Final Results
Capita Group PLC
20 February 2003
20 February 2003
THE CAPITA GROUP PLC
Preliminary results for the year ended 31 December 2002
Financial Highlights
Year ended Year Ended Change
31 December 2002 31 December 2001
Turnover £898m £691m up 30%
Profit Before Tax* £98.2m £72.1m up 36%
Earnings per share* 10.5p 7.7p up 36%
Total dividend per share 3.0p 2.25p up 33%
* Before amortising goodwill and exceptional gain
Operating Highlights
• Margins increased to 12% (2001: 11.2%)
• £117m of cash generated in year, representing 109% of Operating Profit
• Pre-tax Return on Capital Employed 18.6% (2001: 16.6%)
• £1.1bn of new contract wins (2001: £744m)
• £116m of new contracts won in first six weeks of 2003
• Current live bid pipeline of £2.2bn
• Substantial underpinning of 2003 forecast revenues of £1,075m
• Implemented the largest congestion management scheme in the world to
specification and on time
Rod Aldridge, Executive Chairman of The Capita Group, commented:
'The results we are announcing today demonstrate the strength of our business
model. The long-term nature of our contracts underpins future revenues. The
extent of our customer base provides diversity of income. The market demand for
outsourced services remains buoyant. Our unique ability to provide a broad
range of services to match the needs of this market has again fuelled our
healthy growth. We remain confident of achieving the same in 2003.'
For further information:
The Capita Group Plc Tel 020 7799 1525
Rod Aldridge, Executive Chairman Press Office 020 7544 3141
Paul Pindar, Chief Executive
Shona Nichols, Group Marketing Director
Finsbury Tel 020 7251 3801
Morgan Bone
Mark Harris
Chairman's Statement
Results
In the year ending 31 December 2002, the Group strengthened further its position
as the UK's leading provider of business process outsourcing. This progress is
reflected in our financial performance where, for the fourteenth successive year
as a public company, Capita is reporting record results.
Turnover increased by 30% to £898m (2001: £691m), operating profits before
goodwill amortisation and before an exceptional gain of £5.3m, rose by 39% to
£107.3m (2001: £77.1m), and net profits before taxation on a similar basis
increased by 36% to £98.2m (2001: £72.1m). Earnings per share before
amortisation of goodwill and before the exceptional gain grew by 36% to 10.5p
(2001: 7.7p, restated for Financial Reporting Standard 19 - Deferred Taxation).
Four other financial measures merit comment. First, our operating margins have
increased during the period from 11.2% to 12%. This reflects an increasing
trend in the market for customers to choose service partners based on the
criteria of quality and value, as opposed to price. It is also evidence of
Capita's ability to be selective regarding which opportunities to pursue and the
economies of scale we can bring to our customers.
Secondly, the underlying financial strength of Capita's business is reflected by
our excellent cash flow, with £117m generated by operations in the year,
excluding the exceptional gain, representing an operating profits to cash
conversion rate of 109%. We anticipate that operating cash flow will strengthen
further in the current year.
Thirdly, capital expenditure in the year was £57m. This was unusually high due
to the implementation of two projects, the Criminal Records Bureau (CRB) and
Transport for London's (TfL) Congestion Charging Scheme. Based upon the
projects for which we are currently bidding, capital expenditure in 2003 will be
significantly lower, returning to normal historic levels.
Fourthly, our pre tax return on average capital employed (including debt) has
increased again to 18.6% (2001: 16.6%). This is expected to improve further in
the current year.
Dividend
The Board is recommending a final dividend of 2p per ordinary share, making a
total of 3p (2001: 2.25p) for the year. This represents a 33% increase on
dividends paid in respect of the 2001 financial year. The total dividend for
the year is covered 3.5 times by the earnings per ordinary share before
amortisation of goodwill and before the exceptional gain. The final dividend
will be payable on 7 May 2003 to shareholders on the register at the close of
business on 11 April 2003.
Following the EGM on 12 November 2002, the Group now has authority to repurchase
up to 10% of its issued share capital and we plan to renew this authority
annually.
Creating Organic Growth
Capita has built a formidable position in the UK business process outsourcing
market through both organic and acquired growth. We have a unique range of
integrated services covering IT, human resources, property, finance and customer
contact centre capability which mirror the back office and customer support
services common to most organisations. These comprehensive services have
enabled us to build a substantial presence in markets covering both the public
and private sectors. Supported by scale and infrastructure, this allows us to
deliver innovative solutions very cost effectively and provides a platform for
organic growth.
Progress on organic growth has been excellent. In 2002, we secured £1.1bn of
major contract wins (2001: £744m), substantially outperforming our internal
budget. 2003 has also started well with some encouraging wins, further
strengthening this position.
This month, we signed a contract with the joint provisional liquidators of
Independent Insurance Plc to acquire Aurora Corporate Services Limited, a
business focused on run-off activity in the London market. As part of the
transaction, Aurora has been granted the exclusive right to administer the
run-off of all claims relating to Independent Insurance Plc. Aurora is expected
to generate at least £80m in revenue over the next 5 years.
Within the local government market, we have secured a five to eight year
contract with the London Borough of Brent to deliver revenue collection services
and a 10 year contract with East Renfrewshire Council to deliver a range of IT
services. These contracts have an aggregate value of £36m.
These successes mean that the total value of major contracts won in the first
six weeks of 2003 is £116m. We also have no material contract renewals until
April 2004. As a consequence of this and our sales performance in 2002, the
Group has already secured increased revenues of some £160m for 2003.
Accordingly, a substantial proportion of our forecast revenue growth for the
current year is already secured. This underpins our estimate of turnover for
2003 of £1,075m.
Looking forward, we are encouraged by the strength of our sales pipeline. While
we continue to be highly selective about the opportunities we pursue, the Group
is currently working on 16 core live bids with a total value of £2.2bn. All our
markets are active, but the Insurance and Life & Pensions markets are
particularly buoyant representing the majority by value of the bids we are
pursuing.
Capita's progress is founded not only on securing new customers, but also by
consistently developing our numerous existing relationships. We have paid
particular attention to this activity during 2002 with an increased investment
in both people and sales process. These investments are already generating a
payback.
A key part of this strategy has been the establishment of our business centre
network. Built up through the contracts that the Group has won over a number of
years, this network gives the Group significant delivery flexibility and scale.
We now have 27 centres around the country, many of which are multi-skilled.
These centres deliver services ranging from insurance claim processing to
pensions and payroll administration, share registration to housing benefits and
council tax administration. The centres also give the Group the ability to
implement greenfield initiatives such as the Winter Fuel Payments Scheme and the
Connexions Card Service without the need to build new infrastructure. We plan
to establish a further six centres over the next two years.
Our partnership with Blackburn with Darwen Borough Council is a good
illustration of what this model can achieve. Some 600 staff transferred from
the local authority with the original contract in 2001. Today, 1,200 staff
deliver a range of services to the authority and also work on BBC TV Licensing
and the CRB. The Group has extended the initial services delivered to include
further IT, property, personnel and recruitment and cash collection services.
Similar progress has been achieved in our partnerships with Cumbria County
Council and Norfolk County Council. Across these three centres, additional
revenues of £105m have been generated over the life of the contracts, equating
to annualised revenues of £13m.
Acquisitions
During the period, we continued our policy of making small acquisitions to
develop our position in specific markets. Six acquisitions were completed for
an aggregate net purchase consideration of £62m. All have been integrated into
the appropriate business division and are trading in line with expectations.
The two largest transactions were the purchase of four human resources
businesses from PricewaterhouseCoopers (PwC) for a consideration of £14m and the
acquisition of Wynchgate Holdings, an absence management services business, for
an initial consideration of £18.6m.
The businesses acquired from PwC strengthen Capita's HR offering particularly in
the field of payroll administration, employee benefit administration, interim
management and executive search and selection. Trading as Veredus, the search
and selection team has retained and developed its client base since joining the
Group, including involvement with a number of prestigious public sector
appointments. The acquisition of these businesses has enabled the Group to
expand its relationships with several existing clients and to open new
relationships with others.
The acquisition of three businesses from the Wynchgate Group strengthened
further our position in HR related services and further enhanced our service
offering to the education sector. These businesses specialise in providing
absence and related cost management services. The principal business is the
UK's leading provider of staff absence services to the education sector,
typically through three year contracts. The client base includes 42 Local
Education Authorities, over 2,000 schools and a growing number of 'not for
profit' organisations. Since the acquisition, Wynchgate, now trading as Capita
Absence Management Services Ltd, has grown its revenues substantially.
In January 2003, we announced our intention to acquire the administration
services division (comprising Northern Registrars Limited, Northern
Administration Limited and the Connaught St. Michaels Group) from BWD Securities
for £18.5m. The companies provide share registration, unit trust administration
and ancillary services to over 500 customers. The companies will be integrated
into Capita Registrars and Capita Financial. Over the last year, we have
successfully re-engineered these two businesses, mainly through the introduction
of new technology and by developing add on services. For example, our share
plan administration business has grown by 250% in 2002. Both businesses have a
high percentage of recurring revenues and are well primed for an upturn in the
market.
Going forward, our activity and expenditure on acquisitions will reduce as we
focus our increasing resources on the numerous opportunities available to
generate strong organic growth.
We would like to welcome all the employees of our newly acquired businesses into
Capita, along with those that have joined us through contract wins and direct
recruitment. More than 4,000 people have joined the Group during the year.
Operational Performance
Our track record of delivery is exceptional. We consistently deliver ahead of
both expectation and, where relevant, previous service levels. In the recent
Comprehensive Performance Assessments designed to evaluate overall local
authority performance, including education services, the majority of authorities
with long term relationships with Capita were amongst the highest performers.
In the case of two of our strategic partners, their innovative partnerships with
Capita were cited as major contributing factors to their success, particularly
in service improvements, development of operational capacity and securing wider
community goals.
Each day, Capita delivers a myriad of services to some 20,000 customers and
through over 300 long term relationships. We now interact with over 33 million
people in the UK and 23 million households, placing a high level of
responsibility on us to perform consistently. Our retention rate of those
customers is in the high 90s, a testament to the relationships we have and the
services we deliver. Many services are highly complex, are at the edge of
change and inevitably cause debate. A number of our recent large contracts fit
into this category and have raised the overall profile of the Group.
At the CRB, the service for Standard and Enhanced Disclosures went live on 11
March 2002. The agency operates through a Public Private Partnership involving
550 of Capita's staff working alongside 400 civil servants to deliver jointly
the various stages of a complex process, which also requires interaction with 43
police forces and 8,395 Registered Bodies. The initial period of this new
service was challenging, but through working in partnership with our colleagues,
the output of the CRB has increased significantly and the service is now
consistently good and sustainable.
The CRB has so far issued over 1.1 million Disclosures and is now averaging over
40,000 a week compared to 24,000 in August 2002. This is more than double the
number of checks issued by the police forces under pre-CRB arrangements. On
average, it now takes less than five weeks to process most applications (except
where there are errors or omissions in the form), with 80% of Standard
Disclosures issued in three weeks and a Disclosure accuracy rate of over 99%.
Our contract to administer the TV Licensing service on behalf of the BBC went
live on 1 July 2002. Capita's task is to issue and collect payment for 23.5m TV
licences per annum, focusing on increasing 'take up' and reducing evasion.
Research shows that nearly 90% of people who contact TV Licensing with a query
believe that their questions are being handled in a good or very good manner.
Over the first six months of the contract significant progress has already been
made. Our Enquiry Officers average efficiency has improved, with more effective
visits resulting in an increase in licences issued. Even with a 10% increase in
calls to the contact centre, our agents have met or exceeded all their targets
for grade of service. Additionally, response rates in the back office have
improved to less than a five day turnaround. Our Bristol operation, including
our main contact centre, has recently been relocated to modern offices, which
will aid further the transformation of the service. The BBC is very satisfied
with the service standards which have been achieved since the 'go live' date. We
have developed a strong partnership together.
On 1 August 2002, we commenced Capita's first significant Life & Pensions
service on behalf of Lincoln Life, in Gloucester. Again, we have been delighted
by the manner in which this contract has been implemented. We are already
achieving all of the 30 key performance indicators agreed with our client. We
have also benefited from 500 talented individuals from the Life & Pensions
industry joining Capita. Their skills contribute greatly to developing our
business in a market worth a potential £6bn.
On 17 February 2003, our project to implement TfL's Congestion Charging Scheme
went fully live. A transport management scheme of this scale and type has never
previously been implemented anywhere in the world. It has required 200 man
years of implementation resource and we are indebted to both our staff and
suppliers for the exceptional commitment demonstrated during this period. We
are proud to have been chosen to administer this innovative scheme. Capita is
the operational engine of the TfL scheme and we administer the scheme in
accordance with the parameters laid out by TfL.
More than 35 major cities in the UK have expressed interest in the congestion
charging scheme and will be watching the London solution as a way of reducing
congestion and improving the quality of life in our City centres. The fact that
Capita has built a scalable, modular solution will give us a very significant '
first mover' advantage. We consider transport as a potential market for further
significant growth for Capita. We expect our revenues from the transport sector
- spanning road, rail and air - to double in 2003.
Our Markets
Estimating the addressable market for Capita's services in the UK is not easy.
The market is evolving constantly, with our customers considering new services
which could potentially be outsourced on an ongoing basis. We currently
estimate our potential market in the UK to be worth £65bn per annum. We
estimate that only a small share of these services have been outsourced to date,
but we believe the market will develop in a structured and orderly way over the
next decade.
The 2003 Hi Europe (formerly Total Romtec) UK IT & Business Process Outsourcing
Report places Capita overall leader in BPO in the UK, increasing our market
share to 24% in 2002 from 19% in 2001. We are market leader in local government
- again with an increased market share - and are ranked second in central
government. The success of our strategy to increase our presence in the private
sector is demonstrated by a market leading position in insurance and a new
ranking in the finance sector (excluding insurance), at fifth position.
The business drivers to outsource services in both the public and private
sectors remain strong. In the public sector, the key driver is service
modernisation including the e-government agenda, as authorities strive to meet
the changing needs of the citizen. Technology will be at the heart of this
change which will see a radical shift in the way services are provided, where
they are delivered from and the manner in which they are transacted. Over the
next decade, many of the current structures of organisations will change
radically. Back office support services will increasingly be delivered through
regional business centres. The Government is increasing funding to encourage
and support 'joint service centres' across public sector agencies.
For companies in the private sector, particularly in financial services, change
will be key to competitiveness. A company such as Capita is increasingly seen
as an essential partner to act as the catalyst and facilitator of change. Our
experience, infrastructure and knowledge are key to addressing this in a speedy
way, allowing senior management of these organisations to focus on core
activities.
Our People
The Board would like to offer its sincere thanks to the 17,000 staff who
contribute to the Group's progress. We are proud of the unique culture and the
strong team spirit which prevail throughout the Group, and which have been key
factors in the success we have enjoyed over a long period. This style is
reflected in our relationships with clients, who often comment upon Capita's
open and fair style of doing business.
During the year, we introduced a Capita share ownership plan to operate
alongside our existing Capita sharesave scheme. Both schemes are open to all
employees to participate. We are delighted that our employees' interests are
aligned closely with those of our shareholders and that over 50% of our staff
have chosen to participate in one or both of the schemes.
Prospects
Capita has a simple business model which is consistent, proven, scalable and
sustainable over the long term. Our strategy remains to identify opportunities
where we can enhance materially our clients' operations whilst creating value
for our shareholders. Our markets in the UK continue to expand, thereby
underpinning our opportunities for growth.
The Group has started 2003 strongly. We continue to generate good profits and
excellent cash flow. We are confident that shareholders will be pleased by
Capita's performance for the year as a whole.
R.M. Aldridge OBE
Executive Chairman
Group Profit and Loss Account
for the year ended 31st December 2002
2002 2001
Before Goodwill
Goodwill and Amortisation
Exceptional and
Item Exceptional Before Goodwill
Item Total Goodwill Amortisation Total
(restated)* (restated)* (restated)*
Notes £000's £000's £000's £000's £000's £000's
Turnover 1
Continuing operations 868,376 - 868,376 691,203 - 691,203
Acquisitions 29,128 - 29,128 - - -
897,504 - 897,504 691,203 - 691,203
Cost of sales 665,017 - 665,017 483,463 - 483,463
Gross profit 232,487 - 232,487 207,740 - 207,740
Administrative expenses 125,222 25,472 150,694 130,665 19,032 149,697
107,265 25,472 81,793 77,075 19,032 58,043
Other operating income -
warranty claim 2 - 5,319 5,319 - - -
107,265 (20,153) 87,112 77,075 (19,032) 58,043
Operating profit 1
Continuing operations 103,254 (18,798) 84,456 77,075 (19,032) 58,043
Acquisitions 4,011 (1,355) 2,656 - - -
107,265 (20,153) 87,112 77,075 (19,032) 58,043
Net interest payable (9,043) - (9,043) (4,943) - (4,943)
Profit on ordinary
activities
before taxation 1 98,222 (20,153) 78,069 72,132 (19,032) 53,100
Taxation on profit on
ordinary
activities (28,628) (1,596) (30,224) (21,491) - (21,491)
Profit on ordinary
activities
after taxation 69,594 (21,749) 47,845 50,641 (19,032) 31,609
Minority interest (equity) 51 - 51 21 - 21
Minority interest (32) - (32) (48) - (48)
(non-equity)
Profit for the financial 69,613 (21,749) 47,864 50,614 (19,032) 31,582
year
Dividends 20,093 - 20,093 14,868 - 14,868
Retained profit for the year 49,520 (21,749) 27,771 35,746 (19,032) 16,714
Earnings per share - Basic 3 10.47p (3.27)p 7.20p 7.70p (2.90)p 4.80p
- Diluted 3 9.90p (3.09)p 6.81p 7.34p (2.76)p 4.58p
* Comparatives have been restated following adoption of FRS 19
Balance Sheets
at 31st December 2002
Group
2002 2001
(restated)
£000's £000's
Fixed assets
Intangible assets 452,868 401,642
Tangible assets 98,266 61,162
551,134 462,804
Current assets
Trade investments 5,962 5,822
Debtors due within one year 186,091 144,802
Debtors due beyond one year 10,449 4,777
202,502 155,401
Creditors: amounts falling
due within one year 260,709 236,499
Net current liabilities (58,207) (81,098)
Total assets less current liabilities 492,927 381,706
Creditors: amounts falling due
after more than one year 158,354 79,064
Provisions for liabilities
and charges 17,547 18,537
317,026 284,105
Capital and reserves
Called up share capital 13,370 13,230
Shares to be issued - 5,426
Share premium account 239,860 237,601
Merger reserve - -
Profit and loss account 63,841 27,242
Shareholders' funds (equity) 317,071 283,499
Minority interest (equity) (45) 6
Minority interest (non-equity) - 600
317,026 284,105
Group Statement of Total Recognised Gains and Losses
for the year ended 31st December 2002
2002 2001
(restated)
£000's £000's
Profit attributable to the members of the parent undertaking 47,864 31,582
Exchange adjustments 176 (59)
Total recognised gains and losses 48,040 31,523
Prior year adjustment 2,439
Total recognised gains and losses since last annual report 50,479
Group Cash Flow Statement
for the year ended 31st December 2002
2002 2001
Notes £000's £000's £000's £000's
(restated) (restated)
Cash flow from operating activities before other operating
income 116,582 90,019
Cash flow from other operating income 5,319 -
Cash flow from operating activities 4 121,901 90,019
Returns on investments and
Servicing of finance
Issue cost of bonds (500) -
Dividends paid to minorities in subsidiaries (80) (48)
Interest received 239 1,108
Interest element of finance lease payments (52) (65)
Interest paid (9,230) (5,986)
Net cash outflow from returns on
investments and servicing of finance (9,623) (4,991)
Taxation paid (25,818) (22,756)
Capital expenditure and financial investment
Purchase of tangible fixed assets (57,387) (34,328)
Purchase of current asset investments (4) (18)
Proceeds on sale of current asset investments - 1,915
Proceeds on sale of fixed assets 890 938
Net cash outflow from capital
expenditure and financial investment (56,501) (31,493)
Acquisitions and disposals
Purchase of subsidiary undertakings and businesses (63,841) (78,326)
Cash acquired with subsidiary undertakings 7,952 13,265
Accrued consideration paid (374) (1,107)
Pre-acquisition deferred consideration paid by subsidiary
undertaking - (325)
Net cash outflow from
acquisitions and disposals (56,263) (66,493)
Equity dividends paid (16,643) (12,131)
Net cash outflow before use of financing (42,947) (47,845)
Financing
Issue of ordinary share capital 1,766 4,900
Share issue costs (14) -
Bond issue 124,959 50,000
Capital element of finance lease rental payments (975) (1,282)
Repayment of loan notes and long term loans (74,342) (12,050)
Net cash inflow from financing 51,394 41,568
Increase/(Decrease) in cash in the period 8,447 (6,277)
Notes to the Accounts
for the year ended 31st December 2002
1 Segmental information
(a) Turnover and profit on ordinary activities before taxation
Business Commercial Integrated Professional
Services Services Services Services Total
£000's £000's £000's £000's £000's
Turnover
2002 Continuing operations 272,291 262,012 176,996 251,846 963,145
Acquisitions 16,527 309 - 12,292 29,128
288,818 262,321 176,996 264,138 992,273
Inter-segment sales (15,899) (8,103) - (70,767) (94,769)
Third party sales 272,919 254,218 176,996 193,371 897,504
2001 Continuing operations 224,790 210,542 141,580 175,469 752,381
Inter-segment sales (6,390) (5,231) (12,517) (37,040) (61,178)
Third party sales 218,400 205,311 129,063 138,429 691,203
Profit before taxation
2002 Continuing operations 34,382 24,257 24,031 20,584 103,254
Acquisitions 2,075 74 - 1,862 4,011
Segment profit before goodwill amortised 36,457 24,331 24,031 22,446 107,265
Goodwill amortised (12,188) (9,029) (849) (3,406) (25,472)
Segment profit after goodwill amortised
and before other operating income 24,269 15,302 23,182 19,040 81,793
Other operating income - 5,319 - - 5,319
24,269 20,621 23,182 19,040 87,112
Interest payable (9,043)
Total 78,069
2001 Continuing operations 26,825 18,889 15,808 15,553 77,075
Goodwill amortised (9,457) (7,542) (848) (1,185) (19,032)
Profit after goodwill amortised 17,368 11,347 14,960 14,368 58,043
Interest payable (4,943)
Total 53,100
Net assets
2002 Continuing operations 29,960 11,376 10,081 11,712 63,129
Acquisitions (2,766) (5,282) - 443 (7,605)
Net operating assets excluding 27,194 6,094 10,081 12,155 55,524
goodwill
Goodwill 221,709 173,094 13,679 44,386 452,868
Net operating assets including 248,903 179,188 23,760 56,541 508,392
goodwill
Non-operating liabilities (191,366)
317,026
2001 Continuing operations 19,542 (10,772) 2,762 3,681 15,213
Goodwill 203,564 160,925 14,528 22,625 401,642
Net operating assets including 223,106 150,153 17,290 26,306 416,855
goodwill
Non-operating liabilities (132,750)
284,105
Non-operating liabilities comprise taxation and dividend liabilities and net
debt.
Notes to the Accounts
for the year ended 31st December 2002
1 Segmental information (continued)
The results of the Group are now reported under four divisions, which differ
from those reported in the accounts for the year ended 31st December 2001. In
order to maintain the required focus, to meet the demands made on the Group
through growth and success in our chosen markets a fourth division, Integrated
Services, has been created. The effect of the above on the 2001 comparatives
was first to reduce Business Services turnover by £78,928,000 and operating
profit before goodwill by £2,895,000. Secondly to increase Commercial Services
turnover by £23,922,000 and reduce operating profit before goodwill by
£2,544,000. Thirdly, to increase Integrated Services turnover by £129,063,000
and operating profit before goodwill by £15,808,000 and fourthly to reduce
Professional Services turnover by £74,057,000 and operating profit before
goodwill by £10,369,000.
Included within turnover from acquisitions is £4,952,000 in respect of City
Financial Group Ltd, £3,094,000 in respect of Mission Testing Plc, £9,198,000 in
respect of Capita Absence Management Services Limited (formerly Wynchgate
Holdings (1997) Limited), £309,000 in respect of Cost Auditing Ltd and
£11,575,000 in respect of Veredus.
A small amount of turnover and profit before taxation was generated within the
Republic of Ireland but otherwise all other turnover and profit before taxation
was generated within the United Kingdom. The net assets of the Group are based
in the United Kingdom apart from a small amount of net assets based in the
Republic of Ireland.
2 Other Operating Income
Other operating income is a result of a warranty claim by a subsidiary
undertaking of the group, Capita Insurance Services Group Limited (CISGL). It
is in relation to an acquisition CISGL made prior to being acquired by The
Capita Group Plc.
3 Earnings per share
Earnings per share is calculated on the basis of earnings of £47,864,000 (2001
restated: £31,582,000) and on the weighted average of 664,826,000 (2001:
657,517,000) shares in issue during the year, excluding the shares held in the
Employee Benefit Trust.
The diluted profit for the year is based on profit for the year of £47,896,000
(2001 restated: £31,630,000), being profit for the year after adjusting for
dividends payable of £32,000 (2001: £48,000) on the convertible preference
shares of a subsidiary undertaking. The number of ordinary shares of 703,500,000
(2001: 690,076,000) is calculated as follows:
2002 2001
000's 000's
Basic weighted average number of shares 664,826 657,517
Dilutive potential ordinary shares:
Employee share options 36,932 28,929
Shares to be issued in respect of deferred consideration - 1,107
Convertible preference shares of a subsidiary undertaking 1,742 2,523
703,500 690,076
The additional earnings per share figures shown on the profit and loss account
are calculated based on earnings before the impact of goodwill amortisation and
exceptional items. They are included as they provide a better understanding of
the underlying trading performance of the Group.
Notes to the Accounts
for the year ended 31st December 2002
4 Reconciliation of operating profit to net cash inflow from operating
activities
2002 2001
(restated)
£000's £000's
Operating profit before interest and other operating income 81,793 58,043
Other operating income - warranty claim 5,319 -
Operating profit 87,112 58,043
Depreciation charge 21,133 15,440
Amortisation of goodwill 25,472 19,032
Provision against trade investments - 12
Employee Benefit Trust amortisation - 375
Profit on sale of fixed assets (524) (550)
Profit on sale of current asset investment - (169)
Utilisation of provisions (1,109) (1,073)
Increase in debtors (44,662) (15,666)
Increase in creditors 34,479 14,575
121,901 90,019
5 Reconciliation of net cash flow to movement in net funds/(debt)
Net debt at Acquisitions Net debt at
1st January in 2002 Cash flow Non-cash 31st December
2002 flow 2002
(exc cash) Movements
Movements
£000's £000's £000's £000's £000's
Overdrafts (9,447) - 8,447 - (1,000)
(9,447) - 8,447 - (1,000)
Loan notes (50,183) (7,019) 23,092 - (34,110)
Long-term loans (50,000) (1,250) 51,250 - -
Bonds* - - (124,459) (42) (124,501)
Finance leases (1,553) (2) 975 (283) (863)
Total (111,183) (8,271) (40,695) (325) (160,474)
*Bonds are shown net of issue costs of £500,000 shown under returns on
investments and servicing of finance
Net funds at Acquisitions Net debt at
1st January in 2001 Cash flow Non-cash 31st December
2001 flow 2001
(exc cash) Movements
Movements
£000's £000's £000's £000's £000's
Overdrafts (3,170) - (6,277) - (9,447)
(3,170) - (6,277) (9,447)
Loan notes (47,636) (14,597) 12,050 - (50,183)
Long term loans - - (50,000) - (50,000)
Finance leases (1,533) (685) 1,282 (617) (1,553)
Total (52,339) (15,282) (42,945) (617) (111,183)
Notes to the Accounts
for the year ended 31st December 2002
6 Preliminary announcement
The preliminary announcement is prepared on the same basis as set out in the
previous year's annual accounts.
A duly appointed and authorised committee of the Board of Directors approved the
preliminary announcement on 19 February 2003.
The announcement represents non statutory accounts within the meaning of S240 of
the Companies Act 1985. The statutory annual accounts for the year ended 31
December 2002, upon which an unqualified audit opinion has been given and which
did not contain a statement under section 235, 237(2) or 237(3) of the Companies
Act 1985, will be sent to the Registrar of Companies.
Copies of the announcement can be obtained from the Company's registered office
at 71 Victoria Street, Westminster, London, SW1H 0XA.
It is intended that the Annual Report and Accounts will be posted to
shareholders on 18 March 2003 and will be available to members of the public at
the registered office of the Company from that date.
This information is provided by RNS
The company news service from the London Stock Exchange
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