Interim Results
Costain Group PLC
03 September 2003
COSTAIN GROUP PLC
('Costain' or the 'Group')
Interim results for the six months ended 30 June 2003
Costain, the international engineering and construction group, announces a 30%
increase in profit before tax and a strong forward order book up 17% at £820m.
FINANCIAL HIGHLIGHTS
• Group turnover up 17% to £296.4m (2002: £252.4m)
• Profit before tax up 30% to £6.1m (2002: £4.7m)
• Earnings per share up 15% to 1.5p (2002: 1.3p)
• UK operating profit up fourfold to £3.9m (2002: £1.0m)
OPERATIONAL HIGHLIGHTS
• Key appointments further strengthen management team
• Order book up 17% to £820m
• 85% partnering/framework type contracts
• significant growth in asset management
• Contract successes across the business
• Preferred bidder for £75m ProCure 21 schemes for NHS
• Two CTRL contracts progressing well
• £106m water treatment contract at Heathrow
• Preferred bidder for £38m Sirhowy Way PFI scheme
Commenting on the announcement, the Chairman, David Jefferies, said:
'Once again Costain has produced an excellent set of results. The recovery phase
is complete. We can now focus on playing to our strengths across a range of
activities. Our strong forward order book will stand us in good stead for the
second half and we are confident of a good result for the full year.'
3rd September 2003
ENQUIRIES:
Costain Group PLC Tel: 020 7705 8444
Stuart Doughty, Chief Executive
Charles McCole, Finance Director
Graham Read, Public Relations
College Hill Tel: 020 7457 2020
Mark Garraway
Matthew Gregorowski
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMent
OVERVIEW
The Group continues to benefit from rigorously implementing the strategy which
was agreed two years ago. We continue to de-risk the business by focusing on
growth sectors where we have expertise, in particular health, transport and
utilities. Our key clients are organisations that value the benefits of working
with a contractor who understands their requirements and who will work with them
to ensure success.
The recent announcement concerning Foundation Hospitals will allow them to raise
money through private borrowing to enhance further the committed capital
investment programme of £2.3bn in 2002/3, rising to over £6bn in 2007/8.
Costain's track record and experience places the Company in a strong position to
secure work here.
The Government has also pledged high levels of investment in transport, with a
£180bn public and private investment over ten years. We are ideally placed to
assist the Government in the urgent need to upgrade roads and alleviate
congestion.
Work in Asset Management continues to grow as our clients in the water industry
focus on completing the AMP3 programme. We have 15% of the water sector
business and this work now comprises 31% of our contracting business, well ahead
of our target of reaching 50% by 2006. We continue to work closely with key
water company clients as they approach their next regulatory review.
The above activities have resulted in a dramatic change in the risk profile of
the business. In 2000, less than 50% of the forward order book could be
described as partnering/framework agreements. This has now increased to 85% of
the forward order book.
We continue to recruit high calibre staff to ensure that we can both generate
and manage the increased turnover and profitability set out in our strategy.
Two recent key appointments are Stephen Prendergast, MD International
(ex-Business Development Director of AMEC) and Stephen Wells, Group Business
Development Director (ex-MD of Biwater Leisure).
RESULTS
The results for the six months ended 30 June 2003 show a profit before tax of
£6.1m (2002: £4.7m), up 30% on turnover up 17% at £296.4m (2002: £252.4m).
Earnings per share rose to 1.5p (2002: 1.3p), up 15%.
Profit on ordinary activities before interest grew to £5.9m (2002: £2.9m) with
the UK operations providing £3.9m against £1.0m in the comparable period last
year. Operating profit from overseas activities was £2.0m compared to £1.9m in
the first half of 2002.
At the half year work in hand was up 17% at £820m (2002: £700m).
Finance
The Group has no significant borrowings and net cash balances at the half year
totalled £65.1m (2002: £65.2m) including the Group share of cash held by joint
arrangements (construction joint ventures) of £34.2m (2002: £39.2m). This
represents a cash outflow during the first half of the year of £6.2m reflecting
the utilisation of advance payments on significant contracts and the changing
profile of the businesses.
TRADING & PROSPECTS
Health
A key ingredient of our health strategy has been to secure the NHS pilot ProCure
21 framework initiative in the North West and Midlands, thus providing a service
to the NHS through the principle of supply chain partnership.
In terms of current work we are building a new maternity and paediatric unit at
Southport & Ormskirk for the NHS Trust, a mental health unit for Cheshire and
Wirral Partnership, an operating theatre and offices also for Southport &
Ormskirk NHS Trust and a diagnostic and treatment centre at Good Hope Hospital
in Birmingham. In total the current health workload has a value of
approximately £45m generating a turnover this year of £39m. Our progress in
ProCure 21 has been exceptional in terms of delivery and is now producing a
sustainable profit stream.
There is also reason for confidence regarding the future. We are preferred
bidder for approximately £75m worth of schemes within the initial ProCure 21 -
an intermediate care centre in Birmingham, an education centre for the George
Eliot Hospital in Nuneaton, a multi-use health centre in Birmingham,
intermediate care beds in Cheshire, an energy centre for Southport & Ormskirk
NHS Trust, re-provision of mental health facilities for the Pennine Care NHS
Trust, community hospital and A&E wing at Bridgnorth, a mental health unit at
Sheldon Hospital and a diagnostic and treatment centre at Stepping Hill Hospital
at Stockport.
While this initiative progresses, we are also leading a consortium with AMEC and
Mowlem to compete for work when ProCure 21 is rolled out on a national basis.
Our health portfolio has become one of our strongest assets and we have
capitalised on the opportunities which have been presented as a result of the
Government's pledge to improve the NHS and commit considerable investment in
upgrading the infrastructure.
Our PFI division has also focused on the needs of the healthcare sector. We
have been appointed preferred bidder for Kingston Hospital and we anticipate
financial close on two intermediate care homes in Kent in the Autumn.
Another important landmark for us occurred in the Summer 2003 when Her Majesty
The Queen opened the Golden Jubilee Wing at the King's College Hospital in
London. Patients moved into this facility two months earlier than planned which
was testament to the success of the construction joint venture of which Costain
was a major part and also the special purpose vehicle in which Costain has a
major involvement. This PFI project now focuses on the refurbishment of the
Ruskin Wing at the Hospital which is already ahead of programme with both the
building and site-wide services performing well.
Transport
As already stated, there is considerable investment in the transport sector and
it is becoming increasingly apparent that previously made commitments are now
turning into reality. Two schemes already started are the M4, where we were
awarded a £10m major reconstruction between junctions 5 and 7, and the A34/M4
£38.5m design and construct junction improvement at Chieveley. We have also
been nominated as preferred contractor to carry out the £38m Sirhowy Way road
contract in South Wales on a PFI basis.
Recently the £124m A2/M2 widening scheme was opened by the UK Transport Minister
David Jamieson. The project lasted approximately three years and Costain played
a major role in the joint venture. The contract involved widening a two-lane
highway into four lanes in each direction from Cobham to junction 3 and three
lanes in each direction from junction 3 to junction 4. This also involved the
replacement of nearly all the existing bridges along the A2/M2 as well as the
construction of a one kilometre long bridge across the River Medway.
With regard to Rail, our two contracts on the Channel Tunnel Rail Link Scheme -
Stratford and St Pancras - are progressing well. The initial difficulties at
Stratford have now been totally overcome and the two tunnel boring machines have
reached the first shaft which is approximately 38% of the total distance. Work
at King's Cross, in rebuilding the Underground Station complex for LUL is also
continuing satisfactorily.
Asset Management
Costain is working for Thames Water, Yorkshire Water, United Utilities, Wessex
Water and Southern Water. Each of our clients is heavily involved in the AMP 3
stage of the capital programme and these long-term framework schemes will
generate in excess of £580m turnover over the period of the framework.
These agreements fit within each water company's strategic plan and are subject
to financial business modelling as well as external planning and approval
issues. Turnover in the first half year has been slightly behind original
expectations, but should recover over the programme life of the agreements.
Our teams are working alongside our clients providing delivery information to
support the next round of the 5 year capital programme - AMP4 - and we are in
continuous dialogue with all the water utility companies in maintaining our
involvement in their ongoing long term framework agreements.
To match anticipated programme growth and ensure the quality of delivery is
maintained Costain has made significant investments in training and development
of its water and process sector staff as well as recruiting specialists from UK
water companies and overseas. From our long term relationships in Southern
Africa we have recently secured engineering resources to support the growth of
this sector.
Within our Asset Management operation we have one of Costain's largest single
contracts which will allow the new Heathrow Terminal 5 to progress. We are
responsible to Thames Water (RWE Group) and BAA, for the Perry Oaks and Iver
South project which involves moving an existing sludge dewatering plant at Perry
Oaks to a new location west of the M25 at Iver South and upgrading and renewing
pipelines and transfer tunnels to Twickenham some eight miles away. The target
price for the overall project is now agreed at £106m with a contract period
running through to September 2005 with a 6 month commissioning and testing
period to follow. Works are underway at all locations and we are currently ahead
of programme.
Construction
In general building, we continue our long relationship with Tesco and completed
three contracts worth a total of £12m. The initial phase of Diamond Synchrotron
Light Source Building is progressing well and the scheme will move to the second
stage during the second half of the year. This, when complete, will be the
largest scientific facility to be built in the UK for 30 years and we are
delighted to be involved in such a landmark project. We also completed the IACR
Rothamstead Laboratory and have been appointed contractor for the new London
Metropolitan University Graduate Centre. In addition we have been named
preferred bidder for the RAF Honnington prime contract.
In London we are preferred contractor for the £18m construction of the Stockley
Academy for Science and Technology and we have been awarded the £8m contract for
the Broad Street Place development.
We have recruited new Regional Directors for both Midlands and Northern Regions
as part of our commitment to ensuring strong management throughout. The quality
of our people must always be of paramount concern and it was particularly
gratifying that one of our building projects - The Quadrant at Windsor - was
voted the Most Considerate Site in the UK construction industry. The project
involved building a new office facility and refurbishment of a Grade II listed
building beside Windsor Castle. The award commended the high standards of
cleanliness and tidiness on site, the good relationships with the local
community and demonstrated to our clients the high standards to which Costain
people aspire. Modern day building work involves a significant degree of
environmental sensitivity which clients and communities expect and this award
highlighted the fact that in this regard we were playing a leading role.
The spotlight was also on Costain when Her Royal Highness Princess Alexandra
opened the new Golden Jubilee Bridges (formerly known as the Hungerford Bridge)
in Summer 2003. The project was another example of quality engineering which
Costain carried out in joint venture. The Bridges are on the River Thames in
the heart of London and it is estimated that they will carry an estimated seven
million people each year.
Costain, in joint venture, is responsible for the £79m design and construction
of the new Meteorological Office in Exeter. This project is a perfect example of
the quality performance which Costain delivers. All agreed dates have been met
and installation of the 'Super Computers' has commenced. Approximately 200 Met
Office staff have already moved into three new buildings. In total six new
buildings will be provided to accommodate a total of 1100 staff. Completion is
due in November 2003.
In the Building market there is little activity in commercial office development
but we continue to make progress in the retail sector. In healthcare and
education there has been much focus from Government on the need for improvement
and investment. We are well established in healthcare and are actively pursuing
various opportunities in education.
International
International's strategy for increasing its workload in partnership with our
major shareholders has proved successful in the first half of the year with the
commencement of the £20m Palapye sewerage contract with Kharafi in Botswana. In
Tanzania we have jointly prequalified for the New National Sports Stadium in Dar
es Salaam and are pursuing joint venture arrangements for major road
rehabilitation projects.
Elsewhere in Africa we are in the final stages of acquiring a major interest in
Costain (West Africa) Plc and, with new contracts being awarded by leading
companies such as Shell, we look set to benefit from the increased business
generated by this company. In Zimbabwe, we continue to operate successfully in
both our contracting and property activities despite the political
uncertainties.
Since the end of hostilities in Iraq, we have been proactive in seeking
appropriate opportunities for reconstruction work. However in the short-term,
security issues have prevented the award of any significant contracts. We are
co-operating with Kharafi and other strategic partners in focusing on the longer
term prospects which will materialise once the political and security issues
have been resolved.
In Hong Kong we are leading a consortium comprising China Harbour Engineering
Company and JFE of Japan in tendering for the Stonecutters Bridge. This will be
the world's longest cable-stayed bridge. We are also involved in tendering for
a number of asset management contracts in the water sector reflecting the
capability for this type of work which we have built up in the UK.
Our development in Southern Spain, Alcaidesa, where we hold a 50% interest in
Alcaidesa Holding SA, a residential and leisure company, is continuing to
progress. The 2003 housing programme is progressing well with 65 units to be
completed in the year. A new club/hotel complex with 700 beds opened this
Summer. This will add to the development's attraction in terms of increased
tourism and has already improved revenue at the Alcaidesa links golf course.
Early works for the second golf course have now started, along with the large
infrastructure project to service phase 2 of the scheme. These works, which
include roads, drainage, water supply, electricity and a water treatment plant,
to be completed by the middle of 2004.
It is hoped that approval for the third phase of the Masterplan at Alcaidesa,
comprising 1200 residential units, will be forthcoming before the year end.
Some provisional land sales have been agreed within this phase, which will
generate significant profit and fund all required infrastructure costs.
Meanwhile, we have started to work on initial designs for a 320 unit scheme
which we intend to start building towards the end of 2004.
A number of new opportunities to expand Alcaidesa's activities in the local area
are currently under consideration.
Costain Oil, Gas & Process
(COGAP)
The first half of 2003 saw COGAP serving major clients and further pursuing its
strategic goals of addressing markets beyond the oil and gas industry.
COGAP continued to support the Galliford Costain joint venture framework
agreement for United Utilities with the supply of project and construction
services.
The Company was awarded additional shutdown work in Abu Dhabi for ZADCO & ADMA
and is due to commence the next annual LNG outage for ADGAS in mid-September.
Basic engineering was completed for the Clean Fuels projects for Total Fina Elf
at Milford Haven.. Follow-on detailed engineering, procurement and construction
is expected to commence in the second half of 2003.
The £85m Rivers Fields project for Burlington Resources has moved into the
construction phase and the milestone of 1 million man-hours without a lost time
accident has been reached. The project is on course to deliver gas on the
original programme date of mid-December 2003.
August 2003 saw the successful on-time shipment of our largest Syngas Purifier
Cold Box for a petrochemical complex in Iran for Snamprogetti.
In addition, COGAP commenced work on a Floating Storage & Regasification Unit
project. We are managing the motion and dynamic studies being carried out by
Herriott Watt University. For this leading technology project we are now moving
into basic engineering of the topsides process and utilities system in order to
obtain permits for the project.
COGAP's Managing Director, Bill Dube, left the Company for personal reasons in
July and a suitable replacement has been identified.
Health, Safety and Environment
We continue to develop the BE SAFE initiative across the whole company to raise
the awareness of safety as a culture rather than just a compliance to a rule.
At the Royal Society for the Prevention of Accidents Awards, we received 11 gold
awards, 11 silver awards, six bronze awards and four merit awards. COGAP won the
highly prestigious President's Award. In addition, we also received the '
Excellence in Construction Safety Award' which was presented to Costain and its
partner by Yorkshire Water at its Contractor Partners Award ceremony. This award
was judged on a safety culture spread over approximately 750,000 working hours.
Effective environmental management of all our activities remains a vital aspect
of our business. Accordingly we are updating Environmental Management Systems
to reflect better our business needs whilst managing our environmental risks.
The revised system will be implemented throughout Costain over the forthcoming
months. We successfully retained our ISO14001 registration in February 2003.
SHARE CAPITAL
At the beginning of April 2003 the London Stock Exchange admitted to trading
8,000,010 ordinary shares of 10p each fully paid ranking pari passu with
existing ordinary shares. The shares were issued pursuant to a Share Warrant
Instrument by way of Deed Poll dated 29 March, 2001 in which the Company's
bankers were granted share warrants in return for refinancing the Company's
existing term facilities at that time. A total of 1,600,000 warrants were
issued and each warrant gave the recipient a right to subscribe for 10 ordinary
shares in the Company. The exercise price was 112.25p per warrant. 799,999
warrants remain in issue.
OUTLOOK
We continue to deliver the objectives as set out in our strategic plan. We have
secured significant positions in transport, health and in the asset management
market for water utilities giving us a stable platform for future growth.
International is also now showing signs of growth, especially given our
excellent relationship with our major shareholders. We will continue to develop
our presence in the retail sector whilst taking advantage of Government's
commitment to expenditure in education.
The majority of our turnover is resulting from Government and regulated
expenditure and therefore we are enjoying the benefits of Government's
commitment to improving national infrastructure.
In the particular area of San Roque in Spain (Alcaidesa) the market continues
unabated and our development is going to plan.
We remain confident of delivering profitable growth for the full-year and
beyond, and our investment in key resources and a dominant position in the
market place will continue to sustain an increase in shareholder value.
DAVID G JEFFERIES
Chairman
STUART J DOUGHTY
Chief Executive
2 September 2003
COSTAIN GROUP PLC
Interim results for the half-year end 30 June 2003
Consolidated Profit and Loss Account
Reviewed but
unaudited
Unaudited Audited
Half year ended 30 June, Notes 2003 2002 2002
year ended 31 December Half year Half year Year
£m £m £m
Turnover
Group and share of joint ventures 1 296.4 252.4 543.4
Less: share of joint ventures turnover (3.2) (0.8) (21.6)
Group undertakings 293.2 251.6 521.8
Group operating profit
Group undertakings 3.9 2.3 0.5
Share of operating profit of joint ventures 2.0 0.6 7.5
Profit on ordinary activities before 1 5.9 2.9 8.0
interest
Net interest receivable/(payable) and
similar charges
Group undertakings 0.8 1.1 2.0
Joint ventures (0.2) (0.3) (0.6)
Other finance (charges)/income 2 (0.4) 1.0 1.9
Profit on ordinary activities before 6.1 4.7 11.3
taxation
Taxation (0.9) (0.5) (1.8)
Profit on ordinary activities after 5.2 4.2 9.5
taxation
Minority interests - 0.1 -
Retained for the period 5.2 4.3 9.5
Earnings per share - basic & diluted 3 1.5p 1.3p 2.8p
All results derive from continuing operations
Consolidated Cash Flow Statement
Reviewed
but
unaudited Unaudited Audited
Half year ended 30 June, 2003 2002 2002
year ended 31 December Half year Half year Year
£m £m £m £m £m £m
Net cash (outflow)/inflow from operating activities (7.2) (2.7) 3.9
Net cash inflow from returns on investments and
servicing of finance
0.8 1.1 2.0
Tax paid - - (0.4)
Capital expenditure and financial investment
Capital expenditure less sales of tangible fixed (0.1) (0.4) (1.1)
assets
Loans to joint ventures - (0.2) (0.5)
Repayment of loans to other investments - - 0.1
Net cash outflow from capital expenditure and (0.1) (0.6) (1.5)
financial investment
Net cash (outflow)/inflow before financing (6.5) (2.2) 4.0
Equity financing
Issue of ordinary share capital (Note 3) 0.9 - -
(Decrease)/increase in cash (5.6) (2.2) 4.0
Reconciliation of Net Cash Flow to Movement in Net Cash
(Decrease)/increase in cash (5.6) (2.2) 4.0
Hire purchase contract (0.6) - -
Currency realignment - (0.4) (0.5)
Opening net cash 71.3 67.8 67.8
Closing net cash 65.1 65.2 71.3
Consolidated Balance Sheet
Reviewed but Unaudited Audited
unaudited
Half year as at 30 June, Note 2003 2002 2002
year as at 31 December Half year Half year Year
£m £m £m
Fixed assets 3.7 2.8 3.3
Investments 1.1 1.1 1.0
Investments in joint ventures
Share of gross assets 60.1 50.3 59.7
Share of gross liabilities (40.3) (39.5) (43.0)
19.8 10.8 16.7
24.6 14.7 21.0
Current assets
Other debtors and stocks 123.3 113.2 111.3
Cash at bank, monies on deposit and in hand 65.9 65.5 71.8
189.2 178.7 183.1
Creditors: amounts falling due within one year
Borrowings (0.3) (0.3) (0.5)
Other creditors (190.6) (183.3) (189.8)
(190.9) (183.6) (190.3)
Net current assets/(liabilities)
Due within one year (6.0) (8.8) (11.5)
Debtors due after more than one year 4.3 3.9 4.3
(1.7) (4.9) (7.2)
Total assets less current liabilities 22.9 9.8 13.8
Creditors: amounts falling due after more than one year
Borrowings (0.5) - -
Other creditors and provisions (12.3) (11.4) (10.8)
Net assets/(liabilities) excluding pension (liability)/ 10.1 (1.6) 3.0
asset
Pension (liability)/asset 4 (23.7) 10.0 (24.1)
Net (liabilities)/assets including pension (liability)/ (13.6) 8.4 (21.1)
asset
Equity shareholders' funds (13.7) 8.3 (21.2)
Minority interests 0.1 0.1 0.1
(13.6) 8.4 (21.1)
Notes to the Accounts
1. Geographical segment information
In the opinion of the Directors, the administering of the engineering,
construction and property development projects are the only material classes of
business.
Turnover Operating profit/(loss)
2003 2002 2002 2003 2002 2002
Half year Half year Year Half year Half year Year
£m £m £m £m £m £m
United Kingdom 280.5 224.8 488.2 3.9 1.0 2.2
Rest of the world -
property development
1.6 0.8 17.9 1.1 0.6 7.5
Rest of the world -
engineering &
construction 14.3 26.8 37.3 0.9 1.3 (1.0)
Reorganisation costs - - - - - (0.7)
296.4 252.4 543.4 5.9 2.9 8.0
2. Other finance (charges)/income
The other finance (charges)/income comprise the expected return on the assets of
pension scheme less the expected increase in the present value of the scheme
liabilities. The expected return and the increase in present value are based on
the value of assets and liabilities of the pension scheme at the start of the
period. The change from a net asset at 1 January 2002 to a net liability at 1
January 2003 caused the change from other finance income to other finance
charges.
3. Earnings per share
The calculation of basic earnings per share is based on profit after
taxation and minority interests of £5.2m (2002 half year £4.3m, 2002 full year
£9.5m) and 343,238,585 ordinary shares (2002 half and full year 341,442,838)
being the weighted average number of shares in issue during the period adjusted
for the issue of 8,000,010 ordinary shares following the exercise of warrants,
which raised £0.9m.
Diluted earnings per share is based on the weighted average number of ordinary
shares in issue increased to assume the conversion of all dilutive potential
ordinary shares. The total shares on this basis were 352,043,437 (2002 half year
343,267,929, full year 344,334,546). Diluted earnings per share rounds to the
same figure as basic earnings per share.
4. Pension liability
The pension liability has not been revalued at the balance sheet date.
This is in accordance with FRS17, which does not require revaluations for
interim accounts. The change in the liability in the half-year resulted from the
timing of contributions to the scheme.
The results of the Group for the six months to 30 June 2003 and 30 June 2002
were prepared in accordance with the accounting policies stated in the Company's
2002 statutory accounts. The Interim Report and Accounts are unaudited but have
been reviewed by the Auditors and their Independent Review Report is set out
below.
The figures for the year ended 31 December 2002 do not constitute the Company's
statutory accounts within the meaning of Section 240 of the Companies Act 1985,
but are extracted from them. The Company's statutory accounts for 2002 have
been delivered to the Registrar of Companies. The Company's auditors have
reported on those accounts; their report was unqualified and did not contain
statements under Section 237 of the Companies Act 1985.
INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC TO COSTAIN GROUP PLC
Introduction
We have been engaged by the Company to review the financial information set out
in the attached Consolidated Profit and Loss Account, Consolidated Cash Flow
Statement, Consolidated Balance Sheet and Notes to the Accounts and we have read
the other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Whilst the Company has previously produced an interim review report, that report
has not previously been subject to an interim review. As a consequence, the
review procedures set out above have not been performed in respect of the
comparative period for the six months ended 30 June 2002.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
KPMG Audit Plc
Chartered Accountants
London
2 September 2003
SHAREHOLDER INFORMATION
The Company's Registrar is Lloyds TSB Registrars, The Causeway, Worthing, West
Sussex BN99 6DA. Their web site address is www.lloydstsb-registrars.co.uk. For
enquiries regarding your shareholding, please telephone 0870 600 3984. You can
also view up-to-date information about your holdings by visiting the shareholder
web site at www.shareview.co.uk. Please ensure that you advise Lloyds TSB
Registrars promptly of a change of name or address.
ShareGIFT
The Orr Mackintosh Foundation (ShareGIFT) operates a charity share donation
scheme for shareholders with small parcels of shares whose value makes it
uneconomic to sell them. Details of the scheme are available on the ShareGIFT
Internet Site www.sharegift.org. Lloyds TSB Registrars can provide stock
transfer forms on request. Donating shares to charity in this way gives rise
neither to a gain nor a loss for Capital Gains Tax purposes. This service is
completely free of charge.
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