partnerships and in excess of 20,000
customers, the majority of which buy our services on a regular and consistent
basis. A substantial proportion of Capita's revenue is now secured through
evergreen contracts or contracts ranging from 3 to 10 years, of which the
weighted average is over 7 years.
Group businesses - Growth across the Group's businesses remains strong. Our
focus on enhancing services and re-engineering the cost of delivery continues to
attract new and existing clients.
Capita's IT and software businesses have benefited from the continued drive to
implement e-government across local government and the social housing marketplace.
Contract wins and extensions have been secured with many organisations including
Leeds City Council, Bolton Metropolitan Borough Council, Derby City Council and
Magna Housing Group.
The HR businesses have performed well with Veredus, our executive recruitment
business, winning major assignments for senior appointments with the Crown
Prosecution Service, the Independent Police Complaints Commission, Qualifications
& Curriculum Authority and the Office of the Deputy Prime Minister (ODPM). The
resourcing businesses have maintained market share in challenging market conditions.
This has been achieved due to their niche specialisations and drive to deliver
consistent quality of service, resulting in inclusion on some key public sector
framework agreements and an increasing number of managed service contracts. Our
pensions and payroll businesses have performed particularly strongly in the year,
with contracts won with Cambridgeshire County Council, First Assist, GUS and Bayer.
Our strategic education services have continued to grow rapidly, delivering
significant educational improvements in some exceptionally challenging areas.
This has been recognised by a recent OFSTED inspection report on the London
Borough of Haringey and an independent report commended the very good progress
made by Education Leeds. Our consultancy practice has secured inclusion on a
number of key public sector procurement framework agreements, such as the ODPM's
programme to build local government capacity. These framework agreements provide
strong channels for future business, with limited competition.
Capita's Central and Local Government services continue to perform strongly,
securing many key contract wins and extensions. Our off-site operation in
housing benefits and revenues collection is continuing its rapid growth, winning
business from Southampton, Edinburgh, Nottingham and Aberdeen City Councils.
Our insurance business has generally performed strongly. During the year, 57 new
contracts or extensions have been won across our various insurance service
offerings. In particular, our London Markets Business and Outsourcing areas have
produced good results. Our exercise to re-engineer the cost base of our loss
adjusting business has been completed and we are in the process of rolling out a
technically enhanced, more cost efficient claims processing model. However, loss
adjusting market conditions remain very challenging, with volumes depressed.
Capita Registrars and Capita Financial Services have performed well across their
growing portfolio of services. These services were broadened by our acquisition
in February 2003 of the administration services division (comprising Northern
Registrars Ltd, Northern Administration Ltd and the Connaught St. Michaels Group)
from BWD Securities for £18.5m. The companies provide share registration, unit
trust administration and ancillary services to over 500 customers. The companies
have been successfully integrated into Capita Registrars and Capita Financial
during the year. The enlarged businesses have a high percentage of recurring
revenues and are now additionally benefiting from the recent upturn in the markets.
Our property consultancy won major assignments in the year including ASDA, DWP
and Perth and Kinross Council. The infrastructure and property operations in our
business centres at Cumbria and Blackburn continue to develop strongly. This
month, we extended our property offering by acquiring Symonds Group (Holdings)
Limited for an initial cash consideration of £29.9m. A further £1m may be payable
upon the achievement of certain targets. Symonds is a leading provider of
consultancy, project management and design services for the property and
infrastructure markets.
Symonds will be integrated with Capita's existing multi-disciplinary property
business, Capita Property Consultancy, to form a new company, Capita Symonds Ltd.
Its breadth of expertise, geographic reach across the UK and extensive resources
will ensure the new company, with proforma annual revenues of £160m, is a leading
player in the industry. We have been impressed by both the calibre of management
and the quality of work inherent within Symonds and we believe the acquisition will
strengthen Capita's existing business.
Major contract wins - During 2003, we secured £615m of major contract wins and
extensions. These included contracts with Aurora Corporate Services, the London
Boroughs of Brent and Lambeth, Teachers' Pensions with the Department of Education
and Skills (DfES), the Department for Work and Pensions (DWP), the BBC, Alba Life
Limited, National Air Traffic Services, Transport for London and Lincoln Financial
Group.
Specifically, in September, Capita was selected to manage the payment and assessment
administration of the new Education Maintenance Allowance (EMA) by the DfES,
extending the role we already play in supporting the Department. The contract,
valued at £48m over five years with an option to extend for a further one or two
years, builds upon the Government's commitment to help young people to fulfil
their educational potential. Capita will be responsible for managing the service,
which involves accepting and processing applications for the EMA allowance from
potential students. The initial service, including a helpline launched in November
2003, is progressing well, with application/assessment services due on stream by
May 2004. The full service provision, inclusive of payment services, will go live
in September 2004.
In December, we took responsibility for running the life operations for Prudential
International Assurance and St. James's Place International in Dublin. The
contracts together are worth £110m over 10 years; revenues of at least £18m
will be generated in 2004. It is one of the largest open book outsourcing contracts
to be awarded in the industry. The operations have been transferred seamlessly
and already we are achieving higher service standards for our customers. This
contract considerably strengthens Capita's capability to service both UK and
Irish domestic business.
2004 has started well with the announcement on 16 February that Capita has been
selected to administer all miners' personal injury liability claims, on behalf
of the Department of Trade and Industry, with respect to certain health problems
caused by working underground in British Coal mines. The contract, which concerns
the processing of claims relating to chronic obstructive pulmonary disease and
vibration white finger, is estimated to generate revenues of £125m over the
initial term of the contract to 31 July 2006, with some £46m of revenue generated
in 2004. Over 1,250 employees, largely based in Sheffield, will transfer to
Capita. This establishes Capita Insurance Services as the largest employer of
claims handlers in the UK.
Future growth - In the next 6 years, we have only three material contracts
(defined as having annual revenue in excess of 1% of 2003 turnover) due for
renewal. There are no material contract renewals in 2004. As a consequence of
this and our sales activity, we have already secured substantial additional
revenue for 2004.
Our major contract sales pipeline continues to be buoyant and we are currently
working on live major bids with a total value of £2.7bn across the public and
private sectors. The pace of development within our markets and our strong
competitive position enables us to have a high degree of choice regarding which
opportunities to pursue. Increasingly, customers are selecting partners on
their ability to deliver sustainable, high quality service rather than being
driven mainly by cost considerations.
Capita is recognised as the leading BPO company in the UK, with a market share
of 24.3% (2002: 23.7%) of the total value of contracts let. We lead or are
positioned well in all our markets which continue to grow strongly. Capita is
the No.1 BPO supplier by market share in Local Government and Insurance, 2nd
largest in Central Government and 2nd largest in its newest market, Finance,
and No.1 in Other Services (source: HI Europe 2004).
Operational performance - Our track record of delivery is excellent. We
predominantly deliver ahead of both contracted service levels and, where they
existed, the service levels prevailing prior to the transfer of an operation
into Capita.
In some situations, we operate in the public spotlight and where service excellence
is imperative. A good example is Capita's highly successful implementation of
Transport for London's (TfL) Congestion Charging Scheme. The scheme, which has
just had its first anniversary on 17 February, has been a success in reducing
traffic congestion by 30% with 18% less traffic entering the zone and 15% less
activity in the zone.
The innovation of SMS texting, introduced by Capita as part of its solution, has
also been a major success. 170,000 people have now signed up to use this method
to pay the charge and 3.2 million payments have been made since the service
commenced. This is now the most used SMS channel for financial transactions in
the UK. 88% of those paying the charge are using SMS, the Web, Interactive Voice
Recognition (IVR) and PayPoint, with 12% using the call centre. The call centre
service has improved and is currently performing well with 91% of all calls being
answered in less than 30 seconds (service standard 80%) and with less than 2% of
calls abandoned by customers (service standard 5%). Our postal processing Key
Performance Indicators (KPIs) continue to be exceeded.
We are delighted that the quality of our work has recently been recognised by the
British Computer Society which has given us a major award as a result of our
design, implementation and management of the central London congestion charging
scheme. This made particular reference to the successful implementation of the
450 man-year IT system which was introduced on time and to budget.
The 10 year contract that we have with the Home Office to provide services to the
Criminal Records Bureau (CRB) has recently been successfully renegotiated to
reflect the current methods of operating. The CRB has issued over 3.2m Disclosures
and has recently extended the Disclosure service to around 250,000 people working
in the care sector. The CRB has exceeded its public service standards for issuing
Disclosures for the past year. 93% of Standard Disclosures are issued within two
weeks (service standard 90%) and 93% of Enhanced Disclosures issued within four
weeks (service standard 90%). The CRB is now issuing 50,000 checks per week, twice
as many as last summer, and more than double the number carried out by the 43
police forces prior to the introduction of the Disclosure service. The backlog of
applications has been eradicated.
Whilst our prime objective in delivering services is to satisfy our customers,
it is also heartening when our efforts are acknowledged by recognised industry
specialists in Capita's area of operations. We are delighted to have been
awarded Member of the Year status by the Contact Centre Association (CCA) and to
have achieved CCA accreditation at Capita run operations in Bristol, Darwen,
Liverpool, Glasgow, Belfast, Gloucester and Stevenage. We were also delighted
to have been named 'Company of the Year' at the Royal Bank of Scotland/Sunday
Times Business Awards 2003.
3. Valuing our people
Capita's track record of delivery for shareholders and customers is due to the
skill and dedication of Capita's staff who contribute to the Group's progress.
We also have a very stable management team and low turnover of senior people
across the Group. The team spirit and 'can do' attitude is often commented upon
by Capita's clients who also welcome our fair and open style of doing business.
We would like to welcome into Capita our 2,000 employees who have recently joined
us from our newly acquired businesses, through contract wins and by direct
recruitment. They join successful teams and will be fully supported, along with
all our staff, in their professional and personal development. The Group now
employs over 19,000 people.
During the year, we continued to invest substantially in training across the
Group and introduced a new portfolio of training courses in association with our
own training business, Capita Learning & Development. In further recognition of
the contribution of our employees to the Group's success, we have launched a staff
awards scheme, The Capita Excellence Awards. The awards recognise and celebrate
staff who truly reflect the values of the Group, delivering excellence in service,
demonstrating real responsiveness to customers and supporting their colleagues and
the communities in which they work. Employees are nominated by their colleagues
and we have been delighted by the response and quality of nominations, clearly
demonstrating our staff's wealth of talent, commitment and enthusiasm.
4. Future prospects
Capita has a proven, scalable business model, with high barriers to entry, which
we believe will continue to deliver long-term shareholder value. We are actively
managing our existing business to generate improved returns whilst continuing to
develop new opportunities. Our cash generation is strong, predictable and
growing and we have significant visibility of our revenues and profit for 2004
and beyond. We believe that shareholders will be delighted by Capita's continuing
performance.
Rodney M Aldridge OBE
Executive Chairman
25 February 2004
Group profit and loss account
for the year ended 31 December 2003
2003 2002
Goodwill
Before amortisation
goodwill and and
Before Goodwill exceptional exceptional
goodwill amortisation Total item item Total
Notes £Million £Million £Million £Million £Million £Million
Turnover 1
Continuing operations 1,073.3 - 1,073.3 897.5 - 897.5
Acquisitions 7.3 - 7.3 - - -
1,080.6 - 1,080.6 897.5 - 897.5
Cost of sales 804.8 - 804.8 665.0 - 665.0
Gross profit 275.8 - 275.8 232.5 - 232.5
Administrative expenses 144.4 27.7 172.1 125.2 25.5 150.7
131.4 (27.7) 103.7 107.3 (25.5) 81.8
Other operating income -
warranty claim - - - - 5.3 5.3
131.4 (27.7) 103.7 107.3 (20.2) 87.1
Operating profit 1
Continuing 129.8 (27.0) 102.8 107.3 (20.2) 87.1
Acquisitions 1.6 (0.7) 0.9 - - -
131.4 (27.7) 103.7 107.3 (20.2) 87.1
Net interest payable (10.2) - (10.2) (9.0) - (9.0)
Profit on ordinary activities
before taxation 121.2 (27.7) 93.5 98.3 (20.2) 78.1
Taxation on profit on
ordinary activities (34.1) - (34.1) (28.6) (1.6) (30.2)
Profit on ordinary
activities after taxation 87.1 (27.7) 59.4 69.7 (21.8) 47.9
Minority interest (equity) (0.1) - (0.1) - - -
Profit for the financial
year 87.0 (27.7) 59.3 69.7 (21.8) 47.9
Dividends 5 26.7 - 26.7 20.1 - 20.1
Retained profit for the
year 60.3 (27.7) 32.6 49.6 (21.8) 27.8
Earnings per share
- Basic 2 13.04p (4.15)p 8.89p 10.47p (3.27)p 7.20p
- Diluted 2 12.35p (3.93)p 8.42p 9.90p (3.09)p 6.81p
Balance sheets
at 31 December 2003
Group
2003 2002
Notes £Million £Million
Fixed assets
Intangible assets 451.2 452.9
Tangible assets 111.7 98.3
Investments - -
562.9 551.2
Current assets
Trade investments 5.2 6.0
Debtors due within one year 211.8 186.1
Debtors due after more than one year 11.9 10.4
Cash at bank and in hand 19.8 -
248.7 202.5
Creditors: amounts falling due within one year 299.7 260.7
Net current liabilities (51.0) (58.2)
Total assets less current liabilities 511.9 493.0
Creditors: amounts falling due after more than one year 152.3 158.4
Provisions for liabilities and charges 17.4 17.5
342.2 317.1
Capital and reserves
Called up share capital 13.3 13.4
Share premium account 242.7 239.9
Capital redemption reserve 0.1 -
Merger reserve - -
Profit and loss account 86.0 63.8
Shareholders' funds (equity) 342.1 317.1
Minority interest (equity) 0.1 -
342.2 317.1
Group cash flow statement
for the year ended 31 December 2003
2003 2002
Notes £Million £Million £Million £Million
Cash flow from operating activities before other
operating income 3 158.2 116.6
Cash flow from other operating income - 5.3
Cash flow from operating activities 158.2 121.9
Returns on investments and Servicing of finance
Issue cost of bonds - (0.5)
Dividends paid to minorities in subsidiaries - (0.1)
Interest received 0.8 0.2
Interest element of finance lease payments (0.1) (0.1)
Interest paid (10.9) (9.1)
Net cash outflow from returns on investments
and servicing of finance (10.2) (9.6)
Taxation paid (28.0) (25.9)
Capital expenditure and financial investment
Purchase of tangible fixed assets (38.2) (57.4)
Proceeds on sale of current asset investments 0.6 -
Proceeds on sale of fixed assets 1.0 0.9
Net cash outflow from capital
expenditure and financial investment (36.6) (56.5)
Acquisitions and disposals
Purchase of subsidiary undertakings and businesses (27.9) (63.8)
Cash acquired with subsidiary undertakings 2.0 7.9
Accrued consideration paid (1.7) (0.4)
Net cash outflow from acquisitions and disposals (27.6) (56.3)
Equity dividends paid (22.1) (16.6)
Net cash inflow/(outflow) before use of financing 33.7 (43.0)
Financing
Issue of ordinary share capital 2.9 1.8
Bond issue - 125.0
Share repurchase (12.2) -
Capital element of finance lease rental payments (0.8) (1.0)
Repayment of loan notes and long term loans (2.8) (74.4)
Net cash (outflow)/inflow from financing (12.9) 51.4
Increase in cash in the period 20.8 8.4
Group statement of total recognised gains and losses
for the year ended 31 December 2003
2003 2002
£Million £Million
Profit attributable to the members of the Parent
undertaking 59.3 47.9
Exchange adjustments - 0.2
Total recognised gains and losses 59.3 48.1
Reconciliation of movements in shareholders' funds
for the year ended 31 December 2003
2003 2002
£Million £Million
Total recognised gains and losses 59.3 48.1
Dividends (26.7) (20.1)
32.6 28.0
New share capital subscribed 4.7 11.0
Share repurchase (12.2) -
Share capital to be issued - (5.4)
Net movement to shareholders' funds 25.1 33.6
Opening shareholders' funds 317.1 283.5
Closing shareholders' funds 342.2 317.1
Notes to the accounts
for the year ended 31 December 2003
1 Segmental information
(a) Turnover and profit on ordinary activities before taxation
Business Commercial Integrated Professional
Services Services Services Services Total
£Million £Million £Million £Million £Million
Turnover
2003 Continuing operations 298.0 293.2 230.8 352.5 1,174.5
Acquisitions 7.3 - - - 7.3
305.3 293.2 230.8 352.5 1,181.8
Inter-segment sales (12.7) (4.9) (12.3) (71.3) (101.2)
Third party sales 292.6 288.3 218.5 281.2 1,080.6
2002 Continuing operations 288.8 262.3 177.0 264.2 992.3
Inter-segment sales (15.9) (8.1) - (70.8) (94.8)
Third party sales 272.9 254.2 177.0 193.4 897.5
Profit before taxation
2003 Continuing operations 37.5 22.1 33.1 37.1 129.8
Acquisitions 1.6 - - - 1.6
Segment profit before goodwill amortised 39.1 22.1 33.1 37.1 131.4
Goodwill amortised (14.7) (9.9) (0.9) (2.2) (27.7)
Segment profit after goodwill amortised
and before other operating income 24.4 12.2 32.2 34.9 103.7
Interest payable (10.2)
Total 93.5
2002 Continuing operations 36.5 24.3 24.1 22.4 107.3
Goodwill amortised (13.4) (9.0) (0.9) (2.2) (25.5)
Segment profit after goodwill amortised
and before other operating income 23.1 15.3 23.2 20.2 81.8
Other operating income - 5.3 - - 5.3
23.1 20.6 23.2 20.2 87.1
Interest payable (9.0)
Total 78.1
Included within turnover is £7.3m in respect of the acquisition of Northern
Registrars and Northern Administrators Limited and included within profit before
taxation and goodwill is £1.6m in respect of these acquisitions.
Business Commercial Integrated Professional
Services Services Services Services Total
£Million £Million £Million £Million £Million
Net assets
2003 Continuing operations 33.3 7.0 12.4 19.2 71.9
Acquisitions (0.1) - - - (0.1)
Net operating assets excluding goodwill 33.2 7.0 12.4 19.2 71.8
Goodwill 229.1 170.5 12.9 38.7 451.2
Net operating assets including goodwill 262.3 177.5 25.3 57.9 523.0
Non-operating liabilities (180.8)
342.2
Business Commercial Integrated Professional
Services Services Services Services Total
£Million £Million £Million £Million £Million
Net
Assets
2002 Continuing operations 27.2 6.1 10.1 12.2 55.6
Goodwill 221.7 173.1 13.7 44.4 452.9
Net operating assets including goodwill 248.9 179.2 23.8 56.6 508.5
Non-operating liabilities (191.4)
317.1
Non-operating liabilities comprise taxation, including deferred taxation, and
dividend liabilities and net debt.
A small amount of turnover and profit before taxation was generated within the
Republic of Ireland but otherwise all other turnover and profit before taxation
was generated within the United Kingdom. The net assets of the Group are based
in the United Kingdom apart from a small amount of net assets based in the
Republic of Ireland.
2 Earnings per share
Earnings per share is calculated on the basis of earnings of £59.3 (2002:£47.9m)
and on the weighted average of 667.1m (2002: 664.8m) shares in issue during the
year, excluding the shares held in the Employee Benefit Trust.
The diluted profit for the year is based on profit for the year of £59.3 (2002:£47.9m).
The number of ordinary shares of 704.5m (2002: 703.5m) is calculated as follows:
2003 2002
Million Million
Basic weighted average number of shares 667.1 664.8
Dilutive potential ordinary shares:
Employee share options 37.4 36.9
Convertible preference shares of a subsidiary undertaking - 1.8
704.5 703.5
The additional earnings per share figures shown on the profit and loss account
are calculated based on earnings before the impact of goodwill amortisation and
exceptional items. They are included as they provide a better understanding of
the underlying trading performance of the Group.
3 Reconciliation of operating profit to net cash inflow from operating activities
2003 2002
£Million £Million
Operating profit before interest and other operating
income 103.6 81.8
Other operating income - warranty claim - 5.3
Operating profit 103.6 87.1
Depreciation charge 24.4 21.1
Amortisation of goodwill 27.7 25.5
Profit on sale of fixed assets (0.6) (0.5)
Amounts owed on fixed asset disposals (1.6) -
Loss on sale of current asset investment 0.4 -
Utilisation of provisions (1.6) (1.1)
Increase in provisions 1.4 -
Increase in debtors (21.3) (44.7)
Increase in creditors 25.8 34.5
158.2 121.9
Notes to the accounts
for the year ended 31 December 2003
4 Reconciliation of net cash flow to movement in net funds/(debt)
Net debt at Acquisitions Net debt at
1 January in 2003 Cash flow Non-cash flow 31 December
2003 (exc cash) Movements Movements 2003
£Million £Million £Million £Million £Million
Cash at bank and in hand - - 19.8 - 19.8
Overdrafts (1.0) - 1.0 - -
Cash (1.0) - 20.8 - 19.8
Loan notes (34.1) (1.7) 2.8 - (33.0)
Bonds (124.5) - - (0.1) (124.6)
Finance leases (0.9) - 0.8 (0.4) (0.5)
Total (160.5) (1.7) 24.4 (0.5) (138.3)
Net debt at Acquisitions Net debt at
1 January in 2002 Cash flow Non-cash flow 31 December
2002 (exc cash) Movements Movements 2002
£Million £Million £Million £Million £Million
Overdrafts (9.4) - 8.4 - (1.0)
Cash (9.4) - 8.4 - (1.0)
Loan notes (50.2) (7.0) 23.1 - (34.1)
Long-term loans (50.0) (1.3) 51.3 - -
Bonds - - (124.5) - (124.5)
Finance leases (1.6) - 1.0 (0.3) (0.9)
Total (111.2) (8.3) (40.7) (0.3) (160.5)
5 Dividends
2003 2002
£Million £Million
Ordinary shares (equity) - Interim - paid 8.7 6.7
- Final - proposed 18.0 13.4
26.7 20.1
Final dividend of 2.7p per share (2002: 2.0p per share) to be paid on 5 May 2004
to ordinary shareholders on the register on 2 April 2004. This gives a total
dividend for the year of 4.00p per share (2002: 3.00p per share).
6 Preliminary announcement
The preliminary announcement is prepared on the same basis as set out in the
previous years annual accounts.
A duly appointed and authorised committee of the Board of Directors approved the
preliminary announcement on 25 February 2004.
The announcement represents non-statutory accounts within the meaning of section
240 of the Companies Act 1985. The statutory annual accounts for the year ended
31 December 2003, upon which an unqualified audit opinion has been given and
which did not contain a statement under section 235, 237(2) or 237(3) of the
Companies Act 1985, will be sent to the Registrar of Companies.
Copies of the announcement can be obtained from the Company's registered office
at 71 Victoria Street, Westminster, London, SW1H 0XA.
It is intended that the Annual Report and Accounts will be posted to
shareholders on 26 March 2004 and will be available to members of the public at
the registered office of the Company from that date.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
COMPANIES COVERED:
Latest directors dealings
- 17 hours ago Cerillion
- 19 hours ago Associated British Foods
- 19 hours ago B&M European Value Retail S.A. (DI)
- 19 hours ago B&M European Value Retail S.A. (DI)
- 19 hours ago Haleon