Interim Results

Pendragon PLC 04 August 2004 FOR IMMEDIATE RELEASE 4 August 2004 INTERIM RESULTS TO 30 JUNE 2004 Pendragon PLC, the UK's largest dealership group, today reports interim results for the six months to 30 June 2004. Highlights: • Turnover of £1,601 million (2003: £948 million) • Profit before tax, goodwill & exceptionals up 52% to £36.7 million (2003: £24.2 million) • Underlying operating margin 3.1% (2003: 3.2%) • Profit before tax up 71% to £40.6 million (2003: £23.7 million) • Basic earnings per share up 76% to 22.4p (2003: 12.7p) • Dividend up 10.5% to 4.2 pence per share • Strong operating cash flow of £106.1 million (2003: £48.4 million) • Successful integration of CD Bramall PLC Trevor Finn, Chief Executive, commented: ' Following the acquisition of CD Bramall at the beginning of March this year we have maintained our focus on the group's profitability to produce an excellent set of results. We have already started to realise the benefits of the acquisition in the enlarged group, and look forward to taking the opportunities we have to generate further economies of scale and achieve another set of good results for the year.' Enquiries: Pendragon PLC Trevor Finn, Chief Executive Tel: 01623 725 114 David Forsyth, Finance Director Finsbury Gordon Simpson Tel: 0207 251 3801 CHIEF EXECUTIVE'S OPERATIONAL REVIEW Introduction The group's results for the first six months of 2004 have been excellent and CD Bramall has made a strong contribution since acquisition at the beginning of March. Acquiring CD Bramall, one of the UK's largest motor car and truck retailers, has underlined our position as the leading dealer group in the UK. The integration of the new business is progressing well. Turnover in the first six months was £1,601 million compared to £948 million in the first half of 2003. Profit before tax of £40.6 million is up 70.8% compared to the same period last year. The interim dividend has been increased 10.5% to 4.2 pence per share. Our UK operations have continued to perform extremely well, with the opportunity now to benefit from greater economies of scale in the enlarged group as we continue to integrate the CD Bramall business. The dealerships in the USA have delivered a 44% improvement in underlying profitability. The performance of our small German operation reflects the poor general economic situation in that market. Results and Dividend The results for the six months to 30 June 2004 are summarised as follows: 2004 2003 £m £m ------------------------------------------------------------------------------ Turnover 1,601.3 948.1 ------------------------------------------------------------------------------ Underlying operating profit 50.4 30.5 ------------------------------------------------------------------------------ Goodwill amortisation (3.4) (1.3) ------------------------------------------------------------------------------ Exceptional operating costs (4.3) - ------------------------------------------------------------------------------ Operating profit 42.7 29.2 ------------------------------------------------------------------------------ Business disposals 0.4 (0.7) Property disposals 11.2 0.4 ------------------------------------------------------------------------------ Profit on ordinary activities before interest 54.3 28.9 Income from investments - 1.0 Interest (13.7) (6.2) ------------------------------------------------------------------------------ Profit on ordinary activities before tax 40.6 23.7 ------------------------------------------------------------------------------ Earnings per share 22.4p 12.7p ------------------------------------------------------------------------------ Dividend per share 4.2p 3.8p ------------------------------------------------------------------------------ Turnover has increased to £1,601 million with the CD Bramall business contributing £669 million. On a like for like basis the existing Pendragon business increased turnover by 7% compared to last year. Operating profit, excluding exceptionals and goodwill amortisation, increased by £19.9 million to £50.4 million from £30.5 million in 2003. The underlying improvement in performance of the existing Pendragon business was £2.5 million, equivalent to an increase of almost 10%. Disposals over the last twelve months reduced operating profits by £3.7 million. CD Bramall made an excellent contribution of £21.1 million in the period. Interest costs increased due to higher borrowings in order to acquire CD Bramall. We have reduced our borrowings since the acquisition in line with our plan principally by the strong cash flow generated from operations and selected disposals. Exceptional operating costs of £4.3 million relate to integration and reorganisation costs arising with the acquisition of CD Bramall. These costs include redundancy payments necessary to eliminate duplicated functions across the enlarged group. During the first six months we have disposed of four dealerships, three of which were acquired with the CD Bramall business. The profit on disposal of the CD Bramall dealerships is treated as an adjustment to goodwill. Underlying operating profit of £50.4 million (2003: £30.5 million) less interest cost of £13.7 million (2003: £6.3 million) gives profit before tax, goodwill amortisation and exceptionals of £36.7 million (2003: £24.2 million). Adjusted earnings per share increased by 55% to 20.1p from 13.0p last year. An interim dividend of 4.2 pence per share will be paid which compares to 3.8 pence last year, an increase of 10.5%. Motor Retail Business The acquisition of CD Bramall dealerships has strengthened our franchise portfolio in the UK with our focus continuing to be on specialist and luxury cars along with selected volume brands. Our principal business is in the UK and we have dealerships in California and Germany. The new block exemption rules have now been in place for nine months and we have already seen the benefits of this fundamental change in the industry through the creation of greater commercial independence for large dealer groups such as ourselves. UK In the UK, demand has continued to be stable with new car registrations of almost 1.4 million in the first six months of the year, a small increase on the previous year. The latest industry forecast for 2004 is for an annual new car market around the level of last year, of 2.6 million. The results of the UK business can be summarised as follows: £m Turnover Gross Profit Gross Margin Underlying Underlying % Operating Operating Profit Margin % -------------------------------------------------------------------------------- Existing 803.4 108.2 13.5 28.3 3.5 -------------------------------------------------------------------------------- Acquired 629.6 85.5 13.6 21.2 3.4 -------------------------------------------------------------------------------- Disposed 37.8 4.6 12.2 1.4 3.6 -------------------------------------------------------------------------------- Total 2004 1,470.8 198.3 13.5 50.9 3.5 -------------------------------------------------------------------------------- Total 2003 834.9 116.3 13.9 31.8 3.8 On a like for like basis, turnover for the existing Pendragon dealerships increased by £62.6 million, up 8.5% on last year, due to higher sales of new and used cars. Aftersales turnover is in line with last year. With the increased sales of cars, gross margins have reduced as the relative mix of sales has changed with a smaller proportion arising from the higher margin aftersales activities. Profitability in the existing Pendragon volume dealerships has improved again year on year, principally due to the ongoing changes we are making in our Ford franchises and from another good performance in the Vauxhall business. The acquired business relates to CD Bramall, which operates franchised dealerships in the UK covering primarily volume brands Ford, Vauxhall, Rover, Peugeot and Citroen and specialist marques BMW, Jaguar, Land Rover and Mercedes-Benz. The acquisition adds further franchises in the important specialist brands and also provides geographic benefits to Pendragon, giving greater national coverage with more locations in Scotland and south west England. The acquisition also adds a commercial vehicle group representing Iveco, DAF, Mercedes-Benz and MAN/ERF. The CD Bramall business has performed well since acquisition. Operations have been reorganised and integrated within the existing Pendragon franchise group structure. Support functions, such as payroll, group accounts and property management, have already been transferred into our existing team at Loxley House. We have disposed of four businesses in the first half of 2004. Three of these were acquired as part of the CD Bramall acquisition and have been included in disposals as they are no longer part of the group. The profit on sale of these three dealerships, in accordance with accounting rules, has been credited against goodwill. We also sold a Mercedes dealership in Leicester as planned with a profit on disposal of £0.4 million. USA The overall market has improved, with total new car sales in the USA in the first six months increasing by 2% to 8.4 million registrations. The results of the USA business for the first half of 2004 are summarised as follows: £m Turnover Gross Profit Gross Margin Underlying Underlying % Operating Operating Profit Margin % -------------------------------------------------------------------------------- Total 2004 77.8 14.0 18.0 2.6 3.4 -------------------------------------------------------------------------------- Total 2003 79.4 13.9 17.5 1.8 2.3 Currently we represent Jaguar, Land Rover, Lincoln Mercury and Aston Martin in California from seven locations. Nationally Jaguar and Land Rover sales have fallen 3% and 10% respectively. Turnover has fallen, although only marginally as this year we had a full six month contribution from the two Land Rover dealerships we purchased and from the Lincoln Mercury dealership we opened last year. Profitability has improved and our margins have increased. The performance of our Land Rover businesses, which we acquired in February last year, has been good. We are particularly pleased with the improvement in performance of our Land Rover and Jaguar dealership in Los Angeles, which has maintained sales volumes, in contrast to the national picture, and increased margin on all activities. We are currently evaluating a number of opportunities to expand our operations in California over the next twelve months. Germany The German economy has shown little sign of recovery although business confidence generally appears to be improving slightly. The results of the German business for the first half of 2004 are summarised as follows: £m Turnover Gross Profit Gross Margin Underlying Underlying % Operating Operating Loss Margin % -------------------------------------------------------------------------------- Total 2004 16.9 2.2 13.2 (1.2) (7.0) -------------------------------------------------------------------------------- Total 2003 22.6 3.1 13.5 (0.3) (1.2) -------------------------------------------------------------------------------- We have seen a fall in new car volumes of both Land Rover and Jaguar models. Consequently both turnover and operating profit have fallen. At the end of the first half we closed our Wiesbaden sales point as part of our continuing drive to reduce the cost base of the business. The new Aston Martin DB9 has recently been launched and will improve second half sales. Technology and Support Services This group of businesses provides a broad range of services to both the Pendragon group and outside customers, the principal activities being contract hire and the development and installation of software for dealer management systems. The underlying operating profit generated by these businesses was £4.8 million, an increase of £2.6 million on 2003. The existing Pendragon businesses have improved their underlying profitability. Our software companies, Pinewood Technologies and Car Fleet Control, have both performed strongly, aided by sales of our new dealer management system, Pinnacle. Contract hire has also generated a good return on the disposal of cars coming off hire. With the contribution from CD Bramall's contract hire and parts wholesale operation this area of our business continues to move ahead. Finance Our borrowings at 30 June 2004 were £287.0 million, an increase of £190.3 million from the 2003 year end balance of £96.7 million. Gearing at 30 June 2004 was 169%. Gearing is stated after implementing changes in accounting presentation for shares held in employee benefit trusts to satisfy share options when exercised. In accordance with UITF 38 these shares have been reclassified from fixed asset investments to a deduction from shareholders' funds. This change increases headline gearing based on shareholders' funds of £170.1 million by 10%. The prior year balance sheet has accordingly been restated. The level of borrowings is within the plan we set ourselves at the time of the acquisition of CD Bramall and gearing is steadily falling. The increase in borrowings arising with the acquisition of CD Bramall totalled £289.8 million. This consists of cash paid for shares of £221.7 million, loan notes granted of £15.8 million and assumed borrowings of £52.3 million. Operating cash inflow for the first six months was £106.1 million, which compares with £48.4 million generated in 2003. We reduced working capital in the period by £50.7 million in comparison to the reduction of £13.0 million in the same period last year. This has been achieved by a combination of good inventory management and working capital disciplines in the enlarged group. Capital expenditure and financial investment resulted in a cash inflow of £10.5 million (2003: outflow of £13.8 million). Proceeds of £22.0 million from the disposal of property and £0.6 million received on the exercise of share options more than offset capital expenditure of £12.1 million. In addition to this £14.3 million was raised from business disposals. Current Trading and Prospects The UK market for new cars has been relatively stable over the past few years and 2004 has continued the trend. Our year started well, as we noted in a trading update issued in June, and trading continues to be good. Integration of CD Bramall is ahead of programme and the benefits are already flowing through. The extra debt we incurred to finance the acquisition is being reduced in line with our plan to return to our normal levels of gearing by the end of 2005. We look forward to achieving our near term goals of fully integrating the CD Bramall business whilst at the same time taking further advantage of the scale benefits this affords us. We are confident the group will continue to build on the success achieved so far this year. TREVOR FINN Chief Executive 4 August 2004 Consolidated Profit and Loss Account Interim Results for the six months ended 30 June 2004 ------------------------------------------------------------------------------- Unaudited Unaudited Audited 6 Months to 6 Months to 12 Months to 30.06.04 30.06.03 31.12.03 £000 £000 £000 ------------------------------------------------------------------------------ Turnover Existing operations 932,212 948,085 1,841,610 Acquisitions 669,101 - - ------------------------------------------------------------------------------ 1,601,313 948,085 1,841,610 ------------------------------------------------------------------------------ Gross profit 227,305 137,279 265,510 Net operating expenses (184,828) (108,043) (217,114) ------------------------------------------------------------------------------ -------------------------------------------------------------------------------- |Existing operations 28,341 29,236 48,396 | |Acquisitions 14,136 - - | -------------------------------------------------------------------------------- Group operating profit 42,477 29,236 48,396 -------------------------------------------------------------------------------- |Group operating profit before goodwill | |amortisation and exceptional costs | |Existing operations 29,274 30,509 50,784 | |Acquisitions 20,927 - - | |------------------------------------------------------------------------------| | 50,201 30,509 50,784 | |Exceptional costs (note 4) (4,349) - - | |Goodwill amortisation - existing (933) (1,273) (2,388)| |operations | |Goodwill amortisation - acquisitions (2,442) - - | |------------------------------------------------------------------------------| | | |Group operating profit 42,477 29,236 48,396 | -------------------------------------------------------------------------------- Share of profit of associated company 180 - - ------------------------------------------------------------------------------ Total operating profit 42,657 29,236 48,396 Profit / (loss) on disposal of 361 (656) 1,894 businesses Profit on disposal of investments - - 2,560 Profit on disposal of fixed assets 11,214 396 3,010 ------------------------------------------------------------------------------ Profit on ordinary activities before 54,232 28,976 55,860 investment income, interest and taxation Income from investments - 1,040 1,040 Net interest payable (note 5) (13,682) (6,270) (12,552) ------------------------------------------------------------------------------ Profit on ordinary activities before 40,550 23,746 44,348 taxation Taxation (note 6) (13,081) (7,686) (13,858) ------------------------------------------------------------------------------ Profit on ordinary activities after 27,469 16,060 30,490 taxation Dividends (note 7) (5,111) (4,747) (9,490) ------------------------------------------------------------------------------ Retained profit for the period 22,358 11,313 21,000 ------------------------------------------------------------------------------ Earnings per ordinary share (note 8) 22.4p 12.7p 24.5p Diluted earnings per ordinary share (note 8) 21.7p 12.5p 24.1p Adjusted earnings per ordinary share 20.1p 13.0p 20.6p (note 8) All amounts relate to continuing operations Consolidated Balance Sheet --------------------------------------------------------------------------------- restated * restated * Unaudited Unaudited Audited 30.06.04 30.06.03 31.12.03 £000 £000 £000 --------------------------------------------------------------------------------- Fixed assets Intangible assets 184,989 31,568 29,220 Tangible assets 292,347 171,786 161,057 Investment in associated company 2,285 - - Other investments - 11,635 - --------------------------------------------------------------------------------- 479,621 214,989 190,277 --------------------------------------------------------------------------------- Current assets Stocks 370,169 229,074 217,987 Consignment vehicles 52,608 30,079 37,219 Vehicles subject to repurchase agreements 65,405 22,624 22,048 Debtors 196,772 98,691 74,797 Cash at bank 86,229 28,717 7,523 --------------------------------------------------------------------------------- 771,183 409,185 359,574 --------------------------------------------------------------------------------- Creditors: amounts falling due within one year Unsecured loans (9,000) (4,000) (4,000) Unsecured bank loans and overdrafts - (32,000) (38,062) Unsecured loan notes (15,796) (613) (513) Finance leases (5,017) - - Consignment vehicle liabilities (52,608) (30,079) (37,219) Repurchase commitments (25,889) (9,794) (10,712) Trade and other creditors (532,816) (273,412) (222,659) Corporation tax (20,796) (10,054) (10,176) Dividends payable (5,181) (4,677) (4,733) --------------------------------------------------------------------------------- (667,103) (364,629) (328,074) --------------------------------------------------------------------------------- Net current assets 104,080 44,556 31,500 --------------------------------------------------------------------------------- Total assets less current liabilities 583,701 259,545 221,777 --------------------------------------------------------------------------------- Creditors: amounts falling due after more than one year Unsecured bank loans (195,744) (71,212) (29,019) Unsecured loan notes (142,730) (32,670) (32,670) Finance leases (4,928) - - Repurchase commitments (39,516) (12,830) (11,336) --------------------------------------------------------------------------------- (382,918) (116,712) (73,025) Provisions for liabilities and charges (30,652) (3,187) (1,680) --------------------------------------------------------------------------------- Net assets 170,131 139,646 147,072 --------------------------------------------------------------------------------- Capital and reserves Called up share capital 32,799 13,027 32,790 Share premium 56,792 76,042 56,773 Other reserves 15,092 15,003 15,092 Own shares (10,218) (8,870) (10,822) Profit and loss account 75,666 44,444 53,239 --------------------------------------------------------------------------------- Equity shareholders' funds (note 11) 170,131 139,646 147,072 --------------------------------------------------------------------------------- * Restated for the change in accounting policy as described in note 1. Consolidated Cash Flow Statement -------------------------------------------------------------------------------- Unaudited Unaudited Audited 6 Months to 6 Months to 12 Months to 30.06.04 30.06.03 31.12.03 £000 £000 £000 -------------------------------------------------------------------------------- Cash flow from operating activities 106,104 48,443 59,134 (note 9) -------------------------------------------------------------------------------- Net interest paid (14,077) (7,073) (13,767) Dividends received 90 1,040 1,040 -------------------------------------------------------------------------------- Returns on investments and servicing (13,987) (6,033) (12,727) of finance -------------------------------------------------------------------------------- Taxation (8,651) (4,274) (12,334) -------------------------------------------------------------------------------- Payments to acquire tangible fixed (21,805) (23,952) (42,991) assets Payments to acquire investments - (5,382) (8,565) Receipts from sales of tangible 31,680 14,394 38,691 fixed assets Receipts from sales of investments 604 1,179 16,605 -------------------------------------------------------------------------------- Capital expenditure and financial 10,479 (13,761) 3,740 investment -------------------------------------------------------------------------------- Business acquisitions (221,677) (8,330) (8,557) Business disposals 14,325 2,629 9,486 Borrowings of acquired businesses (4,988) - - -------------------------------------------------------------------------------- Acquisitions and disposals (212,340) (5,701) 929 -------------------------------------------------------------------------------- Equity dividends paid (7,363) (6,102) (10,789) -------------------------------------------------------------------------------- Net cash flow before financing (125,758) 12,572 27,953 -------------------------------------------------------------------------------- Financing Issue of ordinary share capital 28 3 586 Redemption of issued ordinary share - (10,291) (11,017) capital Payment of capital element of (1,748) - - finance lease rentals Repayment of unsecured bank loans (92,754) (96) (35,445) Repayment of loan notes (469) (15,118) (15,218) Unsecured loans 301,785 32,121 29,019 -------------------------------------------------------------------------------- Net cash inflow / (outflow) from 206,842 6,619 (32,075) financing -------------------------------------------------------------------------------- Movement in cash and overdrafts 81,084 19,191 (4,122) -------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net debt Movement in cash and overdrafts 81,084 19,191 (4,122) Exchange differences (58) (18) (219) Issue of loan notes on purchase of (15,752) - - investment in CD Bramall PLC Loans and finance leases acquired (47,395) - - New finance leases (1,310) - - Cash (inflow) / outflow from (206,814) (16,907) 21,644 increase / (decrease) in debt financing -------------------------------------------------------------------------------- Movement in net debt in the period (190,245) 2,266 17,303 Opening net debt (96,741) (114,044) (114,044) -------------------------------------------------------------------------------- Closing net debt (note 10) (286,986) (111,778) (96,741) -------------------------------------------------------------------------------- Group Statement of Total Recognised Gains and Losses -------------------------------------------------------------------------------- Unaudited Unaudited Audited 6 Months to 6 Months to 12 Months to 30.06.04 30.06.03 31.12.03 £000 £000 £000 -------------------------------------------------------------------------------- Profit for the financial period: Group 27,343 16,060 30,490 Share of associate 126 - - -------------------------------------------------------------------------------- 27,469 16,060 30,490 Currency translation adjustments 69 (136) (302) relating to net investments in foreign enterprises -------------------------------------------------------------------------------- Total recognised gains and losses 27,538 15,924 30,188 relating to the period -------------------------------------------------------------------------------- Notes 1. The interim report has been prepared on a basis consistent with the accounting policies stated in the financial statements for the year ended 31 December 2003 with the exception of the change in accounting policy noted below. Applicable accounting standards have been followed. For the year ending 31 December 2004 the Group is required to comply with the provisions of UITF 38 - Accounting for ESOP Trusts. These provisions have been adopted in the interim report and prior year reserves have been restated accordingly. As a result of this, investments in own shares, with a cost at 31 December 2003 of £10.8m (2003 interim: £8.9m) have been reclassified to an own shares reserve shown within shareholders' funds. 2. The comparative results for the year ended 31 December 2003 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain a statement under s237 (2) or (3) of the Companies Act 1985. 3. The interim report has been approved by the board of directors and is unaudited. 4. Exceptional costs incurred during the first half of 2004 total £4.3 million (2003 : £nil). These are in respect of integration costs arising from the acquisition of CD Bramall PLC which include redundancy payments made to the former directors. 5. Interest payable 6 Months 6 Months 12 Months to 30.06.04 to 30.06.03 to 31.12.03 £000 £000 £000 -------------------------------------------------------------------------- Bank loans and overdrafts 6,124 2,289 4,157 Loan notes 3,470 968 1,919 Manufacturer stocking loans 4,279 3,085 6,668 Interest capitalised - - (91) Other interest receivable (191) (72) (101) -------------------------------------------------------------------------- 13,682 6,270 12,552 ------------------------------------------------------------------------- 6. The effective tax rate for 2004 of 32.3% (2002 : 32.4%) is an estimate based upon the anticipated charge for the full year on profit on ordinary activities before taxation. 7. A dividend of 4.2p (2003 : 3.8p) net per ordinary share will be paid on 1 October 2004 to shareholders appearing on the register at the close of business on 3 September 2004. 8. Earnings per share 6 Months 6 Months 12 Months to 30.06.04 to 30.06.03 to 31.12.03 pence pence pence -------------------------------------------------------------------------- Basic earnings per share 22.4 12.7 24.5 Effect of non trading items (2.3) 0.3 (3.9) -------------------------------------------------------------------------- Adjusted earnings per share 20.1 13.0 20.6 -------------------------------------------------------------------------- Diluted earnings per ordinary 21.7 12.5 24.1 share -------------------------------------------------------------------------- The calculation of basic, diluted and adjusted earnings per share is based on: Number of shares 30.06.04 30.06.03 31.12.03 number number number -------------------------------------------------------------------------- Weighted average number of 122,651,668 126,374,325 124,391,818 shares used in basic and adjusted earnings per share calculation Weighted average number of 3,884,975 2,193,220 2,328,925 dilutive shares under option -------------------------------------------------------------------------- Diluted weighted average number of shares used in diluted earnings per share calculation 126,536,643 128,567,545 126,720,743 -------------------------------------------------------------------------- Earnings 30.06.04 30.06.03 31.12.03 £000 £000 £000 -------------------------------------------------------------------------- Earnings for basic and diluted 27,469 16,060 30,490 earnings per share calculation Non trading items: Profit on disposal of (11,575) 260 (7,464) businesses, fixed assets and investment disposals Goodwill amortisation 3,375 1,273 2,388 Exceptional costs 4,349 - - Income from investments - (1,040) (1,040) Tax effect of non trading 1,043 (72) 1,243 items -------------------------------------------------------------------------- Earnings for adjusted earnings 24,661 16,481 25,617 per share calculation -------------------------------------------------------------------------- The directors consider that the adjusted earnings per share figures provide a better measure of comparative performance. 9. Net cash inflow from operating activities 6 Months to 6 Months to 12 Months to 30.06.04 30.06.03 31.12.03 £000 £000 £000 -------------------------------------------------------------------------- Operating profit 42,477 29,236 48,396 Loss on sale of fixed assets - - 9 Depreciation 9,540 4,942 10,279 Goodwill amortisation 3,375 1,273 2,388 Movement in working capital 50,712 12,992 (1,938) -------------------------------------------------------------------------- 106,104 48,443 59,134 -------------------------------------------------------------------------- 10. Analysis of net debt 30.06.04 30.06.03 31.12.03 £000 £000 £000 -------------------------------------------------------------------------- Cash at bank and in hand 86,229 28,717 7,523 Overdrafts and other - - (2,320) borrowings -------------------------------------------------------------------------- 86,229 28,717 5,203 Other borrowings due within (24,796) (36,613) (40,255) one year Finance leases due within one (5,017) - - year Other borrowings due after one (338,474) (103,882) (61,689) year Finance leases due after one (4,928) - - year -------------------------------------------------------------------------- Total (286,986) (111,778) (96,741) -------------------------------------------------------------------------- Movement in period -------------------------------------------------------------------------- Cash at bank and in hand 78,764 19,191 (1,802) Overdrafts and other 2,320 - (2,320) borrowings Exchange differences (58) (18) (219) -------------------------------------------------------------------------- 81,026 19,173 (4,341) Other borrowings due within 15,459 15,118 11,476 one year Finance leases due within one (5,017) - - year Other borrowings due after one (276,785) (32,025) 10,168 year Finance leases due after one (4,928) - - year -------------------------------------------------------------------------- Total (190,245) 2,266 17,303 -------------------------------------------------------------------------- 11. Reconciliation of movements in shareholders' funds restated * restated * 30.06.04 30.06.03 31.12.03 £000 £000 £000 -------------------------------------------------------------------------- Opening shareholders' funds as 157,894 145,399 145,399 previously reported Prior year adjustment: (10,822) (4,667) (4,667) Investment in own shares transferred to equity -------------------------------------------------------------------------- Opening shareholders' funds as 147,072 140,732 140,732 restated Retained earnings 22,358 11,313 21,000 Issue of ordinary share 28 3 586 capital Purchase of own shares - (5,383) (8,565) Disposal of own shares 604 1,180 2,410 Redemption of issued ordinary - (10,291) (11,017) share capital Goodwill written back - 2,228 2,228 Exchange adjustment 69 (136) (302) -------------------------------------------------------------------------- Closing shareholders' funds 170,131 139,646 147,072 -------------------------------------------------------------------------- * Restated for the change in accounting policy as described in note 1. 12. With the acquisition of CD Bramall PLC we are required to review the book value of the assets acquired and make adjustments as appropriate to align accounting policies and restate assets and liabilities to their estimated market values. This review is often referred to as a fair value exercise and has to be completed, under prospective International Financial Reporting Standards, within 12 months of acquisition. Fair value adjustments made during the first half have reduced the value of the assets acquired by £43.7 million giving total goodwill on acquisition of £167.4 million. £28.5 million of the fair value adjustments relate to pension fund liabilities. We have not as yet finalised our review of all the assets and liabilities and further adjustments may be required in the second half of 2004. We will therefore conclude the fair value exercise in the 2004 financial statements. This information is provided by RNS The company news service from the London Stock Exchange

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