RNS Number:4059P
RMC Group PLC
05 September 2003
RMC Group p.l.c.
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
The information presented below relates to the six months ended 30 June 2003 and
2002, unless otherwise stated.
2003 2002
#m #m
Total turnover 2,356.8 2,497.1
EBITA (excluding exceptional items) 106.5 140.9
Profit before tax
- excluding exceptional items 50.7 80.6
- including exceptional items 98.5 105.1
Earnings per share
- basic 21.8p 21.5p
- basic excluding exceptional items
and goodwill amortisation 15.7p 21.3p
Interim dividend per share 9.4p 9.4p
"As I indicated at the AGM, the key objective for the Board in 2003 is the next
phase of the re-shaping of the RMC Group. During the first half of this year, we
have made good progress in delivering this objective. The planned
rationalisation of our portfolio is progressing well, debt has been
substantially reduced, with gearing now below 60%, and we have already
identified new cost savings amounting to over #40m on an annualised basis
against the Board's target of at least #50m.
Against this background, our results are in line with the expectations set
earlier in the year. While market conditions in Germany remain difficult,
business performance elsewhere has generally been encouraging, with the recovery
at Rugby a particular highlight. We continue to seek ways to return the German
business to profitability.
We are making substantial progress rebuilding the long term value of RMC and the
Board is determined to deliver on its promises to shareholders."
Sir John Parker, Chairman
KEY POINTS
* Next phase of the re-shaping of RMC well underway.
* Profit before tax, excluding exceptionals, fell to #50.7m (2002: #80.6m),
due to the difficult trading conditions in Germany.
* In Great Britain, the Rugby cement plant has achieved consistently high
levels of production for the past six months.
* Key geographic markets stable, with the exception of Germany, with a number
exceeding expectations, notably Spain, Croatia and Australia.
* Further options to address the unacceptable level of losses in Germany are
being considered.
* Group net debt has been further reduced to #1,221.9m at 30 June 2003 from
#1,369.8m at 30 June 2002 and the Group is on track to meet its target of
below #1 billion by the end of 2003.
* Gearing reduced from 68% to just below 60%.
* Dividend for the full year to be maintained (subject to no unforeseen
events).
* The Board has set a target for annualised cost savings of at least #50m.
Full benefits to flow in 2005.
- savings amounting to over #40m already identified.
- restructuring charges estimated to be #35m.
OVERVIEW
Group results
As indicated in the Trading Review issued in July, with the exception of
Germany, the Group's results in the first half of 2003 were broadly in line with
our expectations. There were particularly encouraging performances from the
cement business in Great Britain, and from Spain, Croatia and Australia.
Total turnover from continuing operations fell by #11.1m to #2,299.2m. Falls in
the USA and Germany were largely offset by increased turnover in the Rest of
Europe and the Rest of the World.
EBITA from continuing operations (profit before tax, interest, amortisation of
goodwill and exceptional items) fell by #34.6m to #103.3m. This decline was
mainly attributable to Germany (#33.9m), reflecting substantially lower cement
prices, which have seen a dramatic fall of nearly 50% in the last 18 months, and
the impact of weak demand on ready mixed concrete margins. Profits from the
property division were #3.7m (2002: #8.4m).
Goodwill amortisation was #17.7m (2002: #17.5m).
Net exceptional items delivered a profit of #47.8m (2002: #24.5m). This related
to the disposal of non-core businesses, primarily Hales, the waste management
division.
Net interest fell by #4.7m to #38.1m, reflecting reduced borrowing levels and
lower interest rates.
The impact of changes in exchange rates was to decrease profit before tax
excluding exceptional items by #1.1m, with the weakness of the US dollar
partially offset by the strength of the euro.
Profit before tax, excluding exceptional items, fell by #29.9m to #50.7m. Profit
before tax, including exceptional items, fell by #6.6m to #98.5m.
The reported tax rate was 29.7% (2002: 32.9%). The underlying tax rate, based on
profit before tax excluding goodwill amortisation and exceptional items, was
22.2% (2002: 28.4%). This fall in the underlying tax rate is the result of a
change in the mix of profits, and greater focus on improving the Group's tax
structure.
Earnings per share, excluding exceptional items and goodwill amortisation, were
15.7p, compared with 21.3p in 2002. Including these items, basic earnings per
share were 21.8p (2002: 21.5p).
Group cash flow from operating activities was #50.1m (2002: #74.1m). Net
payments in relation to capital expenditure were #70.6m (2002: #54.8m).
Expenditure on acquisitions totalled #41.6m (2002: #12.9m), while disposals
generated #162.3m (2002: #234.7m). Compared to last year, net borrowings fell
from #1,369.8m to #1,221.9m at 30 June 2003, with gearing falling to just below
60% (2002: 68%).
Dividend
The Board continues to recognise the importance of the dividend to shareholders,
particularly during this phase of re-shaping the business. As a consequence,
recognising the strength of cash cover, the improving balance sheet and the
prospects of medium term earnings recovery, the Board is minded, in the absence
of unforeseen circumstances, to maintain the current level of dividend for the
full year. Accordingly, the Board has declared an interim dividend of 9.4p per
ordinary share (2002: 9.4p), which will be paid on 1 December 2003 to
shareholders on the Register on 31 October 2003.
Group developments
* As part of its 2002 business review, the Group identified the
rationalisation of its business portfolio, debt reduction and achievement
of a 12% EBITA return on net operating assets in the medium term as the key
elements of its future strategy. The decision to concentrate on core
products (concrete, aggregates and cement), positions the Group to achieve
greater synergies from vertical integration and generate improved returns,
and has led to a number of disposals. Most of the rationalisation programme
was successfully implemented by the spring of this year, in what were
difficult market conditions for asset sales. The strategy was then further
refined, with Great Britain and Ireland, Continental Europe and the USA
confirmed as the Group's key strategic business areas.
Implementation of this business portfolio rationalisation programme
contributed to net debt falling by more than #300m in 2002, with further
disposals completed in the first half of 2003. These included the sale of
the assets of Hales Waste Control Limited and RMC Environmental Services
Limited in Great Britain ("Hales"), Rugby IPD in the USA and the Group's
businesses in Belgium and Jordan. In addition, the disposal of Metromont
Prestress Company, our US precast /prestress concrete business, was
completed in July. With disposal proceeds of over #400m since the start of
2002, the Group remains on target to reduce net debt below #1 billion by
the end of 2003.
* At our Annual General Meeting in May 2003, we announced that in addition to
the further streamlining of the Group's organisation, the next phase of the
reshaping of RMC would involve a review of the cost base of the Group's
core businesses, with the aim of improving operational efficiency. In this
context, the Board has set a target for cost savings to be achieved of at
least #50m. Supported by L.E.K. Consulting, the review has focused on the
Group's major areas of operations, namely Great Britain, Germany, France,
Spain and the USA.
Detailed work has confirmed cost savings of over #40m per annum and work
continues on validating further savings that have been identified. As well
as reducing staff costs, savings will be generated through the
rationalisation of IT systems and infrastructures. At the year-end, the
Board will outline these opportunities in detail and the basis of their
delivery. The changes necessary to achieve these savings will mainly be
implemented during the course of 2004.
These cost reductions are expected to result in a charge against profits of
approximately #35m over the period during which the changes are
implemented.
In Great Britain, the concrete and aggregates divisions will be combined in
order to improve operational efficiency. The new organisational structure
will be based on 5 regions, replacing the current 21 operating companies.
In Germany, the concrete products businesses will be restructured and there
will be further integration of regional operations. Plant closures and work
to rationalise the complex subsidiary holdings structure is being
accelerated, IT systems will be rationalised, and a shared service centre
established.
These cost reductions only partially address the unacceptable level of
losses in Germany and further options are being considered.
In the USA, our operations in the Carolinas and Georgia, and in Florida are
being reorganised. This will involve the merger of adjacent businesses.
Additional savings will arise from the rationalisation of IT systems and
back-office functions.
In France, the initial focus will be on the rationalisation of IT systems
and costs. In Spain, the focus will be on the rationalisation of
back-office functions.
This cost reduction programme is aimed at positioning RMC at the forefront
of industry cost competitiveness, and is an essential component in
delivering a 12% return on net operating assets in the medium term.
The Group is continuing to position itself to selectively reinvest in
support of its core businesses, targeting returns which will enhance the
Group's ability to achieve its financial targets.
* The search process for a new Group Chief Executive to succeed Stuart Walker
on his retirement is now well advanced. The Board expects to be in a
position to announce the appointment during the fourth quarter of this
year.
* A review of the UK pension funds is underway and will be completed by the
end of the year. Preliminary indications are that the UK pension
contribution could increase by up to #10m per annum in 2004.
RESULTS (CONTINUING OPERATIONS) AND BUSINESS DEVELOPMENTS BY REGION
Great Britain
Results
2003 2002
#m #m
Total turnover 526.7 510.7
EBITA (excluding exceptional items) 41.0 37.5
Excluding the discontinued activities of Hales, turnover of #526.7m was #16.0m
higher than last year. EBITA rose by #3.5m to #41.0m, despite the property
division profits being #1.6m lower at #2.9m.
The cement division benefited from improved production at the Rugby cement
plant, which is now consistently achieving its design capacity. In January,
during the plant's annual shutdown, the kiln's burners were replaced, and other
modifications and upgrades were implemented. In the four months of full
production to the end of June, clinker production averaged 100,000 tonnes per
month and this level of production has been sustained over the summer. Although
sales volumes and prices were similar to 2002, the increased output from the
Rugby plant has enabled sales of own production to progressively displace sales
of lower margin externally sourced cement. Additional costs incurred during the
periods of volatile output at Rugby can now be reduced as a priority. As a
result of the improved performance of the Rugby plant, the cement division's
profitability rose by #5m.
Although aggregates sales were lower than last year, when sales rose in advance
of the introduction of the Aggregates Levy in April 2002, the aggregates
division benefited from improved margins, resulting in a small increase in
profitability. The readymix division saw a decline in market share, principally
due to its relatively strong presence in the south east of England, where market
demand has fallen by an estimated 10%, and a focus on margin improvement.
The building products division benefited from the increase in Network Rail's
investment programme and the resulting record demand for railway sleepers. In
response to this, RMC has increased its sleeper production capacity by 50%.
Taken together, profitability of the aggregates, readymix and building products
divisions fell by #1m.
Market conditions in the second half of the year are expected to be similar to
those experienced during the first half, although there may be some softening.
Encouraging aspects are the level of government investment in public services
and infrastructure, and Network Rail's track renewal programme. However, demand
in the south east is expected to remain depressed. The performance of the cement
division will continue to benefit from the improved production of the Rugby
plant and the operating improvement programmes that can now be implemented on
the platform of stable operating conditions.
Business developments
* Permission has been granted for the Rugby cement plant to conduct trials
using chipped tyres as a partial replacement for coal for a six-month
period. These are likely to start after the annual maintenance shutdown in
January next year.
* A new state-of-the-art concrete block and concrete block paving factory
costing #9m was opened at Northfleet, Kent. In addition, following the
transfer of concrete block production to a recently acquired facility at
Penrith, the block works at Shap in Cumbria has been converted to concrete
block paving production. Together, these developments have improved the
nationwide coverage of these products.
* Transfer of the financial back-office functions of the aggregates and
readymix divisions to the Shared Service Centre (SSC) based at Teesside has
been completed. Plans for the transfer of the back-office functions of the
building products division to the SSC during the second half of the year
are at an advanced stage.
* A new rail terminal to handle dry mortar from the factory at Dove Holes in
Derbyshire, which was commissioned in the last quarter of 2002, has been
opened at Bletchley, near Milton Keynes. This was partly funded by a
Strategic Rail Authority grant and opens up access to the Home Counties
segment of the rapidly growing dry silo mortar market.
* In the cement division, a new ash storage facility at Long Bennington, and
new process and storage facilities at Cottam power station were
commissioned. Also, following the award of a 5-year contract, pulverised
fuel ash supplies to the Terminal 5 project at Heathrow airport have
commenced.
Germany
Results
2003 2002
#m #m
Total turnover 351.0 365.9
EBITA (excluding exceptional items) (31.4) 2.5
As indicated at the AGM in May, performance in Germany has been severely
affected by a further substantial decline in cement prices and the impact of
weak demand for ready mixed concrete on concrete margins.
Excluding the discontinued activities of YTONG, turnover of #351.0m was #14.9m
lower and EBITA fell by #33.9m to a loss of #31.4m, of which #2.8m was
attributable to the strength of the euro.
The fall in EBITA was principally attributable to the cement division, where the
domestic price for cement fell by one-third compared with the first half of last
year, from Euro45 to about Euro30 per tonne, having been around Euro55 two years ago. The
volume of cement sold rose by 8%, reflecting a full six months of in-house
sourcing of cement to the concrete division. However, weak demand for ready
mixed concrete meant that concrete margins fell sharply, although our volumes
rose by 1%. Aggregates volumes were only slightly down, having benefited from
continuing demand due to the flood repair damage in the east, while prices were
relatively stable.
Market conditions in Germany for the remainder of 2003 offer little sign of
recovery, although seasonality of demand means that the loss in the second half
is expected to be lower than in the first half. Although RMC, along with its
major competitors, has announced its intention to raise cement prices, this will
have a limited impact in 2003 due to the terms of existing contracts. Weak
demand and over-capacity mean that ready mixed concrete margins will continue to
remain under pressure. Any benefit from the increase in housing permits granted
early in the year is likely to be spread over a number of years, and
construction demand is still expected to be lower than last year.
Higher cement prices are important for the Group, as well as the industry as a
whole, and could mean that 2003 represents the low point of our financial
performance in Germany. Each Euro5 per tonne price rise will increase RMC's profits
by around Euro20m, provided it is reflected in concrete prices.
Business developments
* As the construction market in Germany has contracted in recent years, the
business has responded by taking a number of actions that have led to
significant job reductions and plant closures. Further action has been
taken to reduce costs this year, including headcount reductions in all
divisions, reduction of variable and fixed costs, and savings on long-term
IT contract costs.
Rest of Europe
Results
2003 2002
#m #m
Total turnover 647.5 587.3
EBITA (excluding exceptional items) 48.3 48.2
Performance in the Rest of Europe benefited from strong demand in Croatia, but
this was offset by the impact of weak prices in Poland and lower demand in
France. Excluding the impact of the discontinued activities of YTONG, Belgium
and the Netherlands, turnover rose by #60.2m to #647.5m. EBITA was virtually
unchanged at #48.3m (2002: #48.2m). Profit from property disposals fell by
#3.1m, but this was offset by the strength of the euro, which increased profit
by #4.3m.
In France, underlying profit (excluding exchange rate impact) fell in response
to weaker demand. However, profit continued to grow strongly in Spain. In
Ireland, demand was higher than had been anticipated, although pricing was
competitive, resulting in profits similar to last year. Trading conditions
remain difficult in Austria. However, the business is benefiting from a
reorganisation that is currently under way.
In Croatia, profits rose as our operations benefited from strong demand in the
road building and tourism sectors. In the Czech Republic, higher sales of
concrete, improved margins and the contribution from the cement grinding plant
that came into operation last year resulted in increased profits. In Poland,
harsh winter conditions together with a fall in cement prices resulted in lower
profits.
The market conditions prevalent in the Rest of Europe during the first half of
2003 are expected to continue through the second half of the year.
Business developments
* In Austria, a business reorganisation is being implemented, with the
rationalisation of the aggregates and readymix divisions almost complete.
This will be extended to the concrete products division during the second
half of the year.
* In Ireland, the purchase of the Breton-Roecrete business by Readymix plc,
the Group's Irish subsidiary, will consolidate its position in the concrete
flooring market in the Republic.
* In Spain, the number of mobile ready mixed concrete plants operated by the
concrete division has increased from 13 to 23 over the course of the last
18 months. These have enabled the business to successfully increase the
geographic spread of its competition for large public sector contracts and
currently account for about one-third of future contracted production,
compared with one-sixth at the start of 2002.
* In Croatia, the new coal grinding mill is fully operational and is
supplying two of the Group's three cement plants in the country. The third
plant is currently being converted to coal from oil. Large volumes of
cement are being supplied to the new Zagreb/Split motorway.
* In Poland, a reorganisation of RMC Polska resulted in a 7% reduction in the
number of employees and the outsourcing of certain activities. The Chelm
cement plant and the Gdynia cement grinding plant were successfully
recommissioned after modernisation work undertaken during the winter.
USA
Results
2003 2002
#m #m
Total turnover 555.2 647.8
EBITA (excluding exceptional items) 23.1 32.4
With the exception of the Carolinas and Georgia, underlying performance in the
USA (excluding exchange rate impact) was broadly similar to last year. Turnover
fell by #92.6m to #555.2m. EBITA fell by #9.3m to #23.1m.
The exchange rate reduced turnover by #61.3m and EBITA by #2.8m.
Overall, trading conditions remained unchanged, the weakness in the
non-residential sector being compensated by the continuing strength of the
residential sector. Sales of aggregates, cement and concrete were higher than in
2002, but sales of concrete products in the Carolinas and Georgia were lower.
Pressure on margins was partially offset by profit improvement initiatives and
reductions in overhead costs.
Profits in the eastern USA fell by #5.8m to #8.7m, of which #1.1m was due to
exchange rates.
As anticipated, the Carolinas and Georgia proved to be the most difficult
markets in the first half of 2003. The impact of continuing weak demand and the
resulting pricing pressures was compounded by the disruption of construction
activity by extremely wet weather. This affected our heavy building materials
(HBM) businesses and resulted in significantly lower profitability. The
prestressed concrete business, Metromont Prestress, which is based in South
Carolina, with operations in adjacent states, was also affected by weak demand.
In Florida, the continuing strength of the residential market meant that
underlying profit of the HBM businesses increased slightly.
Profits in the western USA fell by #3.5m to #14.4m, of which #1.7m was due to
the weakness of the dollar.
In the southwest, which includes Arizona, Nevada, southern New Mexico and El
Paso in Texas, and in the important northern California market, underlying
profits of the HBM businesses were similar to last year. In these areas, the
strength of housing and infrastructure demand offset weakness in the commercial
sector.
Although we do not anticipate any dramatic change in market conditions during
the remainder of the year, activity levels have firmed in recent months. If
these were to continue, and we do not encounter adverse weather conditions, we
would expect performance in the second half of the year to be better than the
first.
Business developments
* At the end of July, RMC's 80% holding in Metromont Prestress Company was
sold to the minority shareholders.
Rest of the World
Results
2003 2002
#m #m
Total turnover 218.8 198.6
EBITA (excluding exceptional items) 22.3 17.3
Performance in the Rest of the World reflected the continuing favourable market
conditions in Australia and the contribution from Adelaide Brighton.
Turnover rose by #20.2m to #218.8m. EBITA increased by #5.0m to #22.3m, of which
#0.4m related to exchange rate movements.
In Australia, Adelaide Brighton's turnover rose by 17%, reflecting steady volume
growth in cement and lime, together with benefits from the 2002 price increases
and the full half-year contribution from Hy-Tec Concrete. For the remainder of
2003, demand is expected to continue to remain firm.
In the Gulf States, profits rose in response to increased demand, while results
in Israel were held back by the continuing political uncertainty.
Business developments
* In Australia, at the start of July, Adelaide Brighton acquired 55% of the
concrete products company C&M Brick Pty Limited and 100% of the Rocla
Pavers and Masonry business of Rocla Pty Limited for a combined cash
consideration of Aus$50m plus the assumption of debt of approximately
Aus$10m. These acquisitions position Adelaide Brighton as the number two
in this growing and less cyclical market segment.
OUTLOOK
The Group will continue its drive to re-shape the business and balance this
against the delivery of a satisfactory trading performance and dividend rewards
to shareholders. While market conditions in Germany continue to be particularly
challenging, recent price increases and the actions we are taking offer the
prospect of some recovery in 2004. The Group will benefit from the improved
performance of the Rugby cement plant and there are early signs that market
conditions in the USA could firm during the remainder of the year. Provided we
do not encounter any unexpected adverse events, RMC expects that its overall
financial performance will be within the range of market expectations for the
year.
GROUP PROFIT AND LOSS ACCOUNT
Year to
6 months to 30.06.03 6 months to 30.06.02 31.12.02
Excluding Excluding
exceptional Exceptional exceptional Exceptional
items items Total items items Total Total
#m #m #m #m #m #m #m
Turnover
Total turnover
including
Group share of
joint
ventures
and associated 2,356.8 2,356.8 2,497.1 2,497.1 4,971.4
undertakings
Less: Share of
turnover of
joint ventures
and
associated 210.1 210.1 231.3 231.3 469.1
undertakings _______ _______________________ _____________________
Turnover of
subsidiary
undertakings 2,146.7 2,146.7 2,265.8 2,265.8 4,502.3
======= ======================= =====================
_______ _______________________ _____________________
Continuing 2,082.6 2,082.6 2,081.4 2,081.4 4,213.8
operations
Acquisitions 6.5 6.5 - - -
Discontinued 57.6 57.6 184.4 184.4 288.5
operations _______ _______________________ _____________________
Turnover of
subsidiary
undertakings 2,146.7 2,146.7 2,265.8 2,265.8 4,502.3
======= ======================= =====================
Operating
profit
_______ _______________________ _____________________
Continuing 80.5 80.5 115.1 115.1 171.5
operations
Acquisitions 0.6 0.6 - - -
Discontinued 3.2 3.2 3.0 3.0 9.9
operations _______ _______________________ _____________________
Operating 84.3 84.3 118.1 118.1 181.4
profit
Share of
operating
profit
of joint
ventures and
associated 4.5 4.5 5.3 5.3 11.1
undertakings _______ _______________________ _____________________
Total trading 88.8 88.8 123.4 123.4 192.5
profit
Non-operating
exceptional
items
- profit on
disposal of
discontinued - 57.3 57.3 - 24.5 24.5 39.5
operations
- loss on
disposal of
continuing - (9.5) (9.5) - - - (13.9)
operations
- profit on
disposal of
fixed assets - - - - - - 1.7
__________________________________________________________________________________________
Profit before
net interest
payable 88.8 47.8 136.6 123.4 24.5 147.9 219.8
Interest
payable (net)
- Group 36.9 - 36.9 41.2 - 41.2 80.5
- Joint
ventures and
associated 1.2 - 1.2 1.6 - 1.6 3.2
undertakings
__________________________________________________________________________________________
Profit on
ordinary
activities
before 50.7 47.8 98.5 80.6 24.5 105.1 136.1
taxation _______ _______ _______ _______
Taxation 29.3 34.6 37.9
_______ _______ _______
Profit on
ordinary
activities
after 69.2 70.5 98.2
taxation
Minority 11.5 13.5 27.9
interests _______ _______ _______
Profit
attributable
to
shareholders 57.7 57.0 70.3
Dividends 24.9 24.9 82.6
_______ _______ _______
Retained 32.8 32.1 (12.3)
profit/(loss) ======= ======= =======
Earnings per
share of 25p
Basic 21.8p 21.5p 26.5p
Basic 9.1p 14.8p 28.4p
excluding
exceptional
items
Basic
excluding
exceptional
items
and goodwill 15.7p 21.3p 41.4p
amortisation
Diluted 21.8p 21.4p 26.5p
Diluted 9.1p 14.7p 28.4p
excluding
exceptional
items
Diluted
excluding
exceptional
items
and goodwill 15.7p 21.2p 41.3p
amortisation
Dividend per 9.4p 9.4p 31.2p
share
GROUP BALANCE SHEET
At 30.06.03 At 30.06.02 At 31.12.02
_____________________________________________________________
#m #m #m #m #m #m
Fixed assets
Intangible 579.0 572.5 562.7
assets -
Goodwill
Tangible 2,745.8 2,776.6 2,725.2
assets
Properties 35.1 34.8 30.4
held for
resale
Joint 80.7 81.6 77.5
ventures
Associated 67.0 81.6 70.9
undertakings
Other 5.0 18.5 4.8
investments _______ _______ _______
152.7 181.7 153.2
_______ _______ _______
3,512.6 3,565.6 3,471.5
Current
assets
Stocks 292.8 297.3 291.7
Debtors - due 1,023.7 1,023.5 850.6
within one
year
Debtors - due 54.2 60.7 60.6
after one _______ _______ _______
year
1,077.9 1,084.2 911.2
Investments 12.6 12.4 11.8
Cash at bank 149.9 122.1 117.2
and in hand _______ _______ _______
1,533.2 1,516.0 1,331.9
_______ _______ _______
Creditors:
amounts
falling due
within one
year
Loans and 475.4 282.2 245.4
overdrafts
Dividend 24.9 24.9 57.7
Creditors 1,009.8 962.3 914.9
_______ _______ _______
1,510.1 1,269.4 1,218.0
_______ _______ _______
Net current 23.1 246.6 113.9
assets _______ _______ _______
Total assets 3,535.7 3,812.2 3,585.4
less current
liabilities
Creditors:
amounts
falling due
after more
than one
year
Bank and other 909.0 1,222.1 1,063.2
loans
Deferred 46.3 34.3 32.9
creditors _______ _______ _______
955.3 1,256.4 1,096.1
_______ _______ _______
Provisions for
liabilities
and charges
Deferred 272.0 280.2 270.0
taxation
Other 259.9 257.9 264.8
provisions _______ _______ _______
531.9 538.1 534.8
_______ _______ _______
1,487.2 1,794.5 1,630.9
_______ _______ _______
Net assets 2,048.5 2,017.7 1,954.5
======= ======= =======
Capital and
reserves
Called up 66.3 66.3 66.3
equity share
capital
Share premium 650.6 650.3 650.6
account
Profit and 1,093.6 1,063.8 1,002.1
loss account _______ _______ _______
Shareholders' 1,810.5 1,780.4 1,719.0
equity funds
Minority
interests
(including
non-
equity 238.0 237.3 235.5
interests) _______ _______ _______
Total capital 2,048.5 2,017.7 1,954.5
and reserves ======= ======= =======
SUMMARISED GROUP CASH FLOW STATEMENT
6 months 6 months Year to
to 30.06.03 to 30.06.02 31.12.02
______________________________________
#m #m #m
Cash flow from operating activities 50.1 74.1 392.0
Dividends from joint ventures and 7.3 2.8 8.2
associates
Returns on investments and servicing of (46.5) (44.5) (103.2)
finance
Taxation (9.6) (7.7) (36.2)
Capital expenditure (net) and financial (70.6) (54.8) (115.5)
investment*
Acquisitions (41.6) (12.9) (30.8)
Disposals 162.3 234.7 239.8
Equity dividends paid to RMC (57.7) (57.7) (82.6)
shareholders ______________________________________
Net cash (outflow)/inflow before (6.3) 134.0 271.7
financing
Equity financing:
Issues of equity share capital - 0.8 1.2
Minority interests equity capital (0.8) 8.2 7.0
contributions ______________________________________
Change in net debt (7.1) 143.0 279.9
======================================
Opening net debt (1,179.6) (1,489.4) (1,489.4)
Foreign currency translation (36.6) (9.5) 17.1
adjustments
New Group undertakings/undertakings 1.4 (13.9) 12.8
sold
Change in net debt arising from cash (7.1) 143.0 279.9
flows ______________________________________
Closing net debt (1,221.9) (1,369.8) (1,179.6)
======================================
* Comprises investment in fixed assets of #81.5 million (30.06.02: #77.3
million; 31.12.02: #185.0 million), less fixed asset disposal proceeds of
#10.9 million (30.06.02: #22.5 million; 31.12.02: #69.5 million)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months 6 months Year to
to 30.06.03 to 30.06.02 31.12.02
______________________________________
#m #m #m
Profit attributable to shareholders 57.7 57.0 70.3
Other gains and losses:
Foreign currency translation 53.8 27.4 12.3
adjustments ______________________________________
Total recognised gains and losses 111.5 84.4 82.6
relating to the period
Prior year adjustment in respect of FRS - (188.3) (188.3)
19 'Deferred tax' ______________________________________
Total recognised gains and losses since
the
last Interim / Annual Report 111.5 (103.9) (105.7)
======================================
MOVEMENT IN SHAREHOLDERS' EQUITY FUNDS
6 months 6 months Year to
to 30.06.03 to 30.06.02 31.12.02
______________________________________
#m #m #m
Profit attributable to shareholders 57.7 57.0 70.3
Dividends (24.9) (24.9) (82.6)
______________________________________
32.8 32.1 (12.3)
Foreign currency translation 53.8 27.4 12.3
adjustments
New share capital subscribed - 0.9 1.2
Goodwill written back on disposal 4.9 53.5 51.3
______________________________________
91.5 113.9 52.5
______________________________________
Opening shareholders' equity funds 1,719.0 1,854.8 1,854.8
Prior year adjustment in respect of FRS - (188.3) (188.3)
19 'Deferred tax' ______________________________________
Opening shareholders' equity funds (as 1,719.0 1,666.5 1,666.5
restated) ______________________________________
Closing shareholders' equity funds 1,810.5 1,780.4 1,719.0
======================================
GEOGRAPHICAL ANALYSIS OF TOTAL TURNOVER, EBITA, TOTAL TRADING PROFIT AND NET
OPERATING ASSETS (including joint ventures and associated undertakings)
Total turnover
6 months to 30.06.03 6 months to 30.06.02 Year to 31.12.02
__________________________________________________________________________________________________________
Continuing Discontinued Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total operations operations Total
#m #m #m #m #m #m #m #m #m
Great 526.7 57.6 584.3 510.7 56.3 567.0 1,037.1 118.7 1,155.8
Britain
Germany 351.0 - 351.0 365.9 30.1 396.0 766.0 30.3 796.3
Rest of 647.5 - 647.5 587.3 97.7 685.0 1,212.4 138.4 1,350.8
Europe
USA 555.2 - 555.2 647.8 - 647.8 1,255.4 - 1,255.4
Rest of 218.8 - 218.8 198.6 2.7 201.3 408.0 5.1 413.1
the
World
__________________________________________________________________________________________________________
2,299.2 57.6 2,356.8 2,310.3 186.8 2,497.1 4,678.9 292.5 4,971.4
==========================================================================================================
EBITA*
6 months to 30.06.03 6 months to 30.06.02 Year to 31.12.02
__________________________________________________________________________________________________________
Continuing Discontinued Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total operations operations Total
#m #m #m #m #m #m #m #m #m
Great 41.0 3.2 44.2 37.5 4.3 41.8 67.7 10.4 78.1
Britain
Germany (31.4) - (31.4) 2.5 (4.6) (2.1) (0.3) (4.6) (4.9)
Rest of 48.3 - 48.3 48.2 3.3 51.5 92.3 4.3 96.6
Europe
USA 23.1 - 23.1 32.4 - 32.4 57.2 - 57.2
Rest of 22.3 - 22.3 17.3 - 17.3 35.9 (0.1) 35.8
the
World
__________________________________________________________________________________________________________
103.3 3.2 106.5 137.9 3.0 140.9 252.8 10.0 262.8
==========================================================================================================
Total trading profit**
6 months to 30.06.03 6 months to 30.06.02 Year to 31.12.02
__________________________________________________________________________________________________________
Continuing Discontinued Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total operations operations Total
#m #m #m #m #m #m #m #m #m
Great 34.6 3.2 37.8 31.2 4.3 35.5 45.8 10.3 56.1
Britain
Germany (33.1) - (33.1) 1.0 (4.6) (3.6) (21.0) (4.6) (25.6)
Rest of 43.7 - 43.7 43.8 3.1 46.9 79.8 4.0 83.8
Europe
USA 22.6 - 22.6 31.6 - 31.6 51.8 - 51.8
Rest of 17.8 - 17.8 13.0 - 13.0 26.5 (0.1) 26.4
the
World
85.6 3.2 88.8 120.6 2.8 123.4 182.9 9.6 192.5
Net operating assets
At 30.06.03 At 30.06.02 At 31.12.02
__________________________________________________________________________________________________________
Continuing Discontinued Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total operations operations Total
#m #m #m #m #m #m #m #m #m
Great 952.6 - 952.6 983.8 38.4 1,022.2 946.0 39.1 985.1
Britain
Germany 670.4 - 670.4 639.7 - 639.7 594.0 - 594.0
Rest of 1,099.4 - 1,099.4 1,065.9 34.1 1,100.0 1,041.1 17.0 1,058.1
Europe
USA 525.8 - 525.8 607.6 - 607.6 523.2 - 523.2
Rest of 532.5 - 532.5 500.7 6.2 506.9 477.9 5.4 483.3
the
World
3,780.7 - 3,780.7 3,797.7 78.7 3,876.4 3,582.2 61.5 3,643.7
Continuing operations for the 6 months to 30.06.03 include contributions from
acquisitions in the Rest of Europe segment: total turnover #2.9 million, EBITA
#0.3 million and total trading profit #0.3 million; net operating assets at
30.06.03 were #5.3 million and in the USA segment: total turnover #3.6 million,
EBITA #0.3 million and total trading profit #0.3 million; net operating assets
at 30.06.03 were #2.6 million.
Discontinued operations comprise the waste management division in Great Britain,
which was sold in June 2003, and the Group's businesses in the Benelux countries
and Jordan which were sold in early 2003.
* Profit before interest, tax and goodwill amortisation.
** Total trading profit is stated after charging goodwill amortisation of
#17.7 million (30.06.02: #17.5 million; 31.12.02: #34.8 million).
NOTES TO THE INTERIM STATEMENT
1. The 2003 Interim Statement was approved by the Board of Directors on 4
September 2003.
2. The financial information does not amount to statutory accounts within
the meaning of Section 240 of the Companies Act 1985. The figures for the
year ended 31 December 2002 have been extracted from the statutory accounts
which have been filed with the Registrar of Companies. The Auditors' report
on those Accounts was unqualified and did not contain any statement under
Section 237 of the Companies Act 1985.
3. The financial information for the six months ended 30 June 2003 has not
been audited but has been reviewed by PricewaterhouseCoopers LLP who have
reported on the financial information without qualification in accordance
with the Bulletin 1999/4, Review of Interim Financial Information, issued
by the Auditing Practices Board.
4. This Interim Statement has been prepared using accounting policies set out
in the 2002 Annual Report and Accounts.
5. Assets and liabilities in foreign currencies have been translated into
sterling at rates of exchange ruling at the end of the financial periods.
Results and balance sheet movements in foreign currencies have been
translated into sterling using average rates of exchange. The rates of
exchange used for the translation of major currencies are as follows:-
Average As at
___________________________________________________________________________
6 months 6 months Year to
to 30.06.03 to 30.06.02 31.12.02 30.06.03 30.06.02 31.12.02
Euro (Euro) 1.46 1.61 1.60 1.44 1.54 1.53
USA ($) 1.61 1.45 1.50 1.65 1.52 1.61
Australia 2.63 2.72 2.77 2.46 2.72 2.86
($)
6. a) Earnings per share
6 months to 30.06.03 6 months to 30.06.02 Year to 31.12.02
_______________________________________________________________________
Earnings Earnings Earnings
Earnings per share Earnings per share Earnings per share
#m pence #m pence #m pence
Earnings 57.7 21.8 57.0 21.5 70.3 26.5
Exceptional (47.8) (18.0) (24.5) (9.2) 8.2 3.1
items
Taxation
arising on
operating
exceptional - - - - (7.6) (2.9)
items
Taxation
arising on
non-operating
exceptional 14.1 5.3 6.7 2.5 5.1 1.9
items
Minority
interest share
of
exceptional - - - - (0.6) (0.2)
items _______________________________________________________________________
Earnings 24.0 9.1 39.2 14.8 75.4 28.4
excluding
exceptional
items
Goodwill 17.7 6.7 17.5 6.6 34.8 13.0
amortisation
Minority
interest share
of
goodwill (0.2) (0.1) (0.2) (0.1) (0.4) -
amortisation _______________________________________________________________________
Earnings
excluding
exceptional
items
and goodwill 41.5 15.7 56.5 21.3 109.8 41.4
amortisation =======================================================================
b) Basic earnings per share are based on the profit for the year attributable
to shareholders and on the weighted average number of shares in issue
during the year, excluding shares owned by the RMC Long Term Incentive
Plan which are treated as cancelled. The number of shares used for
calculating basic earnings per share was 265,149,269 (30.06.02:
265,065,010; 31.12.02: 265,082,150). The number of shares used for
calculating diluted earnings per share, taking into account employee share
option schemes was 265,269,478 (30.06.02: 266,101,453; 31.12.02:
265,686,708).
c) Supplementary basic and diluted earnings per share have been calculated to
exclude the effect of goodwill amortisation and exceptional items. The
adjusted numbers have been provided in order that the effects of goodwill
amortisation and exceptional items on reported earnings can be fully
appreciated.
NOTES TO THE INTERIM STATEMENT Continued
7. Exceptional items
Non-operating exceptional items in the six months to 30 June 2003 comprised
net profits of #57.3 million arising on the disposals of the assets of the
waste management division in Great Britain and the Group's businesses in
Belgium and Jordan, after charging goodwill written off to reserves of #4.9
million (shown as profit on disposal of discontinued operations) and losses
of #9.5 million arising on the disposal of non-core businesses in the USA,
Germany and Croatia (shown as loss on disposal of continuing operations).
In the six months to 30 June 2002 non-operating exceptional items comprised
profits of #24.5 million arising on the disposals of the Group's aerated
concrete businesses, Durox and YTONG, after charging goodwill written-off
to reserves of #53.5 million.
For the year 2002, non-operating exceptional items comprised profits of
#39.5 million on the sale of the Group's aerated concrete businesses, Durox
and YTONG and its concrete products business in the Netherlands, after
charging goodwill previously written off to reserves of #51.3 million
(shown as profit on disposal of discontinued operations), a loss of #13.9
million on the withdrawal from certain non-core operations in the USA and
Germany (shown as loss on disposal / termination of continuing operations)
and a profit of #1.7 million on the disposal of fixed assets and
investments in the USA and Germany. Operating exceptional items of
#31.4 million comprised anticipated fines for anti-competitive activities
and associated legal costs totalling #15.9 million, principally arising
from German Federal Cartel Office investigation into the cement industry,
redundancy costs arising from the Group's business review of #9.5 million,
abortive disposal costs of #3.4 million and a write-down of the shares held
by the Trustee of the Long Term Incentive Plan to market value at 31
December 2002 amounting to #2.6 million. In addition there was a goodwill
impairment in the Group's associate, Huttig Building Products, Inc. in the
USA of #4.1 million.
6 months 6 months Year to
8. Taxation to 30.06.03 to 30.06.02 31.12.02
_____________________________________
#m #m #m
United Kingdom 4.6 1.8 6.4
Overseas 8.7 23.7 28.9
Joint ventures and associated 1.9 2.4 5.1
undertakings
Exceptional items 14.1 6.7 (2.5)
_____________________________________
29.3 34.6 37.9
=====================================
6 months 6 months Year to
9. Cash flow from operating to 30.06.03 to 30.06.02 31.12.02
activities _____________________________________
#m #m #m
Operating profit 84.3 118.1 181.4
Depreciation and depletion 96.7 103.3 210.4
Profit on sale of fixed assets (5.1) (10.0) (18.7)
Amortisation of goodwill 17.3 16.9 33.6
Working capital movements (143.1) (154.2) (14.7)
_____________________________________
50.1 74.1 392.0
=====================================
10. Contingent liabilities
In the normal course of business there are legal claims outstanding for the
supply of goods and in connection with other disputes and processes, for
which provision is made in the accounts for any liabilities that are
expected to arise. The Board considers that the possibility of any
significant loss arising to the Group from these contingent liabilities is
unlikely.
INDEPENDENT REVIEW REPORT TO RMC Group p.l.c.
Introduction
We have been instructed by the Company to review the financial information which
comprises the Group profit and loss account, the Group balance sheet, the
summarised Group cash flow statements, the statement of total recognised gains
and losses, the movements in shareholders' equity funds, the geographical
analysis of total turnover, EBITA, total trading profit and net operating assets
and the related Notes. We have read the other information contained in the
Interim Statement and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The Interim Statement, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Directors are
responsible for preparing the Interim Statement in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of the Listing Rules of the Financial Services Authority and for no other
purpose. We do not, in producing this report, accept or assume responsibility
for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in
writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
PricewaterhouseCoopers LLP
Chartered Accountants
London
5 September 2003
ENQUIRIES
Enquiries relating to RMC's results, General enquiries about shareholder
business and matters
financial position should be made to:- should be made to:-
Investor Relations Department Computershare Investor Services plc
RMC Group p.l.c. P O Box 82
RMC House, Coldharbour Lane The Pavillions
Thorpe, Egham Bridgwater Road
Surrey, TW20 8TD Bristol, BS99 7NH
Tel: 01932 583219 Tel: 0870 702 0001
FINANCIAL CALENDAR
Ex-dividend date for 2003 interim dividend 29 October 2003
Record date for 2003 interim dividend 31 October 2003
Payment of 2003 interim dividend 1 December 2003
Announcement of 2003 Preliminary Results 3 March 2004
This information is provided by RNS
The company news service from the London Stock Exchange
END
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