Final Results
Keller Group PLC
06 March 2006
For immediate release Monday, 6 March 2006
Keller Group plc
Preliminary results for the year ended 31 December 2005
Keller Group plc ('Keller' or 'the Group'), the international ground engineering
specialist, is pleased to announce its preliminary results for the year ended 31
December 2005.
Highlights include:
• Sales of £731.0m (2004: £595.9m) up 23%, representing excellent organic
growth across our international markets
• Profit before tax up 64% to £48.8m (2004: £29.7m)
• Earnings per share up 73% to 41.8p (2004: 24.2p)
• Excellent cash generation - year end debt reduced to £40.9m (2004:
£58.7m)
• Total dividend per share increased by 10% to 12.0p (2004: 10.9p)
• Record order book now stands at over five months' sales
Justin Atkinson, Keller Chief Executive said:
'2005 was an outstanding year for the Group, in which we delivered excellent
organic growth across our international markets and a substantial increase in
profits. These results reflect an exceptional performance in the US, where all
four of our businesses took full advantage of a strong market.
'We do not expect US demand to abate in the first half of 2006 and nor do we
expect major changes in our other principal markets. This, together with a
record current order book of over five months' sales, creates a positive outlook
for the first half.
'Whilst the exceptional 2005 result may not be repeated this year, the Board is
confident that 2006 will be another good year for Keller.'
For further information, please contact:
Keller Group plc www.keller.co.uk
Justin Atkinson, Chief Executive 020 8341 6424
James Hind, Finance Director
Smithfield
Reg Hoare/Rupert Trefgarne 020 7360 4900
A presentation for analysts will be held at 9.15 for 9.30am at
the offices of Smithfield, 10 Aldersgate Street, London EC1A 4HJ
Print resolution images are available for the media to download from
www.vismedia.co.uk
Chairman's Statement
Results
2005 has been a landmark year for Keller, in which we have delivered excellent
organic growth across our international markets and a substantial increase in
profits. These results reflect an exceptional performance in the US, where all
four of our businesses took full advantage of a strong market, and amply
demonstrate the strength of our business model.
Group sales rose by 23% to £731.0m (2004: £595.9m), being almost entirely
organic growth. Profit before tax was up 64% to £48.8m (2004: £29.7m) and
earnings per share grew by 73% to 41.8p (2004: 24.2p). Operating margins
increased to 7.3% from 5.7%, reflecting the excellent performance in the US.
Cash flow and net debt
Net cash inflow from operations increased to £73.4m (2004: £33.6m) which
compares to EBITDA of £64.9m, underlining the quality of Keller's earnings. Net
debt at the end of the year benefited from this excellent operating cash flow
and stood at £40.9m (2004: £58.7m). This performance is evidence of the Group's
ongoing strong focus on cash and working capital management.
Dividends
In recognition of these outstanding results, the Board is this year recommending
a final dividend of 8.2p per share (2004: 7.3p), representing an increase of
12%. This brings the total dividend for the year to 12.0p (2004: 10.9p), a 10%
increase, which is covered 3.5 times by earnings per share. The final dividend
will be paid on 29 June 2006 to shareholders on the register at 2 June 2006.
This increase reflects our policy of reinvesting our cash flow in the growth of
the Group, whilst maintaining a healthy dividend cover and seeking to reward
shareholders with above inflation increases.
Pensions
The UK defined benefit pension scheme had its triennial actuarial valuation at 5
April 2005, which showed a deficit of £11.3m on an ongoing basis. Since the year
end, the Group has announced that it will close the scheme for future benefit
accrual with effect from 31 March 2006. Active members will be transferred to a
new defined contribution arrangement. To help reduce the deficit, the Group is
to make a one-off cash contribution of £4.0m in April 2006 and has doubled its
ongoing contributions to £0.1m a month.
Strategy
Our strategy, which continues to deliver value for shareholders, remains
unchanged. Our goal is the further consolidation of our global leadership in
specialist ground engineering services, through a combination of organic growth
and targeted acquisitions.
In 2005 we made significant progress against this objective, with the
introduction of several new products into our existing markets and a continued
advance into new geographic regions. In September, we completed the acquisition
of G. Donaldson Construction in the US for an initial consideration of $10.6m
(£5.8m), preparing the ground for future growth by extending our reach and our
product offering in the New England market.
The Group has a proven track record in sourcing, integrating and growing its
acquisitions. For example, in the US, Suncoast has doubled in size and
profitability since it was acquired by the Group in 2001 and in Europe,
Keller-Terra has doubled its sales in the three years under Keller's ownership,
whilst remaining one of the Group's highest margin businesses.
In 2006, we will focus on making further strategic advances, together with
delivering improved performance from our UK businesses.
People
The outstanding performance in 2005 is a tribute to the skills, commitment and
drive of our employees. On behalf of the Board and shareholders, I thank them
for their support and professionalism. Keller has long been fortunate in being
able to attract and maintain some of the best talent in our industry. The Board
remains committed to recognising and rewarding their achievements and to
maintaining an environment in which they can continue to develop and to make a
difference.
2005 was Keller's first full year under the direction of Justin Atkinson as
Chief Executive. Whilst the executive team is still relatively new, its
maturity, cohesion and collective experience is second to none and I am
confident that it will continue to drive the Group forward.
Outlook
Whilst remaining cautious about the sustainability of recent levels of US
construction output, we do not expect demand to abate in the first half of 2006
and nor do we expect major changes in our other principal markets. This,
together with a record current order book of over five months' sales, creates a
positive outlook for the first half. Whilst the exceptional 2005 result may not
be repeated this year, the Board is confident that 2006 will be another good
year for Keller.
Operating Review
2005 was an outstanding year for the Group, in which we produced an excellent
overall margin and continued to build on our strong track record of growth. This
underlines Keller's inherent strengths: our global spread, coupled with local
knowledge and presence, our balanced contract portfolio, our broad range of
industry-leading technologies, our focus on what we do well, our deep industry
knowledge and our good growth prospects.
Conditions in our major markets
In North America, the three main construction sectors - residential, commercial
and public infrastructure - all surged ahead, with total expenditure on
construction in 2005 increasing by 9% on the previous year(1). In Europe, German
annual construction output fell somewhat, whilst activity in Austria picked up
in the second half of the year. Of our other main European markets, Spain,
France and Poland remained buoyant, whilst the UK was more subdued. There were
good opportunities in the Middle East and demand in our Far East markets
improved as the year progressed.
Against this generally good trading background, it is pleasing to note that in
most of our principal territories we grew sales by more than market growth
rates, thus gaining market share and outperforming the competition.
Operations
North America
2005 was an exceptionally good year for our North American operations which
produced record sales, profit and cash. Sales of £399.9m (2004: £280.2m) were
43% ahead and operating profit of £42.1m (2004: £21.0m) doubled. Our US
businesses benefited from both favourable market conditions and an outstanding
performance on a number of contracts.
Suncoast
Suncoast increased its sales in the year by 28%. Both sales and profit have
doubled in the four years under Keller's ownership. Its results were boosted by
an excellent performance from the commercial high-rise division, which benefited
from a very strong condominium market.
Further growth was achieved in slab-on-grade sales in California and Arizona,
where product substitution in favour of post-tension foundations, as an
alternative to traditional foundation methods, continues. Sales outside Texas
have grown to more than three times their level in 2002, the first full year
under Keller's ownership. This has reduced the reliance of the business on its
traditional Texan market, which represented around half of all sales in 2005,
compared to three quarters in 2002.
The combination of high volumes, stable raw material costs and operating cost
efficiencies sustained healthy margins, which further benefited from a shift in
product mix from rebar to steel strand.
Despite a general expectation that the housing market will eventually cool, this
is certainly not yet apparent, as evidenced by the strong housing starts
reported for January 2006.(2
Hayward Baker
Hayward Baker had an excellent year, with record results generated from over
1,800 contracts, with values ranging from a few thousands to several millions of
dollars. This indicates the strength of Hayward Baker's devolved, regional
structure, which enables it to win, and to make a success of, small local jobs
and multi-million-dollar projects alike. The wide range of projects on which it
was engaged during 2005 - from swimming pools to sky-scrapers, fast-food outlets
to freeways and power plants to places of worship - illustrates the diversity of
Hayward Baker's customer base.
A soil stabilisation contract for the Florida Department of Transportation
involved Hayward Baker in Keller's first application in the US of its dry soil
mixing technology, acquired by the Group through the acquisition of LCM in
Sweden. The technology was used to stabilise extremely soft and wet soils next
to the existing US Route 1 in South Florida, allowing the only road serving the
Florida Keys to be widened. This project illustrates one of Keller's key
strengths - the ability to transfer technology between Group companies and
between countries in this way.
In September, Hayward Baker acquired the business and assets of Donaldson, a
specialist in deep foundation and earth support services, serving the New
England construction market. Hayward Baker's Boston office has now been
integrated with the Donaldson operation, which is being managed as a division of
Hayward Baker. The benefits of combining Donaldson's strong local reputation and
field resources with Hayward Baker's technical resources and Keller's financial
strength are already beginning to show through and the ability to offer extended
capacity and a comprehensive range of solutions is expected to create good
opportunities in the future.
Case
Case, which has a higher average contract size than other Group companies,
reported a very solid performance in 2005, which included the successful
completion of the $15.3m (£8.4m) Trump Tower project in Chicago, where Case
provided foundations and excavation support for the new, 92-storey Trump
International Hotel and Tower.
Several diaphragm wall projects were completed during the year, as was the first
phase of a two-year $20m (£11.0m) contract to install four shafts to provide
intake water for the Elm Road Generating Station near Milwaukee, Wisconsin. The
intrinsic operational and technical risks around a project of this nature were
well controlled and we look forward to the successful completion of the second
phase in 2006.
Case has recently extended its offering with the addition of augercast piles - a
product which is gaining increasing recognition in the US and one in which the
Group has extensive experience elsewhere in the world: the business successfully
undertook several such projects in 2005.
McKinney
McKinney, which is increasingly prospering under the Group's ownership, also had
a record year. Of some 2,000 contracts successfully completed during the year
from 14 offices across the southern and eastern states, it is notable that a
number were in joint venture with other Keller businesses, illustrating one of
the synergies that Keller has been able to deliver from its acquisitions.
A seamless transition of McKinney's senior management was achieved during the
year and the business is in good shape to take full advantage of continuing
strong market conditions.
Continental Europe & Overseas
Our Continental Europe & Overseas business reported a good overall performance,
with sales of £204.7m (2004: £175.0m) up some 17% on the previous year.
Operating profit was £12.7m (2004: £11.9m), 7% ahead of last year.
Keller-Terra had another good year, in which it was involved in several high
profile infrastructure projects. These included the development of the Metro
systems in Barcelona and Madrid and, in preparation for the America's Cup in
2007, the refurbishment of Valencia Harbour. All major product lines performed
well and it is particularly pleasing to note that Keller-Terra doubled its sales
from ground improvement products which, in the three years since the business
was formed, have grown from a standing start to around 20% of sales. In
addition, two additional techniques - compaction grouting and large diameter jet
grouting - were introduced into the Spanish market during the year.
Our French business performed well, increasing its share of a growing ground
improvement sector and, in particular, undertaking a significant amount of work
for housebuilders. The development in 2004 of specialist equipment for composite
columns, which comprise a lower part in concrete and a traditional stone column
on top, led to a significant increase in the use of these solutions, in which
Keller France is the market leader. Whilst activity levels in North Africa were
disappointing, reflecting delays in a number of planned infrastructure projects,
completion of vibro compaction works at the Oued Ziatine Dam firmly established
Keller's credentials in Tunisia.
In Central and Eastern Europe, our operations in Austria had a much-improved
second half of the year after a slow start and despite strong competition. Work
was completed on Kops Cavern, where permanent rock anchors were installed to
support one of the largest underground excavations in Europe for a new water
power plant. Further progress was made in Eastern Europe, particularly Poland,
where what was a start-up business some 10 years ago is now the market leader,
offering a range of ground engineering solutions to both the public and private
sectors from five regional offices across the country. From this established
position in Poland, we are now seeking to extend our footprint into Ukraine.
Sales in Germany fell slightly, reflecting the state of the market. However,
measures taken in 2004 and the start of 2005 to reduce costs and improve
efficiencies lifted the profitability of the German operations in the second
half. This success was also reflected in improvements in other key indicators,
such as equipment utilisation ratios and site-level margins. Whilst many
competitors continue to suffer from the harsh market conditions, improvements in
our German organisation make it better positioned to take advantage of an
eventual upturn.
Within the Overseas division, the Middle East reported a good result, with a
particularly strong contribution from Bahrain, where we completed a number of
prestigious contracts including a design and build contract for the foundations
of a new power station at Al Ezzel and piling works for the King Hamad General
Hospital at Muharraq. Our operations in the Far East had a slow start but an
improved second half of the year, when we successfully completed ground
improvement work on Penang Island, Malaysia, at the site for a new sewerage
treatment plant.
UK
Sales in the year were 18% down on the previous year at £89.2m (2004: £108.3m),
with an operating loss of £0.3m (2004: profit of £1.9m).
Makers
As previously reported, Makers had a disappointing year, with delays in getting
social housing work onto site continuing throughout the second half of the year.
Nevertheless, the business continued to be awarded, and to successfully
discharge, multi-million-pound social housing contracts for various London
Boroughs. In addition, it undertook a major internal and external refurbishment
contract for two tower blocks for Leicester Housing Association. At the close of
the year, Makers' order book was significantly higher than at the start of 2005,
which should lead to a better result in 2006.
KGE
Keller Ground Engineering (KGE) had a satisfactory year overall. A very good
trading result from the foundation support division was partly masked by a
weaker performance from the geotechnical division, which suffered from a
shortage of major infrastructure projects.
The decision to retain a piling capability, when the business withdrew from
large diameter piling in 2003, means that KGE is able to offer overall solutions
comprising several different techniques, including augercast and cast-in-situ
piling. A 'packaged solution' was provided at London's Millennium Dome, where a
range of techniques, including driven piles, continuous flight auger piles and
minipiles, was chosen to take account of the uniqueness of the site and the
different structures to be constructed within the shell of the Dome. Another
such contract in 2005 for a regional housebuilder, including earthworks,
remediation, dynamic compaction, piling and vibro techniques, is a further
example of the competitive advantage this gives the business. Few competitors
can offer the same breadth of packaged solutions.
Earth retaining solutions - for retaining walls, slope retention and reinforced
soil - made a good contribution, in a segment that is small, but has good growth
potential. Projects worked on during 2005 included Essex Road Bridge in
Hoddesdon, Hertfordshire, where a new bridge was being constructed over a busy
electrified railway. KGE designed and installed vertical concrete panel walling
and steeply sloping, grass faced 'Textomur' which, in combination, gave the most
cost-effective solution for retaining the side of the bridge approach ramps. KGE
also designed and installed vibro concrete columns to limit settlement behind
the bridge abutments.
Australia
Sales of £37.1m (2004: £32.4m) were some 15% above the previous year, whilst
operating profit of £1.8m (2004: £1.7m) was up by 6%.
Our northern branch - covering Queensland and Western Australia - had a busy
year, particularly on the Gold Coast which is seeing a surge in housing, retail
and leisure schemes to satisfy the demands created by internal migration to this
area. Also, in Western Australia two of our Australian businesses joined forces
to provide a combined lateral support and piling package for the site of the new
Perth Law Courts.
The new ground engineering business, which commenced operations in January 2004
to promote the full range of ground improvement and specialty grouting
solutions, moved into profitability in 2005. It successfully undertook several
high profile contracts during the year, including compensation grouting works
for new twin rail tunnels under construction beneath the centre of Perth. The
development of this business exemplifies one of our approaches to delivering
organic growth, through the introduction of 'new' techniques from elsewhere in
the Group to territories where we have an established presence. As ground
engineering solutions continue to gain acceptance in Australia, we anticipate
further growth for this business in 2006.
People and processes
The quality and professionalism of our people are elements which distinguish the
Keller Group. It is the willingness of individuals and teams across the business
to constantly challenge themselves to beat their best results which enables us
to improve our productivity and capability. As a result, we are continually
achieving new records and 'first time evers'. A selection of these from 2005
gives a flavour of some of our recent achievements:
• For the first time in the US, Hayward Baker used new Japanese technology
for trench cutting and installation of barrier walls of up to 30 metres
depth. The 'TRD' method utilises a large base machine resembling a vertical
chain saw to cut a continuous slot in the soil, whilst simultaneously
adding cement slurry to create a soil-cement area.
• Vibro-pile drilled the largest ever ventilation shaft in Australia -
with a depth of 84 metres and a seven metre diameter.
• Suncoast worked on its tallest ever and its largest ever buildings - a
74-storey commercial structure and a 4.5 million sq. ft. condominium
building, respectively.
• Keller Grundbau developed a prototype 'minicat' - a smaller, lighter and
more versatile version of Keller's proprietary 'vibrocat' equipment - for
use in Europe.
• Hayward Baker carried out its first ever mass dry soil mixing contract
in the US. This technique has particular application in soft, organic clays
and was used by Hayward Baker in a difficult mangrove swamp area.
• Keller Algeria undertook its first dry method, bottom feed stone column
contract for an industrial plant near Algiers.
• Keller established a ground engineering presence in South Korea.
• In Austria, Keller installed 40 metre long, vertical rock anchors in the
ceiling of the largest underground excavation in Europe, for a new
underground power station.
• LCM and Keller Grundbau jointly undertook the first ever stone column
project in Sweden, for a new road by-pass scheme.
We are confident that these and other advances in our equipment, techniques and
capabilities mean that we will continue to find the best solutions to our
customers' needs and maintain our competitive positions around the world.
Financial Review
Preparation of financial statements
The Group's 2005 financial statements have for the first time been prepared in
accordance with International Financial Reporting Standards (IFRS) and the 2004
results and year end balance sheet have been restated accordingly.
This restatement has had no significant impact on the reported 2004 profit
before tax. The 2004 reported earnings per share, however, have decreased by
3.6% as a result of a different deferred tax treatment, although this change in
accounting treatment does not impact on the Group's cash tax payments. Reported
net assets as at 31 December 2004 have been reduced by £10.4m. Full details of
the changes in accounting policies and the restatement of the 2004 numbers are
set out in the Group's IFRS announcement dated 17 June 2005, which is available
on the Group's web-site.
Trading results
Group sales increased by 23% in the year to £731.0m, reflecting very strong
organic growth in many of the Group's main markets, especially the US. For once,
movements in reported sales and profits were not significantly influenced either
by acquisitions or by fluctuations in foreign currency exchange rates. The
average US dollar exchange rate against sterling was US$1.82, compared to
US$1.83 in 2004, while the average euro exchange rate was €1.46, versus €1.47 in
2004. Stripping out the effects of acquisitions and currency movements, the
Group's 2005 sales were still 21% up on 2004.
Operating profit was £53.1m, up from £33.9m in 2004, and the operating margins
increased to 7.3% from 5.7%. This substantial improvement mainly reflects an
excellent performance in the US, where all four of our businesses significantly
outperformed a strong market, and the business benefited from excellent returns
on an unusually high number of large contracts. This contribution from large
contracts is unlikely to be repeated in 2006. Results in Continental Europe &
Overseas, and in Australia, were also up on last year. The UK result, however,
was disappointing, reflecting low volumes at Makers.
The Group's trading performance is discussed in more detail in the Operating
Review.
Interest
The net interest charge changed little from £4.1m in 2004 to £4.2m in 2005, with
the benefit of lower average borrowings being offset by higher interest rates on
US dollar denominated debt. The majority of the Group's borrowings are US dollar
denominated, in order to provide a hedge against the Group's US dollar
denominated net assets, and bear interest at floating rates. The average
interest rate paid on US dollar borrowings increased from 2.9% to 4.3%. Interest
cover is very comfortable at over 15 times EBITDA.
Tax
The Group's effective tax rate was 41%, up from 40% in 2004. The increase is
largely due to higher taxable losses in the UK, after central costs and
interest.
The Group's effective rate is high compared to most UK domiciled businesses,
reflecting the fact that the vast majority of the Group's profits are earned in
relatively high tax jurisdictions, in particular the US where the effective
federal and state tax rates total nearly 40%. The Group's tax charge in both
2004 and 2005 also includes an annual IFRS deferred tax charge of £0.7m, arising
as a result of goodwill amortisation which is deductible for tax purposes but is
not, under IFRS, charged in the Group profit and loss account. This amount is
not payable in cash.
Earnings and dividends
Earnings per share increased by 73% to 41.8p. Following the recommendation of an
increased final dividend of 8.2p per share, the total dividend paid out of 2005
profits will be 12.0p, an increase of 10% on 2004. This is covered 3.5 times by
earnings per share.
Cash flow
In 2005, the Group continued its excellent record of converting profits into
cash. Net cash inflow from operations was £73.4m, representing 113% of the
Group's EBITDA. Year-end working capital, at £50.5m, was £3.0m higher than the
previous year's level. However, if adjusted for acquisitions and adverse
year-end exchange rates, working capital would have been £5.5m or 12% below the
previous year, despite the like-for-like organic sales growth of 21%.
This outstanding performance is evidence of the Group's ongoing strong focus on
cash and working capital management and reflects considerable hard work and
achievement throughout the organisation.
Capital expenditure, principally on plant and equipment, increased by 14% to
£15.8m, reflecting the increase in the scale of the Group's activities. After
proceeds from the sale of fixed assets, net capital expenditure in the year,
representing 1.2 times depreciation, was £13.9m, up from £11.8m in 2004.
Financing
Year-end net debt decreased to £40.9m at the end of 2005 from £58.7m at 31
December 2004. Net debt at the year-end was less than 0.6 times EBITDA. Based on
net assets of £117.2m, gearing was 35%, down from 65% at the beginning of the
year.
The Group's debt and committed facilities mainly comprise a US$100m private
placement, repayable $30m in 2011 and $70m in 2014, and an £80m syndicated
revolving credit facility expiring in 2009. At the year-end, the Group also had
other committed and uncommitted borrowing facilities totalling £31m. We
therefore have more than sufficient available financing to support our strategy
of growth both through organic means and targeted, bolt-on acquisitions.
Pensions
The Group has defined benefit pension arrangements in the UK, Germany and
Austria. The last actuarial valuation of the UK scheme, which has been closed to
new members since 1999, was as at 5 April 2005. At this date, the market value
of the scheme's assets was £17.3m and the valuation concluded that the scheme
was 61% funded on an ongoing basis. The year-end 2005 IAS 19 valuation showed
assets of £19.8m, liabilities of £31.7m and a pre-tax deficit of £11.9m.
In January 2006, the Group announced that the UK defined benefit scheme would
close for future benefit accrual with effect from 31 March 2006 and that the
existing active members would be transferred to a new defined contribution
arrangement. To help reduce the deficit in the scheme, the Group has agreed to
make a one-off cash contribution of £4.0m in April 2006 and to double its
regular contributions to £0.1m a month with effect from January 2006. The level
of monthly contributions will be reviewed at the time of the next actuarial
valuation, currently scheduled for April 2008.
In Germany and Austria, the defined benefit arrangements only apply to certain
employees who joined the Group prior to 1998. There are no segregated funds to
cover these defined benefit obligations and the respective liabilities are
included on the Group balance sheet.
All other pension arrangements in the Group are of a defined contribution
nature.
Consolidated income statement
for the year ended 31 December 2005
-------------------------------- ----- -------- --------
2005 2004
Note £000 £000
-------------------------------- ----- -------- --------
Revenue 3 731,039 595,856
Operating costs (677,960) (561,961)
-------------------------------- ----- -------- --------
Operating profit 3 53,079 33,895
Finance income 1,544 1,393
Finance costs (5,775) (5,540)
-------------------------------- ----- -------- --------
Profit before taxation 48,848 29,748
Taxation 4 (19,888) (11,874)
-------------------------------- ----- -------- --------
Profit for the period 28,960 17,874
-------------------------------- ----- -------- --------
Attributable to:
Equity holders of the parent 27,286 15,743
Minority interests 1,674 2,131
-------------------------------- ----- -------- --------
28,960 17,874
-------------------------------- ----- -------- --------
Basic earnings per share 6 41.8p 24.2p
Diluted earnings per share 6 41.6p 24.1p
-------------------------------- ----- -------- --------
Consolidated statement of recognised income and expense
for the year ended 31 December 2005
-------------------------------- -------- --------
2005 2004
£000 £000
-------------------------------- -------- --------
Exchange differences on translation of foreign operations 8,642 (5,626)
Actuarial losses on defined benefit pension schemes (5,894) (2,668)
Tax on items taken directly to equity 1,777 856
-------------------------------- -------- --------
Net income/(expense) recognised directly in equity 4,525 (7,438)
Profit for the period 28,960 17,874
-------------------------------- -------- --------
Total recognised income and expense for the period 33,485 10,436
-------------------------------- -------- --------
Attributable to:
Equity holders of the parent 32,091 8,255
Minority interests 1,394 2,181
-------------------------------- -------- --------
33,485 10,436
-------------------------------- -------- --------
Consolidated balance sheet
As at 31 December 2005
-------------------------------- ----- -------- --------
2005 2004
Note £000 £000
-------------------------------- ----- -------- --------
Assets
Non-current assets
Intangible assets 55,693 51,761
Property, plant and equipment 90,375 80,937
Deferred tax assets 5,706 3,146
-------------------------------- ----- -------- --------
151,774 135,844
-------------------------------- ----- -------- --------
Current assets
Inventories 24,437 24,319
Trade and other receivables 194,574 143,926
Cash and cash equivalents 25,910 16,416
-------------------------------- ----- -------- --------
244,921 184,661
-------------------------------- ----- -------- --------
Total assets 396,695 320,505
-------------------------------- ----- -------- --------
Liabilities
Current liabilities
Loans and borrowings (7,183) (9,787)
Current tax liabilities (11,046) (5,538)
Trade and other payables (168,499) (120,701)
-------------------------------- ----- -------- --------
(186,728) (136,026)
-------------------------------- ----- -------- --------
Non-current liabilities
Loans and borrowings (59,578) (65,286)
Employee benefits (21,158) (17,211)
Deferred tax liabilities (5,524) (8,138)
Other liabilities (6,520) (2,875)
-------------------------------- ----- -------- --------
(92,780) (93,510)
-------------------------------- ----- -------- --------
Total liabilities (279,508) (229,536)
-------------------------------- ----- -------- --------
Net Assets 117,187 90,969
-------------------------------- ----- -------- --------
Equity
Share capital 6,552 6,536
Share premium account 36,370 36,027
Capital redemption reserve 7,629 7,629
Translation reserve 3,259 (5,666)
Retained earnings 57,248 40,832
-------------------------------- ----- -------- --------
Equity attributable to equity holders of the parent 7 111,058 85,358
Minority interests 6,129 5,611
-------------------------------- ----- -------- --------
Total equity 117,187 90,969
-------------------------------- ----- -------- --------
Consolidated cash flow statement
for the year ended 31 December 2005
-------------------------------- -------- --------
2005 2004
£000 £000
-------------------------------- -------- --------
Cash flows from operating activities
Operating profit 53,079 33,895
Depreciation charge 11,775 10,992
Amortisation of intangibles 83 87
Profit on sale of property, plant and equipment (120) (727)
Other non-cash movements 539 117
Foreign exchange losses 144 501
-------------------------------- -------- --------
Operating cash flows before movements in working capital 65,500 44,865
Movement in long-term provisions (2,202) 206
Decrease/(increase) in stocks 1,692 (8,559)
Increase in debtors (32,416) (11,483)
Increase in creditors 40,874 8,548
-------------------------------- -------- --------
Cash generated from operations 73,448 33,577
Interest paid (5,058) (4,368)
Income tax paid (18,769) (7,339)
-------------------------------- -------- --------
Net cash inflow from operating activities 49,621 21,870
-------------------------------- -------- --------
Cash flows from investing activities
Proceeds from sale of property, plant & equipment 1,907 2,063
Interest received 1,239 339
Acquisition of subsidiaries, net of cash acquired (7,807) (3,422)
Acquisition of property, plant & equipment (15,750) (13,887)
Acquisition of intangible fixed assets - (15)
-------------------------------- -------- --------
Net cash outflow from investing activities (20,411) (14,922)
-------------------------------- -------- --------
Cash flows from financing activities
Proceeds from the issue of share capital 359 15
New borrowings 1,045 55,982
Repayment of borrowings (10,998) (52,498)
Payment of finance lease liabilities (138) (373)
Dividends paid (8,133) (9,345)
-------------------------------- -------- --------
Net cash outflow from financing activities (17,865) (6,219)
-------------------------------- -------- --------
Net increase in cash and cash equivalents 11,345 729
Cash and cash equivalents at beginning of period 11,109 10,812
Effect of exchange rate fluctuations 853 (432)
-------------------------------- -------- --------
Cash and cash equivalents at end of period 23,307 11,109
-------------------------------- -------- --------
-------------------------------- -------- --------
2005 2004
£000 £000
-------------------------------- -------- --------
Analysis of closing net debt
Cash in hand 25,906 15,907
Short term deposits 4 509
Bank overdrafts (2,603) (5,307)
-------------------------------- -------- --------
Net cash 23,307 11,109
Bank and other loans (58,978) (65,114)
Loan notes due within one year (2,804) (3,036)
Finance leases (2,376) (1,616)
-------------------------------- -------- --------
Closing net debt (40,851) (58,657)
-------------------------------- -------- --------
1. Basis of preparation
The Group's 2005 results have for the first time been prepared in accordance
with International Financial Reporting Standards ('IFRS'). The 2004 comparative
numbers have been restated to comply with IFRS.
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2005 or 2004 but is derived
from the 2005 accounts. Statutory accounts for 2004, which were prepared under
UK GAAP, have been delivered to the registrar of companies, and those for 2005,
prepared under IFRS as adopted by the EU, will be delivered in due course. The
auditors have reported on those accounts; their reports were (i) unqualified,
(ii) did not include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports and (iii) did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
2. Foreign currencies
The exchange rates used in respect of principal currencies are:
2005 2004
------------------------------------------- ------- -------
US dollar: average for year 1.82 1.83
US dollar: year end 1.72 1.93
Australian dollar: average for year 2.39 2.49
Australian dollar: year end 2.36 2.47
Euro: average for year 1.46 1.47
Euro: year end 1.45 1.41
------------------------------------------- ------- -------
3. Segmental analysis
Turnover, operating profit and capital employed may be analysed as follows:
----------------- ------- ------- ------- ------- ------- -------
2005 2005 2005 2004 2004 2004
Revenue Operating Capital Revenue Operating Capital
profit employed profit employed
£000 £000 £000 £000 £000 £000
----------------- ------- ------- ------- ------- ------- -------
United Kingdom 89,221 (332) (7,080) 108,263 1,901 (1,006)
North America 399,943 42,125 116,913 280,212 20,981 105,530
Continental
Europe and
Overseas 204,736 12,742 51,689 175,024 11,867 48,692
Australia 37,139 1,764 7,380 32,357 1,671 6,940
----------------- ------- ------- ------- ------- ------- -------
731,039 56,299 168,902 595,856 36,420 160,156
Central items and
eliminations - (3,220) (51,715) - (2,525) (69,187)
----------------- ------- ------- ------- ------- ------- -------
731,039 53,079 117,187 595,856 33,895 90,969
----------------- ------- ------- ------- ------- ------- -------
In the opinion of the directors the Group operates only one class of business.
4.
Taxation
The taxation charge comprises:
------------------------------------------- ------- -------
2005 2004
£000 £000
------------------------------------------- ------- -------
Current tax expense
Current year 23,787 10,480
Prior years 119 (850)
------------------------------------------- ------- -------
Total current tax 23,906 9,630
------------------------------------------- ------- -------
Deferred tax expense
Current year (3,528) 1,465
Prior years (490) 779
------------------------------------------- ------- -------
Total deferred tax (4,018) 2,244
------------------------------------------- ------- -------
19,888 11,874
------------------------------------------- ------- -------
5.
Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
------------------------------------------- ------- -------
2005 2004
£000 £000
------------------------------------------- ------- -------
Amounts recognised as distributions to equity holders
in the period:
Interim dividend for the year ended 31 December 2005
of 3.8p (2004: 3.6p) per share 2,486 2,350
Final dividend for the year ended 31 December 2004
of 7.3p (2003: 6.95p) per share 4,771 4,522
------------------------------------------- ------- -------
7,257 6,872
------------------------------------------- ------- -------
The Directors have proposed a final dividend for the year ended 31 December 2005
of £5.4million, representing 8.2p (2004:7.3p) per share. The proposed dividend
is subject to approval by shareholders at the Annual General Meeting on 22 June
2006 and has not been included as a liability in these financial statements.
6. Earnings per share
Basic and diluted earnings per share are calculated as follows:
---------------------------- -------- -------- -------- --------
2005 2005 2004 2004
Basic Diluted Basic Diluted
£000 £000 £000 £000
---------------------------- -------- -------- -------- --------
Earnings (after tax and
minority interests) being
net profits attributable to
equity holders of the parent 27,286 27,286 15,743 15,743
---------------------------- -------- -------- -------- --------
No. of No. of No. of No. of
shares shares shares shares
000s 000s 000s 000s
---------------------------- -------- -------- -------- --------
Weighted average of
ordinary shares in
issue during the year 65,328 65,328 65,129 65,129
Add: Weighted average of
shares under option during
year - 1,471 - 1,678
Add: Weighted average of
own shares held - 74 - 83
Less: no. of shares
assumed issued at fair
value during year - (1,339) - (1,509)
---------------------------- -------- -------- -------- --------
Adjusted weighted
average ordinary
shares in issue 65,328 65,534 65,129 65,381
---------------------------- -------- -------- -------- --------
Pence Pence Pence Pence
---------------------------- -------- -------- -------- --------
Earnings per share 41.8p 41.6p 24.2p 24.1p
---------------------------- -------- -------- -------- --------
7. Reconciliation of movements in equity attributable to equity holders of the
parent
---------------------------------- -------- --------
2005 2004
£000 £000
---------------------------------- -------- --------
Equity at start of period 85,358 83,829
Total recognised income and expense 32,091 8,255
Dividends to shareholders (7,257) (6,872)
Shares issued* 359 29
Share based payments 507 144
Share capital to be issued - (27)
---------------------------------- -------- --------
Equity at end of period 111,058 85,358
---------------------------------- -------- --------
* Includes share premium.
--------------------------
(1) Data published by the US Census Bureau of the Department of Commerce on 1
March 2006
(2) Monthly housing starts published by the National Association of Home
Builders in February 2006.
This information is provided by RNS
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