6th Mar 2006 07:01
Keller Group PLC06 March 2006 For immediate release Monday, 6 March 2006 Keller Group plc Preliminary results for the year ended 31 December 2005 Keller Group plc ("Keller" or "the Group"), the international ground engineeringspecialist, is pleased to announce its preliminary results for the year ended 31December 2005. Highlights include: • Sales of £731.0m (2004: £595.9m) up 23%, representing excellent organic growth across our international markets • Profit before tax up 64% to £48.8m (2004: £29.7m) • Earnings per share up 73% to 41.8p (2004: 24.2p) • Excellent cash generation - year end debt reduced to £40.9m (2004: £58.7m) • Total dividend per share increased by 10% to 12.0p (2004: 10.9p) • Record order book now stands at over five months' sales Justin Atkinson, Keller Chief Executive said: "2005 was an outstanding year for the Group, in which we delivered excellentorganic growth across our international markets and a substantial increase inprofits. These results reflect an exceptional performance in the US, where allfour of our businesses took full advantage of a strong market. "We do not expect US demand to abate in the first half of 2006 and nor do weexpect major changes in our other principal markets. This, together with arecord current order book of over five months' sales, creates a positive outlookfor the first half. "Whilst the exceptional 2005 result may not be repeated this year, the Board isconfident that 2006 will be another good year for Keller." For further information, please contact: Keller Group plc www.keller.co.uk Justin Atkinson, Chief Executive 020 8341 6424James Hind, Finance Director Smithfield Reg Hoare/Rupert Trefgarne 020 7360 4900 A presentation for analysts will be held at 9.15 for 9.30am at the offices of Smithfield, 10 Aldersgate Street, London EC1A 4HJ Print resolution images are available for the media to download from www.vismedia.co.uk Chairman's Statement Results 2005 has been a landmark year for Keller, in which we have delivered excellentorganic growth across our international markets and a substantial increase inprofits. These results reflect an exceptional performance in the US, where allfour of our businesses took full advantage of a strong market, and amplydemonstrate the strength of our business model. Group sales rose by 23% to £731.0m (2004: £595.9m), being almost entirelyorganic growth. Profit before tax was up 64% to £48.8m (2004: £29.7m) andearnings per share grew by 73% to 41.8p (2004: 24.2p). Operating marginsincreased to 7.3% from 5.7%, reflecting the excellent performance in the US. Cash flow and net debt Net cash inflow from operations increased to £73.4m (2004: £33.6m) whichcompares to EBITDA of £64.9m, underlining the quality of Keller's earnings. Netdebt at the end of the year benefited from this excellent operating cash flowand stood at £40.9m (2004: £58.7m). This performance is evidence of the Group'songoing strong focus on cash and working capital management. Dividends In recognition of these outstanding results, the Board is this year recommendinga final dividend of 8.2p per share (2004: 7.3p), representing an increase of12%. This brings the total dividend for the year to 12.0p (2004: 10.9p), a 10%increase, which is covered 3.5 times by earnings per share. The final dividendwill be paid on 29 June 2006 to shareholders on the register at 2 June 2006.This increase reflects our policy of reinvesting our cash flow in the growth ofthe Group, whilst maintaining a healthy dividend cover and seeking to rewardshareholders with above inflation increases. Pensions The UK defined benefit pension scheme had its triennial actuarial valuation at 5April 2005, which showed a deficit of £11.3m on an ongoing basis. Since the yearend, the Group has announced that it will close the scheme for future benefitaccrual with effect from 31 March 2006. Active members will be transferred to anew defined contribution arrangement. To help reduce the deficit, the Group isto make a one-off cash contribution of £4.0m in April 2006 and has doubled itsongoing contributions to £0.1m a month. Strategy Our strategy, which continues to deliver value for shareholders, remainsunchanged. Our goal is the further consolidation of our global leadership inspecialist ground engineering services, through a combination of organic growthand targeted acquisitions. In 2005 we made significant progress against this objective, with theintroduction of several new products into our existing markets and a continuedadvance into new geographic regions. In September, we completed the acquisitionof G. Donaldson Construction in the US for an initial consideration of $10.6m(£5.8m), preparing the ground for future growth by extending our reach and ourproduct offering in the New England market. The Group has a proven track record in sourcing, integrating and growing itsacquisitions. For example, in the US, Suncoast has doubled in size andprofitability since it was acquired by the Group in 2001 and in Europe,Keller-Terra has doubled its sales in the three years under Keller's ownership,whilst remaining one of the Group's highest margin businesses. In 2006, we will focus on making further strategic advances, together withdelivering improved performance from our UK businesses. People The outstanding performance in 2005 is a tribute to the skills, commitment anddrive of our employees. On behalf of the Board and shareholders, I thank themfor their support and professionalism. Keller has long been fortunate in beingable to attract and maintain some of the best talent in our industry. The Boardremains committed to recognising and rewarding their achievements and tomaintaining an environment in which they can continue to develop and to make adifference. 2005 was Keller's first full year under the direction of Justin Atkinson asChief Executive. Whilst the executive team is still relatively new, itsmaturity, cohesion and collective experience is second to none and I amconfident that it will continue to drive the Group forward. Outlook Whilst remaining cautious about the sustainability of recent levels of USconstruction output, we do not expect demand to abate in the first half of 2006and nor do we expect major changes in our other principal markets. This,together with a record current order book of over five months' sales, creates apositive outlook for the first half. Whilst the exceptional 2005 result may notbe repeated this year, the Board is confident that 2006 will be another goodyear for Keller. Operating Review 2005 was an outstanding year for the Group, in which we produced an excellentoverall margin and continued to build on our strong track record of growth. Thisunderlines Keller's inherent strengths: our global spread, coupled with localknowledge and presence, our balanced contract portfolio, our broad range ofindustry-leading technologies, our focus on what we do well, our deep industryknowledge and our good growth prospects. Conditions in our major markets In North America, the three main construction sectors - residential, commercialand public infrastructure - all surged ahead, with total expenditure onconstruction in 2005 increasing by 9% on the previous year(1). In Europe, Germanannual construction output fell somewhat, whilst activity in Austria picked upin the second half of the year. Of our other main European markets, Spain,France and Poland remained buoyant, whilst the UK was more subdued. There weregood opportunities in the Middle East and demand in our Far East marketsimproved as the year progressed. Against this generally good trading background, it is pleasing to note that inmost of our principal territories we grew sales by more than market growthrates, thus gaining market share and outperforming the competition. Operations North America 2005 was an exceptionally good year for our North American operations whichproduced record sales, profit and cash. Sales of £399.9m (2004: £280.2m) were43% ahead and operating profit of £42.1m (2004: £21.0m) doubled. Our USbusinesses benefited from both favourable market conditions and an outstandingperformance on a number of contracts. SuncoastSuncoast increased its sales in the year by 28%. Both sales and profit havedoubled in the four years under Keller's ownership. Its results were boosted byan excellent performance from the commercial high-rise division, which benefitedfrom a very strong condominium market. Further growth was achieved in slab-on-grade sales in California and Arizona,where product substitution in favour of post-tension foundations, as analternative to traditional foundation methods, continues. Sales outside Texashave grown to more than three times their level in 2002, the first full yearunder Keller's ownership. This has reduced the reliance of the business on itstraditional Texan market, which represented around half of all sales in 2005,compared to three quarters in 2002. The combination of high volumes, stable raw material costs and operating costefficiencies sustained healthy margins, which further benefited from a shift inproduct mix from rebar to steel strand. Despite a general expectation that the housing market will eventually cool, thisis certainly not yet apparent, as evidenced by the strong housing startsreported for January 2006.(2 Hayward BakerHayward Baker had an excellent year, with record results generated from over1,800 contracts, with values ranging from a few thousands to several millions ofdollars. This indicates the strength of Hayward Baker's devolved, regionalstructure, which enables it to win, and to make a success of, small local jobsand multi-million-dollar projects alike. The wide range of projects on which itwas engaged during 2005 - from swimming pools to sky-scrapers, fast-food outletsto freeways and power plants to places of worship - illustrates the diversity ofHayward Baker's customer base. A soil stabilisation contract for the Florida Department of Transportationinvolved Hayward Baker in Keller's first application in the US of its dry soilmixing technology, acquired by the Group through the acquisition of LCM inSweden. The technology was used to stabilise extremely soft and wet soils nextto the existing US Route 1 in South Florida, allowing the only road serving theFlorida Keys to be widened. This project illustrates one of Keller's keystrengths - the ability to transfer technology between Group companies andbetween countries in this way. In September, Hayward Baker acquired the business and assets of Donaldson, aspecialist in deep foundation and earth support services, serving the NewEngland construction market. Hayward Baker's Boston office has now beenintegrated with the Donaldson operation, which is being managed as a division ofHayward Baker. The benefits of combining Donaldson's strong local reputation andfield resources with Hayward Baker's technical resources and Keller's financialstrength are already beginning to show through and the ability to offer extendedcapacity and a comprehensive range of solutions is expected to create goodopportunities in the future. CaseCase, which has a higher average contract size than other Group companies,reported a very solid performance in 2005, which included the successfulcompletion of the $15.3m (£8.4m) Trump Tower project in Chicago, where Caseprovided foundations and excavation support for the new, 92-storey TrumpInternational Hotel and Tower.Several diaphragm wall projects were completed during the year, as was the firstphase of a two-year $20m (£11.0m) contract to install four shafts to provideintake water for the Elm Road Generating Station near Milwaukee, Wisconsin. Theintrinsic operational and technical risks around a project of this nature werewell controlled and we look forward to the successful completion of the secondphase in 2006. Case has recently extended its offering with the addition of augercast piles - aproduct which is gaining increasing recognition in the US and one in which theGroup has extensive experience elsewhere in the world: the business successfullyundertook several such projects in 2005. McKinneyMcKinney, which is increasingly prospering under the Group's ownership, also hada record year. Of some 2,000 contracts successfully completed during the yearfrom 14 offices across the southern and eastern states, it is notable that anumber were in joint venture with other Keller businesses, illustrating one ofthe synergies that Keller has been able to deliver from its acquisitions. A seamless transition of McKinney's senior management was achieved during theyear and the business is in good shape to take full advantage of continuingstrong market conditions. Continental Europe & Overseas Our Continental Europe & Overseas business reported a good overall performance,with sales of £204.7m (2004: £175.0m) up some 17% on the previous year.Operating profit was £12.7m (2004: £11.9m), 7% ahead of last year. Keller-Terra had another good year, in which it was involved in several highprofile infrastructure projects. These included the development of the Metrosystems in Barcelona and Madrid and, in preparation for the America's Cup in2007, the refurbishment of Valencia Harbour. All major product lines performedwell and it is particularly pleasing to note that Keller-Terra doubled its salesfrom ground improvement products which, in the three years since the businesswas formed, have grown from a standing start to around 20% of sales. Inaddition, two additional techniques - compaction grouting and large diameter jetgrouting - were introduced into the Spanish market during the year. Our French business performed well, increasing its share of a growing groundimprovement sector and, in particular, undertaking a significant amount of workfor housebuilders. The development in 2004 of specialist equipment for compositecolumns, which comprise a lower part in concrete and a traditional stone columnon top, led to a significant increase in the use of these solutions, in whichKeller France is the market leader. Whilst activity levels in North Africa weredisappointing, reflecting delays in a number of planned infrastructure projects,completion of vibro compaction works at the Oued Ziatine Dam firmly establishedKeller's credentials in Tunisia. In Central and Eastern Europe, our operations in Austria had a much-improvedsecond half of the year after a slow start and despite strong competition. Workwas completed on Kops Cavern, where permanent rock anchors were installed tosupport one of the largest underground excavations in Europe for a new waterpower plant. Further progress was made in Eastern Europe, particularly Poland,where what was a start-up business some 10 years ago is now the market leader,offering a range of ground engineering solutions to both the public and privatesectors from five regional offices across the country. From this establishedposition in Poland, we are now seeking to extend our footprint into Ukraine. Sales in Germany fell slightly, reflecting the state of the market. However,measures taken in 2004 and the start of 2005 to reduce costs and improveefficiencies lifted the profitability of the German operations in the secondhalf. This success was also reflected in improvements in other key indicators,such as equipment utilisation ratios and site-level margins. Whilst manycompetitors continue to suffer from the harsh market conditions, improvements inour German organisation make it better positioned to take advantage of aneventual upturn. Within the Overseas division, the Middle East reported a good result, with aparticularly strong contribution from Bahrain, where we completed a number ofprestigious contracts including a design and build contract for the foundationsof a new power station at Al Ezzel and piling works for the King Hamad GeneralHospital at Muharraq. Our operations in the Far East had a slow start but animproved second half of the year, when we successfully completed groundimprovement work on Penang Island, Malaysia, at the site for a new seweragetreatment plant. UK Sales in the year were 18% down on the previous year at £89.2m (2004: £108.3m),with an operating loss of £0.3m (2004: profit of £1.9m). MakersAs previously reported, Makers had a disappointing year, with delays in gettingsocial housing work onto site continuing throughout the second half of the year.Nevertheless, the business continued to be awarded, and to successfullydischarge, multi-million-pound social housing contracts for various LondonBoroughs. In addition, it undertook a major internal and external refurbishmentcontract for two tower blocks for Leicester Housing Association. At the close ofthe year, Makers' order book was significantly higher than at the start of 2005,which should lead to a better result in 2006. KGEKeller Ground Engineering (KGE) had a satisfactory year overall. A very goodtrading result from the foundation support division was partly masked by aweaker performance from the geotechnical division, which suffered from ashortage of major infrastructure projects. The decision to retain a piling capability, when the business withdrew fromlarge diameter piling in 2003, means that KGE is able to offer overall solutionscomprising several different techniques, including augercast and cast-in-situpiling. A 'packaged solution' was provided at London's Millennium Dome, where arange of techniques, including driven piles, continuous flight auger piles andminipiles, was chosen to take account of the uniqueness of the site and thedifferent structures to be constructed within the shell of the Dome. Anothersuch contract in 2005 for a regional housebuilder, including earthworks,remediation, dynamic compaction, piling and vibro techniques, is a furtherexample of the competitive advantage this gives the business. Few competitorscan offer the same breadth of packaged solutions. Earth retaining solutions - for retaining walls, slope retention and reinforcedsoil - made a good contribution, in a segment that is small, but has good growthpotential. Projects worked on during 2005 included Essex Road Bridge inHoddesdon, Hertfordshire, where a new bridge was being constructed over a busyelectrified railway. KGE designed and installed vertical concrete panel wallingand steeply sloping, grass faced 'Textomur' which, in combination, gave the mostcost-effective solution for retaining the side of the bridge approach ramps. KGEalso designed and installed vibro concrete columns to limit settlement behindthe bridge abutments. Australia Sales of £37.1m (2004: £32.4m) were some 15% above the previous year, whilstoperating profit of £1.8m (2004: £1.7m) was up by 6%. Our northern branch - covering Queensland and Western Australia - had a busyyear, particularly on the Gold Coast which is seeing a surge in housing, retailand leisure schemes to satisfy the demands created by internal migration to thisarea. Also, in Western Australia two of our Australian businesses joined forcesto provide a combined lateral support and piling package for the site of the newPerth Law Courts. The new ground engineering business, which commenced operations in January 2004to promote the full range of ground improvement and specialty groutingsolutions, moved into profitability in 2005. It successfully undertook severalhigh profile contracts during the year, including compensation grouting worksfor new twin rail tunnels under construction beneath the centre of Perth. Thedevelopment of this business exemplifies one of our approaches to deliveringorganic growth, through the introduction of 'new' techniques from elsewhere inthe Group to territories where we have an established presence. As groundengineering solutions continue to gain acceptance in Australia, we anticipatefurther growth for this business in 2006. People and processes The quality and professionalism of our people are elements which distinguish theKeller Group. It is the willingness of individuals and teams across the businessto constantly challenge themselves to beat their best results which enables usto improve our productivity and capability. As a result, we are continuallyachieving new records and 'first time evers'. A selection of these from 2005gives a flavour of some of our recent achievements: • For the first time in the US, Hayward Baker used new Japanese technology for trench cutting and installation of barrier walls of up to 30 metres depth. The 'TRD' method utilises a large base machine resembling a vertical chain saw to cut a continuous slot in the soil, whilst simultaneously adding cement slurry to create a soil-cement area. • Vibro-pile drilled the largest ever ventilation shaft in Australia - with a depth of 84 metres and a seven metre diameter. • Suncoast worked on its tallest ever and its largest ever buildings - a 74-storey commercial structure and a 4.5 million sq. ft. condominium building, respectively. • Keller Grundbau developed a prototype 'minicat' - a smaller, lighter and more versatile version of Keller's proprietary 'vibrocat' equipment - for use in Europe. • Hayward Baker carried out its first ever mass dry soil mixing contract in the US. This technique has particular application in soft, organic clays and was used by Hayward Baker in a difficult mangrove swamp area. • Keller Algeria undertook its first dry method, bottom feed stone column contract for an industrial plant near Algiers. • Keller established a ground engineering presence in South Korea. • In Austria, Keller installed 40 metre long, vertical rock anchors in the ceiling of the largest underground excavation in Europe, for a new underground power station. • LCM and Keller Grundbau jointly undertook the first ever stone column project in Sweden, for a new road by-pass scheme. We are confident that these and other advances in our equipment, techniques andcapabilities mean that we will continue to find the best solutions to ourcustomers' needs and maintain our competitive positions around the world. Financial Review Preparation of financial statements The Group's 2005 financial statements have for the first time been prepared inaccordance with International Financial Reporting Standards (IFRS) and the 2004results and year end balance sheet have been restated accordingly. This restatement has had no significant impact on the reported 2004 profitbefore tax. The 2004 reported earnings per share, however, have decreased by3.6% as a result of a different deferred tax treatment, although this change inaccounting treatment does not impact on the Group's cash tax payments. Reportednet assets as at 31 December 2004 have been reduced by £10.4m. Full details ofthe changes in accounting policies and the restatement of the 2004 numbers areset out in the Group's IFRS announcement dated 17 June 2005, which is availableon the Group's web-site. Trading results Group sales increased by 23% in the year to £731.0m, reflecting very strongorganic growth in many of the Group's main markets, especially the US. For once,movements in reported sales and profits were not significantly influenced eitherby acquisitions or by fluctuations in foreign currency exchange rates. Theaverage US dollar exchange rate against sterling was US$1.82, compared toUS$1.83 in 2004, while the average euro exchange rate was €1.46, versus €1.47 in2004. Stripping out the effects of acquisitions and currency movements, theGroup's 2005 sales were still 21% up on 2004. Operating profit was £53.1m, up from £33.9m in 2004, and the operating marginsincreased to 7.3% from 5.7%. This substantial improvement mainly reflects anexcellent performance in the US, where all four of our businesses significantlyoutperformed a strong market, and the business benefited from excellent returnson an unusually high number of large contracts. This contribution from largecontracts is unlikely to be repeated in 2006. Results in Continental Europe &Overseas, and in Australia, were also up on last year. The UK result, however,was disappointing, reflecting low volumes at Makers. The Group's trading performance is discussed in more detail in the OperatingReview. Interest The net interest charge changed little from £4.1m in 2004 to £4.2m in 2005, withthe benefit of lower average borrowings being offset by higher interest rates onUS dollar denominated debt. The majority of the Group's borrowings are US dollardenominated, in order to provide a hedge against the Group's US dollardenominated net assets, and bear interest at floating rates. The averageinterest rate paid on US dollar borrowings increased from 2.9% to 4.3%. Interestcover is very comfortable at over 15 times EBITDA. Tax The Group's effective tax rate was 41%, up from 40% in 2004. The increase islargely due to higher taxable losses in the UK, after central costs andinterest. The Group's effective rate is high compared to most UK domiciled businesses,reflecting the fact that the vast majority of the Group's profits are earned inrelatively high tax jurisdictions, in particular the US where the effectivefederal and state tax rates total nearly 40%. The Group's tax charge in both2004 and 2005 also includes an annual IFRS deferred tax charge of £0.7m, arisingas a result of goodwill amortisation which is deductible for tax purposes but isnot, under IFRS, charged in the Group profit and loss account. This amount isnot payable in cash. Earnings and dividends Earnings per share increased by 73% to 41.8p. Following the recommendation of anincreased final dividend of 8.2p per share, the total dividend paid out of 2005profits will be 12.0p, an increase of 10% on 2004. This is covered 3.5 times byearnings per share. Cash flow In 2005, the Group continued its excellent record of converting profits intocash. Net cash inflow from operations was £73.4m, representing 113% of theGroup's EBITDA. Year-end working capital, at £50.5m, was £3.0m higher than theprevious year's level. However, if adjusted for acquisitions and adverseyear-end exchange rates, working capital would have been £5.5m or 12% below theprevious year, despite the like-for-like organic sales growth of 21%. This outstanding performance is evidence of the Group's ongoing strong focus oncash and working capital management and reflects considerable hard work andachievement throughout the organisation. Capital expenditure, principally on plant and equipment, increased by 14% to£15.8m, reflecting the increase in the scale of the Group's activities. Afterproceeds from the sale of fixed assets, net capital expenditure in the year,representing 1.2 times depreciation, was £13.9m, up from £11.8m in 2004. Financing Year-end net debt decreased to £40.9m at the end of 2005 from £58.7m at 31December 2004. Net debt at the year-end was less than 0.6 times EBITDA. Based onnet assets of £117.2m, gearing was 35%, down from 65% at the beginning of theyear. The Group's debt and committed facilities mainly comprise a US$100m privateplacement, repayable $30m in 2011 and $70m in 2014, and an £80m syndicatedrevolving credit facility expiring in 2009. At the year-end, the Group also hadother committed and uncommitted borrowing facilities totalling £31m. Wetherefore have more than sufficient available financing to support our strategyof growth both through organic means and targeted, bolt-on acquisitions. Pensions The Group has defined benefit pension arrangements in the UK, Germany andAustria. The last actuarial valuation of the UK scheme, which has been closed tonew members since 1999, was as at 5 April 2005. At this date, the market valueof the scheme's assets was £17.3m and the valuation concluded that the schemewas 61% funded on an ongoing basis. The year-end 2005 IAS 19 valuation showedassets of £19.8m, liabilities of £31.7m and a pre-tax deficit of £11.9m. In January 2006, the Group announced that the UK defined benefit scheme wouldclose for future benefit accrual with effect from 31 March 2006 and that theexisting active members would be transferred to a new defined contributionarrangement. To help reduce the deficit in the scheme, the Group has agreed tomake a one-off cash contribution of £4.0m in April 2006 and to double itsregular contributions to £0.1m a month with effect from January 2006. The levelof monthly contributions will be reviewed at the time of the next actuarialvaluation, currently scheduled for April 2008. In Germany and Austria, the defined benefit arrangements only apply to certainemployees who joined the Group prior to 1998. There are no segregated funds tocover these defined benefit obligations and the respective liabilities areincluded on the Group balance sheet. All other pension arrangements in the Group are of a defined contributionnature. Consolidated income statementfor the year ended 31 December 2005 -------------------------------- ----- -------- -------- 2005 2004 Note £000 £000-------------------------------- ----- -------- -------- Revenue 3 731,039 595,856Operating costs (677,960) (561,961)-------------------------------- ----- -------- --------Operating profit 3 53,079 33,895Finance income 1,544 1,393Finance costs (5,775) (5,540)-------------------------------- ----- -------- --------Profit before taxation 48,848 29,748Taxation 4 (19,888) (11,874)-------------------------------- ----- -------- --------Profit for the period 28,960 17,874-------------------------------- ----- -------- -------- Attributable to:Equity holders of the parent 27,286 15,743Minority interests 1,674 2,131-------------------------------- ----- -------- -------- 28,960 17,874-------------------------------- ----- -------- -------- Basic earnings per share 6 41.8p 24.2pDiluted earnings per share 6 41.6p 24.1p-------------------------------- ----- -------- -------- Consolidated statement of recognised income and expensefor the year ended 31 December 2005 -------------------------------- -------- -------- 2005 2004 £000 £000-------------------------------- -------- -------- Exchange differences on translation of foreign operations 8,642 (5,626)Actuarial losses on defined benefit pension schemes (5,894) (2,668)Tax on items taken directly to equity 1,777 856-------------------------------- -------- --------Net income/(expense) recognised directly in equity 4,525 (7,438)Profit for the period 28,960 17,874-------------------------------- -------- --------Total recognised income and expense for the period 33,485 10,436-------------------------------- -------- -------- Attributable to:Equity holders of the parent 32,091 8,255Minority interests 1,394 2,181-------------------------------- -------- -------- 33,485 10,436-------------------------------- -------- -------- Consolidated balance sheetAs at 31 December 2005 -------------------------------- ----- -------- -------- 2005 2004 Note £000 £000-------------------------------- ----- -------- -------- Assets Non-current assetsIntangible assets 55,693 51,761Property, plant and equipment 90,375 80,937Deferred tax assets 5,706 3,146-------------------------------- ----- -------- -------- 151,774 135,844-------------------------------- ----- -------- --------Current assetsInventories 24,437 24,319Trade and other receivables 194,574 143,926Cash and cash equivalents 25,910 16,416-------------------------------- ----- -------- -------- 244,921 184,661-------------------------------- ----- -------- -------- Total assets 396,695 320,505-------------------------------- ----- -------- -------- Liabilities Current liabilitiesLoans and borrowings (7,183) (9,787)Current tax liabilities (11,046) (5,538)Trade and other payables (168,499) (120,701)-------------------------------- ----- -------- -------- (186,728) (136,026)-------------------------------- ----- -------- --------Non-current liabilitiesLoans and borrowings (59,578) (65,286)Employee benefits (21,158) (17,211)Deferred tax liabilities (5,524) (8,138)Other liabilities (6,520) (2,875)-------------------------------- ----- -------- -------- (92,780) (93,510)-------------------------------- ----- -------- -------- Total liabilities (279,508) (229,536)-------------------------------- ----- -------- -------- Net Assets 117,187 90,969-------------------------------- ----- -------- -------- Equity Share capital 6,552 6,536Share premium account 36,370 36,027Capital redemption reserve 7,629 7,629Translation reserve 3,259 (5,666)Retained earnings 57,248 40,832-------------------------------- ----- -------- --------Equity attributable to equity holders of the parent 7 111,058 85,358Minority interests 6,129 5,611-------------------------------- ----- -------- --------Total equity 117,187 90,969-------------------------------- ----- -------- -------- Consolidated cash flow statementfor the year ended 31 December 2005-------------------------------- -------- -------- 2005 2004 £000 £000-------------------------------- -------- -------- Cash flows from operating activitiesOperating profit 53,079 33,895Depreciation charge 11,775 10,992Amortisation of intangibles 83 87Profit on sale of property, plant and equipment (120) (727)Other non-cash movements 539 117Foreign exchange losses 144 501-------------------------------- -------- --------Operating cash flows before movements in working capital 65,500 44,865Movement in long-term provisions (2,202) 206Decrease/(increase) in stocks 1,692 (8,559)Increase in debtors (32,416) (11,483)Increase in creditors 40,874 8,548-------------------------------- -------- --------Cash generated from operations 73,448 33,577Interest paid (5,058) (4,368)Income tax paid (18,769) (7,339)-------------------------------- -------- --------Net cash inflow from operating activities 49,621 21,870-------------------------------- -------- -------- Cash flows from investing activitiesProceeds from sale of property, plant & equipment 1,907 2,063Interest received 1,239 339Acquisition of subsidiaries, net of cash acquired (7,807) (3,422)Acquisition of property, plant & equipment (15,750) (13,887)Acquisition of intangible fixed assets - (15)-------------------------------- -------- --------Net cash outflow from investing activities (20,411) (14,922)-------------------------------- -------- -------- Cash flows from financing activitiesProceeds from the issue of share capital 359 15New borrowings 1,045 55,982Repayment of borrowings (10,998) (52,498)Payment of finance lease liabilities (138) (373)Dividends paid (8,133) (9,345)-------------------------------- -------- --------Net cash outflow from financing activities (17,865) (6,219)-------------------------------- -------- -------- Net increase in cash and cash equivalents 11,345 729Cash and cash equivalents at beginning of period 11,109 10,812Effect of exchange rate fluctuations 853 (432)-------------------------------- -------- --------Cash and cash equivalents at end of period 23,307 11,109-------------------------------- -------- -------- -------------------------------- -------- -------- 2005 2004 £000 £000-------------------------------- -------- -------- Analysis of closing net debtCash in hand 25,906 15,907Short term deposits 4 509Bank overdrafts (2,603) (5,307)-------------------------------- -------- --------Net cash 23,307 11,109Bank and other loans (58,978) (65,114)Loan notes due within one year (2,804) (3,036)Finance leases (2,376) (1,616)-------------------------------- -------- --------Closing net debt (40,851) (58,657)-------------------------------- -------- -------- 1. Basis of preparation The Group's 2005 results have for the first time been prepared in accordancewith International Financial Reporting Standards ("IFRS"). The 2004 comparativenumbers have been restated to comply with IFRS. The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2005 or 2004 but is derivedfrom the 2005 accounts. Statutory accounts for 2004, which were prepared underUK GAAP, have been delivered to the registrar of companies, and those for 2005,prepared under IFRS as adopted by the EU, will be delivered in due course. Theauditors have reported on those accounts; their reports were (i) unqualified,(ii) did not include references to any matters to which the auditors drewattention by way of emphasis without qualifying their reports and (iii) did notcontain statements under section 237(2) or (3) of the Companies Act 1985. 2. Foreign currencies The exchange rates used in respect of principal currencies are: 2005 2004------------------------------------------- ------- -------US dollar: average for year 1.82 1.83US dollar: year end 1.72 1.93Australian dollar: average for year 2.39 2.49Australian dollar: year end 2.36 2.47Euro: average for year 1.46 1.47Euro: year end 1.45 1.41------------------------------------------- ------- ------- 3. Segmental analysis Turnover, operating profit and capital employed may be analysed as follows:----------------- ------- ------- ------- ------- ------- ------- 2005 2005 2005 2004 2004 2004 Revenue Operating Capital Revenue Operating Capital profit employed profit employed £000 £000 £000 £000 £000 £000----------------- ------- ------- ------- ------- ------- -------United Kingdom 89,221 (332) (7,080) 108,263 1,901 (1,006)North America 399,943 42,125 116,913 280,212 20,981 105,530ContinentalEurope andOverseas 204,736 12,742 51,689 175,024 11,867 48,692Australia 37,139 1,764 7,380 32,357 1,671 6,940----------------- ------- ------- ------- ------- ------- ------- 731,039 56,299 168,902 595,856 36,420 160,156Central items andeliminations - (3,220) (51,715) - (2,525) (69,187)----------------- ------- ------- ------- ------- ------- ------- 731,039 53,079 117,187 595,856 33,895 90,969----------------- ------- ------- ------- ------- ------- ------- In the opinion of the directors the Group operates only one class of business. 4. Taxation The taxation charge comprises:------------------------------------------- ------- ------- 2005 2004 £000 £000------------------------------------------- ------- -------Current tax expenseCurrent year 23,787 10,480Prior years 119 (850)------------------------------------------- ------- -------Total current tax 23,906 9,630------------------------------------------- ------- -------Deferred tax expenseCurrent year (3,528) 1,465Prior years (490) 779------------------------------------------- ------- -------Total deferred tax (4,018) 2,244------------------------------------------- ------- ------- 19,888 11,874------------------------------------------- ------- ------- 5. Dividends payable to equity holders of the parent Ordinary dividends on equity shares:------------------------------------------- ------- ------- 2005 2004 £000 £000------------------------------------------- ------- -------Amounts recognised as distributions to equity holders in the period:Interim dividend for the year ended 31 December 2005 of 3.8p (2004: 3.6p) per share 2,486 2,350Final dividend for the year ended 31 December 2004 of 7.3p (2003: 6.95p) per share 4,771 4,522------------------------------------------- ------- ------- 7,257 6,872------------------------------------------- ------- ------- The Directors have proposed a final dividend for the year ended 31 December 2005of £5.4million, representing 8.2p (2004:7.3p) per share. The proposed dividendis subject to approval by shareholders at the Annual General Meeting on 22 June2006 and has not been included as a liability in these financial statements. 6. Earnings per share Basic and diluted earnings per share are calculated as follows:---------------------------- -------- -------- -------- -------- 2005 2005 2004 2004 Basic Diluted Basic Diluted £000 £000 £000 £000---------------------------- -------- -------- -------- -------- Earnings (after tax andminority interests) being net profits attributable to equity holders of the parent 27,286 27,286 15,743 15,743---------------------------- -------- -------- -------- -------- No. of No. of No. of No. of shares shares shares shares 000s 000s 000s 000s---------------------------- -------- -------- -------- -------- Weighted average ofordinary shares inissue during the year 65,328 65,328 65,129 65,129Add: Weighted average ofshares under option during year - 1,471 - 1,678Add: Weighted average of own shares held - 74 - 83Less: no. of shares assumed issued at fairvalue during year - (1,339) - (1,509)---------------------------- -------- -------- -------- -------- Adjusted weightedaverage ordinaryshares in issue 65,328 65,534 65,129 65,381---------------------------- -------- -------- -------- -------- Pence Pence Pence Pence---------------------------- -------- -------- -------- -------- Earnings per share 41.8p 41.6p 24.2p 24.1p---------------------------- -------- -------- -------- -------- 7. Reconciliation of movements in equity attributable to equity holders of the parent---------------------------------- -------- -------- 2005 2004 £000 £000---------------------------------- -------- --------Equity at start of period 85,358 83,829Total recognised income and expense 32,091 8,255Dividends to shareholders (7,257) (6,872)Shares issued* 359 29Share based payments 507 144Share capital to be issued - (27)---------------------------------- -------- --------Equity at end of period 111,058 85,358---------------------------------- -------- -------- * Includes share premium. --------------------------(1) Data published by the US Census Bureau of the Department of Commerce on 1March 2006(2) Monthly housing starts published by the National Association of HomeBuilders in February 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Keller