RNS Number:5834O
BPP Holdings PLC
13 August 2003
BPP HOLDINGS PLC
June 2003 interim results
BPP Holdings plc, the UK's largest quoted professional education group,
announces its results for the six months ending 30 June 2003.
Key figures
Turnover +8% #55.7m (2002 - #51.6m)
Pre-tax profits * +1% #9.10m (2002 - #8.97m)
Earnings per share * +6% 10.8p (2002 - 10.2p)
Interim dividend +10% 4.4p (2002 - 4.0p)
*before goodwill amortisation
In brief
"Notwithstanding the difficulties experienced by our Financial Services and
Language Training divisions we expect that the rising contribution from our Law
division will enable us to report an overall increase in profits for 2003."
Charles Prior, Chief Executive
Contacts
Charles Prior Chief Executive 020 8740 2222
Lynn Chandler Finance Director 020 8740 2222
BPP Holdings plc - interim report for the six months to 30 June 2003
Chairman's statement
The BPP Professional Education group reports a small increase in first half
profits over 2002. For the first six months to 30 June 2003 turnover was
#55.7m (2002 #51.6m), pre-tax profits before goodwill amortisation #9.10m (2002
#8.97m) and normalised earnings per share 10.8p (2002 10.2p). An interim
dividend of 4.4p (2002 4.0p) per share will be paid on 28 October to
shareholders on the register at 3 October 2003.
Divisional results
6m to 30 June 2003 6m to 30 June 2002 12m to 31 December 2002
Turnover Profits Turnover Profits Turnover Profits
#'000 #'000 #'000 #'000 #'000 #'000
Professional training 43,012 6,532 38,445 6,201 81,000 12,056
Language training 8,610 353 9,156 603 18,527 1,139
Academic education 4,103 1,277 3,993 1,104 6,171 714
--------- --------- --------- --------- ---------- ----------
55,725 8,162 51,594 7,908 105,698 13,909
====== ====== ======
Notional rent less
depreciation 1,128 1,035 2,096
Interest (net) (189) 29 10
--------- --------- ----------
Pre-tax profit before
goodwill amortisation 9,101 8,972 16,015
Goodwill amortisation (3,550) (2,672) (5,488)
--------- --------- ----------
Pre-tax profit after
goodwill amortisation 5,551 6,300 10,527
====== ====== ======
Earnings per share
(normalised) 10.8p 10.2p 18.3p
--------- --------- ----------
Dividend per share 4.4p 4.0p 12.5p
--------- --------- ----------
Commentary
Professional Training
Analysis of turnover
6 months to 6 months to 12 months to
30 June 2003 30 June 2002 31 December 2002
#'000 #'000 #'000
Accountancy & Tax 25,067 24,659 51,743
Actuarial 2,115 1,930 4,115
Financial Services 3,905 5,179 9,149
Human Resources 2,229 - 270
(acquired December 2002)
Law 9,696 6,677 15,723
--------- --------- ----------
43,012 38,445 81,000
====== ====== ======
Accountancy and Tax
Turnover in the Accountancy and Tax division continued to grow overall. Our
core ACCA and CIMA businesses both showed volume increases but ICAEW and Tax
training revenues were down, reflecting lower intakes by professional firms. We
believe that recruitment levels have now stabilised. Performance in our
regional accountancy and tax businesses has been mixed, but we have continued to
expand in Central Europe. Our Singapore business now has a team of full time
lecturers and has started to trade and its bookings for the second half of the
year are encouraging. Sales of e-learning products have increased and our
development spend in this area has now stabilised. Our business in the
Netherlands remains on course.
Actuarial Services
The Actuarial division produced solid first half results. In the UK, strong
sales of study materials and record tutorial enrolments helped BPP to increase
turnover despite price reductions required under the agreement with the UK
actuarial profession. Our North American operation completed its first full
year of trading and achieved substantial growth in turnover from the previous
half-yearly exam cycle. We are hopeful that this operation will breakeven
during 2004.
Financial Services
Market conditions in the financial services industry continue to be challenging,
with no upturn in volumes expected for the rest of this year. We are keeping
tight control on costs at the same time as rolling out significant developments
to our products in the form of enhanced material and online support. We are
well positioned to take advantage of an upturn in the industry when it comes.
Law
The Law division continues to display strong growth with improved enrolments on
pre-qualification courses, and advance recruitment figures indicate that the
division's growth will continue in the second half.
Human Resources
Our human resources division, Malpas, acquired at the end of last year, is being
integrated into the group and has made a promising start in 2003.
Language Training
The adverse economic conditions throughout Europe continued to affect results at
Linguarama during the period. While business for the second half of the year is
expected to remain difficult, Linguarama has a strong client list in all the
major European countries and is in a good position to benefit when economic
conditions improve.
Academic Education
MPW continued the good start it made to the academic year. Profits rose on a
small increase in turnover, principally due to cost savings in London. Once
again there was strong growth in two year A-level courses offsetting the
continued decline in the retake market.
The Board
In July this year, we welcomed Carl Lygo, head of our successful Law division,
to the Board, and we look forward to his contribution.
Outlook
Our Financial Services and Language Training businesses continue to suffer in
adverse conditions. Our other businesses are reasonably resilient, and we
expect that the rising contribution from our Law division will enable us to
report an overall increase in profits for 2003.
Our businesses are cash generative and accordingly we have increased our
dividend in line with our policy.
JANET COHEN
Chairman: BPP Holdings plc
Unaudited Group Profit and Loss Account
Half year to Half year to Full year to
30 June 2003 30 June 2002 31 December 2002
#'000 #'000 #'000
Turnover (note 1) 55,725 51,594 105,698
Cost of sales (28,547) (25,824) (52,005)
---------- ---------- ----------
Gross profit 27,178 25,770 53,693
Administrative expenses
before goodwill
amortisation (17,888) (16,827) (37,688)
Goodwill amortisation (3,550) (2,672) (5,488)
---------- ---------- ----------
Administrative expenses (21,438) (19,499) (43,176)
---------- ---------- ----------
Profit on ordinary activities 5,740 6,271 10,517
before interest
(Interest expense)/Other income
(net) (189) 29 10
---------- ---------- -----------
Profit on ordinary activities
before taxation 5,551 6,300 10,527
Tax on profit on ordinary
activities (note 2) (3,049) (3,001) (5,075)
---------- ---------- -----------
Profit on ordinary activities
after taxation 2,502 3,299 5,452
Minority interests (138) (289) (782)
---------- ---------- -----------
Profit attributable to members
of the holding company 2,364 3,010 4,670
Dividends per ordinary share
(note 3)
Interim of 4.4p (2002 -4.0p) (2,379) (2,188)
Total for 2002 of 12.5p (6,832)
----------- ----------- -------------
Retained (loss)/profit (15) 822 (2,162)
====== ====== ======-
Earnings per share (notes 3, 4)
Basic 4.3p 5.5p 8.5p
Diluted 3.2p 4.1p 7.2p
Basic (before goodwill
amortisation and exceptional 10.8p 10.2p 18.3p
items)
Unaudited group statement of total recognised gains and losses and
reconciliation of movements in shareholders' funds
2003 2002 2002
As at 30 June As at 30 June As at 31 December
#'000 #'000 #'000
Profit attributable to
members of the parent
company 2,364 3,010 4,670
Exchange differences on
retranslation of net assets of
subsidiary undertakings 257 255 354
---------- ---------- -------------
Total recognised gains and
losses in period 2,621 3,265 5,024
Dividends (2,379) (2,188) (6,832)
Other movements:
New shares issued 2 221 271
Purchase of own shares - (970) (1,674)
---------- ---------- -------------
Total movements in period 244 328 (3,211)
Shareholders' funds at start of
period 53,583 56,794 56,794
---------- ---------- -------------
Shareholders' funds at end of
period 53,827 57,122 53,583
---------- ---------- ------------
Unaudited Balance Sheet
30 June 2003 30 June 2002 31 December 2002
#'000 #'000 #'000 #'000 #'000 #'000
Fixed Assets
Tangible assets 68,703 62,698 67,272
Intangible assets 17,124 13,286 15,302
Investments 5,456 5,166 5,325
--------- --------- ---------
91,283 81,150 87,899
Current assets
Stock 1,293 1,269 1,265
Debtors: due within one 13,919 15,146 16,916
year
Debtors: due in over one
year
178 102 237
Investments 11 56 11
Cash at bank and in hand 3,808 5,169 6,877
--------- --------- ---------
19,209 21,742 25,306
Creditors: amounts
falling due within one
year (note 5) (43,815) (33,427) (46,974)
--------- --------- ---------
Net current liabilities (24,606) (11,685) (21,668)
--------- --------- ---------
Total assets less
current liabilities 66,677 69,465 66,231
Creditors: amounts
falling due in over one
year (note 6) (9,613) (9,685) (9,269)
Provision for
liabilities and charges (2,630) (1,868) (2,379)
--------- --------- ---------
54,434 57,912 54,583
Minority interests (607) (790) (1,000)
--------- --------- ---------
53,827 57,122 53,583
===== ===== =====
Capital and reserves
Share capital 5,672 5,701 5,671
Share premium 6,175 6,127 6,174
Capital redemption 75 43 75
reserve
Other reserves 9,872 9,872 9,872
Profit and loss account 32,033 35,379 31,791
--------- --------- ---------
53,827 57,122 53,583
===== ===== =====
Unaudited Group Cash Flow Statement
Half year to Half year to Full year to
30 June 2003 30 June 2002 31 December 2002
#'000 #'000 #'000
Cashflow from operating
Activities 3,367 1,264 18,861
--------- --------- -----------
Returns on investments and
servicing of finance
Interest received 8 134 206
Interest paid (392) (151) (597)
Dividends paid to minority
shareholders (70) (149) (487)
--------- --------- --------
(454) (166) (878)
--------- --------- --------
Tax paid (1,994) (1,252) (4,144)
--------- --------- ---------
Capital expenditure and
financial investment
Purchase of tangible fixed (3,500) (10,844) (14,708)
assets
Purchase of own shares by ESOT (130) - (287)
Funds released by ESOT on
exercise options - - 128
Sale of tangible fixed assets 123 63 131
--------- --------- ----------
(3,507) (10,781) (14,736)
-------- -------- ---------
Acquisitions and disposals
Purchase of subsidiary
undertakings (net) - - (3,182)
Purchase of minority
interests in subsidiary
undertakings (5,843) (915) (931)
Costs of closing subsidiary
business (59) (173) (182)
Redemption of loan notes
and release of funds in escrow 48 63 127
--------- --------- ---------
(5,854) (1,025) (4,168)
--------- --------- ---------
Equity dividends paid (4,628) (4,127) (6,320)
--------- --------- ---------
Net cashflow before use of
liquid resources and
financing (13,070) (16,087) (11,385)
Financing
Issue of shares 2 221 271
Redemption of shares - (970) (1,674)
New loans 972 10,100 10,350
Placing of funds in escrow - (1,500) (1,500)
Release of funds in escrow - 2,500 2,500
Repayment of loans (694) (2,801) (3,502)
Repayment of loan notes (48) (63) (127)
--------- --------- -------------
232 7,487 6,318
--------- --------- ------------
Decrease in cash (12,838) (8,600) (5,067)
--------- --------- ------------
Notes to the unaudited group cash flow statement
Half year to Half year to Full year to
30 June 2003 30 June 2002 31 December 2002
#'000 #'000 #'000
(a) Reconciliation of
operating profit to net
cash inflow from
operating activities
Operating profit 5,740 6,271 10,517
Depreciation charges 2,262 1,919 4,142
(Profit)/Loss on disposal
of fixed assets (10) 22 81
Write down current asset
investment - 30 75
Amortisation of goodwill 3,550 2,672 5,488
Exchange differences 25 (57) 34
Increase in stock (19) (202) (157)
Decrease in
debtors 3,957 2,646 1,176
(Decrease)/Increase in
creditors (12,138) (12,037) (2,495)
---------- ---------- ----------
Cashflow from operating
activities 3,367 1,264 18,861
---------- ---------- ----------
(b) Analysis of net cash at
bank and in hand
Cash per analysis of net 3,225 4,474 6,246
funds
Escrow deposits 583 695 631
-------- -------- ----------
Cash at bank and in hand per
balance sheet 3,808 5,169 6,877
Bank overdraft (14,862) (6,933) (5,128)
Bank loans (11,027) (10,994) (10,611)
-------- -------- ----------
(22,081) (12,758) (8,862)
-------- -------- ----------
(c) Analysis of net funds At 1 January Cash Exchange At 30 June
2003 Flow movement 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 6,246 (3,104) 83 3,225
Overdrafts (5,128) (9,734) - (14,862)
--------- -------- ------- ---------
1,118 (12,838) 83 (11,637)
Escrow deposits 631 (48) - 583
Loan notes (631) 48 - (583)
Bank loans (10,611) (278) (138) (11,027)
--------- --------- -------- ---------
(9,493) (13,116) (55) (22,664)
-------- --------- -------- ---------
Notes to 2003 Interim Statement
1. Turnover and operating profit derive from continuing operations.
2. The taxation charge for the six months ended 30 June 2003 is at the
rate that is anticipated will be applicable for the whole year.
3. The Trustees of the BPP Employee Share Ownership Trust have waived the
right to receive dividends on the 2,286,730 (30 June 2002 - 2,160,730; 31
December 2002 - 2,236,730) 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.
4. (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
54,434,217 (six months ended 30 June 2002 - 55,022,430; year ended 31
December 2002 - 54,868,695).
(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, from 1999 onwards under FRS10, for goodwill amortisation.
Half year to Half year to Full year to
30 June 30 June 31 December
2003 2002 2002
Attributable profit #'000 #'000 #'000
Basic earnings per share 2,364 3,010 4,670
Dilutive potential ordinary
shares:
Purchase minority interests (537) (670) (565)
------- ------- ----------
1,827 2,340 4,105
------- ------- ---------
Weighted number of shares No. of shares No. of shares No. of shares
Basic earnings per share 54,434,217 55,022,430 54,868,695
Dilutive potential ordinary
shares:
Employee share schemes 400,763 323,772 240,002
Purchase minority interests 1,492,082 1,888,666 1,891,911
-------------- -------------- ---------------
56,327,062 57,234,868 57,000,608
-------------- -------------- ---------------
For the purposes of calculating diluted eps, the goodwill arising has been
assumed to be amortised over five years. If goodwill was not written off the
purchase of subsidiaries and minority interests would normally be earnings
enhancing, as the p/e ratio applied in most cases is a proportion of BPP's p/e
ratio.
The earnings per share before exceptional items, goodwill amortisation and
profit on disposal of fixed assets is based on earnings of #5,859,000, (six
months ended 30 June 2002 - #5,627,000; year ended 31 December 2002 -
#10,046,000). FRS 3 earnings have been increased by goodwill amortisation net
of tax relief of #3,495,000 (six months ended 30 June 2002 - #2,617,000; year
ended 31 December 2002 - #5,376,000).
5. Creditors include bank loans and overdrafts of #16,276,000 (30 June
2002 - #8,242,000; 31 December 2002 - #6,470,000) and other loans of #583,000
(30 June 2002 - #695,000; 31 December 2002 - #631,000).
6. Creditors falling due in over one year are amounts repayable for bank
loans taken to finance the purchase of freehold property. The loans are
wholly repayable within 10 years.
7. The results for the half years ended 30 June 2002 and 30 June 2003 are
neither audited nor reviewed and do not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985. The results for the
year ended 31 December 2002 have been extracted from the statutory accounts
for that period which have been delivered to the Registrar of Companies and
on which the auditors gave an unqualified report.
Copies of this announcement will be posted to shareholders and will be available
free of charge from the Company's registered office at: BPP House, Aldine Place,
142-144 Uxbridge Road, London W12 2AA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UUUOROARWAAR