Final Results
SIG PLC
09 March 2004
9 March 2004
PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2003
SIG plc is the market leading specialist distributor of insulation, roofing and
commercial interiors products in Europe. It has 371 branches located in the UK,
Republic of Ireland, France, Germany, The Netherlands, Poland and the USA.
• Sales increased by 9.8% to £1,268.5m (2002: £1,155.0m). Like for like
(1) sales growth was 6.7%.
- UK and Republic of Ireland (c. 64% of Group sales), sales increased by
10.4% to £810.7m (2002: £734.5m), with sales growth being achieved in
all market sectors other than premium office interiors which account
for less than 7% of total Group sales. The largest division,
Insulation, performed particularly strongly, achieving double digit
like for like sales growth as the impact of increased insulation
building standards took effect.
- In Mainland Europe (c. 31% of Group sales), sales increased by 2.9% in
local currencies and 12.7% in Sterling to £394.2m (2002: £349.8m),
against a background of weak markets. Sales were up in local currency
in all countries. Costs were held in real terms in local currencies and
this, combined with an increase in the gross margin, enabled operating
profits (pre goodwill amortisation of £0.6m (2002: £0.6m)) to increase
by 29% in local currencies and 43% in Sterling to £11.0m (2002: £7.7m).
- In the USA (c. 5% of Group sales), sales declined by 1.7% in US Dollars
(9.8% in Sterling), against the background of weak demand from the
petrochemical industries.
• Five acquisitions were made in the year, all of which traded profitably.
• Operating profit up 9.9% to £58.6m (2002: £53.4m).
• Profit before tax was up 11.1% to a record £51.5m (2002: £46.3m) and
earnings per share increased by 8.7% to 28.6p (2002: 26.3p).
• Cash flow strengthened progressively during the year, enabling
substantial reduction in gearing to 38% at the year end (2002: 70%).
• Tenth successive year of dividend growth. Recommended final dividend per
share of 8.3p gives a total dividend up 6.9% to 12.4p (2002: 11.6p),
reflecting the Board's confidence in the Group's prospects.
(1) - 'Like for like' in this context means excluding the sales of acquisitions
made in 2002 and 2003.
Barrie Cottingham, Chairman, commented:
'The Group has produced a solid performance in 2003, having achieved growth in
sales, operating profit, profit before tax and earnings per share compared with
the prior year. New records for sales and profits have been set in a year when
only the UK Structural Insulation market showed any growth, with all other
markets in which the Group operates having experienced either flat or reduced
demand. This clearly demonstrates the underlying strength and resilience of the
Group.
Market conditions are not expected to change significantly in 2004, but the
Group, having strengthened its market position and its finances in 2003, enters
the year in excellent shape, giving me confidence of continued further
progress.'
Enquiries:
David Williams, Chief Executive SIG plc Today 020 7020 4000
Gareth Davies, Finance Director Thereafter 0114 285 6300
Faeth Birch / Gordon Simpson Finsbury 020 7251 3801
Full Preliminary Results information, including a webcast of the presentation,
is available on www.sigplc.co.uk/results
An interview with David Williams, Chief Executive is available on SIG's
website and on http://www.cantos.com
Introduction
The Group has produced a solid performance in 2003, having achieved growth in
sales, operating profit, profit before tax and earnings per share compared with
the prior year. New records for sales and profits have been set in a year when
only the UK Structural Insulation market showed any growth, with all other
markets in which the Group operates having experienced either flat or reduced
demand. This clearly demonstrates the underlying strength and resilience of the
Group.
Actions taken during the year on the management of working capital have improved
cash flow, reduced gearing significantly and further strengthened the Balance
Sheet.
Results
For the year ending 31 December 2003, compared with the corresponding period in
2002:
Sales
• Sales increased by £113.6m (9.8%) to £1,268.5m (2002 : £1,155.0m);
• Sales growth, excluding the impact of foreign exchange, was 6.9%;
• Like for like sales growth was 6.7%, before the benefit of
acquisitions in 2002 and 2003.
Profits
• Operating profit was £58.6m, up £5.3m (9.9%);
• Goodwill amortisation increased marginally by £0.3m to £4.8m. Interest
costs (prior to FRS 17 finance charges) fell £0.6m to £6.5m, reflecting a
significant reduction in borrowings. The impact of adopting FRS 17 (see below)
is reflected in an additional £0.7m charge to the total interest figure;
• Profit before tax rose by 11.1%, an increase of £5.1m to £51.5m
(2002: £46.3m).
Margins and Costs
• The gross margin declined slightly compared with prior year, due
primarily to changes in the sales mix;
• Operating costs (before goodwill amortisation of £4.8m) were reduced
as a proportion of sales;
• The overall Group operating margin (before goodwill amortisation of
£4.8m) was maintained at 5.0%.
Earnings and Dividends
Earnings per share in 2003 were 28.6p compared with 26.3p in 2002, an increase
of 8.7%. A final dividend of 8.3p is proposed, subject to shareholder approval.
This would make a total dividend for the year of 12.4p, up 6.9% from the 11.6p
per share dividend in 2002. If approved, the final dividend will be payable on
21 May 2004 to shareholders on the register at 16 April 2004. This marks the
tenth successive annual increase in the dividend, a tangible demonstration of
the Group's commitment to a progressive dividend policy.
Acquisitions
The Group stated early in 2003 that its primary focus would be on seeking
organic improvements during the year and the acquisition programme would be
temporarily held back. There were five small bolt-on acquisitions completed
during 2003, for a total consideration of £3.5m. Three of these were in the UK
and two in France.
Finances
Progressive improvement in cash inflow enabled a substantial reduction in
gearing to be achieved, to 38% at the end of December 2003 compared with 50% at
30 June 2003 and 70% at 31 December 2002. The gearing figures have been adjusted
to take account of the impact of the early adoption of FRS 17 (see below).
Gearing figures pre FRS 17 are 35% for 31 December 2003 and 63% for 31 December
2002. Interest cover remained very prudent and strengthened during 2003 over
2002.
Pensions
The Group has adopted the accounting policy FRS 17 Retirement benefits this
year. Though not required to be adopted, the Board considers that, given the
last triennial actuarial valuation of the main scheme was at 1 January 2001, the
profit and loss charge and balance sheet position is more accurately reflected
under the new standard. The effect of the introduction of the new standard in
2003, when compared to SSAP 24, is to reduce profit before taxation by £190,000
(2002: £nil) and to reduce comparative shareholders' funds by £16.9m.
Board
Barrie Cottingham, Chairman, has indicated his intention to step down from the
Board following the AGM in April 2004. He will be replaced by Les Tench who
joined the Board in March 2003 and is presently Deputy Chairman.
An additional independent Non-Executive Director, Michael Borlenghi, has been
appointed and joins the Board on 2 April 2004.
Review of Operations
The Group made good progress in 2003. Sales and profits hit record levels and
SIG strengthened its market position throughout all its activities.
In addition to achieving like for like growth in sales and operating profits,
the results for the year benefited from the efficiency improvements under the
Group's Continuous Improvement Programme, the ongoing impact of acquisitions and
the strength of the Euro.
Highlights
UK and Republic of Ireland (c. 64% of total Group sales)
Sales were increased by 10.4% to £810.7m (2002: £734.5m) and operating profits
(pre goodwill amortisation of £3.951m (2002: £3.669m)) grew by 5.5% to £54.2m
(2002 : £51.4m). Like for like sales growth overall was 6% (2002: 3%).
Sales growth was achieved in all market sectors in the UK and Republic of
Ireland, other than in premium office interiors, where the sharp decline in
market demand continued throughout the year.
SIG's largest business unit, UK and Republic of Ireland Insulation had an
excellent year, with double digit growth in like for like sales and operating
profits.
Whilst the gross margin reduced slightly due to changes in the product mix, the
net operating margin increased.
Market demand for thermal insulation materials increased progressively
throughout the year, as the new, tighter Building Regulations increased the
minimum standards of insulation required in the walls, roof and floor of all
types of new buildings. It is also apparent that the new standards are being
used in many renovation and upgrading projects, where it is technically feasible
to do so.
The impact of the new Regulations has created some changes in product mix, due
to the technical characteristics of different insulation materials. Whilst this
mix change has been slightly detrimental to the gross margin, SIG believes it
has strengthened its market position due to the uniquely comprehensive breadth
and depth of its stockholding. SIG has been able to meet the changing pattern of
customer requirements on demand, whilst maintaining very high service levels.
Continued investment in customer service is key to its performance in this area.
The Group is heavily involved in a range of energy efficiency programmes
concerning the upgrading of insulation in existing homes and these programmes
stimulated increased demand during 2003.
The Roofing division grew sales and profits significantly during the year, with
good like for like sales growth being supplemented by the incremental benefit of
the acquisitions made in this sector in 2002 and 2003.
Actions were taken to widen the product range and SIG's on-going programme of
expansion led to new site openings in both the UK and the Republic of Ireland.
SIG reinforced its position as the largest materials supplier to the roofing
industry.
Gross margins were maintained compared with prior year and the net operating
margin reduced slightly due to the impact of increased costs associated with the
ongoing programme of investment in sales and customer service facilities.
Within the Commercial Interiors division SIG experienced a continuation of the
fall in demand for fit-out products from the premium office sector. Sales and
operating profits were sharply down for the core products associated with this
market, especially high specification bespoke partition systems.
Expenditure on new product development was increased and the associated costs
also impacted on the results in 2003. These changes to the product range extend
SIG's coverage and take it into new market sectors and reinforce their position
as the leading supplier of specialist partitioning and related products in the
UK.
The larger volume operation involved in the supply of mainstream interior
products to the wider non-residential building sector had a good year with both
sales and operating profits increased. This picture does emphasise the point
that the difficulties in the interiors sector were localised to the premium
office market.
In Safety Products, SIG had a very successful turnaround year, and moved back
into profit. Sales were increased, costs reduced and the gross and operating margin
significantly improved. The product range and sales operation have been
refocused and these changes, together with a warehouse reorganisation have
enabled customer service levels to be significantly improved.
Like for like sales growth in Construction Accessories was supplemented by the
full year impact of an acquisition made in 2002. Operating profits declined due
to margin pressure and the impact of cost increases partly associated with the
reorganisation of this unit.
Mainland Europe (c. 31% of total Group sales)
Sales increased by 2.9% in local currencies and 12.7% in Sterling to £394.2m
(2002: £349.8m). Sales were up in local currency in all countries in which the
Group operates (i.e. Germany, France, The Netherlands and Poland). Costs were
held in real terms in local currencies and this combined with an increase in the
gross margin enabled operating profits (pre goodwill amortisation of £0.6m
(2002: £0.6m)) to increase by 29% in local currencies and 43% in Sterling to
£11.0m (2002: £7.7m).
This is an excellent performance against a background of weak markets.
In Germany construction activity fell in 2003 and whilst the market for SIG's
products declined, SIG increased sales in Euros despite the closure of six
branches towards the end of 2002.
Improved efficiencies and increased focus on pricing management within the
business enabled operating profits to be substantially increased.
New products have been added to the stock range and SIG has further strengthened
its position in the market.
France
Sales and operating profit grew in 2003 in Euros, on a like for like basis. This
was supplemented by two small acquisitions.
Market demand in both insulation and commercial interiors was weak and SIG's
performance represents an increase in its market share.
Sales from the new roofing branches increased and the product range was
extended.
The Netherlands
Market demand fell in The Netherlands in 2003, both for commercial interior and
industrial insulation products. Sales were increased in Euros, due to the full
year benefit of the 2002 acquisition. Costs associated with the opening of a new
operation together with changes in the product mix reduced operating profits.
Poland
Sales grew strongly and operating losses were sharply lower than prior year.
Market demand began to improve from the mid-year onwards. SIG added a new branch
in the North to improve customer service and also invested in new insulation
fabrication facilities to take advantage of emerging opportunities.
These developments combined with tight cost control enabled a small operating
profit to be achieved in the second half of the year, for the first time in any
six month period.
USA (c. 5% of total Group sales)
Total sales in the USA declined by 1.7% in US Dollars and 9.8% in Sterling to
£63.7m (2002: £70.6m).
Demand from the core petrochemical and refining industries in the Southern Gulf
States continued to be very weak and some major projects were delayed towards
the year end. Actions were taken to reduce costs by restructuring certain
operations. Sales and operating profits declined.
The branches located down through the Eastern States, which operate in generally
lighter industrial insulation markets (such as heating and air conditioning)
traded well, increasing both sales and operating profits.
SIG's USA operations successfully embraced the drive to improve the operational
ratios in the Group and made good progress in cash generation, working capital
ratios and cost reduction.
Prospects
Market conditions are not expected to change significantly in 2004 across the
areas in which the Group operates.
In the UK and Republic of Ireland, general construction activity is expected to
remain robust and demand for insulation and related products is expected to
continue to grow. Whilst demand from the premium office sector is not expected
to recover in the near term, the wider markets for mainstream commercial
interiors products continue to be stable. Demand for roofing products is driven
more by essential repairs and maintenance than new build, and this market is
expected to continue at satisfactory levels.
In Mainland Europe, whilst demand remains weak in Germany and The Netherlands,
the outlook is more positive in France and Poland. Overall demand is expected to
be broadly similar to 2003.
In the USA, it is anticipated that activity levels in the industrial and
petrochem fields will begin to improve as the year progresses.
As indicated in the Trading Update in January 2004, the Group is active in
expanding its position within existing business streams, and SIG will continue
to invest in trading locations and resources to extend its customer reach and
service.
The Group has further strengthened its market position and its finances in 2003
and enters 2004 in excellent shape. The Board has confidence that the Group will
continue to make further progress.
Consolidated Profit and Loss Account
for the year ended 31 December 2003
Note 2003 2003 2002 2002
Restated
£'000's £'000's £'000's £'000's
--------------------------------------------------------------------------------------
Turnover
Continuing 2 1,263,508 1,154,968
operations
Acquisitions 2 5,017 -
--------------------------------------------------------------------------------------
1,268,525 1,154,968
Cost of sales 948,169 859,128
--------------------------------------------------------------------------------------
Gross profit 320,356 295,840
Other operating 261,714 242,461
expenses
--------------------------------------------------------------------------------------
Operating profit
Continuing 2 58,337 53,379
operations
Acquisitions 2 305 -
--------------------------------------------------------------------------------------
58,642 53,379
Net interest 6,466 7,051
payable
Other finance 685 (20)
charges/(income)
--------------------------------------------------------------------------------------
Profit before taxation and 56,287 50,872
amortisation of goodwill
Amortisation of 2 4,796 4,524
goodwill
--------------------------------------------------------------------------------------
Profit on ordinary activities 51,491 46,348
before taxation
Tax on profit on 16,786 14,646
ordinary
activities
--------------------------------------------------------------------------------------
Profit on ordinary activities 34,705 31,702
after taxation
Minority interests 447 294
(all equity)
--------------------------------------------------------------------------------------
Profit for the 34,258 31,408
financial year
Equity dividends paid 14,920 13,917
and proposed
---------------------------------------------------------------------------------------
Retained profit for 19,338 17,491
the year
--------------------------------------------------------------------------------------
Earnings per
share
Basic earnings per 3 28.6p 26.3p
share
Diluted earnings 3 28.2p 26.1p
per share
---------------------------------------------------------------------------------------
Earnings per share
before amortisation
of goodwill
Basic earnings per 3 32.5p 30.1p
share
Diluted earnings 3 32.2p 29.9p
per share
---------------------------------------------------------------------------------------
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2003
2003 2002
Restated
Note £'000's £'000's
-------------------------------------------------------------------------------
Profit for the financial year 34,258 31,408
Tax credit on exchange loss arising on foreign 1,570 1,197
currency borrowings
Tax credit arising on repayment of overseas
intercompany loans - 4,572
Exchange difference on retranslation of overseas 5,202 3,062
net investments
Exchange difference on foreign currency (5,235) (3,990)
borrowings
Actuarial gain/(loss) relating to the pension 335 (13,154)
schemes
-------------------------------------------------------------------------------
Deferred tax movement associated with actuarial
gain/(loss) (101) 3,946
--------------------------------------------------------------------------------
Total recognised gains and losses for the year 36,029 27,041
--------------------------------------------------------------------------------
Prior year adjustment (FRS 17) 7 (16,884) -
--------------------------------------------------------------------------------
Total recognised gains and losses since last 19,145 27,041
annual report
--------------------------------------------------------------------------------
There is no difference between the results presented on page 7 and the results
on an unmodified historical cost basis. Therefore, a note of historical cost
profits is not required.
Reconciliation of Movement in Consolidated Shareholders' Funds
for the year ended 31 December 2003
2003 2002
Restated
Note £'000's £'000's
--------------------------------------------------------------------------------
Profit for the financial year 34,258 31,408
Dividends (14,920) (13,917)
--------------------------------------------------------------------------------
19,338 17,491
New share capital issued 895 1,735
Tax credit on exchange loss arising on foreign 1,570 1,197
currency borrowings
Tax credit arising on repayment of overseas - 4,572
intercompany loans
Exchange difference on retranslation of overseas 5,202 3,062
net investments
Exchange difference on foreign currency (5,235) (3,990)
borrowings
Credit to L-TIP reserve 137 174
Actuarial gain/(loss) relating to the pension 335 (13,154)
schemes
Deferred tax movement associated with actuarial (101) 3,946
gain/(loss)
Goodwill transfer - 4,835
--------------------------------------------------------------------------------
Net additions to shareholders' funds 22,141 19,868
--------------------------------------------------------------------------------
Opening shareholders' funds as previously reported 194,056 164,980
Prior year adjustment (FRS 17) 7 (16,884) (7,676)
--------------------------------------------------------------------------------
Opening shareholders' funds as restated 177,172 157,304
--------------------------------------------------------------------------------
Closing shareholders' funds 199,313 177,172
--------------------------------------------------------------------------------
Consolidated Balance Sheet
as at 31 December 2003
2003 2002
Restated
Note £'000's £'000's
--------------------------------------------------------------------------------
Fixed assets
Intangible assets 78,696 80,693
Tangible assets 69,194 71,717
--------------------------------------------------------------------------------
147,890 152,410
Current assets
Stocks 93,035 88,876
Debtors 223,483 218,074
Cash at bank and in hand 55,417 13,558
--------------------------------------------------------------------------------
371,935 320,508
Creditors:
Amounts falling due within one year (198,618) (172,242)
--------------------------------------------------------------------------------
Net current assets 173,317 148,266
--------------------------------------------------------------------------------
Total assets less current liabilities 321,207 300,676
Creditors:
Amounts falling due after more than one year (98,419) (105,920)
Provision for liabilities and charges (9,327) (3,136)
--------------------------------------------------------------------------------
Net assets excluding pension liability 213,461 191,620
--------------------------------------------------------------------------------
Pension liability 7 (13,701) (14,154)
--------------------------------------------------------------------------------
Net assets including pension liability 199,760 177,466
--------------------------------------------------------------------------------
Capital and reserves
Called up share capital 12,027 11,968
Share premium account 14,967 14,131
Capital redemption reserve 347 347
Special reserve 22,113 22,113
L-TIP reserve 237 326
Exchange reserve 66 (1,471)
Profit and loss account 149,556 129,758
--------------------------------------------------------------------------------
Shareholders' funds (all equity) 199,313 177,172
Minority interest 447 294
--------------------------------------------------------------------------------
Total capital employed 199,760 177,466
--------------------------------------------------------------------------------
Consolidated Cash Flow Statement
for the year ended 31 December 2003
2003 2003 2002 2002
Restated Restated
Note £000's £000's £000's £000's
--------------------------------------------------------------------------------
Net cash inflow from 4 97,942 64,679
operating activities
--------------------------------------------------------------------------------
Returns on investments
and
servicing of finance
Interest received 1,744 1,426
Interest paid (8,476) (7,879)
Interest element of finance (406) (582)
lease rentals
Dividends paid to minority (294) -
shareholders
--------------------------------------------------------------------------------
Net cash outflow from
returns on
investments and servicing
of finance (7,432) (7,035)
Tax paid (10,809) (14,323)
Capital expenditure
Purchase of tangible fixed (13,367) (22,068)
assets
Sale of tangible fixed 1,405 1,844
assets
--------------------------------------------------------------------------------
(11,962) (20,224)
Acquisitions
Purchase of subsidiary (3,026) (22,956)
undertakings
Net cash acquired with 343 899
subsidiary undertakings
--------------------------------------------------------------------------------
Net cash outflow from (2,683) (22,057)
acquisitions
Equity dividends paid (14,153) (13,363)
--------------------------------------------------------------------------------
Cash inflow/(outflow) 50,903 (12,323)
before financing
--------------------------------------------------------------------------------
Financing
Issue of ordinary share 895 1,735
capital
Lease financing 286 7,430
Capital element of finance (5,408) (7,107)
lease rental payments
Repayment of loans (16,873) -
New loans 26,499 10,286
--------------------------------------------------------------------------------
Net cash inflow from 5,399 12,344
financing
--------------------------------------------------------------------------------
Increase in cash 5 56,302 21
--------------------------------------------------------------------------------
Notes
1. Basis of preparation
The preliminary announcement does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985 but is derived from those
statutory accounts. The announcement has been agreed with the Company's auditors
for release. The financial information has been prepared on a basis consistent
with the previous year, with the exception of a change in accounting policy
resulting from the adoption of FRS 17 Retirement benefits (note 7).
The Group's statutory accounts for the year ended 31 December 2002 have been
filed with the Registrar of Companies, and those for 2003 will be delivered
following the Company's Annual General Meeting, restated as necessary to comply
with FRS 17 Retirement benefits. The auditors have reported on the statutory
accounts for 2002 and 2003, and their reports were unqualified and did not
contain statements under section 237 (2) or (3) of the Companies Act 1985.
2. Segmental information
2003 2002
Operating Net
Geographical Operating Net Profit Assets
analysis
Turnover Profit Assets Turnover Restated Restated
£000's £000's £000's £000's £000's £000's
--------------------------------------------------------------------------------------
Continuing
operations
- UK & 807,752 53,944 184,361 734,537 51,428 175,601
Republic of
Ireland
- Mainland 392,088 11,024 120,212 349,821 7,718 87,290
Europe
- USA 63,668 906 19,850 70,610 1,501 14,515
- Parent - (2,741) (128,908) - (2,744) (99,940)
Company
- Amortisation - (4,796) - - (4,524) -
of goodwill
--------------------------------------------------------------------------------------
Total 1,263,508 58,337 195,515 1,154,968 53,379 177,466
--------------------------------------------------------------------------------------
Acquisitions
- UK & 2,952 291 3,260 - - -
Republic of
Ireland
- Mainland 2,065 14 985 - - -
Europe
--------------------------------------------------------------------------------------
Total 5,017 305 4,245 - - -
--------------------------------------------------------------------------------------
Total
operations 1,268,525 58,642 199,760 1,154,968 53,379 177,466
--------------------------------------------------------------------------------------
Turnover and operating profit by destination are not materially different from
these amounts.
The directors consider that all of the Group's activities in each of its market
sectors represent one principal activity, being the distribution of construction
related products.
Of the goodwill amortisation, £3.951m (2002 : £3.669m ) relates to the UK and
Republic of Ireland, £0.602m (2002 : £0.586m ) relates to Mainland Europe and
£0.243m (2002 : £0.269m ) relates to the USA.
3. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares:
Basic and diluted Basic and diluted before
amortisation of goodwill
2003 2002 2003 2002
£'000's £'000's £'000's £'000's
-----------------------------------------------------------------------------------------
Profit after tax 34,705 31,702 34,705 31,702
Minority (447) (294) (447) (294)
interests
Amortisation of - - 4,796 4,524
goodwill
------------------------------------------------------------------------------------------
34,258 31,408 39,054 35,932
------------------------------------------------------------------------------------------
Weighted average 2003 2002
number of shares: Number Number
------------------------------------------------------------------------------------------
For basic earnings 119,981,696 119,309,596
per share
Exercise of share 1,313,821 935,230
options
------------------------------------------------------------------------------------------
For diluted 121,295,517 120,244,826
earnings per
share
------------------------------------------------------------------------------------------
Earnings per share before amortisation of goodwill is presented in order to give an
indication of the underlying performance of the Group.
4. Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
Restated
£'000's £'000's
-------------------------------------------------------------------------------
Operating profit 58,642 53,379
Depreciation charge 16,831 16,028
Amortisation of goodwill 4,796 4,524
Profit on sale of tangible fixed assets (335) (451)
Increase in stocks (2,525) (4,010)
Decrease / (increase) in debtors 946 (5,675)
Increase in creditors 19,587 884
-------------------------------------------------------------------------------
Net cash inflow from operating activities 97,942 64,679
--------------------------------------------------------------------------------
5. Reconciliation of net cash flow to movements in net debt
2003 2002
£'000's £'000's
--------------------------------------------------------------------------------
Increase in cash in the year 56,302 21
Cash outflow from decrease in debt (4,504) (10,609)
--------------------------------------------------------------------------------
Changes in net debt resulting from cash flows 51,798 (10,588)
Acquisitions (20) (151)
Exchange differences (4,713) (3,313)
--------------------------------------------------------------------------------
Movement in net debt in the year 47,065 (14,052)
Net debt at beginning of year (123,380) (109,328)
--------------------------------------------------------------------------------
Net debt at end of year (76,315) (123,380)
--------------------------------------------------------------------------------
6. Proposed dividend
The proposed dividend of 8.3p per ordinary share, if approved, will be payable
on 21 May 2004 to shareholders on the register at 16 April 2004.
7. Prior year adjustment
The Group has adopted FRS 17 Retirement benefits with effect from 1 January
2003. The adoption of this standard represents a change in accounting policy and
the comparative figures have been restated to reflect the removal of the pension
costs, prepayment and provisions made under SSAP 24 as previously reported and
to include the cost and liability position under FRS 17.
As a result, the 2002 Group Balance Sheet has been restated as follows:
Equity
Prepayments and Pension Deferred shareholders'
accrued income liability taxation funds
£'000's £'000's £'000's £'000's
--------------------------------------------------------------------------------
2002 as previously 10,541 - (1,609) 194,056
reported
Reversal of SSAP 24 (3,900) - 1,170 (2,730)
Adoption of FRS 17 - (14,154) - (14,154)
--------------------------------------------------------------------------------
2002 restated 6,641 (14,154) (439) 177,172
--------------------------------------------------------------------------------
There was no material impact on reported profit as a result of adopting FRS 17
in 2002 and as a result the only adjustment to the 2002 Consolidated Profit and Loss
Account has been to add £20,000 income to 'Other finance charges/(income)' and to
increase operating expenses by £20,000.
The impact in 2003 of adopting FRS 17 was to reduce profit before taxation by
£190,000 and reduce net assets by £17,074,000.
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