8th Mar 2005 07:01
SIG PLC08 March 2005 8 March 2005 PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2004 SIG plc is the market leading specialist distributor of insulation, roofing andcommercial interiors products in Europe. •SIG reports record results due to strong trading in all its main business areas and products. •Sales increased by 10.2% to £1,398.2m (2003: £1,268.5m). Like for like* sales growth was up 7.7%. Excluding the impact of foreign exchange, sales growth was up 11.6% and like for like sales growth was up 9.0%. • UK & Republic of Ireland sales increased 11.9% to £907.1m. Operating profit before goodwill amortisation increased 18.2% to £64.1m, with growth in insulation, roofing and commercial interiors. • In Mainland Europe, sales increased 10.0% in Sterling to £433.6m. Local currency like for like sales growth was 10.5%. Operating profit before goodwill amortisation increased 40% in Sterling to £15.4m. • In the USA sales increased 1% in local currency. Operating profit before goodwill amortisation increased 85% in Sterling to £1.7m. •Operating profit before goodwill amortisation was up 21.9% to £77.3m (2003: £63.4m). •Profit before tax and goodwill amortisation was up 26.5% to £71.2m (2003: £56.3m). Profit before tax rose 27.2% to £65.5m (2003: £51.5m). •Earnings per share increased by 26.2% to 36.1p (2003: 28.6p). •Dividend increase of 12.9% to 14.0p, the 11th consecutive year in which the dividend has been raised. €13 acquisitions were completed in 2004 for a total spend of £45.1m. Les Tench, Chairman, commented:"After a year of exceptional progress in 2004, the Group enters 2005 from aposition of strength both financially and in the markets in which we operate,and the Board is confident that further progress will be made." * - Like for like is defined as the business excluding the impact ofacquisitions made since 1 January 2003. Enquiries: David Williams, Chief Executive SIG plc today 020 7251 3801Gareth Davies, Finance Director thereafter 0114 285 6300 Faeth Birch /Gordon Simpson Finsbury 020 7251 3801 Full Preliminary Results information is available on www.sigplc.co.ukAn interview with David Williams, Chief Executive, is available on SIG's websiteand on www.cantos.com Chairman's Statement 2004 has been a year of significant growth and expansion for the Group. Sales,profit before tax and earnings per share all grew substantially compared withthe prior year. In addition the number of trading sites increased by 42 duringthe course of the year to a total of 412 at the end of December 2004. Key factors contributing to the excellent results were the strong like for likesales performance, the positive impact of widespread product price inflation andthe increased pace of acquisition activity. Results For the year ended 31 December 2004, compared with the corresponding period in2003. Sales •Total sales, in Sterling, increased by £129.7m (10.2%) to £1,398.2m (2003 : £1,268.5m). •Sales growth, excluding adverse movement in foreign currency exchange was higher at 11.6%. •Like for like sales growth (i.e. excluding the impact of acquisitions made in 2003 and 2004) was 7.7% in Sterling and 9.0% excluding foreign exchange movement. Profits •Operating profit (before goodwill amortisation) increased by £13.9m (21.9%) to £77.3m (2003 : £63.4m). •Goodwill amortisation increased by £0.9m to £5.7m (2003 : £4.8m). Total interest charges were reduced by £1.0m to £6.2m (2003 : £7.2m). •Profit before tax increased by £14.0m (27.2%) to £65.5m (2003 : £51.5m). Margins •The gross margin increased to 25.83% (2003 : 25.25%) reflecting improved price management and the planned investment in increased stockholding at the time of manufacturers' price increases. •The net operating profit margin before goodwill amortisation of £5.7m (2003 : £4.8m) increased to 5.5% (2003 : 5.0%). This reflects the gross margin increase and the operational gearing impact of the additional sales volume, compared with prior year. Earnings and Dividends •Earnings per share increased by 7.5p to 36.1p (2003 : 28.6p), an increase of 26.2%. •Subject to Shareholder approval, a final dividend of 9.4p is proposed. This would make a total dividend for the year of 14.0p, compared with the 2003 full year dividend of 12.4p per share. This represents an increase of 12.9%, and is the 11th consecutive year in which the dividend has been increased. If approved, the final dividend will be payable on 23 May 2005 to Shareholders on the register at 15 April 2005. Finances Underlying cash flow (i.e. operating cash flow before working capital movements)strengthened further throughout 2004 compared with prior year. An increase instock levels (partly due to new branches, and also to support increasedcommercial activities), together with the acquisition program, resulted in anincreased borrowing figure at the year end. Gearing rose to 44% as at 31December 2004 (2003 : 38%). The Group has a sound financial position with dividend and interest cover ratiosboth increased compared to prior year. Acquisitions The Group indicated early in 2004 its intention to actively resume its programmeof seeking suitable acquisitions. A total of 13 acquisitions were completed in the year, all of which complementexisting businesses within the Group, and are within countries in which wealready had a trading presence. The total spend on these acquisitions was £45.1m (including assumed debt anddeferred consideration). Board Following my appointment to the post of Non-Executive Chairman in April 2004, inaccordance with current best practice and recommendations in relation tocorporate governance, Peter Blackburn CBE has been appointed Senior IndependentDirector. Peter has been a member of the Board since 1 July 2001 and thisappointment further strengthens the corporate governance of the Company. The composition of the Board has been addressed and considered during the year,and I believe we have a good mix of experience and varying backgrounds, whichprovides very considerable professional and commercial expertise to draw upon. Employees The commitment, energy and drive shown by all of our employees throughout theGroup is our greatest asset, and our ability to meet the demands of ourcustomers, suppliers and shareholders is dependent upon their efforts. I wouldlike to thank all our employees for their loyalty and hard work, and wish themcontinued success. I would like to pay particular tribute to the new employees who have joined SIGas a result of acquisition. They have been involved in a process of change andhave coped remarkably well and continued to focus on their particular role inthe business. Prospects Trading conditions were generally more favourable throughout 2004 than in 2003in most of the main markets in which the Group operates. In addition, priceinflation had a higher than expected beneficial impact across a significantproportion of our trading operations. Looking into 2005 we expect to experience continued strong demand from the broadbased construction industry in the UK and Republic of Ireland. Pricing isexpected to be positive, but we do not expect the exceptional benefits achievedin 2004 to be repeated. The outlook for market conditions in France, Poland and Benelux is positive,whilst in Germany, demand is expected to continue to be subdued. In the USA demand for industrial and technical insulation products is expectedto improve. We are continuing to invest in additional trading sites throughout ouroperations, and where appropriate, relocating to larger premises in order toincrease capacity and further improve customer service. The recently acquiredbusinesses are integrating well into the Group, and we look forward to apositive impact from these expansion activities going forward. After a year of exceptional progress in 2004, the Group enters 2005 from aposition of strength both financially and in the markets in which we operate,and the Board is confident that further progress will be made. Chief Executive's Review of Operations I am pleased to report that the Group had a very successful year in 2004. Inaddition to producing record sales, profits and earnings per share, we investedsignificantly in expanding the business for future growth. Market demand and product pricing were generally more helpful in most of ourmain markets and countries of operation than in the previous year. Against this positive background, the trading and commercial skills of the Groupenabled strong underlying sales growth and maximum benefits from the pricingenvironment to be achieved. Our focused, specialist approach to customers andthe markets in which we operate has enabled the Group to outperform. Trading Highlights UK and Republic of Ireland (65% of total Group sales) •Sales increased by £96.4m (11.9%) to £907.1m (2003 : £810.7m). •Like for like* sales increased by £71.2m (8.8%). •Operating profit before goodwill amortisation of £4.8m (2003 : £4.0m) increased by £9.9m (18.2%) to £64.1m (2003 : £54.2m). •Sales and operating profits were increased in all market sectors in the UK and the Republic of Ireland. * - Like for like is defined as the business excluding the impact ofacquisitions made since 1 January 2003. The Insulation operations again had a year of substantial growth, with doubledigit like for like and total growth of sales and operating profits comparedwith prior year. The slight decline in the operating profit margin whichoccurred in 2003 due to an adverse movement in product mix was reversed in 2004and the net operating margin for the year was ahead of that in both 2002 and2003. This is despite continued sluggish demand from the industrial insulationmarket, where margins have traditionally been slightly higher than from thebuilding related sectors. Across the building sector demand for thermal and acoustic insulation productsfor newbuild and renovation applications, ranging from housing upgrading rightthrough to major projects such as new hospitals, increased significantlythroughout the year. The tighter regulatory standards within the BuildingRegulations continued to stimulate demand, as did the increased activity in theexisting housing sector driven by various Government sponsored grants and otherschemes. The Group is the leading provider across the entire spectrum of themarket and benefited from the widespread increase in demand. The general level of increased demand exceeded internal expectations and it maybe that in addition to the more obvious demand drivers mentioned above, we arebeginning to see the effects of higher energy prices, and concern about theimpact on the environment of heating related energy consumption withinbuildings, feed through to demand for insulation. Some price inflation wasevident within the insulation sector, though this was not universal across theproduct range. Overall, an excellent performance and our strong market position was furtherreinforced. The Roofing division achieved good like for like growth in sales and operatingprofits, supplemented by expansion from recent acquisitions. During the year webegan a programme of upgrading premises to enable a wider range of products tobe offered to our customers and this will continue throughout the network. As we reported at the time of our January 2005 Trading Update, we believe thatoverall market demand rose very slightly in the year and that price inflationhad a modest, but positive impact on performance in this sector. The operatingprofit margin was held at the prior year level, and operating profits increased. The mix of business in the roofing division continued to be biased towardsrepairs and maintenance, except in the Republic of Ireland where new housingaccounts for a relatively larger proportion of sales, reflecting the buoyant newbuild sector throughout the year. Commercial Interiors had an excellent performance across the whole division,with a like for like double digit increase in sales and operating profits. Throughout 2004 we saw growing demand for specialist interior products for boththe renovation of existing properties, and new construction in a wide range ofnon-residential buildings. These include schools, hospitals, sports and leisurefacilities, offices, retail developments, hotels, public sector buildings,factories and warehouse units. The specific premium office sector began to recover after two years of sharplyreduced demand. Improvements to our product range for office fit out, and thedevelopment and introduction of new products for specific related marketsenabled the operating margin and operating profits to double in 2004 over prioryear in this specific sector. The core business, which is the leading supplier of interior products to thewider non-residential buildings market invested in additional sales resources.We also successfully re-branded and re-launched the business to provide asimpler, more effective offering to customers. These initiatives were wellreceived and the division achieved excellent growth. In Safety and Construction Products, significant like for like sales growth anda strong improvement in the operating margin produced operating profits morethan double that of the prior year. This excellent organic growth wassupplemented by the addition of three newly acquired trading sites. Thecontinued development and expansion of this division is enabling us to broadenour offering whilst remaining highly focused on the supply of specialistproducts to the construction and related markets. The use of catalogue and internet trading are growing features of our marketingapproach in this division. Mainland Europe (31% of total Group sales) •Overall in Mainland Europe, sales grew by 12.4% in local currencies, and by £39.4m (10.0%) in Sterling to £433.6m (2003 : £394.2m). The local currency like for like sales growth was 10.5%. •On a country by country basis, we believe this represents market-beating performance, reflecting continued growth of our market position and market share. •Operating profits (pre goodwill amortisation) increased by 43.0% in local currencies and by 40.0% in Sterling, up £4.5m to £15.5m (2003 : £11.0m). Like for like sales growth including the impact of newly opened brownfieldtrading sites, was achieved in all countries in which we operate in MainlandEurope, and this was supplemented by small bolt-on acquisitions, enablinggreater market penetration and improved customer service. In Germany, a modest decline in the volume demand from the construction sectorwas offset by increased product prices, leaving the overall market value aboutthe same as in 2003. Sales increased by 6.4% in Euros, and a total of five new sites were addedduring the year, one of which was acquired and four brownfield openings. Threeof the new brownfield sites are in Austria, where a local opportunity arose toestablish a position. As these branches are managed within the German managementstructure, they will continue to be reported within the German results. Particular emphasis was placed on the management of pricing and improvingoperational efficiencies within the German business throughout the year. As aresult, and despite the one-off charges associated with the new branch openings,costs were reduced as a proportion of sales, and the gross margin wasstrengthened. The operating profit margin was increased and operating profitswere substantially up on prior year. An excellent performance in a difficultmarket. In France, we continued to make solid progress with sales up 25.9% in total inEuros, of which 18.4% was like for like. Price inflation on a number of productshad a positive impact on both sales and margins. Growth was achieved in insulation, commercial interiors and in the fledglingroofing business. We continue to expand the range by offering more specialistproducts and the sales of air handling and forced ventilation systems (which areoften installed at the same time as our commercial insulation products), grewstrongly. We have increased the dedicated sales resources aimed at this marketsector. Operating profits increased significantly though the operating margin wasreduced compared with 2003 due to increased costs associated with the absorptionof the loss-making business acquired mid year. At the year end we had added 4new additional branches in France, three of which were acquired. Sales in Benelux were increased by 11.0% in Euros, on a like for like basis,despite very depressed market conditions across the building and constructionsector. The operating profit declined, due to increased costs partly associated withchanges to the branch structure, including the opening of a new site in Belgium,and a reduction in the gross margin. In Poland, sales in local currency on a like for like basis increased by 42.5%,in a market which was considerably stronger than prior year in terms of both thevolume of demand and price levels. Four new branches were opened during the yearas part of our continuing expansion programme. Having previously reported a small operating profit in the first half of 2004for the first time in a six month period, profits improved progressively intothe second half, with 2004 therefore marking our first full year with a positiveoperating profit in Poland. USA (4% of total Group sales) In the USA, whilst demand from the Petrochem sector was depressed, conditions inthe commercial market strengthened, and sales grew by 1% on a like for likebasis in Dollars. Management dealt well with these conditions, reducing costsand achieving an increase in the gross margin. The margin improvement was partlyinfluenced by the significant increase in metal prices during the year. As aresult of these actions, the operating profit margin was increased, and theoperating profit more than doubled in Dollars (an increase of 85% over 2003 inSterling). Acquisitions The acquisition programme, having been deliberately de-emphasised in 2003, wasreactivated in 2004, and we increased our resources to improve the depth andpace at which we can conduct research, and to pursue suitable opportunities. During the year we successfully completed 13 acquisitions, and these breakdownas follows: Insulation Commercial Interiors Roofing Others ---------- -------------------- ------- ------ UK & ROI 2/£38m - 4/£18m 3/£10mMainland Europe - 4/£14m - - Number of deals/approx £m sales annualised. As the table shows, all acquisitions during the year were within our existinggeographic regions and were all complementary to our existing market focus. In all cases the acquisitions meet the strategic requirement of being suppliersof specialist products, chiefly to the building and construction industry. I ampleased to say that the integration process is progressing well. The additional sites (33) gained and retained through the acquisition programmehave enabled the Group to reach new customers, extend our product offering toexisting and new customers, and to further improve our standards of service toall customers thereby continuing the process of strengthening the company goingforward. People I am proud to be part of such a professional and committed team of people;throughout our businesses, regardless of country or market sector, our peopleare acknowledged as the best in their particular field, with particular focus onmeeting their customers requirements. This is an enormous strength of the Groupand I thank everyone in the business for their own effort in enabling us toproduce such great results in 2004. Summary The growth and development of the Group has been very extensive in the last 12months; virtually every part of the company has shown strong improvements overprior year. Markets have been reasonably helpful, but I believe that the companyhas outperformed, and that our people have shown skill and tenacity inexploiting those conditions. We have strong positions in markets which I believe will continue to show longterm growth. We will continue to seek growth opportunities both organically andthrough acquisition, and I am confident in our ability to continue to developand grow the Group to enhance Shareholder value. Consolidated Profit and Loss Account for the year ended 31 December 2004 Note 2004 2004 2003 2003 £'000's £'000's £'000's £'000's------------------------------------------------------------------------------------- TurnoverExisting operations 2 1,369,093 1,268,525Acquisitions 2 29,144 --------------------------------------------------------------------------------------Continuing operations 1,398,237 1,268,525Cost of sales 1,037,052 948,169------------------------------------------------------------------------------------- Gross profit 361,185 320,356Other operating expenses 289,512 261,714------------------------------------------------------------------------------------- Operating profitExisting operations 2 69,792 58,642Acquisitions 2 1,881 --------------------------------------------------------------------------------------Continuing operations 71,673 58,642Net interest payable 5,683 6,466Other finance charges 470 685--------------------------------------------------------------------------------------|Profit before taxation and ||amortisation of goodwill 71,173 56,287 ||Amortisation of goodwill 2 5,653 4,796 |-------------------------------------------------------------------------------------- Profit on ordinary activities 65,520 51,491before taxation Tax on profit on ordinary activities 21,360 16,786------------------------------------------------------------------------------------- Profit on ordinary activities after taxation 44,160 34,705Minority interests (all equity) 572 447------------------------------------------------------------------------------------- Profit for the financial year 43,588 34,258Equity dividends paid and proposed 17,016 14,920------------------------------------------------------------------------------------- Retained profit for the year 26,572 19,338------------------------------------------------------------------------------------- Earnings per shareBasic earnings per share 3 36.1p 28.6pDiluted earnings per share 3 35.6p 28.2p------------------------------------------------------------------------------------- Earnings per share before amortisation of goodwillBasic earnings per share 3 40.7p 32.5pDiluted earnings per share 3 40.2p 32.2p------------------------------------------------------------------------------------- Consolidated Statement of Total Recognised Gains and Losses for the year ended 31 December 2004 2004 2003 £'000's £'000's------------------------------------------------------------------------------ Profit for the financial year 43,588 34,258 Tax credit on exchange difference arising on foreigncurrency borrowings 1,786 1,570Exchange difference on retranslation of overseas netinvestments (532) 5,202Exchange difference on foreign currency borrowings (1,676) (5,235)Actuarial (loss)/gain relating to the pension schemes (8,728) 335Deferred tax movement associated with actuarial(loss)/gain 2,534 (101)------------------------------------------------------------------------------Total recognised gains and losses for the year 36,972 36,029------------------------------------------------------------------------------ There is no difference between the results presented in the Consolidated Profitand Loss Account and the results on an unmodified historical cost basis.Therefore, a note of historical cost profits is not required. Reconciliation of Movements in Consolidated Shareholders' Fundsfor the year ended 31 December 2004 2004 2003 £'000's £'000's------------------------------------------------------------------------------ Profit for the financial year 43,588 34,258Dividends (17,016) (14,920)------------------------------------------------------------------------------ 26,572 19,338New share capital issued 1,938 895Tax credit on exchange difference arising onforeign currency borrowings 1,786 1,570Exchange difference on retranslation ofoverseas net investments (532) 5,202Exchange difference on foreign currency borrowings (1,676) (5,235)Credit to L-TIP reserve 324 137Actuarial (loss)/gain relating to the pension schemes (8,728) 335Deferred tax movement associated withactuarial (loss)/gain 2,534 (101)------------------------------------------------------------------------------Net additions to shareholders' funds 22,218 22,141------------------------------------------------------------------------------Opening shareholders' funds 199,313 177,172------------------------------------------------------------------------------Closing shareholders' funds 221,531 199,313------------------------------------------------------------------------------ Consolidated Balance Sheet as at 31 December 2004 2004 2003 Restated------------------------------------------------------------------------------ £'000's £'000's------------------------------------------------------------------------------ Fixed assetsIntangible assets - goodwill 114,045 78,696Tangible assets 74,481 69,194------------------------------------------------------------------------------ 188,526 147,890 Current assetsStocks 116,436 93,035Debtors 263,762 223,483Cash at bank and in hand 19,467 55,417------------------------------------------------------------------------------ 399,665 371,935Creditors:Amounts falling due within one year (230,143) (198,618)------------------------------------------------------------------------------ Net current assets 169,522 173,317------------------------------------------------------------------------------ Total assets less current liabilities 358,048 321,207 Creditors:Amounts falling due after more than one year (106,185) (98,419)Provision for liabilities and charges (12,728) (8,131)------------------------------------------------------------------------------ Net assets excluding pension liability 239,135 214,657------------------------------------------------------------------------------ Pension liability (17,032) (14,897)------------------------------------------------------------------------------ Net assets including pension liability 222,103 199,760------------------------------------------------------------------------------ Capital and reservesCalled up share capital 12,139 12,027Share premium account 16,793 14,967Capital redemption reserve 347 347Special reserve 22,113 22,113L-TIP reserve 554 237Exchange reserve (356) 66Profit and loss account 169,941 149,556------------------------------------------------------------------------------ Shareholders' funds (all equity) 221,531 199,313Minority interest (all equity) 572 447------------------------------------------------------------------------------ Total capital employed 222,103 199,760------------------------------------------------------------------------------ Consolidated Cash Flow Statement for the year ended 31 December 2004 2004 2004 2003 2003 Note £000's £000's £000's £000's------------------------------------------------------------------------------ Net cash inflow from operatingactivities 4 77,422 97,942------------------------------------------------------------------------------ Returns on investments andservicing of financeInterest received 2,319 1,744Interest paid (8,301) (8,476)Interest element of finance lease rentals (171) (406)Dividends paid to minority shareholders (447) (294)------------------------------------------------------------------------------ Net cash outflow from returns oninvestments and servicing of finance (6,600) (7,432) Tax paid (15,049) (10,809) Capital expenditurePurchase of tangible fixed assets (22,627) (13,367)Sale of tangible fixed assets 1,549 1,405------------------------------------------------------------------------------ (21,078) (11,962) AcquisitionsPurchase of subsidiaryundertakings and businesses (35,826) (3,026)Net cash acquired with subsidiaryundertakings and businesses 86 343------------------------------------------------------------------------------ Net cash outflow from acquisitions (35,740) (2,683) Equity dividends paid (15,587) (14,153)------------------------------------------------------------------------------ Cash (outflow)/inflow before financing (16,632) 50,903------------------------------------------------------------------------------ FinancingIssue of ordinary share capital 1,938 895Lease financing - 286Capital element of finance leaserental payments (3,317) (5,408)Repayment of loans (17,172) (16,873)New loans - 26,499------------------------------------------------------------------------------ Net cash (outflow)/inflow fromfinancing (18,551) 5,399------------------------------------------------------------------------------ (Decrease)/increase in cash 5 (35,183) 56,302------------------------------------------------------------------------------ Notes 1. Basis of preparation The preliminary announcement does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985 but is derived from thosestatutory accounts. The financial information has been prepared on a basisconsistent with the previous year. The Consolidated Balance Sheet at 31 December2003 has been restated for a change in pension scheme presentation, as explainedbelow. In the prior year, two book reserved schemes operated in Germany and France werereported within other provisions. In 2004, in accordance with FRS17, these arenow included as part of the FRS17 pensions liability. The effect of this changein presentation as at 31 December 2003 is a restatement to decrease theprovision for liabilities and charges from £9.327m to £8.131m, to increase netassets excluding pension liability from £213.461m to £214.657m, and to increasethe pension liability from £13.701m to £14.897m. There was no effect on theConsolidated Profit and Loss Account. The Group's statutory accounts for the year ended 31 December 2003 have beenfiled with the Registrar of Companies, and those for 2004 will be deliveredfollowing the Company's Annual General Meeting. The auditors have reported onthe statutory accounts for 2003 and 2004, and their reports were unqualified anddid not contain statements under section 237 (2) or (3) of the Companies Act1985. 2. Segmental information 2004 2003Geographical analysis Operating Net Operating Net Turnover Profit Assets Turnover Profit Assets £000's £000's £000's £000's £000's £000's------------------------------------------------------------------------------------------Existing operations- UK & Republic of Ireland 884,220 62,217 225,063 810,704 54,235 187,621- Mainland Europe 427,285 15,487 93,205 394,153 11,038 121,197- USA 57,588 1,681 19,194 63,668 906 19,850- Parent Company - (3,940) (120,855) - (2,741) (128,908)- Amortisation of goodwill - (5,653) - - (4,796) ------------------------------------------------------------------------------------------- Total 1,369,093 69,792 216,607 1,268,525 58,642 199,760------------------------------------------------------------------------------------------ Acquisitions- UK & Republic of Ireland 22,834 1,912 4,462 - - -- Mainland Europe 6,310 (31) 1,034 - - ------------------------------------------------------------------------------------------- Total 29,144 1,881 5,496 - - ------------------------------------------------------------------------------------------- Total continuingoperations 1,398,237 71,673 222,103 1,268,525 58,642 199,760------------------------------------------------------------------------------------------ Turnover and operating profit by destination are not materially different fromthese amounts. The directors consider that all of the Group's activities in each of its marketsectors represent one principal activity, being the distribution of constructionrelated products. Of the amortisation of goodwill, £4.807m (2003 : £3.951m ) relates to the UK &Republic of Ireland, £0.639m (2003 : £0.602m ) relates to Mainland Europe and£0.207m (2003 : £0.243m ) relates to the USA. 3. Earnings per share The calculations of earnings per share are based on the following profits andnumbers of shares: Basic and diluted Basic and diluted before amortisation of goodwill 2004 2003 2004 2003 £'000's £'000's £'000's £'000's-------------------------------------------------------------------------------------------- Profit after tax 44,160 34,705 44,160 34,705Minority interest (572) (447) (572) (447)Amortisation of goodwill - - 5,653 4,796-------------------------------------------------------------------------------------------- 43,588 34,258 49,241 39,054-------------------------------------------------------------------------------------------- Weighted average number of shares: 2004 2003 Number Number-------------------------------------------------------------------------------------------- For basic earnings per share 120,863,011 119,981,696Exercise of share options 1,747,068 1,313,821-------------------------------------------------------------------------------------------- For diluted earnings per share 122,610,079 121,295,517-------------------------------------------------------------------------------------------- Earnings per share before amortisation of goodwill is presented in order to givean indication of the underlying performance of the Group. 4. Reconciliation of operating profit to net cash inflow from operating activities 2004 2003 £'000's £'000's------------------------------------------------------------------------------ Operating profit 71,673 58,642Depreciation charge 17,820 16,831Amortisation of goodwill 5,653 4,796Profit on sale of tangible fixed assets (279) (335)Increase in stocks (19,307) (2,525)(Increase)/decrease in debtors (21,573) 946Increase in creditors 23,435 19,587------------------------------------------------------------------------------Net cash inflow from operating activities 77,422 97,942------------------------------------------------------------------------------ The acquisitions during the year had the following effects on the Group's cashflows: net cash inflow from operating activities, £1.125m; interest paid,£0.049m; capital expenditure, £0.114m; taxation paid, £0.624m. Included within the increase in creditors is a cash outflow relating to pensioncontributions being £4.578m (2003 : £0.313m) greater than the amount charged tooperating profit. 5. Reconciliation of net cash flow to movements in net debt 2004 2003 £'000's £'000's------------------------------------------------------------------------------ (Decrease)/increase in cash in the year (35,183) 56,302Cash inflow/(outflow) from movement in debt 20,255 (4,504)------------------------------------------------------------------------------Changes in net debt resulting from cash flows (14,928) 51,798Acquisitions (7,488) (20)Exchange differences 413 (4,713)------------------------------------------------------------------------------ Movement in net debt in the year (22,003) 47,065Net debt at beginning of year (76,315) (123,380)------------------------------------------------------------------------------ Net debt at end of year (98,318) (76,315)------------------------------------------------------------------------------ 6. Proposed dividend The proposed dividend of 9.4p per ordinary share, if approved, will be payableon 23 May 2005 to shareholders on the register at 15 April 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SIG