Interim Results
9 December 2008
SCOTT WILSON GROUP PLC
Interim Results for the 26 week period ended 26 October 2008
Another period of strong organic growth and confident outlook
Highlights
|
|
2008/2009
|
2007/2008
|
(%)
|
|
Revenue including share of joint ventures
|
£180.4m
|
£153.1m
|
+17.8
|
|
Group revenue
|
£173.2m
|
£146.9m
|
+18.0
|
|
Operating profit
|
£10.1m
|
£9.6m
|
+5.8
|
|
Adjusted* operating profit
|
£12.0m
|
£11.0m
|
+10.0
|
|
Adjusted* operating margin
|
6.7%
|
7.2%
|
|
|
Diluted earnings per share
|
10.1p
|
9.7p
|
+4.1
|
|
Interim dividend
|
1.33p
|
1.20p
|
+10.8
|
-
Another strong performance with revenues and profits significantly up.
-
Another consecutive period of organic revenue growth over 10 per cent as Group continues to deliver on strategic targets.
-
Bolt-on acquisition strategy has enhanced expertise in, and exposure to, the metro and strategic leisure sectors.
-
Number of good project wins; strong order book; revenue gap closing rapidly.
-
Interim dividend increased 10.8 per cent to 1.33p underlining the Board's confidence in the Group's future prospects.
-
Positive outlook maintained.
* The Directors believe that the presentation of adjusted operating profit, adjusted operating margin and adjusted earnings per share assists with the understanding of the performance of the Group.
* Adjusted operating profit is operating profit adjusted for the impact of amortisation of business combination intangibles, changes in the fair value of exchange rate derivative financial instruments, retention bonuses arising from acquisitions and the Group's share of taxation in relation to joint ventures.
* Adjusted operating margin is adjusted operating profit expressed as a percentage of revenue including share of joint ventures.
* Adjusted profit before taxation is profit before taxation adjusted for the impact of amortisation of business combination intangibles, changes in the fair value of derivative financial instruments, retention bonuses arising from acquisitions and the Group's share of taxation in relation to joint ventures.
* Adjusted earnings per share is earnings per share adjusted for the impact of amortisation of business combination intangibles, changes in the fair value of derivative financial instruments and retention bonuses arising from acquisitions.
Reconciliations of these measures to operating profit, operating margin and earnings per share are set out in notes 7 and 13.
Geoff French, Chairman of Scott Wilson commented:
"This is another strong performance which highlights the underlying resilience of our core business. Demand for Scott Wilson's services remains at extremely high levels due to a large proportion of our work on infrastructure development, enhancement and replacement being underpinned by long term budgetary planning frameworks. We continue to benefit from the diversity of our service offer combined with the flexibility and competence of our workforce around the world.
The business continues to meet the robust performance targets that were set a year ago and, in addition to strong organic growth, strategic acquisitions have enhanced our exposure to high margin areas. The Board's decision to raise the interim dividend demonstrates the confidence that we have in the Group's prospects going forward and Scott Wilson's ability to deliver sustained growth."
Contact Details
|
Scott Wilson Group plc Hugh Blackwood, Chief Executive Sean Cummins, Finance Director Lak Siriwardene, Head of Communications |
07730 928067 07825 797962 07824 311762 |
|
Financial Dynamics Charlie Armitstead/ Charlotte Whitley |
020 7269 7291 |
Notes to editors:
Please note that the investor relation section of www.scottwilson.com has recently been relaunched.
Chairman's Statement
I am pleased to report that, as demonstrated by these half year results, Scott Wilson continues to make strong progress despite the current economic uncertainty. Once again we have achieved organic revenue growth of over 10 per cent and, in line with our strategic plan, our activities in the international market are now making a significant contribution to Group profits. A large proportion of our work on infrastructure development, enhancement and replacement is underpinned by long term budgetary planning frameworks.
Results
The results for the first half of the year are considerably ahead of the same period last year. Revenues, including our share of joint ventures, increased by 17.8 per cent to £180.4m (2008: £153.1m) of which 1.4 per cent arose from recent acquisitions and 16.4 per cent was continuing organic growth. Revenues, excluding joint ventures, increased from £146.9m to £173.2m. Adjusted* operating profit improved to £12.0m, an increase of 10.0 per cent compared to the corresponding period last year. Adjusted* operating margin was 6.7 per cent (2008: 7.2 per cent), held back by timing issues relating to the workflow on major contracts within UK Railways. We expect this to show some recovery in the second half of the current financial year.
Adjusted* basic earnings per share were 10.3p, their failure to match growth in adjusted* operating profit being a direct result of the £1.1m reduction in the net notional interest on the Group's pension scheme.
Net borrowings increased in the period to £22.1m, primarily as a result of higher levels of working capital associated with the organic sales growth, combined with the normal seasonal increase. As was the case in the last financial year, we anticipate a significant reduction in working capital utlisation in the second half. The Group has extended its committed bank facilities to £70m until April 2011.
Pensions
At 26 October 2008, the aggregate deficit on the Group's defined benefit schemes was £11.8m compared with the position at the last balance sheet date of a deficit of £19.9m.
Acquisitions
We have continued to progress our acquisition strategy. Those completed in the year to date, Strategic Leisure Limited, Terence Lee Partnership and Benaim Enterprise (Holdings) Limited, have significantly increased our capability in the metro and leisure sectors.
Share Buyback
At the end of October, we announced the purchase of 1,000,000 of the Company's ordinary shares at a price of 127 pence per share, using the authority given by our shareholders at our AGM held in September 2008. The purchased shares are being held as treasury shares for the purpose of satisfying option grants and share awards made under the Company's employee share schemes.
Dividend
In line with our progressive dividend policy and demonstrating confidence in the Group's future prospects, the Board has declared an interim dividend of 1.33p per share (2008: 1.20p) to be paid on 20 February 2009 to Ordinary shareholders on the register on 23 January 2009.
Strategic Targets
The Board met recently to review the Group's five year strategic targets and considered the impacts that the current economic climate and market conditions might have on their delivery. The Board agreed that the Group should maintain the principles inherent in its five year strategic plan; however, next year's detailed Business Plan should reflect the current economic uncertainty and should place emphasis in the short term on business improvement, implementation of operational controls and priority on cash generation. Further emphasis will be placed on developing our international presence whilst maintaining strict control of our cost base and working capital utilisation. However, given the strength of our balance sheet and the likelihood that a sustained period of economic stress may result in attractive growth opportunities, we will continue to identify and assess infill acquisitions, in line with our strict financial and commercial criteria.
Board of Directors
On 1 May 2008 Hugh Blackwood became the sole Chief Executive and on 1 November 2008 I moved from Executive Chairman to Non Executive Chairman consistent with the Group's commitment to plan for senior executive succession and Board structure over the long term.
We are also pleased to announce that Christopher Kemball, Vice Chairman at Hawkpoint Partners, will become a Non Executive Director on 1 January 2009 replacing Pelham Allen who is stepping down after more than six years in the role. The Board would like to record its thanks to Pelham for all that he has done in his time with Scott Wilson.
Employees
At the heart of our business are our staff. With over 6,600 employees, with wide ranging and transportable skills, qualities and expertise, we are able to benefit from the flexibility this offers by moving staff to areas of continuing strong demand in order to improve our positioning, delivery, effectiveness and profitability. This is a key factor in our continuing development as a global integrated enterprise.
The introduction of our talent management programme and our continuing recruitment and training of a significant number of graduates each year emphasises the importance we place on the development of our staff and the Group's strategy to attract, retain and develop key members of staff.
Our newly defined vision, mission and values are being embedded throughout the Group and the recent publication of The Way We Do Business allows for all our staff worldwide to work from one common understanding of the way we, as a Group, behave.
On behalf of the Board I am delighted to record our thanks to all members of staff for their significant contribution to the delivery of these record results.
Awards
In 2008 the talent and dedication of Scott Wilson's staff has been recognised with an assortment of award wins. Most recently, at the 2008/09 British Expertise International Awards Scott Wilson won consultancy project (<£2m) of the year for the Hai He River Landscape Design project in Tianjin, China and young consultant of the year presented to Sustainability Consultant Mike Pigeon. Emily Spearman won the Karen Burt Award which is presented annually to a newly chartered female engineer who has demonstrated a commitment to the promotion of her profession. The Orchard Building at Stranmillis University College in Belfast was named sustainability winner at the prestigous Royal Institute of Chartered Surveyors 2008 Awards with a second Scott Wilson project, the icon business centre in Leeds, commended in the same category. Further wins have been celebrated at the 2008 Landscape Institute Awards and the 2008 Concrete Society Awards.
Outlook
The Group continues to make strong progress despite the current economic uncertainty, tangibly demonstrated by our order book which remains close to record levels.
We continue to believe that the skills, qualities and expertise of our staff enables us to re-deploy them to areas where there is continuing strong demand for our services. This confidence is endorsed by our international regional businesses which continue to make an increasing contribution to our revenue and profit.
Our continuing organic growth together with the additional skills provided by our selective acquisitions means that the Board remains confident of delivering results for the full year in line with expectations.
Geoff French
9 December 2008
Business Review
During the period, the market has become more challenging as a result of the global financial situation but Scott Wilson has been able to rely on its diversity across geographic sectors and services which, combined with the flexibility of our highly skilled employee resource, have enabled the Group to successfully address the changing commercial circumstances.
Over the first half of 2008-2009, therefore, the organisation has continued to perform in line with its five year financial goals of 10 per cent annual revenue growth and improving operating profit and has delivered results in line with market expectations.
A key feature of the period has been the rapid expansion in our international regional businesses, off-setting some softening of selected markets in the UK. Over the period internationally sourced work has amounted to 31 per cent of revenue and has contributed materially to our satisfactory progress.
Implementation of our new internal management and reporting structure is proceeding smoothly and in the second half we will shadow report in the new structure which will go live from May 2009.
Managing Risks
Our strategy for achieving consistent and sustainable growth in revenue, profit and margins in a changing economic climate is to manage the balance between the markets in which we operate. The Group mitigation strategy includes spreading market risks to achieve an acceptable balance of revenue earned from market sector, geography, public/private client and contract type, to invest in market sectors where growth is more assured, to ensure our commitment to excellence in quality of our services and client care. In addition, we use hedging instruments to reduce our currency and interest rate risks. These factors remain fundamental to mitigating economic risks.
The key financial and non-financial risks faced by the Group are disclosed in the Group's Annual Report and Accounts for the 52 week period ended 27 April 2008 within the Business Review (pages 20 and 21) and in Note 3 of the Consolidated Financial Statements available at www.scottwilson.com. The Board considers that these remain a current reflection of the risks and uncertainties facing the business.
Outlook
Looking forward we remain confident that we can achieve our long term plans. However, over the shorter term we are responding to the challenges and opportunities being created by the current global financial situation. Looking to the second half of the year, the majority of our order book is already secure and we foresee a continuing revenue growth in our international regional businesses offsetting any continuing softening in investment in our core UK market. We are also implementing sensible defensive measures across the business with a view to increased efficiency and to preserve cash.
Recent UK Government budget statements reinforce the position of organisations like Scott Wilson to help mitigate the effects of recession and we continue to advise our many public sector clients on potential acceleration of capital works projects, the A46 upgrade being a good example.
From May 2009 we will manage the business globally within five sectors namely; Buildings & Infrastructure, Roads, Environment & Natural Resources, Rail and Strategic Consultancy. When applied across our global footprint, a wide range of potential growth paths becomes immediately evident. This will provide us with the flexibility and resilience necessary to plot a successful course through global financial turbulence and to continue to make headway towards our long term aspiration to become an Integrated Global Enterprise.
Hugh Blackwood
9 December 2008
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34;
(b) the interim management report includes a fair review of the information required by
DTF4.2.7R; and
(c) the interim management report includes a fair review of the information required by
DTF 4.2.8R;
By order of the Board
H Blackwood S V Cummins
Group Chief Executive Group Finance Director
9 December 2008
Condensed consolidated income statement
|
|
|
26 weeks ended 26 October 2008 unaudited |
|
26 weeks ended 28 October 2007 unaudited |
|
52 weeks ended 27 April 2008 audited |
||||||
|
|
|
Adjusted* |
Note(i) |
Total |
|
Adjusted* |
Note(i) |
Total |
|
Adjusted* |
Note(i) Restated# |
Total Restated# |
|
|
Notes |
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue including share of joint venture revenues |
|
180,355 |
- |
180,355 |
|
153,123 |
- |
153,123 |
|
324,182 |
- |
324,182 |
|
Less: share of joint venture revenues |
|
(7,125) |
- |
(7,125) |
|
(6,264) |
- |
(6,264) |
|
(15,485) |
- |
(15,485) |
|
Group revenue |
|
173,230 |
- |
173,230 |
|
146,859 |
- |
146,859 |
|
308,697 |
- |
308,697 |
|
Cost of sales |
|
(110,551) |
(22) |
(110,573) |
|
(85,709) |
- |
(85,709) |
|
(194,653) |
(385) |
(195,038) |
|
Gross profit |
|
62,679 |
(22) |
62,657 |
|
61,150 |
- |
61,150 |
|
114,044 |
(385) |
113,659 |
|
Administrative expenses |
|
(51,748) |
(1,582) |
(53,330) |
|
(50,706) |
(1,241) |
(51,947) |
|
(93,570) |
(3,032) |
(96,602) |
|
Share of result of joint ventures |
|
1,111 |
(326) |
785 |
|
506 |
(152) |
354 |
|
2,116 |
(578) |
1,538 |
|
Operating profit |
|
12,042 |
(1,930) |
10,112 |
|
10,950 |
(1,393) |
9,557 |
|
22,590 |
(3,995) |
18,595 |
|
Finance income |
5 |
7,300 |
- |
7,300 |
|
7,308 |
- |
7,308 |
|
14,642 |
- |
14,642 |
|
Finance costs |
6 |
(7,956) |
(261) |
(8,217) |
|
(6,537) |
(83) |
(6,620) |
|
(13,380) |
(109) |
(13,489) |
|
Profit before taxation |
|
11,386 |
(2,191) |
9,195 |
|
11,721 |
(1,476) |
10,245 |
|
23,852 |
(4,104) |
19,748 |
|
Taxation |
|
(3,595) |
848 |
(2,747) |
|
(4,078) |
549 |
(3,529) |
|
(7,982) |
1,636 |
(6,346) |
|
Profit for the period |
|
7,791 |
(1,343) |
6,448 |
|
7,643 |
(927) |
6,716 |
|
15,870 |
(2,468) |
13,402 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the Company |
|
7,774 |
(1,343) |
6,431 |
|
7,610 |
(927) |
6,683 |
|
15,766 |
(2,468) |
13,298 |
|
Minority interests |
|
17 |
- |
17 |
|
33 |
- |
33 |
|
104 |
- |
104 |
|
|
|
7,791 |
(1,343) |
6,448 |
|
7,643 |
(927) |
6,716 |
|
15,870 |
(2,468) |
13,402 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
7 |
10.28p |
(1.77)p |
8.51p |
|
10.21p |
(1.25)p |
8.96p |
|
21.03p |
(3.29)p |
17.74p |
|
Diluted |
7 |
10.08p |
(1.74)p |
8.34p |
|
9.72p |
(1.18)p |
8.54p |
|
20.26p |
(3.17)p |
17.09p |
|
Dividends declared: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount per share |
|
|
|
2.4p |
|
|
|
2.3p |
|
|
|
3.5p |
|
Total amount absorbed (£'000) |
|
|
|
1,828 |
|
|
|
1,727 |
|
|
|
2,638 |
There were no discontinued operations in any period.
* Before: items described in note (i) below.
Note (i): Amortisation of business combination intangibles, retention bonuses arising from acquisitions, changes in the fair value of derivative financial instruments and the Group's share of taxation in relation to joint ventures, as detailed further in note 3.
# Restated for the presentation of changes in the fair value of exchange rate derivative financial instruments, as detailed further in note 4.
Condensed consolidated statement of recognised income and expense
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Currency translation differences on translation of foreign operations |
554 |
532 |
1,155 |
|
Effect of change in UK tax rate |
- |
- |
(175) |
|
Actuarial gains and losses on defined benefit pension schemes |
6,662 |
9,043 |
(13,654) |
|
Tax on items recognised directly in equity |
(2,020) |
(2,873) |
3,499 |
|
Deferred tax relating to unexercised share options |
(668) |
281 |
(243) |
|
Income/(expense) recognised directly in equity |
4,528 |
6,983 |
(9,418) |
|
Profit for the period |
6,448 |
6,716 |
13,402 |
|
Total recognised income/(expense) for the period |
10,976 |
13,699 |
3,984 |
|
Attributable to: |
|
|
|
|
Equity holders of the Company |
10,959 |
13,666 |
3,880 |
|
Minority interests |
17 |
33 |
104 |
|
|
10,976 |
13,699 |
3,984 |
Condensed consolidated balance sheet
|
|
|
26 October |
28 October |
27 April |
|
|
|
|
2008 |
2007 |
2008 |
|
|
|
|
unaudited |
unaudited |
audited |
|
|
|
Notes |
£'000 |
£'000 |
£'000 |
|
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Tangible fixed assets |
|
20,106 |
18,035 |
20,157 |
|
|
Goodwill |
|
42,074 |
37,328 |
37,706 |
|
|
Other intangible assets |
|
16,131 |
15,869 |
14,786 |
|
|
Investments in joint ventures |
|
1,766 |
1,051 |
1,113 |
|
|
Deferred tax assets |
|
2,996 |
1,257 |
6,932 |
|
|
|
|
83,073 |
73,540 |
80,694 |
|
|
Current assets |
|
|
|
|
|
|
Trade and other receivables |
|
134,554 |
119,378 |
115,858 |
|
|
Derivative financial instruments |
|
- |
76 |
- |
|
|
Cash and cash equivalents |
|
14,044 |
14,765 |
19,233 |
|
|
|
|
148,598 |
134,219 |
135,091 |
|
|
Total assets |
|
231,671 |
207,759 |
215,785 |
|
|
Equity and liabilities |
|
|
|
|
|
|
Equity attributable to equity holders of the Company |
|
|
|
|
|
|
Issued capital |
8 |
99,115 |
96,206 |
98,645 |
|
|
Other reserves |
8 |
(5,047) |
(5,949) |
(5,310) |
|
|
Retained earnings |
8 |
(6,566) |
(3,473) |
(14,423) |
|
|
|
|
87,502 |
86,784 |
78,912 |
|
|
Minority interests |
|
399 |
141 |
237 |
|
|
Total equity |
|
87,901 |
86,925 |
79,149 |
|
|
Non-current liabilities |
|
|
|
|
|
|
Borrowings |
|
2,363 |
3,008 |
3,253 |
|
|
Provisions |
|
1,779 |
2,932 |
982 |
|
|
Retirement benefit obligations |
|
11,840 |
205 |
19,940 |
|
|
|
|
15,982 |
6,145 |
24,175 |
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
82,895 |
74,936 |
79,408 |
|
|
Derivative financial instruments |
|
2,092 |
186 |
633 |
|
|
Current tax liabilities |
|
2,896 |
1,259 |
2,414 |
|
|
Borrowings |
|
33,797 |
30,096 |
22,995 |
|
|
Provisions |
|
6,108 |
8,212 |
7,011 |
|
|
|
|
127,788 |
114,689 |
112,461 |
|
|
Total liabilities |
|
143,770 |
120,834 |
136,636 |
|
|
Total equity and liabilities |
|
231,671 |
207,759 |
215,785 |
|
Condensed consolidated cash flow statement
|
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
|
ended |
ended |
ended |
|
|
|
26 October |
28 October |
27 April |
|
|
|
2008 |
2007 |
2008 |
|
|
|
unaudited |
unaudited |
audited |
|
|
Notes |
£'000 |
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated from operations |
9 |
470 |
6,681 |
30,521 |
|
Defined benefit pension plan contributions |
|
(2,876) |
(3,923) |
(7,607) |
|
Dividends received from joint ventures |
|
800 |
- |
2,736 |
|
Tax (paid)/received |
|
(2,358) |
52 |
(1,738) |
|
Net cash flows from operating activities |
|
(3,964) |
2,810 |
23,912 |
|
Cash flows from investing activities |
|
|
|
|
|
Interest received |
|
107 |
101 |
612 |
|
Purchase of tangible fixed assets |
|
(2,224) |
(3,678) |
(8,349) |
|
Purchase of intangible assets |
|
(1,219) |
(689) |
(1,628) |
|
Proceeds from sale of tangible fixed assets |
|
50 |
1,780 |
1,909 |
|
Acquisition of subsidiaries, net of cash and cash equivalents acquired |
|
(3,454) |
(1,484) |
(4,788) |
|
Net cash flows from investing activities |
|
(6,740) |
(3,970) |
(12,244) |
|
Cash flows from financing activities |
|
|
|
|
|
Interest and finance charges paid |
|
(1,127) |
(1,091) |
(2,210) |
|
Proceeds from issue of Ordinary Shares, net of issue costs of £nil |
|
40 |
25 |
85 |
|
Receipt of new loans and finance lease advances |
|
14,998 |
6,333 |
7,736 |
|
Repayment of loans and finance leases |
|
(4,139) |
(1,725) |
(9,894) |
|
Dividends paid to equity shareholders |
|
(1,828) |
(1,727) |
(2,638) |
|
Net cash flows from financing activities |
|
7,944 |
1,815 |
(6,921) |
|
Net (decrease)/increase in cash and cash equivalents |
|
(2,760) |
655 |
4,747 |
|
Net cash and cash equivalents at start of period |
|
18,279 |
12,815 |
12,815 |
|
Foreign exchange |
|
(1,482) |
262 |
717 |
|
Net cash and cash equivalents at end of period |
|
14,037 |
13,732 |
18,279 |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
14,044 |
14,765 |
19,233 |
|
Bank overdrafts |
|
(7) |
(1,033) |
(954) |
|
Net cash and cash equivalents |
|
14,037 |
13,732 |
18,279 |
Notes to the condensed interim consolidated financial statements
1. General information
The condensed interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. The basis of preparation, methods of computation and accounting policies used in the condensed interim financial statements are consistent with International Financial Reporting Standards (IFRS) and those followed in the preparation of the Group's financial statements for the 52 weeks ended 27 April 2008.
The financial information in the Interim Report relating to the 52 weeks ended 27 April 2008 does not constitute statutory accounts within the meaning of s435 of the Companies Act 2006. The statutory accounts of the Group for the 52 week period ended 27 April 2008 have been delivered to the Registrar of Companies. The auditors' opinion on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under s498(2) or (3) of the Companies Act 2006.
2. Segment analysis
The trading activities and performance of the Group continue to be managed through five geographical Divisions: UK Central, UK South, Scotland & Ireland, UK Railways and International.
Segment revenue and results for the 26 weeks ended 26 October 2008 (unaudited):
|
|
UK |
UK |
Scotland |
UK |
|
|
|
|
Central |
South |
& Ireland |
Railways |
International |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue including share |
|
|
|
|
|
|
|
of joint venture revenues |
35,703 |
60,055 |
17,845 |
21,370 |
45,382 |
180,355 |
|
Group revenue |
30,347 |
60,055 |
17,845 |
21,370 |
43,613 |
173,230 |
|
Adjusted* operating profit |
3,056 |
4,895 |
1,583 |
110 |
2,398 |
12,042 |
|
Operating profit - segment result |
2,626 |
4,226 |
1,084 |
16 |
2,160 |
10,112 |
Segment revenue and results for the 26 weeks ended 28 October 2007 (restated, unaudited):
|
|
UK |
UK |
Scotland |
UK |
|
|
|
|
Central |
South |
& Ireland |
Railways |
International |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue including share |
|
|
|
|
|
|
|
of joint venture revenues |
31,657 |
51,696 |
14,465 |
23,738 |
31,567 |
153,123 |
|
Group revenue |
26,561 |
51,696 |
14,465 |
23,738 |
30,399 |
146,859 |
|
Adjusted* operating profit |
2,561 |
4,392 |
1,189 |
1,225 |
1,583 |
10,950 |
|
Operating profit - segment result |
2,317 |
3,820 |
768 |
1,221 |
1,431 |
9,557 |
Included in the above is a net cost of £384,000 relating to a dilapidations charge of £1,434,000 and a profit on sale of property of £1,050,000.
The segment revenue and results for the 26 weeks ended 28 October 2007 have been restated to reflect the transfer of certain operations between segments. The transfers were made in order to align better these operations with the Group's geographical divisions. The restatements are as follows:
Revenue of £11,424,000 and operating profit of £830,000 have been transferred from UK Central to UK South
Revenue of £461,000 and operating profit of £82,000 have been transferred from International to UK South
Segment revenue and results for the 52 weeks ended 27 April 2008 (restated, unaudited):
|
|
UK |
UK |
Scotland |
UK |
|
|
|
|
Central |
South |
& Ireland |
Railways |
International |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue including share |
|
|
|
|
|
|
|
of joint venture revenues |
69,043 |
109,610 |
31,549 |
44,693 |
69,287 |
324,182 |
|
Group revenue |
56,495 |
109,608 |
31,549 |
44,693 |
66,352 |
308,697 |
|
Adjusted* operating profit |
5,559 |
8,705 |
2,513 |
2,264 |
3,549 |
22,590 |
|
Operating profit - segment result |
4,526 |
7,166 |
1,479 |
2,189 |
3,235 |
18,595 |
The segment revenue and results for the 52 weeks ended 27 April 2008 have been restated to reflect the transfer of certain operations between segments. The transfers were made in order to better align these operations with the Group's geographical divisions. The restatements are as follows:
Revenue of £23,601,000 and operating profit of £1,824,000 have been transferred from UK Central to UK South
Revenue of £908,000 and operating profit of £72,000 have been transferred from International to UK South.
Losses of £524,000 for the 52 weeks ended 27 April 2008 relating to exchange rate derivative financial instruments previously included within other gains and losses are now included within administration costs. There is no impact on the adjusted* operating profit.
The allocation by Division is as follows:
£'000
UK Central 95
UK South 187
Scotland & Ireland 54
UK Railways 75
International 113
3. Amortisation of business combination intangibles, retention bonuses arising from acquisitions, changes in the fair value of derivative financial instruments and the Group's share of taxation in relation to joint ventures
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
|
ended |
ended |
ended |
|
|
|
26 October |
28 October |
27 April |
|
|
|
2008 |
2007 |
2008 |
|
|
|
unaudited |
unaudited |
audited |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Amortisation of intangible assets acquired in business combinations |
(1,350) |
(1,214) |
(2,455) |
|
|
Retention bonuses arising from acquisitions |
(25) |
- |
(438) |
|
|
Changes in the fair value of exchange rate derivative financial instruments |
(229) |
(27) |
(524) |
|
|
Changes in the fair value of interest rate derivative financial instruments |
(261) |
(83) |
(109) |
|
|
Group's share of taxation relating to joint ventures |
(326) |
(152) |
(578) |
|
|
|
(2,191) |
(1,476) |
(4,104) |
|
Changes in the fair value of derivative financial instruments
The Group has entered into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange risk, which do not qualify for hedge accounting under IAS 39. When the commercial transaction to which they relate is reflected in the Income Statement, the financial impact of the associated instruments is reflected in the adjusted results. The timing impact of the requirement to mark-to-market derivatives relating to future transactions, not yet reflected in the Income Statement, is captioned as "Changes in the fair value of derivative financial instruments" and not reflected in the adjusted results. Amounts relating to the revaluation of exchange rate derivative financial instruments are included in administrative expenses, amounts relating to the revaluation of interest rate derivative financial instruments are included in finance income or costs.
Retention bonuses arising from acquisitions
The amounts recorded reflect retention bonuses arising from acquisitions, which management considers an integral cost of making the acquisitions.
Group's share of taxation relating to joint ventures
The Group's share of tax in relation to joint ventures has been included as an adjustment in order to present operating profit before tax (which would have been arrived at under UK GAAP equity accounting), a measure which management uses for internal performance analysis.
4. Presentation of changes in the fair value of exchange rate derivative financial instruments
In the current period the Group has changed its presentation of the amount relating to changes in the fair value of exchange rate derivative financial instruments so that these are now reflected as administrative expenses rather than as other gains and losses. The charge for the current period is £1,198,000. Comparative figures have been restated accordingly, the effect of which is to increase administrative expenses and reduce operating profit by £524,000 in the 52 weeks ended 27 April 2008. No restatement of the results for the 26 weeks ended 28 October 2007 is required.
5. Finance income
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Interest income on bank deposits |
107 |
368 |
762 |
|
Expected return on pension plan assets |
7,193 |
6,940 |
13,880 |
|
|
7,300 |
7,308 |
14,642 |
6. Finance costs
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Interest on bank loans and overdrafts |
828 |
674 |
1,627 |
|
Interest on other loans |
104 |
105 |
210 |
|
Finance lease charges |
196 |
187 |
447 |
|
Unwind of discount on deferred consideration |
101 |
107 |
168 |
|
Loss on interest rate derivative financial instruments |
261 |
83 |
109 |
|
Interest on retirement benefit obligations |
6,727 |
5,464 |
10,928 |
|
|
8,217 |
6,620 |
13,489 |
7. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period, excluding Ordinary Shares held by the Scott Wilson Holdings Ltd Employee Share Ownership Trust.
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Profit attributable to equity holders of the Company |
6,431 |
6,683 |
13,298 |
|
Weighted average number of Ordinary Shares in issue (thousands) |
75,604 |
74,552 |
74,969 |
|
Basic earnings per share (p) |
8.51p |
8.96p |
17.74p |
|
Weighted average number of Ordinary Shares in issue (thousands) |
75,604 |
74,552 |
74,969 |
|
Dilutive effect of share options |
1,427 |
2,878 |
2,604 |
|
Dilutive effect of business combination deferred consideration shares |
99 |
831 |
235 |
|
Diluted weighted average number of Ordinary Shares in issue (thousands) |
77,130 |
78,261 |
77,808 |
|
Diluted earnings per share (p) |
8.34p |
8.54p |
17.09p |
Adjusted* earnings per share
The Directors believe that the presentation of adjusted* earnings per share assists with the understanding of the results of the Group. Adjusted* earnings per share is earnings per share adjusted for amortisation of business combination intangibles, retention bonuses arising from acquisitions and changes in the fair value of derivative financial instruments.
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Profit attributable to equity holders of the Company |
6,431 |
6,683 |
13,298 |
|
Amortisation of intangible assets acquired in business combinations |
1,350 |
1,214 |
2,455 |
|
Retention bonuses arising from acquisitions |
25 |
- |
438 |
|
Changes in the value of derivative financial instruments |
490 |
110 |
633 |
|
Tax relating to amortisation of business combination intangibles, retention bonuses arising from acquisitions and changes in the value of derivative financial instruments |
(522) |
(397) |
(1,058) |
|
Adjusted* profit attributable to equity holders of the Company |
7,774 |
7,610 |
15,766 |
|
Weighted average number of Ordinary Shares in issue (thousands) |
75,604 |
74,552 |
74,969 |
|
Adjusted* basic earnings per share (p) |
10.28p |
10.21p |
21.03p |
|
Weighted average number of Ordinary Shares in issue (thousands) |
75,604 |
74,552 |
74,969 |
|
Dilutive effect of share options |
1,427 |
2,878 |
2,604 |
|
Dilutive effect of business combination deferred consideration shares |
99 |
831 |
235 |
|
Diluted weighted average number of Ordinary Shares in issue (thousands) |
77,130 |
78,261 |
77,808 |
|
Adjusted* diluted earnings per share (p) |
10.08p |
9.72p |
20.26p |
No options over Ordinary Shares have been awarded since 26 October 2008.
8. Statement of changes in shareholders' equity
|
|
Issued |
Other |
Retained |
|
|
|
capital |
reserves |
earnings |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
At 28 April 2008 |
98,645 |
(5,310) |
(14,423) |
78,912 |
|
Shares issued under share option schemes |
40 |
- |
- |
40 |
|
Shares issued relating to business combinations |
430 |
(97) |
- |
333 |
|
Income recognised directly in equity |
- |
- |
4,129 |
4,129 |
|
Profit for the period |
- |
- |
6,431 |
6,431 |
|
Equity-settled share-based compensation |
- |
- |
407 |
407 |
|
Translation differences (net of tax) |
- |
388 |
- |
388 |
|
Dividend declared on Ordinary Shares |
- |
- |
(1,828) |
(1,828) |
|
Purchase of own shares for Treasury |
- |
- |
(1,282) |
(1,282) |
|
Other movements |
- |
(28) |
- |
(28) |
|
At 26 October 2008 |
99,115 |
(5,047) |
(6,566) |
87,502 |
9. Cash generated from operations
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Operating profit |
10,112 |
9,557 |
18,595 |
|
Share of result of joint ventures |
(785) |
(354) |
(1,538) |
|
(Profit)/loss on sale of tangible fixed assets |
(20) |
(980) |
(930) |
|
Defined benefit pension plan current service cost |
1,473 |
2,198 |
4,396 |
|
Depreciation and amortisation |
4,664 |
4,079 |
8,503 |
|
Share-based compensation expense |
407 |
294 |
622 |
|
Loss on exchange rate derivative financial instruments |
229 |
27 |
524 |
|
Increase in receivables and prepayments |
(18,314) |
(18,347) |
(15,475) |
|
Increase in payables and accruals |
4,550 |
8,771 |
15,580 |
|
(Decrease)/increase in provisions |
(1,846) |
1,436 |
244 |
|
Cash generated from operations |
470 |
6,681 |
30,521 |
10. Business combinations
(a) Acquisition of Strategic Leisure Limited
On 5 June 2008, the Group acquired the issued share capital of Strategic Leisure Limited, a management consultancy specialising in strategic advice to public and private sector leisure organisations based in Manchester, for a maximum consideration of £0.6m.
The assets and liabilities acquired and the provisional goodwill arising on the acquisition are as follows:
|
|
|
|
Accounting |
|
|
|
Acquiree's |
|
policy |
Fair value |
|
|
carrying amount |
Revaluation |
alignment |
to Group |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Tangible fixed assets |
8 |
- |
(5) |
3 |
|
Intangible assets |
- |
170 |
- |
170 |
|
Trade and other receivables |
525 |
- |
(84) |
441 |
|
Cash and cash equivalents |
97 |
- |
- |
97 |
|
Trade and other payables |
(412) |
(18) |
(23) |
(453) |
|
|
218 |
152 |
(112) |
258 |
|
Cost of acquisition |
|
|
|
|
|
Cash consideration |
|
|
|
180 |
|
Issue of 94,488 Ordinary Shares |
|
|
|
210 |
|
Deferred contingent consideration to be settled in ordinary shares or cash |
|
|
|
190 |
|
Acquisition costs |
|
|
|
4 |
|
Total purchase consideration |
|
|
|
584 |
|
Fair value of assets and liabilities acquired |
|
|
|
258 |
|
Provisional goodwill |
|
|
|
326 |
The deferred consideration to be settled in Ordinary Shares or cash at the discretion of the Group is payable in equal annual instalments over three years, contingent upon the achievement of financial targets, with the first settlement due in May 2009.
The goodwill is attributable to the premium paid to strengthen and expand the Group's existing service offering and market share in line with the Group's strategy.
The net cash outflow on the acquisition of Strategic Leisure was:
|
|
£'000 |
|
Cash consideration |
184 |
|
Cash and cash equivalents acquired |
(97) |
|
|
87 |
Strategic Leisure contributed revenue of £534,000 and profit before taxation of £17,000 to the Group's results for the 26 weeks ended 26 October 2008.
10. Business combinations continued
(b) Acquisition of Terence Lee Partnership
On 6 June 2008, the Group acquired the business of Terence Lee Partnership, a mechanical and electrical building services consultancy based in London, for a maximum consideration of £1.4m.
The assets and liabilities acquired and the provisional goodwill arising on the acquisition are as follows:
|
|
|
|
Accounting |
|
|
|
Acquiree's |
|
policy |
Fair value |
|
|
carrying amount |
Revaluation |
alignment |
to Group |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Intangible assets |
- |
401 |
- |
401 |
|
Trade and other receivables |
205 |
- |
- |
205 |
|
|
205 |
401 |
- |
606 |
|
Cost of acquisition: |
|
|
|
|
|
Initial cash consideration |
|
|
|
1,038 |
|
Deferred cash consideration |
|
|
|
265 |
|
Acquisition costs |
|
|
|
76 |
|
Total purchase consideration |
|
|
|
1,379 |
|
Fair value of assets and liabilities acquired |
|
|
|
606 |
|
Provisional goodwill |
|
|
|
773 |
The consideration paid on completion was £1.0million. Deferred cash consideration of £0.3million will be paid in two equal annual tranches in June 2009 and June 2010.
The goodwill is attributable to the premium paid to strengthen and expand the Group's existing service offering and market share in line with the Group's strategy.
The net cash outflow on the acquisition of Terence Lee was:
|
|
£'000 |
|
Initial cash element of purchase consideration |
1,038 |
|
Cash and cash equivalents acquired |
- |
|
|
1,038 |
Terence Lee contributed revenue of £405,000 and profit before taxation of £45,000 to the Group's results for the 26 weeks ended 26 October 2008.
10. Business combinations continued
(c) Acquisition of Benaim Enterprise (Holdings) Limited
On 24 July 2008 the Group acquired the entire share capital of Benaim Enterprise (Holdings) Limited, a civil, structural and geotechnical consultancy specialising in the design of high quality structures for the public and private sector, based in the UK and Hong Kong. The maximum consideration for the acquisition is £5.5m.
The assets and liabilities acquired and the provisional goodwill arising on the acquisition are as follows:
|
|
|
|
Accounting |
|
|
|
Acquiree's |
|
policy |
Fair value |
|
|
carrying amount |
Revaluation |
alignment |
to Group |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Tangible fixed assets |
85 |
- |
- |
85 |
|
Intangible assets |
32 |
1,688 |
- |
1,720 |
|
Trade and other receivables |
2,260 |
- |
(17) |
2,243 |
|
Cash and cash equivalents |
1,386 |
- |
- |
1,386 |
|
Trade and other payables |
(1,842) |
- |
(125) |
(1,967) |
|
|
1,921 |
1,688 |
(142) |
3,467 |
|
Cost of acquisition: |
|
|
|
|
|
Initial cash consideration |
|
|
|
4,054 |
|
Issue of convertible loan notes |
|
|
|
1,580 |
|
Deferred cash consideration |
|
|
|
935 |
|
Acquisition costs |
|
|
|
151 |
|
Total purchase consideration |
|
|
|
6,720 |
|
Fair value of assets and liabilities acquired |
|
|
|
3,467 |
|
Provisional goodwill |
|
|
|
3,253 |
The loan notes bear interest at 4.0% and are convertible into Ordinary Shares on 23 January 2010.
The goodwill is attributable to the premium paid to strengthen and expand the Group's existing service offering and market share in line with the Group's strategy.
The net cash outflow on the acquisition of Benaim was:
|
|
£'000 |
|
Initial cash element of purchase consideration |
4,054 |
|
Cash and cash equivalents acquired |
(1,386) |
|
|
2,668 |
Benaim contributed revenue of £1,268,000 and profit before taxation of £90,000 to the Group's results for the 26 weeks ended 26 October 2008.
(d) Total of all acquisitions
Had the acquisitions taken place at the beginning of the financial year, Group revenue and profit before taxation for the 26 weeks ended 26 October 2008 would have been £174.5m and £9.6m respectively.
11. Interim dividend
An interim dividend for the 52 week period ended 27 April 2008 of 1.2p per Ordinary Share was paid on 23 February 2008. A final dividend for the 52 week period ended 27 April 2008 of 2.4p per Ordinary Share was paid on 6 October 2008.
The Directors have declared an interim dividend for the 53 week period ending 3 May 2009 of 1.33p per Ordinary Share to be paid on 20 February 2009 to shareholders on the register on 23 January 2009. In accordance with IAS 10, this interim dividend has not been recognised in the Interim Report.
12. Related party transactions
Transactions between the Company and its subsidiaries and joint ventures represent related party transactions.
Transactions with subsidiaries are eliminated on consolidation.
Except as disclosed below, no material related party transactions have been entered into, during the period, which might reasonably affect any decisions made by the users of these Interim Condensed Consolidated Financial Statements.
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Transactions with joint ventures: |
|
|
|
|
- sales of goods and services |
2,485 |
2,639 |
5,288 |
|
- purchases of goods and services |
139 |
246 |
429 |
|
Net amount due to Group at the period end |
237 |
333 |
417 |
In the 26 weeks ended 26 October 2008, the Group made contributions to defined benefit pension schemes of £2,876,000 (26 weeks ended 28 October 2007: £3,923,000: 52 weeks ended 27 April 2008: £7,607,000).
Compensation paid to key management of the Group will be disclosed in the Group's Annual Report for the 53 weeks ending 3 May 2009.
13. Reconciliation of adjusted Group results
The Directors believe that the presentation of adjusted operating profit, adjusted operating margin and adjusted profit before taxation assists with the understanding of the results of the Group.
Adjusted operating profit is operating profit adjusted for amortisation of business combination intangibles, retention bonuses arising from acquisitions, changes in the fair value of exchange rate derivative financial instruments and the Group's share of taxation in relation to joint ventures.
Adjusted operating margin is adjusted operating profit expressed as a percentage of revenue, including share of joint venture revenues.
Adjusted profit before taxation is profit before taxation adjusted for amortisation of business combination intangibles, retention bonuses arising from acquisitions, changes in the fair value of derivative financial instruments and the Group's share of taxation in relation to joint ventures.
A reconciliation of these measures to operating profit is given below:
|
|
26 weeks |
26 weeks |
52 weeks |
|
|
ended |
ended |
ended |
|
|
26 October |
28 October |
27 April |
|
|
2008 |
2007 |
2008 |
|
|
unaudited |
unaudited |
audited |
|
|
£'000 |
£'000 |
£'000 |
|
Operating profit |
10,112 |
9,557 |
18,595 |
|
Amortisation of intangible assets acquired in business combinations |
1,350 |
1,214 |
2,455 |
|
Retention bonuses arising from acquisitions |
25 |
- |
438 |
|
Loss on exchange rate derivative financial instruments |
229 |
27 |
524 |
|
Group's share of taxation relating to joint ventures |
326 |
152 |
578 |
|
Adjusted* operating profit |
12,042 |
10,950 |
22,590 |
|
Net finance (costs) / income |
(917) |
688 |
1,153 |
|
Loss on interest rate derivative financial instruments |
261 |
83 |
109 |
|
Adjusted* profit before taxation |
11,386 |
11,721 |
23,852 |
|
Adjusted* operating margin |
6.7% |
7.2% |
7.0% |
This information is provided by RNS
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