1st Sep 2005 07:01
BBA Group PLC01 September 2005 BBA Group PLC 2005 Interim Results Results for the Half Year Ended 30th June 2005 For further information please contact: Roy McGlone, Chief Executive (020) 7514 3990Andrew Wood, Finance Director (020) 7514 3950BBA GROUP PLC Mike Smith or Lucie Anne Brailsford (020) 7404 5959BRUNSWICK PRESS INFORMATION Thursday, 1st September 2005 BBA GROUP PLCINTERIM RESULTS FOR THE HALF YEAR ENDED 30th JUNE 2005 Interim Results •Sales from continuing operations increased by 12 per cent to £740m on a constant currency basis, with both divisions contributing strong turnover increases. •Underlying operating profits* from continuing operations up 9 per cent to £68m on a constant currency basis. •Profit for the Period £54.8m (2004: £41.6m), increased by 32 per cent including profit on disposal of Finotech. •Underlying Profit before Tax* £55.6m (2004: £58.9m), with 2005 impacted by a charge of £2.6m relating to IAS32/39 preference dividend costs which was not included in 2004. •Adjusted* earnings per share 8.7p (2004: 9.2p), basic earnings per share (unadjusted) up 36% at 12.0p (2004: 8.8p). •Interim dividend increased by 4 per cent to 3.5p (2004: 3.35p). •Free cash flow** £16.9m (2004: £42.3m), predominantly timing. Significant improvement expected in the second half of the year. •Aviation strong performance: sales grew by 10 per cent to £417m and underlying operating profits by 21 per cent to £48m (on a constant currency basis). Operating margins improved by 1 per cent to 11.5 per cent. •Today we are announcing the acquisition of two further aviation bases at Le Bourget in France and Cape Town in South Africa for a total consideration of £9m. •Materials Technology: sales grew by 15 per cent (on a constant currency basis), operating profits and margins were impacted by increased raw material costs leaving underlying operating profits £3m lower. Sale of 40 per cent interest in Finotech joint venture for £46m resulted in profit on disposal of £23m. •Net debt £566m (2004 Year End: £512m) does not include the £46m proceeds from Finotech sale which was received in early July. Commenting on the results, Roy McGlone, BBA Group Chief Executive, said: "In the first half of 2005 we have seen strong growth in sales in both of ourbusinesses. In Aviation operating profits advanced strongly and marginsimproved. Materials Technology remained robust although operating profits wereslightly lower due to the continued impact of increasing raw material costs.Interest costs have increased due to higher US dollar interest rates which haveincreased by 50 per cent since the start of the year. For the second half of 2005 we expect to make good progress compared to thefirst half with continued strong sales growth in both divisions and increasedfree cash flow where we have seen an improving trend since the end of June." *Continuing operations before restructuring costs and other non-recurring items(see below).**See definitions below. Interim Results ---BBA Group PLC, the international aviation and materials technology company,announces its interim results for the six months ended 30th June 2005. FINANCIAL HIGHLIGHTS (unaudited)£m (other than percentages and per share amounts in pence) 2005 2004 (6)REVENUE (continuing operations) 739.8 672.9OPERATING PROFIT (1) 68.1 64.0OPERATING MARGIN (1) 9.2% 9.5%OPERATING PROFIT FROM CONTINUING OPERATIONS(Statutory) 57.3 59.6EBITDA (5) 105.1 101.6EBITDA MARGIN (5) 14.2% 15.1%NET INTEREST (12.5) (5.1)PROFIT BEFORE TAX (operating profit (1) lessinterest) 55.6 58.9PROFIT BEFORE TAX FROM CONTINUING OPERATIONS(Statutory) 44.8 54.5PROFIT FOR THE PERIOD (Statutory) 54.8 41.6EARNINGS PER SHARE (Adjusted) (3) 8.7p 9.2pEARNINGS PER SHARE (Unadjusted) 12.0p 8.8pDIVIDENDS PER ORDINARY SHARE 3.5p 3.35pFREE CASH FLOW (2) 16.9 42.3NET DEBT (566.4) (445.6)GEARING (net debt to shareholders' funds) 80% 65% (1) Underlying operating profit being total operating profit (includingassociates) of £59.7m (2004: £63.8m) before restructuring costs and othernon-recurring items of £(10.8)m (2004: £(4.4)m) and operating profit fromdiscontinuing operations of £2.4m (2004: £4.2m). This measure of earnings isshown because the directors consider that this gives a better indication ofunderlying performance. (2) Cash generated by operations of £63.5m (2004: £79.9m) plus dividends fromassociates of £0.4m (2004: £0.2m) less tax of £6.0m (2004: £6.6m), interest of£9.7m (2004: £7.3m), preference dividends of £1.9m (2004: £1.9m) and net capitalexpenditure of £29.4m (2004: £22.0m). (3) Basic earnings per share of 12.0p (2004: 8.8p) adjusted to exclude theafter-tax impact of restructuring costs, other non-recurring items and profit/loss on disposals of (2.8)p (2004: 1.1p) and discontinuing operations of (0.5)p(2004: (0.7)p). (4) Exchange rates used in the preparation of these results US$ - Average $1.88(2004: $1.81), spot $1.79 (2004: $1.81); Euro - Average €1.45 (2004: €1.48),Spot €1.48 (2004: €1.49). (5) Operating profit (as defined in (1) above) before depreciation of £37.0m(2004: £37.6m). (6) Prior year comparatives have been restated to reflect the transition toIFRS These definitions as outlined above and on page 1, are consistently appliedthroughout this preliminary announcement. BBA Group PLC - Preliminary Results, 1st September 2005 INTERIM RESULTS 2005 These are the first results to be presented in accordance with InternationalFinancial Reporting Standards ("IFRS"). The comparative information has beenrestated and is in accordance with the information released to the market on the28th of July 2005. We have realigned the segmental reporting of the Group andhave now split Aviation into two separate areas: Airport Services (comprisingSignature and ASIG our Business and Commercial Aviation handling businesses) andMaintenance Repair and Overhaul (comprising Engine Repair, Parts Distribution,Landing Gear and Hydraulics and all other businesses). The Materials Technologysegment remains unchanged and includes our Non-Wovens and Rail Frictionbusinesses. Both divisions recorded strong sales growth with sales from continuingoperations for the Group up by 12 per cent on a constant currency basis.Underlying operating profits increased by 9 per cent to £68.1 million andoperating margins were slightly reduced at 9.2 per cent (2004: 9.5 per cent)principally due to raw material price increases in our Materials Technologydivision. In the first half of 2005 the Group produced underlying pre tax profits of £55.6million which were slightly lower than in 2004 (£58.9 million) although on alike-for-like basis and at constant currency showed a 2 per cent increase overthe prior period. Adjusted earnings per share were 8.7p (2004 9.2p). In theperiod we continued to be impacted by the weakening of the dollar againststerling which depreciated by an average of 4 per cent during the first half ofthe year, reducing our underlying pre tax profits by £1.3 million compared tothe prior period. Total profit for the period was £54.8 million (£41.6 million)with unadjusted earnings per share of 12.0 pence, up 36 per cent on the priorperiod. Our free cash flow at £16.9 million was lower than the prior period (£42.3million) due principally to higher capital expenditure, an additionalcontribution to the UK pension scheme of £5 million, an increase of workingcapital in our engine repair business at Dallas and increased receivables atSignature due to the impact of higher fuel prices. We expect significantimprovement in the cash flow in the second half. We invested £10.8 million inacquisitions during the first half and since the 30th June have spent a further£9 million expanding our business aviation network. Aviation In Aviation, revenue increased by 10 per cent to £417.2 million (2004: £378.5million at constant currency). Underlying operating profits increased by 21 percent to £48.1 million and operating margins improved by 1 per cent to 11.5 percent due in particular to a strong performance by our Airport Services groupwhere the acquisitions made last year are now fully integrated. Increased fuelcosts added £16 million to revenue and reduced operating margins by 0.5 percent. Airport Services sales grew by 19 per cent on a constant currency basis to£241.7 million, of which increased fuel prices contributed 7 per cent. Operatingmargins improved from 12.5 per cent to 13.4 per cent and underlying operatingprofits were up 28 per cent (on a constant currency basis) to £32.4 million. Today we are announcing a further expansion of our network outside the US withthe acquisition of the Privatair FBO at Le Bourget for £7 million and an FBO inCapetown for £2 million. In total these investments are expected to generateincremental revenue of £10 million in a full year. We were also successful inrenewing our lease at Boston Logan International Airport for a further 10 years.The Group is currently evaluating a number of other opportunities to furtherbroaden its global network of bases and we have recently signed a 3 yearagreement with Clear Channel Communications to provide advertising space at anumber of Signature locations. At ASIG, our commercial aviation servicesprovider, the acquisitions made last year have been successfully integrated. Wehave won a new baggage handling contract worth $40 million over 5 years withDisney World and have won a number of cargo handling contracts on the west coastof the USA worth over $5 million per annum. We are also expanding our TechnicalServices operations providing an increasing amount of Ground Support Equipmentmaintenance at a number of locations. Operating margins at ASIG remain above 8per cent. In Maintenance, Repair and Overhaul sales were flat year on year with lowerdemand for Spey overhauls being offset by increased demand for TFE731.Underlying operating profits increased to £15.7 million (from £14.4 million atconstant currency) and operating margins improved from 8.2 per cent to 8.9 percent as the savings associated with the closure of Millville started to comethrough. Engine overhauls have started on the new PW300/500 engine programme andthis, together with additional savings from the Millville closure and other costreduction action taken since the 30th June should improve performance in thesecond half of the year. The company has also been awarded a $6 million perannum support agreement with NetJets to maintain TFE731 engines in the USA andEurope. Our parts distribution businesses had a good first half with strongdemand in most sectors. The acquisition of International Governor Services("IGS") in June expands our capabilities further in this area and will add $10million to revenue in a full year. The Landing Gear and Hydraulics businessesperformed satisfactorily and a manufacturing site was closed in the UKconsolidating the business into another existing site. Materials Technology Materials Technology revenue increased 15 per cent to £322.6 million at constantcurrency, of which 4 per cent was due to the impact of higher raw material costsbeing passed on to customers through contracted arrangements. Underlyingoperating profits reduced by £3.1 million to £24.5 million (2004: £27.6 million- restated for the disposal of Finotech) and operating margins were 7.6 per cent(2004 H1: 9.8 per cent, 2004 H2: 8.4 per cent). Significantly increased rawmaterial costs, net of recovery through contracted and uncontracted priceincreases, reduced underlying profits by approximately £4 million compared tothe prior period. Raw Material costs have reduced since the end of last year and we currentlyanticipate that they will increase from current levels by the end of this yearbut are unlikely to reach the levels seen at the start of the year. In thisevent average prices in the second half will be similar to the second half ofthe prior year. We continue to focus on a wide range of productivity initiativesto optimise yields and improve recycling. In North America we have decided to further rationalise the number of sites andwe will therefore be closing our Toronto site and relocating the equipment toMexico and Berlin. This project will be a priority for the second half and weexpect to complete the move by the summer of 2006. The total cash cost of thisinitiative will be approximately £12 million (capital expenditure £8 million)and the full year savings are expected to be £5 million, which will commence inthe middle of next year. Cash pay back is expected to be achieved in 3 years. The sale of our interest in Finotech concluded a very successful partnershipwith Clopay which, due to changes in the technology and market outlook, webelieve had become less relevant to our business model. We had originallyestimated that Finotech would have contributed some £7 million of operatingprofit during 2005. At the half year, prior to its sale, the contribution was £3million. A new management team has been appointed. Daniel Dayan (CEO) and Wim Das (CFO)have revalidated our strategy for this division. We will continue to focus ongrowth in the industrial sectors, increasing the efficiency of our hygieneoperations and, as a priority, expanding globally outside the USA and Europe. Financial results Turnover from continuing operations at £739.8 million was 10 per cent higherthan the prior year (2004: £672.9 million) although, excluding the movement inexchange rates, growth would have been 12 per cent (2004 (restated): £659.5million). Underlying operating profits were 6 per cent higher at £68.1 million (2004:£64.0 million) with the adverse translation impact of movement in exchange ratesimpacting the current period by approximately £2 million compared to 2004.Operating margins were 9.2 per cent, lower than the prior year of 9.5 per centprincipally due to the higher raw material costs in the Materials Technologydivision. Earnings before interest, taxation, depreciation, amortisation and exceptionalitems (EBITDA) were £105.1 million (2004: £101.6 million). During the period the Group disposed of its 40 per cent interest in Finotech,the Non-Wovens joint venture, and also sold a small parts distribution businessat Oxford airport. In the prior period the Group closed a loss-making Fiberwebdistribution business in Japan. Before their closure or disposal theseoperations produced operating profits of £2.4 million (2004: £4.2 million),which have been classified as discontinuing operations. The net profitassociated with the disposals or closure amounted to a profit of £19.5 million(Finotech profit £23.1 million) compared to a loss of £1.3 million in the priorperiod. Restructuring costs amounted to £9.3 million (£8.3 million cash) compared to theprevious year of £2.8 million (£1.9 million cash). The current year includes thecompletion of the closure of the Millville facility, the closure of amanufacturing site in the UK Landing Gear businesses, the completion of theintegration of AGI (acquired in October 2004) and a further rationalisation inFiberweb USA. Other non-recurring items amounted to £1.5 million and related to the cost ofsettling legal proceedings relating to ASIG's fuel farm operations at Miamiairport which related to the period from 1996 to the spring of 2003 (ASIG wasacquired by BBA in July 2001). In the prior period costs of £1.6 million relatedto aborted acquisition costs. The net interest charge of £12.5 million (2004: £5.1 million) included an IFRSreclassification of £2.6 million in respect of the preference dividend which wasnot included in the prior period due to the transition arrangements of IAS32/39.The preference shares were converted into ordinary shares in June and thereforethis item will not recur in the second half of the year. The increase in thecharge compared to the prior year, exclusive of IFRS adjustments, principallyreflects higher average dollar interest rates and higher average debt levelsassociated with the £90 million investment in acquisitions during the secondhalf of last year. Interest cover was 5.4 times but 6.9 times exclusive of theimpact of the non-recurring preference dividend adjustment (2004: 12.5 times). Underlying pre tax profits at £55.6 million were 5.6 per cent lower than theprior year of £58.9 million although the comparison with the prior period wasimpacted by the charge in the current year of £2.6 million relating to the IAS32/39 adjustments. The translation impact of the weaker US dollar (2005: $1.88,2004: $1.81) reduced half year underlying pre tax profits by £1.3 millioncompared to the prior period. On a like-for-like basis i.e. excluding thedistorting impact of the reclassification of the preference dividend in 2005only and at constant exchange rates underlying pre tax profits were 2 per centhigher than the prior period. Total Profit for the period was £54.8 million (2004: £41.6 million) with theimprovement principally due to the increased profit on disposal of businesses£19.5 million (2004: loss £1.3 million) partially offset by the increasedreorganisation costs of £9.3 million (2004 £2.8 million). The effective tax rate was 28 per cent (2004: 27 per cent) of the underlyingprofit before tax. Adjusted earnings per share on a continuing basis were 8.7p (2004: 9.2p). Basicearnings per share (unadjusted) were 12.0p (2004: 8.8p). The Group produced positive free cash flow of £16.9 million (2004: £42.3million). The reduction from the prior year principally reflects higher capitalexpenditure, an additional contribution to the UK pension scheme of £5 million,an increase of working capital in our engine repair business at Dallas andincreased receivables at Signature due to the impact of higher fuel prices. Weexpect significant improvement in the cash flow in the second half. Capital expenditure increased to £30.4 million (2004: £23.3 million) andrepresents 0.8 times depreciation (2004: 0.6 times). Aviation expenditureamounted to £15.1 million (2004: £14.6 million) and Materials £15.3 million(2004: £8.7 million). For the year as a whole we expect capital expenditure notto exceed 1.0 times depreciation. Net debt increased to £566.4 million (2004 Year End: £511.6 million) due to theimpact of exchange rates on the translation of our dollar debt which added £33million and a net cash outflow of £19.8 million in the period. Monies receivedin respect of the disposal of Finotech of £46 million are not included in thehalf year net debt figures as they were received in early July. Dividend The Board recommends an interim dividend of 3.5 pence (2004: 3.35 pence), anincrease of 4 per cent. The increase in the dividend reflects the Board'sconfidence in the Group's outlook and its ability to deliver strong free cashflows in the future. Outlook For the second half of 2005 we expect to make good progress compared to thefirst half with continued strong sales growth in both divisions and increasedfree cash flow where we have seen an improving trend since the end of June. Roberto Quarta, ChairmanRoy McGlone, Chief Executive1st September 2005 GROUP INCOME STATEMENTUNAUDITED First half First Half Full Year 2005 2004 2004 Notes £m £m £m------------------------------------------------------------------------------Continuing operationsRevenue 1 739.8 672.9 1,367.2 Cost of sales (591.2) (526.0) (1,083.0)------------------------------------------------------------------------------Gross profit 148.6 146.9 284.2 Distribution costs (33.1) (32.4) (64.0)Administrative expenses (48.9) (52.8) (97.4)Other operating income 1.3 1.8 3.6Share of results of associates 0.2 0.5 0.9------------------------------------------------------------------------------Operating profit from continuingoperations before restructuringcosts and other non-recurring items 1 68.1 64.0 127.3Restructuring costs 1, 4 (9.3) (2.8) (22.7)Other non-recurring items 1, 4 (1.5) (1.6) (1.0)------------------------------------------------------------------------------Operating profit from continuingoperations 1 57.3 59.6 103.6 Investment income 11.6 10.9 31.3Finance costs (24.1) (16.0) (43.2)------------------------------------------------------------------------------Profit before tax from continuingoperations 44.8 54.5 91.7 Tax 5 (12.3) (14.8) (24.2)------------------------------------------------------------------------------Profit for the period fromcontinuing operations 32.5 39.7 67.5 Discontinuing Operations Operating profit from discontinuingoperations 2.4 4.2 8.5Profit/(loss) on disposal 19.5 (1.3) (7.9)Tax 0.4 (1.0) (0.2)------------------------------------------------------------------------------Profit for the period fromdiscontinuing operations 22.3 1.9 0.4------------------------------------------------------------------------------Profit for the period 54.8 41.6 67.9------------------------------------------------------------------------------Attributable to:Equity holders of the parent 54.7 41.6 67.8Minority interest 0.1 - 0.1------------------------------------------------------------------------------ 54.8 41.6 67.9------------------------------------------------------------------------------EARNINGS PER SHARE Basic 12.0p 8.8p 14.3p Diluted 11.6p 8.6p 14.0p------------------------------------------------------------------------------ GROUP BALANCE SHEETUNAUDITED 30 June 30 June 31 Dec 2005 2004 2004 Notes £m £m £m------------------------------------------------------------------------------NON-CURRENT ASSETSIntangibleassets: Goodwill 402.0 320.9 370.4 Licences & software 23.4 20.1 23.1 Other intangible assets 2.8 - 2.6Property, plant and equipment 723.6 718.4 713.2Interests in associates 16.9 29.0 33.4Trade and other receivables 23.1 19.2 18.8------------------------------------------------------------------------------ 1,191.8 1,107.6 1,161.5------------------------------------------------------------------------------CURRENT ASSETSInventories 230.8 218.9 219.3Trade and other receivables 342.6 304.6 336.9Cash and cash equivalents 345.1 106.8 134.0Tax recoverable 0.5 - 4.8------------------------------------------------------------------------------ 919.0 630.3 695.0------------------------------------------------------------------------------Total assets 1 2,110.8 1,737.9 1,856.5==============================================================================CURRENT LIABILITIESTrade and other payables (243.3) (240.7) (253.7)Tax liabilities (56.5) (52.2) (54.8)Obligations under financeleases (2.8) (6.2) (2.8)Bank overdrafts and loans (251.8) (548.2) (47.8)Provisions (1.8) (1.0) (2.3)------------------------------------------------------------------------------ (556.2) (848.3) (361.4)------------------------------------------------------------------------------Net current assets 362.8 (218.0) 333.6 NON-CURRENT LIABILITIESBank loans (626.7) (16.4) (620.6)Other payables due after oneyear (19.3) (4.2) (6.5)Retirement benefit obligations (68.4) (54.4) (69.9)Obligations under financeleases (36.3) (44.0) (36.4)Deferred tax liabilties (71.0) (61.0) (66.2)Provisions (23.3) (25.5) (24.2)------------------------------------------------------------------------------ (845.0) (205.5) (823.8)------------------------------------------------------------------------------Total liabilities 1 (1,401.2) (1,053.8) (1,185.2)==============================================================================Net assets 709.6 684.1 671.3 EQUITYShare capital 122.9 169.2 169.0 Share premium account 337.9 285.0 285.3Revaluation reserves 3.9 3.9 3.9Treasury shares (2.5) (7.7) (7.4)Capital reserve 15.5 15.0 15.2Hedging and translation reserves (7.7) (29.8) (17.6)Retained earnings 239.6 248.5 222.9------------------------------------------------------------------------------Total equity 709.6 684.1 671.3Equity attributable to:Ordinary shareholders 709.3 627.9 615.0Preference shareholders 0.1 56.2 56.2Minority Interest 0.2 - 0.1------------------------------------------------------------------------------Total equity 709.6 684.1 671.3------------------------------------------------------------------------------ GROUP CASH FLOW STATEMENTUNAUDITED First half First Half Full Year 2005 2004 2004 Notes £m £m £m------------------------------------------------------------------------------OPERATING ACTIVITIESNet cash flow from operatingactivities 9 57.5 73.3 132.4 INVESTING ACTIVITIESDividends received fromassociates 0.4 0.2 0.9Purchase of property,plant and equipment (29.9) (23.3) (56.5)Purchase of intangible assets (0.5) - (5.2)Proceeds from disposal of property,plant and equipment 1.0 1.3 5.7Acquisition of subsidiaries (10.8) (7.6) (85.4)Proceeds from disposal of subsidiaries and associates 0.5 - 0.2Investment in associates - (0.8) (0.8)Deferred considerationpaid from prior year activities (0.8) (0.2) (1.7)------------------------------------------------------------------------------Net cash outflow from investingactivities (40.1) (30.4) (142.8)------------------------------------------------------------------------------FINANCING ACTIVITIES Interest received 10.9 10.2 30.4Interest paid (20.4) (16.6) (42.5)Interest element of finance leasespaid (0.2) (0.9) (1.4)Preference dividends paid (1.9) (1.9) (3.8)Dividends paid (35.9) (34.3) (49.4)Proceeds from issue of ordinary shares 7.1 - 0.2Proceeds from sale of treasury shares 3.2 0.9 1.0Increase/(decrease) in loans (23.4) (13.0) 67.4Increase/(decrease) in finance leases (1.2) (3.8) (15.5)Increase/(decrease) in overdrafts 205.9 (22.8) 3.8Decrease/(increase) in otherliquid assets 43.0 - 7.6------------------------------------------------------------------------------Net cash inflow/(outflow) fromfinancing activities 187.1 (82.2) (2.2)------------------------------------------------------------------------------Cash and cash equivalents atbeginning of year 134.0 154.7 154.7Exchange adjustments 6.6 (8.6) (8.1)Increase/(decrease) in cashand cash equivalents 204.5 (39.3) (12.6)------------------------------------------------------------------------------Cash and cash equivalents atend of year 345.1 106.8 134.0------------------------------------------------------------------------------Net debt at beginning of year (511.6) (459.5) (459.5)Increase/(decrease) in cashequivalents 204.5 (39.3) (12.6)(Increase)/decrease in loans 23.4 13.0 (67.4)(Increase)/decrease in finance leases 1.2 3.8 15.5(Increase)/decrease in overdrafts (205.9) 22.8 (3.8)Increase/(decrease) in other liquid assets (43.0) - (7.6)Debt element of convertible preference shares (1.8) - -Bank loans acquired - - (10.7)Finance leases acquired - (0.2) (1.9)Exchange adjustments (33.2) 13.8 36.4------------------------------------------------------------------------------Net debt at end of year (566.4) (445.6) (511.6)------------------------------------------------------------------------------ GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSEUNAUDITED First half First Half Full Year 2005 2004 2004 £m £m £m------------------------------------------------------------------------------Exchange difference on translation offoreign operations 51.5 (29.3) (58.3)Gains/(losses) on net asset hedges (38.4) 17.8 38.6Fair value movements in cash flow hedges (3.6) - -Fair value movements in interest rate swaps 2.4 - -Actuarial gains/(losses) on definedbenefit pension schemes - - (15.7)------------------------------------------------------------------------------Net income recognised directly in equity 11.9 (11.5) (35.4)------------------------------------------------------------------------------Conversion of preference shares 16.1 - -Transfer to profit or loss from equity oncash flow hedges (3.6) - -Transfer to profit or loss from equity onsale of business (0.2) - -Tax on items transferred from equity - (2.1) (0.7) Profit for the period 54.8 41.6 67.9------------------------------------------------------------------------------Total recognised income and expense for theperiod 79.0 28.0 31.8------------------------------------------------------------------------------Attributable to:Equity holders of the parent 78.9 28.0 31.7Minority interests 0.1 - 0.1------------------------------------------------------------------------------ 79.0 28.0 31.8------------------------------------------------------------------------------Fair value of cash flow hedges on adoption ofIAS39 8.2 - -Fair value of interest rate swaps ofadoption of IAS39 (6.4) - -Reduction in net assets on initial adoptionof IAS32 (17.2) - -------------------------------------------------------------------------------Change of accounting policy on adoption ofIAS32/39 (15.4) - -------------------------------------------------------------------------------Attributable to:Equity holders of the parent (15.4) - -Minority interests - - ------------------------------------------------------------------------------- (15.4) - ------------------------------------------------------------------------------- RECONCILIATION OF MOVEMENTS IN TOTAL SHAREHOLDERS' EQUITYUNAUDITED First half First Half Full Year 2005 2004 2004 £m £m £m------------------------------------------------------------------------------Total recognised income and expense for theperiod 79.0 28.0 31.8Equity dividends paid (35.9) (34.3) (49.4)Preference dividends paid - (1.9) (3.8)Equity movement in capital reserve 0.3 0.2 0.3Movement on treasury shares 3.2 0.9 1.0Issue of shares 7.1 - 0.2------------------------------------------------------------------------------Net movement in total shareholders'equity for the period 53.7 (7.1) (19.9)Change of accounting policy on adoption ofIAS32/39 (15.4) - -Total shareholders' equity at the beginning of the period 671.3 691.2 691.2------------------------------------------------------------------------------Total shareholders' equity at the end of theperiod 709.6 684.1 671.3------------------------------------------------------------------------------ NOTES ON THE FINANCIAL STATEMENTSUNAUDITED 1. SEGMENTAL Operating INFORMATION profit before restructuring Restructuring costs and costs and Depreciation External non-recurring non-recurring Operating and Capital revenue items items profit amortisation additions Assets Liabilities Business £m £m £m £m £m £m £m £mSegments --------------------------------------------------------------------------------------------------------------First Half2005AirportServices 241.7 32.4 (1.7) 30.7 8.5 5.2 505.8 (109.2)Maintenance,Repair &Overhaul 175.5 15.7 (7.3) 8.4 5.6 9.9 453.1 (104.8)--------------------------------------------------------------------------------------------------------------Aviation 417.2 48.1 (9.0) 39.1 14.1 15.1 958.9 (214.0)MaterialsTechnology 322.6 24.5 (1.8) 22.7 22.7 15.4 767.1 (173.3)Unallocatedcorporate - (4.5) - (4.5) 0.2 0.1 383.2 (1,012.0)--------------------------------------------------------------------------------------------------------------Continuingoperations 739.8 68.1 (10.8) 57.3 37.0 30.6 2,109.2 (1,399.3)Discontinuingoperations (1) 0.9 2.4 - 2.4 - - 1.6 (1.9)--------------------------------------------------------------------------------------------------------------Total 740.7 70.5 (10.8) 59.7 37.0 30.6 2,110.8 (1,401.2)--------------------------------------------------------------------------------------------------------------First Half2004AirportServices 209.6 26.5 (0.1) 26.4 8.7 8.6 428.6 (88.4)Maintenance,Repair &Overhaul 180.0 14.9 (0.6) 14.3 6.2 6.0 397.0 (82.8)--------------------------------------------------------------------------------------------------------------Aviation 389.6 41.4 (0.7) 40.7 14.9 14.6 825.6 (171.2)MaterialsTechnology 283.3 27.6 (2.1) 25.5 22.3 8.7 734.5 (183.8)Unallocatedcorporate - (5.0) (1.6) (6.6) 0.3 - 150.6 (697.6)--------------------------------------------------------------------------------------------------------------Continuingoperations 672.9 64.0 (4.4) 59.6 37.5 23.3 1,710.7 (1,052.6)Discontinuingoperations (1) 4.0 4.2 - 4.2 0.1 - 27.2 (1.2)--------------------------------------------------------------------------------------------------------------Total 676.9 68.2 (4.4) 63.8 37.6 23.3 1,737.9 (1,053.8)--------------------------------------------------------------------------------------------------------------Full Year2004AirportServices 419.3 50.1 (0.9) 49.2 17.7 17.2 463.3 (96.9)Maintenance,Repair &Overhaul 375.8 33.6 (15.9) 17.7 10.6 16.2 406.9 (89.5)--------------------------------------------------------------------------------------------------------------Aviation 795.1 83.7 (16.8) 66.9 28.3 33.4 870.2 (186.4)MaterialsTechnology 572.1 51.8 (3.9) 47.9 45.1 23.7 776.3 (204.6)Unallocatedcorporate - (8.2) (3.0) (11.2) 0.2 0.1 186.6 (793.5)--------------------------------------------------------------------------------------------------------------Continuingoperations 1,367.2 127.3 (23.7) 103.6 73.6 57.2 1,833.1 (1,184.5)Discontinuingoperations (1) 7.8 8.5 - 8.5 0.1 - 23.4 (0.7)--------------------------------------------------------------------------------------------------------------Total 1,375.0 135.8 (23.7) 112.1 73.7 57.2 1,856.5 (1,185.2)-------------------------------------------------------------------------------------------------------------- First Half 2005 First Half 2004 Full Year 2004 Total Capital Total Capital Total Capital revenue additions Assets revenue additions Assets revenue additions AssetsGeographical £m £m £m £m £m £m £m £m £mSegments --------------------------------------------------------------------------------------------------------------United Kingdom 108.4 6.3 354.4 153.6 5.4 356.6 217.8 7.6 418.9Mainland Europe 147.7 4.8 445.6 113.4 2.8 274.1 238.5 9.9 357.6North America 460.3 18.6 1,235.9 387.9 14.1 1,034.9 873.2 37.9 1,006.9 Rest of World 24.3 0.9 74.9 22.0 1.0 72.3 45.5 1.8 73.1--------------------------------------------------------------------------------------------------------------Total 740.7 30.6 2,110.8 676.9 23.3 1,737.9 1,375.0 57.2 1,856.5-------------------------------------------------------------------------------------------------------------- (1) Operating profit from discontinuing operations primarily relates to the MaterialsTechnology segment. 2. RECONCILIATIONS TO UK GAAP The effects of differences to UK GAAP arising as a result of the adoption ofIFRS are outlined below. RECONCILIATION OF NORMALISED PROFIT BEFORE TAX First half Full year 2004 2004 £m £m---------------------------------------------------------------------------Normalised profit before tax under UK GAAP 60.6 117.7Adjustments Share based payments (1.5) (3.0) Acquired intangible assets - (0.1) Associates (0.1) (0.1) Pensions (0.1) 0.9--------------------------------------------------------------------------- 58.9 115.4--------------------------------------------------------------------------- RECONCILIATION OF PROFIT FOR THE PERIOD First half Full year 2004 2004 £m £m---------------------------------------------------------------------------Profit for the period under UK GAAP 33.9 49.8Adjustments Share based payments (1.5) (3.0) Goodwill and acquired intangible assets 10.1 20.7 Deferred taxation (0.8) (2.5) Pensions (0.1) 2.9--------------------------------------------------------------------------- 41.6 67.9--------------------------------------------------------------------------- RECONCILIATION OF SHAREHOLDERS' EQUITY First half Full year 2004 2004 £m £m---------------------------------------------------------------------------Shareholders' equity under UK GAAP 686.4 659.1Adjustments Share based payments (2.2) (3.5) Goodwill and acquired intangible assets 10.1 20.0 Dividends 15.1 35.9 Deferred taxation 12.1 11.2 Pensions (37.4) (51.4)--------------------------------------------------------------------------- 684.1 671.3--------------------------------------------------------------------------- 3. BASIS OF PREPARATION AND ACCOUNTING POLICIES The financial information set out above does not constitute the Company'sstatutory financial statements for 2005 or 2004 under section 240 of theCompanies Act 1985. The figures for the full year 2004 as adjusted under IFRSare an abridged version of the financial statements for that year. Thoseaccounts, together with an unqualified audit report, have been filed with theRegistrar of Companies. The unaudited results for the six months ended 30 June 2005 have been preparedin accordance with International Financial Reporting Standards (IFRSs) for thefirst time, following a regulation adopted by the European Parliament. The BBAaccounting policies under IFRS are as reported in appendix 6 to the IFRSRestatement document reported to the London Stock Exchange on 28 July 2005,which is also available on the Company's website www.bbagroup.com. The transition date for the application of IFRS is 1 January 2004. Thecomparative figures for 30 June 2004 and 31 December 2004 have been restated toreflect the transition to IFRS. The accounting policies applied in determiningthe comparative financial information for the period ended 30 June 2004 and yearended 31 December 2004 are consistent with those applied in the six month periodended 30 June 2005. The financial statements for the year ended 31 December 2005are currently expected to be prepared on this basis. Foreign currency assetspreviously reported in borrowings at 30 June 2004 (£62.4 million) have beenreclassified as other debtors. The reconciliations of profit for the period/year and shareholders' equity fromprevious GAAP to IFRS are provided in note 2. IAS 39 'Financial Instruments:Recognition and Measurements' and IAS 32 'Financial Instruments: Disclosure andPresentation' are applicable from the 2005 financial year with a transition dateof 1 January 2005 and accordingly no restatement of prior period comparativeshas been made. 4. RESTRUCTURING AND OTHER NON-RECURRING COSTS Restructuring costs in the period of £9.3 million consist principally of furthercosts relating to the closure of the Millville facility which could not beprovided at the end of 2004, as well as costs associated with the integration ofacquisitions and the rationalisation of two facilities within the APPH businessinto one. The nature of these costs is consistent with the nature of the itemscharged in the prior period/year. Other non-recurring items in the period of £1.5 million relate to the settlementof legal proceedings relating to the fuel farm operations of ASIG in Miami. Theproceedings involved the period from 1996 to the spring of 2003 (ASIG wasacquired by BBA in July 2001). Other non-recurring items in the prior periodrelated to aborted acquisition costs, and in the prior year included gains onthe curtailment of defined benefit pension schemes. 5. TAXATION First half First Half Full Year 2005 2004 2004 £m £m £m------------------------------------------------------------------------------Current and deferred tax : Corporate Income Tax 8.6 6.5 10.0 Deferred Tax 3.7 8.3 14.2------------------------------------------------------------------------------ Total Tax Charge (continuing) 12.3 14.8 24.2------------------------------------------------------------------------------ Corporation tax for the interim period is charged at 28% (First Half 2004: 27%;Full Year 2004: 25%), representing the best estimate of the weighted averageannual corporation tax expected for the full financial year. 6. ACQUISITIONS AND DISPOSALS On 30 June 2005, the Group purchased International Governor Services Inc. for animmediate cash consideration of $18.0 million (£10.0 million) and a deferredcontingent cash consideration of up to $10.0 million (£5.6 million). On 30 June 2005, the Group disposed of its 40% minority interest in FinotechGmbH for an immediate cash consideration of $76.0 million (£42.6 million) and adeferred cash consideration of $6.0 million (£3.4 million). The initial paymentof $76.0 million was received on 5 July 2005 and has been included within thebalance sheet at 30 June 2005 as a receivable. The profit on disposal ofFinotech amounted to £23.1 million. 7. DIVIDENDS The 2005 interim dividend of 3.5 pence per share (2004: 3.35 pence per share)was approved by the Board of Directors on 30 August 2005 and will be paid on 4November 2005 to ordinary shareholders registered on 16 September 2005. Thisinterim dividend has not been included as a liability as at 30 June 2005. 8. EARNINGS PER SHARE First half First Half Full Year 2005 2004 2004 £m £m £m------------------------------------------------------------------------------Earnings from continuing and discontinuing operationsBasic earnings attributable to ordinaryshareholders 54.7 39.7 64.0Restructuring costs and non-recurringitems 10.8 4.4 23.7(Profit)/loss on disposal (19.5) 1.3 7.9Tax on restructuring costs, non-recurringitems and (profit)/loss on disposal (4.0) (1.0) (7.1)------------------------------------------------------------------------------Adjusted earnings (continuing anddiscontinuing operations) 42.0 44.4 88.5------------------------------------------------------------------------------Earnings from continuing activitiesAdjusted earnings (continuing anddiscontinuing operations) 42.0 44.4 88.5Discontinuing operations (2.4) (3.1) (6.2)------------------------------------------------------------------------------Adjusted earnings (continuing operations) 39.6 41.3 82.3------------------------------------------------------------------------------Number of sharesWeighted average number of 25p ordinaryshares 456.2 448.9 449.0End of period 485.2 451.2 451.3 Adjusted earnings per share(continuing and discontinuing operations) 9.2p 9.9p 19.7pAdjusted earnings per share(continuing operations) 8.7p 9.2p 18.3p On 6 June 2005, 54,075,172 6.75% cumulative redeemable convertible preferenceshares were converted into 30,958,035 ordinary 25p shares. 9. CASH FLOW FROM OPERATING ACTIVITIES First half First Half Full Year 2005 2004 2004 £m £m £m------------------------------------------------------------------------------Operating profit from continuing operations 57.3 59.6 103.6Operating profit from discontinuingoperations 2.4 4.2 8.5Share of profit from associates (2.7) (5.0) (9.6)------------------------------------------------------------------------------Profit from operations 57.0 58.8 102.5Depreciation of property, plant & equipment 35.5 35.8 70.1Amortisation of intangible assets 1.5 1.8 3.6Profit on sale of tangible fixed assets (0.3) (0.4) -Decrease in provisions (1.6) (2.6) (0.4)Additional pension scheme contributions (5.0) - -Other non-cash items 5.0 2.6 8.0------------------------------------------------------------------------------Operating cashflows before movements inworking capital 92.1 96.0 183.8Increase in working capital (28.6) (16.1) (38.4)------------------------------------------------------------------------------Cash generated by operations 63.5 79.9 145.4Income taxes paid (6.0) (6.6) (13.0)------------------------------------------------------------------------------Net cash flow from operating activities 57.5 73.3 132.4------------------------------------------------------------------------------Dividends received from associates 0.4 0.2 0.9Purchase of property, plant and equipment (29.9) (23.3) (56.5)Purchase of intangible assets (0.5) - (5.2)Proceeds from disposal of property, plantand equipment 1.0 1.3 5.7Interest received 10.9 10.2 30.4Interest paid (20.4) (16.6) (42.5)Interest element of finance leases paid (0.2) (0.9) (1.4)Preference dividends paid (1.9) (1.9) (3.8)------------------------------------------------------------------------------Free cashflow 16.9 42.3 60.0------------------------------------------------------------------------------ Share of profit from associates above includes discontinued operations which areincluded within operating profit from discontinuing operations on the face ofthe income statement. 10. FINANCIAL CALENDAR The preliminary announcement of results for the year ending 31 December 2005will be made in late February 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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