RNS Number:4227I
Keller Group PLC
07 March 2003
Friday, 7 March 2003
Keller Group plc
Preliminary Results for the year ended 31 December 2002
Keller Group plc ("Keller" or "the Group"), the global
construction services group, is pleased to announce its
preliminary results for the year ended 31 December 2002.
Highlights include:
> Sales break through #500m barrier
> Operating profit* up 35% to #34.3m; margins* up to
6.7% (2001: 6.0%)
> Profit before tax* up 29% to #30.4m (2001: #23.6m)
> Earnings per share* increased 27% to 32.7p (2001:25.8p)
> Strong cash flow with EBITDA interest cover of 11 times
> Five acquisitions completed during the year
> 2003 prospects enhanced by recent acquisitions
> Recommended total dividend up 8% at 9.9p (2001: 9.2p)
* before goodwill amortisation of #3.1m
Commenting on the results, Tom Dobson, Keller's Chief
Executive said:
"These excellent results demonstrate our ability to
generate sustained organic growth, complemented by
selective value-creating acquisitions. The consistency
of performance across the Group, with significantly
improved margins, reflects the strength of our business
model and the ability of our management to adapt to
changing market conditions."
"I am pleased to be able to report that we go into 2003
with a total order book representing four months' sales,
which gives a strong platform for the year ahead."
Enquiries:
Keller Group plc www.keller.co.uk
Tom Dobson, Chief Executive On the day: 020 7067 0700
Justin Atkinson, Chief Operating
Officer and Finance Director Thereafter: 020 8341 6424
Weber Shandwick Square Mile 020 7067 0700
Reg Hoare/ Josh Royston
A briefing for analysts will be held at 9.15 for 9.30am
on Friday, 7 March 2003 at the offices of Weber Shandwick
Square Mile, Fox Court, 14 Gray's Inn Road, London, WC1X 8WS.
Preliminary Announcement
Chairman's Statement
Results
I am pleased to report another outstanding set of results
for the Group. The 2002 financial year saw Group sales
at #511.0m up 21% (2001: #422.2m), with profit before tax
and goodwill amortisation up 29% to #30.4m (2001:
#23.6m). Of the profit increase roughly half was
generated from organic growth and half from acquisitions
completed during 2001 and 2002. Earnings per share before
goodwill amortisation increased by 27% to 32.7p (2001:
25.8p). These excellent results demonstrate our
ability to generate sustained organic growth,
complemented by selective value-creating acquisitions.
The consistency of performance across the Group, with
significantly improved margins, reflects the strength of
our business model and the ability of our management to
adapt to changing market conditions.
Within Foundation Services, the US had a record year,
whilst Continental Europe & Overseas produced another
excellent performance. The UK and Australian foundation
businesses both returned results that were much improved
on the previous year. Within Specialist Services,
Makers started to see returns from its investment in
systems and processes, whilst Suncoast had a satisfactory
first full year of ownership by the Group.
Acquisitions
2002 was an active year for acquisitions reflecting good
opportunities which became available to us and which were
consistent with our strategy. In December 2002, in
Foundation Services we acquired both a 51% interest in
the new Spanish subsidiary, Keller-Terra, for #8.6m, and
McKinney Drilling in the US for an initial consideration
of #17.1m, together with the acquisition of Vibropile,
announced at the half year, for #1.0m. In Specialist
Services, we added Wannenwetsch in Germany and Accrete in
the UK for a combined investment of #6.8m. We are
encouraged by both the strategic benefit and the initial
performance of these businesses as part of the Keller
Group and we have made good progress in terms of their
integration. As the acquisitions of Keller-Terra and
McKinney were not completed until the end of 2002, there
is no contribution from them in these results.
Financing
We completed two share issues during the year: 3.0m new
shares were issued on 9 December 2002 as consideration
for our 51% share in Keller-Terra and on 20 December 2002
we raised approximately #5.1m through a placing of 2.2m
shares to part finance the acquisition of McKinney.
With EBITDA interest cover remaining strong at 11 times,
the board is of the view that the Group continues to be
efficiently, but conservatively, financed.
Dividends
In light of this strong performance, the Board is
recommending an increased final dividend of 6.6p per
share (2001: 6.05p), bringing the total dividend for the
year to 9.9p (2001: 9.2p), an increase of 7.6%. This
increase is in line with our policy of reinvesting our
strong cash flow in the continued growth of the Group,
whilst at the same time maintaining a healthy dividend
cover and seeking to reward shareholders with above
inflation increases. We have achieved this aim for each
year since flotation in 1994, returning compound annual
dividend growth of 9.5%.
Board
After twelve years with the Group, including three and a
half years as finance director, Justin Atkinson (42) has
been appointed chief operating officer with immediate
effect. A search for a new finance director is already
underway. Building on the management changes announced
at the half year, Bob Rubright (51) and Rob Ewen (43),
managing directors of Foundation Services and Specialist
Services respectively, join the board with effect from
today. The promotion of these three extremely capable
individuals combines continuity with a fresh perspective
and reinforces our management structure.
In January 2003, we welcomed Pedro Lopez Jimenez to the
Board as a non-executive director. Amongst his external
appointments, Mr Lopez Jimenez is chairman of Terratest
Tecnicas Especiales S.A., a shareholder in Keller-Terra.
With first-hand knowledge of the construction sectors in
Europe and South America, his appointment brings valuable
insight and extensive international experience to the
board.
People
In the last two years, we have increased Group turnover
from #313m to #511m, much of which has come from organic
growth. This has presented a considerable challenge to
our management and staff. Delivering this growth in
turnover, whilst increasing margins and maintaining a
healthy cash flow, is a tribute to the skill and
dedication of our employees. I would like to extend the
Board's sincere thanks for their hard work in 2002, which
has been at the heart of our success.
Strategy
Our performance in 2002 continues our impressive track
record, reflecting the consistency of our strategy to
further consolidate our global leadership in Foundation
Services and to strengthen and broaden our offering of
technical services and products to the construction
industry. In 2003, we will continue to invest wisely in
our existing businesses to exploit fully the
opportunities to grow their market share and extend their
geographic presence. We will also continue to take
advantage of selective acquisition opportunities where
they arise and where they offer long term growth and
value enhancement.
Outlook
In closing, I am pleased to be able to report that we go
into 2003, with a total order book representing four
months' sales, which gives a strong platform for the year
ahead. We see potential for continued growth in Europe,
given our broad product range, leading market positions
and sector mix. In the US, although weather has delayed
some job starts, we continue to see strength in the
infrastructure and housing sectors. Against this
background, and with the benefit of a full year's
contribution from McKinney and Keller-Terra, the present
indications encourage us to believe that 2003 will be
another good year for the Keller Group.
Operating Review
2002 was another highly successful year for Keller, in
which we significantly improved margins and continued our
strong track record of growth. Whilst we faced
difficult conditions in some of our traditional markets,
the range and technical superiority of our products and
the diversity of markets we serve once again held us in
good stead.
Conditions in our major markets
Despite the general economic uncertainty in the US, the
construction market has remained resilient. Towards the
end of 2002, activity slowed in the commercial sector,
whilst housing and public infrastructure continued to be
strong. The picture across Europe was mixed: Germany
saw construction output fall for the eighth consecutive
year and Poland and Switzerland both experienced a
construction slowdown. France and Sweden remained
robust, whilst Italy showed signs of growth. Housing and
infrastructure were fairly strong in the UK, but the
ground engineering sub-sector remained flat. Overseas,
the Far East once again offered good opportunities,
whilst the Middle East continued to be slow. In
Australia, both the commercial and infrastructure sectors
saw recovery from a post-Olympic slump.
Strategic developments
Last year, we made further significant progress towards
our strategic objective of developing our global
leadership in our core foundations business, whilst
expanding the range of specialist products and services
we offer to the built environment. In Foundation
Services, the acquisition of Vibropile consolidates our
number one ranking in the Australian foundations sector;
our 51% interest in Keller-Terra will enable us to
penetrate the growing and attractive Spanish ground
engineering market; whilst the acquisition of McKinney
reinforces our position as the leading provider of
foundation services in the US. In Specialist Services,
we acquired an 84% interest in Wannenwetsch, the supplier
of robotic hydrodemolition services for precision
concrete removal, to complement the services already
offered by Makers in the concrete refurbishment market.
In addition, the acquisition of Accrete is enhancing the
position of Makers Infrastructure as a major partnering
contractor in the water sector. We are confident that
we have the experience, skills and resources to add value
to these businesses and to manage their integration, as
our past track record amply demonstrates.
Foundation Services
The Foundation Services operations had another excellent
year in 2002, with sales 4% ahead of last year at #361.4m
(2001: #347.8m) and operating profit before amortisation
of goodwill of #27.7m (2001: #23.6m), 17% better than the
previous year's good performance. This result reflects
improved margins from 6.8% to 7.7%, combined with
continued good organic growth.
North America
Hayward Baker achieved another good, balanced
performance, with steady margin growth in the established
business, complemented by the strong performance of
recent acquisitions, further increasing Hayward Baker's
market penetration. The business continued to extend
its geographic presence through the opening of new branch
offices in Boston and Houston.
Sales were once again dominated by small to medium sized
jobs across the United States, for which Hayward Baker's
highly developed, regional structure enables it to
compete successfully and profitably. Risk management
continues to be a priority and Hayward Baker continues to
focus on projects with acceptable margins and levels of
risk.
The successful $23m Wickiup Dam remediation project, a
superjet grouting and earthworks project for the US
Bureau of Reclamation, was an exception to the normal job
profile. This is the largest single jet-grouting
project ever performed in the US, involving two rigs
working two shifts a day from April through to October
2002, creating a total of over 200,000 cubic yards of
Soilcrete within the dam. Other significant projects
undertaken during the year included a groundwater control
and excavation project using various grouting techniques
for a new sewer tunnel in Los Angeles; and a soil mixing
scheme to improve the stability of a site for three 310-
foot diameter petroleum tanks in Louisiana.
Case Foundation and Case Atlantic had a record year, with
both sales and operating profit significantly ahead of
the previous year's very strong performance. Following
its opening in January 2002, the new office in Phoenix
performed well, continuing the geographic expansion of
the Case operation. Amongst the noteworthy jobs
undertaken during the year were the foundation system for
the Hyatt Center in Chicago; the installation of caissons
to support highway and railway bridges over the Tennessee
River in Northern Kentucky; and construction of concrete
diaphragm walls at the University of Chicago Graduate
School. The largest single job in Case's 50-year
history, the Cooper River Bridge in Charleston, South
Carolina, began in 2002 and was 60% complete at the year
end. The project is being performed by Case Atlantic
and involves the construction of 10-foot diameter
caissons to a maximum depth of 230 feet.
At the end of 2002, we completed our acquisition of
McKinney, a leading provider of drilled shaft caissons
across the Eastern US. This high-margin, well-
established business operates principally in the civil
(highways and bridges) and commercial sectors.
Operating at the small to mid-diameter end of the caisson
market, the McKinney products complement those offered by
Case and, whilst McKinney will continue to be managed
separately, there are expected to be some synergies
between the two businesses.
Continental Europe & Overseas
Our Continental Europe & Overseas business reported
another excellent performance. Once again, the broad
spread of markets we serve provided some insulation from
the difficult economic conditions persisting in parts of
Europe and the Middle East. In the face of keen
competition, the continuous development of technologies
such as Vibro and Soilcrete has been key to maintaining
our market leading edge.
Against a general downturn in the German construction
market of around 9% last year, our German operation saw a
slight reduction in sales, but improved its margin
significantly, thereby increasing its contribution. We
saw an increase in sales in Austria, despite growing
competition, and in France, after extending the range of
products on offer and our geographic reach. In Sweden,
we increased sales volume and margins, predominantly
using the lime column technology of our LCM subsidiary
which we continue to introduce to other territories.
After a difficult start to the year, our operation in
Poland saw a recovery in the second half, when it took on
a significant amount of flood protection work. With a
steady performance in the Czech Republic and Slovakia and
an established presence in Croatia, we are well
positioned to take advantage of the growth opportunities
that are expected to result from an enlarged European
Union.
Within the Overseas division, the Far East region
delivered the lion's share of sales volume and profit.
In Singapore, two large sand compaction contracts for
land reclamation schemes progressed well. A good
performance was delivered on the Ipoh-Rawang railway
project, which marked the introduction of the LCM
technology to Malaysia. Results for the Middle East
region were in line with our expectations. Our
geographic expansion continues with the establishment of
a new branch in Morocco and subsidiaries in India and
Algeria.
UK
In line with the results for the half year, volumes in
KGE, the UK foundation business, were some 6% down on the
previous year, whilst margins improved, justifying our
concentration on value-added, higher margin products.
The range of solutions KGE can provide is a key factor in
winning work and last year, as anticipated, KGE stepped
up its offering of mixed-product packages. An example
of this was the solution for a brownfield site in
Feltham, Middlesex, being developed by a leading
housebuilder. A combination of vibro stone columns,
driven cast in-situ piles, continuous flight auger bored
piles and dynamic compaction provided a cost-effective
and technically efficient means of stabilising the ground
and supporting the proposed structures. KGE's package
offering has been enhanced by the development of soil
reinforcing systems, which provide an alternative to
concrete, steel or brickwork retaining walls, with a
particular application in rail and highway improvement
schemes.
Throughout 2002, KGE developed new partnering
relationships with a number of general contractors and
homebuilders, resulting in an increased proportion of
repeat and negotiated work. Such a relationship led to
Keller's involvement in the high profile Blackheath
project, where compaction grouting was used to stabilise
a road collapse on the main A2 route through Greenwich
into central London.
The single biggest contract on which KGE was engaged
during the year was CTRL 310, where it is installing
large diameter rotary bored pile foundations to support
structures for the second phase of the Channel Tunnel
Rail Link.
Australia
2002 saw a very strong performance from Franki Australia
and an excellent result by our mid year acquisition,
Vibropile. Franki Indonesia also performed particularly
well, in the light of the continuing fragile economy and
an almost total lack of foreign investment.
Major contracts in Australia during the year included the
foundations for the prestigious 88-storey "Q1" Tower on
the Gold Coast and the Asset Development Project for BHP-
Billiton at Port Hedland in northern Western Australia, a
particularly demanding design and construct package
requiring very close co-operation with the client.
Franki also successfully carried out jet-grouting to
retain the basement boundaries on a refurbishment project
in Manly, Sydney with extremely restricted access and
used compaction grouting techniques for Port Waratah Coal
Services to re-level a conveyor transfer house that had
tilted at their Kooragang Terminal, near Newcastle.
The acquisition of Vibropile has strengthened Keller's
position as the leading specialist foundation contractor
in Australia, bringing expertise in hard rock rotary
drilling, deep continuous flight auger and rotary
displacement piles to complement our existing range of
products.
Specialist Services
The results for the Specialist Services operations
include, for the first time, a full year for Suncoast.
With sales of #149.6m and operating profit before
amortisation of goodwill of #8.8m, Specialist Services
now accounts for 29% of Group turnover and 26% of
operating profit.
Makers
Last year, Makers started to reap the benefits of the
investment in core business systems, which characterised
the previous year and created the platform for growth.
The business is now clearly structured around its key
markets - social housing, car parking and infrastructure
- in which Makers has established a growing number of
long-term partnering relationships.
In social housing, which accounts for around 50% of
turnover, Makers worked with 21 out of 33 London
Boroughs, together with a further 25 local authorities
outside London. Makers was pleased to secure first time
contracts with the London Boroughs of Lambeth and
Islington and Mercian Housing Association. The successful
track record with the City of Westminster, which has been
at the vanguard of partnering arrangements for social
housing refurbishment, has resulted in approaches from
other authorities looking to adopt the Westminster model.
Makers is hopeful of securing partner status with a
number of these clients in 2003. During the year, the
business moved into reactive maintenance services through
its joint venture company, Makers Haywards Property
Service (MHPS). Supported by a state of the art
communication and job-processing system, MHPS had a
pleasing first year, serving several housing "villages"
within the City of Westminster.
Makers Parking completed the refurbishment works at
Heathrow's Short Stay Car Park 1 and replaced support
columns at Car Park 3 which had been unsettled by the
tunnelling for the adjacent Heathrow Express railway
line. In addition to working with BAA and other clients
on deteriorated car park structures, Makers completed its
first new build multi-storey car park during the year.
The innovative and practical design of this steel-framed
car park attracted significant interest and Makers is
about to embark on a similar project for Norwich City
Council.
Last year, Makers restructured its former civil
engineering repair division into dedicated teams of
industry specialists under the new name Makers
Infrastructure. The infrastructure division works on
capital refurbishment projects, either as a main
contractor or as a specialist supply chain partner, to
the highway authorities, the railway industry and
utilities. Makers' position in the UK water market was
strengthened through the acquisition of Accrete in August
2002. Accrete provides a wide range of maintenance,
refurbishment and security services to the water and
waste-water industry through framework agreements with
Scottish Water, Yorkshire Water, South West Water and
Vivendi.
Wannenwetsch
During the year we increased our stake in Wannenwetsch to
84%, from our original 49% interest acquired in January
2002. Wannenwetsch returned an excellent margin on
sales that were almost entirely domestically sourced in
Germany. With a new management team in place, the
business will now focus on growing its share of the
repair and maintenance market, one of the expanding
segments of the construction market in Central Europe,
and taking its technology into new territories.
Suncoast
Suncoast produced a satisfactory result for the year,
albeit at the lower end of our original expectations. The
principal weakness was in high rise activity following 11
September, on which we reported at the half year and
which continued into the second half. In addition,
sales in the slab-on-grade market were affected in the
last few months of the year by adverse weather in the
Texas area.
With a strengthened management team and new control and
information systems in place, Suncoast is now better
placed to anticipate and mitigate the effects of such
external factors on its business. The growth prospects
of the business will be enhanced by further geographic
diversification. To this end, new offices were
established in Las Vegas, Sacramento, Atlanta and Denver,
marking the start of a rollout of the business into new
markets where competition is fragmented and significant
opportunities exist for Suncoast to increase its market
share. As the opening of new offices gathers momentum,
Suncoast's heavy reliance on the Texas area, which
accounted for some 73% of sales in 2002, will be reduced.
Improved management information is also enabling us to
improve operational efficiency within Suncoast. Last
year we reduced inventory levels by 13% through improved
controls, whilst the investment in upgrading the
production facility in Houston is expected to generate
cost savings this year. In addition, the advantage
which Suncoast has over its smaller competitors in terms
of strand-buying is expected to strengthen as domestic
strand prices increase.
Financial review
Results
The Group's operating profit before the amortisation of
goodwill at #34.3m was 35% higher than in 2001. Some 5%
or #1.4m of this increase arose as a result of profit
earned on the acquisitions made during the year. In
addition, the Suncoast business acquired in October 2001
contributed a full year's profit against a three-month
contribution last year.
Group operating margins before goodwill amortisation
increased to 6.7% from the 6.0% margin reported in 2001,
reflecting the full year impact of the Suncoast business
together with improved margins across all our major
Foundation Services business units.
The average foreign currency exchange rates of the Euro
and Australian dollar against Sterling each strengthened
by around 1% year on year but the US dollar weakened by
some 4% against Sterling. Cumulatively this had an
adverse effect on operating profit before goodwill
amortisation of #0.8m.
Stripping out the effects of acquisitions and currency,
the like for like growth in operating profit before the
amortisation of goodwill was 14% indicating that the
Group has continued to deliver strong organic growth.
Acquisitions
Several acquisitions were made in the year for a total
investment (including costs) of #34.4m, of which #19.3m
was in cash. In December, McKinney Drilling was acquired
for an initial consideration of #17.1m funded by a
placing of new shares and an extension to the Group's
banking facilities. There is a deferred consideration
payable in 2005 dependent on McKinney's results in the
two years to December 2004. The directors' current
estimate of such deferred consideration is #1.7m. Also in
December, the Group created a new venture, Keller-Terra,
with Terratest, one of Spain's leading ground engineers,
with an investment of #8.6m, representing 51% of the new
venture. This was satisfied by the issue of 3m new Keller
shares to Terratest. In August, Keller Australia
purchased Vibropile for a cash consideration of #1.0m and
Makers UK purchased Accrete for an initial consideration
of #3.2m with a deferred consideration which the
directors currently estimate at #0.9m. A number of
smaller investments were made during the year including
the buy out of the remaining 15% minority interest in
Keller Australia and an investment of 84% in
Wannenwetsch, a German concrete repair business. Total
net debt assumed on all of these acquisitions was #0.8m
with net goodwill arising of #8.7m.
Capital and reserves
The net assets of the Group increased during the year by
#26.8m to stand at #100.1m at 31 December 2002. The net
goodwill carried on the balance sheet increased by #5.7m
to #66.3m and taking into account other intangibles of
#0.4m the tangible net assets were #33.4m at the year
end, an increase of two and a half times the figure at
the end of the prior year.
Of the increase in net assets, #13.6m net of expenses
arose as a result of the two share issues during the
year: 3,029,000 shares at 277p for the investment in
Keller-Terra and 2,215,000 shares at 240p for the partial
funding of McKinney. Retained earnings increased by
#10.1m in the year and minority interests increased by
#3.2m reflecting the new 49% minority in Keller-Terra and
the new 16% minority in Wannenwetsch, offset by the buy-
out of the 15% minority in Keller Australia.
Group insurances
In line with most other businesses in our industry the
Group has faced significant rises in its insurance costs
during the year.
As a result of this, and after taking advice from our
insurance brokers and reviewing several available
options, the Group set up a captive insurance company
with effect from May 2002 to self insure a portion of the
general third party insurance exposure. The provisions
for reserves made by the captive together with net cash
balances retained by the captive are consolidated with
these financial statements.
Accounting standards
Although the full implementation of FRS17 on retirement
benefits has been deferred indefinitely, under its
transitional disclosures, the net deficit after deferred
tax relief in the UK-based Keller Group Pension Scheme
has increased to #4.6m. This increase has arisen not only
as a result of the recent deterioration in the equity
markets but also as a result of a reduction in the
discount rate used to value the liabilities. The scheme
has been closed to new employees since 1999 and all new
contributions into the scheme are going into fixed
interest securities, with the split between equities and
bonds being 60% to 40% at the year end. Contributions
into the scheme have been increased. In addition to this
defined benefit scheme the Group retains funds within the
business to provide for retirement obligations for the
German and Austrian employees. Although these retirement
obligations are not fully funded the respective assets
and liabilities are included within debtors and creditors
on the Group balance sheet. All other pension provisions
in the Group are of a defined contribution nature.
UITF Abstract 34 on pre contract costs which was issued
in May 2002 has had no adverse impact on the Group. In
general the Group's contracts are of a relatively short-
term nature and the Group has always had a policy of
expensing all bid related costs as they are incurred.
Taxation
The Group's effective tax rate for the year at 39% is the
same as that of the prior year. While this is
significantly higher than the standard UK corporation tax
rate of 30% it is a direct result of more than 60% of the
Group's taxable profit arising in the US where the
effective federal and state tax rate is nearly 40% and
less than 5% of taxable profit arising in the UK .
Cash flow and net debt
The operating cash flow of the Group at #43.2m represents
126% of the operating profit before goodwill amortisation
in the year compared to #32.2m and 127% respectively for
the prior year. Cash conversion is one of the great
strengths of this Group and is something that all of our
key employees work hard to achieve. Working capital
controls have remained good with an inflow from working
capital of #0.5m in the year, despite sales increases of
21%. However, net capital expenditure has increased over
the prior year and at #12.7m, of which #1.8m was spent on
land and buildings, it was one and a half times the
depreciation charge.
Although net debt levels at the year end increased to
#68.0m from #63.2m the previous year, the gearing level
reduced from 86% to 68%. The majority of the Group's debt
is denominated in US dollars reflecting its profit and
asset profile.
The net interest charge in the year of #3.9m more than
doubled compared to the previous year reflecting the
higher debt levels taken on since the acquisition of
Suncoast in October 2001. The Group increased its banking
facilities in December 2002 to help fund the McKinney
acquisition, when the revolving credit facility was
increased from #40m to #53m and a new four year term loan
of $18m was negotiated. Around 60% of the Group's net
debt is subject to floating interest rates with 40%
subject to fixed rates until September 2004.
The Group has sufficient headroom in its banking
facilities and its banking covenants to give it
flexibility in funding its existing operations and future
strategy. The Group's EBITDA interest cover for 2002 was
11.1 times (2001: full year pro forma of 7.8 times), well
within its banking covenant.
Earnings and dividends
After a minority interest charge of #0.2m, slightly below
the prior year, and an increase in the weighted average
number of shares in issue during the year of 3,109,000
reflecting the placing of shares which was made in
December 2001, earnings per share for the year were
27.5p, an increase of 17% on 2001 reflecting an increase
in the goodwill charge from #1.3m to #3.1m in 2002.
Earnings per share before goodwill amortisation of 32.7p
were 27% ahead of the prior year.
Following the recommendation of a final dividend of 6.6p,
the total dividend for the year of 9.9p, an increase of
8% on 2001, is covered 2.6 times by earnings and 3.1
times by earnings before goodwill amortisation.
Consolidated Profit and Loss account
for the year ended 31 December 2002
2002 2002 2001
2002 Continuing Continuing Continuing
Note Continuing operations operations operations
operations Acquisitions Total Total
#000 #000 #000 #000
------------------------------------------------------------------------------------------------------
Turnover 1 502,403 8,568 510,971 422,248
Operating costs (472,451) (7,276) (479,727) (398,070)
------------------------------------------------------------------------------------------------------
Operating profit before
amortisation of goodwill 32,955 1,389 34,344 25,429
Amortisation of goodwill (3,003) (97) (3,100) (1,251)
------------------------------------------------------------------------------------------------------
Operating profit 29,952 1,292 31,244 24,178
Net interest payable (3,914) (1,785)
------------------------------------------------------------------------------------------------------
Profit on ordinary activities
before taxation 27,330 22,393
Taxation 2 (10,684) (8,684)
------------------------------------------------------------------------------------------------------
Profit on ordinary activities
after taxation 16,646 13,709
Equity minority interests (233) (342)
------------------------------------------------------------------------------------------------------
Profit for the financial year 16,413 13,367
Dividends paid and proposed 3 (6,284) (5,401)
------------------------------------------------------------------------------------------------------
Retained profit for the financial year 10,129 7,966
======================================================================================================
Basic earnings per share 4 27.5p 23.6p
------------------------------------------------------------------------------------------------------
Earnings per share before
amortisation of goodwill 4 32.7p 25.8p
------------------------------------------------------------------------------------------------------
Diluted earnings per share 4 27.3p 23.4p
------------------------------------------------------------------------------------------------------
Diluted earnings per share before
amortisation of goodwill 4 32.5p 25.6p
------------------------------------------------------------------------------------------------------
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2002
2002 2001
#000 #000
------------------------------------------------------------------------------------------------------
Profit for the financial year 16,413 13,367
Currency translation differences on overseas investments (107) (555)
Prior year adjustment in 2001 - (1,081)
------------------------------------------------------------------------------------------------------
Total recognised gains and losses relating to the year 16,306 11,731
======================================================================================================
Consolidated Balance Sheet
As at 31 December 2002
2002 2001
#000 #000
------------------------------------------------------------------------------------------------
Fixed assets
Positive goodwill 68,529 60,752
Negative goodwill (2,239) (105)
------------------------------------------------------------------------------------------------
66,290 60,647
Other intangible assets 374 372
------------------------------------------------------------------------------------------------
Intangible assets 66,664 61,019
Tangible assets 79,815 59,277
Investments - -
------------------------------------------------------------------------------------------------
146,479 120,296
------------------------------------------------------------------------------------------------
Current assets
Stocks 15,147 12,466
Debtors 143,897 120,318
Cash at bank and in hand 16,206 12,209
------------------------------------------------------------------------------------------------
175,250 144,993
Creditors: amounts falling due within one year (141,404) (129,143)
------------------------------------------------------------------------------------------------
Net current assets 33,846 15,850
------------------------------------------------------------------------------------------------
Total assets less current liabilities 180,325 136,146
Creditors: amounts falling due after more than one year (72,341) (56,825)
Provision for liabilities and charges (7,840) (6,046)
------------------------------------------------------------------------------------------------
Net assets 100,144 73,275
================================================================================================
Capital and reserves
Called up share capital 6,498 5,968
Share premium account 35,293 22,202
Capital redemption reserve 7,629 7,629
Profit and loss account 46,494 36,472
------------------------------------------------------------------------------------------------
Equity shareholders' funds 95,914 72,271
Equity minority interests 4,230 1,004
------------------------------------------------------------------------------------------------
100,144 73,275
================================================================================================
Consolidated Cash Flow Statement
for the year ended 31 December 2002
2002 2002 2001 2001
#000 #000 #000 #000
------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 43,171 32,187
Returns on investment and servicing of finance
Interest received 288 482
Interest paid (4,073) (1,951)
Interest element of finance lease rental
payments (104) (71)
Finance costs of new bank loans (297) (1,646)
Payments to minority interests (172) (115)
------------------------------------------------------------------------------------------------
(4,358) (3,301)
Taxation
UK corporation tax paid (403) (505)
Overseas tax paid (8,572) (7,732)
------------------------------------------------------------------------------------------------
(8,975) (8,237)
Capital expenditure
Purchase of intangible fixed assets (82) (72)
Purchase of tangible fixed assets (16,868) (11,385)
Sale of tangible fixed assets 4,250 1,223
------------------------------------------------------------------------------------------------
(12,700) (10,234)
Acquisitions and disposals
Acquisition of subsidiary undertakings (32,941) (67,343)
Net cash acquired with subsidiary undertakings 899 13
------------------------------------------------------------------------------------------------
(32,042) (67,330)
Equity dividends paid (5,609) (5,000)
------------------------------------------------------------------------------------------------
Net cash outflow before use of liquid
resources and financing (20,513) (61,915)
Management of liquid resources
(Payments into)/repayments from short
term bank deposits (61) 947
Financing
Issue of new shares 13,621 7,944
New bank loans drawn 72,555 62,153
Repayment of bank loans and loan notes (54,759) (18,407)
Sale and leaseback transactions 739 887
Capital element of finance lease rental payments (902) (396)
------------------------------------------------------------------------------------------------
Net cash inflow from financing 31,254 52,181
------------------------------------------------------------------------------------------------
Increase/(decrease) in cash in the year 10,680 (8,787)
================================================================================================
Notes to the accounts
1.Segmental analysis
Turnover, operating profit and net assets may be analysed as follows:
------------------------------------------------------------------------------------------------
2002 2002 2001
2002 Continuing Continuing Continuing
Continuing operations operations operations
operations Acquisitions Total Total
#000 #000 #000 #000
------------------------------------------------------------------------------------------------
Turnover
Class of business
Foundation services 356,416 5,025 361,441 347,826
Specialist services 145,987 3,543 149,530 74,422
------------------------------------------------------------------------------------------------
502,403 8,568 510,971 422,248
================================================================================================
Geographical origin
United Kingdom 104,704 2,034 106,738 100,130
The Americas 242,567 - 242,567 188,761
Continental Europe and overseas 133,918 1,681 135,599 115,008
Australia 21,214 4,853 26,067 18,349
------------------------------------------------------------------------------------------------
502,403 8,568 510,971 422,248
================================================================================================
Operating profit
Class of business
Foundation services 26,625 761 27,386 23,216
Specialist services 5,490 531 6,021 2,762
------------------------------------------------------------------------------------------------
32,115 1,292 33,407 25,978
------------------------------------------------------------------------------------------------
Geographical origin
United Kingdom 3,830 117 3,947 3,167
The Americas 19,536 - 19,536 16,344
Continental Europe and overseas 7,490 430 7,920 5,820
Australia 1,259 745 2,004 647
------------------------------------------------------------------------------------------------
32,115 1,292 33,407 25,978
Unallocated central costs - (2,163) (1,800)
------------------------------------------------------------------------------------------------
31,244 24,178
------------------------------------------------------------------------------------------------
Net interest payable (3,914) (1,785)
------------------------------------------------------------------------------------------------
Profit on ordinary activities before taxation 27,330 22,393
================================================================================================
The amortisation of goodwill has been analysed by
geographic segment as follows: United Kingdom #376,000
(2001: #288,000), The Americas #2,802,000 (2001:
#1,005,000), Continental Europe and overseas #122,000
(2001: #62,000) and Australia a credit of #200,000 (2001:
credit #104,000).
The amortisation of goodwill has been analysed by class of
business as follows: Foundation services #292,000 (2001:
#336,000), Specialist services #2,808,000 (2001:
#915,000).
1. Segmental analysis continued
2002 2001
Net assets #000 #000
Class of business
Foundation services 73,986 69,532
Specialist services 94,153 66,945
--------------------------------------------------------------------------------------
168,139 136,477
Net debt (67,995) (63,202)
--------------------------------------------------------------------------------------
100,144 73,275
--------------------------------------------------------------------------------------
Geographical origin
United Kingdom 22,839 9,194
The Americas 115,507 109,862
Continental Europe and overseas 26,251 15,468
Australia 3,542 1,953
--------------------------------------------------------------------------------------
168,139 136,477
Net debt (67,995) (63,202)
--------------------------------------------------------------------------------------
100,144 73,275
======================================================================================
In the opinion of the directors: (i) it is not deemed
appropriate to analyse net debt and net interest payable
thereon by geographic segment, and (ii) turnover by
destination is not materially different from turnover by
origin.
2002 2001
2. Taxation #000 #000
The taxation charge comprises:
--------------------------------------------------------------------------------------
Current tax
UK corporation tax on the profits of the period 342 411
Overseas tax 9,555 9,285
Adjustments in respect of previous periods (1,030) 37
--------------------------------------------------------------------------------------
8,867 9,733
--------------------------------------------------------------------------------------
Deferred tax
Current year 359 (1,049)
Prior year 1,458 -
--------------------------------------------------------------------------------------
1,817 (1,049)
--------------------------------------------------------------------------------------
======================================================================================
10,684 8,684
======================================================================================
2002 2001
3. Dividends paid and proposed #000 #000
Ordinary dividends on equity shares
--------------------------------------------------------------------------------------
Interim paid 1,995 1,790
Final proposed 4,289 3,611
--------------------------------------------------------------------------------------
6,284 5,401
======================================================================================
An interim ordinary dividend of 3.3p (2001: 3.15p) per
share was paid on 31 October 2002. The final proposed
ordinary dividend of 6.6p (2001: 6.05p) per share will be
paid on 30 May 2003 to holders on the register at 2 May
2003.
4.Earnings per share
Earnings per share is calculated as follows:
-------------------------------------------------------------------------------------------------------
2002 2002 2001 2001
Basic Diluted Basic Diluted
-------------------------------------------------------------------------------------------------------
Profit after tax and minority interests #16,413,000 #16,413,000 #13,367,000 #13,367,000
-------------------------------------------------------------------------------------------------------
No. of No. of No. of No. of
shares shares shares shares
-------------------------------------------------------------------------------------------------------
Weighted average of ordinary shares in
issue during the year 59,749,130 59,749,130 56,640,447 56,640,447
-------------------------------------------------------------------------------------------------------
Add: Weighted average of shares under option
during the year - 993,116 - 168,862
-------------------------------------------------------------------------------------------------------
Add: Weighted average of own shares held - 218,625 - 318,000
-------------------------------------------------------------------------------------------------------
Subtract: Number of shares assumed issued at
fair value during the year - (827,442) - (79,362)
-------------------------------------------------------------------------------------------------------
Adjusted weighted average ordinary shares
in issue 59,749,130 60,133,429 56,640,447 57,047,947
-------------------------------------------------------------------------------------------------------
pence Pence pence pence
-------------------------------------------------------------------------------------------------------
Earnings per share 27.5 27.3 23.6 23.4
=======================================================================================================
Earnings per share before amortisation of goodwill of
32.7p (2001: 25.8p) is calculated based on profit after
tax and minority interests before amortisation of
goodwill of #19,513,000 (2001: #14,618,000) and the
weighted average number of ordinary shares in issue
during the year of 59,749,130 (2001: 56,640,447).
Diluted earnings per share before amortisation of goodwill
of 32.5p (2001: 25.6p) is calculated based on profit
after tax and minority interests before amortisation of
goodwill of #19,513,000 (2001: #14,618,000) and the
adjusted weighted average number of ordinary shares in
issue during the year of 60,133,429 (2001: 57,047,947).
5. Foreign Currencies
Balance sheet items in foreign currencies are translated
into Sterling at closing rates of exchange at the balance
sheet date. However, if amounts receivable and payable
in foreign currencies are covered by a forward contract,
the contract rate of exchange is used for translation.
Profit and loss accounts and cash flows of overseas
subsidiary undertakings are translated into Sterling at
average rates for the year.
Exchange differences arising from the retranslation of
opening net assets and profit and loss accounts at
closing rates of exchange are dealt with as movements on
reserves. All other exchange differences are charged to
the profit and loss account.
The exchange rates used in respect of principal currencies are:
2002 2001
US Dollar: average for year 1.50 1.44
US Dollar: year end 1.60 1.45
Australian Dollar: average for year 2.77 2.79
Australian Dollar: year end 2.84 2.84
Euro: average for year 1.59 1.61
Euro: year end 1.53 1.64
6.Basis of preparation
The financial information set out above does not
constitute the Company's statutory accounts for the years
ended 31 December 2002 or 2001 but is derived from those
accounts. Statutory accounts for 2001 have been
delivered to the Registrar of Companies and those for
2002 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those
accounts: their reports were unqualified and did not
contain statements under section 237 (2) or (3) of the
Companies Act 1985.
Accounts will be posted to shareholders by 10 April 2003.
The Annual General Meeting will be held on 13 May 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANDKEELDEFE