Final Results
Kier Group PLC
17 September 2003
17 September 2003
KIER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2003
•Eleventh year of growth in turnover and profits
•EPS of 69.5p up 15.1% (2002:60.4p)
•Adjusted earnings per share up 19.2% (adjusted to exclude the
exceptional profit of £0.7m on sale of a subsidiary undertaking in 2002)
•Profit before tax at £33.3m up 18.9% (2002: £28.0m)
•Dividend increased by 15.5% to 16.4p (2002: 14.2p)
•Strong cash performance - £53.5m generated from operating activities
•Construction & Services order books at record levels - £1.75bn
•Homes order book ahead of last year
Commenting on the results Colin Busby, Chairman of Kier Group, said
"At £1.75bn our order books in Construction & Services are now at record levels.
In Homes we commenced the new year with strong order books and sales and
reservations have been maintained at a healthy rate. Our property development
portfolio is providing us with good opportunities.
"The markets in all of our sectors remain sound. In Construction the market is
underpinned by Government spending; in Support Services building maintenance
work for local authorities will provide us with opportunities; and in Homes a
combination of low interest rates and undersupply of houses continues to support
the levels of demand required to meet our targets.
"All this, together with the quality of our management teams, their skills,
experience and commitment, ensure we are well placed to continue to deliver
further improved performance and growth."
Enquiries to:
John Dodds, Chief Executive
Deena Mattar, Finance Director
Kier Group plc Tel: 01767 640111
Caroline Sturdy/Bella Jowett
Bell Pottinger Financial Tel: 020 7861 3889
CHAIRMAN'S STATEMENT
Overview
I am pleased to report that Kier Group plc has achieved another excellent
performance this year with turnover and profit at record levels. Our integrated
business model, the fundamentals of which have remained unchanged for 10 years,
has provided consistent growth in overall profits with compound growth in
earnings per share of 23.2% per annum over the seven years since flotation.
Financial performance
Operating profit, including the Group's share of joint ventures, rose 29.4% to
£33.9m (2002: £26.2m) on turnover up 4.5% at £1,445.6m (2002: £1,382.7m). Profit
before tax increased by 18.9% to £33.3m (2002: £28.0m) and earnings per share of
69.5p rose 15.1% (2002: 60.4p). Profit before tax increased by 22.0% and
earnings per share by 19.2% after adjusting for the exceptional profit of £0.7m
on the partial disposal of an interest in a subsidiary undertaking in 2002. The
cash performance has again been excellent with a record £53.5m generated from
operating activities.
Our Construction & Services segment has seen a modest growth in profits during
the year. Kier Regional continues to be the contractor of choice for many of our
clients and has achieved an outstanding performance in the year, enhanced by
profits arising on the finalisation of accounts on a number of contracts.
However this performance was tempered by post acquisition losses recorded within
Partnerships First, the social housing business acquired in November 2002 as a
strategic long-term investment to take advantage of opportunities arising from
the increasing Government spend on social housing. In Kier National, another
excellent performance achieved in our international business was overshadowed by
losses in the UK major projects building business, largely caused by two
contracts. In Support Services we secured the 10-year £640m outsourcing contract
for Sheffield City Council in March 2003 and are pleased to report that it is
trading in line with expectations.
The Homes & Property divisions have each performed strongly this year with
overall operating profits up 45.9%. Kier Residential has enjoyed a steady demand
for its quality product and has benefited from a full year of contribution from
Allison Homes. Our Property development business has been transformed by the
acquisition, in joint venture, of Laing Property in April 2002.
The Board proposes a final dividend for the year ended 30 June 2003 of 11.2p to
be paid on 9 December 2003 to shareholders on the register at close of business
on 3 October 2003. This dividend, when added to the interim dividend of 5.2p
totals 16.4p for the year (2002: 14.2p) and is covered 4.2 times by basic
earnings per share of 69.5p. The dividend represents a 15.5% increase over that
for 2002; the sixth successive year in which the dividend has increased by 15%
or more.
In February 2003 we completed a private placing of debt raising a total of
£30.1m in order to lengthen the maturity of our borrowings and to provide an
appropriate structure to support the continuing development of the Group. At 30
June 2003 the net cash position, after borrowings, was £62.0m (2002: £46.4m)
including an advance payment in respect of the sale of the Whitehall property
development, much of which is expected to unwind over the next 12 months.
Pensions
A combination of falling equity values and interest rates as well as the mature
nature of our pension liability profile has resulted in a net deficit, on an FRS
17 basis, in the Kier Group Pension Scheme of £79.7m at 30 June 2003 (2002:
£46.3m). The Group continues to review its strategy for providing pension
benefits to all of its employees and a number of measures have been taken to
reduce the deficit: the final salary section of the Pension Scheme was closed to
new members on 1 January 2002 (a defined contribution arrangement is now
offered), employer's contributions have increased by 1% of payroll (£2.0m),
employees' contributions are increasing by 1% and changes have been made to
early retirement terms.
The Scheme is likely to enjoy positive net cash flows for the next nine years,
excluding the sale of investments, which provides sufficient time in which to
establish whether the current deficit is a transient outcome of depressed bond
yields and equity prices or whether a more substantial response is required.
Markets
Activity in the Construction & Services markets was strong in the year to June
2003 with Government spending on the increase and private sector spending
slowing slightly, although still at reasonable levels. Contract awards in our
Regional division totalled a record £760m (2002: £670m). The order book in
Support Services benefited from securing the £640m, 10-year building maintenance
contract for Sheffield City Council in March 2003. There is a growing market for
similar contracts and we believe we are well positioned to benefit from these
opportunities.
Demand for houses in our areas of operation continued through the second half of
the year. Consumer confidence suffered a little during the Middle East conflict
but activity has now returned to satisfactory levels. Scotland has been a
particularly good market with prices continuing to increase. In the southern
area of our operations our strategy to reduce unit size has proved successful.
The acquisition of the Laing Property portfolio, in joint venture with the Bank
of Scotland, has increased our profile in the property market thereby providing
us with many good opportunities. There is still a market in property offering
reasonable returns, without undue risk, by combining the two vital ingredients
of a good tenant and a good location.
Strategy
The strategy for the Group continues to be underpinned by our business model. As
cash continues to be generated by our high volume, low margin construction
businesses we have continued to invest in asset based businesses that provide
greater returns.
Growth in our Construction & Services businesses has largely been achieved
organically, although the acquisition of Partnerships First has contributed to
turnover growth in Kier Regional in the year. In Kier National the strategy to
reduce risk by seeking more partnered and negotiated work has resulted in
reduced turnover and awards. Within Support Services the building maintenance
business continues to benefit from the Government's 'best value' initiative and,
with more of this work available in the market, is expected to achieve further
growth.
The Homes & Property operations continue to grow both organically and from
corporate acquisition. Although no acquisitions were made in 2003 the previous
year saw two key purchases: Allison Homes and Laing Property. Both of these
businesses have performed well in the period since acquisition and Allison
Homes, in particular, has contributed strongly to the results for the year.
We were pleased to be announced preferred bidder on two further Private Finance
Initiative projects, Hinchingbrooke Hospital and Waltham Schools. These projects
will increase our portfolio of PFI investments to eight and further enhances our
track record in the health and education sectors. We remain committed to
selective investment in PFI projects.
The combination of our businesses and the effective use of our cash resources
have resulted in a return on shareholders' funds of 40% or more for six
consecutive years.
The Board
As announced at the time of our interim results, my previous role of Chairman
and Chief Executive has now been separated; John Dodds has taken on the role of
Group Chief Executive from 1 May 2003 and I have retained the role of Chairman.
My focus is primarily on strategic issues with John's on operational issues.
John has vast knowledge of the construction industry and in-depth knowledge of
Kier and his experience has continued to benefit the Group in this wider role.
Martin Scarth and David Homer retired at the end of the financial year. I would
like to express my thanks to Martin and David for their significant
contributions to the Group each having developed key businesses that have become
core to the successful performance of the Group. We wish them both well in their
retirement. Since last year three new appointments have been made to the Board:
Dick Side, Managing Director of the Regional construction division; Dick Simkin,
Managing Director of the Property division; and more recently Robert Gregory,
Managing Director of the Residential division. While each brings with him
substantial experience within the Group their appointments bring fresh ideas and
a new perspective to the Board and will maintain our drive to develop the Group.
Employees
On behalf of the Board I would like to thank all our employees for their
commitment and contribution to the continued success of the Group.
Prospects
At £1.75bn our order books in Construction & Services are now at record levels.
In Homes we commenced the new year with strong order books and sales and
reservations have been maintained at a healthy rate. Our property development
portfolio is providing us with good opportunities.
The markets in all of our sectors remain sound. In Construction the market is
underpinned by Government spending; in Support Services building maintenance
work for local authorities will provide us with opportunities; and in Homes a
combination of low interest rates and undersupply of houses continues to support
the levels of demand required to meet our targets.
All this, together with the quality of our management teams, their skills,
experience and commitment, ensure we are well placed to continue to deliver
further improved performance and growth.
Colin Busby
Chairman
CHIEF EXECUTIVE'S REVIEW
Overview
2003 has been another record year for Kier. Turnover increased by 4.5% to
£1,445.6m (2002: £1,382.7m) and profit before tax, excluding the exceptional
profit of £0.7m arising on the partial sale of a subsidiary undertaking in 2002,
rose by 22.0% to £33.3m (2002: £27.3m). All of our reporting segments have
performed ahead of last year and are well positioned to achieve further growth.
Our strong performance again this year can be attributed to the quality of our
management teams and the structure of our Group; particularly our integrated
business model which operates in different yet complementary markets. This gives
us flexibility and provides protection against exposure to any particular
market. In our Construction & Services segment we have businesses that provide a
range of services with an extensive spread of activities across the UK and
selectively overseas; in Homes each of our four brands is well established in
its own locality and offers a broad range of product type; in Property the
acquisition of Laing's property portfolio, in joint venture last year, has
increased our visibility in the property world providing us with many
opportunities. We continue to invest in the Private Finance Initiative (PFI),
but not extravagantly. We remain focused on particular sectors and projects
where we believe we have a competitive edge.
The principal feature of our business model is that it provides consistency in
the delivery of profit. I am confident that our businesses will continue to
respond to each of their markets and to provide results which will ensure that
the Group maintains this consistency in the future.
Construction & Services
Construction & Services recorded an operating profit of £12.9m (2002: £12.5m) an
increase of 3.2% with a good contribution from Kier Regional's businesses.
Turnover was 1.6% ahead of last year at £1,237.9m (2002: £1,218.4m).
On 26 November 2002 the Group disposed of its 49% investment in Belan Limited
and acquired 100% of the shares in Partnerships First Limited (Belan's social
housing subsidiary) in a strategic move to gain a greater market share in the
growing social housing market. The business is included within Kier Regional and
in the period following acquisition a thorough review of contracts has been
undertaken; Kier Regional's procedures and policies have been adopted and
changes have been made to the senior management team. Whilst the business has
recorded a loss during the seven months since acquisition we believe that, in
time, it will make a good contribution to the Group. The losses incurred by
Partnerships First have extinguished profits recorded from a number of
favourable final account settlements on contracts in Kier Regional's other
operations and have moderated, what would otherwise have been, an exceptional
performance from Kier Regional. Within Kier National a modest loss was recorded
overall largely due to loss provisions taken on two major building projects,
however an excellent result was achieved from our international business as some
of our longer term contracts come to an end.
On 31 March 2003 we achieved financial close on the £640m building maintenance
contract for Sheffield City Council, which involved acquiring the business of
its Construction and Building Services operation. This acquisition, together
with Partnerships First, has resulted in £21.1m of goodwill in the balance sheet
at 30 June 2003 which is being written off over a period of ten years.
Overall the operating margin achieved in Construction & Services at 1.04% was in
line with last year. Our ambition in this segment is to achieve net operating
margins of 1.5% in the medium term.
Construction
Kier Regional achieved an excellent performance in the year, turnover rose by
8.6% to £787.6m (2002: £724.9m) and cash, on average, £15.0m ahead of 2002,
reflected this strong result. The business operates from 31 offices providing
wide coverage throughout the UK; more extensive we believe, than any other
regional contractor. This coverage, together with its flexibility to respond to
changing market places and its low risk profile, has ensured Kier Regional
maintains a healthy order book and continues to provide a robust and consistent
performance.
The value of awards in the year to 30 June 2003 increased to a record £760m,
from £670m in 2002. The percentage of awards for public sector clients increased
to 31% (2002: 23%) largely due to awards in the health and education sectors.
Despite the increase in public sector work, which tends to be competitively
tendered, the percentage of negotiated and partnered work has been maintained at
around 42% with sectors such as retail and commercial, which offer more
opportunity for negotiated work, still providing the highest values of awards.
Further growth is anticipated in Kier Regional's turnover next year. The order
book of £430m at 30 June 2003 continues to grow and we enjoy a strong pipeline
of opportunities.
We were pleased to learn that we have been selected as a framework partner by
the NHS Estates for its ProCure 21 initiative. The framework is to carry out
some £1.4bn of capital projects per annum for five years with work distributed
amongst an exclusive group of 12 partners.
In Kier National, our major projects division, turnover has reduced to £334.9m
(2002: £412.6m) in line with our programme to restructure the business and to
reduce risk. A further reduction in turnover is anticipated in 2004. As part of
the restructuring programme the operations of Kier Construction (UK civil
engineering, rail and mining) have been combined with those of Kier
International under one management team. The international business has
continued to perform well and has exceeded expectations with particularly strong
performances from our operations in the Caribbean, the Middle East and Hong
Kong. The result is not expected to be repeated as it reflects the completion of
some of our longer term contracts. In the UK good progress is being made on our
two contracts on the Channel Tunnel Rail Link and our framework agreement with
United Utilities in the North West of England has grown with work now under way
or complete on 53 sites.
Within the UK major projects building business, good contributions from a number
of contracts have been overshadowed by loss provisions taken primarily on two
projects: the headquarters for TAG McLaren in Woking and a retail project in
Bournemouth. Both contracts are nearing completion and we are focused on
improving upon the final outturn recorded in the financial statements.
Support Services
Our Support Services business achieved turnover of £115.4m for the year (2002:
£80.9m) and, with the financial close in March 2003 of the £640m 10-year
building maintenance contract for Sheffield City Council, puts us on course to
achieve the medium term turnover target, which we established last year, of
£150m to £200m per annum. The potential market for local government building
maintenance contracts under the Government's 'best value' programme is
significant and, with our current portfolio of such contracts, we believe we are
the market leader in this type of work. Our other focus within Support Services,
that of Managed Services, is continuing to grow. The range of services has
broadened and includes Private Finance Initiative work. The Support Services
division increasingly enables the Group to provide a fully integrated managed
service to our clients.
Homes & Property
An excellent performance was achieved in this segment with both Kier Residential
and Kier Property contributing to the 45.9% growth in operating profit to £32.4m
(2002: £22.2m) on turnover up 26.8% to £201.3m (2002: £158.8m).
Residential
Kier Residential sold 990 units in the year to 30 June 2003, a 12.9% increase
over the 877 completions in 2002 and, with average selling prices up 9.5% to
£181,900 (2002: £166,100), we recorded an increase in turnover of 23.7% to
£180.1m (2002: £145.6m). Operating profit increased by 28.9% to £26.3m (2002:
£20.4m); an improvement in the margin to 14.6% from 14.0% in 2002 reflecting our
continuing focus on margins and profits. Operating profit per unit increased by
14.2% to £26,600 from £23,300.
A further £57.2m was invested in new land across all operating areas; this was
less than last year reflecting a highly competitive land market and a desire to
acquire appropriate sites at sensible margins. Consequently there has been a
modest reduction in the number of owned or controlled plots to 3,700 plots
(2002: 3,814 plots) representing 3.7 years of land bank. Our target is to hold
between 3.5 and 4 years of land and we are planning further investment during
2004. In addition to consented land we control some 12,000 plots of strategic
land which we are taking through the planning system. Whilst only 13% of our
unit sales in the year emanated from strategic sites, this proportion is
expected to grow as more strategic land is being converted into sites ready for
development and will contribute to our profit margins in due course.
Demand has remained strong across all our areas of operation. Our order book at
31 August 2003 at £55.9m was 9% ahead of last year providing a good start to the
new year. We are not exposed to the Central London market and have only a few,
carefully selected, sites within the M25 in line with our strategy since we
commenced our housebuilding activities.
Property
The acquisition, last year, of Laing's property portfolio, in joint venture with
the Bank of Scotland has provided the critical mass required to transform Kier
Property into a major player in the property market. Opportunities are being
presented to us on a regular basis as our network of contacts continues to grow.
Since this acquisition the Group's property activities are divided between those
in which the Group is engaged directly (Kier Ventures) and those that operate
through the joint venture with the Bank of Scotland (Kier Developments). Within
Kier Ventures the significant event during the year was securing the sale of the
Whitehall development in December 2002. This development is being constructed by
Kier Build and good progress is being made. Profit on this sale is recognised
over the life of the two year construction contract. At Waltham Point, where
Kier Ventures is in joint venture with Morley Fund Management, the 700,000sqft
regional distribution centre for J. Sainsbury, situated alongside the M25, was
sold.
Within Kier Developments good progress has been made on some early opportunities
providing the Group with profits ahead of expectation.
Infrastructure Investment
In October 2002, we were pleased to announce the award of our first PFI Care
Homes project in Greenwich, which is under construction by Kier Regional. In
December 2002 we were announced preferred bidder on our fourth PFI hospital,
Hinchingbrooke, on which we are hopeful of achieving financial close in the near
future. In August 2003 we were delighted to be announced preferred bidder on the
Waltham Schools project which involves the construction of eight schools by Kier
Regional under a £50m construction contract. This last project strengthens our
track record in PFI schools and will bring our total committed investment in PFI
projects to £13.8m with an expected average yield of over 15%. We are also
bidding for a number of other projects focusing on our traditional areas of
health, education, care homes and libraries. Our approach to bidding, as ever,
remains cautious as we are concerned about the time and costs expended on
bidding for these projects. This year £1.6m has been charged to profits in
respect of overheads and bidding costs (2002: £1.2m). We expect this level of
investment to continue.
Health & Safety
Kier Group recognises that achieving and maintaining high standards of health
and safety is integral to the success of our business performance and
objectives. Significant emphasis is placed on the reporting of incidents in
order that even the most minor can be effectively scrutinised to gain knowledge
and prevent reoccurrence.
Our procedures and processes are regularly reviewed to ensure that they are user
friendly and that standards set are linked to industry best practice and can be
delivered by all who form part of the supply chains. During 2002 a decision was
taken at Board level to have our Health & Safety Management System assessed by
BSI for accreditation to OHSAS 18001 standards. This assessment has taken place
and our systems gained the award of compatibility with 18001 standards. A
programme of audits is in progress throughout each division within the Group to
ensure all companies are operating to OHSAS 18001 requirements.
During the year to 30 June 2003 Kier Group's Accident Incident Rate was 747 per
100,000 staff and contractors and compares favourably with the Health & Safety
Executive average for our sector of 1,097.
During the year Kier companies were awarded recognition by the Health and Safety
Executive, the Royal Society for the Prevention of Accidents and the British
Safety Council, a fitting tribute to the standards and efforts being achieved by
our managers and staff.
The Environment
Kier Group companies are committed to working closely and sensitively within the
environment and communities they serve recognising that the industry as a whole
carries the potential to cause harm. As part of a continuing commitment to the
Group's environmental performance the Group's overall policy has been updated
this year with policies set which are specific to the nature of each of our
businesses. The Group has measured its performance against a range of five
benchmark targets for the last two years and has set targets for improvement
over the year to 30 June 2004. These benchmarks include the costs of waste
disposal, energy usage and CO2 emissions.
Training
It is important that we recruit and maintain the right people with the
appropriate skills, enthusiasm and integrity. Our objective is to ensure that
our employees are of the highest calibre and can add value to our business and
we recognise that it is our responsibility to provide an appropriate programme
of training.
Our training department continues to provide a range of courses with the aim of
developing the entire workforce to be best in class. The Group also recognises
its responsibility in recruiting and training young people. This year 60 new
graduates and 50 students have been recruited to start their professional
careers with Kier and over 150 employees are currently studying for technical
qualifications on various training schemes having joined the Group as school
leavers.
Summary
The year to 30 June 2003 has been a busy and challenging one for the Group and
it is only with the commitment, skill and professionalism of our employees that
another record year of profits was achieved. I would like to thank all our
employees at every level throughout our many businesses for their contribution
to the continuing success of the Group.
The Group is well placed going forward; our order books are strong in
Construction and Housing; plenty of opportunities are available in the Support
Services and Property markets and we have high quality, well motivated
management teams for whom I have great respect. All of this gives me confidence
for the future.
John Dodds
Chief Executive
Consolidated profit and loss account
for the year ended 30 June 2003
Notes 2003 2002
£m £m
Turnover - Continuing
operations
Group and share of joint 2 1,445.6 1,382.7
ventures
Less share of joint (27.9) (13.3)
ventures' turnover
------------ ------------
Group turnover 1,417.7 1,369.4
(acquisitions £38.0m)
Cost of sales (1,307.2) (1,276.2)
------------ ------------
Gross profit 110.5 93.2
Administrative expenses (77.4) (68.4)
------------ ------------
Group operating profit - 33.1 24.8
Continuing operations
Share of operating profit - 3.1 1.4
joint ventures
Share of operating loss - (2.3) -
associates (Belan)
------------ ------------
Operating profit: Group and 2 33.9 26.2
share of joint ventures
(acquisitions: 2003 loss £7.3m)
Profit on disposal of interest - 0.7
in subsidiary undertaking
Net interest receivable - 0.6 1.9
Group
Net interest payable - joint (1.2) (0.6)
ventures
Net interest payable - - (0.2)
associates
------------ ------------
Profit on ordinary activities 2 33.3 28.0
before taxation
Taxation on profit on ordinary 3 (9.5) (7.7)
activities
------------ ------------
Profit for the year 23.8 20.3
Dividends 4 (5.6) (4.8)
------------ ------------
Retained profit for the Group and its
share of joint ventures and associates 18.2 15.5
------------ ------------
Earnings per Ordinary Share 5
- basic 69.5p 60.4p
- diluted 68.2p 58.8p
------------ ------------
Adjusted Earnings per Ordinary 5
Share
(excluding profit on disposal
of interest in subsidiary
undertaking)
- basic 69.5p 58.3p
- diluted 68.2p 56.7p
------------ ------------
Dividend per Ordinary Share 16.4p 14.2p
------------ ------------
All items in the profit and loss account relate to operations continuing as at
30 June 2003.
Acquisitions in 2003 relate to the acquisition of the shares in Partnerships
First Limited on 26 November 2002 and the acquisition of the business relating
to the Construction and Building Services operation of Sheffield City Council on
31 March 2003. £0.9m of goodwill relating to these acquisitions has been
amortised and included in administrative expenses in the year to 30 June 2003.
Consolidated balance sheet
at 30 June 2003
Notes 2003 2002
£m £m
Fixed assets
Intangible assets - 21.1 -
goodwill
Tangible assets 53.0 48.9
Investments
Investments in joint ventures
Share of gross assets 159.1 143.1
Share of gross (155.8) (139.8)
liabilities
Loans provided to 27.4 21.9
joint ventures
------------- -------------
Investment in joint 30.7 25.2
ventures
Investment in associates - 2.3
Investment in own shares 1.5 1.6
32.2 29.1
------------- -------------
106.3 78.0
------------- -------------
Current assets
Stock 261.3 251.3
Debtors 205.2 209.2
Cash at bank and in hand 92.5 49.2
------------- -------------
559.0 509.7
------------- -------------
Current liabilities
Creditors - amounts falling (496.1) (488.2)
due within one year
------------- -------------
Net current assets 62.9 21.5
------------- -------------
Total assets less current 169.2 99.5
liabilities
Creditors - amounts falling (62.7) (18.0)
due after more than one year
Provisions for liabilities (13.1) (7.0)
and charges
------------- -------------
Net assets 93.4 74.5
============== =============
Capital and reserves
Called up share capital 0.3 0.3
Share premium account 15.2 13.7
Capital redemption reserve 2.7 2.7
Profit and loss account 75.2 57.8
------------- -------------
Equity shareholders' funds 6 93.4 74.5
============= =============
Consolidated cash flow statement
for the year ended 30 June 2003
Notes 2003 2002
£m £m
Net cash inflow from operating 7(a) 53.5 50.0
activities
------------ ------------
Dividends received from joint 1.1 -
ventures ------------ ------------
Returns on investments and servicing of finance
Interest received 0.9 2.1
Interest paid (1.3) (1.1)
Interest from joint ventures 0.7 0.7
------------ ------------
0.3 1.7
------------ ------------
Taxation paid (7.7) (6.8)
------------ ------------
Capital expenditure and financial investment
Purchase of tangible fixed (10.8) (11.5)
assets
Sale of tangible fixed assets 2.2 2.1
------------ ------------
(8.6) (9.4)
------------ ------------
Acquisitions and disposals 7(c) (19.0) (44.0)
------------ ------------
Equity dividends paid (3.8) (3.2)
------------ ------------
Cash inflow/(outflow) before
use of liquid resources and
financing 15.8 (11.7)
Management of liquid resources
Net increase in short-term bank (34.3) (6.4)
deposits ------------ ------------
Financing
Issue of ordinary share 0.2 0.5
capital
Purchase of own shares (0.4) (0.5)
Net proceeds of private 30.1 -
placement of loan notes ------------ ------------
29.9 -
------------ ------------
Increase/(decrease) in cash 11.4 (18.1)
during the year ------------ ------------
Reconciliation of net cash flow
to movement in net funds
Increase/(decrease) in cash 11.4 (18.1)
during the year
Cash outflow from movement in 34.3 6.4
liquid resources
Increase in long-term (30.1) -
borrowings
------------ ------------
Movement in net funds in the 15.6 (11.7)
year
Cash, net of debt on 1 July 46.4 58.1
------------ ------------
Cash, net of debt at 30 June 7(b) 62.0 46.4
============= ============
1. Accounting policies
There have been no changes to accounting policies in these financial statements.
2. Turnover, profit and segmental information
Segmental analysis of the results is shown below:
Turnover Operating profit Profit before tax
2003 2002 2003 2002 2003 2002
£m £m £m £m £m £m
Construction & 1,237.9 1,218.4 12.9 12.5 21.2 20.8
Services
Homes & 201.3 158.8 32.4 22.2 24.5 17.6
Property
Infrastructure 6.4 5.5 (0.5) (0.6) 0.7 (0.2)
Investment
Corporate - - (8.6) (7.9) (10.8) (10.0)
Overhead/
Finance
Investment in - - (2.3) - (2.3) (0.2)
Belan
----------- ----------- ----------- ----------- ----------- -----------
1,445.6 1,382.7 33.9 26.2 33.3 28.0
=========== =========== =========== =========== =========== ===========
Net operating assets Net assets
2003 2002 2003 2002
£m £m £m £m
Construction & (143.8) (146.0) 63.5 60.7
Services
Homes & 165.0 168.8 48.8 41.8
Property
Infrastructure 11.1 6.7 (0.9) (1.6)
Investment
Corporate (0.9) (1.4) (18.0) (26.4)
Overhead/
Finance ------------ ------------ ------------ ------------
31.4 28.1 93.4 74.5
============ ============ ============ ============
Geographical analysis of the results is as follows:
Turnover Operating profit Profit before tax
2003 2002 2003 2002 2003 2002
£m £m £m £m £m £m
United 1,368.2 1,310.7 26.1 19.9 25.4 21.3
Kingdom
Rest of 77.4 72.0 7.8 6.3 7.9 6.7
World
----------- ----------- ----------- ----------- ----------- -----------
1,445.6 1,382.7 33.9 26.2 33.3 28.0
============ =========== ============ ============ =========== ===========
Net operating assets Net assets
2003 2002 2003 2002
£m £m £m £m
United 41.4 29.5 87.3 69.7
Kingdom
Rest of (10.0) (1.4) 6.1 4.8
World
----------- ----------- ----------- -----------
31.4 28.1 93.4 74.5
=========== =========== =========== ===========
The above analysis of turnover shows the geographical segments from which the
products or services are
supplied and is not materially different from the geographical segments to which
products or services are supplied.
Net operating assets represent assets excluding cash, bank overdrafts, long-term
borrowings and interest-bearing inter-company loans.
3. Analysis of taxation charge
2003 2002
£m £m
Current tax
UK corporation tax on profits for 9.0 6.6
the year at 30%
Adjustments in respect of (0.4) 0.6
previous years
Joint venture tax 0.3 0.2
Overseas tax 0.9 0.2
------------ ------------
Total current tax 9.8 7.6
------------ ------------
Deferred tax
Origination and reversal of (0.2) 0.6
timing differences
Adjustments in respect of (0.5) (0.5)
previous years
Joint venture tax 0.4 -
------------ ------------
Total deferred tax (0.3) 0.1
Total tax on profit on ordinary 9.5 7.7
activities ------------ ------------
4. Dividends
2003 2002
£m £m
Ordinary Shares
Paid 5.2 pence (2002: 4.5 pence) 1.8 1.5
Proposed 11.2 pence (2002: 9.7 3.8 3.3
pence)
------------ ------------
5.6 4.8
============ ============
5. Earnings per share
Earnings per share
is calculated as follows: 2003 2002
Basic Diluted Basic Diluted
£m £m £m £m
Profit after 23.8 23.8 20.3 20.3
tax
Less: profit - - (0.7) (0.7)
on disposal of
interest in
subsidiary
undertaking
------------ ------------ ------------ ------------
Adjusted 23.8 23.8 19.6 19.6
profit after tax ------------ ------------ ------------ ------------
million million million million
Weighted 34.2 34.2 33.6 33.6
average number of
shares
Weighted - 0.3 - 0.5
average number of
unexercised
options -
dilutive effect
Weighted - 0.4 - 0.4
average impact of
Long-Term Incentive
Plan ------------ ------------ ------------ ------------
Weighted average 34.2 34.9 33.6 34.5
number of shares
used for EPS ------------ ------------ ------------ ------------
pence pence pence pence
Earnings 69.5 68.2 60.4 58.8
per share ------------ ------------ ------------ ------------
Adjusted earnings per
share (after
excluding profit on
disposal of
interest in
subsidiary
undertaking) 69.5 68.2 58.3 56.7
------------ ------------ ------------ ------------
6. Reconciliation of movements in shareholders' funds
£m
Shareholders' funds at 1 July 2002 74.5
Issue of shares 1.5
Retained profit for the year 18.2
Currency translation (0.8)
-------------
Shareholders' funds at 30 June 2003 93.4
=============
7. Cash flow notes
a) Reconciliation of operating profit to operating cash flows
2003 2002
£m £m
Group operating profit 33.1 24.8
Amortisation of goodwill 0.9 -
Depreciation charges 8.1 7.3
Profit on sale of fixed assets (0.8) (0.4)
Increase in stocks (5.8) (48.5)
Decrease in debtors 13.1 3.7
Increase in creditors 1.5 62.3
Increase in provisions 3.4 0.8
----------- ------------
Net cash inflow from operating 53.5 50.0
activities =========== ============
b) Analysis of 1 July 2002 Cash flows 30 June 2003
changes in net funds £m £m £m
Cash at bank and in 32.5 9.0 41.5
hand
Bank overdrafts (2.8) 2.4 (0.4)
Short-term bank 16.7 34.3 51.0
deposits
Long-term - (30.1) (30.1)
borrowings ------------- ------------- -------------
Cash, net of debt 46.4 15.6 62.0
============= ============= ==============
Cash, net of debt includes £12.5m (2002: £18.7m) being the Group's share of cash
and liquid resources held by joint arrangements and £12.6m (2002: £6.2m) of cash
not readily available to the Group.
c) Acquisitions and disposals 2003 2002
£m £m
Sale of interest in subsidiary - 1.5
undertaking (proceeds)
Sale of interest in subsidiary - (1.2)
undertaking (cash)
Investment in subsidiary undertakings (11.8) (15.8)
(assets)
Investment in subsidiary undertaking (1.9) (9.5)
(overdraft)
Investment in associate - (2.5)
Investment in joint ventures (5.3) (16.5)
------------- -------------
(19.0) (44.0)
============== ==============
8. Statutory Accounts
The financial information set out above does not constitute statutory accounts
for the years ended 30 June 2003 or 2002 but is derived from those accounts.
Statutory accounts for 2002 have been delivered to the Registrar of Companies
and those for 2003 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts, their reports were
unqualified and did not contain statements under section 237 (2) or (3) of the
Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
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