20th Jul 2006 10:18
Scott Wilson Group plc20 July 2006 For immediate release Thursday 20 July 2006 SCOTT WILSON GROUP PLC Preliminary unaudited results for the year ended 30 April 2006 FULL TABLES AND NOTES CONSOLIDATED INCOME STATEMENT (unaudited)For the year ended 30 April 2006 Year ended Year 30 April ended 30 April Notes 2006 2006 2005 Before Non- Total Total non-recurring recurring and and restructuring restructuring £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Continuing operations:Revenueincludingshare of jointventurerevenues 197,765 - 197,765 171,945Less: Share ofjoint venturerevenues (11,841) - (11,841) (11,924)-------------------------------------------------------------------------------- Group revenue 185,924 - 185,924 160,021Cost of sales (117,964) - (117,964) (100,421) -------- -------- ------- ------- Gross profit 67,960 - 67,960 59,600Administrativeexpenses 3 (58,843) 10,977 (47,866) (53,155)Share ofresult ofjoint ventures 1,289 - 1,289 979 -------- -------- ------- ------- Operatingprofit 10,406 10,977 21,383 7,424Finance income 8 8,283 6,440Finance costs 9 (10,400) (9,572) ------- ------- Profit beforetaxation 19,266 4,292Taxation 10 (6,325) (1,905) ------- ------- Profit for theyear 12,941 2,387 ======= ======= Attributable to:Equity holdersof the Company 12,527 2,141Minorityinterests 414 246 ------- ------- 12,941 2,387 ======= ======= Earnings per share:From continuing operations - basic 11 38.90p 9.09pFrom continuing operations - diluted 11 37.70p 9.09p There were no discontinued operations in either year. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited)As at 30 April 2006 Year ended Year ended 30 April 30 April Notes 2006 2005 £'000 £'000Currency translation differences (381) 212 Actuarial gains and losses on defined benefitpension schemes 13 (4,376) (3,992) Tax on items recognised directly in equity 1,427 1,134 -------- --------- Expense recognised directly in equity (3,330) (2,646) Profit for the year 12,941 2,387 -------- --------- Total recognised income/(expense) for the year 9,611 (259) --------------------------------------------------------------------------------Attributable to:Equity holders of the Company 9,110 (486)Minority interests 501 227 -------- --------- 9,611 (259) ======== ========= CONSOLIDATED BALANCE SHEET (unaudited) 30 30 April April 2006 2005 £'000 £'000 ASSETS Tangible fixed assets 13,847 8,891Goodwill 6,864 5,839Other intangible assets 1,333 975Investments in joint ventures 680 916Deferred tax assets 11,897 14,943 -------- --------- NON CURRENT ASSETS 34,621 31,564 Trade and other receivables 65,483 50,630Current tax assets 1,089 244Cash and cash equivalents 33,067 4,660 -------- --------- CURRENT ASSETS 99,639 55,534 -------- ---------TOTAL ASSETS 134,260 87,098 -------- --------- EQUITY AND LIABILITIESEquity attributable to equity holders of the Company Issued capital 12 86,277 21,950Other reserves 12 (6,074) (6,212)Retained earnings 12 (28,426) (36,321) -------- --------- 51,777 (20,583)Minority interests 971 519 -------- ---------TOTAL EQUITY 52,748 (20,064)-------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET (unaudited) (continued) Borrowings 2,304 13,302Retirement benefit obligations 33,577 49,377 NON CURRENT LIABILITIES 35,881 62,679 -------- ---------Trade and other payables 40,531 27,800Current tax liabilities 474 - Borrowings 3,813 16,683Provisions 813 -------- ---------CURRENT LIABILITIES 45,631 44,483 -------- ---------TOTAL LIABILITIES 81,512, 107,162 TOTAL EQUITY AND LIABILITIES 134,260 87,098 -------- --------- CONSOLIDATED CASH FLOW STATEMENT (unaudited)For the year ended 30 April 2006 Year Year ended ended 30 30 April April Notes 2006 2005 £'000 £'000 Cash flows from operating activitiesCash generated from operations 15 560 5,384Dividends received from joint ventures 1,575 837Income tax paid (2,510) (1,973) -------- -------- Net cash flows from operating activities (375) 4,248 ======== ======== Cash flows from investing activitiesPurchase of tangible fixed assets (6,946) (6,110)Purchase of intangible assets (995) (667)Proceeds from sale of tangible fixed assets 6 906Acquisition and investment in subsidiaries, net ofcash (606) (461)and cash equivalents -------- -------- Net cash flows from investing activities (8,541) (6,332) ======== ======== Cash flows from financing activitiesInterest received 154 87Interest and finance charges paid (1,780) (901)Proceeds from issue of ordinary shares, net of issuecosts of £5.8m (2005: £nil) 62,122 517Purchase of own equity shares by employee share - (214)trustReceipt of new loans and finance lease advances 5,831 4,057Repayment of loans and finance leases (18,871) (1,775)Dividends paid to equity shareholders (1,334) (678) -------- -------- Net cash flows from financing activities 46,122 1,093 ======== ======== Net increase in cash and cash equivalents 37,206 (991)Cash and cash equivalents at start of year (4,154) (3,163) -------- --------Foreign Exchange 15 -Cash and cash equivalents at end of year 33,067 (4,154) ======== ======== NOTES TO THE ACCOUNTS 1. Basis of preparation The financial information set out in this preliminary announcement has beenprepared on the basis of the principal accounting policies set out in theProspectus published on 7 March 2006 and available on our website which reflectthe changes made following the introduction of International Financial ReportingStandards. Whilst the financial information included in this preliminaryannouncement has been compiled in accordance with International FinancialReporting Standards (IFRSs), this announcement does not itself containsufficient information to comply with IFRSs. The Group expects to publish) fullfinancial statements that comply with IFRS. The audit report on the full financial statements has yet to be signed andtherefore the financial information presented is unaudited. The 2005 comparatives have been restated to reflect the adoption of theseaccounting policies. A full reconciliation from UK GAAP to IFRS, consistent withthe requirements of IFRS 1 will be presented in the Group's full financialstatements. The financial information set out in this preliminary announcement does notconstitute statutory accounts within the meaning of section 140 of the CompaniesAct 1985. Statutory accounts for the year ended 30 April 2006 will be finalisedon the basis of the financial information presented by the directors in thispreliminary announcement and will be dispatched to shareholders during August2006 for approval at the Annual General Meeting to be held on 13 September 2006. This preliminary announcement was approved by the Board of Directors on 19 July2006. In December 2005 the Company acquired 65.66 per cent of the shares of ScottWilson Holdings Limited through a four for one share exchange. In preparing theconsolidated financial statements, Scott Wilson Holdings Limited has been deemedto be the acquirer and the Company, the legal parent, has been deemed to be theacquiree. Accordingly this transaction has been accounted for as a reverseacquisition under the requirements of IFRS 3 Business Combinations. On the admission of the Company to the Official List of the London StockExchange, the Company also acquired Basing View Investments Limited (BVI), whichheld the remaining 34.34 per cent of shares in Scott Wilson Holdings Limited. Asthe ultimate holders of the beneficial interest in BVI are the original holdersof the 65.66 per cent share in Scott Wilson Holdings Limited obtained by theCompany in December 2005, the acquisition of BVI has been treated as part of thesame reverse acquisition transaction for the purpose of preparing theconsolidated financial statements. Accordingly the financial statements of the Group consolidate the revenues,costs, assets, liabilities and cash flows of both Scott Wilson Holdings Limitedand BVI and their subsidiaries throughout both the period for which they areprepared and the comparative period. The principal impact of consolidating the revenues, costs, assets, liabilitiesand cash flows of BVI was the recognition of losses (pre-finance costs) of£780,000 and profits of £337,000 in the consolidated income statements for theyears ended 30 April 2006 and 2005 respectively. As the BVI group is expected tobe dormant from 1 May 2006 onwards, these losses will not recur in futureperiods and accordingly these losses have been classified within non-recurringitems. 2 Segment analysis The Directors consider that the Group operates in a single business segment. Formanagement purposes, the Group reports its performance on a geographic segmentbasis. UK Central: consultancy services on projects in the Midlands and Northernregions of England and also includes the Group's pavement engineeringconsultancy business, which operates worldwide. UK South: consultancy services on projects in London and the South of England. Scotland & Ireland: consultancy services on projects in Scotland and Ireland. UK Railways: railway-related consultancy services to infrastructure owners andtrain operators, principally in the UK. International: consultancy services on projects undertaken outside the UK,throughout the world, including both projects undertaken from the UK and thoseundertaken by the Group's overseas operations. Core: the Group's head office function, together with revenues, costs, assetsand liabilities not allocated to any of the other segments. Segment results for the year ended 30 April 2006: Scotland UK UK & UK Inter- Central South Ireland Railways national Core Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Sales toexternalcustomers 38,634 43,810 11,893 42,090 49,497 - 185,924Sales toother 5,695 5,760 2,147 804 3,159 - 17,565segments ------ ------- ------- ------- ------- ------- ------- Revenue fromall sales 44,329 49,570 14,040 42,894 52,656 - 203,489Sales onbehalf ofother (2,945) (3,037) (698) (7,750) (3,135) - (17,565)segments ------ ------- ------- ------- ------- ------- ------- Group 41,384 46,533 13,342 35,144 49,521 - 185,924revenue ====== ======= ======= ======= ======= ======= ======= Operatingprofit beforenon recurringitems andrestructuring 3,846 2,050 1,112 2,831 567 - 10,406Restructuringcosts - (471) - - (220) - (691)Loss relatingto BasingViewInvestments - - - - - (780) (780)LtdGain arisingon retirementbenefit planchanges - - - - - 13,546 13,546Costsrelating - - - - - (1,098) (1,098)to Admission ------ ------- ------- ------- ------- ------- ------- Operatingprofit /segment 3,846 1,579 1,112 2,831 347 11,668 21,383resultFinance 8,283incomeFinance (10,400)costs ------- Profit beforetaxation 19,266Taxation (6,325) ------- Profit forthe 12,941year ======= Share of result of joint ventures of £950,000 and £339,000 is included inCentral and International respectively. Segment results for the year ended 30 April 2005: Scotland UK UK & UK Inter- Central South Ireland Railways national Core Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Sales toexternalcustomers 33,778 41,525 10,395 28,997 45,326 - 160,021Sales toother 4,530 3,936 1,466 1,751 883 - 12,566segments ------ ------- ------- ------- ------- ------- ------- Revenue fromall sales 38,308 45,461 11,861 30,748 46,209 - 172,587Sales onbehalf ofother (2,246) (2,870) (525) (4,389) (2,536) - (12,566)segments ------ ------- ------- ------- ------- ------- ------- Group 36,062 42,591 11,336 26,359 43,673 - 160,021revenue ====== ======= ======= ======= ======= ======= ======= Operatingprofit beforenon recurringitems andrestructuring 3,664 1,523 620 1,299 647 - 7,753Profitrelating toBasing ViewInvestmentsLtd - - - - - 337 337Profit onsaleof land & - - - - - 358 358buildingsRestructuringcosts - (634) - (184) (129) (77) (1,024) ------ ------- ------- ------- ------- ------- ------- Operatingprofit /segment 3,664 889 620 1,115 518 618 7,424resultFinance 6,440incomeFinance (9,572)costs ------- Profit beforetaxation 4,292Taxation (1,905) ------- Profit for the 2,387year ======= Share of result of joint ventures of £787,000 and £192,000 is included inCentral and International respectively 3. Non- Recurring items and restructuring costs Note 2006 2005 £'000 £'000Restructuring costs 4 (691) (1,024)(Loss)/Profit relating to Basing View Investments Ltd 5 (780) 337Gain arising on retirement benefit plan changes 6 13,546 -Costs relating to Admission 7 (1,098) -Profit on sale of land and buildings - 358 Total 10,977 (329) 4 Restructuring costs In the year ended 30 April 2006, the Group incurred £0.7m redundancy costsresulting from restructuring in the UK South (£0.5m) and International (£0.2m)divisions. In the year ended 30 April 2005, the Group incurred £0.9m redundancy costsresulting from restructuring in the UK South (£0.6m), UK Railways (£0.2m) andInternational (£0.1m) divisions. It additionally incurred £0.1m of costs inrelation to advice on strategic options available to the Group. 5 (Loss)/Profit relating to Basing View Investments Ltd On 15 March 2006, the Company acquired Basing View Investments Ltd (BVI), whichheld the 34.34% interest in Scott Wilson Holdings Ltd not then held by theCompany and liabilities under various loan and redeemable share instruments. TheCompany immediately purchased, or funded the settlement of, all thoseliabilities. As described under "Basis of preparation" in note 1, the Groupfinancial statements of the Group consolidate the revenues, costs, assets,liabilities and cash flows of BVI and its subsidiaries throughout both theperiod for which they are prepared and the comparative prior period. The loss/profit relating to BVI substantially reflects exchange movements arising on thetranslation of dollar denominated liabilities, which have now been settled. 6 Gain arising on retirement benefit plan changes In March 2006, the trustees and substantially all of the members of the ScottWilson Pension Scheme, a defined benefit retirement benefit plan, agreed,conditional on the Company's admission to the Official List and the payment of aminimum £16.0m special cash contribution into the scheme, to break the link from1 October 2006 between accrued pensionable service up to that date and futuresalary increases. Additionally, they agreed that from 1 October 2006 activemembers would either pay increased contributions, accrue pension benefit at areduced rate or switch into the Group's money purchase scheme. Also in March 2006, the trustees and substantially all of the members of theScott Wilson Shared Cost Section of the Railways Pension Scheme, a definedbenefit retirement benefit plan, agreed, conditional on the Company's admissionto the Official List and the payment of a £2.0m special cash contribution intothe scheme, to break the link from 1 October 2006 between accrued pensionableservice up to that date and future salary increases. The impact of these changes is to reduce the overall gross deficit on theseschemes by £13.5m. 7. Costs relating to Admission During the year ended 30 April 2006, costs of £1.1m were incurred in relation tothe Admission of the Company to the Official List. Additionally, costs of £4.8mwere incurred in relation to the issue of additional ordinary shares at the timeof Admission, which have been charged against the share premium. 8 Finance income Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Interest income on bank deposits 345 87Preference shares redemption premium - 20Expected return on pension plan assets 7,938 6,333 -------- --------- 8,283 6,440 ======== ========= 9 Finance costs Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Interest on bank loans and overdrafts 723 870Interest on other loans 489 39Preference shares redemption premium 304 315Finance lease charges 264 124Interest on retirement benefit obligations 8,620 8,224 -------- --------- 10,400 9,572 ======== ========= 10 Taxation Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Current tax 1,851 1,844 Deferred tax 4,474 61 -------- --------- 6,325 1,905 ======== ========= 11 Earnings per share Basic earnings per share is calculated by dividing the profit attributable toequity holders of the Company by the weighted average number of ordinary sharesin issue during the period, excluding ordinary shares held by the Scott WilsonHoldings Ltd employee share ownership trust. Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Profit attributable to equity holders of the Company 12,527 2,141 --------- --------- Weighted average number of ordinary shares in issue(thousands) 32,203 23,551 --------- --------- Basic earnings per share (pence) 38.90p 9.09p ========= ========= Weighted average number of ordinary shares in issue(thousands) 32,203 23,551Dilutive effect of share options 1,025 - --------- ---------Diluted weighted average number of ordinary shares inissue (thousands) 33,228 23,551 --------- --------- Diluted earnings per share (pence) 37.70p 9.09p ========= ========= In all cases, the weighted average number of shares used in the calculation ofearnings per share amounts has been adjusted to reflect the restructuring underwhich each ordinary share in Scott Wilson Holdings Ltd was exchanged for fourordinary shares in Scott Wilson Group plc. 12 Reconciliation of changes in equity Total £'000 At 30 April 2005 (20,583)Changes in equity during 2006New shares issued net of issue costs 64,327Profit for the year 12,527Other movements (4,494) ---------At 30 April 2006 51,777 ========= 13 Retirement benefit obligations There are two funded defined benefit retirement plans in which certain of theGroup's employees participate, all of which are now closed to new members:(i) the Scott Wilson Pension Scheme; and (ii) the Scott Wilson Shared Cost Section of the Railways Pension Scheme.The amounts recognised in the balance sheet in relation to these plans are asfollows: 30 April 30 April 2006 2005 £'000 £'000 Total fair value of plan assets 149,979 113,255Present value of plan liabilities (183,556) (162,632) -------- -------- Net plan obligations (33,577) (49,377) ======== ======== There were no unrecognised actuarial gains or losses or past service costs as at30 April 2006 (2005: £nil). Amounts recognised in the income statement are as follows: Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Current service cost (4,757) (5,329)Interest on retirement benefit obligations (8,620) (8,224)Expected return on plan assets 7,938 6,333Gain arising on retirement benefit plan changes 13,546 - -------- -------- 8,107 (7,220) ======== ======== Amounts recognised in the statement of recognised income and expense are asfollows: Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Actuarial gains relating to plan assets 19,382 4,127Actuarial losses relating to plan liabilities (23,758) (8,119) -------- -------- (4,376) (3,992) ======== ======== The plan asset mix and the expected returns on the assets are as follows: 30 April 2006 30 April 2005 Expected return £'000 Expected return £'000 Equities 8.0% 99,436 8.0% 74,729Property 8.0% 3,641 7.0% 266Bonds 4.8% 37,867 4.7% 33,490Cash and other 4.8% 9,035 4.7% 4,770 -------- -------- Total fair value of planassets 149,979 113,255 ======== ======== The movements in the fair value of plan assets are as follows: Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 At start of the year 113,255 96,431Expected return 7,938 6,333Actuarial gains 19,382 4,127Employer contributions 12,069 6,472Employee contributions 2,932 3,027Benefits paid out (2,951) (2,784)Expenses (2,646) (351) -------- -------- At end of the year 149,979 113,255 ======== ======== The principal assumptions underlying the actuarial assessments of the presentvalue of the plan liabilities are: 30 April 30 April 2006 2005 Inflation rate 3.0% 2.8%Future salary increases 4.5% 4.3%Future pension increases 2.9% 2.8%Discount rate 4.9% - 5.15% 5.05% - 5.3% The movements in the present value of the plan liabilities are as follows: Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 At start of the year (162,632) (141,068)Current service cost (4,757) (5,329)Interest cost (8,620) (8,224) Impact of changes in assumptions (23,758) (8,119)Impact of retirement benefit plan changes 13,546 -Employee contributions (2,932) (3,027)Benefits paid out 2,951 2,784Expenses 2,646 351 -------- -------- At end of the year (183,556) (162,632) ======== ======== The best estimate of contributions due to be paid to the defined benefit plansduring the year ending 30 April 2007 is £6.2m. Additionally, specialcontributions of £17.3m remain to be paid from the proceeds of shares issued atthe time of the Company's admission to the Official List, of which £16.6m hasbeen paid in May 2006, with the balance of £0.7m to be paid in April or May2007. 14 Dividends Dividends on ordinary shares totalling £667,000 were declared and paid in theyear ended 30 April 2005, representing a dividend equivalent to 2.5p per sharein relation to the year ended 30 April 2004. A dividend equivalent to 2.5p perordinary share in relation to the year ended 30 April 2005, totalling £667,000,was declared in October 2005 (paid in January 2006) and a dividend of 2.5p pershare for the year ending 30 April 2006, totalling £667,000, was declared andpaid on 6 March 2006. 15 Cash generated from operations Year Year ended ended 30 30 April April 2006 2005 £'000 £'000 Operating profit 21,383 7,424 Gain arising on retirement benefit plan changes (13,546) - Share of result of joint ventures (1,289) (979) Defined benefit pension plan current service cost 4,757 5,329 Defined benefit pension plan contributions (12,069) (6,472) Depreciation 2,176 1,740 Amortisation 656 451 (Increase)/decrease in receivables and prepayments (14,722) (5,588) Increase/(decrease) in payables and accruals 12,065 3,479 Costs of Admission recognised through the income 1,098 - statement Share expense 51 - -------- -------- Cash generated from operations 560 5,384 ======== ======== 16 Reconciliation of underlying Group results The Directors believe that the presentation of underlying operating profit,underlying operating margin, underlying cash generated from operations,underlying cash conversion margin and underlying earnings per share assist withthe understanding of the underlying results of the Group. The underlying resultsare these line items within the Group results adjusted for the impact of specialpension curtailment gains and cash payments in the year, the impact ofrestructuring costs, costs relating to Admission and (loss)/profit relating toBasing View Investments Ltd. A reconciliation of these measures to Groupoperating profit, cash flow generated from operations and basic and dilutedearnings per share is given below. Underlying Group operating profit Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Group statutory operating profit 21,383 7,424Restructuring costs 691 1,024Loss/(profit) relating to Basing View Investments Ltd 780 (337)Gain arising on retirement benefit plan changes (13,546) -Costs relating to Admission 1,098 -Profit on sale of land and buildings - (358) -------- ----------Underlying operating profit 10,406 7,753 ======== ========== Underlying operating profit margin 5.6% 4.8% Underlying cash generated from operations Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Cash generated from operations (note 15) 560 5,384Costs of Admission 1,098 -Restructuring costs 691 1,024Special pension payment 6,090 -Cash movements associated with Basing ViewInvestments Ltd 1,555 -Dividends received from joint ventures 1,575 837 -------- --------Underlying cash generated from operations 11,569 7,245 ======== ======== Underlying cash conversion ratio 111% 93% Underlying basic and diluted earnings per share Year Year ended ended 30 April 30 April 2006 2005 £'000 £'000 Profit attributable to equity holders of the Company 12,527 2,141Restructuring costs 691 1,024(Loss)/profit relating to Basing View Investments Ltd 780 (337)Gain arising on retirement benefit plan changes (13,546) -Costs relating to Admission 1,098 -Profit on sale of land and buildings - (358)Less tax @ 30% on above related items 3,623 123 -------- --------Underlying profit attributable to equity holders of theCompany 5,173 2,593 -------- -------- Weighted average number of ordinary shares in issue(thousands) 32,203 23,551 -------- -------- Underlying basic earnings per share (pence) 16.06p 11.01p ======== ======== Weighted average number of ordinary shares in issue(thousands) 32,203 23,551Dilutive effect of share options 1,025 - -------- --------Diluted weighted average number of ordinary shares inissue (thousands) 33,228 23,551 -------- -------- Underlying diluted earnings per share (pence) 15.57p 11.01p ======== ======== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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