Final Results
Weir Group PLC
21 March 2007
THE WEIR GROUP PLC PRELIMINARY RESULTS 2006
Results for 52 weeks ended 29 December 2006
HIGHLIGHTS
Continuing Operations
• Order input(*1) up 23% to £1099.5m (2005: £892.5m)
• Revenue up 19% to £940.9m (2005: £789.4m)
• Operating profit(*2) up 32% to £87.7m (2005: £66.3m)
• Earnings per share(*2) up 38% to 32.4p (2005: 23.5p)
• Dividend increase of 10% to 14.5p (2005: 13.2p)
• Cash generation improved significantly to £134.5m (2005: £71.3m)
• Net debt reduced to £7.1m (2005: £76.4m)
2006 2005 Change
------ ------ --------
Continuing Operations
Order Input (*1) £1,099.5m £892.5m +23%
Revenue £940.9m £789.4m +19%
Operating Profit (*2) £87.7m £66.3m +32%
Profit before tax (*2) £87.1m £62.2m +40%
Earnings per share (*2) 32.4p 23.5p +38%
Total Operations
Profit before tax £102.8m £37.5m +174%
Earnings per share 39.4p 12.6p +213%
Dividend per share 14.5p 13.2p +10%
Net debt £7.1m £76.4m -91%
(*1) Excludes Joint Ventures & Associates; calculated at constant 2006 exchange
rates
(*2) Adjusted to exclude exceptional items
The Chairman of The Weir Group, Sir Robert Smith, commented: 'Ongoing
operational improvements, the benefits of restructuring, together with the
addition of a full year contribution from Gabbioneta all contributed to the
Group's excellent results in 2006.
We enter 2007 with a robust portfolio of businesses operating in buoyant end
markets which provides an excellent platform for further improvement in the year
ahead. The Group's healthy balance sheet and cash generation provide the
necessary flexibility to pursue new capital investments and aligned
acquisitions.'
Contact details:
The Weir Group PLC
Mark Selway, Chief Executive Tel. 0141 637 7111 (switchboard);
Helen Walker, Public Relations Manager Tel. 0141 308 3739 (Mobile: 07789 032296)
Maitland Tel. 020 7379 5151
Suzanne Bartch (Mobile: 07769 710 335)
Peter Ogden
FINANCIAL HIGHLIGHTS
2006 input for continuing operations at £1099.5m was 23% higher than 2005 with
Engineering Products, Engineering Services and the Defence, Nuclear & Gas
businesses all showing improvement.
Revenue growth was achieved across all divisions with revenue for Group
continuing operations growing 19% to £940.9m (2005: £789.4m). More than 70% of
the year's output was generated from the power, oil and gas and mining markets.
Operating profit from continuing operations before exceptional items at £87.7m
(2005: £66.3m) was 32% above 2005.
Attributable profits from our Joint Ventures and Associates companies
contributed £10.5m against £9.2m in 2005.
Net finance costs of £0.6m were £3.5m below 2005 and this was positively
affected by a £4.4m improvement in the net income earned on the assets of the
pension scheme. Pre-tax profit from continuing operations before exceptional
items was up 40% on the previous year at £87.1m (2005: £62.2m).
Exceptional items during the year totalled £15.7m. These included a gain on sale
of £6.8m from the former Weir Valves & Controls site in Huddersfield,
fundamental restructuring costs of £1.8m in respect of the previously announced
UK restructuring and a once-off gain of £10.7m arising on the agreed
implementation of changes to the defined benefits arrangements in our main UK
pension scheme.
A tax charge of £19.9m (2005: £13.8m) gives a normalised tax rate of 26% on
profit before tax and exceptional items for continuing operations, as adjusted
for Joint Ventures and Associates.
The resulting underlying earnings per share for continuing operations, before
exceptional items, were 38% higher at 32.4p (2005: 23.5p). Basic earnings per
share for total operations rose to 39.4p from 12.6p last year, reflecting the
impact of exceptional items and discontinued operations.
Cash generated from operations of £134.5m was substantially ahead of the prior
year (2005: £71.3m) as a consequence of increased profitability and a much
improved working capital position. Net capital expenditure was £26.6m (2005:
£25.3m) reflecting continued investment across the business. In addition,
proceeds from the sale of the Huddersfield site of £8.3m were offset by related
cash restructuring costs of £5.8m. Net debt at the year end was £7.1m compared
to £76.4m for the prior year.
The Group has 16 pension schemes around the world of which six are defined
benefit schemes, the most significant being the UK and Canadian schemes. All
defined benefit schemes are closed to new members and the net Group deficit for
retirement benefit obligations at 29 December 2006 was £3.9m (2005: £61.6m). The
Group reviews the level of the deficit on an annual basis and in 2006 made a
special contribution of £7.0m to reduce the UK pension deficit.
DIVIDEND
A final dividend of 10.75p (2005: 9.65p) is proposed making a total payment for
the year of 14.5p (2005: 13.2p). Subject to shareholder approval, the final
dividend will be paid on 1 June 2007 to shareholders on the register at the
close of business on 4 May 2007.
REVIEW OF RESULTS
To assist in meaningful comparison, the following review of results, with the
exception of joint ventures & associates, restates comparative 2005 figures at
constant exchange rates.
ENGINEERING PRODUCTS
The Engineering Products Division includes the operations of our Minerals, Clear
Liquid and Valves & Controls businesses which supply pumps, valves and ancillary
products to the mining, power and oil industries. The division delivered the
highest ever level of new orders with input increasing 23% when compared to
2005. Revenue from continuing businesses increased 21% to £608.5m (2005:
£501.4m) while operating profit, before exceptional items from continuing
operations, increased 49% to £62.6m (2005: £41.9m). Workload was largely
balanced between new project and aftermarket activity.
At the operating profit level, the margin was 10.3% compared with 8.4% in 2005,
underpinned by a continued strong performance from Minerals and significant
improvements resulting from the restructuring of the UK businesses of Valves &
Controls and Clear Liquid. The full year contribution from Gabbioneta is also
evident in the results.
Minerals
Minerals had an excellent year growing order input, revenue and profit due to a
combination of buoyant commodity markets, new product offerings and improvements
in operational efficiency.
Order input increased 19% to £390.5m (2005: £328.1m), driven by a continued
strong investment climate across our most important mining markets. The Americas
saw a 25% increase in orders due to a combination of sales initiatives, new
products and the strong investment climate. Growth in flue gas desulphurisation
and the oil sands also contributed to the result.
A 51% increase was achieved in Europe and the Former Soviet Union reflecting the
award of large contract wins in the FSU and increased demand for flue gas
desulphurisation throughout the region.
The Minerals businesses have achieved significant success in expanding their
position in the higher growth markets of South America, Eastern Europe and Asia.
During the year, Minerals added significantly to its installed foundry capacity
with new facilities coming on stream in South Africa and China. In 2007, further
investments will be made to add foundry capacity in Brazil and the Chinese
business will become fully operational.
Going forward, the Minerals businesses are expected to continue to benefit from
the favourable economic climate and make further progress in their already
established leadership positions.
Clear Liquid
Clear Liquid performed well with order input up 32% at £222.7m (2005: £168.2m).
The collective speciality pump businesses improved their results and achieved
good levels of growth in each of their respective markets.
The 2006 results included the full year benefits from the prior year
restructuring at Weir Pumps and a full year contribution from Gabbioneta, which
contributed £50.2m of input in 2006 against a final quarter contribution of
£13.1m in 2005. Following the successful integration of Gabbioneta with our
Clear Liquid operations, this business delivered turnover and profits in line
with our expectations and continues to progress well.
In 2007, we expect further improvements from our Clear Liquid operations largely
driven by the continued strength of our most important markets, operational
benefits attributable to the growing order book and ongoing implementation of
the Weir Production System.
Valves & Controls
The Valves & Controls businesses made good progress in 2006 and contributed to
the revenue and profit growth in the Engineering Products Division during the
year.
The business continued to build on its achievements in the Chinese power market
and was successful in its integration of our newly acquired wholly-owned
subsidiary located at Suzhou. The increased activity in the domestic US power
market helped deliver growth in turnover in the US operation.
Weir Valves & Controls France benefited from its ongoing success in Eastern
European nuclear markets where upgrade work is being funded by the European
Union and also growth in the Middle East oil and gas markets. Growth in sales
and profits from these businesses was evident in the 2006 results.
The restructuring of the Weir Valves & Controls UK operation is now complete and
the move to a modern, appropriately sized facility was executed both on time and
on budget. The second half performance of the UK operation provides increased
confidence in the delivery of anticipated improvements and positions us well for
further profit progress in 2007.
We remain encouraged by the prospects for the Valves & Controls businesses. The
US operation will move to larger premises to capitalise on the growing power
opportunities in their domestic market. The growth of our acquisition in China,
coupled to further progress from our UK and French operations, is expected to
deliver further progress in 2007.
ENGINEERING SERVICES
Input from Engineering Services increased 5% to £236.6m (2005: £225.5m). Revenue
increased 3% to £225.2m (2005: £218.8m) producing an operating profit from
continuing operations of £12.4m against £13.6m in 2005, primarily due to once
off costs of £4.4m relating to restructuring initiatives in the UK, USA and
Middle East.
In the UK, input grew 6% to £60.0m (2005: £56.7m) with new hydro orders from
ScottishPower and Scottish & Southern Energy contributing to solid growth in our
power generation activities. Rationalisation of the number of UK Service Centres
was largely completed during the year and 2007 results are expected to reflect
improving returns.
At our Middle East business, input grew 62% to £26.9m (2005: £16.6m) with
significant new orders booked in oil services. Once off costs were taken in the
year to realign overheads and refocus the operation on the oil sector. Good
second half improvements are now expected to underpin further progress.
The Canadian operation had another successful year benefiting from continued
buoyant market conditions and Weir's growing position in the oil sands sector.
In the USA, we took the decision to close our loss making Service Centres which,
while disappointing, will result in the remaining US businesses contributing
positively to Services results in the coming year.
The restructuring work undertaken in 2006 was necessary to reposition the
Engineering Services Division in those sectors and geographies which are
critical to the future of the Group. The rationalisation of our UK
infrastructure, closure of smaller less profitable US Service Centres and
refocus towards the oil services sector in the Middle East, leave the Division
better equipped to improve margins and take advantage of the significant
opportunities available for accelerated growth.
We remain optimistic of the prospects within our Services Division. The
restructuring investments made in 2006, together with the excellent progress
from our Joint Ventures in Saudi Arabia and Abu Dhabi, provide the foundations
for improvement in 2007.
DEFENCE, NUCLEAR & GAS
Revenue from the Defence, Nuclear & Gas Division increased 57% to £107.2m (2005:
£68.3m) and produced an operating profit before exceptional items, from
continuing operations, of £9.8m against a prior year of £6.7m. 2006 input
increased 60% to £179.1m against £112.0m in the previous year.
The liquid gas storage business, Weir LGE, achieved a significant increase in
revenue and operating profit when compared to 2005. New orders from Korean and
European shipbuilders delivered input of £98.8m compared with £80.2m last year.
Future market demand and limited shipbuilding capacity continue to underpin Weir
LGE's earning stream in 2007 and beyond.
The defence and nuclear businesses delivered an increase in revenue and
operating profit. Order input at £80.3m was 153% above 2005. The first half
award of the £38m Spanish defence contract and our increased presence in the UK,
Australia and Canada helped deliver higher turnover and profits from the defence
operations in 2006. We expect a number of significant new opportunities in the
defence and nuclear activities in 2007.
JOINT VENTURES AND ASSOCIATES
Weir's share of profit after interest and tax from Joint Ventures and Associates
was up 14% to £10.5m (2005: £9.2m). The increased profits from DML reflect the
benefits of the improved performance of its pension scheme offsetting the
negative impact of favourable profit taking on a number of key contracts in the
prior year. The full year contribution from the Group's 49% share of its Joint
Venture in Saudi Arabia also contributed to the improved result.
STRATEGY
Five years ago we outlined our strategy which was aimed at achieving sector best
performance by targeting those markets which offered the most attractive
prospects and where we had a realistic ability to lead. The portfolio of Group
businesses has changed dramatically since this time, having largely restructured
our underperformers, exited lower margin activities and grown the business in
higher margin, high growth sectors.
At the same time we have implemented across the entire organisation the Weir
Production System, a structured process geared to maximise operational
performance. The benefits of these strategies are evident in today's results.
In February 2007, the Group announced that it was in discussion to sell the
Glasgow-based business unit of Weir Pumps to Sulzer AG for an expected
consideration of £48m. Weir Pumps represents 8% of Weir Group revenue and a
lower percentage of annual profits and its disposal is entirely consistent with
our stated intention to exit lower margin activities where the Group has limited
prospects to lead.
The potential disposal is subject to reaching an acceptable final agreement and
receipt of regulatory approvals which are expected in the first half of 2007.
Going forward the Group will continue to invest in developing a geographic
presence in high growth markets. Our growing infrastructure in China, the Former
Soviet Union and India, combined with our decision to invest in further foundry
capacity in Brazil, are all key components of our plans for future growth.
We will also remain focused on continuing to improve the operational performance
of each of the businesses within the Group in order to unlock their full
potential. Our strong cash generation and largely ungeared balance sheet also
provide us with flexibility to pursue the full range of options for future
growth.
THE BOARD
As previously reported, Keith Cochrane joined the Group as Group Finance
Director, effective 3 July 2006, and has made a significant contribution since
joining.
OUTLOOK
In 2007, the Engineering Products Division is expected to deliver growth in
revenue, margins and profits when compared to 2006.
Minerals are expecting another good year against a backdrop of buoyant commodity
markets, new product offerings and the continuing benefits being delivered from
their operational improvement activities.
The outlook for the Clear Liquid businesses remains encouraging. Growth in sales
from the higher margin businesses and continued benefits from operational
initiatives should produce improved results when compared to 2006.
Valves & Controls is expected to deliver improved results in 2007. The benefits
from the UK restructuring, addition of China and improved market outlook for
power generation markets in the United States, Indo Pacific and Former Soviet
Union are expected to provide a platform for further progress when compared to
2006.
In the Engineering Services Division, the benefits of restructuring in the
United States, the UK and Middle East are expected to grow margins and profits
when compared to 2006.
The Defence, Nuclear & Gas Division is positioned to deliver a further set of
solid results in 2007. While the exceptional input during the past twelve months
is not expected to repeat, the Division has secured the order book and
underpinned revenues for the medium term.
While continuing its good performance in 2007, our Associates business, DML, is
not expected to repeat the favourable profit making milestones which were
evident in the 2006 results.
The Group is in good financial condition with a robust order book which supports
our continuing level of confidence in our most important markets. By remaining
on course, capitalising on our strong portfolio of businesses and striving for
continued operational improvement, we will deliver a good level of progress in
2007.
AUDITED RESULTS
Consolidated Income Statement
for the 52 weeks ended 29 December 2006
52 weeks ended 29 December 2006 52 weeks ended 30 December 2005
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 3) Total items (note 3) Total
Notes £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------------------------
Continuing operations
Revenue 2 940.9 - 940.9 789.4 - 789.4
Cost of sales (679.5) - (679.5) (570.7) - (570.7)
-----------------------------------------------------------------------------------------------------------------------
Gross profit 261.4 - 261.4 218.7 - 218.7
Other operating income 2.1 6.8 8.9 1.5 - 1.5
Selling & distribution costs (119.3) - (119.3) (106.6) - (106.6)
Administrative expenses (67.0) 10.7 (56.3) (56.5) - (56.5)
Restructuring costs - (1.8) (1.8) - (24.7) (24.7)
Share of results of
- joint ventures 2.4 - 2.4 1.7 - 1.7
- associates 8.1 - 8.1 7.5 - 7.5
-----------------------------------------------------------------------------------------------------------------------
Operating profit 87.7 15.7 103.4 66.3 (24.7) 41.6
Finance costs (10.8) - (10.8) (6.6) - (6.6)
Finance income 5.3 - 5.3 2.0 - 2.0
Other finance income
- retirement benefits 4.9 - 4.9 0.5 - 0.5
-----------------------------------------------------------------------------------------------------------------------
Profit before tax from
continuing operations 87.1 15.7 102.8 62.2 (24.7) 37.5
Tax expense 4 (19.9) (2.7) (22.6) (13.8) - (13.8)
-----------------------------------------------------------------------------------------------------------------------
Profit for the period from
continuing operations 67.2 13.0 80.2 48.4 (24.7) 23.7
Profit for the period from
discontinued operations 1.4 - 1.4 2.3 - 2.3
-----------------------------------------------------------------------------------------------------------------------
Profit for the period 68.6 13.0 81.6 50.7 (24.7) 26.0
=======================================================================================================================
Attributable to:
Equity holders of the Company 68.6 13.0 81.6 50.6 (24.7) 25.9
Minority interests - - - 0.1 - 0.1
-----------------------------------------------------------------------------------------------------------------------
68.6 13.0 81.6 50.7 (24.7) 26.0
=======================================================================================================================
Earnings per share
Basic - total operations 39.4p 12.6p
Basic - continuing operations 32.4p 38.7p 23.5p 11.5p
Diluted - total operations 38.8p 12.5p
Diluted - continuing operations 32.0p 38.2p 23.4p 11.4p
Consolidated Balance Sheet
at 29 December 2006
29 December 30 December
2006 2005
Note £m £m
-------------------------------------------------------------------------------------------
ASSETS
Non-current assets
Property,plant & equipment 116.6 119.2
Intangible assets 180.1 187.5
Investments in joint ventures & associates 33.5 20.9
Deferred tax assets 19.3 17.4
Retirement benefit plan surpluses 7.8 -
Forward foreign currency contracts 4.9 0.4
-------------------------------------------------------------------------------------------
Total non-current assets 362.2 345.4
-------------------------------------------------------------------------------------------
Current assets
Inventories 120.9 122.8
Trade & other receivables 203.8 207.3
Construction contracts 34.9 28.2
Forward foreign currency contracts 6.5 2.3
Income tax receivable 0.1 0.6
Cash & short term deposits 146.3 109.6
-------------------------------------------------------------------------------------------
Total current assets 512.5 470.8
-------------------------------------------------------------------------------------------
Total assets 874.7 816.2
===========================================================================================
LIABILITIES
Current liabilities
Interest-bearing loans & borrowings 7.5 10.9
Trade & other payables 212.4 178.8
Construction contracts 46.3 39.2
Forward foreign currency contracts 3.0 4.6
Income tax payable 19.4 7.3
Provisions 27.3 26.1
-------------------------------------------------------------------------------------------
Total current liabilities 315.9 266.9
-------------------------------------------------------------------------------------------
Non-current liabilities
Interest-bearing loans & borrowings 145.9 175.1
Forward foreign currency contracts 1.8 3.1
Provisions 13.6 14.6
Deferred tax liabilities 13.9 3.9
Retirement benefit plan deficits 11.7 61.6
-------------------------------------------------------------------------------------------
Total non-current liabilities 186.9 258.3
-------------------------------------------------------------------------------------------
Total liabilities 502.8 525.2
===========================================================================================
NET ASSETS 371.9 291.0
===========================================================================================
CAPITAL & RESERVES
Share capital 6 26.4 26.2
Share premium 6 35.4 32.5
Treasury shares 6 (10.7) (10.7)
Capital redemption reserve 0.5 0.5
Foreign currency translation reserve (2.9) 9.9
Hedge accounting reserve 3.5 (3.7)
Retained earnings 319.3 235.9
-------------------------------------------------------------------------------------------
Shareholders equity 6 371.5 290.6
Minority interest 6 0.4 0.4
-------------------------------------------------------------------------------------------
TOTAL EQUITY 6 371.9 291.0
===========================================================================================
Consolidated Cash Flow Statement
for the 52 weeks ended 29 December 2006
52 weeks 52 weeks
ended ended
29 December 30 December
2006 2005
Note £m £m
-------------------------------------------------------------------------------------------
Cash flows from operating activities 7
Cash generated from operations 134.5 71.3
Additional pension contributions paid (7.0) (10.0)
Fundamental restructuring costs paid (5.8) (16.6)
Income tax paid (14.6) (7.9)
-------------------------------------------------------------------------------------------
Net cash generated from operating activities 107.1 36.8
-------------------------------------------------------------------------------------------
Cash flows from investing activities
Acquisitions of subsidiaries & joint ventures (2.1) (75.6)
Disposals of subsidiaries & joint ventures (1.8) 14.2
Purchases of property,plant & equipment & intangible assets (27.6) (25.7)
Exceptional proceeds on sale of property 8.3 -
Other proceeds from sale of property, plant & equipment &
intangible assets 1.0 0.4
Proceeds from sale of other investments - 0.2
Interest received 5.3 1.9
Dividends received 1.5 4.0
-------------------------------------------------------------------------------------------
Net cash used in investing activities (15.4) (80.6)
-------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issue of ordinary shares 3.1 6.3
Purchase of treasury shares - (10.7)
Proceeds from borrowings 90.7 170.0
Repayments of borrowings (110.2) (84.5)
Interest paid (10.2) (8.3)
Dividends paid to equity holders of the Company (27.7) (26.6)
-------------------------------------------------------------------------------------------
Net cash (used in) generated from financing activities (54.3) 46.2
-------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 37.4 2.4
Cash and cash equivalents at beginning of period 104.0 95.6
Foreign currency translation differences (2.3) 6.0
-------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 139.1 104.0
-------------------------------------------------------------------------------------------
Consolidated Statement of Recognised Income & Expense
for the 52 weeks ended 29 December 2006
52 weeks 52 weeks
ended ended
29 December 30 December
2006 2005
£m £m
-------------------------------------------------------------------------------------------
Income & expense recognised directly in equity
Gains (losses) taken to equity on cash flow hedges 11.5 (10.7)
Exchange differences on translation of foreign operations (12.8) 13.9
Actuarial gains on defined benefit plans 33.0 22.1
Share of associate's actuarial gain on defined benefit plans 4.4 4.8
Transfers to the income statement
On cash flow hedges (1.1) 0.3
Tax on items taken directly to or transferred from equity (12.5) (2.9)
-------------------------------------------------------------------------------------------
Net income recognised directly in equity 22.5 27.5
Profit for the period 81.6 26.0
-------------------------------------------------------------------------------------------
Total recognised income & expense for the period 104.1 53.5
===========================================================================================
Attributable to:
Equity holders of the Company 104.1 53.4
Minority interests - 0.1
-------------------------------------------------------------------------------------------
104.1 53.5
-------------------------------------------------------------------------------------------
Effect of changes in accounting policy:
Net gain on cash flow hedges on first time application of IAS39 - 2.4
-------------------------------------------------------------------------------------------
1. Basis of preparation
The preliminary results for the 52 weeks ended 29 December 2006 have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the European Union and
applied in accordance with the provisions of The Companies Act 1985. The format of the
consolidated income statement included in this preliminary announcement differs from the Group's
financial statements for the 52 weeks ended 30 December 2005 and its unaudited 2006 interim report
as the directors are of the opinion that the revised format, which presents exceptional items in
separate columns, is more relevant to users of the financial statements. The accounting policies
applied in preparing these preliminary results are unchanged from those which applied in the
period to 30 December 2005.
These preliminary results for the 52 weeks ended 29 December 2006 do not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. They are extracted from the full
statutory accounts, which were approved by a Committee of the Board of Directors on 21 March 2007.
A copy of those full statutory accounts will be lodged with the Registrar of Companies in due course.
The report of the auditors on those accounts is unqualified and does not contain a statement
under section 237 (2) or section 237 (3) of the Companies Act 1985 concerning accounting records
or failure to obtain necessary information and explanations.
2. Segment information
Business segments
The following table presents revenue and profit information on the Group's continuing operations
for the 52 weeks ended 29 December 2006 and the 52 weeks ended 30 December 2005 analysed by business
segment.
Engineering Engineering Defence, Total continuing
Products Services Nuclear & Gas operations
2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------------------------
Revenue
Sales to external customers 608.5 505.6 225.2 215.4 107.2 68.4 940.9 789.4
Inter-segment sales 20.9 19.0 1.6 1.3 - - 22.5 20.3
-----------------------------------------------------------------------------------------------------------------------
Segment revenue 629.4 524.6 226.8 216.7 107.2 68.4 963.4 809.7
-----------------------------------------------------------------------------------------------------------------------
Sales to external customers at 2006
average exchange rates 608.5 501.4 225.2 218.8 107.2 68.3 940.9 788.5
Result
Segment result before exceptional items 62.6 42.3 12.4 13.1 9.8 6.8 84.8 62.2
Exceptional income (costs) (net) 5.0 (24.7) - - - - 5.0 (24.7)
-----------------------------------------------------------------------------------------------------------------------
Segment result after exceptional items 67.6 17.6 12.4 13.1 9.8 6.8 89.8 37.5
Share of results of - joint ventures - - 2.4 1.7 - - 2.4 1.7
- associates - - 8.1 7.5 - - 8.1 7.5
-----------------------------------------------------------------------------------------------------------------------
67.6 17.6 22.9 22.3 9.8 6.8 100.3 46.7
==========================================================
Unallocated expenses (7.6) (5.1)
Unallocated exceptional income 10.7 -
-------------------
Operating profit 103.4 41.6
===================
Segment result before exceptional items
at 2006 average exchange rates 62.6 41.9 12.4 13.6 9.8 6.7 84.8 62.2
3. Exceptional items
2006 2005
Recognised in arriving at operating profit from continuing operations: £m £m
-----------------------------------------------------------------------------------------------------------------------
Profit on sale of property 6.8 -
Pension plan gain 10.7 -
Restructuring costs (1.8) (24.7)
-----------------------------------------------------------------------------------------------------------------------
15.7 (24.7)
=======================================================================================================================
Profit on sale of property
A profit of £6.8m (2005: £nil) was made on the sale of the Group's former premises at
Huddersfield which were vacated as part of the restructuring of the UK Engineering
Products businesses.
Pension plan gain
The pension plan gain of £10.7m (2005: £nil), which represents a reduction in past
service costs, arose on the implementation of amendments to the defined benefit
arrangements of the Group's main UK defined benefit pension plan made with effect
from November 2006.
Restructuring costs
During 2005 the Group incurred costs of £21.4m and impairment losses of £3.3m in
connection with the previously announced fundamental restructuring activities in the
UK Engineering Products businesses. Further costs of £1.8m have been incurred in 2006
in connection with this restructuring.
The restructuring costs arose from activities that are not considered to fall within
the normal function based classifications adopted by the Group when analysing results
and, accordingly, they have been disclosed on a separate line on the income statement.
4. Tax expense
2006 2005
£m £m
-----------------------------------------------------------------------------------------------------------------------
Group - United Kingdom (1.6) (0.9)
Group - Overseas (21.0) (13.0)
-----------------------------------------------------------------------------------------------------------------------
Total income tax expense in the consolidated income statement (22.6) (13.9)
=======================================================================================================================
The total income tax expense is disclosed in the consolidated income statement as follows:
Tax expense - continuing operations before exceptional items (19.9) (13.8)
- exceptional items (2.7) -
- within profit from discontinued operations - (0.1)
=======================================================================================================================
The total income tax expense included in the Group's share of results of joint ventures
and associates is as follows:
Joint ventures (0.4) (0.2)
Associates (3.3) (2.9)
=======================================================================================================================
5. Dividends paid and proposed
2006 2005
£m £m
-----------------------------------------------------------------------------------------------------------------------
Declared and paid during the period:
Equity dividends on ordinary shares:
Final dividend for 2005: 9.65p (2004: 9.35p) 19.9 19.3
Interim dividend for 2006: 3.75p (2005: 3.55p) 7.8 7.3
-----------------------------------------------------------------------------------------------------------------------
27.7 26.6
=======================================================================================================================
Proposed for approval by shareholders at the AGM:
Final dividend for 2006: 10.75p (2005: 9.65p) 22.3 19.9
=======================================================================================================================
The proposed dividend is based on the number of shares in issue, excluding treasury shares
held, at the date the financial statements were approved and authorised for issue. The final
dividend may differ due to increases or decreases in the number of shares in issue between
the date of approval of the report and financial statements and the record date for the final
dividend.
6. Reconciliation of movements in equity
Minority Total
Attributable to equity holders of the Company interest equity
-----------------------------------------------------------------------------------------------------------------------
Share Share Treasury
capital premium shares Reserves Total
£m £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------------------------
At 31 December 2004 25.9 26.5 - 212.4 264.8 0.6 265.4
Adjustments relating to adoption of
IAS 32 and IAS 39 from 1 January 2005 - - - 2.4 2.4 - 2.4
-----------------------------------------------------------------------------------------------------------------------
At 1 January 2005 25.9 26.5 - 214.8 267.2 0.6 267.8
Total recognised income and expense for
the period - - - 53.4 53.4 0.1 53.5
Cost of share-based payments - - - 1.0 1.0 - 1.0
Dividends - - - (26.6) (26.6) - (26.6)
Exercise of options 0.3 6.0 - - 6.3 - 6.3
Purchase of treasury shares - - (10.6) - (10.6) - (10.6)
Transaction costs - - (0.1) - (0.1) - (0.1)
Acquisition of minority interest - - - - - (0.3) (0.3)
-----------------------------------------------------------------------------------------------------------------------
At 30 December 2005 26.2 32.5 (10.7) 242.6 290.6 0.4 291.0
Total recognised income and expense for
the period - - - 104.1 104.1 - 104.1
Cost of share-based payments - - - 1.4 1.4 - 1.4
Dividends - - - (27.7) (27.7) - (27.7)
Exercise of options 0.2 2.9 - - 3.1 - 3.1
-----------------------------------------------------------------------------------------------------------------------
At 29 December 2006 26.4 35.4 (10.7) 320.4 371.5 0.4 371.9
=======================================================================================================================
7. Additional cash flow information
2006 2005
£m £m
-----------------------------------------------------------------------------------------------------------------------
Net cash generated from operations
Operating profit before exceptional items 87.7 66.3
Loss from discontinued operations before net finance costs and tax - (0.7)
Share of results of joint ventures & associates (10.5) (9.2)
Depreciation & amortisation 20.1 17.1
Loss on disposal of property, plant & equipment & investments 0.1 0.3
Funding of pension & post retirement costs (0.9) (0.8)
Exchange (1.1) 0.3
Employee share schemes 1.4 1.0
Increase in provisions 2.8 2.4
Increase in inventories (7.0) (18.9)
Increase in trade & other receivables, construction contracts &
forward foreign currency contracts (6.8) (12.3)
Increase in trade & other payables, construction contracts &
forward foreign currency contracts 48.7 25.8
-----------------------------------------------------------------------------------------------------------------------
Cash generated from operations 134.5 71.3
Additional pension contributions paid (7.0) (10.0)
Fundamental restructuring costs paid (5.8) (16.6)
Income tax paid (14.6) (7.9)
-----------------------------------------------------------------------------------------------------------------------
Net cash generated from operating activities 107.1 36.8
=======================================================================================================================
Reconciliation of net increase in cash and cash equivalents to movement in net debt
Net increase in cash and cash equivalents 37.4 2.4
Net decrease (increase) in debt 19.5 (85.5)
-----------------------------------------------------------------------------------------------------------------------
Change in net (debt) funds resulting from cash flows 56.9 (83.1)
Lease acquired - (0.2)
Lease inception - (0.1)
Foreign currency translation differences 12.4 (5.6)
-----------------------------------------------------------------------------------------------------------------------
Change in net (debt) funds during the period 69.3 (89.0)
Net (debt) funds at beginning of period (76.4) 12.6
-----------------------------------------------------------------------------------------------------------------------
Net debt at end of period (7.1) (76.4)
========================================================================================================================
Net debt comprises the following:
Cash & short term deposits 146.3 109.6
Current interest-bearing loans & borrowings (7.5) (10.9)
Non current interest-bearing loans & borrowings (145.9) (175.1)
-----------------------------------------------------------------------------------------------------------------------
(7.1) (76.4)
=======================================================================================================================
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
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