Final Results
Keller Group PLC
7 March 2002
March 7 2002
Keller Group plc
Preliminary Results for the
Year Ended December 31 2001
Keller Group plc ('Keller' or 'the Group') reports an outstanding set of results
for 2001, underlining the Group's strong business fundamentals and providing
further evidence of the success of its growth strategy.
• Turnover grows by 35% to £422.2 million
• Profit before tax* up 49% to £23.6 million
• EPS* increases 44% to 25.8p
• Recommended total dividend of 9.2p up from 8.5p in 2000, an increase of 8%
• Major acquisition of a niche business completed in fourth quarter
• Order book up 27% on previous year
* before goodwill amortisation
Tom Dobson, Keller Chief Executive said:
'Strong organic growth in North America, France and the Far East and significant
contract wins have driven an outstanding year of performance right across the
Group.
'The acquisition of Suncoast has established specialist services as a major new
sector for the Group with good prospects for growth.
'The current year has begun well, with a record January order intake. Given the
continuing strength in our markets and a full year's contribution from Suncoast,
we are confident that 2002 will produce another good result.'
Enquiries:
Tom Dobson Chief Executive, Keller 020 7950 2800
Justin Atkinson Finance Director, Keller 020 7950 2800
Peter Gaze Weber Shandwick /Square Mile 020 7950 2800
Laurence Read Weber Shandwick /Square Mile 020 7950 2800
A briefing for analysts will be held at 11.15 am on Thursday, 7 March 2002 at
the offices of Weber Shandwick I Square Mile, Aldermary House, 15 Queen Street,
London, EC4N 1TX.
Chairman's Statement
Results
I am pleased to report a record set of results for 2001: Group sales at £422.2m
were up 35% (2000: £313.0m), with profit before tax and goodwill amortisation up
49% to £23.6m (2000: £15.8m). Earnings per share before goodwill amortisation
increased to 25.8p (2000: 17.9p), representing 45% growth of 44%over the same
period.. This decisive recovery underlines the Group's strong business
fundamentals and is further evidence of the success of our growth strategy.
The acquisition during the year of Suncoast represented a step change for the
Group, increasing a full year contribution of our specialist services businesses
from 15% of salesoperating profit in 2000 to some 30%. We believe that, in the
medium term, the balance of the Group will be optimised by further increasing
the contribution of this sector of our business. WWe shall continue to look for
acquisitions offor potential acquisitions niche businesses, principally in
Europe, which provide value-added services to the construction industry.
Our foundations businesses are consolidating their leading market positions, as
their reputation for innovative solutions continues to grow and they expand
their geographical coverage and market share. We shall support their ongoing
development through investment in skills, plant and technology and, within the
Group, will continue to facilitate cooperation, the exchange of ideas and the
promotion of best practice.
In reviewing the performance of the Group in 2001, I am struck by the resilience
and resourcefulness of all parts of our business. Our North American operations
have had an exceptional year, taking full advantage of a strong market. In the
UK, the Makers business has made good good progress in developing partnerships
with both public and private sector clients, which will bear fruit in the
future. We have seen a very good performance from Continental Europe and
overseas, with particularly strong organic growth in France and the Far East.
The Franki operations in Australia and Indonesia have shown an impressive
turnaround, and look set to steer a steady course in 2002.
Cash flow and financing
Operating cash flows in 2001 improved strongly over 2000 at £32.2m compared to
£19.6m. The increase in profit was the main reason for this 64% improvement.
Management of working capital, particularly in the last quarter of the year, was
very good resulting in no change year-on-year, even though there was an increase
in annual sales of £109m.
Net debt at the end of 2001 was £63.2m compared to £9.6m at the end of 2000.
This large increase was due to the financing of the £65.7m Suncoast acquisition
which was funded entirely by debt. On a full year pro-forma basis, assuming
Suncoast had been owned and financed for the whole of 2001, the Group's net
interest cover based on EBITDA would have remained comfortable at 7.8 times.
On 11 December 2001, the Company raised net proceeds of £7.9m from a 5% placing
of new shares in order to position the Company to continue to pursue bolt-on
acquisitions whilst maintaining borrowing levels within the Board's internal
limits.
Dividend
In light of this strong performance, the board is recommending an increased
final dividend of 6.05p per share, bringing the total dividend for the year to
9.2p (2000: 8.5p).
Board
At the end of last year, we announced the retirement from the board of Mike
Martin. Mike, who joined the Group in 1967 and was Managing Director of Keller
Limited from 1986, had been a main board director since the management buyout in
1990. Mike's wise counsel and management experience will be missed and the board
wishes him well in his retirement. In December, we welcomed Gerry Brown to the
board as a non-executive director as a non-executive director, followed by the
appointment of Richard Scholes as a non-executive director as a non-executive
director in February of this year. With these new non-executive appointments
secured, Dr Harald Peipers and Dr Kevin Bond have decided to stand down as
non-executive directors at the forthcoming Annual General Meeting, having been
with Keller since 1995 and 1999 respectively. We thank them both for their
contributions to the development of the Group and wish them well for the future.
People
Keller has experienced significant change during the past year: the integration
of a major new business, changes in the structure of some of our marketplaces,
general economic uncertainty and ever more stringent standards and regulations.
Our people, on whom the performance of the Group rests, have once again
responded extremely well to these challenges. I would like to thank them for
their hard work in 2001. The board is committed to rewarding their loyalty with
excellent training and development opportunities, in an environment where they
can fulfil their potential and really make a difference.
Strategy
The performance of the Group in 2001 confirms that our strategy of maintaining
global leadership in the core foundations businesses, while expanding our range
of specialist services, continues to deliver benefits for the Company, its
shareholders and its employees.
In further pursuit of this strategy, we shall continue to seek acquisition
opportunities to broaden our offering of technical services to world markets. We
shall focus our search principally on specialist services businesses within
Europe, which offer strong growth prospects. Any such acquisitions will redress
the balance between our North American operations, which currently account for
some two thirds of profits, and the rest of the Group. In addition, we will
continue to enhance the geographical and technical coverage of our
market-leading foundations businesses through bolt-on acquisitions, where
appropriate. We believe our strategy will continue to enhance value for
shareholders.
Outlook
In the foundations businesses, we expect to see some recovery of the German and
Austrian markets and are encouraged by activity levels in the Far East, France
and the Iberian Peninsula. In the UK, the business should benefit from an
increase in infrastructure spending, in particular, related to the Channel
Tunnel Rail Link project. In our North American foundations operations,
underlying business fundamentals remain strong and order books are at a record
high. The recovery seen last year in our Australian and Indonesian operations is
expected to be sustained this year.
Our specialist services operations will have the benefit of a full year's
results from Suncoast and Makers is expected to prosper in a continuing buoyant
repair and refurbishment market in the UK.
Building on the strong order books at the end of 2001, the current year has
started well, with a total order book at the start of the year some 27% ahead of
the previous year, on a like for like basis, and a record January order intake.
This encouraging start, together with the on-target performance of Suncoast
since its acquisition last October, lead me to anticipate a good performance for
the Group in 2002.
Operating Review
The past year has been highly successful for Keller: these excellent results
show that the Group's impressive track record has been restored; we have
completed a major acquisition of a niche business in an expanding market; and we
have extended our range of specialist services and our geographical reach,, both
through through the successful integration of bolt-on acquisitions made during
2000 and 2001 and through through the increasing acceptance of Keller
techniques. These results reflect record performances in North America, combined
with a good performance in Europe and a strong rebound in Australia.
Conditions in our major markets
The construction industry in North America remained strong and we experienced
infrastructure spending at an all time high, with no slowdown since the events
of 11 September. In most of our key European markets, conditions were good,
offset to some extent by weakness in Germany and Austria. The UK refurbishment
sector, in which Makers operates, continued to be buoyant. The Far East was
strong, whilst the Middle East was subdued.
The Group has demonstrated a degree of insulation from weaknesses in individual
construction markets. In part, this is due to the Group's our broad geographical
spread, which means that we face a variety of market conditions in any one year.
It also reflects the mix of schemes in which we are involved. With around 20 to
30 % of our work in remediation or refurbishment and a further 20 to 30 % in
public infrastructure, a significant proportion of our work is unaffected by
volatility in the private construction sector.
Strategic developments
Last year, we stated our commitment to the expansion of our range of specialist
services as we continue to strengthen our position as an international market
leader in foundation services. Throughout our ongoing evaluation of potential
acquisitions, we have focused, in particular, on providers of specialist,
value-added services to the construction industry which are leaders in their
target markets and offer opportunities for growth.
On 1 October 2001, we acquired the business and assets of Suncoast for $90m.
Suncoast is a leading designer, fabricator and distributor of post-tension cable
systems to the construction industry in North America. This acquisition
represents a significant step in Keller's development, providing growth
opportunities in new, specialist construction services outside our traditional
foundation services markets.
Suncoast, together with Makers - our UK refurbishment and facilities management
business - and Wannenwetsch - a German specialist construction service business
in which we acquired a 49% stake in January 2002 - will form the basis of our
new specialist services division. We believe this new structure will encourage
greater management focus which should enable the parallel development and growth
of the foundations and specialist services businesses.
In November 2001, we acquired the assets of Catoh - a US, regional geotechnical
construction business specialising in heavy drilling techniques. The performance
and integration of acquisitions made during the year are discussed in the
following review of operations.
Foundations
North America
The results of the foundations operations were excellent in 2001, with sales 31%
ahead at £347.8m (2000: £265.3m) and operating profit before amortisation of
goodwill of £23.6m (2000: £16.6m), some 42% better than the previous year. This
strong growth was largely organic, with all operating units showing sales ahead
of last year.
North America
2001 was a record year for our North American operations, with operating profit
well ahead of the previous year, reflecting the strong underlying fundamentals
of our North American businesses.
Hayward Baker gave its best-ever performance with record sales, gross margin and
operating profit due, in part, to its core strategy of regionalisation
throughout North America. Whilst offering global technologies, regionalisation
offers offers clients a local presence, which is considered essential in winning
the small and medium-sized contracts. In line with this strategy, we opened an
office in the San Francisco Bay area in December 2001 to foster interest in the
area. Another success factor was the strong growth in several key product
markets in the geotechnical construction sector. The construction community
continues to adopt our techniques in ever increasing numbers, progressively
expanding our market share. Such techniques include minipiling, soil mixing, jet
grouting and vibro.
Hayward Baker and Case continued to be involved in contracts at port facilities,
power stations, mass transit systems, airports and TEA21 infrastructure
projects, along with a wide variety of small to medium sized jobs in the private
sector.
Among the major contracts undertaken during the year was work following the
tragic events at the World Trade Center. Shortly after 11 September, Hayward
Baker was contacted by New York City's consulting engineers to discuss possible
assistance with underground support throughout the recovery and reconstruction
efforts. Within four weeks, Hayward Baker was on site working in joint venture
with one of our competitors to provide the expertise and level of resources
necessary for the project. Hayward Baker's work entailed the installation of
high capacity tieback anchors through the existing World Trade Center basement
walls. The tieback anchors are necessary to support the basement walls against
the exterior forces created by soil and groundwater as the debris from the
collapsed structure is removed from the basement area. As a result of further
work awarded in January 2002, Hayward Baker's work is likely to continue until
late Spring of 2002 when recovery operations should conclude.
Another noteworthy project involved vibro work carried out as part of the high
profile Pier 400 project at the Port of Los Angeles. The work involved extensive
bottom feed vibro in two areas and dynamic compaction in a third. The effect of
these ground improvement techniques was to mitigate the risk of damage during
seismic events over a large area of reclaimed land originally created by
backfilling with dredged sands or silts. This project was successfully completed
in difficult soil conditions and within tight deadlines.
During the year, Hayward Baker acquired the assets of Catoh, a New York State
based regional market leader in speciality drilling, minipiles and earth
retention. Catoh's drilling capabilities have proved very useful over recent
years on numerous joint ventures with Hayward Baker, including a scheme last
year to reinforce the visitors' observation platform at Niagara Falls. The
addition of experienced field forces and drilling equipment is an advantage in
Hayward Baker's north-east operations.
Case Foundation and Case Atlantic returned excellent results, with sales and
operating profit both significantly ahead of the previous year. These results,
which were reflected across virtually all business units, benefited from the
commencement of delayed contracts and from good operating conditions in Case's
segments of the North American market. In November 2001, Case opened a new
office in Phoenix, Arizona, to serve the local client base.
Case was involved in several prestigious projects during the year, including the
construction of a large diameter water intake shaft approximately one mile
offshore in Lake Michigan. Among several successful projects in the
north-eastern United States was one for the South Jersey Light Rail System,
while in the mid-west Case installed the caissons for a new convention centre in
Grand Rapids. In Charleston, South Carolina, Case Atlantic carried out piling
work for two bridges and was awarded a significant contract for a two year
project at the Cooper River Bridge, as part of the TEA21 federal infrastructure
budget spend.
The Shedd Aquarium in Chicago, Illinois, was another key contract for Case, with
both Case and Hayward Baker working over the past two years on this high profile
lake-front museum, installing minipiles and soil nails and undertaking a
significant earth retention project.
Continental Europe and overseas
The European and overseas business achieved a good performance, despite
difficult economic conditions in some of our markets. The broad spread of our
operations and the mix of contracts protected us from the slowdowns experienced
in parts of Europe and the Middle East.
Our German operations succeeded in increasing turnover by more than 12% whilst
improving margins, thereby returning an encouraging result, in contrast to a 7%
downturn in the construction sector. A strong performance was shown by our
businesses in Poland and France, which are becoming well established. In France,
we introduced piling as a product line to support our ground improvement
services. Major contracts in France included one at Nice Airport, where Keller
installed vibro stone columns to reduce the risk of liquefaction and increase
the earthquake resistance of the proposed main terminal building and car parks.
During the year we developed our Spanish business, undertaking four vibro
contracts there in the second half of the year.
We were involved in a number of environmental schemes in Continental Europe,
including a major groundwater improvement scheme in Bruck, Austria, requiring
the decontamination of subsoil using horizontal jet grouting; the rehabilitation
of a dam near Krakow in Poland; and, in the Rhein-Ruhr area of Germany, over 20
contracts for exploration drilling and cavity grouting of disused mines, to
protect the local population from the collapse of unstable shafts and tunnels.
The year 2001 marked the first full year's contribution from both LCM, the
Swedish provider of lime cement columns in which the Group has a 50% interest,
and MTS, our Swiss regional specialist in anchors, micro piling and soil
nailing, both acquired in the last quarter of 2000. LCM rebounded well after a
slow start, to have a good full year and shows promise for the future, while MTS
struggled to recover from adverse weather conditions early in the year.
Lime column contracts took the Group into Norway for the first time.
Outside Europe, the Far East performed well, particularly Malaysia and
Singapore. Keller, with some participation from LCM, is stabilising the soil
beneath the realignment of a railway line in Malaysia, using stone and lime
cement columns. The success of the project, together with similar joint ventures
between LCM and the UK ground engineering business, demonstrates our good
progress in transferring the newly acquired technology to other regions of the
world. Furthermore, we commenced vibro work at Hong Kong's Container Terminal 9,
marking a return to Hong Kong, after more than four years' absence from the
city.
Operations in the Middle East were affected by difficult market conditions in
the region. While our businesses in Saudi Arabia and Bahrain managed to turn in
creditable results, Dubai and Egypt were less well able to withstand the impact
of the slowdown. We also entered into co-operation agreements for vibro work in
Turkey and for foundation works in Algeria, marking the start of a more active
involvement in those regions.
UK
The UK ground engineering market was relatively static during the year, with
continued overcapacity in the foundations sector. However, Keller remains the
market leader in the UK ground improvement subsector, which accounts for an
increasing proportion of its work and where recent growth has come largely from
an increase in the development of brownfield sites.
The ground engineering business had a slow start to the year, due to the very
wet weather, which resulted in delayed contract starts. Activity picked up as
the year progressed, however, the result was affected by the absorption of costs
associated with remedial works.
Significant projects included vibro stone column work at the port of Mostyn in
North Wales and contract 320 at the Channel Tunnel Rail Link project, where
vibro concrete columns were used to provide a stable working platform, allowing
construction of a viaduct. Bored piling contracts included continuing jobs at
Canary Wharf and a new hotel complex and associated development at West India
Quay. The specialist grouting division benefited from a compaction and void
filling grouting job at Reading, where previous mineworkings had threatened to
cause severe settlement to local authority housing units. Here, a novel approach
combining probe drilling, injection grouting and compaction grouting provided a
solution to undermining caused by cavities in the underlying chalk.
The specialist grouting division has also been working alongside our Swedish
soil mixing contractor, LCM. The application of lime column technology for the
first time in the UK is providing a solution to a near intractable problem at
Hull docks, where foundations for a bund are being created on very soft marine
alluvium in tidal conditions.
Through good co-operation across all divisions, the ground engineering business
was able to offer packaged solutions, consisting of ground improvement and
earthworks. In the current year we hope to accelerate the provision of complete
enablement solutions for new and brownfield sites.
Australia
Franki operations in Australia and Indonesia enjoyed a significant turnaround
due, in part, to the restructuring carried out in 2000 and to a more stable
business environment in Australia. The Indonesian operation performed
particularly well, given the political uncertainty and fragile economy of the
region, with activity steady throughout the year in each of its product lines.
Major contracts during the year included several major precast projects in the
docklands precinct of Melbourne. Franki also entered into a joint venture with
Vibropile for the foundations for one of the tallest residential buildings in
the world - Grollo's Eureka Tower in Melbourne. This project, with the most
complex foundations we have encountered on a building site in Australia, is
nearing successful completion.
A common feature of contracts successfully completed during the year was the
resolution of major foundation and logistical problems through effective
communication and close co-operation with the client. One such job was in the
Pilbara region of Western Australia, where BHP Billiton operate a series of
major iron ore mines. One of these, at Yandi, is located some 400km from the
coastal shipping port of Port Hedland. The Yandi mine load-out facility had to
remain operational during upgrading and only limited time windows were available
for the work. Franki, together with the client, their consultants and the steel
work contractor, devised a cost-effective solution which involved building a
structure around the existing tunnel, whilst allowing loading operations to
continue. A complex matrix of 'what ifs' was drawn up, as no delay to the
contract could be tolerated. Standby units of critical plant, such as drilling
rigs and concrete batching plants, were required on site. Time was of the
essence and the work was completed on time and to budget.
Specialist services
The results for specialist services include the full year for Makers and three
months of Suncoast. Operating profit before goodwill amortisation was 32% ahead
at £3.7m (2000: £2.8m) on turnover of £74.4m (2000: £47.6m).
Suncoast
On 1 October 2001, we completed the acquisition of Suncoast - a Houston based
market leader in the design, fabrication and distribution of post-tension cable
systems to the construction industry.
Post-tension cable systems are used to reinforce concrete foundations and
structural spans, enhancing their load-bearing capacity by applying a
compressive force to the concrete, once set. Post-tension technology has been
used in North America since the mid 1960s and has been used increasingly in the
residential and commercial construction markets. This trend has been driven by
the cost savings in labour and materials and the enhanced design flexibility,
compared with more traditional reinforcement methods. Post-tension reinforcement
foundation slabs are particularly appropriate to the soil conditions found in
Texas, California and Arizona, where Suncoast has developed its principal
operations.
The market for post-tension reinforcement systems has seen significant growth.
Annual growth rates in the use of post-tension systems in the US residential
market averaged 26% between 1990 and 2000, compared to only 4% annual growth
rates in new house construction over the same period.
In 2001, 56% of Suncoast's sales came from the concrete foundation slabs market,
primarily for use in the construction of single family homes. 24% of its
business came from the commercial construction sector, relating to the use of
concrete structural spans and beams in a wide range of concrete framed
structures including hotels, sports stadia and parking garages.
Suncoast also offers a rebar design and supply package, either with Suncoast's
post-tension systems, as part of a concrete reinforcement solution, or for use
on a stand-alone basis. This complementary product area represented the balance
of Suncoast's sales in 2001.
The Suncoast business has traditionally been seasonal, with a relatively quiet
final quarter. Since its acquisition, the performance of Suncoast has been as
anticipated. With historically low interest rates and a continuing strong level
of housing starts in the United States, Suncoast's first full year's
contribution in 2002 should be in line with our expectations at the time of
acquisition.
Looking ahead, the Suncoast business is well placed to take advantage of growth
opportunities which are expected to come from the continued technology transfer
in the concrete foundation slabs market; continued favourable demographics which
support new housing demand in Suncoast's core markets; geographical expansion
outside Suncoast's current core residential markets; increased penetration of
post-tension systems in the commercial construction markets; and opportunities
for consolidation within a highly fragmented post-tension industry.
Makers
Over the five years since acquisition, Makers has seen a compound growth in
sales of 24%. During 2001, the strategic aim was to consolidate and to
strengthen the core business systems. This has created a strong platform from
which to exploit the significant growth opportunities emerging across all its
sectors.
Makers has benefited from a growing number of partnership arrangements, through
which it has been able to secure long-term contracts at commercially acceptable
rates. Our customers benefit from the reinvestment in training, information
technology, supply chain management and customer care services, which together
generate improved service delivery.
In social housing, Makers has won major contracts on partnering schemes with the
London Boroughs of Westminster, Waltham Forest and Camden for the refurbishment
of housing stock. Makers' growing reputation for quality and community care has
enabled it recently to enter into a joint venture to deliver reactive
maintenance services for part of a social housing complex in London's
Westminster. This marks a first step into a new sphere of business. We believe
the strong contracting skills and high customer focus within the business will
make this a good strategic move into facilities management.
The relationship with BAA has matured and during the year Makers progressed a
number of contracts to refurbish car parking facilities at Heathrow and Gatwick
Airports. The success of this experience positions the business well to support
local authorities and railway companies on similar projects in the future.
Makers has traditionally undertaken cladding work on an ad hoc basis. With an
increase in demand for this type of construction, two business units were set up
during the year to cover the national market. Makers' track record, skilled
workforce and its relationships with materials suppliers mean that it is well
placed to benefit from the growth in this sector.
A good performance was delivered by the AMS division, which showed improvements
in all major business areas and a new business unit was set up during the year
to supply services to communications companies upgrading mobile phone networks
across the UK. The masonry division had success on a number of key contracts
including St Paul's Cathedral, Norwich Cathedral and Norwich Castle.
Wannenwetsch
Since the year end, we have acquired a 49% stake in Wannenwetsch. Wannenwetsch
is Europe's leading supplier of robotic hydrodemolition services for precision
concrete removal. Using high-pressure water jets guided by robotic carriers,
Wannenwetsch's concrete removal process has been developed to suit operations
where removal of concrete to a specific depth or length is required, without
damage to the surrounding area of the structure. Typical applications, including
the renovation of parking garages, bridges, tunnels, airport runways, wharfs and
industrial plants, complement the services already offered by Makers in the
concrete refurbishment market.
Consolidated Profit and Loss account
for the year ended 31 December 2001
2001 2001 Restated
2001 Continuing Continuing 2000
Continuing operations operations Continuing
operations Acquisitions Total operations
Note £000 £000 £000 Total
£000
------------------------------------------------------------------------------------------------------------------------
Turnover 1 401,749 20,499 422,248 312,954
Operating costs (377,919) (20,151) (398,070) (296,747)
------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------
Operating profit before amortisation of goodwill and
restructuring costs 24,449 980 25,429 17,706
Amortisation of goodwill (619) (632) (1,251) (322)
-----------------------------------------------------
Restructuring costs - - - (1,177)
----------------------------------------------------- --------------------------------------------------------
Operating profit 23,830 348 24,178 16,207
Net interest payable (1,785) (760)
------------------------------------------------------------------------------------------------------------------------
Profit on ordinary activities before taxation 22,393 15,447
Taxation 2 (8,684) (5,791)
------------------------------------------------------------------------------------------------------------------------
Profit on ordinary activities after taxation 13,709 9,656
Equity minority interests (342) 140
------------------------------------------------------------------------------------------------------------------------
Profit for the financial year 13,367 9,796
Dividends paid and proposed 3 (5,401) (4,829)
------------------------------------------------------------------------------------------------------------------------
Retained profit for the financial year 7,966 4,967
------------------------------------------------------------------------------------------------------------------------
Basic earnings per share 4 23.6p 17.3p
Earnings per share before amortisation of
goodwill 4 25.8p 17.9p
------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share 4 23.4p 17.2p
------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share before amortisation
of goodwill 4 25.6p 17.8p
------------------------------------------------------------------------------------------------------------------------
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2001
Restated
2001 2000
£000 £000
------------------------------------------------------------------------------------------------------------------------
Profit for the financial year 13,367 9,796
Currency translation differences on overseas investments (555) 1,617
Tax effect of currency translation differences - 39
------------------------------------------------------------------------------------------------------------------------
Total recognised gains and losses relating to the year 12,812 11,452
------------------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet
As at 31 December 2001
Restated
2000
2001 £000
£000
------------------------------------------------------------------------------------------------------------------------
Fixed assets
Positive goodwill 60,752 12,510
Negative goodwill (105) (209)
------------------------------------------------------------------------------------------------------------------------
60,647 12,301
Other intangible assets 372 395
------------------------------------------------------------------------------------------------------------------------
Intangible assets 61,019 12,696
Tangible assets 59,277 50,788
Investments - -
------------------------------------------------------------------------------------------------------------------------
120,296 63,484
------------------------------------------------------------------------------------------------------------------------
Current assets
Stocks 12,466 7,026
Debtors 120,318 91,111
Cash at bank and in hand 12,209 13,568
------------------------------------------------------------------------------------------------------------------------
144,993 111,705
Creditors: amounts falling due within one year (129,143) (92,740)
------------------------------------------------------------------------------------------------------------------------
Net current assets 15,850 18,965
------------------------------------------------------------------------------------------------------------------------
Total assets less current liabilities 136,146 82,449
Creditors: amounts falling due after more than one year (56,825) (17,242)
Provisions for liabilities and charges (6,046) (7,579)
------------------------------------------------------------------------------------------------------------------------
Net assets 73,275 57,628
------------------------------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 5,968 5,681
Share premium account 22,202 14,545
Capital redemption reserve 7,629 7,629
Profit and loss account 36,472 29,061
------------------------------------------------------------------------------------------------------------------------
Equity shareholders' funds 72,271 56,916
Equity minority interests 1,004 712
------------------------------------------------------------------------------------------------------------------------
73,275 57,628
------------------------------------------------------------------------------------------------------------------------
Consolidated Cash Flow Statement
for the year ended 31 December 2001
2001 2001 2000 2000
£000 £000 £000 £000
------------------------------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 32,187 19,558
Returns on investment and servicing of finance
Interest received 482 664
Interest paid (1,951) (1,224)
Interest element of finance lease rental payments (71) (82)
Finance costs of new bank loans (1,646) (172)
Payments to minority interests (115) (184)
------------------------------------------------------------------------------------------------------------------------
(3,301) (998)
Taxation
UK corporation tax paid (505) (821)
Overseas tax paid (7,732) (5,014)
------------------------------------------------------------------------------------------------------------------------
(8,237) (5,835)
Capital expenditure
Purchase of intangible fixed assets (72) (119)
Purchase of tangible fixed assets (11,385) (9,779)
Sale of tangible fixed assets 1,223 1,040
------------------------------------------------------------------------------------------------------------------------
(10,234) (8,858)
Acquisitions and disposals
Acquisition of subsidiary undertakings (67,343) (9,058)
Net cash acquired with subsidiary undertakings 13 271
------------------------------------------------------------------------------------------------------------------------
(67,330) (8,787)
Equity dividends paid (5,000) (4,571)
------------------------------------------------------------------------------------------------------------------------
Net cash outflow before use of liquid resources and
financing (61,915) (9,491)
Management of liquid resources
Repayments from short term bank deposits 947 2,978
Financing
Issue of new shares 7,944 41
New bank loans drawn 62,153 9,868
Repayment of bank loans and loan notes (18,407) (4,211)
Sale and leaseback transactions 887 -
Capital element of finance lease rental payments (396) (307)
------------------------------------------------------------------------------------------------------------------------
Net cash inflow from financing 52,181 5,391
------------------------------------------------------------------------------------------------------------------------
Decrease in cash in the year (8,787) (1,122)
------------------------------------------------------------------------------------------------------------------------
Notes to the accounts
1. Segmental analysis
Turnover, operating profit and net assets may be analysed as follows:
------------------------------------------------------------------------------------------------------------------------
2001 2001 2001 2000
Continuing Continuing Continuing Continuing
operations operations operations operations
£000 Acquisitions Total Total
£000 £000 £000
------------------------------------------------------------------------------------------------------------------------
Turnover
Class of business
Foundations 347,549 277 347,826 265,322
Specialist services 54,200 20,222 74,422 47,632
------------------------------------------------------------------------------------------------------------------------
401,749 20,499 422,248 312,954
------------------------------------------------------------------------------------------------------------------------
Geographical origin
United Kingdom 100,130 - 100,130 91,021
The Americas 168,262 20,499 188,761 110,063
Continental Europe and overseas 115,008 - 115,008 97,689
Australia 18,349 - 18,349 14,181
------------------------------------------------------------------------------------------------------------------------
401,749 20,499 422,248 312,954
------------------------------------------------------------------------------------------------------------------------
Operating profit
Class of business
Foundations 23,191 25 23,216 15,394
Specialist services 2,439 323 2,762 2,411
------------------------------------------------------------------------------------------------------------------------
25,630 348 25,978 17,805
------------------------------------------------------------------------------------------------------------------------
Geographical origin
United Kingdom 3,167 - 3,167 3,411
The Americas 15,996 348 16,344 9,692
Continental Europe and overseas 5,820 - 5,820 4,886
Australia 647 - 647 (184)
------------------------------------------------------------------------------------------------------------------------
25,630 348 25,978 17,805
Unallocated central costs - (1,800) (1,598)
------------------------------------------------------------------------------------------------------------------------
24,178 16,207
Net interest payable (1,785) (760)
------------------------------------------------------------------------------------------------------------------------
22,393 15,447
------------------------------------------------------------------------------------------------------------------------
The amortisation of goodwill (2000: together with restructuring costs of
£1,177,000) has been analysed by geographical segment as follows: United Kingdom
£288,000 (2000: £937,000), The Americas £1,005,000 (2000: £212,000), Continental
Europe and overseas £62,000 (2000: £227,000) and Australia, a credit of £104,000
(2000: charge £123,000).
Restated
2001 2000
Net assets £000 £000
Class of business
Foundations 69,532 65,509
Specialist services 66,945 1,730
------------------------------------------------------------------------------------------------------------------------
136,477 67,239
Net debt (63,202) (9,611)
------------------------------------------------------------------------------------------------------------------------
73,275 57,628
------------------------------------------------------------------------------------------------------------------------
Restated
1. Segmental analysis - continued
2001 2000
Net assets £000 £000
Geographical origin
United Kingdom 9,194 10,276
The Americas 109,862 39,945
Continental Europe and overseas 15,468 13,215
Australia 1,953 3,803
------------------------------------------------------------------------------------------------------------------------
136,477 67,239
Net debt (63,202) (9,611)
------------------------------------------------------------------------------------------------------------------------
73,275 57,628
------------------------------------------------------------------------------------------------------------------------
In the opinion of the directors: (i) it is not deemed appropriate to analyse net
debt and net interest payable thereon by geographical segment and (ii) turnover
by destination is not materially different from turnover by origin.
Restated
2001 2000
2. Taxation £000 £000
The taxation charge comprises:
------------------------------------------------------------------------------------------------------------------------
UK corporation tax at 30% (2000: 30%) 411 579
Overseas tax 9,286 4,988
Deferred tax (1,049) 252
Under/(over) provisions in respect of prior years 36 (28)
------------------------------------------------------------------------------------------------------------------------
8,684 5,791
------------------------------------------------------------------------------------------------------------------------
3. Dividends paid and proposed
2001 2000
£000 £000
Ordinary dividends on equity shares:
------------------------------------------------------------------------------------------------------------------------
Interim paid 1,790 1,619
Final proposed 3,611 3,210
------------------------------------------------------------------------------------------------------------------------
5,401 4,829
------------------------------------------------------------------------------------------------------------------------
An interim ordinary dividend of 3.15p (2000: 2.85p) per share was paid on 31
October 2001.
The final proposed ordinary dividend of 6.05p (2000: 5.65p) per share will be
paid on 31 May 2002, to shareholders on the register at the close of business on
3 May 2002.
4. Earnings per share
Earnings per share is calculated as follows:
------------------------------------------------------------------------------------------------------------------------
2001 2001 Restated Restated
Basic Diluted 2000 2000
Basic Diluted
------------------------------------------------------------------------------------------------------------------------
Profit after tax and minority interests £13,367,000 £13,367,000 £9,796,000 £9,796,000
------------------------------------------------------------------------------------------------------------------------
No. of shares No. of shares No. of shares No. of shares
------------------------------------------------------------------------------------------------------------------------
Weighted average of ordinary shares in issue during
the year 56,640,447 56,640,447 56,529,208 56,529,208
------------------------------------------------------------------------------------------------------------------------
Add: Weighted average of shares - 168,862 - 188,365
under option during the year
------------------------------------------------------------------------------------------------------------------------
Add: Weighted average of own shares held - 318,000 - 277,427
------------------------------------------------------------------------------------------------------------------------
Subtract: Number of shares assumed issued - (79,362) - (91,467)
at fair value during the year
------------------------------------------------------------------------------------------------------------------------
Adjusted weighted average ordinary shares in issue 56,640,447 57,047,947 56,529,208 56,903,533
------------------------------------------------------------------------------------------------------------------------
pence pence pence pence
------------------------------------------------------------------------------------------------------------------------
Earnings per share 23.6 23.4 17.3 17.2
------------------------------------------------------------------------------------------------------------------------
Earnings per share before amortisation of goodwill of 25.8p (2000: 17.9p) is
calculated based on profit after tax and minority interests before amortisation
of goodwill of £14,618,000 (2000: £10,118,000) and the weighted average number
of ordinary shares in issue during the year of 56,640,447 (2000: 56,529,208).
Diluted earnings per share before amortisation of goodwill of 25.6p (2000:
17.8p) is calculated based on profit after tax and minority interests before
amortisation of goodwill of £14,618,000 (2000: £10,118,000) and the adjusted
weighted average number of ordinary shares in issue during the year of
57,047,947 (2000: 56,903,533).
5. Foreign Currencies
Balance sheet items in foreign currencies are translated into Sterling at
closing rates of exchange at the balance sheet date. However, if amounts
receivable and payable in foreign currencies are covered by a forward contract,
the contract rate of exchange is used for translation. Profit and loss accounts
and cash flows of overseas subsidiary undertakings are translated into Sterling
at average rates of exchange for the year.
Exchange differences arising from the retranslation of opening net assets and
profit and loss accounts at closing rates of exchange are dealt with as
movements on reserves. All other exchange differences are charged to the profit
and loss account.
The exchange rates used in respect of principal currencies are:
2001 2000
US Dollar: average for year 1.44 1.52
US Dollar: year end 1.45 1.49
Australian Dollar: average for year 2.79 2.61
Australian Dollar: year end 2.84 2.67
Euro: average for year 1.61 1.64
Euro: year end 1.64 1.59
6. Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2001 or 2000 but is derived
from those accounts. Statutory accounts for 2000 have been delivered to the
Registrar of Companies and those for 2001 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those accounts:
their reports were unqualified and did not contain statements under section 237
(2) or (3) of the Companies Act 1985.
The Group has implemented FRS 19 - Deferred Tax, which has given rise to a prior
year adjustment, as detailed in note 8.
Accounts will be posted to shareholders on 31 March 2002. The Annual General
Meeting will be held on 9 May 2002.
7. Reconciliation of movements in shareholders' funds
------------------------------------------------------------------------------------------------------------------------
2001 Restated
£'000 2000
£'000
------------------------------------------------------------------------------------------------------------------------
Profit for the financial year 13,367 9,796
Dividends (5,401) (4,829)
Exchange differences net of taxation (555) 1,656
Issue of new shares* 7,944 41
------------------------------------------------------------------------------------------------------------------------
Net movements in shareholders' funds 15,355 6,664
Shareholders' funds at 1 January:
As previously reported 57,997 51,044
Prior year adjustment (see note 8) (1,081) (792)
As restated 56,916 50,252
------------------------------------------------------------------------------------------------------------------------
Shareholders' funds at 31 December 72,271 56,916
------------------------------------------------------------------------------------------------------------------------
* Shares include share premium
8. Prior year adjustment - deferred tax
The Group has implemented FRS 19 - Deferred Tax. This standard requires
provision for taxation in respect of all timing differences. This represents a
change in accounting policy and therefore results in a prior year adjustment.
The charge to reserves brought forward at 1 January 2001 amounted to £1,081,000
(2000: £792,000). The comparatives for the year to 31 December 2000 have been
restated in accordance with the new accounting policy.
This information is provided by RNS
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