Final Results
22 March 2011
Preliminary Results
For Year Ended 31 December 2010
CREDITABLE YEAR - TOUGH 2011 - IMPROVING UK OUTLOOK - INDIAN GROWTH
Severfield-Rowen Plc, the market leading structural steel group, today announces its unaudited Preliminary Results for the year ended 31 December 2010.
Financial Highlights
|
£m |
|
2010 |
2009 |
|
Revenue |
|
266.7 |
349.4 |
|
Underlying* operating profit |
|
16.2 |
51.8 |
|
Operating profit |
|
12.0 |
45.1 |
|
Underlying profit before tax |
|
15.3 |
50.8 |
|
Retained profit after tax |
|
7.6 |
31.3 |
|
Underlying basic earnings per share |
|
12.50p |
41.11p |
|
Dividend per share |
|
7.50p |
15.00p |
· Revenue decreased by £82.7m to £266.7m (2009: £349.4m)
· Underlying operating margin at 6.1% (2009: 14.8%)
· Underlying profit before tax margin at 5.7% (2009: 14.5%)
· Underlying profit before tax decreased to £15.3m (2009: £50.8m)
· Profit after tax (reflecting non-underlying items) of £7.6m (2009: £31.3m)
· Basic earnings per share of 8.58p (2009: 35.34p)
· Recommended final dividend per share of 2.50p giving total dividend of 7.50p (2009: 15.00p)
· Year end net debt of £15.0m (2009: £11.5m net cash)
· Current UK order book value £226m
· Current JSSL (India) order book value £33m
* Underlying is before:
o the amortisation of acquired intangible assets - £2.7m (2009: £4.4m)
o share of pre-operating losses of Indian joint venture - £1.4m (2009: £1.0m, re-classified for consistency)
o impairment in valuation of investment property - £2.1m (2009: nil)
o movements in the valuation of derivative financial instruments - nil (2009: gain £3.4m)
o release of provisions no longer required - £2.0m gain (2009: nil)
o the associated tax impact of the above.
Tom Haughey, Chief Executive Officer, commented:
Twelve months ago the Company had the view that 2010 would be the low point of the cycle for our industry, but UK economic conditions, the public spending review and rising steel costs are likely to prolong the relatively weak levels of activity throughout most of 2011.
The Company's results for 2010 are very creditable in a year of severe trading conditions. The results were supported by the dramatic cost reductions implemented at the end of 2009, which are being followed by current initiatives to further reduce our costs.
In 2010 the Company saw its UK market share reach virtually double the level achieved in 2007, while significant capacity was taken out of the industry. Market prices in 2011 remain relatively low and are expected to continue to restrain margins, although performance is expected to improve in 2012 when the mix of project type changes. Against this backdrop, the Company will remain prudent with regard to dividend. At this point in the cycle a final dividend of 2.50p is being recommended, giving a full year dividend of 7.50p.
Last year saw the Company successfully undertake many important projects, including The Shard of Glass, the main Olympic Stadium, Blackfriars Bridge and key projects at Heathrow and Gatwick. Our professional engagement together with performance to programme and budgets remain the cornerstone of providing high levels of satisfaction to clients.
The Company's UK order book stands at a very respectable £226m, which includes new London commercial offices and new industrial facility projects.
The Company continues to follow its strategy of international diversification. In January of this year a collaboration agreement was signed with Zamil Industries of Saudi Arabia to improve the Company's prospects of involvement in large construction projects in the Middle East. The Indian joint venture company, JSW Severfield Structures Ltd, has grown its order book value to £33m which provides a significant base load for the plant in Bellary. Together with our partner, JSW Steel, we remain positive about realising our growth ambitions in India.
The Company is increasingly confident that some UK recovery will follow in 2012, led by the industrial, commercial and energy/power markets, feeding through to improved financial performance. The Company is well placed, given its UK market share and competitive advantages, to benefit from this recovery.
For further information, please contact:
Severfield-Rowen Plc Toby Hayward 01845 577896
Chairman
Tom Haughey 01845 577896
Chief Executive Officer
Alan Dunsmore 01845 577896
Finance Director
RBS Hoare Govett Ltd John MacGowan 020 7678 8000
Stephen Bowler 020 7678 8000
Pelham Bell Pottinger Archie Berens 020 7861 3157
Francesca Tuckett 020 7861 3157
Chairman's Statement
Overview
In 2010 the Company produced lower but creditable profits in an extremely harsh business environment for the structural steel sector in the UK. The Company continues to extend its leading position in the market, reflected by its financial performance and market share gains.
The Company anticipates that trading conditions will only improve marginally towards the end of 2011, before a richer vein of project opportunities materialises in 2012.
Results
The Group has made an underlying operating profit of £16.2m (2009: £51.8m) on revenue of £266.7m (2009: £349.4m). Group profit after tax is £7.6m (2009: £31.3m), with basic earnings per share of 8.58p (2009: 35.34p), both reflecting the impact of non-underlying items.
Dividend
The Company, while optimistic for 2012 and beyond, feels that trading in the UK market in 2011 will remain very tough. In remaining prudent against this outlook, it will recommend a final dividend payment of 2.50p, giving 7.50p for the full year (2009: 15.00p).
Board Changes
The Board is pleased to announce that Derek Randall, currently Executive Director with responsibility for Business Development and International, including JSW Severfield Structures Ltd in India, joined the Company's main Board in February 2011.
The Company is also pleased to welcome John Dodds to its Plc Board as a non-executive director in October 2010. John retired from Kier Group last year, after working for the company for 40 years. John became CEO of Kier Group in 2003 and, with his wealth of experience in the construction industry, will be a valuable asset to our Board.
People
Our employees continue to be our key competitive advantage, with their experience and commitment contributing to our relative success and development.
Outlook
2011 will be a tough trading year. The macro-economic situation in the UK has been and remains difficult to interpret and predict. Clearer consensus is emerging that recovery will be apparent in GDP growth in 2012. Privately led investment in a few key sectors will provide improved prospects for us in 2012. The Company expects that the remainder of 2011 will be notable for the absence of large, major project starts with an improvement being seen in our pipeline for 2012.
In our overseas target markets, we are demonstrating that our experience, methods and capability can be transferred successfully as we attempt to offset the impact of tough trading conditions in the UK. Progress in India is extremely good where exciting prospects are in the pipeline and growth potential is strong.
Chief Executive's Review
In 2010 Severfield-Rowen traded through some of the most difficult conditions seen by the UK industry in the last few decades.
It faces the challenges of 2011 in a determined but pragmatic manner and is now more optimistic of a partial recovery in demand during 2012.
Business
The companies within the Group have displayed their individual strengths which have collectively enabled the Group to trade profitably and competitively in the last 12 months. Features such as close commercial interaction, design capability, cost base, volume outputs, experience and co-ordinated steel erection, together with product range have been key in growing market share in such difficult circumstances.
Internationally, the Company is successfully establishing long-term positions in India and the Middle East.
Order Book
The order book for the UK based operations of the Company stands at a healthy £226m, as it continues to secure business from all of the sectors making up UK demand.
The pipeline of enquiries is more encouraging than six months ago, however a large proportion of the work will be for commencement in 2012.
Costs
The Company specifically targeted cost reductions across all businesses at the end of 2009. These improvements have provided for our resultant competitiveness throughout 2010. Further cost reduction initiatives remain under review and development, including a procurement related initiative.
Prices and Margins
Market prices bottomed in the first half of 2010 and, while remaining relatively low, have moved in line with the steel material developments of the international market.
Margins have remained subdued with little improvement in the supply/demand balance of the UK market.
India
In November 2010, the joint venture (JSSL) manufacturing facilities at Bellary were officially opened and attended by approximately 200 guests from the Indian construction industry.
The business is now designing, drawing, fabricating and erecting quality structural steelwork for the growing Indian market.
Four months after the opening, the order book currently stands at £33m, demonstrating the value of the new service on offer to clients in India.
These developments underpin the Company's confidence that it can realise its financial and growth ambitions in India.
Projects
A significant number of major projects have been completed or undertaken during the past 12 months, including:
2012 Olympic Stadium The Shard of Glass Commercial Office, London
2012 Olympic Media Centre Vestas Manufacturing Facility, Isle of Wight
2012 Olympic Handball Arena National Indoor Sports Arena & Velodrome, Glasgow
2012 Olympic Bastketball Arena Blackfriars Bridge & Thameslink Station, London
2012 Velodrome Heathrow Terminal 2A
ArcelorMittal Orbit Portlaiose Retail Development, Ireland
Heathrow Terminal 3 Titanic Quarter Development, Belfast
Sirius Academy, Hull Brighton FC Stadium
Co-op, Glasgow Co-op, Andover
Mann Island Development, Liverpool Sackville Street Commercial Office, London
Baker Street Commercial Office, London Bombardier Aerospace Development, Belfast
Chivas Bros Warehouses, Mulben Gatwick North Terminal
Thameslink Viaduct Borough Market, London Cannon Place Commercial Office, London
Saica Paper Mill Development, Partington Medical Research Council, LMB, Cambridge
Winifred & Holtby School Development, Hull Bankside Residential Building, London
Melior College Development, Scunthorpe
Business Investment
UK investment was at reduced levels compared to recent years but included state-of-the-art milling capability at Watson's (for high tolerance steelwork) which is being used on the ArcelorMittal Orbit structure at the 2012 Olympic site.
Corporate Social Responsibility
The Company is proactively seeking to take a leadership position in the areas of health, safety and sustainability and is implementing a strategy of continuous improvement in these key areas of our business.
There are three branded strands to our "Steel Futures" strategy:
Sustainable Future
· Community and stakeholder engagement
· Leadership and people development
· Cost reconciliation and profitable growth
· Market leading innovation
· Performance management and development
· Supply chain partnering
Safe Future
· Safety leadership
· Behavioural Safety
· Safety 'Golden Rules'
· Health and wellbeing
· Safety in design
· Communications
Zero Carbon Future
· Carbon management and reduction
· Transport policy and strategy
· Waste and recycling
· Renewable energy
· Responsible sourcing of materials
· Water management
A challenging plan supporting this vision has been implemented and we look forward to reporting good progress in 2011.
Risk Management
The Company has a proactive and formal approach to Risk Management. During the year, another comprehensive review of its risk profile and risk management process was undertaken in conjunction with Willis. The emphasis changed from previous reviews to reflect the more challenging environment within which it is now operating and the greater international dimension to its business. A more complete review of detailed risks and mitigating factors will be incorporated in the Annual Report and Accounts.
Summary
The Company remains pleased with its relative performance in the very challenging UK market place. The UK based operations have shown their strengths and competitiveness to produce an overall successful performance in the last twelve months. We commence this year with a good order book, but recognise that UK demand in 2011 remains weak.
In India, we now have a very strong order book and will continue our drive for growth in those markets.
We see a partial improvement in UK demand and mix emerging in 2012, which, while not a comprehensive recovery, will present the Company with good opportunities.
Financial Review
|
|
2010 |
2009 |
|
|
£m |
£m |
|
Revenue |
266.7 |
349.4 |
|
Operating profit before non-underlying items |
16.2 |
51.8 |
|
Profit before tax and non-underlying items |
15.3 |
50.8 |
|
Profit before tax |
11.1 |
44.1 |
|
Profit after tax |
7.6 |
31.3 |
|
Year end (debt)/cash |
(15.0) |
11.5 |
Overview
The Group's results for 2010 reflect the impact of the continuing difficult trading conditions in the UK market. Capacity was reduced by 20% at the end of 2009 and the Group was able to operate at this new capacity throughout the year, increase its market share and maintain a relatively strong order book in these difficult conditions.
During the year, the Company's Indian joint venture business commenced trading on schedule and good progress is being made as this business moves towards its initial full operating capacity.
Revenue and Operating Profit
Revenue fell by 24% to £266.7m (2009: £349.4m). This reflects the reduction in production capacity and lower contract pricing compared with the previous year. Pricing reached its nadir in the first half of the year but a combination of increasing steel prices and continuing capacity reductions by our competitors led to more stable pricing towards the year end, although still at very tight margins.
The operating profit before non-underlying items of £16.2m was 69% down on the previous year (2009: £51.8m). Operating profit margins reduced from 14.8% to 6.1% in the year, reflecting the reduced capacity and lower margins highlighted above, although the worst pricing impacts were, to some extent, compensated by the successful conclusion of more profitable contracts which commenced in the previous years.
Share of Losses of Associate Companies
Operating profit includes the Group's 50% share of the results of its Indian joint venture. There is both an underlying and a non-underlying element to these results. The underlying loss of £0.4m (2009: nil) represents the initial losses after the commencement of commercial production towards the end of 2010. The non-underlying loss of £1.4m (2009: £1.0m) represents the Group's share of the joint venture's pre-operating costs throughout the year. The Group's share of losses from the joint venture for 2009, which also related to pre-operating costs, have been re-classified as non-underlying for consistency.
Finance Costs
Net finance costs for the Group amounted to £0.9m (2009: £1.0m). The reduction reflects a lower level of average net debt levels throughout the year, compared with the previous year.
Non-underlying Items
Non-underlying items reduced the profit before tax for the year by £4.2m (2009: £6.7m) and include the following:
· Amortisation of acquired intangibles - £2.7m (2009: £4.4m).
· Share of pre-operating losses of Indian joint venture - £1.4m (2009: £1.0m).
· Impairment in valuation of Investment Property - £2.1m (2009: nil). The Group has an investment property, purchased in 2007, which was previously held at its fair value of £6.1m. The Directors have reviewed both the resale and rental prospects for this property in light of the continuing market weakness for commercial property and have concluded that its fair value is £4.0m. Consequently, an impairment charge of £2.1m has been taken in the year.
· Movements in the valuation of derivative financial instruments - nil (2009: gain £3.4m).
· Release of provisions no longer required - £2.0m gain (2009: nil). During the year, good progress was made in reducing the Group's exposure to potential liabilities under legal claims. Consequently, the Directors' best estimate of known legal claims in process has reduced from £2.6m to £0.6m.
Taxation
The underlying tax charge of £4.2m represents an effective rate of 26.6% (on applicable profit which excludes results of associates) compared with 28.3% in the previous year. This was aided by the satisfactory conclusion of some outstanding matters relating to previous years.
The total tax charge for the year was £3.5m which represents an effective tax rate of 27.0%. The impairment of the investment property does not attract tax relief and the negative impact of this is partially offset by the deferred tax benefit from the reduction of the UK corporation tax rate to 27.0%. As the impact of both of these points is non-underlying, it is reflected in Other Items.
Earnings per Share
Underlying basic earnings per share was at 12.50p, a decrease of 70% over the previous year. This calculation is based on the underlying profit after tax of £11.1m and 88,973,821 shares, being the weighted average number of shares in issue during the year.
Basic earnings per share, based on profit after tax after non-underlying items is 8.58p (2009: 35.34p).
For 2010, there is no difference between basic and diluted earnings per share (2009: underlying 40.91p, total 35.16p).
Dividend
The Board recommends a final dividend of 2.50p payable on 16 June 2011 to shareholders on the register at the close of business on 20 May 2011. This will give a total dividend for the year of 7.50p.
Balance Sheet
Shareholders' funds decreased slightly during the year from £132.5m to £130.9m. This equates to a total equity value per share at 31 December 2010 of 146.7p, compared with 149.5p at the end of 2009. This decrease reflects the dividend paid during the year being higher than the profit after tax.
Goodwill on the Balance Sheet is valued at £54.7m (2009: £54.7m) and is subject to an annual impairment review under IFRS 3. No impairment existed at either 31 December 2010 or 2009.
Other intangible assets on the Balance Sheet are valued at £20.5m (2009: £23.2m) and represent the net book value of the intangible assets identified on the acquisition of Fisher Engineering in 2007. Each class of asset identified is being amortised on a straight line basis over varying periods. The amortisation charged in the year was £2.7m (2009: £4.4m), giving a total amortised at the year-end of £18.5m (2009: £15.8m).
The Group now has property, plant and equipment and investment property totalling £86.9m (2009: £91.0m). Depreciation charged in the year amounted to £4.5m (2009: £5.2m) and the investment property was impaired by £2.1m (2009: nil). Capital expenditure in the year was £3.0m (2009: £4.8m). This included some replacement of older equipment across the Group and also some safety equipment for protection of site workers on high-rise buildings.
During the year the Group invested £2.9m (2009: £2.4m) as equity into the joint venture company in India.
The Group's capital expenditure in 2011 in the UK is not expected to be more than £3m.
Unlike the rest of the Group, Atlas Ward has a defined benefit pension scheme which, although closed to new members, had an IAS 19 deficit of £8.4m as at 31 December 2009. At 31 December 2010, the deficit increased to £8.5m and is shown as a liability in the Group Balance Sheet. The increase in the deficit is as a result of the changes in the assumptions made, including a reduction in corporate bond yields and an increase in mortality rates, offset by slightly lower inflation expectations.
Cash Flow
There was an expected outflow of cash during the year to leave year end net debt at £15.0m (2009: net cash £11.5m). This movement reflects an outflow from operating activities of £11.2m, and also includes dividends of £8.9m and investment in capital expenditure and the Indian joint venture of £3.0m and £2.9m, respectively. The outflow from operating activities reflects the reversal of the particularly favourable contract working capital position at 31 December 2009, but also reflects the impact of higher steel prices on working capital and an overall extension of customer payment cycles as weak market conditions persist. Management continues to monitor customer credit risk very closely and credit insurance remains a key factor in mitigating this risk. The outflow also includes corporation tax payments of £5.4m.
The Group continues to operate within the parameters of its £40m revolving credit facility, renewed during the year, with RBS and Yorkshire Bank, a member of National Australia Bank Group.
Treasury
Group treasury activities are managed and controlled centrally. Risks to assets and potential liabilities to customers, employees and the public continue to be insured. The Group maintains its low risk financial management policy by insuring all significant trade debtors.
The treasury function seeks to reduce the Group's exposure to any interest rate, foreign exchange and other financial risks, to ensure that adequate, secure and cost effective funding arrangements are maintained to finance current and planned future activities and to invest cash assets safely and profitably.
The Group continues to have some exposure to exchange rate fluctuations, currently between Sterling, the Euro and the US Dollar. In order to maintain the projected level of profit budgeted on contracts foreign exchange contracts are taken out to convert into Sterling at the expected date of receipt.
Going Concern
In determining whether the Group's annual consolidated financial statements can be prepared on a going concern basis, the Directors considered all factors likely to affect its future development, performance and its financial position, including cash flows, liquidity position and borrowing facilities and the risks and uncertainties relating to its business activities. The key areas of uncertainty considered by the Directors were as follows:
· The UK order book, which currently stands at £226m, the pipeline of potential orders, including the relative attractiveness of the market sectors which are feeding that pipeline, and the anticipated conversion of this pipeline.
· The implications of the continuing challenging economic environment on the Group's revenues and profits. The Group undertakes forecasts and projections of trading and cash flows on a regular basis. Whilst this is essential for targeting performance and identifying areas of focus for management to improve performance and mitigate the possible adverse impact of a deteriorating economic outlook, they also provide projections of working capital requirements;
· The impact of the very competitive environment within which the Group operates, including pressures on margins and counterparty risks. This included an assessment of the current stage of the economic cycle of the construction industry, the prospects for any recovery in the short to medium term, and the potential development of the competitive environment.
· The impact on our business of key suppliers being unable to meet their obligations to the Group including the ability of the Group to find alternative suppliers who could also enable the business to continue trading satisfactorily.
· The potential mitigating actions that could be taken in the event that revenues are worse than expected, to ensure that operating profit and cash flows are protected; and
· The committed finance facilities to the Group, including both the level of the facilities and the banking covenants attached to them. The Group has access to a £40m revolving credit facility to meet day to day working capital requirements, which is available until March 2013. This facility provides the Group with sufficient headroom both on the facility itself and on the bank covenants in place. This position is forecast to continue for the foreseeable future.
Having considered all the factors impacting the Group's business, including downside sensitivities, the Directors are satisfied that the Group will be able to operate within the terms and conditions of the Group financing facilities for the foreseeable future.
The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the 2010 Annual Report.
Summary
The Group continues to perform profitably and in line with expectations despite the existing poor market conditions. In 2010, overall margins were under sustained pressure but remained positive. While overall net debt has increased during the year, it remains at levels with which management is comfortable. All aspects of the business will continue to be managed tightly in order that it emerges stronger and fitter when growth in its key sectors is anticipated to return in 2012.
Alan Dunsmore
Finance Director
Consolidated Income Statement
For the year ended 31 December 2010
|
Continuing operations |
Before Other Items 2010 £000
|
Other Items
2010 £000 |
Total
2010 £000 |
Before Other Items 2009 £000
|
Other Items
2009 £000 |
Total
2009 £000 |
|
Revenue |
266,692 |
- |
266,692 |
349,417 |
- |
349,417 |
|
Cost of sales |
(242,568) |
2,000 |
(240,568) |
(288,658) |
(2,283) |
(290,941) |
|
Gross profit |
24,124 |
2,000 |
26,124 |
60,759 |
(2,283) |
58,476 |
|
|
|
|
|
|
|
|
|
Other operating income |
510 |
- |
510 |
568 |
- |
568 |
|
Distribution costs |
(1,937) |
- |
(1,937) |
(2,123) |
- |
(2,123) |
|
Administrative expenses |
(6,127) |
(4,821) |
(10,948) |
(7,425) |
(6,889) |
(14,314) |
|
Movements in the valuation of derivative financial contracts |
- |
39 |
39 |
- |
3,440 |
3,440 |
|
Operating profit before share of results of associates |
16,570 |
(2,782) |
13,788 |
51,779 |
(5,732) |
46,047 |
|
Share of results of associates |
(366) |
(1,394) |
(1,760) |
49 |
(991) |
(942) |
|
Operating profit |
16,204 |
(4,176) |
12,028 |
51,828 |
(6,723) |
45,105 |
|
|
|
|
|
|
|
|
|
Investment revenue |
55 |
- |
55 |
131 |
- |
131 |
|
Finance costs |
(976) |
- |
(976) |
(1,145) |
- |
(1,145) |
|
Profit before tax |
15,283 |
(4,176) |
11,107 |
50,814 |
(6,723) |
44,091 |
|
|
|
|
|
|
|
|
|
Tax |
(4,160) |
686 |
(3,474) |
(14,383) |
1,605 |
(12,778) |
|
Profit for the period attributable to the equity holders of the parent |
11,123 |
(3,490) |
7,633 |
36,431 |
(5,118) |
31,313 |
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
12.50p |
(3.92p) |
8.58p |
41.11p |
(5.77p) |
35.34p |
|
Diluted |
12.50p |
(3.92p) |
8.58p |
40.91p |
(5.75p) |
35.16p |
Other items relate to:
· The amortisation of acquired intangibles.
· The pre-operating losses of the Group's Indian joint venture (the 2009 equivalent number has also been reanalysed as "Other Items" for that period).
· Impairment of investment property.
· Movements in the valuation of derivative financial instruments.
· Release of provisions not required.
· The associated tax impact of these items.
Other items have been disclosed separately in order to give an indication of the underlying earnings of the Group.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2010
|
|
Year ended 31 December 2010 £000
|
Year ended 31 December 2009 £000
|
|
Actuarial loss on defined benefit pension scheme |
(440) |
(2,091) |
|
|
|
|
|
Tax on items taken directly to equity |
123 |
586 |
|
|
|
|
|
Net expense recognised directly in equity |
(317) |
(1,505) |
|
|
|
|
|
Profit for the year from continuing operations |
7,633 |
31,313 |
|
|
|
|
|
Total recognised income and expense for the year attributable to equity shareholders |
7,316 |
29,808 |
|
|
|
|
Consolidated Statement of Changes in Equity
31 December 2010
|
|
Share Capital £000 |
Share Premium £000 |
Other Reserves £000 |
Retained Earnings £000 |
Total Equity £000 |
|
|
|
|
|
|
|
|
At 1 January 2009 |
2,215 |
46,152 |
439 |
70,957 |
119,763 |
|
Profit for the period (attributable to equity holders of the parent) |
- |
- |
- |
31,313 |
31,313 |
|
Dividends paid |
- |
- |
- |
(17,722) |
(17,722) |
|
Share based payments |
- |
- |
626 |
- |
626 |
|
Actuarial loss on defined benefit pension scheme |
- |
- |
- |
(2,091) |
(2,091) |
|
Deferred income taxes on defined benefit pension scheme |
- |
- |
- |
586 |
586 |
|
|
|
|
|
|
|
|
At 31 December 2009 |
2,215 |
46,152 |
1,065 |
83,043 |
132,475 |
|
|
|
|
|
|
|
|
|
Share Capital £000 |
Share Premium £000 |
Other Reserves £000 |
Retained Earnings £000 |
Total Equity £000 |
|
|
|
|
|
|
|
|
At 1 January 2010 |
2,215 |
46,152 |
1,065 |
83,043 |
132,475 |
|
Profit for the period (attributable to equity holders of the parent) |
- |
- |
- |
7,633 |
7,633 |
|
Dividends paid |
- |
- |
- |
(8,883) |
(8,883) |
|
Equity settled shared based payments |
16 |
- |
(896) |
915 |
35 |
|
Actuarial loss on defined benefit pension scheme |
- |
- |
- |
(440) |
(440) |
|
Deferred income taxes on defined benefit pension scheme |
- |
- |
- |
123 |
123 |
|
|
|
|
|
|
|
|
At 31 December 2010 |
2,231 |
46,152 |
169 |
82,391 |
130,943 |
|
|
|
|
|
|
|
Consolidated Balance Sheet
31 December 2010
|
|
At 31 December 2010 £000
|
At 31 December 2009 £000
|
|
ASSETS |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
Goodwill |
54,712 |
54,712 |
|
Other intangible assets |
20,495 |
23,244 |
|
Property, plant and equipment |
82,949 |
84,907 |
|
Investment property |
4,000 |
6,135 |
|
Interests in associates |
2,857 |
1,733 |
|
|
165,013 |
170,731 |
|
Current assets |
|
|
|
Inventories |
12,633 |
9,810 |
|
Trade and other receivables |
71,861 |
54,655 |
|
Cash and cash equivalents |
3,589 |
11,548 |
|
|
88,083 |
76,013 |
|
|
|
|
|
Total assets |
253,096 |
46,744 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
75,868 |
82,564 |
|
Financial liabilities - borrowings |
18,629 |
- |
|
Financial liabilities - derivative financial instruments |
108 |
147 |
|
Tax liabilities |
5,217 |
6,034 |
|
|
99,822 |
88,745 |
|
Non-current liabilities |
|
|
|
Retirement benefit obligations |
8,532 |
8,407 |
|
Deferred tax liabilities |
13,199 |
14,517 |
|
Provisions |
600 |
2,600 |
|
|
22,331 |
25,524 |
|
|
|
|
|
Total liabilities |
122,153 |
114,269 |
|
|
|
|
|
NET ASSETS |
130,943 |
132,475 |
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
Share capital |
2,231 |
2,215 |
|
Share premium |
46,152 |
46,152 |
|
Other reserves |
169 |
1,065 |
|
Retained earnings |
82,391 |
83,043 |
|
TOTAL EQUITY |
130,943 |
132,475 |
Consolidated Cash Flow
For the year ended 31 December 2010
|
|
Year ended 31 December 2010 £000
|
Year ended 31 December 2009 £000
|
|
Net cash (outflow)/inflow from operating activities |
(11,203) |
52,134 |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
Proceeds from sale of property, plant and equipment |
225 |
1,260 |
|
Interest received |
61 |
144 |
|
Purchases of property, plant and equipment |
(3,025) |
(4,847) |
|
Purchases of shares of associates |
(2,884) |
(2,443) |
|
Net cash used in investing activities |
(5,623) |
(5,886) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Interest paid |
(879) |
(1,223) |
|
Dividends paid |
(8,883) |
(17,722) |
|
Repayment of borrowings |
- |
(27,673) |
|
Borrowings taken out |
18,629 |
- |
|
Net cash generated from financing activities |
8,867 |
(46,618) |
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
(7,959) |
(370) |
|
Cash and cash equivalents at beginning of period |
11,548 |
11,918 |
|
Cash and cash equivalents at end of period |
3,589 |
11,548 |
|
|
|
|
1) Basis of preparation
The Group's financial statements have been prepared on a basis consistent with that adopted in the previous year and in accordance with IFRSs. The financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the consolidated financial statements comply with Article 4 of the EU IAS Regulations. The financial statements have been prepared under the historical cost basis, except for the revaluation of financial assets and liabilities under IAS 39 "Financial instruments: recognition and measurement". This preliminary announcement does not constitute the full financial statements prepared in accordance with International Financial Reporting Standards ("IFRSs") or within the meaning of section 435 of the Companies Act 2006.
The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 December 2010 or 31 December 2009. The financial information for the year ended 31 December 2009 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation.
The audit of the statutory accounts for the year ended 31 December 2010 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.
2) Revenue and segmental analysis
Revenue, profit before tax, and net assets, in both years, all relate to the design, fabrication, and erection of structural steelwork and related activities. All of the Group's subsidiary businesses have similar products and services, production processes, types of customer, methods of distribution, regulatory environments, and economic characteristics.
Revenue, which relates wholly to construction contracts and related assets in both years originated from the United Kingdom.
3) Taxation
The taxation charge comprises:
|
|
2010 £000 |
2009 £000 |
|
Current tax |
|
|
|
|
|
|
|
UK corporation tax |
5,161 |
13,661 |
|
Adjustments to prior years' tax provision |
(586) |
(367) |
|
|
4,575 |
13,294 |
|
|
|
|
|
Deferred tax |
|
|
|
|
|
|
|
Current year (credit) |
(1,234) |
(542) |
|
Adjustments to prior years' provision |
133 |
26 |
|
|
(1,101) |
(516) |
|
|
|
|
|
Total tax charge |
3,474 |
12,778 |
4) Dividends
|
|
2010 £000
|
2009 £000
|
|
Second interim dividend for the year ended 31 December 2009 of 5.00p (2008: nil) per share
|
4,430 |
- |
|
Final dividend for the year ended 31 December 2009 of nil (2008: 10.00p) per share |
- |
8,861 |
|
|
|
|
|
Interim dividend for the year ended 31 December 2010 of 5.00p (2009: 10.00p) per share |
4,453 |
8,861 |
|
|
8,883 |
17,722 |
|
|
|
|
|
|
|
|
|
Proposed final dividend for the year ended 31 December 2010 of 2.50p (2009: nil) per share |
2,231 |
- |
5) Earnings per share
There are no discontinued operations in either the current or prior year.
Earnings per share is calculated as follows:
|
|
2010 £000
|
2009 £000
|
|
Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent company |
7,633 _______ |
31,313 ______ |
|
|
|
|
|
Earnings for the purposes of underlying basic earnings per share being underlying net profit attributable to equity holders of the parent company |
11,123 _______ |
36,431 ______ |
|
|
|
|
|
Number of shares |
Number |
Number |
|
|
|
|
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
88,973,821 |
88,607,876 |
|
|
|
|
|
Effect of dilutive potential ordinary shares: |
|
|
|
Share-based payments scheme |
nil |
440,816 |
|
|
_________ |
_________ |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
88,973,821 |
89,048,692 |
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
8.58p |
35.34p |
|
Underlying basic earnings per share |
12.50p |
41.11p |
|
Diluted earnings per share |
8.58p |
35.16p |
|
Underlying diluted earnings per share |
12.50p |
40.91p |
6) Reconciliation of Group operating profit to cash generated from operations
|
|
2010 £000
|
2009 £000
|
|
Operating profit |
12,028 |
45,105 |
|
Adjustments for: |
|
|
|
Depreciation of property, plant and equipment |
4,503 |
5,173 |
|
Impairment / depreciation of investment property |
2,135 |
62 |
|
Loss on disposal of property, plant and equipment |
165 |
220 |
|
Movement in pension |
(317) |
(335) |
|
Share of results of associated companies |
1,760 |
942 |
|
Share based payments |
35 |
626 |
|
Amortisation of intangible assets |
2,749 |
4,408 |
|
Provision release |
(2,000) |
- |
|
Impairment of capitalised development costs |
- |
2,481 |
|
Movement in valuation of derivative financial contracts |
(39) |
(3,440) |
|
|
|
|
|
|
|
|
|
Operating cash flows before changes in working capital |
21,019 |
55,242 |
|
(Increase) in inventories |
(2,823) |
(1,483) |
|
(Increase) / decrease in receivables |
(17,212) |
6,290 |
|
(Decrease) / increase in payables |
(6,794) |
5,320 |
|
|
|
|
|
Cash generated from operations |
(5,810) |
65,369 |
|
Tax paid |
(5,393) |
(13,235) |
|
Net cash (after tax) from operating activities |
(11,203) |
52,134 |
|
|
|
|
7) Analysis of net funds/(borrowings)
|
|
At 31 December 2010 £000
|
At 31 December 2009 £000
|
|
Cash in hand |
3,589 |
11,548 |
|
Borrowings |
(18,629) |
- |
|
|
|
|
|
Closing net funds/(borrowings) |
(15,040) |
11,548 |
This information is provided by RNS