Final Results

Marshalls PLC 07 March 2008 Preliminary results for the year ended 31 December 2007 Marshalls plc, the specialist Landscape Products Group, announces a robust trading performance. Financial Highlights Year ended Year ended Increase 31 December 31 December % 2007 2006 Reported: Revenue Â£402.9m Â£378.1m 6.6 Operating profit Â£48.8m Â£47.8m 2.2 Profit before tax Â£42.1m Â£41.7m 1.0 Basic EPS 21.28p 20.34p 4.6 Final dividend per share 9.30p 8.85p 5.1 Underlying: Operating profit (Note 3) Â£51.1m Â£46.8m 9.2 Profit before tax Â£44.4m Â£40.8m 9.0 Basic EPS 22.43p 19.89p 12.8 Implementation of Strategy Investment for Growth: â€¢Organic and acquisition investment of Â£25m in strong Public Sector and Commercial markets to grow the business. â€¢Display Centre expansion to 10 sites by mid 2008 to drive sales growth, improve product mix and facilitate installation. â€¢Further marketing investment of Â£1.8m to promote the Marshalls brand and Display Centre initiatives. â€¢Continuing sponsorship of the Royal Horticultural Society's Chelsea Flower Show. Operational Delivery and Continuing Improvement: â€¢ Higher input costs recovered through sales price increases. â€¢ Productivity improvements benefited margins. â€¢ Sale of surplus properties delivering further cash for investment. Commenting on these results, Graham Holden, Chief Executive, said: 'Last year began and ended positively and that momentum has continued into 2008. Our strategy is clear, we are investing for growth and we are continuing to deliver operational improvement. The Public Sector and Commercial market, which represents 55 per cent of the Group's revenue, remains robust and lead indicators are positive for 2008 and 2009. In the Domestic market our survey of installers' order books shows them to be at a normal level for this time of year. We are continuing with our development plans and will maintain a strong emphasis on cash management. The strength of our brand, our efficient manufacturing and sourcing, and our comprehensive distribution network give us confidence for the future.' Enquiries: Graham Holden Chief Executive Marshalls plc 01484 438900 Ian Burrell Finance Director Jon Coles Brunswick Group LLP 0207 404 5959 Kate Miller Group Results The 2007 financial year began and ended strongly. The summer was hampered by the exceptionally wet weather but there was strong underlying demand in the Public Sector and Commercial market. Marshalls' revenue at Â£402.9 million (2006: Â£378.1 million) increased by 6.6 per cent, compared with the prior year. Like for like revenue, excluding acquisitions, was 3.9 per cent ahead at Â£392.8 million (2006: Â£378.1 million). Reported operating profit rose by 2.2 per cent to Â£48.8 million (2006: Â£47.8 million). EBITDA was Â£70.5 million (2006: Â£67.7 million), an improvement of 4.3 per cent. The net effect of investment in strategic business initiatives and other one-off items in the year was a net charge against operating profit of Â£2.3 million (2006: Â£1.0 million net credit), giving an underlying operating profit of Â£51.1 million (2006: Â£46.8 million) an increase of 9.2 per cent. Within this net charge the Group has expensed Â£4.3 million (2006: Â£2.0 million) in relation to strategic business initiatives during the year. Of this, Â£3.6 million (2006: Â£2.0 million) relates to a continuation of the Landscape Installations strategy and the introduction of additional Display Centres which remain a key contributor to future growth. Within this is Â£1.8 million relating to further marketing costs, including the Royal Horticultural Society ('RHS') Chelsea Flower Show, to support the development of the Display Centres and the Marshalls brand. Strategic business initiatives in the Public Sector and Commercial market have given rise to revenue expenditure of Â£0.7 million during the year. These include the launch of Woodhouse Landscape Projects which provides design services for prestigious landscape projects, and a significant geographic expansion of the Premier Mortars business which provides ready to use mortar for the building trade. Works closure costs in the year were Â£0.2 million (2006: Â£1.1 million) for the relocation of the recently acquired Ollerton business to another of the Group's Street Furniture operations. In addition, during the year there has been a net profit of Â£2.2 million on property transactions (2005: Â£0.3 million loss). After the net effect of the strategic business initiatives and other one-off items, detailed above, profit before tax increased by 1.0 per cent to Â£42.1 million (2006: Â£41.7 million). Basic earnings per share increased by 4.6 per cent to 21.28 (2006: 20.34) pence per share. Underlying earnings per share, before strategic business initiatives expensed, was 22.43 (2006: 19.89) pence per share, an increase of 12.8 per cent. The Board is recommending a final dividend of 9.30 pence (2006: 8.85 pence) per ordinary share, an increase of 5.1 per cent. This dividend will be paid on 4 July 2008 to shareholders on the register at the close of business on 6 June 2008. The ex dividend date will be 4 June 2008. Operating Performance At the heart of Marshalls is a single manufacturing and distribution operation that supports its two main markets and provides a fundamental competitive advantage, delivering industry leading product availability and delivery performance. It ensures that Marshalls has the lowest cost to market. The Marshalls operating strategy is to combine regional manufacturing and distribution sites, known as Service Centres, with national manufacturing works. The same capital equipment produces products for both the Domestic market and the Public Sector and Commercial market. The national manufacturing sites produce the newly introduced and specialist products that have not reached the commercial volumes that justify regional manufacture. Marshalls geographical spread is unique in the industry and provides a competitive advantage. In the Domestic market like for like revenue was slightly ahead of 2006, having been adversely affected by the unusually wet weather in June and July 2007. These severe weather conditions delayed installers and the additional need for flood rectification work in some parts of the country has also diverted tradesmen into lucrative emergency insurance work. Sales prices and mix were around 4 per cent ahead of the prior year whilst volumes were down by around 3.5 per cent. The Group's Domestic strategy continues to be to unlock the potential of this market. Landscape Installations is part of the Group's 'core' business and significant investment is being made annually to create 'pull through' demand, improve the product mix and continually develop the Marshalls brand. The objective is to deliver a level of service that is 'second to none'. Market research suggests that our target consumers are relatively recession proof and that they recognise that a new driveway or garden will add value to their property. Only 20 per cent of Domestic sales are 'DIY' with 80 per cent being 'Do it for me' projects where a professional carries out the installation. This latter market is more resilient as many of these consumers are in the higher wealth and income groups. The Group's Display Centres give the consumer the opportunity to see how the product looks in a garden setting so that the market potential for more value added products can be unlocked. The Group has a range of tailor made service offers from a fully designed and installed proposition to assistance with product choice and ordering. By Easter 2008 there will be 8 operational Display Centres and this will include sites in garden centres or out of town retail centres where there is established footfall. It is anticipated that there will be 2 further Display Centres established by the middle of 2008. In 2007 Marshalls sponsored the RHS Chelsea Flower Show and this sponsorship will continue for a further two years. Marshalls also sponsored a large garden, 'The Marshalls Sustainability Garden', which was awarded a silver medal at the 2007 Show. The Group's presence at Chelsea and the RHS Hampton Court and RHS Tatton Park Flower Shows has significantly increased awareness of the Marshalls brand and the Group's inspirational design services, innovative products and expert installation. Installer order books remain at the normal level for this time of year with the end of February 2008 at 8.4 weeks (February 2007: 9.1 weeks, February 2006: 8.4 weeks, February 2005: 8.3 weeks). The Public Sector and Commercial market, which now represents 55 per cent of the Group's revenue, continued to perform well with like for like revenue up 7 per cent. Sales prices and mix were 4 per cent ahead with volumes up 3 per cent. Our investment in Public Sector and Commercial growth projects is primarily capital in nature and these business initiatives are expected to generate excellent medium term returns and cash flow. The investment is into strong markets and is asset backed by minerals or tangible processing plant. Once established, these investments will be cash generating for many years. We continue to invest in new technology, such as robot handling and machine lay of concrete block paving, to build competitive advantage and make our workplace safer and more environmentally friendly. We currently have 60 robots installed across the Group and these continue to improve manufacturing efficiency. The Group continues to focus on sustainability, which is an integral part of the Marshalls culture. This includes the elimination of waste and the better use of resources in line with the Group's commercial objectives. Marshalls' sustainability plan sets out to deliver benefit to the environment, recognise social progress and generate economic growth. There is a Group wide strategy of implementing and operating to independently audited and accredited systems for product quality, environmental management and health and safety. In June 2007 Marshalls won the Premier Award for Process Improvement from Business Commitment to the Environment. As a mark of the Group's work in the area of biodiversity, the Maltby site is the first active manufacturing site in the UK to be accredited with the Wildlife Trust's Biodiversity Benchmark for Land Management. The Group continues to source significant quantities of natural stone from India and China. Marshalls was the first company from the UK Building Materials sector to be a member of the Ethical Trading Initiative ('ETI'). Our objective is to ensure that our supply chain is operating to a high standard of integrity and ethics. The Group is also working closely with Ashridge, an international leader in tailored executive education, to develop the knowledge, skills and practices of its management team in order to enhance leadership potential and to facilitate succession planning. Corporate Activity Marshalls continues to acquire complementary businesses that provide quality products to enhance the core product offer. During 2007 the Group has invested Â£12.8 million directly into acquisitions and these businesses have added Â£10.1 million to revenue in the year. The Group added to its street furniture product portfolio with the acquisition of Ollerton, a supplier of high quality and widely specified seating systems. A programme is well underway to introduce modern business systems and integrate all our street furniture businesses, to deliver synergies and provide a solid platform for future organic growth. The Group continues to seek opportunities to expand reserves and geographical coverage in natural stone and during 2007 two businesses were acquired. Marshalls' natural stone business includes paving, walling, aggregates, ready to use mortar and architectural masonry. Since the year end the Group has secured access to significant further reserves of limestone for walling and cladding. Additional investment in plant is planned for 2008 to extend the existing range of walling products. The Group has also been developing a sand and gravel reserve on the outskirts of Manchester and a natural stone reserve beside the M62 in West Yorkshire. At 31 December 2007 the Group's mineral reserves comprised 8.5 million tonnes of block stone and 48.1 million tonnes of aggregates which represent over 70 and 20 years' supply respectively at current extraction rates. Balance Sheet Net assets at 31 December 2007 were Â£200.6 million (2006: Â£184.5 million). Trade receivables have increased to Â£35.7 million (2006: Â£28.6 million) at the year end due to higher revenues in November and December 2007. Inventories were higher due mainly to the commercially beneficial forward purchasing of Â£7.7 million of imported natural stone to mitigate cost increases in transportation. The impact of this and reduced sales in the summer months due to the severe weather conditions caused inventory to remain higher at the year end. It is planned to manage these stocks down during 2008 and 2009. The liability for defined benefit pension obligations decreased from Â£41.9 million at 31 December 2006 to Â£17.8 million at 31 December 2007. This reduction was partly due to the impact of further contributions by the Group to the Scheme and an increase in the AA corporate bond rate from 5.1 per cent to 5.8 per cent. The change in discount rate, together with a strengthening of the mortality rate and other changes to the assumptions, has resulted in an actuarial gain of Â£12.6 million (net of deferred taxation) (2006: Â£7.3 million) and this has been recorded in the Consolidated Statement of Recognised Income and Expenses. In the second half of the year the Group made payments totalling Â£6.9 million to acquire 2,425,000 Treasury Shares. The shares may also be used to satisfy awards under the Group's Long Term Incentive Plan. This acquisition of Treasury Shares increased the Group's gearing ratio by approximately 5 per cent. The Group also redeemed all of the remaining B shares that were issued as part of the return of Â£75 million to shareholders in 2004. The net cash outflow was Â£2.4 million. Gearing at 31 December 2007 was 48.3 per cent (2006: 29.6 per cent) with interest covered strongly at 7.3 times (2006: 7.8 times). Outlook The outlook for the Public Sector and Commercial market, which now represents approximately 55 per cent of the Group's revenue, is positive. We have good visibility of demand and lead indicators continue to be positive. The Construction Products Association ('CPA') forecasts that the Public Sector and Commercial other new work market will grow by 4.6 per cent in 2008 and a further 4.2 per cent in 2009. The effective implementation of the investment plans outlined in the 2007 Comprehensive Spending Review will be central to this sustained growth over the next three years and from 2009 onwards it is anticipated that building for the 2012 Olympics will also gather momentum. The Domestic market is more difficult to predict against the current backdrop of lower consumer confidence, tougher loan conditions and a general housing market that has begun to slow. The CPA is forecasting a flat market in private housing repair, maintenance and improvement expenditure for 2008. Our Domestic installers' average order books from the latest survey at the end of February 2008 are 8.4 weeks, a normal level for this time of year. With our ongoing programme of investment in Display Centres we remain well positioned. We are continuing with our development plans and will maintain a strong emphasis on cash management. The strength of our brand, our efficient manufacturing and sourcing, and our comprehensive distribution network give us confidence for the future. Graham Holden Chief Executive MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 Notes 2007 2006 Â£'000 Â£'000 Revenue 2 402,926 378,100 Net operating costs (354,116) (330,339) ------- ------- Operating profit 2 48,810 47,761 Financial expenses 4 (17,596) (14,904) Financial income 4 10,889 8,846 ------- ------- Profit before tax 2 42,103 41,703 Income tax expense 5 (11,852) (12,623) ------- ------- Profit for the financial period attributable to equity shareholders of the parent 30,251 29,080 ======= ======= Earnings per share: Basic 7 21.28p 20.34p ======= ======= Diluted 7 21.19p 20.32p ======= ======= Dividend: Pence per share 6 13.40p 12.70p ======= ======= Dividends declared 6 19,098 18,158 ======= ======= MARSHALLS PLC PELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 Assets Notes 2007 2006 Â£'000 Â£'000 Non-current assets Property, plant and equipment 209,313 202,941 Intangible assets 60,147 52,667 Deferred taxation assets 7,055 15,018 ------- ------- 276,515 270,626 ------- ------- Current assets Inventories 82,920 68,256 Trade and other receivables 42,866 34,290 Cash and cash equivalents 19 22 Assets held for sale 8,199 - ------- ------- 134,004 102,568 ------- ------- Total assets 410,519 373,194 ======= ======= Liabilities Current liabilities Bank overdraft 27,840 999 Trade and other payables 60,236 57,362 Corporation tax 8,710 8,185 Interest bearing loans and borrowings 7,234 3,565 ------- ------- 104,020 70,111 ------- ------- Non-current liabilities Interest bearing loans and borrowings 61,871 50,064 Employee benefits 8 17,795 41,945 Deferred taxation liabilities 26,192 26,532 ------- ------- 105,858 118,541 ------- ------- Total liabilities 209,878 188,652 ======= ======= Net assets 200,641 184,542 ======= ======= Equity Capital and reserves attributable to equity shareholders of the parent Share capital 35,777 35,777 Share premium account 2,734 2,732 Own shares (8,866) (453) Capital redemption reserve 75,394 73,298 Consolidation reserve (213,067) (213,067) Hedging reserve (3) (6) Retained earnings 308,672 286,261 ------- ------- Equity shareholders' funds 200,641 184,542 ======= ======= MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 Notes 2007 2006 Â£'000 Â£'000 Net cashflow from operating activities 9(i) 27,666 38,846 Net cashflow from investing activities 9(ii) (41,577) (28,033) Net cashflow from financing activities 9(iii) (12,933) (17,000) ------- ------- Net decrease in cash and cash equivalents (26,844) (6,187) Cash and cash equivalents at 1 January (977) 5,210 ------- ------- Cash and cash equivalents at 31 December (27,821) (977) ======= ======= Reconciliation of Net Cash Flow to Movement in Net Debt 2007 2006 Â£'000 Â£'000 Net decrease in cash and cash equivalents (26,844) (6,187) Cash inflow from increase in debt and lease financing (14,890) (1,731) Finance leases acquired on acquisition of subsidiary undertakings (586) - ------- ------- Movement in net debt in the period (42,320) (7,918) Net debt at 1 January (54,606) (46,688) ------- ------- Net debt at 31 December (96,926) (54,606) ======= ======= AUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSES FOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 Â£'000 Â£'000 Cash flow hedges: Effective portion of changes in fair value (net of deferred taxation) 3 (4) Actuarial gains (net of deferred taxation) 12,610 7,342 ------- ------- Net expense recognised directly in equity 12,613 7,338 Profit for the financial period attributable to equity shareholders of the parent 30,251 29,080 ------- ------- Total recognised income and expenses for the period (attributable to equity shareholders of the parent) 42,864 36,418 ======= ======= MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED NOTES FOR THE YEAR ENDED 31 DECEMBER 2007 1. Basis of Preparation The Consolidated Financial Statements have been prepared on the basis of the requirements of International Financial Reporting Standards as adopted by the European Union ('adopted IFRSs') and effective at 31 December 2007. The accounting policies have been applied consistently throughout the Group for the purposes of these Consolidated Financial Statements and are also set out on the Company's website (www.marshalls.co.uk). The Consolidated Financial Statements are presented in sterling, rounded to the nearest thousand. The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 2. Segmental analysis Revenue Operating Profit 2007 2006 2007 2006 Â£'000 Â£'000 Â£'000 Â£'000 Continuing operations 402,926 378,100 48,810 47,761 ======= ======= Financial income and expenses (net) (6,707) (6,058) ------ ------ Profit on ordinary activities before taxation 42,103 41,703 ====== ====== The Directors have undertaken a review of the Group's continuing operations and its associated business risks and consider that the continuing operations should be reported as a single business segment. The Directors consider that the continuing operations represent one product offering with similar risks and rewards and should be managed and reported as a single business segment in line with the Group's internal reporting framework. 2007 2006 Â£'000 Â£'000 Geographical destination of revenue: United Kingdom 400,253 374,627 Rest of the world 2,673 3,473 -------- -------- 402,926 378,100 ======== ======== All revenue originates in the United Kingdom from continuing operations and there is no material inter-segmental turnover. 3. Underlying operating profit Underlying operating profit, which is used in the Financial Highlights, is as follows: 2007 2006 Â£'000 Â£'000 Operating profit: underlying 51,149 46,819 Strategic business initiatives: Landscape Installations (3,627) (2,006) Strategic business initiatives: Commercial Expansion (712) - Works closure costs (160) (1,135) Curtailment gains (net of expenses) - 4,367 Net profit / (loss) on asset and property disposals 2,160 (284) -------- -------- Operating profit: reported 48,810 47,761 ======== ======== 4. Financial expenses and income 2007 2006 Â£'000 Â£'000 (a) Financial expenses Interest expense on bank loans, overdrafts and loan notes 4,721 2,406 Interest on obligations under the defined benefit pension scheme 10,506 10,107 Debenture interest expense 2,275 2,275 B share dividend expense 42 92 Finance lease interest expense 52 24 -------- -------- 17,596 14,904 ======== ======== (b) Financial income Expected return on scheme assets under the defined benefit pension scheme 10,875 8,802 Interest receivable and similar income 14 44 -------- -------- 10,889 8,846 ======== ======== 5. Income tax expense 2007 2006 Â£'000 Â£'000 Current tax expense Current year 11,027 11,004 Adjustments for prior years (1,321) (947) -------- -------- 9,706 10,057 Deferred taxation expense Origination and reversal of temporary differences: Current year 1,983 2,235 Adjustments for prior years 163 331 -------- -------- Income tax expense in the Consolidated Income Statement 11,852 12,623 ======== ======== Reconciliation of effective tax rate 2007 2007 2006 2006 % Â£'000 % Â£'000 Profit before tax 100.0 42,103 100.0 41,703 ----- ------ ----- ------ Tax using domestic corporation tax rate 30.0 12,631 30.0 12,511 Disallowed amortisation of intangible assets 0.4 161 0.3 107 Net items not taxable 2.8 1,179 1.5 621 Adjustments for prior years (2.7) (1,158) (1.5) (616) Impact of change in tax rate on (2.3) (961) - - deferred taxation ----- ------ ----- ------ 28.2 11,852 30.3 12,623 ===== ====== ===== ====== The net amount of deferred taxation debited to the Consolidated Statement of Recognised Income and Expenses in the year was Â£5,172,000 (2006: Â£3,146,000). 6. Dividends Ordinary dividends: equity shares 2007 2006 per share Â£'000 per share Â£'000 2006 Final: paid 6 July 2007 8.85p 12,653 8.40p 12,010 2007 Interim: paid 7 December 2007 4.55p 6,445 4.30p 6,148 ------ ------ ------ ------ 13.40p 19,098 12.70p 18,158 ====== ====== ====== ====== The Directors are recommending a final dividend of 9.30 (2006: 8.85) pence per share. This dividend has not been provided at 31 December 2007. 7. Earnings per share Basic earnings per share of 21.28 (2006: 20.34) pence per share is calculated by dividing the profit attributable to ordinary shareholders of Â£30,251,000 (2006: Â£29,080,000) by the weighted average number of shares in issue during the year of 142,159,560 (2006: 142,949,818). Profit attributable to ordinary shareholders 2007 2006 Â£'000 Â£'000 Profit attributable to ordinary shareholders 30,251 29,080 ====== ====== Weighted average number of ordinary shares 2007 2006 Issued ordinary shares at 1 January 142,949,818 143,087,712 Effect of shares issued in the year - 14,536 Effect of shares transferred into employee benefit trust (366,765) (152,430) Effect of treasury shares acquired in the year (423,493) - ----------- ----------- Weighted average number of ordinary share at 31 December 142,159,560 142,949,818 =========== =========== Diluted earnings per share of 21.19 (2006: 20.32) pence per share is calculated by dividing the profit attributable to ordinary shares, and potentially dilutive ordinary shares, of Â£30,251,000 (2006: Â£29,080,000) by the weighted average number of shares in issue during the year of 142,159,560 (2006: 142,949,818) plus dilutive shares of 572,479 (2006: 152,430) which totals 142,732,039 (2006: 143,102,248). Weighted average number of ordinary shares (diluted) 2007 2006 Weighted average number of ordinary shares at 31 December 142,159,560 142,949,818 Effect of shares transferred into employee benefit trust 523,201 152,430 Effect of treasury shares 49,278 - ----------- ----------- Weighted average number of ordinary shares at 31 December 142,732,039 143,102,248 =========== =========== 8. Employee benefits The Group operates the Marshalls plc Pension Scheme (the 'Scheme') which has both a defined benefit and a defined contribution section. The assets of the Scheme are held in separately managed funds which are independent of the Group's finances. After extensive consultation with the employees affected and their representatives, the Group introduced a new defined contribution section to the Scheme to replace the existing defined benefit section which closed to future service accrual on 1 July 2006. Following this change the Company has made special cash contributions to the Scheme. 2007 2006 Â£'000 Â£'000 Present value of funded obligations (194,782) (209,152) Fair value of scheme assets 176,987 167,207 ----------- ----------- Recognised liability for defined benefit obligations (see below) (17,795) (41,945) =========== =========== Movements in the net liability for defined benefit obligations recognised in the balance sheet 2007 2006 Â£'000 Â£'000 Net liability for defined benefit obligations at 1 January (41,945) (65,264) Contributions received 4,900 10,960 Gain recognised in the Consolidated Income Statement 1,468 1,870 Actuarial gains recognised in the Consolidated Statement of Recognised Income and Expenses 17,782 10,489 ------- ------- Net liability for the defined benefit obligations at 31 December (17,795) (41,945) ======= ======= 9. Notes to the cash flow statement 2007 2006 Â£'000 Â£'000 9(i) Cashflows from operating activities Profit before tax 42,103 41,703 Adjustments for: Depreciation 21,059 19,530 Amortisation 661 357 Negative goodwill (700) - (Gain)/loss on sale of property, plant & equipment (2,856) 66 Equity settled share based expenses 744 250 Financial income and expenses (net) 6,707 6,058 ------- ------- Operating cashflow before changes in working capital, employee benefits and pension scheme contributions 67,718 67,964 (Increase)/decrease in trade and other receivables (7,403) 2,323 Increase in inventories (13,815) (53) Increase/(decrease) in trade and other payables 2,723 (3,197) Decrease in employee benefits (1,099) (2,968) Pension scheme contributions (4,400) (10,000) ------- ------- Cash generated from the operations 43,724 54,069 Financial expenses paid (6,729) (4,265) Non equity dividends paid (42) (149) Income tax paid (9,287) (10,809) ------- ------- Net cash flow from operating activities 27,666 38,846 ------- ------- 9(ii) Cash flows from investing activities Proceeds from sale of property, plant and equipment 2,960 565 Financial income received 14 44 Acquisition of subsidiaries (12,604) (4,157) Bank (overdraft)/balance acquired with subsidiaries (240) 79 Acquisition of property, plant & equipment (30,605) (24,564) Acquisition of intangible assets (1,102) - ------- ------- Net cash flow from investing activities (41,577) (28,033) ------- ------- 9(iii) Cash flows from financing activities Proceeds from issue of share capital - 43 Payments to acquire own shares (8,413) (453) Net decrease in other debt and finance leases (414) (302) Redemption of B shares (2,408) (848) Increase in borrowings 17,400 2,758 Payment of transaction costs - (40) Equity dividends paid (19,098) (18,158) ------- ------- Net cash flow from financing activities (12,933) (17,000) ------- ------- 10. Analysis of net debt 1 January Cash flow Other non cash 31 December 2007 changes 2007 Â£'000 Â£'000 Â£'000 Â£'000 Cash at bank and in hand 22 (3) - 19 Overdrafts (999) (26,601) (240) (27,840) ----- ------- ----- ------- (977) (26,604) (240) (27,821) Debt due within one year (3,423) (15,304) - (18,727) Debt due after one year (50,000) - - (50,000) Finance leases (206) 414 (586) (378) ------ ------- ----- ------- (54,606) (41,494) (826) (96,926) ====== ======= ===== ======= 11. Annual General Meeting The Annual General Meeting will be held at Birkby Grange, Birkby Hall Road, Birkby, Huddersfield, West Yorkshire HD2 2YA at 12.00 (noon) on Thursday 15 May 2008. 12. Other The financial information set out above does not constitute the Company's consolidated statutory accounts for the years ended 31 December 2007 or 2006 but is derived from those accounts. Statutory accounts for the year ended 31 December 2006 have been delivered to the Registrar of Companies, and those for the year ended 31 December 2007 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. Forward Looking Statements This Preliminary Announcement of Results for the year ended 31 December 2007 contains certain forward looking statements with respect to the Group's financial condition, its results, strategy, plans and objectives. The forward looking statements contained in this document are not forecasts or guarantees of future performance and are subject to risks, uncertainties and other factors. Some of these factors are beyond the Group's control, are difficult to predict and could cause actual results to differ materially from those expressed, implied or forecast in the forward looking statements. These factors include, but are not limited to, the fact that the Group operates in a highly competitive environment, is subject to the effects of government regulation and is reliant upon technology, which is subject to risk, change and development. Other factors include risks inherent in the implementation of large scale capital expenditure projects and the Group's ability to continue to communicate and market its services effectively. All forward looking statements in this document are based on information known to the Group as at 7 March 2008. The Group has no obligation publicly to update or revise any forward looking statements, whether as a result of new information or future events. This information is provided by RNS The company news service from the London Stock Exchange

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