Final Results
Kier Group PLC
15 September 2005
KIER GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2005
• 13th successive year of growth in profits
• Pre-tax profits, including exceptional profits of £6.7m, up 39.8% to
£60.4m* (2004: £43.2m*)
• EPS, before exceptional profits, up 20.9% to 105.4p* (2004: 87.2p*)
• Dividend increased by 16.8% to 22.2p (2004: 19.0p)
• £86.4m of cash generated from operating activities
• Construction and Support Services order books at record levels
• The Homes order book together with unit completions to 31 August 2005
secure 43% of full year budgeted unit sales
*Results are shown before deducting £2.5m (2004: £2.6m) relating to goodwill
amortisation.
After deducting goodwill amortisation results are:
• Pre-tax profits, including exceptional profits of £6.7m, up 42.6% to
£57.9m (2004: £40.6m)
• EPS, including exceptional profits, up 31.0% to 106.8p (2004: 81.5p)
Commenting on the results Peter Warry, Chairman of Kier Group, said:
"This is the first set of full year results under my chairmanship and I am
pleased to be announcing another record level of turnover and profits for the
year to 30th June 2005, the 13th successive year of profits increase, with
growth across all divisions.
"We enter this year with record levels of work in hand in Construction and
Support Services and a satisfactory order book in Homes. Our integrated business
model continues to provide competitive advantage. I therefore anticipate further
profitable growth in the current year."
Chairman's statement
This is the first set of full year results under my chairmanship and I am
pleased that we have continued the pattern that was established under Colin
Busby's stewardship with yet another record level of turnover and profit for the
year to 30 June 2005, the 13th successive year of profits growth.
Pre-tax profits before exceptional items and goodwill have increased by 24.3% on
2004; construction awards were the highest ever at £1,372m (2004: £931m) and,
once again, cash generation has been excellent with £86.4m produced from
operations.
Financial performance
A strong performance was achieved in all the divisions. Turnover grew by 9.8%
to £1,621.4m (2004: £1,476.5m), operating profit, after deducting goodwill
amortisation rose 25.4% to £53.4m (2004: £42.6m) and profit before tax (before
exceptional profits) increased by 26.1% to £51.2m. The year end net cash balance
was £58.1m (2004: £7.6m).
Exceptional profits of £6.7m (2004: £nil) comprise £2.1m arising on the sale of
our investment in the Neath Port Talbot Hospital concession, £3.8m on the sale
of a fixed asset property and £0.8m arising on the sale of our remaining
interest in Kier Hong Kong. Tax of £1.8m has been charged on the combined
profit. In addition, whilst no profit has been recognised, an exceptional tax
charge of £2.5m has arisen following refinancing and subsequent £8.1m cash
extraction from the PFI investment vehicle for Hairmyres Hospital. Basic
earnings per share, after all exceptional items, increased by 31.0% to 106.8p
(2004: 81.5p). Adjusted earnings per share before goodwill amortisation and
exceptional items increased by 20.9% to 105.4p (2004: 87.2p).
The Board proposes a final dividend for the year ended 30 June 2005 of 15.2p
(2004: 13.0p) making 22.2p for the year (2004: 19.0p) an increase of 16.8% and
covered 4.7 times by earnings per share before goodwill amortisation and
exceptional items. The dividend will be paid on 6 December 2005 to shareholders
on the register on 30 September 2005 and there will be a scrip alternative.
Shareholders' funds increased by £31.0m to £147.4m (2004: £116.4m). Pre-tax
return on shareholders' funds was 43.9%, having been sustained at around this
level for the last eight years.
International Financial Reporting Standards ('IFRS')
This is the last set of results reported upon under UK Generally Accepted
Accounting Practice. The interim results to 31 December 2005 and those that
follow will be reported upon under IFRS. The results for the year to 30 June
2005 have also been restated under IFRS and, together with the restated balance
sheet at 30 June 2005 and selective notes are disclosed in a separate
announcement released today. The key points relating to the restatement are:-
• The transition to IFRS has no impact on business operations, cash,
financing or our ability to pay dividends;
• There is no impact on the profit recognition policy for Construction or
Support Services and only minor impact on profit recognition for
Housebuilding and Property; and
• The most significant effect of IFRS is in accounting for pensions which
reduces stated net assets.
The Kier Group Board
I am pleased to announce that, with effect from 1 October 2005, Ian Lawson,
managing director of Kier Support Services, and Paul Sheffield, deputy managing
director of Kier Regional, will be joining the Board. Ian returned to the Group
five years ago as managing director of our Infrastructure Investment business,
having previously worked for Kier International. He joined the Regional board in
2003 and the Support Services board in 2004. Paul joined the Group as a graduate
engineer 22 years ago. He has worked in the UK and overseas and was appointed
managing director of Kier Construction in 2001, chairman of Kier Construction in
2003 and joined the Regional board in 2004. I am looking forward to working with
Ian and Paul and am confident that they will both contribute strongly to the
Board and to the future direction of the Group.
The Residential board
Following the restructuring of the Residential board we have appointed Michael
O'Farrell, previously managing director of our subsidiary Allison Homes, as
managing director of Kier Residential reporting to the Kier Group Board through
the chief executive, John Dodds. With Mick's broad experience in housebuilding
I am confident that he will make a significant contribution to the future growth
of the Residential business.
Prospects and markets
We enter the year with record levels of work in hand in Construction and Support
Services and a satisfactory order book in Homes. Our integrated business model
continues to provide competitive advantage. I therefore anticipate further
profitable growth in the current year.
Chief Executive's review
The year has been an extremely busy one for Kier with record turnover and profit
levels achieved by all the divisions. A growing proportion of our work has been
secured from repeat business and negotiated contracts and an increasing amount
is being generated from development schemes where two or more of the divisions
within the Group are working together. An example of this is at Whitehall where
the office development for DEFRA was completed during the year by Kier Build,
working for developer Kier Property, with Kier Managed Services carrying out the
facilities management function. Further examples include PFI projects and other
schemes involving Kier Residential and Kier Partnership Homes. This rare
offering of a total solution to clients' increasingly complex requirements is
providing us with some unique opportunities and an ability to attract new
clients. I am confident that further value can be achieved from these markets.
Construction
The full-year results for the Construction segment have been analysed separately
from those of Support Services for the first time. Our Construction segment
includes Kier Regional, comprising Regional Contracting, Affordable Housing and
Major Building Projects, and Kier Construction our Infrastructure and Overseas
operation. Turnover from the Construction segment reached £1,096.2m, 8.8% up on
2004's £1,007.3m, fuelled by a good market and a strong supply of public sector
work. Operating profit, before goodwill amortisation, increased by 35.7% to
£15.6m (2004: £11.5m) and the operating margin increased from 1.1% to 1.4%.
Cash generation has been exceptionally strong with cash balances at 30 June 2005
over £50m higher than the previous year end and average cash balances for the
year £34m ahead. Contract awards were at a record £1,372m (2004: £931m)
including a number of long-term framework contracts, providing a record order
book of £1,030m at 30 June 2005 (2004: £662m).
The year to 30 June 2005 saw a number of records for Kier Regional: turnover at
£954.6m was 10.0% ahead of 2004; year end cash balances of £205m were £36m
ahead; and contract awards at £1,018m compare favourably with the previous
record set in 2004 of £845m.
The strength of Kier Regional lies in its wide network of UK construction
businesses which combine local knowledge with national presence enabling it to
respond to a wide range of markets and sectors. Through strategic alliances and
frameworks with public sector clients it delivers a co-ordinated service through
Kier Health, for ProCure 21; Kier Custodial, for prisons; and Kier Education,
for Building Schools for the Future. Other local authority and housing
association frameworks have also been established including those to deliver
affordable housing. These frameworks and strategic alliances have contributed to
an increase in public sector awards to 41% of the total, compared with 36% in
2004. In the private sector, where commercial and retail awards dominate,
similar frameworks exist, for example, through Kier Retail, for clients such as
Tesco, Waitrose and Morrisons. The proportion of total awards from negotiated
and two-stage bids has increased to 59% in 2005 from 52% in 2004.
Kier Regional has started the new financial year with an order book of £647m
(2004:£511m) comprising largely shorter-term contracts at an average value of
£2.6m which provides protection against building cost inflation and maintains a
low risk profile, a strategy that has been key to the success of this business.
With this type and value of work in hand and a large volume of contracts pending
award we anticipate further growth in the business during this financial year.
In the UK, the civil engineering arm of Kier Construction successfully completed
a major section of the Channel Tunnel Rail Link and secured a Network Rail
Structures Framework contract for the East Anglia region which is expected to
provide £100m of work over five years. The water sector has provided further
work through our second five year framework agreement with United Utilities, in
joint venture, which will provide £130m of work for Kier over the period. Our
private opencast coal mine at Greenburn has now completed its first full year of
production. So far 750,000 tonnes have been mined and over 60% of that remaining
in the ground has been forward sold at favourable, fixed prices. Possible
extensions to the mine are being explored which could extend the period of
activity beyond the current anticipated completion date of 2009.
Overseas, our activities in the Caribbean are thriving with the award of a new
hotel contract for Sandals in Antigua and a transportation centre in Kingston,
Jamaica. Our long term alliance with Alcoa continues on projects at alumina
refineries in Suriname and Jamaica and we are set to play a further major role
in Alcoa's worldwide capital expansion plans. During the year we sold our
remaining shares in Kier Hong Kong which provided an exceptional profit of
£0.8m. We maintain our relationships with local Hong Kong contractors which may,
in time, lead to future joint venture opportunities in the Far East.
Support Services
Our Support Services business continues to prosper. Overall turnover increased
by 15.1% to £227.5m (2004: £197.7m) and operating profit, after goodwill
amortisation, rose to £3.2m; before goodwill it was £5.1m (2004: £4.7m)
representing a margin of 2.2%. A number of contracts were awarded during the
year resulting in a record order book of £1.2bn at 30 June 2005 (2004: £1.1bn).
Building Maintenance successfully implemented the Leeds North West and Leeds
South repair and maintenance contracts with a combined value of over £10m per
annum for the next five years, extendable for a further five. Kier Sheffield
added to its, already successful, building maintenance contract by securing a
share of the Sheffield Decent Homes framework contract which will provide us
with around £160m of work over seven years. Other Decent Homes framework
contracts were awarded at Islington for £40m and Greenwich for £7.5m, both over
five years. New work is plentiful in this sector and we are hopeful of further
awards in the current financial year.
In Managed Services the portfolio of services provided under the Private Finance
Initiative continues to grow with the start of services at Essex, Harrow,
Waltham Forest and Bexley Schools. We were pleased to have won Best Operational
Health Scheme in the UK for Neath Port Talbot Hospital in the Public Private
Finance Awards for the standard of service provided to clients and the award for
Best Operational Education Project for Pembroke Dock Community School.
Homes
Kier Residential came forward at 1 July 2004 with an exceptionally strong order
book which provided a high level of unit sales for the six months to 31 December
2004. As predicted the number of unit sales was lower in the second half of the
year. Full year completions of 1,215 were 4.9% ahead of 2004's 1,158 at an
average selling price of £181,700 (2004: £186,300) which provided turnover of
£220.8m (2004: £215.7m) from housing sales. A land disposal, planned as part of
a larger site, generated a further £4.7m of turnover at no profit or loss. The
reduction in average selling prices year on year reflects both a 7% reduction in
average unit size and an increase in the proportion of affordable housing sales
from 5% of total sales in 2004 to 12% in 2005.
Operating profit increased by 7.2% to £34.1m (2004: £31.8m) at a margin of 15.4%
on housing turnover (2004: 14.7%), benefiting during the period from a large
strategic site at Royston which is now complete. Our Scottish based business
contributed strongly to the growth following the restructuring and strengthening
of the local management team and assisted by a sound market.
During the year £69m was spent on selective land purchases and in June 2005 we
acquired the land and work in progress of Ashwood Homes, in an off-market deal,
for £23.5m of which £8.5m is deferred. Nine sites, located in Lincolnshire and
Cambridgeshire, were acquired in the transaction comprising 389 units with
planning consent. At 30 June 2005 the land bank contained 5,178 units with
planning consent (2004: 4,961) representing slightly more than our target
holding of four years' unit sales. At 30 June 2005 we held approximately 12,000
units of strategic land, mostly under option, after achieving planning consent
during the year for 550 units on a former Anglian Water site near the centre of
Peterborough. Significant planning progress has also been made in delivering a
site at Aylesbury, part of a mixed-use development area, which should provide us
with 400 units for development. Strategic land is proving a valuable route for
land acquisition. Historically approximately 18% of our annual unit sales have
originated from this process.
Kier Residential is making good progress at Poole Harbour where contracts have
been exchanged with Network Rail on a six acre mixed-use development site. Work
is about to commence, in conjunction with Kier Construction and Kier Property,
to deliver a new hotel, 250 apartments and a new railway station. Other
mixed-use projects include the former Shippams paste factory site in Chichester
where planning consent has been granted for 165 apartments and 50,000sq ft of
retail units for redevelopment in conjunction with Kier Property and Kier
Regional.
The holiday period has, as always, resulted in fewer visitors to our sites,
however, the quality of those visitors has improved. Although purchasers are
taking longer to make their decision, we have taken more reservations in the two
months to 31 August 2005 than in the same period last year. Taken together the
order book and completions to date are at a marginally lower level than last
year reflecting the strong brought forward position at 1 July 2004. We will be
selling from around 18% more outlets during the year compared with the year to
30 June 2005 and therefore we anticipate growth in unit sales for the full year
of which 43% are already secure. The balance of unit sales is expected to be
more heavily skewed towards the second half of the year than 2005.
Property
Kier Property continues to establish itself as one of the UK's leading
commercial property developers. It has a development pipeline totalling 4m sq
ft of space including offices, industrial, retail and mixed-use schemes with a
future sales value of nearly £700m developed directly and through joint venture.
In the year to 30 June 2005 Kier Property achieved a 29.6% increase in
turnover to £60.4m (2004: £46.6m) and a 51.5% increase in operating profit to
£10.0m (2004: £6.6m). The completion, by contractors Kier Regional, of the
office developments at Whitehall for DEFRA and at Swindon for the National Trust
during the year contributed strongly to the results. Also in the offices sector
the 100,000sq ft head office for BAE subsidiary AMS was completed at Frimley
Business Park and plans are in preparation for a further 300,000sq ft office
scheme in the same location.
Under the Trade City industrial brand we acquired a site at Enfield for up to
50,000sq ft of industrial space and completed our sites at Bicester, Exeter and
Romford.
In the retail sector we completed a further 75,000sq ft resource recovery unit
at Waltham Park for Sainsbury adjacent to the 700,000sq ft distribution centre
completed for the same client some time ago. Further investment in retail
included the acquisition of the 100,000sq ft Mannington Retail Park in Swindon
which is let to national occupiers and includes valuable redevelopment and
refurbishment opportunities.
In Reading town centre a 22 storey residential and retail development has been
given the go-ahead and at Sunbury consent has been granted for a new hotel and
90 flats near to Kempton racecourse. More mixed-use opportunities are being bid
for in conjunction with Kier Residential as well as other office, retail and
industrial sites. In order to fund further expansion the bank facilities within
the joint venture with the Bank of Scotland have been increased to £162m.
Infrastructure Investment
Our infrastructure investment business has continued to successfully bid and win
work by drawing together the Group's PFI, construction and services activities
under the banner of Kier. This formula has been a key factor in much of our
success to date.
Financial close was reached on a £50m scheme for Sheffield City Council in May
2005, our third schools project. Kier Regional has started construction on the
four new schools and on completion Kier Managed Services will provide the
services for the 25-year term. Our fourth schools project achieved preferred
bidder status in July 2005 for five new schools and the refurbishment of one
school in Norfolk. In health our fifth project was awarded preferred bidder
status in February 2005 for a treatment centre in Ipswich. Upon financial
close, expected in the New Year, Kier Regional will carry out the £26m
construction project and Kier Managed Services will maintain it for 30 years
after completion. Our response to the Building Schools for the Future
initiative is brought together under the Kier Education banner which achieved
its first short-listing, in July 2005, as one of three bidding to Sheffield City
Council.
As well as investing in new projects this year we have been developing the
returns from our current portfolio. In August 2004 we refinanced our first PFI
project, Hairmyres Hospital which provided us with £8.1m of cash after
contributing 30% of the gain to the Lanarkshire Health Board. No profit can be
recognised on the gain unless we dispose of the investment but tax is payable
resulting in an exceptional tax charge of £2.5m in the accounts. In December
2004 we disposed of our 25.5% investment in the Neath Port Talbot Hospital
concession to Secondary Market Infrastructure Fund UK LP. We received a cash
consideration of £5.0m on the sale and generated an exceptional profit of £2.1m.
Following this disposal our portfolio of investments comprises 12 projects with
a committed investment of £20.3m. As the secondary market for these investments
develops there may be opportunity to realise future value from the portfolio.
Pensions
The FRS 17 deficit in the Kier Group Pension Scheme, after accounting for
deferred tax, has increased during the year from a net £67.2m to £82.6m at 30
June 2005. The market value of the scheme's assets rose by 21% whilst the
present value of liabilities increased by 21%, largely resulting from a 0.9%
reduction in the discount rate compared with the previous year. The assumptions
for longevity have also changed contributing to an increase in the deficit. The
Group has continued to take a responsible approach to the funding requirements
of the pension fund and in March 2005, using the cash proceeds from refinancing
the Hairmyres PFI investment and the sale of the investment in the Neath Port
Talbot Hospital concession, the Group made a £12.0m special cash contribution to
the pension fund, without which the deficit in the fund would have been greater.
Under current accounting standards this contribution has no impact on
operating profits and is treated as a prepayment in the accounts.
Other changes have been made to the way in which pension contributions are made
which will result in savings to the Group and which are being contributed to the
pension fund in addition to normal requirements.
Health & Safety
In an industry where incidents and accidents still occur, Kier Group health &
safety standards are an integral part of the management process. The Group
remains focused on the continuous improvement of health & safety standards
throughout all parts of the business and supply chain and is determined to play
its part in creating an industry that presents a healthy and safe working
environment and is an attractive prospect for the employment of future
generations. The Group's Accident Incidence Rate is 598 per 100,000 staff and
subcontractors, comparing favourably with the Health & Safety Executive
benchmark of 1,023.
The positive attitude displayed toward health & safety by Kier companies led to
the award of one bronze, one silver and 17 gold RoSPA awards and 13 British
Safety Council Awards. We were also delighted that Kier Building Maintenance won
the RoSPA Behavioural Safety and Best Practice award which is a great
achievement.
Kier people
I should like to thank each and every one of our employees for their
contribution to the advancement of the Group. It is the continuing commitment,
innovation, professionalism and integrity of our people that has made the Group
the success it is today and I am confident that the high quality of our teams
will take the Group forward to achieve further growth in the future.
Summary and prospects
Kier has had a very successful year, with strong performances achieved in all
the divisions. Looking forward the Group is in excellent shape to continue its
advancement. The Construction order book is at record levels containing a high
proportion of good quality negotiated work and framework contracts. The local
authority building maintenance outsourcing sector continues to provide our
Support Services division with good opportunities. In Homes our land bank
consists of sites capable of delivering the right product in the right location
which should provide further growth in unit sales this year. In Property our
portfolio of office, retail and industrial developments continues to enhance
value and we are investing further in new schemes; and in Infrastructure
Investment we have developed a good pipeline of projects and remain committed to
the Government's Private Finance Initiative. More opportunities are being
presented to us where we are able to involve the many disciplines in the Group
to provide mixed-use solutions to clients and a total in-house service.
Ours is a long-term business with firm foundations in place and I am confident
that the Group will continue to deliver further growth in 2006 and beyond.
For further information, please contact:
John Dodds, Chief Executive
Kier Group plc Tel: 01767 640111
Deena Mattar, Finance Director
Kier Group plc Tel: 01767 640111
Caroline Sturdy
Madano Partnership Tel: 020 7378 7033
Consolidated profit and loss account
for the year ended 30 June 2005
Notes 2005 2004
£m £m
Turnover - Continuing operations
Group and share of joint ventures 2 1,621.4 1,476.5
Less share of joint ventures' turnover (48.4) (32.4)
------------ ------------
Group turnover 1,573.0 1,444.1
Cost of sales (1,430.7) (1,315.1)
------------ ------------
Gross profit 142.3 129.0
Administrative expenses (93.7) (89.6)
------------ ------------
Group operating profit - Continuing operations 48.6 39.4
Share of operating profit - joint ventures 4.8 3.2
------------ ------------
Operating profit: Group and share of joint ventures 2 53.4 42.6
Exceptional items 3 6.7 -
------------ ------------
Profit on ordinary activities before interest and taxation 60.1 42.6
Net interest receivable/(payable) - Group 0.9 (0.2)
Net interest payable - joint ventures (3.1) (1.8)
------------ ------------
Profit on ordinary activities before taxation 2 57.9 40.6
Taxation on profit before exceptional items 4 (15.8) (12.0)
Taxation on exceptional items 3 (4.3) -
(20.1) (12.0)
------------ -----------
Profit for the year 37.8 28.6
Dividends 5 (7.9) (6.8)
------------ ------------
Retained profit for the Group and its share of joint
ventures 29.9 21.8
------------ ------------
Earnings per Ordinary Share 6
- basic 106.8p 81.5p
- diluted 105.9p 80.8p
------------ ------------
Adjusted Earnings per Ordinary Share 6
(before exceptional items and goodwill amortisation)
- basic 105.4p 87.2p
- diluted 104.5p 86.4p
------------ ------------
Dividend per Ordinary Share 22.2p 19.0p
------------ ------------
All items in the profit and loss account relate to operations continuing as at
30 June 2005.
Group operating profit includes a charge of £2.5m for the amortisation of
goodwill (2004: £2.6m).
Consolidated balance sheet
at 30 June 2005
Notes 2005 2004
£m £m
Fixed assets
Intangible assets - goodwill 16.1 18.6
Tangible assets 75.8 68.9
Investments
Investments in joint ventures
Share of gross assets 218.3 194.8
Share of gross liabilities (221.8) (190.7)
Loans provided to joint ventures 27.3 28.1
------------- -------------
Investment in joint ventures 23.8 32.2
------------- -------------
115.7 119.7
------------- -------------
Current assets
Stock 334.2 328.6
Debtors 259.9 231.2
Cash at bank and in hand 93.5 41.4
------------- -------------
687.6 601.2
------------- -------------
Current liabilities
Creditors - amounts falling due within one year (587.3) (530.7)
------------- -------------
Net current assets 100.3 70.5
------------- -------------
Total assets less current liabilities 216.0 190.2
Creditors - amounts falling due after more than one year (48.3) (58.5)
Provisions for liabilities and charges (20.3) (15.3)
------------- -------------
Net assets 2 147.4 116.4
============= =============
Capital and reserves
Called up share capital 0.4 0.4
Share premium account 17.9 17.1
Capital redemption reserve 2.7 2.7
Share scheme reserve (0.2) (0.4)
Profit and loss account 126.6 96.6
------------- -------------
Equity shareholders' funds 7 147.4 116.4
============= =============
Consolidated cash flow statement
for the year ended 30 June 2005
Notes 2005 2004
£m £m
Net cash inflow/(outflow) from operating activities 8(a) 86.4 (3.7)
------------ ------------
Dividends received from joint ventures 0.4 0.3
------------ ------------
Returns on investments and servicing of finance
Interest received 2.5 1.4
Interest paid (2.6) (2.8)
Interest on loans to joint ventures 1.2 2.0
------------ ------------
1.1 0.6
------------ ------------
Taxation paid (12.8) (11.5)
------------ ------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (19.9) (21.5)
Sale of tangible fixed assets 6.0 2.8
------------ ------------
(13.9) (18.7)
------------ ------------
Acquisitions and disposals 8(c) (4.1) (17.2)
------------ ------------
Equity dividends paid (6.4) (5.5)
------------ ------------
Cash inflow/(outflow) before use of liquid resources and
financing 50.7 (55.7)
Management of liquid resources
Net decrease in short-term bank deposits 16.1 20.7
------------ ------------
Financing
Issue of ordinary share capital 0.2 1.4
Purchase of own shares (0.4) (0.1)
------------ ------------
(0.2) 1.3
------------ ------------
Increase/(decrease) in cash during the year 66.6 (33.7)
------------ ------------
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash 66.6 (33.7)
Decrease in liquid resources (16.1) (20.7)
------------ ------------
Movement in net funds in the year 50.5 (54.4)
Cash, net of debt on 1 July 7.6 62.0
------------ ------------
Cash, net of debt at 30 June 8(b) 58.1 7.6
============= =============
1. Accounting policies
There have been no changes to accounting policies in these financial statements.
They are prepared in accordance with UK Generally Accepted Accounting Practice.
2. Turnover, profit and segmental information
Segmental analysis of the results is shown below:
Turnover Operating profit Profit before tax
2005 2004 2005 2004 2005 2004
£m £m £m £m £m £m
Construction 1,096.2 1,007.3 15.0 10.9 26.4 19.0
Support Services 227.5 197.7 3.2 2.7 3.0 2.2
Homes 225.5 215.7 34.1 31.8 24.7 24.5
Property 60.4 46.6 10.0 6.6 7.2 5.0
Infrastructure Investment 11.8 9.2 (0.9) (1.9) 1.4 (1.3)
Corporate overhead/finance - - (8.0) (7.5) (4.8) (8.8)
----------- ----------- ----------- ----------- ----------- -----------
1,621.4 1,476.5 53.4 42.6 57.9 40.6
=========== =========== =========== =========== =========== ===========
Operating profit and profit before tax is after deducting the amortisation of
goodwill in Construction of £0.6m (2004: £0.6m) and in Support Services of £1.9m
(2004: £2.0m).
Net operating assets Net assets
2005 2004 2005 2004
£m £m £m £m
Construction (175.1) (132.6) 66.6 59.0
Support Services (6.3) 10.6 8.1 7.3
Homes 248.4 201.3 62.9 53.6
Property 24.3 24.8 11.7 8.1
Infrastructure Investment (1.7) 9.0 (3.7) (1.8)
Corporate overhead/finance (0.3) (4.3) 1.8 (9.8)
------------ ------------ ------------ ------------
89.3 108.8 147.4 116.4
============ ============ ============ ============
Net operating assets represent assets excluding cash, bank overdrafts, long-term
borrowings and interest-bearing inter-company loans.
Operating profit and profit before tax for Support Services and corporate
overhead/finance have been adjusted to reallocate costs of bidding for Support
Services contracts from corporate overhead/finance to Support Services. The
adjustment is £2.0m in the year to June 2004. Profit before tax for the year to
30 June 2005 includes: an exceptional profit of £0.8m relating to the sale of an
investment in Construction, an exceptional profit of £2.1m relating to the sale
of an investment in a PFI joint venture in Infrastructure Investment; and an
exceptional profit of £3.8m relating to the sale of a fixed asset property in
corporate overhead/finance.
3. Exceptional items
Exceptional items for the year to 30 June 2005 arise from the following:
Profit Tax Net profit/
before tax (loss)
£m £m £m
Disposal of investment in Kier Hong Kong Limited 0.8 - 0.8
Disposal of investment in a PFI joint venture 2.1 (0.6) 1.5
Refinancing of a PFI joint venture - (2.5) (2.5)
Disposal of a fixed asset property 3.8 (1.2) 2.6
-------- -------- ---------
6.7 (4.3) 2.4
======== ======== =========
4. Analysis of taxation charge
2005 2004
£m £m
Taxation on profit before exceptional items 15.8 12.0
Taxation on exceptional items 4.3 -
----------- -----------
Total taxation charge 20.1 12.0
----------- -----------
Current tax
UK corporation tax on profit before exceptional items at 11.7 10.8
30%
UK corporation tax on exceptional items 4.3 -
Joint venture tax 0.6 0.1
Overseas tax 0.3 0.5
Adjustments in respect of previous years 0.4 0.6
----------- -----------
Total current tax 17.3 12.0
------------ ------------
Deferred tax
Origination and reversal of timing differences 2.8 0.3
Joint venture tax 0.4 (0.3)
Adjustments in respect of previous years (0.4) -
------------ ------------
Total deferred tax 2.8 -
------------ ------------
Total tax on profit on ordinary activities 20.1 12.0
------------ ------------
5. Dividends
2005 2004
£m £m
Ordinary Shares
Paid 7.0 pence (2004: 6.0 pence) 2.5 2.2
Proposed 15.2 pence (2004: 13.0 pence) 5.4 4.6
------------ ------------
7.9 6.8
============ ============
6. Earnings per share
Earnings per share is calculated as follows: 2005 2004
Basic Diluted Basic Diluted
£m £m £m £m
Profit after tax 37.8 37.8 28.6 28.6
Less: exceptional items (6.7) (6.7) - -
Add: tax on exceptional items 4.3 4.3 - -
----------- ------------ ------------ ------------
Profit after tax before exceptional items 35.4 35.4 28.6 28.6
Add: goodwill amortisation 2.5 2.5 2.6 2.6
Less: tax on goodwill amortisation (0.6) (0.6) (0.6) (0.6)
----------- ------------ ------------ ------------
Adjusted profit after tax 37.3 37.3 30.6 30.6
----------- ------------ ------------ ------------
Million Million Million Million
Weighted average number of shares 35.4 35.4 35.1 35.1
Weighted average number of unexercised options
- dilutive effect - 0.1 - 0.1
Weighted average impact of LTIP - 0.2 - 0.2
----------- ------------ ------------ ------------
Weighted average number of shares used for EPS 35.4 35.7 35.1 35.4
----------- ------------ ------------ ------------
Pence Pence Pence Pence
Earnings per share (based on net profit for 106.8 105.9 81.5 80.8
the year)
----------- ------------ ------------ ------------
Adjusted earnings per share (before exceptional 100.0 99.2 81.5 80.8
items)
----------- ----------- ------------ ------------
Adjusted earnings per share (before exceptional 105.4 104.5 87.2 86.4
items and goodwill amortisation)
----------- ----------- ------------ ------------
7. Reconciliation of movements in shareholders' funds
£m
Profit for the year 37.8
Dividends (7.9)
------------
Retained profit for the year 29.9
Currency translation 0.1
Issue of shares 0.8
Movement in share scheme reserve 0.2
------------
Net additions to shareholders' funds 31.0
Opening shareholders' funds 116.4
-----------
Closing shareholders' funds 147.4
-----------
8. Cash flow notes
a) Reconciliation of operating profit to operating cash flows
2005 2004
£m £m
Group operating profit 48.6 39.4
Amortisation of goodwill 2.5 2.6
Depreciation charges 12.3 8.1
Profit on sale of fixed assets (0.5) (1.3)
Decrease/(increase) in stocks 18.5 (52.1)
Increase in debtors (28.7) (26.2)
Increase in creditors 31.9 27.9
Increase/(decrease) in provisions 1.8 (2.1)
----------- -----------
Net cash inflow/(outflow) from operating activities 86.4 (3.7)
=========== ===========
b) Analysis of changes in net funds 1 July 2004 Cash flows 30 June 2005
£m £m £m
Cash at bank and in hand 11.1 68.2 79.3
Bank overdrafts (3.7) (1.6) (5.3)
Short-term bank deposits 30.3 (16.1) 14.2
Long-term borrowings (30.1) - (30.1)
------------- ------------- -------------
Cash, net of debt 7.6 50.5 58.1
============= ============= =============
Cash, net of debt includes £6.2m (2004: £10.2m) being the Group's share of cash
and liquid resources held by joint arrangements and £16.6m (2004: £13.6m) of
cash not readily available to the Group.
c) Acquisitions and disposals 2005 2004
£m £m
Investment in subsidiary undertakings (16.5) (17.0)
Disposal of investment in Kier Hong Kong Limited 0.8 -
Disposal of investment in PFI joint venture 5.0 -
Refinancing of PFI joint venture 8.1 -
Investment in joint ventures (1.5) (0.2)
------------- -------------
(4.1) (17.2)
============= =============
9. Statutory Accounts
The financial information set out above does not constitute statutory accounts
for the years ended 30 June 2005 or 2004 but is derived from those accounts.
Statutory accounts for 2004 have been delivered to the Registrar of Companies
and those for 2005 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 ND
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