RNS Number:8343I
BPP Holdings PLC
18 March 2003
BPP HOLDINGS PLC
December 2002 Final results
BPP Holdings plc, the UK's largest quoted professional education group,
announces its results for the year ending 31 December 2002.
Key figures
Pre-tax profit* has increased from #13.4 million to #16.0 million.
Pre-tax profits* from the core business of professional training up 19% from
#10.2 million to #12.1 million.
Normalised earnings per share 18.3p (2001 - 14.7p) 24% increase
Dividend per share 12.5p (2001 - 11.125p) 12% increase
*before intangibles amortisation and, in 2001, exceptional items
In brief
Janet Cohen, BPP's Chairman, said "Overall our business is in good shape.
Despite the poor business climate, we increased profits this year. The economic
outlook for next year is no more promising but I believe that our business is
highly resilient and that we will continue to make progress."
Contacts
Charles Prior Chief Executive 020 8740 2222
Lynn Chandler Finance Director 020 8740 2222
I am pleased to report an increase in pre-tax profit before exceptional items
and amortisation of intangibles to #16.0m for 2002 from #13.4m for 2001, an
increase of 19%. Earnings per share, calculated on the same basis, was 18.3p
compared to 14.7p, an increase of 24%. The Board proposes a final dividend of
8.5p (2001 7.5p) payable on 30 April 2003 to shareholders on the register on 4
April 2003. This, when taken with the interim dividend of 4p per share paid in
October 2002 (2001 3.625p), brings the total for the year to 12.5p (2001
11.125p).
Divisional results
Year ended 31 December 2002 2001
Turnover Profits Turnover Profits
#'000 #'000 #'000 #'000
Professional training 81,000 12,056 78,292 10,230
Language training 18,527 1,139 23,314 704
Academic education 6,171 714 6,180 628
Law publishing (divested - - 2,140 (18)
2001)
--------- ---------- ---------- ----------
105,698 13,909 109,926 11,544
====== =======
Notional rent
(less depreciation) 2,096 1,035
Interest (net) 10 842
---------- ----------
Pre-tax profit before
exceptionals and
intangibles amortisation 16,015 13,421
Exceptional items - 7,826
Amortisation of intangibles (5,488) (5,466)
---------- ----------
Pre-tax profit after
exceptionals and 10,527 15,781
intangibles amortisation ====== ======
Earnings per share 18.3p 14.7p
(normalised) ---------- ---------
Dividends per share 12.5p 11.125p
(total for year) --------- ---------
This increase in profit has been achieved against a difficult background, both
in the UK and in Europe, which has meant that our overall turnover fell from
#109.9m for 2001 to #105.7m this year. This excellent profit performance
reflects tight cost control everywhere in the group, and real growth in the Law
division of our professional training activities.
The fall in turnover is partly attributable to a very disappointing year for our
financial services training business. I warned at the time of the interim
results that this business was suffering, catering as it does for the investment
banking community. That community has continued to shrink, and our business has
continued to lose turnover and profitability despite rigorous cost control. The
rest of the fall in turnover between 2001 and 2002 is accounted for by a fall in
the turnover of our language training business, which has nonetheless held up
well against the background of faltering economies in the countries we serve.
Overall the group has proved resilient in very difficult economic conditions.
This is due to several factors: the spread of our businesses, the premium
position we occupy in most of our markets, the quality of our people, the
attention we pay to cost control, and our continuing efforts to improve our
products and our service to customers.
This year, we have concentrated on further refining our strategy, and focusing
on our core business of professional education. As part of this focus we have
undertaken an extensive exercise to ensure that we are reaping all the benefits
of the BPP Professional Education name and reputation. We carried out a
rebranding exercise and, after extensive consultation, changed our logo and
extended the BPP name and brand to all our core companies in order to present a
single coherent identity in the marketplace. Along with this exercise we have
worked to ensure that the marketing synergies between our companies are properly
exploited. Many of our companies already serve the same customers and we are
ensuring that all our customers know about all our services, and that we and
they get all the benefits of an integrated group.
As part of the process of integration we are bringing together the reporting for
all our core companies. The profits from the different business streams are
becoming increasingly inter-dependent as we invest in resources for the benefit
of the whole division. So whilst we will continue to report turnover, we are
ceasing to report profit by business stream.
Professional Training
Analysis of turnover 2002 2001
#'000 #'000
Accountancy & Tax 51,743 51,330
Actuarial 4,115 3,367
Financial Services 9,149 12,523
Human Resources 270 -
Law 15,723 11,072
--------- ----------
81,000 78,292
====== ======
Accountancy and Tax
The Accountancy and Tax division continues to make good progress.
A substantial increase in turnover was not expected over 2001, a year in which
several new syllabi were introduced, but a small increase was achieved. Our
expenditure on e-learning has been much reduced because most of the necessary
enhancement to our products was made in 2000 and 2001. Our e-learning sales are
very encouraging and well ahead of expectations. The overseas businesses,
particularly those in Central Europe, are showing profit growth, and we continue
to expand our regional network. Our training business in the Netherlands, after
a difficult year in 2001, is now stabilising and refocused on its core
activities, which has resulted in a lower cost base and improved profits for
this year. The market in the Netherlands is mature but we are launching new
initiatives to make the most of our position there.
We continue to maintain the high quality of our teaching, which is of key
importance to everything we do. ACCA have awarded "Premier Plus", the top level
of quality accreditation, to only 16 colleges worldwide and 11 of these are BPP
centres. The accreditation reflects quality of tuition, material, course
management, facilities and student support. Against this background it is
pleasing if not surprising that BPP students have an exceptional track record in
the ACCA exams. BPP also trained 78% of the UK prizewinners in the November
2002 CIMA exams.
Actuarial
The Actuarial division's core business had a very good year achieving record
levels of turnover and profitability. This success supported the considerable
full first year investment in our US subsidiary which launched a wide range of
study materials for students of the Society of Actuaries and the Casualty
Actuarial Society in May 2002. We are realistic about the time it will take to
achieve significant market share in the US but we are pleased with the level of
interest and the positive feedback from our US students.
Financial Services
The Financial Services division has suffered from the downturn in the financial
markets particularly in the second half of the year. Many major clients have
reduced their headcount and put a freeze on recruitment, thereby reducing
heavily their need for threshold competency exam training. On a more positive
note, demand for professional level exam training such as the CFA and Securities
Institute Diploma remained stable and we held CFA courses in continental Europe
for the first time.
Human Resources
We announced in December last year that we had acquired Malpas Flexible Learning
Limited which trains for the professional examinations of the Chartered
Institute of Personnel Development. This business will contribute to both
turnover and profit for 2003 - the opportunities for training in this field are
very exciting and mesh well with the existing teaching capacity within the BPP
group.
Law
The Law division has substantially increased its turnover, with very pleasing
registration figures for both Bar and Solicitors training. The minority
shareholding in MAR Group Limited, our continuing professional development
branch which had good results last year, has now been acquired and we expect
improved results in this growing area of activity when the company has been
integrated fully into the BPP group.
Language Training
Linguarama now operates from 21 language training centres in six European
countries following a restructuring program in 2000 and 2001 which involved the
closure of a number of less profitable centres. As expected, 2002 was a
challenging year, with many clients reducing spending on language training in
the more difficult economic conditions. Turnover, on a like-for-like basis was
down 13% on 2001, with the decreases evenly spread across Europe and in our
English in England courses. The restructuring, however, which resulted in a
lower cost base, enabled the company to achieve a net profit margin of 6% even
in a difficult climate.
Academic Education
MPW, our group of fifth and sixth form colleges in London, Birmingham and
Cambridge, saw improved profitability on flat turnover. Consolidating our
London colleges into a single site created some cost advantage despite a small
enforced reduction in student numbers, and meanwhile there was pleasing growth
in both turnover and profit in our two regional centres.
Property
We continue to invest in our property portfolio. Effective teaching requires
very specific spaces, a very high standard of electronic equipment and good
library facilities, and these are not usually available in the market. We have
almost invariably to create facilities for the purpose, and often have to
acquire a freehold or very long leasehold to make the investment worthwhile.
This year we acquired, and are in the process of converting, a large site at
Waterloo which will be used by our professional training division. The overall
cost will be in the order of #21m.
People
This year we will say goodbye to James Cooper who has been responsible for the
highly successful growth of the Accountancy and Tax division for 18 years and is
now seeking a career break. Malcolm Hazell, who has responsibility for ACCA,
CIMA and AAT courses, is also leaving and is going to train as a Baptist
Minister. We are particularly grateful to James and Malcolm for their
contributions. Both continue with us until the summer and we are fortunate to
have in place Mike Pennington, who now takes over the whole division. Mike,
most recently in charge of our regional and overseas businesses, has been
actively involved in the overall management of the division for some years.
Outlook
Overall our business is in good shape. Despite the poor business climate, we
increased profits this year. The economic outlook for next year is no more
promising but I believe that our business is highly resilient and that we will
continue to make progress.
JANET COHEN
Chairman: BPP Holdings plc
17 March 2003
Group profit and loss account
2002 2001
#'000 #'000
Turnover 105,698 109,926
Cost of sales (52,005) (57,730)
---------- ----------
Gross profit 53,693 52,196
Distribution costs - (781)
Administrative expenses
before amortisation of
intangibles (37,688) (38,836)
Amortisation of intangibles (5,488) (5,466)
---------- ----------
Administrative expenses (43,176) (44,302)
Operating profit 10,517 7,113
Profit on disposal of business - 9,323
Loss on disposal of business - (509)
Loss on closure of business - (988)
---------- ----------
Profit on ordinary activities 10,517 14,939
before interest
Interest (net) 10 842
---------- ----------
Profit on ordinary activities
before taxation 10,527 15,781
Tax on profit on ordinary activities (5,075) (3,789)
---------- ----------
Profit on ordinary activities
after taxation 5,452 11,992
Minority interests (782) (704)
---------- ----------
Profit attributable to members of
the holding company 4,670 11,288
Dividends per ordinary share (6,832) (6,134)
---------- ----------
Retained (loss)/profit (2,162) 5,154
===== =====
Earnings per share (note 5)
Basic 8.5p 20.2p
Diluted 7.2p 18.3p
Basic (before amortisation of 18.3p 14.7p
intangibles and non-operating
exceptional items)
Group statement of total recognised gains and losses and reconciliation of
movements in shareholders' funds
2002 2001
#'000 #'000
Profit attributable to
members of the parent
company 4,670 11,288
Exchange differences on
retranslation of net assets of
subsidiary undertakings 354 (202)
---------- ----------
Total recognised gains
and losses in period 5,024 11,086
Dividends (6,832) (6,134)
Other movements:
New shares issued 271 277
Purchase of own shares (1,674) (351)
Goodwill reinstated on sale
Of subsidiary businesses - 522
---------- ----------
Total movements in period (3,211) 5,400
Shareholders' funds at
start of period 56,794 51,394
---------- ----------
Shareholders' funds at
end of period 53,583 56,794
===== =====
Group balance sheet
2002 2001
#'000 #'000 #'000 #'000
Fixed Assets
Intangible assets 15,302 15,148
Tangible assets 67,272 53,738
Investments 5,325 5,166
--------- ---------
87,899 74,052
Current assets
Stocks 1,265 1,054
Debtors: amounts falling due
within one year 16,916 17,215
Debtors: amounts falling due
In over one year 237 102
Investments 11 86
Cash at bank and in hand 6,877 7,794
--------- ---------
25,306 26,251
Creditors: amounts falling due (46,974) (38,800)
within one year (note 6)
--------- ---------
Net current liabilities (21,668) (12,549)
--------- ---------
Total assets less current 66,231 61,503
liabilities
Creditors: amounts falling due in
over one year (note 7) (9,269) (1,981)
Provision for liabilities and
charges (note 8) (2,379) (2,077)
--------- ---------
54,583 57,445
Minority interests (1,000) (651)
--------- ---------
53,583 56,794
===== =====
Capital and reserves
Share capital 5,671 2,865
Share premium 6,174 8,777
Capital redemption reserve 75 7
Other reserves 9,872 9,872
Profit and loss account 31,791 35,273
--------- ---------
53,583 56,794
===== =====
Group cash flow statement
2002 2001
#'000 #'000
Cashflow from operating activities 18,861 21,233
--------- -----------
Returns on investments and servicing of finance
Interest received 206 1,238
Interest paid (597) (1,600)
Dividends paid to minority shareholders (487) (270)
--------- --------
(878) (632)
-------- --------
Tax paid (4,144) (4,080)
--------- ---------
Capital expenditure and financial investment
Purchase of tangible fixed assets (14,708) (20,317)
Purchase of own shares by ESOT (287) (2,449)
Funds released by ESOT on exercise of options 128 -
Sale of tangible fixed assets 131 406
------------ ----------
(14,736) (22,360)
------------ ---------
Acquisitions and disposals
Purchase of subsidiary undertakings (net) (3,182) (44)
Purchase of minority interests in subsidiary (931) (87)
undertakings
Receipts from sale of subsidiary businesses - 11,017
Costs of closing subsidiary business (182) (27)
Redemption of loan notes and release of 127 118
funds in escrow
----------- ---------
(4,168) 10,977
---------- ---------
Equity dividends paid (6,320) (5,779)
---------- ---------
Net cashflow before use of liquid resources (11,385) (641)
and financing
Management liquid resources
Purchase of shares quoted on London
Stock Exchange - (86)
-------- ---------
- (86)
---------- ----------
Financing
Issue of shares 271 34
Redemption of shares (1,674) (351)
New loans 10,350 13,405
Placing of funds in escrow (1,500) (2,500)
Release of funds in escrow 2,500 6,000
Repayment of loans (3,502) (29,704)
Repayment of loan notes (127) (118)
------------ -------------
Net cash flow from financing 6,318 (13,234)
------------ ------------
Decrease in cash (5,067) (13,961)
======= =======
Notes to the group cash flow statement
2002 2001
#'000 #'000
(a) Reconciliation of operating profit to net
cash inflow from operating activities
Operating profit 10,517 7,113
Depreciation charges 4,142 3,684
Loss on disposal of fixed assets 81 334
Write down current asset investment 75 -
Amortisation of intangibles 5,488 5,466
Exchange differences 34 (57)
Increase in stock (157) (73)
Decrease in debtors 1,176 2,992
(Decrease)/Increase in creditors (2,495) 1,774
--------- ----------
Cashflow from operating activities 18,861 21,233
--------- ----------
(b) Analysis of cash at bank and in hand
Cash per analysis of net funds 6,246 6,036
Escrow deposits 631 1,758
--------- ----------
Cash at bank and in hand per balance sheet 6,877 7,794
--------- ----------
(c) Analysis of net (debt)/ At 1 January Cash Exchange At 31 December
funds 2002 flow Movement 2002
Cash at bank and in hand 6,036 61 149 6,246
Overdrafts - (5,128) - (5,128)
-------- -------- ------- ---------
6,036 (5,067) 149 1,118
Escrow deposits 1,758 (1,127) - 631
Loan notes (758) 127 - (631)
Bank loans (3,617) (6,848) (146) (10,611)
--------- --------- -------- ---------
3,419 (12,915) 3 (9,493)
-------- --------- -------- ---------
Notes to the preliminary announcement
1. Preliminary Statement
The accounts do not constitute statutory accounts under section 240 of the
Companies Act 1985. The results for the year ended 31 December 2001 are
extracts from the group accounts which carry an unqualified auditors report and
have been filed with the Registrar of Companies. The results for the year ended
31 December 2002 are extracts from the group accounts. The unqualified audit
report on the full financial statements has been signed and will be filed with
the Registrar of Companies after the Annual General Meeting. The preliminary
announcement was approved on 17 March 2003.
2. Accounting Policies
The accounting policies used in preparing the statutory accounts for the year
ended 31 December 2002 from which the preliminary statement is extracted are
consistent with those applied in prior years.
3. Turnover and operating profit derive from continuing operations. The
turnover and operating profit of Malpas Flexible Learning Limited in the period
from acquisition to 31 December 2002 were insignificant to the group.
4. The Trustees of the BPP Employee Share Ownership Trust have waived the
right to receive dividends on the 2,236,730 (2001 - 2,190,730) ordinary shares
held by it. In accordance with UITF Abstract 13 - Accounting for ESOP Trusts,
the shares held by the Trustees have been ignored in the calculation of earnings
per share. 2001 comparatives have been adjusted to take into account the bonus
issue of one ordinary share for each ordinary share held on 29 April 2002.
5. Earnings per share
(a) Basic earnings per share is calculated by dividing profit, after tax and
minority interest by the average number of shares excluding those held by the
BPP Employee Share Ownership Trust, in issue during the period.
The weighted average number of ordinary shares in issue in the period excluding
those held by the BPP Employee Share Ownership Trust was 54,868,695 (2001 -
55,708,712).
(b) Diluted earnings per share is calculated by adjusting profit after tax and
minority interest and the weighted average number of shares for the effects of
all dilutive potential shares. Options granted under Employee Share Schemes
dilute the earnings per share by increasing the weighted average number of
shares without changing net profit. Shares potentially issuable as
consideration for the purchase of minority interests will change net profit.
Net profit attributable increases because of the elimination of the profit
attributable to minority shareholders but is reduced by the charge to the profit
and loss for goodwill amortisation.
2002 2001
Attributable profit #'000 #'000
Basic earnings per share 4,670 11,288
Dilutive potential ordinary shares:
Employee shares schemes - -
Purchase minority interests (565) (654)
--------- ----------
4,105 10,634
--------- ---------
Weighted number of shares No. of shares No. of shares
Basic earnings per share 54,868,695 55,708,712
Dilutive potential ordinary shares:
Employee share schemes 240,002 155,442
Purchase of minority interests 1,891,911 2,256,278
----------- ------------
57,000,608 58,120,432
----------- ------------
The weighted number of shares in issue for 2001 has been adjusted to take into
account the bonus issue of one ordinary share for each ordinary share held on 29
April 2002.
For the purposes of calculating diluted eps, the goodwill arising is amortised
over five years. If goodwill was not written off, the purchase of minority
interests would be earnings enhancing as the p/e ratio applied for the purchase
of minority interests is a proportion of BPP's p/e ratio.
(c) Additional earnings per share information is presented as the directors
believe that this information will be of interest to users of the accounts in
measuring the group's performance and underlying trends. The additional earnings
per share figure presented is earnings per share before exceptional operating
costs, amortisation of intangibles and non-operating items. A reconciliation of
the earnings per share figures presented is below:
Reconciliation of earnings per share before amortisation of intangibles and
non-operating items to basic earnings per share.
2002 2001
Attributable profit #'000 #'000
Earnings before amortisation of intangibles, 10,046 8,200
operating exceptional costs and non-operating
items
Amortisation of intangibles (net of tax) (5,376) (5,312)
Net profit on disposal/closure of subsidiaries
(net of tax) - 8,400
--------- ----------
Profit for the year 4,670 11,288
--------- ---------
2002 2001
Earnings per share Pence Pence
Attributable to operations before amortisation 18.3 14.7
of intangibles, operating exceptional costs
and non-operating items
Attributable to amortisation of intangibles (9.8) (9.6)
(net of tax)
Attributable to net profit on disposal/closure
of subsidiaries (net of tax)
- 15.1
----------- ------------
Basic 8.5 20.2
----------- ------------
6. Creditors: amounts falling due within one year
Creditors include bank loans and overdrafts of #6,470,000 (2001 - #1,636,000)
and other loans of #631,000 (2001 - #758,000).
7. Creditors: amounts falling due in over one year
Amounts repayable under bank loans taken to finance the purchase of freehold
property. The loans are wholly repayable within 10 years.
8. Provisions for Liabilities and Charges
Comprises deferred taxation of #1,701,000 (2001 - #1,176,000) and provision for
sale, closure and reorganisation costs of #678,000 (2001 - #901,000).
9. Dividend
The proposed final dividend of 8.5 pence per share will be paid on 30 April 2003
to shareholders on the register on 4 April 2003.
Copies of this announcement will be posted to shareholders and will be available
free of charge from the Company's registered office at: 142-144 Uxbridge Road,
London W12 8AA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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