23rd Feb 2005 07:02
BBA Group PLC23 February 2005 BBA Group PLC 2004 Preliminary Results Results for the Year Ended 31st December 2004 For further information please contact: Roy McGlone, Chief Executive (020) 7514 3990Andrew Wood, Finance Director (020) 7514 3950BBA GROUP PLC Mike Smith or Emily Kerr (020) 7404 5959BRUNSWICK PRESS INFORMATION Wednesday, 23rd February 2005 BBA GROUP PLCPRELIMINARY RESULTS FOR THE YEAR ENDED 31st DECEMBER 2004 Preliminary Results •Underlying* Profit Before Tax £128.1m (2003: £130.5m), increased by 5 per cent on a constant currency basis. •Statutory Profit Before Tax £73.4m (2003: £55.2m). •Adjusted* earnings per share unchanged at 20.0p (2003: 20.1p), basic earnings per share (unadjusted) 10.2p (2003: 5.5p). •Sales from continuing operations increased by 12 per cent to £1,372m on a constant currency basis. •Final dividend increased by 5 per cent to 7.95p (2003: 7.6p) bringing the dividend for the year to 11.3p, an increase of 5 per cent over 2003 (10.8p). •Free cash flow** £60.0m (2003: £87.2m) after absorbing exceptional restructuring cash costs of £17m (2003: £10m). •Acquisitions completed in 2004 of £98m are expected to contribute sales of circa £120m in 2005. •Aviation: sales grew by 9 per cent (on a constant currency basis), with operating margins maintained. Operating profits increased by 8 per cent (on a constant currency basis). Fifteen new locations added to the Signature network, particularly in Europe, and today we are announcing the acquisition of two further bases at New Orleans and Heathrow. •Materials Technology: sales grew by 16 per cent (on a constant currency basis), although operating profits and margins were impacted by increased raw material costs. Further expansion in European Wipes market. •Net debt £512m (2003: £460m) after acquisitions of £98m. •Interest cover** increased to 11.6x (2003: 8.8x). Commenting on the results, Roy McGlone, BBA Group Chief Executive, said: "In 2004 we have seen strong growth in sales in both of our businesses but ourearnings have been held back by the translation impact of the weakening dollarand by significant increases in raw material costs in our Materials Technologydivision. Despite these difficulties, our underlying pre tax earnings increasedby 5 per cent compared to the prior year. We have invested almost £100 millionon nine acquisitions which are expected to contribute approximately £120 millionof sales in their first full year and have also continued to focus on improvingproductivity across the Group. For 2005 we are confident that, with the benefit of the acquisitions andrationalisation projects completed during 2004 and continuing strong demand inboth our businesses, we will deliver good progress in constant currency termsover 2004." * Continuing operations before goodwill amortisation and all exceptional items(see reconciliation on next page).**See definitions on page 3. Preliminary Results BBA Group PLC, the international aviation and materials technology company,announces its preliminary results for the twelve months ended 31 December2004. FINANCIAL HIGHLIGHTS£m (other than percentages and per share amounts in pence) 2004 2003TURNOVER 1,375.0 1,330.6TURNOVER (continuing operations) 1,371.6 1,319.7EBITDA (6) 213.8 223.0EBITDA MARGIN (6) 15.6% 16.9%OPERATING PROFIT (1) 140.2 147.2OPERATING MARGIN (1) 10.2% 11.2%OPERATING PROFIT (Statutory) 82.1 70.1NET INTEREST (12.1) (16.7)PROFIT BEFORE TAX (operating profit (1) lessinterest) 128.1 130.5PROFIT BEFORE TAX (Statutory) 73.4 55.2EARNINGS PER SHARE (4) 20.0p 20.1pEARNINGS PER SHARE (Unadjusted) 10.2p 5.5pDIVIDENDS PER ORDINARY SHARE 11.3p 10.8pFREE CASH FLOW (2) 60.0 87.2NET DEBT (511.6) (459.5)GEARING (net debt to shareholders' funds) 78% 68%INTEREST COVER (3) 11.6 8.8 (1) Total operating profit (including associates) of £93.4m (2003: £83.9m)before goodwill amortisation and exceptional items of £(46.5)m (2003: £(60.8)m)and operating loss from discontinued operations of £(0.3)m (2003: £(2.5)m. Thismeasure of earnings is shown because the directors consider that this gives abetter indication of underlying performance. (2) Cash flow from operating activities plus dividends from associates of £0.9m(2003: £2.7m) less tax of £13.0m (2003: £10.2m), interest of £13.5m (2003:£16.7m), preference dividends of £3.8m (2003: £3.8m) and net capital expenditureof £56.0m (2003: £69.8m). (3) Operating profit (as defined in (1) above) divided by the net interestcharge. (4) Basic earnings per share of 10.2p (2003: 5.5p) adjusted to exclude theafter-tax impact of goodwill amortisation and exceptional items of 9.7p (2003:14.2p) and discontinued operations of 0.1p (2003: 0.4p). (5) Exchange rates used in the preparation of these results US$ - Average $1.83(2003: $1.64), spot $1.92 (2003: $1.78); Euro - Average €1.47 (2003: €1.45),Spot €1.41 (2003: €1.43). (6) Operating profit (as defined in (1) above) before depreciation of £73.6m(2003: £75.8m). These definitions as outlined above and on page 1, are consistently appliedthroughout this preliminary announcement. BBA Group PLC - Preliminary Results, 23rd February 2005 PRELIMINARY STATEMENT 2004 In 2004 the Group produced underlying pre tax profits of £128.1 million whichwere slightly lower than in 2003 (£130.5 million) and adjusted earnings pershare from continuing operations were 20.0 pence (2003: 20.1 pence). We continueto be impacted by the weakening of the dollar against sterling which depreciatedby an average of 12 per cent during the year, reducing our underlying pre taxprofits by some £8 million compared to the prior period and, in our MaterialsTechnology division, significant increases in raw material costs impactedunderlying profits by circa £8 million. Despite this, in constant currencyterms, underlying pre tax profits advanced by 5 per cent. Both divisionsrecorded strong sales growth with sales from continuing operations for the Groupup by 12 per cent on a constant currency basis. Underlying operating marginsreduced by 1 per cent to 10.2 per cent principally due to the raw material priceincreases. Our free cash flow at £60 million continues to be strong, despiteadditional restructuring costs and increased inventory which is expected toreturn to more normal levels in 2005. We invested £98 million in acquisitionswhich should generate approximately £120 million of turnover in 2005. In the Aviation division, turnover was broadly unchanged at £800 million (2003:£793 million), although in constant currency terms turnover increased by 9 percent of which 3 per cent relates to acquisitions. Underlying operating profitsreduced slightly to £80.6 million (2003: £81.4 million) but were £6.3 million or8 per cent higher at constant exchange rates (2003 restated to £74.3 million).Underlying operating margins at 10.1 per cent were marginally lower than theprior year (2003: 10.3 per cent) due to increased fuel prices in Signature. Materials Technology turnover increased strongly to £572 million (2003: £527million) and in constant currency terms was 16 per cent higher than the prioryear of which 6 per cent relates to acquisitions. Underlying operating profitsreduced by £6.2 million to £59.6 million inclusive of an exchange rate impact ofsome £3.4 million. Significantly increased raw material costs, net of recoverythrough contracted and uncontracted price increases, reduced underlying profitsby approximately £8 million. The increase in raw material costs resulted in areduction in underlying operating margins from 12.5 per cent to 10.4 per cent. Financial results Turnover from continuing operations at £1,371.6 million was 4 per cent higherthan the prior year (2003: £1,319.7 million) although excluding the movement inexchange rates growth would have been 12 per cent (2003 (restated): £1,224.6million). Underlying operating profits were 5 per cent lower at £140.2 million (2003:£147.2 million) with the adverse translation impact of movement in exchangerates impacting the current period by over £10 million compared to 2003.Underlying operating margins were 10.2 per cent, lower than the prior year of11.2 per cent principally due to the higher raw material costs in the MaterialsTechnology division. Statutory operating profit was £82.1 million (2003: £70.1million). Earnings before interest, taxation, depreciation, amortisation and exceptionalitems (EBITDA) were £213.8 million (2003: £223.0 million). The Group disposed of a small avionics business in the US (Precision AvionicsInc) in August 2004 and closed a loss-making Fiberweb distribution business inJapan. In the prior period disposals and closures included the Aviation airframemaintenance businesses at Southampton and Luton airports, our Fair-WeatherFlying base in Tyler, Texas, our Boeing 737 landing gear business at TrinityAerospace in the UK as well as Cordustex, a small South African company withinthe Materials Technology division. Before their closure or disposal theseoperations incurred operating losses of £0.3 million (2003: £2.5 million), whichhave been classified as discontinued operations. Restructuring costs amounted to £25.7 million (£16.9 million cash) compared tothe previous year of £12.7 million (£10.0 million cash). The significantincrease over the prior year related to the closure of the Millville facility inour Engine Repair business. This closure cost £14.8 million (including £7.1million cash) and is expected to save £5 million in 2005 and thereafter. Thebalance of the restructuring costs related to the transfer of the SnowFiltration facility to Nashville (£2.4 million), expenditure associated with theintegration of acquisitions (£1.9 million) and costs of aborted acquisitions(£3.1 million). Non-operating exceptional items include the disposal of Precision Avionics, aswell as the discontinuance of operations at our Fiberweb office in Japan. Thetotal loss incurred on disposal or closure was £7.9 million (2003: loss of £12.0million). The net interest charge of £12.1 million (2003: £16.7 million) was covered 11.6times by the underlying profit before interest, tax, goodwill amortisation andall exceptional items (2003: 8.8 times). The reduction in the charge compared tothe prior year reflects lower average interest rates and the favourable impactof exchange rates on US dollar interest payments. Group statutory profit before tax was £73.4 million (2003: £55.2 million) withthe improvement due to the reduction in the goodwill amortisation charge whichwas £20.8 million compared to £48.1 million in 2003. The 2003 figure included anadjustment to the carrying value of goodwill at Oxford Aviation Services of£25.9 million. Underlying pre tax profits at £128.1 million were 2 per cent lower than theprior year of £130.5 million although in constant currency terms they were 5 percent higher. The translation impact of the weaker US dollar (2004: $1.83, 2003:$1.64) reduced full year pre tax profits by £8 million compared to the priorperiod. The effective tax rate was 27 per cent (2003: 27 per cent) of the underlyingprofit before tax. Adjusted earnings per share on a continuing basis were 20.0p (2003: 20.1p).Basic earnings per share (unadjusted) were 10.2p (2003: 5.5p). The Group continued to produce strong free cash flow of £60.0 million (2003:£87.2 million). The reduction from the prior year reflects the additional cashcosts of the restructuring expenditure incurred in the year (2004: £16.9million, 2003 £10.0 million) and a build up of inventory in both our Aviationand Materials Technology businesses. The Aviation inventory build up related toEngine Repair in the US where a £12 million increase in the first half hadoriginally been expected to reverse in the second half of 2004. Due partly tothe disruption caused by the closure of Millville this did not occur. Inaddition we held more inventory (£8 million) than normal in Materials Technologyin an attempt to mitigate the increasing raw material prices. Both of theseissues are expected to be rectified in 2005. Capital expenditure reduced to £61.7 million (2003: £75.0 million) andrepresents 0.8 times depreciation (2003: 1.0 times). The reduction from theprior year reflects significantly lower capital expenditure in the Fiberwebdivision. This was due to the inclusion in the prior period of expenditurerelating to the introduction of new capacity at Bethune in the USA to supportthe Baby Wipes contract and a new line in Germany. Net debt increased to £511.6 million (2003: £459.5 million) due principally tothe acquisitions made during the year of £98 million offset in part by exchangerate movements which reduced the translated value of debt by some £36.4 millioncompared to 2003. Dividend The Board is recommending a final dividend of 7.95 pence (2003: 7.6 pence), anincrease of 5 per cent. This brings the total dividend for the year to 11.3pence (2003: 10.8 pence), an increase also of 5 per cent. The increase in thedividend reflects the Board's confidence in the Group's outlook and its abilityto deliver strong free cash flows in the future. Aviation In the Aviation division, turnover was broadly unchanged at £800 million (2003:£793 million), although in constant currency terms turnover increased by 9 percent of which 3 per cent relates to acquisitions. Underlying operating profitsreduced slightly to £80.6 million (2003: £81.4 million) but were £6.3 million or8 per cent higher at constant exchange rates (2003 restated to £74.3 million).Underlying operating margins at 10.1 per cent were marginally lower than theprior year (2003: 10.3 per cent) due to increased fuel prices in Signature. Business Aviation sales increased by 21 per cent, on a constant currency basis,to £255 million. Organic growth, excluding the impact of acquisitions andincreased fuel prices, was 8 per cent with most of this coming from thecontinued expansion of the fractional operators. We significantly increasedSignature's international network, particularly in Europe, with the acquisitionof bases at Athens, Crete, Heathrow, Shannon and with the acquisition of Execaira further 10 locations in the UK, Belgium and Ireland. We have grown ourEuropean network from 5 to 19 bases during 2004 and in total now have 67 basesworldwide. In November we acquired an FBO at New Orleans for £3.2 million withannual turnover of approximately £2 million and in January 2005 we furtherconsolidated our position at Heathrow by acquiring another FBO on the airportfor £0.8 million. The Group is currently evaluating a number of otheropportunities to further broaden its global network of bases. At ASIG, our commercial aviation services provider, sales grew by 6 per cent ona constant currency basis to £164 million. The acquisition of AGI (the US basedGround Handler) during the second half of the year added 7 new airport locationsin the USA and strengthened our market position in another 8 locations. ASIG'sworldwide network now amounts to 71 locations of which 46 are in the top 100airports. The acquisition of Boker Aeroclean, an aircraft cleaning company atHeathrow, provides another service at an existing location and our joint ventureat Bangkok's new international airport is on track to commence operations in thefourth quarter of 2005. In Engine Repair and Overhaul sales grew by 4 per cent (at constant currency) to£290 million. Premier Turbines, acquired in 2003, continues to perform well,with excellent growth in TFE731 engine inputs during the year. The company wasalso successful in expanding business in the military sector with the award of a5 year, $7 million per annum U.S. army contract for the overhaul of aviationground power units and in January 2005 has also been awarded a 5 year, $4million per annum U.S. Air Force contract to provide engine maintenance for theC21 (Learjet) fleet. The announcement in July that Dallas Airmotive Inc. hadsecured an authorisation from Pratt and Whitney Canada to overhaul PW300/500engines brings two important new engine programmes into the division.Incremental sales arising from these programmes are anticipated to grow to $30million p.a. (£16.5 million p.a.) within 3 years. We have also completed a majorrestructuring programme with the closure of our Millville site located in NewJersey which will save £5 million per annum from 2005. The other businesses in the Aviation division continue to perform satisfactorilyand there has been some evidence of improving demand in the pilot trainingmarket at Oxford Aviation. Materials Technology Materials Technology turnover increased strongly to £572 million (2003: £527million) and in constant currency terms was 16 per cent higher than the prioryear of which 6 per cent relates to acquisitions. Underlying operating profitsreduced by £6.2 million to £59.6 million inclusive of an exchange rate impact ofsome £3.4 million. Significantly increased raw material costs, net of recoverythrough contracted and uncontracted price increases, reduced underlying profitsby approximately £8 million. The increase in raw material costs resulted in areduction in underlying operating margins from 12.5 per cent to 10.4 per cent. In Fiberweb Industrial and Consumer Care, the Group achieved organic growth insales of 7 per cent. In North America there was strong demand for fabricconditioner and filtration products and the new baby wipes line at Bethune isnear capacity. A number of new products were launched towards the end of theyear which will add incremental sales in 2005. In Europe Tecnofibra, acquired in2003, performed well and we acquired Tenotex in September, further consolidatingour position in the growing European wipes market. In Fiberweb Healthcare, organic growth of 7 per cent was achieved with muchbetter capacity utilisation in each of the major geographical areas. Oursuccessful joint venture Finotech in Germany had another strong year albeitslightly down on the high levels of 2003. It is anticipated that Finotech'searnings will be lower in 2005 than 2004 due to a transition to new productiontechnology which is expected to come fully on stream in 2006. China is nowrunning at near full capacity with profitability improving. The Group iscommitted to increasing its presence in Asia, which is the fastest growingnonwovens market in the world. Raw material costs have increased sharply since the end of 2003 and are now attheir highest levels for many years. The key materials that are used(polypropylene, polyester and cotton) have been affected and the net impact overthe year was to reduce underlying operating profits by some £8 million comparedto the prior period. The outlook for raw material prices in 2005 remains uncertain and if pricesremain at current levels it will restrict profit growth in the first half of2005. It is expected that the environment will generally be more stable althoughsignificant price reductions are not anticipated. Despite the issues with rawmaterials we are anticipating another year of strong operating cash flow in2005. In Becorit, our rail braking business, sales were relatively unchanged at £19million and underlying operating profits remained at satisfactory levels. International Accounting Standards The Group has completed the exercise of restating its transition date balancesheet as at 1 January 2004. This had the overall impact of reducing net assetsby approximately £40 million. The main areas of adjustment were as described inthe 2004 Annual Report, namely splitting the Group's convertible preferenceshares into their debt and equity components (£(51)million), bringing the netdeficit on the Group's pension schemes onto the balance sheet (£(28)million) andthe de-recognition of the proposed final dividend provision for 2003 (£34million). The Group is currently in the process of restating the 2004 Income Statement andBalance Sheet for inclusion in the 2005 Interim Statement which will bepublished in early September. Board This year, Ross McMillan, Chief Executive BBA Fiberweb, is retiring from BBA. Wethank Ross for his contributions to the nonwovens division and as an executiveDirector on the BBA Group Plc Board during the last three and a half years. Roy McGlone, Chief Executive BBA Group Plc will assume responsibility for thenonwovens division until a successor is named. Ross has agreed to provide anyassistance required during a transition period. We are pleased to announce that Michael Harper is appointed a non-executiveDirector with effect from today's date. He is currently Chief Executive of Kiddeplc and non-executive Director of UMECO plc, Ricardo plc and Vitec Group plc.His extensive business experience will be a valuable asset to the Group. Outlook For 2005 we are confident that, with the benefit of the acquisitions andrationalisation projects completed during 2004 and continuing strong demand inboth our businesses, we will deliver good progress in constant currency termsover 2004. Roberto Quarta, ChairmanRoy McGlone, Chief Executive23rd February 2005 Group profit and loss accountfor the year ended 31 December 2004 Before goodwill Goodwill amortisation amortisation & exceptional & exceptional 2004 items items Total 2003 £m £m £m £m-------------------------------------------------------------------------------------------------- Turnover Continuing operations 1,347.0 - 1,347.0 1,319.7 Acquisitions 24.6 - 24.6 - ------------------------------------------------------------------------------- 1,371.6 - 1,371.6 1,319.7 Discontinued operations 3.4 - 3.4 10.9 ------------------------------------------------------------------------------- Turnover 1,375.0 - 1,375.0 1,330.6 Net operating costs Cost of sales (1,090.1) - (1,090.1) (1,047.0) ------------------------------------------------------------------------------- Gross profit 284.9 - 284.9 283.6 Net operating expenses (156.3) (46.5) (202.8) (213.5) ------------------------------------------------------------------------------- ---------------------------------------------------- Operating Continuing operations 125.5 (46.5) 79.0 72.8 profit Acquisitions 3.4 - 3.4 - ------------------------------------------------------------------------------- 128.9 (46.5) 82.4 72.8 Discontinued operations (0.3) - (0.3) (2.7) ------------------------------------------------------------------------------- Group operating profit 128.6 (46.5) 82.1 70.1 Share of operating profit of associates - continuing operations 11.3 - 11.3 13.8 ------------------------------------------------------------------------------- Total operating profit (including associates) 139.9 (46.5) 93.4 83.9 Loss on sale of businesses (net) - (7.9) (7.9) (12.0) ------------------------------------------------------------------------------- Profit Profit on ordinary on activities before interest ordinary and taxation 139.9 (54.4) 85.5 71.9 activities Net interest (12.1) - (12.1) (16.7) ------------------------------------------------------------------------------- Profit on ordinary activities before taxation 127.8 (54.4) 73.4 55.2 Taxation on profit on ordinary activities (34.5) 10.9 (23.6) (26.4) ------------------------------------------------------------------------------- Profit on ordinary activities after taxation 93.3 (43.5) 49.8 28.8 Equity minority interests (0.1) - (0.1) - ------------------------------------------------------------------------------- Profit for the financial year 93.2 (43.5) 49.7 Dividends on non-equity shares (3.8) - (3.8) (3.8) ------------------------------------------------------------------------------- Profit for the financial year attributable to ordinary shareholders 89.4 (43.5) 45.9 25.0 Dividends on equity shares (51.0) - (51.0) (48.7) ------------------------------------------------------------------------------- Retained loss for the financial year transferred to reserves 38.4 (43.5) (5.1) (23.7) ------------------------------------------------------------------------------- Earnings per Basic: ordinary share Before goodwill amortisation and exceptional items 19.9p 19.7p ------------------------------------------------------------------------------- Unadjusted 10.2p 5.5p ------------------------------------------------------------------------------- Diluted: Before goodwill amortisation and exceptional items 19.7p 19.6p ------------------------------------------------------------------------------- Unadjusted 10.1p 5.5p ------------------------------------------------------------------------------- Dividends per Interim paid 3.35p 3.20p ordinary share Final proposed 7.95p 7.60p ------------------------------------------------------------------------------- 11.30p 10.80p ------------------------------------------------------------------------------- Group balance sheetat 31 December 2004 2004 2003 £m £m------------------------------------------------------------------------------Fixed assets Intangible assets 364.1 324.2 Tangible assets Land and buildings 261.5 281.6 Plant and machinery 463.0 487.8 Investments 33.4 26.6 ------------------------------------------------------------ 1,122.0 1,120.2 ------------------------------------------------------------Current assets Stocks 219.3 195.3 Debtors due after one year 18.8 52.4 Debtors due within one year 341.7 269.0 Cash at bank and in hand 134.0 154.7 ------------------------------------------------------------ 713.8 671.4Current Creditors: amounts falling due within oneliabilities year Borrowings and finance leases (50.6) (53.2) Others (344.4) (324.8) ------------------------------------------------------------ Net current assets 318.8 293.4 ------------------------------------------------------------ Total assets less current liabilities 1,440.8 1,413.6 Long-term Creditors: amounts falling due after moreliabilities than one year Borrowings and finance leases (657.0) (614.4) Others (2.7) (2.7)Provisions Provisions for liabilities and charges (122.0) (115.9) ------------------------------------------------------------ Total net assets 659.1 680.6 ------------------------------------------------------------Capital andreserves Called up share capital 169.0 169.1 Share premium account 285.3 285.0 Revaluation reserve 3.9 3.9 Other 7.1 5.5 Profit and loss account 193.8 217.1 ------------------------------------------------------------ Shareholders' funds 659.1 680.6 Equity 602.9 624.3 Non-equity 56.2 56.3 ------------------------------------------------------------ 659.1 680.6 ------------------------------------------------------------ Group cash flow statementfor the year ended 31 December 2004 2004 2003 £m £m----------------------------------------------------------------------------------Operations Net cash inflow from operating activities 145.4 185.0 Dividends fromjoint ventures Dividends from 0.9 2.7and associates associates Returns oninvestments Interest received 30.4 27.5and servicing Interest paid (42.5) (42.0)of finance Preference dividend paid (3.8) (3.8) Interest element of finance leases (1.4) (2.2) ------------------------ ------ ----- Net cash outflow from returns on investments and servicing of finance (17.3) (20.5)Taxation UK corporation tax (paid) / received - - Overseas tax paid (13.0) (10.2) ------------------------ ------ ----- Total tax paid (13.0) (10.2)Capitalexpenditure Purchase of tangible fixed assets (56.5) (75.0) Purchase of intangible assets (5.2) - Sale of tangible fixed assets 5.7 5.2 ------------------------ ------ ----- Net cash outflow from (56.0) (69.8) capital expenditureAcquisitionsand Purchase of subsidiary disposals undertakings and businesses (90.6) (51.3) Net cash acquired 5.2 0.8 Investment in associated undertakings (0.8) (2.3) Sale of subsidiary undertakings and businesses 0.2 1.5 Cash (paid)/received from disposals in prior years (1.7) 8.2 ------------------------ ------ ----- Net cash outflow from acquisitions and disposals (87.7) (43.1)Equitydividends Equity dividends paid (49.4) (32.5) ------------------------ ----- ----- Net cash (outflow) / inflow before management of liquid resources and financing (77.1) 11.6Management ofliquid Net proceeds from issue resources and of ordinary shares 1.2 0.2financing Own shares purchased for cancellation - (44.6) Increase in borrowings and finance leases 55.7 91.0 Decrease in other liquid assets 7.6 4.8 Decrease / (increase) in 9.5 (23.3) short-term deposits ------------------------ ------ ----- Net cash inflow from management of liquid resources and 74.0 28.1 financing ------------------------ ----- -----Movement in (Decrease) / Increase in (3.1) 39.7cash cash ------------------------ ----- ----- Reconciliation (Decrease) / Increase in of net cash cash in year (3.1) 39.7flow to Increase in borrowings changes in net and finance leases (55.7) (91.0) debt Decrease in other liquid assets (7.6) (4.8) (Decrease) / increase in short-term deposits (9.5) 23.3 New finance leases - (0.7) Finance leases acquired with acquisitions (1.9) (0.9) Borrowings acquired with acquisitions (10.7) - Exchange adjustments 36.4 70.6 ------------------------ ----- ----- Movement in net debt in year (52.1) 36.2 Net debt at beginning of year (459.5) (495.7) ------------------------ ----- ----- Net debt at end of (511.6) (459.5) year ------------------------ ----- ----- Reconciliation of movement in Group shareholders' fundsfor the year ended 31 December 2004 2004 2003 £m £m ----------------------------------------------------------------------------- Profit for the financial year 49.7 28.8 Dividends (54.8) (52.5) ----------------------------------------------------------------------------- (5.1) (23.7) Exchange differences on translation (net) (17.6) (13.3) Own shares purchased for cancellation - (44.6) ESOP Shares 1.0 - Shares issued 0.2 16.4 ----------------------------------------------------------------------------- Net decrease in shareholders' funds for the year (21.5) (65.2) Shareholders' funds at beginning of year as previously reported 680.6 745.8 ----------------------------------------------------------------------------- Shareholders' funds at end of year 659.1 680.6 ----------------------------------------------------------------------------- Group statement of total recognised gains and lossesfor the year ended 31 December 2004 2004 2003 £m £m ----------------------------------------------------------------------------- Profit for the financial year 49.7 28.8 Exchange difference on retranslation of net assets of subsidiary undertakings (56.2) (75.0) Exchange difference on foreign currency borrowings 38.6 61.7 ----------------------------------------------------------------------------- Total recognised gains for the year since the last annual report 32.1 15.5 ----------------------------------------------------------------------------- Notes on Financial Statements Operating Profit pre-amotisation Goodwill Exceptional Total Average Turnover by Turnover & exceptional amortisation & restructuring operating Net number of destination by origin costs write-downs costs profit assets employees1. Segmental £m £m £m £m £m £m £m 000's Information --------------------------------------------------------------------------------------------------- By Market 2004 Materials Technology 572.1 59.6 (5.8) (4.9) 48.9 638.5 3.1 Aviation 799.5 80.6 (15.0) (20.8) 44.8 701.7 9.5---------------------------------------------------------------------------------------------------------------------- Continuing operations 1,371.6 140.2 (20.8) (25.7) 93.7 1,340.2 12.6 Discontinued 3.4 (0.3) - - (0.3) 6.6 ----------------------------------------------------------------------------------------------------------------------- Total 1,375.0 139.9 (20.8) (25.7) 93.4 1,346.8 12.6---------------------------------------------------------------------------------------------------- ------- Net non-operating liabilities (162.9) Restructuring and discontinued operations provisions (net) (13.2) Net borrowings (511.6) ------- 659.1 ------- 2003 Materials Technology 526.6 65.8 (5.4) (9.2) 51.2 623.6 3.1 Aviation 793.1 81.4 (42.5) (3.5) 35.4 679.5 9.6---------------------------------------------------------------------------------------------------------------------- Continuing operations 1,319.7 147.2 (47.9) (12.7) 86.6 1,303.1 12.7 Discontinued 10.9 (2.5) (0.2) - (2.7) 7.1 ----------------------------------------------------------------------------------------------------------------------- Total 1,330.6 144.7 (48.1) (12.7) 83.9 1,310.2 12.7---------------------------------------------------------------------------------------------------- ------- Net non-operating liabilities (154.7) Restructuring and discontinued operations provisions (net) (15.4) Net borrowings (459.5) ------- 680.6 ------- By Geography 2004 United Kingdom 129.0 217.8 14.3 (2.5) (3.3) 8.5 157.2 Mainland Europe 259.3 238.5 34.8 (1.2) (1.6) 32.0 273.5 North America 906.3 871.0 86.8 (16.9) (20.8) 49.1 824.7 Rest of World 77.0 44.3 4.3 (0.2) - 4.1 84.8------------------------------------------------------------------------------------------------------------- Continuing 1,371.6 1,371.6 140.2 (20.8) (25.7) 93.7 1,340.2 operations Discontinued 3.4 3.4 (0.3) - - (0.3) 6.6------------------------------------------------------------------------------------------------------------- Total 1,375.0 1,375.0 139.9 (20.8) (25.7) 93.4 1,346.8------------------------------------------------------------------------------------------------------------- 2003 United Kingdom 114.6 216.7 16.8 (29.6) (0.6) (13.4) 124.2 Mainland Europe 216.6 194.7 33.5 (0.4) (2.2) 30.9 215.7 North America 911.7 868.0 93.1 (17.8) (9.8) 65.5 871.3 Rest of World 76.8 40.3 3.8 (0.1) (0.1) 3.6 91.9------------------------------------------------------------------------------------------------------------- Continuing operations 1,319.7 1,319.7 147.2 (47.9) (12.7) 86.6 1,303.1 Discontinued 10.9 10.9 (2.5) (0.2) - (2.7) 7.1------------------------------------------------------------------------------------------------------------- Total 1,330.6 1,330.6 144.7 (48.1) (12.7) 83.9 1,310.2------------------------------------------------------------------------------------------------------------- Operating profit includes the results of associated companies. The Group interest expense is managed centrally and is not attributable to individual markets or geographical areas. Included within the goodwill amortisation and write-downs is a charge of £nil (2003: £25.9m) relating to our pilottraining business. Notes on Financial Statements (continued) 2004 20032. Capital expenditure £m £m Capital expenditure 56.5 75.0 ----------------- Capital expenditure to depreciation - times 0.8 1.0 ----------------- 3. Number of employees Thousands Thousands At 31 December 13.7 12.3 ----------------- 4. Earnings per share 2004 2003 Earnings £m £m Basic: Basic earnings attributable to ordinary shareholders 45.9 25.0 Goodwill amortisation and exceptional items (net of tax) 43.5 64.4 ----------------- Basic earnings before goodwill amortisation and exceptional items 89.4 89.4 ----------------- Diluted: Basic earnings attributable to ordinary shareholders 45.9 25.0 Preference dividends - - ----------------- Diluted earnings attributable to ordinary shareholders 45.9 25.0 Goodwill amortisation and exceptional items (net of tax) 43.5 64.4 ----------------- Diluted earnings before goodwill amortisation and exceptional items 89.4 89.4 ----------------- Millions Millions Average number of 25p ordinary shares: Basic 449.0 453.1 ----------------- Diluted 453.6 455.8 ----------------- Earnings per share: Basic: Before goodwill amortisation and exceptional items 19.9p 19.7p ----------------- Unadjusted 10.2p 5.5p ----------------- Diluted: Before goodwill amortisation and exceptional items 19.7p 19.6p ----------------- Unadjusted 10.1p 5.5p ----------------- Notes on Financial Statements (continued) 2004 20035. Taxation £m £m United Kingdom Corporation tax 2.0 2.3 Double tax relief (1.9) (1.8) Deferred taxation - (1.4) Adjustments in respect of prior years 2.6 - Overseas Current tax charge 7.8 7.1 Deferred taxation 9.1 15.5 Associates and JV's Current tax charge 4.0 4.7 ----------------- 23.6 26.4 ----------------- 6. Reconciliation of Operating Profit to Operating Cash £m £m Flows Operating profit (after goodwill amortisation and 82.1 70.1 exceptional restructuring costs) Depreciation 73.6 75.8 Goodwill amortisation 20.8 48.1 Profit on sale of tangible fixed assets - (0.1) Increase in stocks (28.5) (0.7) Increase in debtors (12.4) (8.4) Increase/ (decrease) in creditors 2.5 (3.5) (Decrease) / Increase in restructuring provisions (0.3) 1.6 (Decrease) / increase in overseas pension funds and (0.1) 1.3 post-retirement benefit provisions Non-cash element of exceptional restructuring costs 7.7 0.8 ----------------- Net cash inflow from operating activities 145.4 185.0 ----------------- Net cash inflow from discontinued activities included above (1.4) 5.2 ----------------- Net cash outflow from exceptional restructuring costs (16.9) (10.0) included above ----------------- Analysis of net debt: Beginning Acquisitions Exchange End of of year Cashflow & disposals adjustments year £m £m £m £m £m Cash 111.8 (8.3) 5.2 (8.1) 100.6 Term deposits 42.9 (9.5) - - 33.4 Debts due within one year (44.4) (2.1) (1.7) 0.4 (47.8) Debts due after one year (568.0) (69.2) (9.0) 25.6 (620.6) Other liquid assets within other debtors 53.4 (7.6) - 16.2 62.0 Finance leases (55.2) 15.6 (1.9) 2.3 (39.2) ------------------------------------------------------ (459.5) (81.1) (7.4) 36.4 (511.6) ------------------------------------------------------7. Dividends Subject to shareholder approval, the final dividend will be paid on 20 May 2005 to ordinary shareholders on the register at the close of business on 15 April 2005. Shareholders are being offered the opportunity of buying additional shares in lieu of a cash dividend under the existing BBA Dividend Re-investment Plan (DRIP). 8. Financial information The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2003 and 2004, but is an abridged statement of those statutory accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered to the Registrar following the Company's annual general meeting. The auditors have reported on the statutory accounts and their reports were unqualified. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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