TIDMKLR
RNS Number : 4596L
Keller Group PLC
01 August 2011
Monday, 1 August 2011
Keller Group plc
Interim Results for the six months ended 30 June 2011
Keller Group plc ("Keller" or "the Group"), the international
ground engineering specialist, announces its interim results for
the six months ended 30 June 2011.
Results summary:
-------------------------- ---------- ----------
2011 2010
-------------------------- ---------- ----------
Revenue GBP545.5m GBP496.9m
-------------------------- ---------- ----------
Operating profit GBP6.4m GBP13.7m
-------------------------- ---------- ----------
Profit before tax GBP3.4m GBP11.3m
-------------------------- ---------- ----------
Earnings per share 4.6p 12.5p
-------------------------- ---------- ----------
Total dividend per share 7.6p 7.6p
-------------------------- ---------- ----------
Highlights include:
-- Results in line with expectations at the time of the IMS in
May
-- Revenue up by 10%
-- Revenue from Australia and developing markets up by 23% to
GBP216.0m, continuing the success of our strategy of geographic
diversification
-- Profitability impacted by floods in Australia and
geopolitical issues in the Middle East and North Africa
-- Net debt of GBP127.8m (2010: GBP121.5m); gearing of 39%
(2010: 40%)
-- Interim dividend maintained at 7.6p per share
-- Order book 14% ahead of this time last year
Justin Atkinson, Keller Chief Executive said:
"While we continue to make progress in our developing markets, a
recovery in our more mature construction markets is taking longer
than expected and over-capacity remains an issue, particularly in
the US, maintaining pressure on margins in the near term.
"In addition to the usual seasonal improvement, our recent
mobilisation on several large jobs will help to support a much
stronger second half. Overall, the expected results for the full
year remain within the current range of market expectations."
For further information, please contact:
Keller Group plc www.keller.co.uk
Justin Atkinson, Chief Executive 020 7616 7575
James Hind, Finance Director
Finsbury
James Leviton, Talia Druker 020 7251 3801
A presentation for analysts will be held at 9.15 for 9.30am at
The London Stock Exchange, 10 Paternoster Square, London, EC4M
7LS
A live audio webcast will be available from 9.30am and, on
demand, from 2.00 pm at
http://www.keller.co.uk/keller/investor/result-centre/latest-results/
Notes to Editors:
Keller is the world's largest independent ground engineering
specialist, providing technically advanced and cost-effective
foundation solutions to the construction industry. With 2010
revenue of GBP1,069m, Keller is a member of the FTSE-250. It has
over 6,000 staff world-wide, with offices in around 40 countries on
five continents.
Keller is the market leader in the US and Australia; it has
prime positions in most established European markets; and a strong
profile in many developing markets.
Chairman's Statement
Financial overview
Our results for the six months ended 30 June 2011 cover a period
in which we saw no significant easing of the challenges that have
beset our industry for the past couple of years. In particular,
recovery in our construction markets most severely impacted by the
global recession - the US and Western Europe - is taking longer
than expected and over-capacity remains an issue, particularly in
the US, maintaining pressure on margins in the near term.
Revenue from Australia and our developing markets(1) was up by
23% at GBP216m, reflecting the strategy of geographic
diversification. Although we continue to make progress in these
markets, as we have previously indicated, the combined impacts of
the floods in Queensland in the first quarter and geopolitical
issues in the Middle East and North Africa curbed our first-half
profitability in these regions.
Group revenue was up 10% at GBP545.5m (2010: GBP496.9m).
Following a loss in the first three months, performance improved in
the second quarter, resulting in a first-half operating profit of
GBP6.4m (2010: GBP13.7m), with an operating margin of 1.2%,
compared with last year's 2.8%.
Profit before tax was GBP3.4m (2010: GBP11.3m) and earnings per
share were 4.6p (2010: 12.5p). The Board has decided to leave the
interim dividend unchanged at 7.6p per share (2010: 7.6p). The
dividend will be paid on 1 November 2011 to shareholders on the
register at the close of business on 7 October 2011.
Cash generated from operations was GBP0.2m, down on last year's
GBP15.0m, reflecting the lower profit and the usual, seasonal
first-half working capital outflow.
Net debt at 30 June 2011 was GBP127.8m, compared to GBP121.5m at
the end of June 2010. Capital expenditure in the first half
totalled GBP15.0m (2010: GBP12.7m), of which around two thirds was
deployed in our developing markets and Australia, as we continue to
build our presence in these higher growth regions.
Net debt at 30 June 2011 represented 1.6 times annualised EBITDA
and annualised EBITDA interest cover was 18 times. Towards the end
of 2010, the Group refinanced its main central banking facilities,
replacing GBP145m of committed facilities that had been due to
expire in the summer of 2011 with a new GBP170m revolving credit
facility, expiring in April 2015.With these extended facilities and
the Group's US$100m private placement, the financial position of
the Group remains healthy and it continues to operate well within
its financial covenants.
(1) Our markets in Asia, Brazil, Eastern Europe, the Middle East
and North Africa.
Board
I am pleased to announce that the Board has today appointed Mr
David Savage as a Non-executive Director of the Company. David has
had a long and successful career in international construction,
most recently as the Chief Operating Officer of Leighton Holdings.
His strong entrepreneurial skills and track record in building
contracting businesses in developing markets will be of immense
value to the Group, as we continue our expansion into new, higher
growth geographic regions.
Operational overview
US
From a market perspective, the value of US non-residential
construction spending in the year to date was down by 6% from the
2010 level. This compares with a fall of 17% in the corresponding
period last year, indicating that, although expenditure continues
to fall, the rate of reduction has slowed. Within non-residential
construction, an increase of 11% in power meant this was the only
sector to show any growth, whereas spend in the commercial
sector(2) fell by a further 12% and has now contracted by almost
60% since the peak. Following a year-on-year reduction of 3% in
2010, the first decline in US public infrastructure spending in at
least 20 years, public expenditure fell again by 6% in the year to
date.
Despite this further contraction in their markets, our US
operations reported revenue of GBP207.9m (2010: GBP198.0m), with
revenue 11% ahead of last year on a constant currency basis, the
increase being mainly in Hayward Baker. Continuing over-capacity
maintained the pressure on margins, particularly in McKinney, which
is that part of our US business most exposed to smaller contracts
in the commercial sector. The US business as a whole reported an
operating loss of GBP1.8m (2010: GBP1.0m loss).
In the face of these severe challenges, our foundation
contracting businesses continue to adapt to their tough trading
environments. At Hayward Baker, there was a change of company
President early in the year and, more recently, a reorganisation
and change of management in its under-performing western region.
Following a disappointing result at McKinney in the first quarter,
actions taken following a review of the business have led to
improvements both in the results and the order book, returning the
business to profitability.
One of the factors influencing performance in the first six
months of the year was the scarcity of large jobs. However, towards
the end of the first half, and after a somewhat delayed start, two
major jobs did get underway which are expected to be important
contributors in the second half. The first of these is a foundation
package comprising caissons and continuous flight auger (CFA) piles
for an extension to the Vogtle nuclear power plant at Augusta, in
Georgia. The other comprises the second phase of CFA piling works
at the BP oil refinery at Whiting, Indiana. The successful first
phase, undertaken jointly by HJ and Case during 2009 and 2010, was
the single largest foundation project we have undertaken in the
US.
The order book of the US foundation businesses, which at the end
of June was similar to the previous year, should underpin activity
levels in these businesses through the second half of the year.
However, we remain of the view that margins will not improve
materially until there is confidence in a sustained recovery in US
construction.
US housing starts appear to have stabilised. As a result, and
following further cost reductions undertaken in the second half of
2010, Suncoast's losses reduced significantly in the first half of
the current year, with the business trading in line with our
expectations.
(2) Office, Commercial, Leisure and Lodging, US Census Bureau of
the Department of Commerce, 1 July 2011.
Continental Europe, Middle East & Asia (CEMEA)
CEMEA reported revenue of GBP207.2m (2010: GBP190.1m) and
operating profit of GBP8.5m (2010: GBP9.3m). On a constant currency
basis, revenue was up 8% on the previous year, whilst operating
profit trailed by 9%. Whilst the results for the division as a
whole were much as we expected at the start of the year, individual
performances across our diverse markets within this division were
varied.
Despite continued strong competition, our German subsidiary
again performed well, with its continued focus on productivity
improvements and careful targeting of contracts, such as one at
Lohsa, a former open-cast mining area close to the Polish border,
where it has been undertaking ground improvement works as part of
an ongoing railway upgrade project. Elsewhere in Western Europe,
conditions remained challenging but stable. Restructuring measures
taken in France and Spain in the latter part of 2010 brought these
businesses back into profit in the first half, although the
outlook, in Spain in particular, remains difficult.
In Eastern Europe, our Polish subsidiary achieved record
first-half revenue and operating profit, in a competitive
marketplace. Once again, large road and rail projects dominated the
workload, such as the installation of piled foundations for a
bridge construction on the A1 motorway and ground improvement for
the modernisation of the Warsaw to Gdynia railway line. Elsewhere
in Eastern Europe, trading in the first six months of the year was
subdued, with very few public infrastructure projects being
progressed.
Our businesses in the Middle East and North Africa were severely
disrupted by the 'Arab Spring', which brought many projects to a
halt and resulted in a loss from the region in the first six months
of the year. Whilst we do not expect a substantial improvement in
trading in those countries most impacted by the geopolitical unrest
until confidence in a stable political environment is restored,
prospects for the second half across the region as a whole are more
encouraging.
Overall, our key markets in Asia remained strong in the first
half of the year and our companies there continued to perform well.
In Singapore and Malaysia, activity levels were high, with our
businesses working on a wide range of industrial and infrastructure
projects.
In India we continue to steadily strengthen and extend our
operations. A new office opened in Hyderabad in the first half and
a regional "Keller Academy", designed along the same lines as that
in Europe, was established to support our focus on recruitment and
training. In this rapidly growing market, we continue to target
jobs in the power, coastal development, transportation and
industrial sectors, where our design and build capability, advanced
techniques, specialist equipment and international standards give
us a competitive advantage.
Amongst the various projects worked on in the first half of
2011, our contract at the Bangalore Metro, where we are installing
2,000 ground anchors as part of the metro upgrade and extension
project, continued to perform well. Also, following our successful
introduction of bored piling last year, we have recently started
work on another major piling contract for a new power plant in the
state of Andhra Pradesh, which will benefit the second half.
Australia
The Australian construction market now appears to be moving at
two different speeds: resources and related infrastructure projects
continue to gain momentum, whereas the remainder of the market is
relatively slow.
Australian revenue was GBP107.7m (2010: GBP80.7m) and operating
profit was GBP3.5m, compared to GBP8.0m in the first half last
year. On a constant currency basis, revenue was up 22% on last
year, mainly reflecting the first-time inclusion of Waterway
Constructions (Waterway), which was acquired in June 2010. The
first-half results were significantly impacted by the flooding in
Queensland in the first few months of the year, the effects of
which proved to be longer lasting than we had at first
anticipated.
Towards the end of the period, Waterway was awarded an A$86m
(c.GBP57m) design and construct contract for a materials offloading
facility at a liquid natural gas (LNG) project, to be undertaken in
a 50:50 joint venture with a local civil construction company. With
the design now underway, construction is expected to start in
December 2011 and to complete a year later. The award of this major
contract reflects the value we are able to bring to businesses that
we acquire, underlining the benefits of our acquisition
strategy.
Looking beyond its own shores, Keller Australia, with support
from Hayward Baker in the US, has recently started work in
Christchurch, New Zealand, where it is re-levelling structures
damaged in the recent earthquakes. This is another example of our
ongoing cross-border transfer of skills and knowledge. Elsewhere,
one of our Australian piling businesses is about to start work on
an LNG project in Papua New Guinea.
With an excellent order book and still several sizeable projects
in the pipeline, the prospects for Keller Australia look good for
the remainder of the year.
UK
The UK business reported revenue of GBP22.7m (2010: GBP28.1m)
and an operating loss of GBP2.0m (2010: loss of GBP0.1m).
As we expected, the UK business had a difficult first half.
However, the second quarter showed an improvement on the first
three months, following the merger of our equipment yards and a
further reduction in headcount. The performance of the UK business
is expected to improve further in the second half of the year, as
some of the transport infrastructure projects in which it will be
involved get underway.
The business was recently awarded a GBP37m contract for grouting
works that form part of the GBP700m Victoria Underground Station
upgrade. Keller will undertake the installation of over 2,400 jet
grout columns, which will allow approximately 400m of new tunnels
to be excavated to connect the new (North) and existing (South)
ticket halls. The project will be undertaken in co-operation with
our German subsidiary, which brings considerable experience of
large-scale tunnel stabilisation projects of this kind, including
major contracts in Antwerp, Leipzig and Cologne. Works will start
in late 2011 and are scheduled for completion early in 2014.
Outlook
Since our May 2011 interim management statement, we have seen
little if any change in our key construction markets, with our more
mature markets in the US and Western Europe reasonably stable but
still challenging and our developing markets continuing to offer
good opportunities. However, with continued economic uncertainty
and intense competition in our more mature markets, pressure on
margins remains.
In addition to the usual seasonal improvement, our recent
mobilisation on several large jobs will help to support a much
stronger second half.
The Group's order book is now 14% ahead of this time last year
on a constant currency basis following the two significant recent
contract awards, albeit that they will not come on stream until the
end of the year.
Overall, the expected results for the full year remain within
the current range of market expectations. Longer term, we are
confident that the Group's geographic diversification and strong
financial position mean that it is well placed to take advantage of
growth opportunities in both existing and new markets.
Roy Franklin
Chairman
1 August 2011
Consolidated Income Statement
for the half year ended 30 June 2011
Half year Half year Year to 31
to 30 June to 30 June December
2011 2010 2010
---------- ---------- ---------
Before
goodwill Goodwill
impairment impairment Total
------------- ---- ---------- ---------- ---------- ---------- ---------
Note GBPm GBPm GBPm GBPm GBPm
------------- ---- ---------- ---------- ---------- ---------- ---------
Revenue 3 545.5 496.9 1,068.9 - 1,068.9
Operating
costs (539.1) (483.2) (1,025.6) (21.8) (1,047.4)
------------- ---- ---------- ---------- ---------- ---------- ---------
Operating
profit 3 6.4 13.7 43.3 (21.8) 21.5
Finance
income 1.1 0.8 3.3 - 3.3
Finance costs (4.1) (3.2) (7.0) - (7.0)
------------- ---- ---------- ---------- ---------- ---------- ---------
Profit before
taxation 3.4 11.3 39.6 (21.8) 17.8
Taxation 4 (0.9) (3.2) (11.0) 4.7 (6.3)
------------- ---- ---------- ---------- ---------- ---------- ---------
Profit for
the period 2.5 8.1 28.6 (17.1) 11.5
------------- ---- ---------- ---------- ---------- ---------- ---------
Attributable
to:
Equity
holders of
the
parent 3.0 8.0 28.3 (17.1) 11.2
Minority
interests (0.5) 0.1 0.3 - 0.3
------------- ---- ---------- ---------- ---------- ---------- ---------
2.5 8.1 28.6 (17.1) 11.5
------------- ---- ---------- ---------- ---------- ---------- ---------
Earnings per share
Basic 6 4.6p 12.5p 44.0p 17.3p
earnings per
share
Diluted 6 4.5p 12.3p 43.2p 17.0p
earnings per
share
Consolidated Statement of Comprehensive Income
for the half year ended 30 June 2011
Half year Half year Year to
to 30 to 30 31 December
June 2011 June 2010 2010
GBPm GBPm GBPm
---------------------------------------- ---------- ---------- ------------
Profit for the period 2.5 8.1 11.5
---------------------------------------- ---------- ---------- ------------
Other comprehensive income
Exchange differences on translation of
foreign operations 2.1 (15.5) 12.0
Net investment hedge gains/(losses) 0.6 (0.7) (0.3)
Cash flow hedge gains/(losses) taken
to equity 3.7 (6.2) (3.0)
Cash flow hedge transfers to income
statement (3.7) 6.2 3.0
Actuarial (losses)/gains on defined
benefit pension schemes (0.1) 0.1 (1.3)
Tax on actuarial losses on defined
benefit pension schemes - - 0.3
---------------------------------------- ---------- ---------- ------------
Other comprehensive income for the
period, net of tax 2.6 (16.1) 10.7
---------------------------------------- ---------- ---------- ------------
Total comprehensive income for the
period 5.1 (8.0) 22.2
---------------------------------------- ---------- ---------- ------------
Attributable to:
Equity holders of the parent 5.3 (7.1) 22.2
Minority interests (0.2) (0.9) -
---------------------------------------- ---------- ---------- ------------
5.1 (8.0) 22.2
---------------------------------------- ---------- ---------- ------------
Consolidated Balance Sheet
as at 30 June 2011
As at As at As at
30 June 30 June 31 December
2011 2010 2010
Note GBPm GBPm GBPm
-------------------------------------- ---- -------- -------- ------------
Assets
Non-current assets
Intangible assets 107.2 128.0 106.8
Property, plant and equipment 270.2 261.3 275.0
Deferred tax assets 10.1 8.8 10.0
Other assets 15.6 16.2 16.1
-------------------------------------- ---- -------- -------- ------------
403.1 414.3 407.9
-------------------------------------- ---- -------- -------- ------------
Current assets
Inventories 39.2 37.8 32.9
Trade and other receivables 360.5 313.6 334.6
Current tax assets 9.4 7.2 6.2
Cash and cash equivalents 7 36.9 30.2 41.4
-------------------------------------- ---- -------- -------- ------------
446.0 388.8 415.1
-------------------------------------- ---- -------- -------- ------------
Total assets 849.1 803.1 823.0
-------------------------------------- ---- -------- -------- ------------
Liabilities
Current liabilities
Loans and borrowings 7 (31.3) (79.2) (25.9)
Current tax liabilities (5.2) (4.3) (7.1)
Trade and other payables (263.7) (248.5) (260.8)
Provisions (9.6) (6.8) (9.1)
-------------------------------------- ---- -------- -------- ------------
(309.8) (338.8) (302.9)
-------------------------------------- ---- -------- -------- ------------
Non-current liabilities
Loans and borrowings 7 (133.4) (72.5) (109.5)
Retirement benefit liabilities (20.8) (19.0) (20.1)
Deferred tax liabilities (18.7) (20.9) (18.4)
Provisions (4.4) (5.0) (4.5)
Other liabilities (35.5) (40.9) (36.8)
-------------------------------------- ---- -------- -------- ------------
(212.8) (158.3) (189.3)
-------------------------------------- ---- -------- -------- ------------
Total liabilities (522.6) (497.1) (492.2)
-------------------------------------- ---- -------- -------- ------------
Net Assets 326.5 306.0 330.8
-------------------------------------- ---- -------- -------- ------------
Equity
Share capital 6.7 6.6 6.6
Share premium account 38.0 38.0 38.0
Capital redemption reserve 7.6 7.6 7.6
Translation reserve 50.8 21.2 48.4
Retained earnings 213.8 223.2 220.1
-------------------------------------- ---- -------- -------- ------------
Equity attributable to equity holders
of the parent 316.9 296.6 320.7
Minority interests 9.6 9.4 10.1
-------------------------------------- ---- -------- -------- ------------
Total equity 326.5 306.0 330.8
-------------------------------------- ---- -------- -------- ------------
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2011
Share Capital
Share premium redemption Translation Retained Minority Total
capital account reserve reserve earnings interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- ------- ---------- ----------- -------- --------- ------
At 30 June
2010 6.6 38.0 7.6 21.2 223.2 9.4 306.0
-------------- ------- ------- ---------- ----------- -------- --------- ------
At 31 December
2010 6.6 38.0 7.6 48.4 220.1 10.1 330.8
Total
comprehensive
income - - - 2.4 2.9 (0.2) 5.1
Share-based
payments - - - - 0.6 - 0.6
Shares issued
in the
period 0.1 - - - - - 0.1
Dividends - - - - (9.8) (0.3) (10.1)
At 30 June
2011 6.7 38.0 7.6 50.8 213.8 9.6 326.5
-------------- ------- ------- ---------- ----------- -------- --------- ------
Consolidated Cash Flow Statement
for the half year ended 30 June 2011
Half year
Half year to Year to
to 30 June 30 June 31 December
2011 2010 2010
Note GBPm GBPm GBPm
---------------------------------- ---- ----------- --------- ------------
Cash flows from operating
activities
Operating profit 6.4 13.7 21.5
Goodwill impairment - - 21.8
---------------------------------- ---- ----------- --------- ------------
Operating profit before goodwill
impairment 6.4 13.7 43.3
Depreciation of property, plant
and equipment 20.8 19.4 40.0
Amortisation of intangible assets 0.7 0.3 1.7
Loss/(profit) on sale of property,
plant and equipment 0.5 0.1 (0.5)
Other non-cash movements 1.4 0.3 5.8
Foreign exchange (gains)/losses (0.1) 0.6 0.2
---------------------------------- ---- ----------- --------- ------------
Operating cash flows before
movements in working capital 29.7 34.4 90.5
(Increase)/decrease in inventories (5.9) (1.0) 5.2
Increase in trade and other
receivables (22.7) (17.2) (23.8)
(Decrease)/increase in trade and
other payables (0.7) (0.9) 2.2
Change in provisions, retirement
benefit and other non-current
liabilities (0.2) (0.3) (3.8)
Cash generated from operations 0.2 15.0 70.3
Interest paid (2.6) (1.5) (4.5)
Income tax paid (6.2) (7.3) (10.2)
---------------------------------- ---- ----------- --------- ------------
Net cash (outflow)/inflow from
operating activities (8.6) 6.2 55.6
---------------------------------- ---- ----------- --------- ------------
Cash flows from investing
activities
Interest received 0.2 0.5 0.5
Proceeds from sale of property,
plant and equipment 0.1 0.3 1.0
Acquisition of subsidiaries, net
of cash acquired (0.2) (22.2) (23.4)
Acquisition of property, plant and
equipment (15.0) (12.7) (28.2)
Acquisition of intangible assets (0.6) - (1.4)
Acquisition of other non-current
assets (0.1) (0.4) (0.3)
---------------------------------- ---- ----------- --------- ------------
Net cash outflow from investing
activities (15.6) (34.5) (51.8)
---------------------------------- ---- ----------- --------- ------------
Cash flows from financing
activities
Proceeds from the issue of share
capital 0.1 - 0.2
New borrowings 29.0 41.5 99.5
Repayment of borrowings (6.3) (10.0) (76.8)
Payment of finance lease
liabilities (0.1) - (1.3)
Dividends paid (10.1) (9.7) (14.9)
---------------------------------- ---- ----------- --------- ------------
Net cash inflow from financing
activities 12.6 21.8 6.7
---------------------------------- ---- ----------- --------- ------------
Net (decrease)/increase in cash
and cash equivalents (11.6) (6.5) 10.5
Cash and cash equivalents at
beginning of period 39.1 29.3 29.3
Effect of exchange rate
fluctuations 0.1 (2.1) (0.7)
---------------------------------- ---- ----------- --------- ------------
Cash and cash equivalents at end
of period 7 27.6 20.7 39.1
---------------------------------- ---- ----------- --------- ------------
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34 - Interim Financial Reporting;
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R - indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year; and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R - disclosure of related party
transactions and changes therein.
By order of the Board
J R Atkinson Chief Executive
J W G Hind Finance Director
Notes to the Condensed Financial Statements
Half year ended 30 June 2011
1. Basis of preparation
The condensed financial statements included in this interim
financial report have been prepared in accordance with IAS 34 -
Interim Financial Reporting, as adopted by the European Union. They
do not include all of the information required for full annual
financial statements, and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 December 2010. The same accounting policies and
presentation are followed in the financial statements that were
applied in the preparation of the Company's published consolidated
financial statements for the year ended 31 December 2010.
The figures for the year ended 31 December 2010 are not
statutory accounts but have been extracted from the Group's
statutory accounts for that financial year. The auditor's report on
those accounts was not qualified and did not contain statements
under section 498(2) or (3) of the Companies Act 2006. A copy of
the statutory accounts for that year has been delivered to the
Registrar of Companies and has been made available on the Company's
website at www.keller.co.uk.
The financial information in this interim financial report for
the half years ended 30 June 2011 and 30 June 2010 has neither been
reviewed, nor audited.
The key risks and uncertainties facing the Group, as explained
in the Group's Annual Report for the year ended 31 December 2010,
continue to be: market cycles, acquisitions, tendering and
management of contracts and people.
2. Foreign currencies
The exchange rates used in respect of principal currencies
are:
Average for Period Period End
----------- ------------------------------- --------------------------------
Half year Half year Year to Half year Half year
to to 31 to to Year to 31
30 June 30 June December 30 June 30 June December
2011 2010 2010 2011 2010 2010
----------- --------- --------- --------- --------- --------- ----------
US dollar: 1.62 1.53 1.55 1.60 1.51 1.55
Euro: 1.15 1.15 1.17 1.11 1.23 1.17
Australian
dollar: 1.56 1.71 1.68 1.51 1.76 1.52
----------- --------- --------- --------- --------- --------- ----------
3. Segmental analysis
The Group is managed as four geographical divisions and has only
one major product or service: specialist ground engineering
services. This is reflected in the Group's management structure and
in the segment information reviewed by the Chief Operating Decision
Maker. There have been no material changes to the assets of these
segments since the year end. Revenue and operating profit of the
four reportable segments is given below:
Revenue Operating profit (2)
------------- ------------------------------ -------------------------------
Half year Half year Year to Half year Half year Year to
to to 31 to to 31
30 June 30 June December 30 June 30 June December
2011 2010 2010 2011 2010 2010
GBPm GBPm GBPm GBPm GBPm GBPm
------------- --------- --------- -------- --------- --------- ---------
UK 22.7 28.1 49.6 (2.0) (0.1) (2.5)
US 207.9 198.0 425.2 (1.8) (1.0) 6.9
CEMEA (1) 207.2 190.1 400.3 8.5 9.3 22.4
Australia 107.7 80.7 193.8 3.5 8.0 19.1
------------- --------- --------- -------- --------- --------- ---------
545.5 496.9 1,068.9 8.2 16.2 45.9
Central items
and
eliminations - - - (1.8) (2.5) (2.6)
------------- --------- --------- -------- --------- --------- ---------
545.5 496.9 1,068.9 6.4 13.7 43.3
------------- --------- --------- -------- --------- --------- ---------
1 Continental Europe, Middle East and Asia.
2 Operating profit in the year to 31 December 2010 totalled
GBP21.5m after goodwill impairment charges of GBP13.5m and GBP8.3
in the US and CEMEA divisions respectively. After these impairment
charges, the US division made a loss of GBP6.6m and the CEMEA
division made a profit of GBP14.1m.
4. Taxation
Taxation, representing management's best estimate of the average
annual effective income tax rate expected for the full year, based
on the profit before tax and goodwill impairment is: 27% (half year
ended 30 June 2010: 28%; year ended 31 December 2010: 28%).
Taxation for the year ended 31 December 2010 based on profit before
tax after goodwill impairment was 35%.
5. Dividends paid to equity holders of the parent
Ordinary dividends on equity shares:
Half year Half year Year to
to 30 to 30 31 December
June 2011 June 2010 2010
GBPm GBPm GBPm
---------------------------------------- ---------- ---------- ------------
Amounts recognised as distributions to
equity holders in the period:
Second interim dividend for the year
ended 31 December 2009 of 14.5p per
share in lieu of a final dividend - 9.3 9.3
Interim dividend for the year ended 31
December 2010 of 7.6p (2009: 7.25p)
per share - - 4.9
Final dividend for the year ended 31
December 2010 of 15.2p (2009: nil) per
share 9.8 - -
---------------------------------------- ---------- ---------- ------------
9.8 9.3 14.2
---------------------------------------- ---------- ---------- ------------
In addition to the above, an interim ordinary dividend of 7.6p
per share (2010: 7.6p) will be paid on 1 November 2011 to
shareholders on the register at 7 October 2011. This proposed
dividend has not been included as a liability in these financial
statements and will be accounted for in the period in which it is
paid.
6. Earnings per share
Earnings per share of 4.6p (half year ended 30 June 2010: 12.5p;
year ended 31 December 2010: 17.3p) was calculated based on
earnings of GBP3.0m (half year ended 30 June 2010: GBP8.0m; year
ended 31 December 2010: GBP11.2m) and the weighted average number
of ordinary shares in issue during the year of 64.2 million (half
year ended 30 June 2010: 64.2million; year ended 31 December 2010:
64.2million).
Diluted earnings per share of 4.5p (half year ended 30 June
2010: 12.3p; year ended 31 December 2010: 17.0p) was calculated
based on earnings of GBP3.0m (half year ended 30 June 2010:
GBP8.0m; year ended 31 December 2010: GBP11.2m) and the adjusted
weighted average number of ordinary shares in issue during the year
of 65.3 million (half year ended 30 June 2010: 65.3million; year
ended 31 December 2010: 65.3 million).
Earnings per share before goodwill impairment of 4.6p (half year
ended 30 June 2010: 12.5p; year ended 31 December 2010: 44.0p) was
calculated based on earnings of GBP3.0m (half year ended 30 June
2010: GBP8.0m; year ended 31 December 2010: GBP28.3m) and the
weighted average number of ordinary shares in issue during the year
of 64.2 million (half year ended 30 June 2010: 64.2million; year
ended 31 December 2010: 64.2 million).
Diluted earnings per share before goodwill impairment of 4.5p
(half year ended 30 June 2010: 12.3p; year ended 31 December 2010:
43.2p) was calculated based on earnings of GBP3.0m (half year ended
30 June 2010: GBP8.0m; year ended 31 December 2010: GBP28.3m) and
the adjusted weighted average number of ordinary shares in issue
during the year of 65.3 million (half year ended 30 June 2010:
65.3million; year ended 31 December 2010: 65.3 million).
The total number of shares held in Treasury was 2.2m (30 June
2010: 2.2m; 31 December 2010:2.2m).
All shares issued related to share options exercised.
7. Analysis of closing net debt
As at As at As at
30 June 30 June 31 December
2011 2010 2010
GBPm GBPm GBPm
----------------------------------------- -------- -------- ------------
Bank balances 35.1 25.9 39.3
Short-term deposits 1.8 4.3 2.1
----------------------------------------- -------- -------- ------------
Cash and cash equivalents in the balance
sheet 36.9 30.2 41.4
Bank overdrafts (9.3) (9.5) (2.3)
Cash and cash equivalents in the cash
flow statement 27.6 20.7 39.1
Bank and other loans (154.1) (135.5) (132.1)
Finance leases (1.3) (6.7) (1.0)
----------------------------------------- -------- -------- ------------
Closing net debt (127.8) (121.5) (94.0)
----------------------------------------- -------- -------- ------------
8. Related party transactions
Transactions between the parent, its subsidiaries and jointly
controlled operations, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
During the period the Group undertook various contracts with a
total value of GBP1.2m (half year to 30 June 2010: GBP1.5m; year
ended 31 December 2010: GBP3.3m) for GTCEISU Construccion, S.A., a
connected person of Mr Lopez Jimenez, a Director of the Company. An
amount of GBP2.2m (30 June 2010: GBP1.4m; 31 December 2010:
GBP2.3m) is included in trade and other receivables in respect of
amounts outstanding as at 30 June 2010. During the period the Group
made purchases from GTCEISU Construccion, S.A with a total value of
GBP1.7m (half year to 30 June 2010: GBP2.0m; year ended 31 December
2010: GBP3.6m). An amount of GBP1.8m (30 June 2010: GBP4.0m; 31
December 2010: GBP2.8m) is included in trade and other payables in
respect of amounts outstanding as at 30 June 2010.
All amounts outstanding from related parties are unsecured and
will be settled in cash. No guarantees have been given or received.
No provisions have been made for doubtful debts in respect of the
amounts owed by related parties.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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