TIDMMGNS
RNS Number : 7607N
Morgan Sindall PLC
24 February 2009
MORGAN SINDALL plc
('Morgan Sindall' or 'the Group')
Preliminary results for the year ended 31 December 2008
Morgan Sindall plc, the construction and regeneration group that operates within
five divisions, Fit Out, Construction, Infrastructure Services, Affordable
Housing and Urban Regeneration, today announces record preliminary results.
+------------------------------------------+------------+------------+--------+
| | 2008 | 2007 | |
+------------------------------------------+------------+------------+--------+
| Revenue | GBP2,548m | GBP2,115m | +20% |
+------------------------------------------+------------+------------+--------+
| Profit before tax and amortisation | GBP71.4m | GBP62.1m | +15% |
+------------------------------------------+------------+------------+--------+
| Profit before tax | GBP62.3m | GBP57.6m | +8% |
+------------------------------------------+------------+------------+--------+
| Year end cash balance | GBP120m | GBP219m | -45% |
+------------------------------------------+------------+------------+--------+
| Adjusted earnings per share ¹ | 127.8p | 104.5p | +22% |
+------------------------------------------+------------+------------+--------+
| Basic earnings per share | 106.3p | 93.8p | +13% |
+------------------------------------------+------------+------------+--------+
| Total dividend per share | 42.0p | 38.0p | +11% |
+------------------------------------------+------------+------------+--------+
¹ Basic earnings per share before amortisation of intangible assets
Group Highlights
* Record set of preliminary results
* Continued success with strategy of developing market leading positions across
chosen sectors of the construction market
* Increased balance to the Group with growth in Construction, Infrastructure
Services and Urban Regeneration
* Three quarters of activity in public and regulated sectors
* Financially robust with strong net cash position
* Forward order book provides good visibility for 2009 and beyond
Divisional Highlights
Fit Out
* Further strengthened market leading position
* Operating profit maintained at GBP25.8m (2007: GBP25.9m), despite revenue
softening to GBP474m (2007: GBP492m)
* Margin at 5.4% (2007: 5.3%), equalling historic peak margin
* Forward order book of GBP124m (2007: GBP179m) strengthened to GBP181m at end of
January 2009 (Jan 2008: GBP183m)
* As previously announced we continue to expect a fall in revenue in 2009
Construction
* Strong public sector demand, particularly in education and healthcare,
offsetting weak commercial property sector
* Operating profit up 94% to GBP9.5m (2007: GBP4.9m), after one-off acquisition
related IT costs of GBP1.0m, on revenue of GBP813m (2007: GBP621m)
* Margin up to 1.3% (2007: 1.2%) after adjusting for one-off costs
* Forward order book maintained at GBP805m (2007: GBP810m)
* Demand underpinned by strong public sector spending, with division holding
strong positions in key public sector markets
Infrastructure Services
* Buoyant market conditions throughout 2008 driven by investment in transport,
water and energy sectors
* Operating profit increased 36% to GBP14.4m (2007: GBP10.6m), after one-off
acquisition related IT costs of GBP1.4m, on revenue of GBP799m (2007: GBP575m)
* Margin maintained at 2.0% (2007: 2.1%), after adjusting for one-off costs
* Forward order book at GBP1.4bn (2007: GBP1.7bn)
* Expecting further market growth with a number of major infrastructure
opportunities in 2009
Affordable Housing
* Division responded to market conditions by increasing focus on refurbishment and
new build social housing activities offsetting subdued open market sector
* Operating profit of GBP21.0m (2007: GBP25.5m) on revenue of GBP377m (2007:
GBP398m)
* Margin of 5.6% (2007: 6.4%) impacted by fall in open market volumes
* Order book at GBP1.3bn (2007: GBP1.5bn)
* Short term focus on social new build and refurbishment continues but mixed
tenure remains a long-term Government priority
Urban Regeneration
* Partnering underpinned the achievements of Muse in 2008
* Full year operating profit of GBP7.8m (5 months, 2007: GBP4.2m) on revenue of
GBP84m (5 months, 2007: GBP26m)
* Renegotiated a number of existing agreements in response to subdued market
conditions
* GBP1.3bn development pipeline plus projects at preferred bidder stage of
GBP0.7bn (2007: GBP1.2bn and GBP1.1bn respectively)
* Mixed use regeneration remains subdued in the short-term but major long-term
opportunity with division well positioned for market recovery
John Morgan, Executive Chairman, commented:
"2008 has been an encouraging year for Morgan Sindall. We have delivered a
record set of results in line with our expectations. Construction and
Infrastructure Services divisions provided significantly increased profit
contributions, which brings increased balance and resilience to our business,
whilst our financial position remains robust.
"We continue to expect market conditions in 2009 to remain challenging, but we
are well placed to emerge from these times as an even stronger business."
+-------------------------------------+---------------------------------+
| ENQUIRIES: | |
+-------------------------------------+---------------------------------+
| | |
+-------------------------------------+---------------------------------+
| Morgan Sindall plc | Tel: 020 7307 9200 |
+-------------------------------------+---------------------------------+
| John Morgan, Executive Chairman | |
+-------------------------------------+---------------------------------+
| Paul Smith, Chief Executive | |
+-------------------------------------+---------------------------------+
| David Mulligan, Finance Director | |
+-------------------------------------+---------------------------------+
| | |
+-------------------------------------+---------------------------------+
| Blythe Weigh Communications | Tel: 020 7138 3204 |
+-------------------------------------+---------------------------------+
| Tim Blythe | Mobile: 07816 924626 |
+-------------------------------------+---------------------------------+
| Paul Weigh | Mobile: 07989 129658 |
+-------------------------------------+---------------------------------+
Chairman and Chief Executive's Statement
We are pleased to report that Morgan Sindall produced a record result in
2008.Trading across the Group was in line with our expectations and we are
pleased to report a 20% increase in revenue to GBP2,548m (2007: GBP2,115m) and a
15% increase in profit before tax and amortisation to GBP71.4m (2007: GBP62.1m).
Profit before tax (after amortisation of intangible assets) rose by 8% to
GBP62.3m (2007: GBP57.6m) while earnings per share before amortisation of
intangible assets increased by 22% to 127.8p (2007: 104.5p). A final dividend of
30.0p (2007: 28.0p) is recommended by the Board, giving a total dividend for the
year of 42.0p (2007: 38.0p), an increase of 11%.
The Group remains financially strong with average cash balances for the year of
GBP77m (2007: GBP75m), year end cash of GBP120m (2007: GBP219m) and debt
facilities available if required to help us exploit opportunities presented by
our markets.
Strategy
This record performance was achieved through our long-term strategy of creating
a construction and regeneration group with market leading positions in our
chosen sectors within the UK construction market. In 2008 Fit Out produced an
excellent performance, expanding its workload in the public sector to offset the
decline in the commercial sector, matching the record operating profit achieved
in 2007 and delivering a peak operating margin. The Construction and
Infrastructure Services divisions both increased in size, scale and capability
and generated record operating profits in 2008 reflecting the full year impact
of the July 2007 acquisition from Amec in addition to organic growth from public
and regulated sector work. Affordable Housing concentrated on its refurbishment
and new build social housing capabilities to largely offset the impact of the
subdued open market housing sector. Finally, Urban Regeneration performed in
line with our expectations in 2008 and remains ideally positioned to take
advantage of opportunities presented when its market recovers. We report more
fully on each division and explain in greater detail the diversity and balance
of our work in the business review following this statement.
Changes to the Board
We welcome Adrian Martin to the Board as a non-executive director. The Board
will benefit from his accounting and financial expertise as well as his
experience over a number of years in various executive and non-executive roles.
Bernard Asher will retire from the Board at the forthcoming Annual General
Meeting. We would like to extend our personal thanks and recognition for his
wisdom, guidance and support to the Group for over a decade during which time
our revenue has grown from GBP331m to GBP2.5bn.
Looking ahead
We expect 2009 to remain challenging for the Group as the construction and
regeneration markets continue to be affected by the general economic downturn.
As previously announced, we expect the strength in the infrastructure market and
the ongoing weakness of the commercial property and open market housing sectors
to continue, which will reduce the Group's overall level of profitability in
2009 compared to the previous year. Nevertheless we do expect opportunities to
present themselves and we remain positive given the financial strength of the
Group and its market leading positions in a number of construction and
regeneration market sectors. Fit Out is well positioned with a broad sector
spread which gives it flexibility to react to changes in any one particular
sector. Construction's exposure to the public sector and the education market in
particular will help to counter any further softening in demand from the private
sector. Infrastructure Services' market is set for further growth with expansion
in the transport, water and energy sectors given a number of major projects
currently being procured. Affordable Housing is seeing buoyant demand for
refurbishment and social housing new build, which will help to mitigate the
impact of weak open market demand. Finally, Urban Regeneration is continuing to
secure development agreements, particularly with the public sector, although its
short-term outlook remains subdued.
Given the general economic downturn we continue to place an increased emphasis
on cash and working capital management, cost reductions and supply chain
improvements in each of our divisions. At the same time, however, we are seeking
to exploit growth opportunities where they arise.
Our forward order book at the start of 2009 stood at GBP3.7bn (2007: GBP4.3bn)
and, in addition, Urban Regeneration's forward development pipeline, its share
of regeneration projects in which it has an interest, is valued at GBP1.3bn
(2007: GBP1.2bn). The forward order book gives us good visibility and a measure
of confidence over the coming year's performance. This, added to a healthy
pipeline of opportunities, particularly a number of major upcoming
infrastructure projects, and our financial resources, provides us with
confidence as we progress into 2009.
Overall, therefore, we are well placed to emerge from these challenging times as
an even stronger business. We all face 2009 with the positive attitude,
enthusiasm and drive that has characterised Morgan Sindall for so long.
John Morgan Paul Smith
Executive ChairmanChief Executive
24 February 2009
Business review
Group performance
Morgan Sindall delivered a record result in 2008. Profit before tax and
amortisation increased by 15% in 2008 to GBP71.4m (2007: GBP62.1m) on revenue
which increased by 20% to GBP2,548m (2007: GBP2,115m). This was due to the
underlying growth of Infrastructure Services as well as the full year impact of
the July 2007 acquisition on the Infrastructure Services and Construction
divisions offset by a fall in profit at Affordable Housing.
Profit before tax increased by 8% to GBP62.3m (2007: GBP57.6m). The income tax
expense for the year reduced to GBP17.5m (2007: GBP18.2m) as a result of a
reduction in the corporation tax rate and the benefit of an adjustment in
respect of prior years' tax. Earnings per share before amortisation of
intangible assets ('adjusted EPS') increased by 22% to 127.8p (2007: 104.5p).
This performance is attributable to the consistent application of our strategy
of seeking to create market leading positions in our chosen sectors of the
construction and regeneration markets.
The final dividend for the year recommended by the Board is 30.0p (2007: 28.0p)
giving a total dividend for the year of 42.0p (2007: 38.0p), being covered by
adjusted EPS by 3.0 times (2007: 2.8 times). The Group's policy is to increase
the dividend broadly in line with the growth in earnings, aiming to cover the
dividend by earnings between two and a half and three times.
Shareholders' equity increased to GBP192.3m (2007: GBP165.7m). The number of
shares in issue at 31 December 2008 was 43.0m (2007: 42.8m). The increase of
0.2m shares was due to the exercise of options under employee share option
schemes.
The cash position of the Group remains strong at GBP120m (2007: GBP219m).
Average cash during 2008 was GBP77m (2007: GBP75m) reflecting increased
profitability offset by increased working capital requirements as discussed
below. The net cash outflow from operating activities was GBP65.5m (2007:
inflow of GBP158.1m) with operating profit being offset by an increased level of
working capital employed in the business. The working capital movement is a
result of the increased level of inventories of GBP43m primarily arising from
the slowdown in the pace of open market house sales at Affordable Housing and
the cash outflow related to the movement in contract fair value provisions of
GBP40m created in relation to the July 2007 acquisition. The other major
categories of cashflow were as follows. There were no net payments to acquire
subsidiaries (2007: GBP11.3m), capital expenditure was GBP8.4m (2007: GBP8.0m)
and payments to increase interests in joint ventures were GBP12.4m (2007:
GBP5.0m), reflecting ongoing investment in the business. After payments for tax,
dividends and servicing of finance, the net decrease in cash and cash
equivalents was GBP98.6m. It is anticipated that the cash resources will be
available for the development of the Group's businesses either through funding
acquisitions or investment in working capital as required.
In addition to its cash resources, the Group has a GBP25m loan facility
available until November 2009, a further GBP25m loan facility available until
June 2010 and a GBP25m, 364-day loan facility which can be extended at the
Group's option until June 2010. Banking facilities are subject to financial
covenants, all of which have been met in the year.
DIVISIONAL REVIEWS
The performance of each of the five operating divisions in 2008 was as follows.
Operating profit is the profit from operations for each division stated before
the amortisation of intangible assets.
Fit Out
2008 2007
Revenue GBP474mGBP492m
Operating profitGBP25.8m GBP25.9m
Margin 5.4% 5.3%
Forward order bookGBP124m GBP179m
Fit Out performed strongly in 2008 delivering operating profit of GBP25.8m
(2007: GBP25.9m) with an increased margin of 5.4% (2007: 5.3%) equalling the
division's peak margin. Revenues across the division fell by 4% to GBP474m
(2007: GBP492m) in line with our expectations.
Fit Out's businesses are ideally placed to respond to market opportunities
presented in tough economic conditions. As previously announced we continue to
expect a fall in demand over the course of 2009. However, the division's broad
sector spread and market leadership in the quality of its delivery is expected
to enable it to adapt to the challenges of the market. It is also expected that
a greater balance of activity will come from the fit out of existing commercial
offices rather than new buildings. Overbury and Morgan Lovell are leaders in the
fit out of occupied office space, and the regional businesses are providing
around a quarter of projects, both of which are markets that traditionally
generate resilient workloads in a downturn.
The division has also seen its relative market share in the commercial office
market continue to grow to over 20% largely due to an increased presence in the
high value projects sector and organic regional growth. The division completed
its largest projects to date during the year, for Deloitte and the International
Maritime Organization, both in excess of GBP40m each. In addition it retained
its focus on the strategically important market of projects under GBP1m in
value.
The business continues to secure major frameworks in the office, retail and
education sectors, which now account for around a third of the division's
revenue. In 2008 these included frameworks with the BBC, RBS, Imperial College
and the Post Office. The division's public sector workload, which accounts for
around a quarter of projects, is expected to provide some stability to
performance in 2009.
The forward order book at the start of the year stood at GBP124m (2007:
GBP179m), although it has subsequently strengthened to stand at GBP181m at the
end of January, consistent with the same period last year and now extends the
forward order book into 2010. The fit out market faces challenging conditions
in 2009 with a fall in revenue expected, as previously announced. However, the
division is well placed due to its spread across a number of market sectors and
resilience coming from its market leading position.
Construction
2008 2007
Revenue GBP813m GBP621m
Operating profit GBP9.5m GBP4.9m
Margin 1.2% 0.8%
Forward order bookGBP805m GBP810m
Construction delivered strong growth in profitability and revenue in 2008.
Revenue increased by 31% to GBP813m (2007: GBP621m) during 2008, driven
primarily by the full year impact of the July 2007 acquisition, with a
strengthened operating profit of GBP9.5m (2007: GBP4.9m) and a margin up to 1.2%
(2007: 0.8%). The operating profit is stated after one-off costs of GBP1.0m
(2007: GBP2.8m) relating to the acquisition, which will not recur in 2009.
Adjusting the operating profit for these costs gives an operating margin for the
period of 1.3% (2007: 1.2%).
The division is currently well placed with over half of its work in the
education sector and in total around three quarters of its work in the public
sector. Strong public sector demand will help to offset a weak commercial
sector. Spending on education projects is forecast to grow by 28% over the next
two years. This includes the Government's multi-billion pound Building Schools
for the Future ('BSF') programme under which the Wright Robinson College in
Manchester was delivered by the division, and work has started on the GBP44m
construction of Bideford College in Devon. During 2008, in the healthcare
sector, Morgan Ashurst was involved in the delivery of the GBP250m
University College Hospital in London. This recent experience and continued
Government investment places the business in a strong position to develop
significant new NHS frameworks and key projects.
New opportunities for long-term growth and development were created in 2008 from
the improved ability to deliver large scale complex projects and the growing
recognition of Morgan Ashurst as a major national contractor. Significant wins
during the year included a seven year, GBP200m construction framework with
Cambridgeshire County Council and a four year, GBP100m school building programme
for North Lanarkshire Council. Morgan Professional Services ('MPS'), the
division's design, engineering and project management business, has also secured
important new contracts in the year, most recently for improvements at Stratford
International Station.
The division has also been able to secure long-term construction frameworks and
partnerships by differentiating the business through project performance and
exceptional customer service. As a result new agreements with BAA, North
Lanarkshire Council, Health Properties, Airbus and a number of local authority
special works frameworks, which focus on small scale projects, have been
secured. Framework and negotiated work now account for around 70% of the
division's revenue.
The forward order book for the division stands at GBP805m (2007: GBP810m)
providing a solid platform for expected performance in 2009. We anticipate that
the market may become more challenging over the next two years. However, with
its focus on public sector work, a strong framework business and an emphasis on
customer service excellence, the business is well placed to meet the challenges
ahead.
Infrastructure Services
2008 2007
Revenue GBP799m GBP575m
Operating profit GBP14.4m GBP10.6m
Margin 1.8% 1.8%
Forward order bookGBP1.4bn GBP1.7bn
Revenue increased by 39% in 2008 to GBP799m (2007: GBP575m), largely due to the
full year impact of the July 2007 acquisition. Operating profit increased by 36%
to reach GBP14.4m (2007: GBP10.6m). Margin was maintained at 1.8% (2007: 1.8%).
The operating profit is also stated after one-off IT costs relating to the
acquisition of GBP1.4m (2007: GBP1.4m) which will not recur in 2009. Adjusting
the operating profit for these costs gives a margin of 2.0% (2007: 2.1%).
The division continues to benefit from a strong market which underpinned a
record year in 2008. The division expanded by more than a third through growth
in the transport, water and energy sectors and through the full year impact of
the July 2007 acquisition. There were significant project successes in 2008,
including the completion of a new London Underground Station at Shepherd's Bush,
the opening of the DLR Woolwich Arsenal Extension valued at GBP180m and the
GBP120m Kincardine Crossing in Scotland, a project which was technically complex
and environmentally challenging. The division is also increasingly working with
other divisions within Morgan Sindall, such as Morgan Ashurst on RAF Valley and
Paddington Station.
Key long-term frameworks were secured during the year including the Vendor
Capital Programme for London Underground. Growing experience in delivering
energy projects, including the wind farms at Clachan Flats in Scotland and the
biomass plants at Drax and Longannet, creates substantial opportunities for
future growth. The division will seek to secure and renew frameworks and
contracts in the energy and water sectors for the next regulated period.
The forward order book stands at GBP1.4bn (2007: GBP1.7bn) and the division is
currently bidding for a number of major infrastructure projects. The division's
diverse and numerous opportunities provide an exciting outlook for 2009 and
beyond. In the short-term it sees further opportunities in the transport, water
and energy sector. In the medium-term it is positioning itself in anticipation
of new opportunities in both the nuclear and traditional power generation
sectors and the defence sector which offers significant expansion opportunities.
Affordable Housing
2008 2007
Revenue GBP377m GBP398m
Operating profit GBP21.0m GBP25.5m
Margin 5.6% 6.4%
Forward order bookGBP1.3bn GBP1.5bn
Affordable Housing delivered an operating profit of GBP21.0m (2007: GBP25.5m) on
revenue that fell to GBP377m (2007: GBP398m) in line with our expectations,
reflecting the effect of tightened credit conditions for home buyers. The
division achieved a margin of 5.6% (2007: 6.4%), which was impacted by the fall
in open market housing volumes.
Affordable Housing continued to secure and deliver refurbishment and new build
social housing projects, which helped to largely offset the impact of the
downturn in open market housing. The affordable housing sector remains a key
Government priority and the recent announcement to accelerate spending in this
area is encouraging. In addition the Government's Decent Homes Programme has
been extended until 2012 in England, and longer still in Wales and Scotland,
providing an optimistic outlook for this sector over the medium-term. In 2008,
refurbishment projects under this programme contributed around half of the
division's revenue.
Tough credit conditions contributed to a slowing of demand for open market
affordable homes in 2008, which is expected to continue in 2009. In response to
these conditions, Lovell has introduced a new shared equity scheme which is
showing significant take up. In addition, the division's 'tenure blind' approach
to housing development, which means that homes across a mixed tenure scheme are
built to a similar standard, is providing the opportunity to switch homes
destined originally for the open market to additional stock for Registered
Social Landlords.
Lovell has completed three schemes in the year as a Homes and Communities Agency
partner and the partnership will continue to generate a significant number of
opportunities for the business as a direct recipient of Government grants for
development. Additionally Compendium, our joint venture business with the
Riverside Group, offers a full one-stop approach to design, sale and management
of large scale residential regeneration projects which has been successfully
applied in the completion of the first two years of its five year Coalville
project in Stoke-on-Trent.
The forward order book stands at GBP1.3bn (2007: GBP1.5bn). Affordable Housing
continues to focus in the short-term on refurbishment and new build social
housing, reducing production costs and selling units designated for open market
sale to Registered Social Landlords. The division's success in these areas will
help to offset the impact in 2009 of the ongoing downturn in open market house
sales.
Urban Regeneration
2008 2007*
Revenue GBP84m GBP26m
Operating profit GBP7.8m GBP4.2m
Margin 9.3% 16.2%
Share of development GBP1.3bn GBP1.2bn
pipeline
*2007 figures relate to 5 months' performance only.
In 2008 the Urban Regeneration division delivered revenue of GBP84m (2007:
GBP26m) and operating profit of GBP7.8m (2007: GBP4.2m), its first full year
contribution following its acquisition in July 2007.
The division is responding to the challenges of the market by revisiting
existing plans and rephasing developments to ensure it is best placed to take
full advantage when the market improves. Although the recent softening of the
commercial and residential property sectors means the short-term outlook for the
division is subdued, the Group remains of the view that mixed use development is
central to the regeneration of urban communities in areas of social and economic
deprivation and will provide major opportunities in the long-term.
The division's approach to partnering underpinned the achievements of Muse in
2008. In particular it secured the GBP350m redevelopment of Swindon Town Centre
in partnership with Swindon Borough Council, South West of England Regional
Development Agency and the Homes and Communities Agency. During the year the
division also created a number of new facilities for clients, including the
Greater Manchester Police Authority, Intercontinental Hotels, Standard Life and
the Department for Communities and Local Government. In all, over 700,000 sq ft
of offices, industrial, leisure and residential facilities were completed during
the year.
Several other large scale opportunities, where Muse is in a preferred developer
position, were also advanced considerably during the year. These are expected to
conclude during 2009 and to provide phases of profitable development in future
years. Commercial and residential lettings and pre sales in 2008, including a
45,000 sq ft pre sale of an office building to United Utilities Plc in
Warrington, will contribute towards Muse's income in future years.
Muse's business model provides insulation from adverse cost and value
corrections, as it does not hold substantial land assets. Its share of the
development pipeline of projects in which it has an interest has increased in
value to GBP1.3bn (2007: GBP1.2bn) with its share of three projects at preferred
bidder valued at GBP650m. The division is expecting subdued conditions in the
short-term with an excellent platform for growth when the market returns to
strength in the medium-term.
Forward looking statements
This preliminary statement has been prepared solely to assist shareholders in
assessing the strategies of the board and in gauging their potential to succeed.
It should not be relied on by any other party or for other purposes. Forward
looking statements have been made by the directors in good faith using
information available up until the day that they approved this preliminary
results announcement. Forward looking statements should be regarded with caution
because of the inherent uncertainties in economic trends and business risks.
Consolidated income statement (unaudited)
For the year ended 31 December 2008
+-----------------------------------+----------+----+-------------+---+-------------+
| | Notes | | 2008 | | 2007 |
| | | | GBPm | | GBPm |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Continuing operations | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Revenue | 1 | | 2,548.1 | | 2,114.6 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Cost of sales | | | (2,297.8) | | (1,892.9) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Gross profit | | | 250.3 | | 221.7 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Other administrative expenses | | | (185.8) | | (168.4) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Amortisation of intangible assets | | | (9.1) | | (4.5) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Total administrative expenses | | | (194.9) | | (172.9) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Share of net profit of | | | 2.6 | | 4.7 |
| equity accounted joint | | | | | |
| ventures | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Profit from operations | 1 | | 58.0 | | 53.5 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Finance income | | | 9.4 | | 8.5 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Finance expenses | | | (5.1) | | (4.4) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net finance income | | | 4.3 | | 4.1 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Profit before income tax expense | | | 62.3 | | 57.6 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Income tax expense | 2 | | (17.5) | | (18.2) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Profit for the year | | | 44.8 | | 39.4 |
| attributable to equity | | | | | |
| holders of the parent | | | | | |
| company | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Earnings per share | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| From continuing operations | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Basic | 4 | | 106.3p | | 93.8p |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Diluted | 4 | | 105.1p | | 91.7p |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
There were no discontinued operations in either the current or comparative
periods. Consolidated balance sheet (unaudited)
At 31 December 2008
+-----------------------------------+----------+----+-------------+---+-------------+
| | Note | | 2008 | | Restated |
| | | | GBPm | | 2007 |
| | | | | | GBPm |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Non current assets | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Property, plant and equipment | | | 32.7 | | 23.8 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Goodwill | | | 183.3 | | 183.3 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Other intangible assets | | | 23.4 | | 32.5 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Investments in equity | | | 53.0 | | 38.1 |
| accounted joint ventures | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Investments | | | 0.1 | | 0.1 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Deferred tax assets | | | 2.7 | | 5.0 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | 295.2 | | 282.8 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Current assets | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Inventories | | | 171.3 | | 128.8 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Amounts due from | | | 189.2 | | 209.1 |
| construction contract | | | | | |
| customers | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Trade and other receivables | | | 209.0 | | 238.3 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Cash and cash equivalents | | | 120.3 | | 218.9 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | 689.8 | | 795.1 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Total assets | | | 985.0 | | 1,077.9 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Current liabilities | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Trade and other payables | | | (675.2) | | (798.1) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Amounts received in | | | (78.3) | | (67.4) |
| advance on construction | | | | | |
| contracts | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Current tax liabilities | | | (8.5) | | (10.6) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Finance lease liabilities | | | (1.9) | | (1.4) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | (763.9) | | (877.5) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net current liabilities | | | (74.1) | | (82.4) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Non current liabilities | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Trade and other payables | | | (0.1) | | (8.9) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Retirement benefit obligation | | | (3.0) | | (3.3) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Finance lease liabilities | | | (7.4) | | (3.2) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Provisions | | | (18.3) | | (19.3) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | (28.8) | | (34.7) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Total liabilities | | | (792.7) | | (912.2) |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net assets | | | 192.3 | | 165.7 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Equity | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Share capital | 5 | | 2.2 | | 2.1 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Share premium account | 5 | | 26.6 | | 26.3 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Capital redemption reserve | 5 | | 0.6 | | 0.6 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Own shares | 5 | | (6.4) | | (5.5) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Hedging reserve | 5 | | (2.3) | | (2.2) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Retained earnings | 5 | | 171.6 | | 144.4 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Total equity | | | 192.3 | | 165.7 |
+-----------------------------------+----------+----+-------------+---+-------------+
Consolidated statement of recognised income and expense (unaudited)
For year ended 31 December 2008
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | 2008 | | 2007 |
| | | | GBPm | | GBPm |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Actuarial losses arising | | | (0.2) | | (0.9) |
| on defined benefit plan | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Deferred tax on retirement | | | - | | 0.3 |
| benefit obligation | | | | | |
| recognised directly in | | | | | |
| equity | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Movement on cash flow | | | (0.1) | | (1.4) |
| hedges in equity accounted | | | | | |
| joint ventures | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net expense recognised | | | (0.3) | | (2.0) |
| directly in equity | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Profit for the year | | | 44.8 | | 39.4 |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Total recognised income | | | 44.5 | | 37.4 |
| and expense for the year | | | | | |
| attributable to equity | | | | | |
| holders of the parent | | | | | |
| company | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
Consolidated cash flow statement (unaudited)
For year ended 31 December 2008
+-----------------------------------+----------+----+-------------+---+-------------+
| | Notes | | 2008 | | 2007 |
| | | | GBPm | | GBPm |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net cash (outflow)/inflow from | 6 | | (65.5) | | 158.1 |
| operating activities | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Cash flows from investing | | | | | |
| activities | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Interest received | | | 9.2 | | 8.4 |
+-----------------------------------+----------+----+-------------+---+-------------+
| Proceeds on disposal of property, | | | 0.8 | | 0.6 |
| plant and equipment | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Purchases of property, plant and | | | (8.4) | | (8.0) |
| equipment | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Payments to acquire interests in | | | (12.4) | | (5.0) |
| joint ventures | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Payment for the acquisition of a | | | - | | (25.5) |
| subsidiary | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net cash acquired on acquisition | | | - | | 14.2 |
| of a subsidiary | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net cash outflow from investing | | | (10.8) | | (15.3) |
| activities | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Cash flows from financing | | | | | |
| activities | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net payments to acquire own | | | (0.9) | | (2.1) |
| shares | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Dividends paid | | | (16.9) | | (12.6) |
+-----------------------------------+----------+----+-------------+---+-------------+
| Repayment of obligations under | | | (4.9) | | (4.7) |
| finance leases | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Proceeds on issue of share | | | 0.4 | | 0.1 |
| capital | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net cash outflow from financing | | | (22.3) | | (19.3) |
| activities | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Net (decrease)/increase in cash | | | (98.6) | | 123.5 |
| and cash equivalents | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Cash and cash equivalents at | | | 218.9 | | 95.4 |
| beginning of year | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Cash and cash equivalents at end | | | | | |
| of year | | | | | |
+-----------------------------------+----------+----+-------------+---+-------------+
| Bank balances and cash | | | 120.3 | | 218.9 |
+-----------------------------------+----------+----+-------------+---+-------------+
Notes (unaudited)
For the year ended 31 December 2008
1.Business segments
For management purposes, the Group is organised into five operating
divisions: Fit Out, Construction, Infrastructure Services, Affordable Housing
and Urban Regeneration. The divisions are the basis on which the Group reports
its primary segment information.
Segment information about the Group's continuing operations is presented
below:
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| 2008 | | Fit | | Construction | | Infrastructure | | Affordable | | Urban | | Group | | Total |
| | | Out | | | | Services | | Housing | | Regeneration | | Activities | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Revenue | | 473.7 | | 813.1 | | 799.2 | | 377.2 | | 83.6 | | 1.3 | | 2,548.1 |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Operating | | 25.8 | | 9.5 | | 14.4 | | 21.0 | | 6.5 | | (12.7) | | 64.5 |
| profit/(loss) | | | | | | | | | | | | | | |
| before | | | | | | | | | | | | | | |
| amortisation | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Share | | - | | - | | - | | - | | 1.3 | | 1.3 | | 2.6 |
| of | | | | | | | | | | | | | | |
| results | | | | | | | | | | | | | | |
| of | | | | | | | | | | | | | | |
| associates | | | | | | | | | | | | | | |
| and joint | | | | | | | | | | | | | | |
| ventures | | | | | | | | | | | | | | |
| after tax | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Profit/(loss) | | 25.8 | | 9.5 | | 14.4 | | 21.0 | | 7.8 | | (11.4) | | 67.1 |
| from | | | | | | | | | | | | | | |
| operations | | | | | | | | | | | | | | |
| before | | | | | | | | | | | | | | |
| amortisation | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Amortisation | | - | | (2.1) | | (0.8) | | - | | (6.2) | | - | | (9.1) |
| of | | | | | | | | | | | | | | |
| intangible | | | | | | | | | | | | | | |
| assets | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Profit/(loss) | | 25.8 | | 7.4 | | 13.6 | | 21.0 | | 1.6 | | (11.4) | | 58.0 |
| from | | | | | | | | | | | | | | |
| operations | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Net | | | | | | | | | | | | | | 4.3 |
| finance | | | | | | | | | | | | | | |
| income | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Profit | | | | | | | | | | | | | | 62.3 |
| before | | | | | | | | | | | | | | |
| tax | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| 2007 | | Fit | | Construction | | Infrastructure | | Affordable | | Urban | | Group | | Total |
| | | Out | | | | Services | | Housing | | Regeneration | | Activities | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Revenue | | 491.7 | | 621.4 | | 575.4 | | 398.0 | | 25.9 | | 2.2 | | 2,114.6 |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Operating | | 25.9 | | 4.9 | | 10.6 | | 25.5 | | 0.9 | | (14.5) | | 53.3 |
| profit/(loss) | | | | | | | | | | | | | | |
| before | | | | | | | | | | | | | | |
| amortisation | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Share | | - | | - | | - | | - | | 3.3 | | 1.4 | | 4.7 |
| of | | | | | | | | | | | | | | |
| results | | | | | | | | | | | | | | |
| of | | | | | | | | | | | | | | |
| associates | | | | | | | | | | | | | | |
| and joint | | | | | | | | | | | | | | |
| ventures | | | | | | | | | | | | | | |
| after tax | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Profit/(loss) | | 25.9 | | 4.9 | | 10.6 | | 25.5 | | 4.2 | | (13.1) | | 58.0 |
| from | | | | | | | | | | | | | | |
| operations | | | | | | | | | | | | | | |
| before | | | | | | | | | | | | | | |
| amortisation | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Amortisation | | - | | (1.0) | | (0.3) | | - | | (3.2) | | - | | (4.5) |
| of | | | | | | | | | | | | | | |
| intangible | | | | | | | | | | | | | | |
| assets | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Profit/(loss) | | 25.9 | | 3.9 | | 10.3 | | 25.5 | | 1.0 | | (13.1) | | 53.5 |
| from | | | | | | | | | | | | | | |
| operations | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Net | | | | | | | | | | | | | | 4.1 |
| finance | | | | | | | | | | | | | | |
| income | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
| Profit | | | | | | | | | | | | | | 57.6 |
| before | | | | | | | | | | | | | | |
| tax | | | | | | | | | | | | | | |
+------------------------+--+-------+--+--------------+--+----------------+--+------------+--+--------------+--+------------+---+---------+
All the Group's operations are carried out in the United Kingdom and the Channel
Islands.
Notes continued (unaudited)
For the year ended 31 December 2008
2. Income tax expense
+------------------------------------------------------------+--+----------+--+----------+
| | | 2008 | | 2007 |
+------------------------------------------------------------+--+----------+--+----------+
| | | GBPm | | GBPm |
+------------------------------------------------------------+--+----------+--+----------+
| Current tax expense: | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| UK corporation tax | | 18.1 | | 19.7 |
+------------------------------------------------------------+--+----------+--+----------+
| Adjustment in respect of prior years | | (1.3) | | 0.3 |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| | | 16.8 | | 20.0 |
+------------------------------------------------------------+--+----------+--+----------+
| Deferred tax expense: | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Current year | | 0.1 | | (0.1) |
+------------------------------------------------------------+--+----------+--+----------+
| Adjustment in respect of prior years | | 0.6 | | (1.7) |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| | | 0.7 | | (1.8) |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Income tax expense for the year | | 17.5 | | 18.2 |
+------------------------------------------------------------+--+----------+--+----------+
Corporation tax is calculated at 28.5% (2007: 30%) of the estimated assessable
profit for the year. The corporation tax rate has changed due to rates reducing
from 30% to 28%, effective from 1 April 2008.
The charge for the year can be reconciled to the profit per the income statement
as follows:
+------------------------------------------------------------+--+----------+--+----------+
| | | 2008 | | 2007 |
| | | GBPm | | GBPm |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Profit before tax | | 62.3 | | 57.6 |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Income tax expense at UK corporation tax rate | | 17.7 | | 17.3 |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Tax effect of: | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Share of net profit of equity accounted joint ventures | | (0.7) | | (1.4) |
+------------------------------------------------------------+--+----------+--+----------+
| Expenses that are not deductible in determining taxable | | 1.2 | | 3.7 |
| profits | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Movements not reflected in the income statement | | - | | (0.3) |
+------------------------------------------------------------+--+----------+--+----------+
| Adjustments in respect of prior years | | (0.7) | | (1.4) |
+------------------------------------------------------------+--+----------+--+----------+
| Effects of rate change | | - | | 0.3 |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Income tax expense for the year | | 17.5 | | 18.2 |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Effective tax rate for the year | | 28.1% | | 31.6% |
+------------------------------------------------------------+--+----------+--+----------+
| Effective tax rate for the year ignoring prior year | | 29.2% | | 34.0% |
| adjustments | | | | |
+------------------------------------------------------------+--+----------+--+----------+
At 31 December 2008, the Group had unused tax losses of GBP0.6m (2007: GBP0.6m)
available for offset against future profit. No deferred tax asset has been
recognised in respect of such losses due to the unpredictability of future
profit streams against which these losses may be utilised. Losses may be carried
forward indefinitely.
Notes continued (unaudited)
For the year ended 31 December 2008
3.Dividends
+------------------------------------------------------------+--+----------+--+----------+
| | | 2008 | | 2007 |
+------------------------------------------------------------+--+----------+--+----------+
| | | GBPm | | GBPm |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Amounts recognised as distributions to equity holders in | | | | |
| the period: | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Final dividend for the year ended 31 December 2007 of | | 11.9 | | 8.4 |
| 28.0p | | | | |
| (2006: 20.0p) per share | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Interim dividend for the year ended 31 December 2008 of | | 5.1 | | 4.2 |
| 12.0p | | | | |
| (2007: 10.0p) per share | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| | | 17.0 | | 12.6 |
+------------------------------------------------------------+--+----------+--+----------+
| | | | | |
+------------------------------------------------------------+--+----------+--+----------+
| Proposed final dividend for the year ended 31 December | | 12.7 | | 12.0 |
| 2008 of 30.0p (2007: 28.0p) per share | | | | |
+------------------------------------------------------------+--+----------+--+----------+
The proposed final dividend is subject to approval by shareholders at the annual
general meeting and has not been included as a liability in these financial
statements. The proposed dividend will be paid on 8 May 2009 to shareholders on
the register at 17 April 2009. The ex-dividend date will be 15 April 2009.
Notes continued (unaudited)
For the year ended 31 December 2008
4. Earnings per share
There are no discontinued operations in either the current or prior year.
The calculation of the basic and diluted earnings per share is based on the
following data:
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | 2008 | | 2007 |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Earnings | | GBPm | | GBPm |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Earnings before taxation | | 62.3 | | 57.6 |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Deduct taxation expense per the income | | (17.5) | | (18.2) |
| statement | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Earnings for the purposes of basic and | | 44.8 | | 39.4 |
| dilutive earnings per share being net profit | | | | |
| attributable to equity holders of the parent | | | | |
| company | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Add back current year's amortisation expense | | 9.1 | | 4.5 |
| pre tax | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Earnings for the purposes of basic and | | 53.9 | | 43.9 |
| dilutive earnings per share adjusted for | | | | |
| amortisation expense being attributable to | | | | |
| equity holders of the parent company | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | 2008 | | 2007 |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Number of shares | | No. | | No. |
| | | '000s | | '000s |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Weighted average number of ordinary shares | | 42,108 | | 41,989 |
| for the purposes of basic earnings per share | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Effect of dilutive potential ordinary shares: | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Share options | | 268 | | 720 |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Conditional shares not vested | | 196 | | 239 |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Weighted average number of ordinary shares | | 42,572 | | 42,948 |
| for the purposes of diluted earnings per | | | | |
| share | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
The average market value of the Company's shares for the purpose of calculating
the dilutive effect of share options and long-term incentive plan shares was
based on quoted market prices for the period that the options were outstanding.
The weighted average share price for the period was GBP7.36 (2007: GBP14.13).
Earnings per share are calculated in accordance with IAS 33 'Earnings per Share'
are disclosed below:
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | 2008 | | 2007 |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Basic earnings per share | | 106.3p | | 93.8p |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Diluted earnings per share | | 105.1p | | 91.7p |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Basic and diluted earnings per share adjusted | | | | |
| for amortisation expense: | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Basic earnings per share excluding | | 127.8p | | 104.5p |
| amortisation expense | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
| Diluted earnings per share excluding | | 126.4p | | 102.2p |
| amortisation expense | | | | |
+--------------------------------------------------------+--+----------------------+--+----------------------+
Notes continued (unaudited)
For the year ended 31 December 2008
5. Reserves
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| | | Share | | Share | | Capital | | Reserve | | Cash | | Retained | | Total |
| | | capital | | premium | | redemption | | for own | | flow | | earnings | | equity |
| | | | | account | | reserve | | shares | | hedging | | | | |
| | | | | | | | | held | | reserve | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Balance | | 2.1 | | 26.2 | | 0.6 | | (3.4) | | (0.8) | | 117.2 | | 141.9 |
| at 1 | | | | | | | | | | | | | | |
| January | | | | | | | | | | | | | | |
| 2007 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Total | | - | | - | | - | | - | | (1.4) | | 38.8 | | 37.4 |
| recognised | | | | | | | | | | | | | | |
| income and | | | | | | | | | | | | | | |
| expense | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Share-based | | - | | - | | - | | - | | - | | 1.7 | | 1.7 |
| payments | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Issue | | - | | 0.1 | | - | | - | | - | | - | | 0.1 |
| of | | | | | | | | | | | | | | |
| shares | | | | | | | | | | | | | | |
| at a | | | | | | | | | | | | | | |
| premium | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Deferred | | - | | - | | - | | - | | - | | (0.7) | | (0.7) |
| tax | | | | | | | | | | | | | | |
| (liability) | | | | | | | | | | | | | | |
| on | | | | | | | | | | | | | | |
| share-based | | | | | | | | | | | | | | |
| payments | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Own | | - | | - | | - | | (2.1) | | - | | - | | (2.1) |
| shares | | | | | | | | | | | | | | |
| acquired | | | | | | | | | | | | | | |
| in the | | | | | | | | | | | | | | |
| period | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Dividends | | | | | | | | | | | | | | |
| paid: | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Final | | - | | - | | - | | - | | - | | (8.4) | | (8.4) |
| dividend | | | | | | | | | | | | | | |
| - 2006 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Interim | | - | | - | | - | | - | | - | | (4.2) | | (4.2) |
| dividend | | | | | | | | | | | | | | |
| - 2007 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Balance | | 2.1 | | 26.3 | | 0.6 | | (5.5) | | (2.2) | | 144.4 | | 165.7 |
| at 31 | | | | | | | | | | | | | | |
| December | | | | | | | | | | | | | | |
| 2007 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Balance | | 2.1 | | 26.3 | | 0.6 | | (5.5) | | (2.2) | | 144.4 | | 165.7 |
| at 1 | | | | | | | | | | | | | | |
| January | | | | | | | | | | | | | | |
| 2008 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Total | | - | | - | | - | | - | | (0.1) | | 44.6 | | 44.5 |
| recognised | | | | | | | | | | | | | | |
| income and | | | | | | | | | | | | | | |
| expense | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Share-based | | - | | - | | - | | - | | - | | 2.3 | | 2.3 |
| payments | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Issue | | - | | 0.3 | | - | | - | | - | | - | | 0.3 |
| of | | | | | | | | | | | | | | |
| shares | | | | | | | | | | | | | | |
| at a | | | | | | | | | | | | | | |
| premium | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Exercise | | 0.1 | | - | | - | | 1.9 | | - | | (1.9) | | 0.1 |
| of share | | | | | | | | | | | | | | |
| options | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Deferred | | - | | - | | - | | - | | - | | (0.8) | | (0.8) |
| tax | | | | | | | | | | | | | | |
| (liability) | | | | | | | | | | | | | | |
| on | | | | | | | | | | | | | | |
| share-based | | | | | | | | | | | | | | |
| payments | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Own | | - | | - | | - | | (2.8) | | - | | - | | (2.8) |
| shares | | | | | | | | | | | | | | |
| acquired | | | | | | | | | | | | | | |
| in the | | | | | | | | | | | | | | |
| period | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Dividends | | | | | | | | | | | | | | |
| paid: | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Final | | - | | - | | - | | - | | - | | (11.9) | | (11.9) |
| dividend | | | | | | | | | | | | | | |
| - 2007 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Interim | | - | | - | | - | | - | | - | | (5.1) | | (5.1) |
| dividend | | | | | | | | | | | | | | |
| - 2008 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
| Balance | | 2.2 | | 26.6 | | 0.6 | | (6.4) | | (2.3) | | 171.6 | | 192.3 |
| at 31 | | | | | | | | | | | | | | |
| December | | | | | | | | | | | | | | |
| 2008 | | | | | | | | | | | | | | |
+----------------------+--+---------+--+---------+--+------------+--+---------+--+---------+--+----------+--+--------+
Cash flow hedging reserve
Under cash flow hedge accounting, movements on the effective portion of the
hedges are recognised through the hedging reserve, while any ineffectiveness is
taken to the income statement.
Notes continued (unaudited)
For the year ended 31 December 2008
6. Cash flows from operating activities
+------------------------------------------------------------+------------+--+----------+
| | | | Restated |
+------------------------------------------------------------+------------+--+----------+
| | 2008 | | 2007 |
+------------------------------------------------------------+------------+--+----------+
| | GBPm | | GBPm |
+------------------------------------------------------------+------------+--+----------+
| | | | |
+------------------------------------------------------------+------------+--+----------+
| Cash flows from operating activities | | | |
+------------------------------------------------------------+------------+--+----------+
| Profit from operations for the year | 58.0 | | 53.5 |
+------------------------------------------------------------+------------+--+----------+
| | | | |
+------------------------------------------------------------+------------+--+----------+
| Adjusted for: | | | |
+------------------------------------------------------------+------------+--+----------+
| Amortisation of fixed life intangible assets | 9.1 | | 4.5 |
+------------------------------------------------------------+------------+--+----------+
| Share of net profit of equity accounted joint | (2.6) | | (4.7) |
| ventures | | | |
+------------------------------------------------------------+------------+--+----------+
| Depreciation of property, plant and equipment | 8.1 | | 6.3 |
+------------------------------------------------------------+------------+--+----------+
| Expense in respect of share options | 2.3 | | 1.7 |
+------------------------------------------------------------+------------+--+----------+
| Defined benefit plan payment | (0.7) | | (0.2) |
+------------------------------------------------------------+------------+--+----------+
| Defined benefit plan charge | 0.2 | | 0.1 |
+------------------------------------------------------------+------------+--+----------+
| (Gain)/loss on disposal of property, plant and | (0.2) | | 1.2 |
| equipment | | | |
+------------------------------------------------------------+------------+--+----------+
| (Decrease)/increase in provisions | (1.0) | | 1.4 |
+------------------------------------------------------------+------------+--+----------+
| | | | |
+------------------------------------------------------------+------------+--+----------+
| Operating cash flows before movements in working | 73.2 | | 63.8 |
| capital | | | |
+------------------------------------------------------------+------------+--+----------+
| | | | |
+------------------------------------------------------------+------------+--+----------+
| Increase in inventories | (41.2) | | (10.4) |
+------------------------------------------------------------+------------+--+----------+
| Decrease/(increase) in receivables | 48.8 | | (33.3) |
+------------------------------------------------------------+------------+--+----------+
| (Decrease)/increase in payables | (122.9) | | 157.8 |
+------------------------------------------------------------+------------+--+----------+
| | | | |
+------------------------------------------------------------+------------+--+----------+
| Cash (utilised)/generated from operations | (42.1) | | 177.9 |
+------------------------------------------------------------+------------+--+----------+
| | | | |
+------------------------------------------------------------+------------+--+----------+
| Income taxes paid | (18.9) | | (15.8) |
+------------------------------------------------------------+------------+--+----------+
| Interest paid | (4.5) | | (4.0) |
+------------------------------------------------------------+------------+--+----------+
| Net cash (outflow)/inflow from operating activities | (65.5) | | 158.1 |
+------------------------------------------------------------+------------+--+----------+
Additions to property, plant and equipment during the year amounting to GBP6.3m
(2007: GBP3.0m) and additions to leasehold property amounting to GBPnil (2007:
GBP2.3m) were financed by new finance leases. Cash and cash equivalents (which
are presented as a single class of assets on the face of the balance sheet)
comprise cash at bank and other short-term highly liquid investments with a
maturity of three months or less.
7.Significant accounting policies
This announcement is prepared on the basis of accounting policies as stated in
the financial statements for the year ended 31 December 2008.
Restatement of comparative balances
As was stated in note 23 on page 76 of the 2007 annual report and accounts, the
fair value adjustments arising on the acquisition of Amec Developments Limited
and certain assets and business carried on by Amec Investments Limited and the
assets, liabilities and contracts relating to the Design and Project Services
division of Amec plc were provisional and subject to finalisation in accordance
with IFRS 3 'Business Combinations'.
The fair value exercise has been completed and the final acquisition balance
sheet and related fair value adjustments are disclosed in the 2008 report and
accounts. In accordance with IFRS 3 'Business Combinations' the affected
financial statement balances have been restated. None of the restatements have
had an impact on gross profit, profit from operations or net assets. There was
no impact on recognised income or expense as previously stated.
Certain comparatives have been reclassified to conform with the current year's
presentation. In the 2007 comparative balance sheet, amounts of GBP19.3m
previously shown as trade and other payables are now classified as provisions.
Preliminary announcement
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2008 or 2007. The
financial information for the year ended 31 December 2007 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was
unqualified, did not draw attention to any matters by way of emphasis without
qualifying their report and did not contain a statement under s237(2) or (3)
Companies Act 1985. The audit of the statutory accounts for the year ended 31
December 2008 is not yet complete. These accounts will be finalised on the basis
of the financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
company's annual general meeting.
Whilst the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient information to
comply with IFRSs. No accounts for the Company in respect of the year ended 31
December 2008 have been delivered to the Registrar of Companies, nor have the
auditors of the Company made a report under Section 236 of the Companies Act
1985 in respect of any accounts for that financial year.
Following changes in Company law and subsequent shareholder approval, the
Company will make financial statements that comply with IFRSs available on the
Company's website on or about the 19 March 2009. If a shareholder has requested
to continue to receive hard copy of the financial statements they will be posted
on or about the 19 March 2009. They will be delivered to the Registrar of
Companies following the Company's annual general meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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