31st Aug 2006 07:02
BBA Group PLC31 August 2006 BBA Group PLC2006 Interim ResultsResults for the Half Year Ended30th June 2006 For further information please contact: Michael Harper, Chief Executive (020) 7514 3990Andrew Wood, Finance Director (020) 7514 3950BBA GROUP PLC Mike Smith or Lucie Anne Brailsford (020) 7404 5959BRUNSWICK BBA Group plc - Thursday, 31st August 2006 INTERIM RESULTS FOR HALF YEAR ENDED 30th JUNE 2006 Aviation • Sales up by 16% to £493m. • Underlying operating profit* up by 16% to £57.5m with a strong recovery in Aftermarket Services and Systems (formerly MRO). • Operating margins increased to 11.7% (2005: 11.6%) after absorbing the impact of significantly increased fuel costs. • Strong performance from recent acquisitions. • Continued good performance anticipated in the second half of 2006. Fiberweb • Sales broadly unchanged at £309m. • Underlying operating profit* of £11.5m significantly lower than the prior period (2005: £23.1m). • Difficult markets in general (particularly wipes) with continuing high raw material and energy costs. • Major productivity and reorganisation projects are proceeding on schedule and are expected to benefit the second half of 2006, with the first full year impact in 2007. Financial • Sales from continuing operations up 8% to £803m (2005: £741m). • Underlying operating profit* from continuing operations down 5% to £64.3m (2005: £68.0m) with a strong performance in Aviation offset by lower profit in Fiberweb. • Loss for the period of £(24.6)m (2005: profit £54.8m), after charging reorganisation, demerger and asset impairment costs of £84.7m (including cash items of £17.9m). • Adjusted earnings per share of 7.4p (2005: 8.7p). • Cash generated by operations of £66.2m, up 4% (2005: £63.5m). • Free cash outflow** of £(9.4)m (2005: inflow £16.9m) after increased capital expenditure of £53.3m (2005: £30.4m) in both divisions. • Interim dividend maintained at 3.5p. Demerger of Fiberweb The Board remains committed to the demerger of Fiberweb and believes that thisstrategy is in the best interests of shareholders. The Group expects thatdocumentation will be posted to shareholders before the end of October 2006 andthat the demerger will be completed before the end of November 2006. It is currently intended that prior to the demerger of Fiberweb, RichardStillwell, who has been a non-executive director of BBA since 1998, will resignfrom the BBA Board and join the Fiberweb Board as Chairman of the remunerationcommittee. It is also currently intended that Peter Hickman will join theFiberweb Board as Chairman of the audit committee. Once appointed, Richard andPeter will join Malcolm Coster (Chairman), Daniel Dayan (Chief Executive) andSimon Bowles (Finance Director). Dividend Policy In light of the impending demerger, the Board has reviewed BBA's dividendpolicy. The Board has, in particular, had regard to the level of dividend cover,the overall indebtedness of the Group and the investment opportunities for bothbusinesses. As a result of the review, the Board believes it is appropriate torebase dividend payments. In the future, the aggregate of the dividends from thecontinuing Group and the demerged Fiberweb business is expected to equate toapproximately 60 per cent of the Group's current total dividend. Commenting, Michael Harper, BBA Group Chief Executive, said: " We have made good progress in our Aviation businesses with both sales andoperating profit well ahead of the prior period. We expect further good progressin the second half of the year. Trading conditions at Fiberweb remainparticularly challenging, but we expect to see an improvement in performanceduring the second half over the first half as a result of management actionsalready implemented. We remain committed to the demerger of Fiberweb and we areplanning to post documents to shareholders by the end of October and to completethe demerger before the end of November 2006." "We have taken the difficult decision to rebase our dividend payment after thedemerger is completed because we believe that this action, together with thedemerger, is in the best long-term interests of our businesses and therefore ourshareholders." *Continuing operations before restructuring costs and other non-recurring items(see below).**See definitions below. Interim Results BBA Group PLC, the international aviation services company, announces itsinterim results for the six months ended 30th June 2006. FINANCIAL HEADLINES (unaudited)£m (other than percentages and per share amounts in pence) 2006 2005REVENUE (continuing operations) 802.8 740.7UNDERLYING OPERATING PROFIT (1) 64.3 68.0UNDERLYING OPERATING MARGIN (1) 8.0% 9.2%OPERATING (LOSS)/PROFIT CONTINUING OPERATIONS (Statutory) (20.4) 55.9NET INTEREST (12.6) (12.5)UNDERLYING PROFIT BEFORE TAX (2) 51.7 55.5(LOSS)/PROFIT FOR THE PERIOD CONTINUING OPERATIONS(Statutory) (24.6) 31.5(LOSS)/PROFIT FOR THE PERIOD (Statutory) (24.6) 54.8EARNINGS PER SHARE (Adjusted) (3) 7.4p 8.7pEARNINGS PER SHARE (Unadjusted) (4) (5.0)p 6.9pDIVIDENDS PER ORDINARY SHARE 3.5p 3.5pFREE CASH FLOW (5) (9.4) 16.9NET DEBT (576.9) (566.4)NET DEBT TO EBITDA (6) 2.9x 2.8x (1) Underlying operating profit being total operating profit (includingassociates) of £64.3m (2005: £68.0m) before restructuring costs and othernon-recurring items of £(84.7)m (2005: £(12.1)m) and operating profit fromdiscontinued operations of £nil (2005: £2.5m). This measure of earnings is shownbecause the directors consider that this gives a better indication of underlyingperformance. (2) Underlying operating profit less net interest. (3) Basic earnings per share of 7.4p (2005: 8.7p) adjusted to exclude theafter-tax impact of restructuring costs, non-recurring items of (12.4)p (2005:(1.8)p) and profit for the period from discontinued operations of 0.0p (2005:5.1p). (4) Basic earnings per share from continuing operations. (5) Cash generated by operations of £66.2m (2005: £63.5m) plus dividends fromassociates of £Nil (2005: £0.4m) less tax of £3.1m (2005: £6.0m), interest of£20.5m (2005: £9.7m), preference dividends of £Nil (2005: £1.9m) and net capitalexpenditure of £52.0m (2005: £29.4m). (6) EBITDA being operating profit (as defined in (1) above) before depreciationof £37.0m (2005: £37.0m). (7) Exchange rates used in the preparation of these results US$ - Average $1.78(2005: $1.88), spot $1.85 (2005: $1.79); Euro - Average €1.45 (2005: €1.45),Spot €1.45 (2005: €1.48). These definitions as outlined above and on page 1 are consistently appliedthroughout this interim announcement. BBA Group PLC - Interim Results, 31st August 2006 INTERIM RESULTS 2006 Revenue from continuing operations increased by 8 per cent to £802.8 million(2005: £740.7 million). At constant exchange rates, revenue was 4 per centhigher. Underlying operating profit reduced by 5 per cent to £64.3 million witha strong performance by our Aviation businesses more than offset by a reductionin profitability at Fiberweb, which continued to suffer from high raw materialand energy costs and generally difficult trading conditions. Operating marginsreduced to 8.0 per cent (2005: 9.2 per cent) due in particular to the increasedraw material and energy costs at Fiberweb. The Group produced underlying pre tax profit from continuing operations of £51.7million (2005: £55.5 million). Movements in exchange rates benefited thecomparison to the prior period by £2.2 million with the average dollar rate forthe half year at $1.78 (2005: $1.88) and for the Euro at €1.45 (2005: €1.45).Adjusted earnings per share were 7.4p (2005: 8.7p). There was a significant level of restructuring and non-recurring costs,including asset impairments, in the period of £84.7 million (2005: £12.1million) of which £73.0 million related directly to Fiberweb. In addition, afurther £8.3m of cash costs were incurred in the period in relation to theexpected demerger. The costs relating directly to Fiberweb can be categorisedunder two main headings: the previously announced North American Hygienereorganisation of £35.3 million (cash £2.7 million); and an impairment charge of£26.6 million in respect of wipes assets in Europe and North America reflectinga significant worsening of conditions in these markets since the end of lastyear. After absorbing these restructuring and non-recurring costs, the loss forthe period was £(24.6) million (2005: profit £54.8 million including a profit ondisposal of £20.8 million). Unadjusted earnings per share were (5.0) p (2005:6.9 p). Cash flow from operations was up 4 per cent. to £66.2 million (2005: £63.5million) and there was a free cash outflow of £(9.4) million (2005: inflow £16.9million). The reduced free cash flow was caused by higher capital expenditure of£53.3 million in the current year compared with £30.4 million in the first halfof 2005. The Group invested £48.2 million in acquisitions during the period(2005: £10.8 million) to expand into aviation components licensing and to add toour business aviation network. Fiberweb also made a small acquisition in Europe. Aviation Flight Support (Formerly Airport Services) Sales in total grew by 18 per cent to £284.5 million. Excluding the impact offuel price increases and movements in exchange rates, sales increased by 4 percent. Underlying operating profit increased to £34.2 million from £32.4 milliondespite being impacted by a weak de-icing season for ASIG, which reducedoperating profit by approximately £2 million compared with the prior period.Excluding the movement in exchange rates, underlying operating profit wasbroadly unchanged. Operating margins reduced to 12.0 per cent from 13.4 per centof which approximately half related to increased fuel prices. At Signature (Business Aviation), we have continued to see growth from thefractional operators with fuel volumes up 5 per cent. Overall organic growth inrevenues during the first half was approximately 3 per cent. We have continuedto add to the network with the addition of La Quinta in California for £4.9million and we have also purchased a further 40 per cent of the shares in AthensAviation for £1.2 million taking our stake up to 91 per cent. We have recentlynegotiated network-wide deals with another fractional operator and a majorcharter business, which should improve volumes in the second half of the year. At ASIG, we have continued to expand our Technical Services operations,providing an increasing amount of Ground Support Equipment maintenance for NorthWest Airlines at a number of locations. ASIG was named "Best Airport Operator"for fuel services for the second year running in an independent survey ofairlines conducted by Amburst. Overall, we expect our Flight Support businesses to continue to perform well inthe second half of the year. Aftermarket Services and Systems (Formerly MRO) Sales increased by 13 per cent to £208.9 million. Organic growth excludingexchange rate movements was approximately 8 per cent. Underlying operatingprofit increased by 37 per cent to £23.3 million with operating marginsrecovering strongly from 9.2 per cent in the prior period to 11.2 per cent dueto the benefits of productivity initiatives, increased volumes and the improvingmix of sales following the acquisition of Ontic in February. Exchange ratemovements provided £0.7 million of the increase in operating profit. In Engine Repair, the new PW300/500 authorisations together with strong demandfor Tay and TFE731 overhauls were the drivers of growth in the US businesses andin the UK the new authorisation for Pratt and Whitney JT15D started to generaterevenue. Across both businesses, savings associated with the productivityinitiatives instigated in 2005 boosted earnings. Dallas Airmotive receivedRolls-Royce approval to support the Tay 611-8c engines installed on the latestmodel of the Gulfstream IV aircraft. The components and parts distribution businesses had a good first half with therecently acquired Ontic business performing strongly. We are working on a numberof significant new licensing opportunities to further expand Ontic's portfolioof products. In APPH, there was strong demand for landing gear and hydraulicsystems: we were awarded the Korean Helicopter Programme contract worth $7million over 6 years and the Arnoni acquisition, which has been successfullyintegrated, is performing well. Oxford Aviation has experienced a significant improvement in demand for pilottraining and the airport has seen increasing levels of business jet activity. Weare planning to invest to increase hangar space, to improve the runway and tointroduce an integrated landing system (ILS) that will further increase thecapacity at the airport. Becorit, our rail braking business in Germany, continues to performsatisfactorily. We anticipate continued good performance in the second half of the year. Fiberweb Sales at Fiberweb of £309.4 million were relatively stable (2005: £313.7million) with the impact of the Toronto closure reducing sales by some £6million compared with the prior period. Underlying operating profit fell to£11.5 million compared with £23.1 million in 2005 due to difficult markets ingeneral (with continued over-capacity in wipes in particular) and high rawmaterial and energy costs which reduced profits by some £5 million compared tothe prior period. Operating margins fell to 3.7 per cent from 7.4 per cent. Since the beginning of the year, the cost of polypropylene has remainedrelatively stable in the USA and Europe but remains some 13 per cent higher onaverage than in the first half of 2005. Fiberweb is making good progress on a number of restructuring and productivityinitiatives that are expected to benefit the second half of the current year andprovide a full year's benefit during 2007. In the North America Hygienebusiness, the closure of the Toronto site and the reconditioning and relocationof the two production lines to Mexico and Berlin has been completed and thelines are now in the process of being recommissioned. The further reorganisationannounced at the end of April, involving the closure of four production lines inthe USA, is on schedule to be completed in the autumn of the current year. Theoverall cost of this project of £35.3 million (£2.7 million cash) is higher thanthe £26 million originally anticipated due to a reassessment of the value of theland and buildings at the Simpsonville, SC site and the creation of a provisionfor the future operating costs of the buildings associated with the closedlines. Other productivity initiatives in the Industrial business relating towaste re-cycling are on-track to make a contribution during the last quarter. n the Industrial business, our filtration and dryer sheet businesses haveperformed strongly and are operating at capacity. The housewrap businesscontinues to grow, albeit there are now some signs of a weaker market. Thelaunch of a new housewrap product (Coastal Wrap) designed to withstand hurricaneforce winds has attracted much interest and is scheduled for early in 2007. Atthe end of July, the Old Hickory site in Nashville suffered from an externalpower supply failure which has impacted H2 operating profit by approximately £2million. Action is being taken to mitigate the impact of this unforeseen eventbut it will not be possible fully to offset the financial impact by theyear-end. The European geotextile business is suffering from high utility costsand significant over-capacity in the market and we are reassessing our strategyfor this business. Sales and marketing personnel have been recruited in Brazilto accelerate the growth of industrial products in South America and moreproduction capacity has recently been commissioned, which was transferred fromSimpsonville. In the Hygiene business, the focus has been on cost reduction and furtherimproving customer relationships. Wipes markets have been particularly difficultwith significant over-capacity and branded players losing market share toprivate label, which is adding to price pressure. We have renegotiated the P&Gwipes contract in North America, extending its life with somewhat reducedvolumes. As a result of this, and the difficult situation in European wipesmarkets, Fiberweb has reassessed the carrying value of the assets and goodwillassociated with its wipes businesses and has decided to make an impairmentcharge of £26.6 million (£14.6 million relating to the goodwill associated withthe Tecnofibra acquisition made in 2003 and the balance of £12.0 millionrelating to the HEF3 wipes line at Bethune, SC). Other impairments of a smallnumber of lines amounted to £9.1m. In China, Fiberweb's airlaid plant isoperating at capacity and we are considering expansion options. Majorinvestments in a new spunbond line in Sweden and the new airlaid line in Italyare progressing well. As a result of these investments, together with therelocation and reconditioning of the lines from Toronto, capital expenditureincreased to £29.8 million (2005: £15.0 million). Trading conditions at Fiberweb remain particularly challenging, but we expect tosee an improvement in performance during the second half over the first half asa result of management actions already implemented. Financial results Turnover from continuing operations of £802.8 million was 8 per cent higher thanthe prior year (2005: £740.7 million). Adjusted earnings per share on a continuing basis were 7.4p (2005: 8.7p). Basicearnings per share (unadjusted) were (5.0)p (2005: 6.9p). Underlying operating profit was 5 per cent lower at £64.3 million (2005: £68.0million). Operating margins were 8.0 per cent lower than the prior year of 9.2per cent. Underlying earnings before interest, taxation, depreciation and amortisation(EBITDA) were £101.3 million (2005: £105.0 million). Restructuring costs and non-recurring items amounted to £84.7 million (2005:£12.1 million) of which £73.0 million (2005: £1.8 million) related directly toFiberweb: All £ million Cash Non-cash Total Fiberweb ---------- Restructuring 3.9 32.9 36.8 Asset impairments - 19.3 19.3 Goodwill impairment - 14.6 14.6 PP Hedge 2.3 - 2.3 ------------------------------------------------ 6.2 66.8 73.0 Aviation ---------- Restructuring 1.9 - 1.9 Other 0.8 - 0.8 ------------------------------------------------ 2.7 - 2.7 Unallocated Corporate ----------------------- Restructuring 0.7 - 0.7 Demerger costs 8.3 - 8.3 ------------------------------------------------ 9.0 - 9.0 ------------------------------------------------Total 17.9 66.8 84.7 ------------------------------------------------ The net interest charge of £12.6 million was unchanged from the prior periodwith the adverse impact of higher US dollar interest rates and exchange ratesbeing offset by the inclusion in the prior period of a £2.6 million charge inrespect of a dividend on preference shares that were redeemed in June 2005.Interest cover was 5.1 times (2005: 5.4 times). Underlying pre tax profit at £51.7 million was 7 per cent lower than the prioryear of £55.5 million. There was a total loss for the period of £24.6 million (2005: profit £54.8million) after absorbing restructuring and non-recurring items (analysed above)of £84.7 million (2005:£12.1 million, with the prior period also including theprofit on disposal of businesses of £20.8 million (current year £nil)). The effective tax rate was 30 per cent (2005: 28 per cent) with the increase inthe rate reflecting a shift in the mix of profits from Europe to the USA withthe increasing Aviation content and a lack of capacity in the UK which has beenimpacted by the sale and demerger costs. The Group improved the cash generated by operations to £66.2 million (2005:£63.5 million) with the significantly reduced working capital outflow (2006: £(5.4) million, 2005: £(28.6) million) more than offsetting the reduced operatingprofit during the first six months of the year. There was a free cash outflow of£(9.4) million (2005: inflow £16.9 million) with the reduced free cash flowcaused by higher capital expenditure of £53.3 million in the current yearcompared with £30.4 million in the first half of 2005. We invested £48.2 millionin acquisitions during the period (2005: £10.8 million) to expand intocomponents licensing and to add to our business aviation network. We also made asmall acquisition for Fiberweb in Europe. Capital expenditure increased to £53.3 million (2005: £30.4 million) andrepresents 1.4 times depreciation (2005: 0.8 times). Aviation expenditureamounted to £23.4 million (2005: £15.4 million) with the increase principallyrelating to investment in our FBO facilities Boston, Teeterboro and Paris and inthe start up of our new commercial handling operation at Bangkok airport.Fiberweb expenditure amounted to £29.8 million (2005: £15.0 million) with theincrease relating to the investment in new lines in Europe and the relocation oflines from Toronto. Net debt was £576.9 million (2005 year end: £527.1 million) due to the impact ofexchange rates on the translation of our dollar debt which reduced net debt by£47.4 million offsetting a net cash outflow of £97.2 million in the period. Demerger of Fiberweb The Board remains committed to the demerger of Fiberweb and believes that thisstrategy is in the best interests of shareholders. The Group expects thatdocumentation will be posted to shareholders before the end of October 2006 andthat the demerger will be completed before the end of November 2006. It is currently intended that prior to the demerger of Fiberweb, RichardStillwell, who has been a non-executive director of BBA since 1998, will resignfrom the BBA Board and join the Fiberweb Board as Chairman of the remunerationcommittee. It is also currently intended that Peter Hickman will join theFiberweb Board as Chairman of the audit committee. Once appointed, Richard andPeter will join Malcolm Coster (Chairman), Daniel Dayan (Chief Executive) andSimon Bowles (Finance Director). Interim Dividend and Dividend Policy In light of the impending demerger, the Board has reviewed BBA's dividendpolicy. The Board has, in particular, had regard to the level of dividend cover,the overall indebtedness of the Group and the investment opportunities for bothbusinesses. As a result of the review, the Board believes it is appropriate torebase dividend payments. In the future, the aggregate of the dividends from thecontinuing Group and the demerged Fiberweb business is expected to equate toapproximately 60 per cent. of the Group's current total dividend. The Board has recommended that the interim dividend be maintained at 3.5 penceper share. Outlook We have made good progress in our Aviation businesses with both sales andoperating profit well ahead of the prior period. We expect to make further goodprogress in the second half of the year. Trading conditions at Fiberweb remainparticularly challenging but we expect to see an improvement in performanceduring the second half over the first half as a result of management actionsalready implemented. Roberto Quarta, ChairmanMichael Harper, Chief Executive31st August 2006 FINANCIAL HIGHLIGHTS UNAUDITED --------------------------------------------------------------------------------£m (other than percentages and per share First half First half Full yearamounts in pence) 2006 2005 2005--------------------------------------------------------------------------------Revenue (continuingoperations) 802.8 740.7 1,510.8--------------------------------------------------------------------------------Underlying operating profit*Continuing operations 64.3 68.0 129.6--------------------------------------------------------------------------------Operating (loss)/profit fromcontinuing operations (20.4) 55.9 81.3-------------------------------------------------------------------------------- Underlying operating marginContinuing operations 8.0% 9.2% 8.6%-------------------------------------------------------------------------------- Net interest (12.6) (12.5) (21.4)Underlying profit before taxfrom continuing operations 51.7 55.5 108.2Restructuring costs andnon-recurring items (84.7) (12.1) (48.3)(Loss)/profit before tax fromcontinuing operations (33.0) 43.4 59.9--------------------------------------------------------------------------------Profit after tax fromdiscontinued operations - 2.5 1.9Profit on disposal after tax - 20.8 21.5(Loss)/profit for the period (24.6) 54.8 75.3-------------------------------------------------------------------------------- Basic earnings per ordinary shareContinuing and discontinued operations:Before restructuring costs andnon-recurring items 7.4p 9.2p 18.3pUnadjusted (5.0p) 12.0p 15.9pContinuing operations:Before restructuring costs andnon-recurring items 7.4p 8.7p 17.9pUnadjusted (5.0p) 6.9p 11.0pDividends per ordinary share 3.5p 3.5p 11.8p-------------------------------------------------------------------------------- Cash generated by operations 66.2 63.5 183.7Free cash flow** (9.4) 16.9 86.3Net debt (576.9) (566.4) (527.1)Net debt to EBITDA*** 2.9x 2.8x 2.6x-------------------------------------------------------------------------------- * operating profit before restructuring costs and non-recurring items ** cash generated by operations plus dividends from associates, less tax,interest, preference dividends and net capital expenditure *** EBITDA being underlying operating profit* before depreciation andamortisation GROUP INCOME STATEMENTUNAUDITED Under- Note First Under- Note First Under Note Full lying* i half lying* i half lying* i year 2006 2005 2005 Notes £m £m £m £m £m £m £m £m £m ContinuingoperationsRevenue 1 802.8 - 802.8 740.7 - 740.7 1,510.8 - 1,510.8Cost of sales (654.2) (21.6) (675.8) (592.2) - (592.2) (1,218.2) (15.9) (1,234.1)---------------------------------------------------------------------------------------------------Gross profit 148.6 (21.6) 127.0 148.5 - 148.5 292.6 (15.9) 276.7 Distribution costs (33.3) - (33.3) (33.1) - (33.1) (65.7) - (65.7)Administrative expenses (52.1) (14.6) (66.7) (48.9) - (48.9) (102.1) (3.2) (105.3)Other operatingincome 1.8 - 1.8 1.3 - 1.3 4.4 3.1 7.5Share of results ofassociates 0.4 - 0.4 0.2 - 0.2 1.0 - 1.0Other operatingexpenses (1.1) (9.1) (10.2) - (1.5) (1.5) (0.6) (6.2) (6.8)Restructuring costs - (39.4) (39.4) - (9.3) (9.3) - (24.8) (24.8)Loss on disposal ofbusinesses - - - - (1.3) (1.3) - (1.3) (1.3)---------------------------------------------------------------------------------------------------Operating profit/(loss)fromcontinuingoperations 1 64.3 (84.7) (20.4) 68.0 (12.1) 55.9 129.6 (48.3) 81.3Investment income 19.7 - 19.7 11.6 - 11.6 35.8 - 35.8Finance costs (32.3) - (32.3) (24.1) - (24.1) (57.2) - (57.2) ---------------------------------------------------------------------------------------------------Profit/(loss) before tax 51.7 (84.7) (33.0) 55.5 (12.1) 43.4 108.2 (48.3) 59.9 Tax 4 (15.5) 23.9 8.4 (15.9) 4.0 (11.9) (23.7) 15.7 (8.0) ---------------------------------------------------------------------------------------------------Profit/(loss) for the periodfromcontinuingoperations 36.2 (60.8) (24.6) 39.6 (8.1) 31.5 84.5 (32.6) 51.9Profit after tax fromdiscontinuedoperations - - - 2.5 - 2.5 1.9 - 1.9Profit on disposal aftertax - - - - 20.8 20.8 - 21.5 21.5 --------------------------------------------------------------------------------------------------Profit/(loss) for the period 36.2 (60.8) (24.6) 42.1 12.7 54.8 86.4 (11.1) 75.3-------------------------------------------------------------------------------------------------- Attributableto: Equity shareholdersof BBA Groupplc 36.2 (60.8) (24.6) 42.0 12.7 54.7 86.2 (11.1) 75.1Minority interests - - - 0.1 - 0.1 0.2 - 0.2-------------------------------------------------------------------------------------------------- 36.2 (60.8) (24.6) 42.1 12.7 54.8 86.4 (11.1) 75.3-------------------------------------------------------------------------------------------------- * Before items described in Note i below Note i: Restructuring costs and non-recurring items as set out in note 3 to thefinancial statements. EARNINGS PER SHARE EARNINGS PER SHARE From continuing and discontinued operationsBasic 7 (5.0p) 12.0p 15.9pDiluted 7 (5.0p) 11.6p 15.8p From continuing operationsBasic 7 (5.0p) 6.9p 11.0pDiluted 7 (5.0p) 6.8p 10.9p--------------------------------------------------------------------------------------------------------------------- GROUP BALANCE SHEET UNAUDITED ------------------------------------------------------------------------------------- Notes 30 June 30 June 31 Dec 2006 2005 2005 £m £m £m-------------------------------------------------------------------------------------NON-CURRENT ASSETSIntangible assets: Goodwill 422.1 402.0 429.8 Licences & software 27.6 23.4 22.3 Other intangible assets 2.3 2.8 2.2Property, plant and equipment 693.4 723.6 746.4Interests in associates 18.1 16.9 18.4Trade and other receivables 16.5 23.1 14.2------------------------------------------------------------------------------------- 1,180.0 1,191.8 1,233.3-------------------------------------------------------------------------------------CURRENT ASSETSInventories 222.7 230.8 234.2Trade and other receivables 279.3 342.6 294.2Cash and cash equivalents 128.0 345.1 174.9Tax recoverable - 0.5 2.8------------------------------------------------------------------------------------- 630.0 919.0 706.1-------------------------------------------------------------------------------------Total assets 1 1,810.0 2,110.8 1,939.4------------------------------------------------------------------------------------- CURRENT LIABILITIESTrade and other payables (238.0) (243.3) (278.3)Tax liabilities (50.7) (56.5) (53.9)Obligations under financeleases (3.3) (2.8) (4.3)Bank overdrafts and loans (38.6) (251.8) (44.0)Provisions (3.6) (1.8) (7.0)------------------------------------------------------------------------------------- (334.2) (556.2) (387.5)-------------------------------------------------------------------------------------Net current assets 295.8 362.8 318.6------------------------------------------------------------------------------------- NON-CURRENT LIABILITIESBank loans (623.8) (626.9) (585.2)Other payables due after oneyear (18.7) (19.3) (43.1)Retirement benefit obligations (45.9) (68.4) (64.6)Obligations under financeleases (35.5) (36.3) (38.1)Deferred tax liabilties (47.4) (71.0) (59.5)Provisions (30.7) (23.3) (25.3)------------------------------------------------------------------------------------- (802.0) (845.2) (815.8)-------------------------------------------------------------------------------------Total liabilities 1 (1,136.2) (1,401.4) (1,203.3)------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------Net assets 673.8 709.4 736.1===================================================================================== EQUITYShare capital 122.4 122.7 121.6Share premium account 344.1 337.9 340.2Other reserves 3.9 3.9 3.9Treasury shares (0.6) (2.5) (0.6)Capital reserve 16.1 15.5 15.8Hedging and translationreserves (9.6) (7.7) (1.5)Retained earnings 196.7 239.4 256.4------------------------------------------------------------------------------------Equity attributable toshareholders of BBA Group plc 673.0 709.2 735.8Minority interests 0.8 0.2 0.3------------------------------------------------------------------------------------Total equity 673.8 709.4 736.1==================================================================================== GROUP CASH FLOW STATEMENT UNAUDITED -------------------------------------------------------------------------------- Notes First half First half Full year 2006 2005 2005 £m £m £m--------------------------------------------------------------------------------OPERATING ACTIVITIESNet cash flow from operatingactivities 8 63.1 57.5 174.0 INVESTING ACTIVITIESDividends received fromassociates - 0.4 0.4Purchase of property, plant andequipment (52.9) (29.9) (72.6)Purchase of intangible assets (0.4) (0.5) (0.7)Proceeds from disposal ofproperty, plant and equipment 1.3 1.0 3.3Acquisition of subsidiaries (48.2) (10.8) (28.0)Proceeds from disposal ofsubsidiaries and associates - 0.5 46.7Deferred consideration paid fromprior year activities (0.7) (0.8) (0.9)--------------------------------------------------------------------------------Net cash outflow from investingactivities (100.9) (40.1) (51.8)-------------------------------------------------------------------------------- FINANCING ACTIVITIESInterest received 19.9 10.9 36.4Interest paid (39.5) (20.4) (50.6)Interest element of financeleases paid (0.9) (0.2) (2.0)Preference dividends paid - (1.9) (1.9)Dividends paid (40.6) (35.9) (53.0)Proceeds from issue of ordinaryshares 4.7 7.1 7.7Proceeds from sale of treasuryshares - 3.2 5.6Increase/(decrease) in loans 56.3 (23.2) (79.7)Decrease in finance leases (1.5) (1.2) (2.8)(Decrease)/increase inoverdrafts (0.4) 205.9 (5.5)Decrease in other liquid assets - 43.0 58.7--------------------------------------------------------------------------------Net cash (outflow)/inflow fromfinancing activities (2.0) 187.3 (87.1)-------------------------------------------------------------------------------- Cash and cash equivalents atbeginning of year 174.9 134.0 134.0Exchange adjustments (7.1) 6.6 5.8(Decrease)/increase in cash andcash equivalents (39.8) 204.7 35.1--------------------------------------------------------------------------------Cash and cash equivalents at endof year 128.0 345.3 174.9-------------------------------------------------------------------------------- Net debt at beginning of year (527.1) (511.6) (511.6)(Decrease)/increase in cashequivalents (39.8) 204.7 35.1(Increase)/decrease in loans (56.3) 23.2 79.7Decrease in finance leases 1.5 1.2 2.8Decrease/(increase) inoverdrafts 0.4 (205.9) 5.5Decrease in other liquid assets - (43.0) (58.7)Debt element of preferencedividend - (1.8) -Bank loans acquired (3.0) - -Finance leases acquired - - (3.3)Exchange adjustments 47.4 (33.2) (76.6)--------------------------------------------------------------------------------Net debt at end of year (576.9) (566.4) (527.1)-------------------------------------------------------------------------------- GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE UNAUDITED First half First half Full year 2006 2005 2005 £m £m £mExchange difference ontranslation of foreignoperations (68.3) 51.5 98.7Gains/(losses) on net assethedges 50.7 (38.4) (79.5)Fair value movements inforeign exchange cash flowhedges 2.6 (3.6) (6.1)Fair value movements ininterest rate cash flowhedges 4.2 2.4 9.3Fair value movements incommodity contract cash flowhedges (0.5) - (3.4)Actuarial gains/(losses) ondefined benefit pensionschemes 7.7 - (0.6)--------------------------------------------------------------------------------Net (expense)/ incomerecognised directly inequity (3.6) 11.9 18.4-------------------------------------------------------------------------------- Conversion of preferenceshares - 16.1 17.9Transfer to profit or lossfrom equity on cash flowhedges (0.5) (3.6) (2.5)Transfer to profit or lossfrom equity on commoditycontracts 3.9 - -Transfer to profit or lossfrom equity on sale ofbusiness - (0.2) -Tax on items recogniseddirectly in equity (2.4) - 10.4 (Loss)/profit for the period (24.6) 54.8 75.3--------------------------------------------------------------------------------Total recognised income andexpense for the period (27.2) 79.0 119.5-------------------------------------------------------------------------------- Attributable to:Equity shareholders of BBAGroup plc (27.2) 78.9 119.3Minority interests - 0.1 0.2-------------------------------------------------------------------------------- (27.2) 79.0 119.5-------------------------------------------------------------------------------- Fair value of cash flowhedges on adoption of IAS39 - 8.2 8.2Fair value of interest rateswaps on adoption of IAS39 - (6.4) (6.4)Reduction in net assets oninitial adoption of IAS32 - (17.2) (17.2)--------------------------------------------------------------------------------Change of accounting policyon adoption of IAS32/39 - (15.4) (15.4)-------------------------------------------------------------------------------- Attributable to:Equity shareholders of BBAGroup plc - (15.4) (15.4)Minority interests - - --------------------------------------------------------------------------------- - (15.4) (15.4)-------------------------------------------------------------------------------- RECONCILIATION OF MOVEMENTS IN TOTAL SHAREHOLDERS' EQUITY UNAUDITED First half First half Full year 2006 2005 2005 £m £m £m--------------------------------------------------------------------------------Total recognised income andexpense for the period (27.2) 78.9 119.3Equity dividends paid (40.6) (35.9) (53.0)Preference dividends paid - - -Equity movement in capitalreserve 0.3 0.3 0.6Movement on treasury shares - 3.2 5.6Issue of shares 4.7 7.1 7.7Movement in minorityinterests 0.5 0.1 0.2--------------------------------------------------------------------------------Net movement in totalshareholders' equity for theperiod (62.3) 53.7 80.4Change of accounting policyon adoption of IAS32/39 - (15.6) (15.6)Total shareholders' equityat the beginning of theperiod 736.1 671.3 671.3--------------------------------------------------------------------------------Total shareholders' equityat the end of the period 673.8 709.4 736.1-------------------------------------------------------------------------------- NOTES TO THE FINANCIAL STATEMENTS 1. SEGMENTAL INFORMATION After- market Total Flight Services & Total Fiberweb Unallocated Continuing Support Systems Aviation Corporate Operations Business Segments £m £m £m £m £m £m------------------------------------------------------------------------------------------------------ First half 2006ExternalRevenue 284.5 208.9 493.4 309.4 - 802.8 Underlyingoperatingprofit 34.2 23.3 57.5 11.5 (4.7) 64.3Restructuringcosts andother nonrecurringitems (2.4) (0.3) (2.7) (73.0) (9.0) (84.7)------------------------------------------------------------------------------------------------------Segment resultfromcontinuingoperations* 31.8 23.0 54.8 (61.5) (13.7) (20.4)------------------------------------------------------------------------------------------------------ Capitaladditions 17.2 9.2 26.4 30.4 0.1 56.9Depreciationandamortisation 9.5 7.0 16.5 20.4 0.1 37.0Impairmentlossesrecognised inprofit or loss - - - 61.2 - 61.2------------------------------------------------------------------------------------------------------Assets 546.4 448.8 995.2 678.2 136.6 1,810.0Liabilities (118.8) (71.8) (190.6) (174.8) (770.8) (1,136.2)------------------------------------------------------------------------------------------------------ *Segment result includes £0.1m and £0.3m profit of associates within FlightSupport and Fiberweb respectively. First half 2005ExternalRevenue 241.7 185.3 427.0 313.7 - 740.7 Underlyingoperatingprofit 32.4 17.0 49.4 23.1 (4.5) 68.0Restructuringcosts andother nonrecurringitems (1.7) (8.6) (10.3) (1.8) - (12.1)---------------------------------------------------------------------------------------------------------Segment resultfromcontinuingoperations* 30.7 8.4 39.1 21.3 (4.5) 55.9--------------------------------------------------------------------------------------------------------- Capitaladditions 5.2 10.2 15.4 15.1 0.1 30.6Depreciationandamortisation 8.5 6.2 14.7 22.1 0.2 37.0Impairment losses recognised in profit or loss - - - - - ----------------------------------------------------------------------------------------------------------Assets 505.8 466.5 972.3 753.7 384.8 2,110.8Liabilities (109.2) (107.4) (216.6) (170.7) (1,014.1) (1,401.4)--------------------------------------------------------------------------------------------------------- *Segment result includes £0.2m profit of associates within Fiberweb. Full year 2005External Revenue 514.4 377.1 891.5 619.3 - 1,510.8 Underlyingoperating profit 60.0 34.4 94.4 43.8 (8.6) 129.6Restructuringcosts and othernon recurringitems (4.6) (15.3) (19.9) (20.5) (7.9) (48.3)---------------------------------------------------------------------------------------------------------Segment resultfrom continuingoperations* 55.4 19.1 74.5 23.3 (16.5) 81.3--------------------------------------------------------------------------------------------------------- Capital additions 26.6 19.4 46.0 33.9 0.2 80.1Depreciation andamortisation 17.7 12.1 29.8 45.4 0.2 75.4Impairment lossesrecognised inprofit or loss - - - 11.5 - 11.5---------------------------------------------------------------------------------------------------------Assets 550.1 439.2 989.3 769.9 180.2 1,939.4Liabilities (143.7) (69.8) (213.5) (201.6) (788.2) (1,203.3)--------------------------------------------------------------------------------------------------------- *Segment result includes £0.3m and £0.7m profit of associates within FlightSupport and Fiberweb respectively. NOTES TO THE FINANCIAL STATEMENTS (continued) 1. SEGMENTAL INFORMATION (continued) Revenue from continuing operations Capital By destination By origin additions Assets Geographical Segments £m £m £m £m-------------------------------------------------------------------------------- First half 2006United Kingdom 82.9 110.0 8.1 307.4Mainland Europe 145.4 144.3 16.0 332.9North America 516.1 518.6 19.0 1,065.5Rest of World 58.4 29.9 13.8 104.2--------------------------------------------------------------------------------Total 802.8 802.8 56.9 1,810.0-------------------------------------------------------------------------------- First half 2005United Kingdom 76.7 108.4 6.3 354.4Mainland Europe 151.5 147.7 4.8 445.6North America 467.7 460.3 18.6 1,235.9Rest of World 44.8 24.3 0.9 74.9--------------------------------------------------------------------------------Total 740.7 740.7 30.6 2,110.8-------------------------------------------------------------------------------- Full year 2005United Kingdom 167.1 217.6 14.9 366.5Mainland Europe 442.1 287.0 11.3 336.0North America 831.3 954.9 47.4 1,151.7Rest of World 70.3 51.3 6.5 85.2--------------------------------------------------------------------------------Total 1,510.8 1,510.8 80.1 1,939.4-------------------------------------------------------------------------------- NOTES TO THE FINANCIAL STATEMENTS (continued) UNAUDITED 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES The financial information set out above does not constitute the Company'sstatutory financial statements for 2006 or 2005 under section 240 of theCompanies Act 1985. The figures for the full year 2005 are an abridged versionof the financial statements for that year. Those accounts, together with anunqualified audit report, have been filed with the Registrar of Companies anddid not contain a report under section 235 of the Companies Act 1985. Thefigures for the half year 2005 are as presented in the financial information forthe six months ended 30 June 2005, subject to the revision of the change inaccounting policy on adoption of IAS32/39 of £0.2 million. The unaudited interim results for the six months ended 30 June 2006 have beenprepared in accordance with its accounting policies under InternationalFinancial Reporting Standards. The same accounting policies and methods ofcomputation are followed in the annual financial statements, as published by thecompany on 20 March 2006, which are available on the company's website,www.bbagroup.com. The interim results do not include all of the information anddisclosures required in the annual financial statements, and should be read inconjunction with the Group's annual financial statements as at 31 December 2005. 3. RESTRUCTURING AND NON-RECURRING COSTS Restructuring costs and non-recurring items included within statutory operatingprofit amounted to £84.7 million (First half 2005: £12.1 million). The mainitems included within this are: - Non-recurring cost of sales £21.6 million (First half 2005: £nil): Includesa £2.3m charge representing the ineffective element of a raw materials hedge;and a £19.3m impairment charge in relation to a small number of Fiberweb wipeslines. These impairments arise as a result of pressure on margins due toovercapacity and increased competition in the wipes market in Europe and NorthAmerica. - Non-recurring administrative expenses £14.6 million (First half 2005: £nil):Represents the impairment of goodwill on the Fiberweb Tecnofibra business. Thisimpairment arises as a result of pressure on margins due to overcapacity andincreased competition in the wipes market in Europe. - Non-recurring other operating expenses £9.1 million (First half 2005: £1.5million): Primarily represents costs of the separation of Fiberweb. - Restructuring costs £39.4million (First half 2005: £9.3 million): Includesline impairments of £25.5m, and severance and other closure costs of £8.3massociated with the rationalisation of the Fiberweb North America Hygienebusiness which was announced to the London Stock Exchange on 28 April 2006; anda £1.6m rationalisation in ASIG USA. - Profit on disposal of businesses £nil (First half 2005: Loss £1.3 million). Net of tax and the profit on disposal of discontinued business, totalrestructuring costs and other non-recurring items included within profit for theperiod amounted to £60.8 million (First half 2005: Gain £12.7 million). --------------------------------------------------------------------------------4. TAXATION First half First half Full year 2006 2005 2005 £m £m £m-------------------------------------------------------------------------------- Current and deferred tax : Corporate income tax 12.1 8.2 12.2 Deferred tax (20.5) 3.7 (4.2)-------------------------------------------------------------------------------- Total tax (credit)/charge (continuing) (8.4) 11.9 8.0-------------------------------------------------------------------------------- Corporation tax for the interim period is charged at an effective rate of 30%(First Half 2005: 28%; Full Year 2005: 22%), representing the best estimate ofthe weighted average annual corporation tax expected for the full financialyear. 5. ACQUISITIONS AND DISPOSALS On 3 January 2006, the Group purchased Arnoni Aviation Services Inc. for animmediate cash consideration of $4.9 million (£2.8 million) and a deferredcontingent cash consideration of up to $2.0 million (£1.1 million). On 17 February 2006, the Group purchased an FBO at La Quinta, California for aconsideration of $8.6 million (£4.9 million). On 24 February 2006, the Group purchased Ontic Engineering & Manufacturing for aconsideration of $65.8 million (£37.2 million). On 1 April 2006, the Group purchased Blowitex GmbH for an immediate cashconsideration of €3.8 million (£2.6 million) and a deferred contingent cashconsideration of €0.7 million (£0.5 million). On 26 April 2006, the Group purchased a further 40% of the shares of AthensAviation Services for a consideration of €1.7 million (£1.2 million). NOTES TO THE FINANCIAL STATEMENTS (continued) 6. DIVIDENDS The 2006 interim dividend of 3.5 pence per share (2005: 3.5 pence per share) wasapproved by the Board of Directors on 29 August 2006 and will be paid on 3November 2006 to ordinary shareholders registered on 15 September 2006. Thisinterim dividend has not been included as a liability as at 30 June 2006. 7. EARNINGS PER SHARE Continuing Continuing and operations discontinued operations Earnings First half First half Full year First half First half Full year 2006 2005 2005 2006 2005 2005 £m £m £m £m £m £m----------------------------------------------------------------------------------------------------------------------- Basic: Earnings(Loss)/profit for the period (24.6) 31.5 51.9 (24.6) 54.8 75.3Minority interests - (0.1) (0.2) - (0.1) (0.2)Preference dividends - - - - - ------------------------------------------------------------------------------------------------------------------------ Basic earnings attributable to ordinary shareholders (24.6) 31.4 51.7 (24.6) 54.7 75.1Restructuring costs and non-recurring items 84.7 12.1 48.3 84.7 12.1 48.3Profit after tax on disposal (discontinuedoperations) - - - - (20.8) (21.5)Tax on restructuring costs and non-recurring items (23.9) (4.0) (15.7) (23.9) (4.0) (15.7)-----------------------------------------------------------------------------------------------------------------------Adjusted earnings 36.2 39.5 84.3 36.2 42.0 86.2----------------------------------------------------------------------------------------------------------------------- Diluted: EarningsBasic earnings attributable to ordinary shareholders(24.6) 31.4 51.7 (24.6) 54.7 75.1Preference dividends - 1.9 - - 1.9 ------------------------------------------------------------------------------------------------------------------------Diluted earnings attributable to ordinaryshareholders (24.6) 33.3 51.7 (24.6) 56.6 75.1Restructuring costs and non-recurring items 84.7 12.1 48.3 84.7 12.1 48.3Profit after tax on disposal (discontinuedoperations) - - - - (20.8) (21.5)Tax on restructuring costs and non-recurring items (23.9) (4.0) (15.7) (23.9) (4.0) (15.7)-----------------------------------------------------------------------------------------------------------------------Adjusted diluted earnings 36.2 41.4 84.3 36.2 43.9 86.2----------------------------------------------------------------------------------------------------------------------- Number of sharesWeighted average number of 25p ordinary shares:For basic earnings per share 487.2 456.2 471.0 487.2 456.2 471.0Exercise of share options 2.9 4.7 4.8 2.9 4.7 4.8Conversion of preference shares - 27.9 - - 27.9 ------------------------------------------------------------------------------------------------------------------------For diluted earnings per share 490.1 488.8 475.8 490.1 488.8 475.8----------------------------------------------------------------------------------------------------------------------- Earnings per shareBasic:Adjusted 7.4p 8.7p 17.9p 7.4p 9.2p 18.3pUnadjusted (5.0p) 6.9p 11.0p (5.0p) 12.0p 15.9p Diluted:Adjusted 7.4p 8.5p 17.7p 7.4p 9.0p 18.1pUnadjusted (5.0p) 6.8p 10.9p (5.0p) 11.6p 15.8p Adjusted earnings per share is shown calculated on earnings before restructuringcosts and non recurring items because the directors consider that this gives abetter indication of underlying performance. In calculating the diluted earningsper share for full year 2005, the effects of the convertible preference shareshave been omitted, as they are anti-dilutive. NOTES TO THE FINANCIAL STATEMENTS (continued) UNAUDITED 8. CASH FLOW FROM OPERATING ACTIVITIES First half First half Full year 2006 2005 2005 £m £m £m--------------------------------------------------------------------------------Operating (loss)/profit fromcontinuing operations (20.4) 55.9 81.3Operating profit from discontinuedoperations - 2.5 1.9Share of profit from associates (0.4) (2.7) (2.8)--------------------------------------------------------------------------------(Loss)/profit from operations (20.8) 55.7 80.4Depreciation of property, plant &equipment 34.8 35.5 71.4Amortisation of intangible assets 2.2 1.5 4.0Profit on sale of tangible fixedassets (0.3) (0.3) (0.2)Increase/(decrease)in provisions 2.4 (1.6) 1.8Additional pension schemecontributions (7.9) (5.0) (7.6)Non-cash impairments 61.2 - 11.5Other non-cash items - 6.3 8.3--------------------------------------------------------------------------------Operating cashflows before movementsin working capital 71.6 92.1 169.6(Increase)/decrease in working capital (5.4) (28.6) 14.1--------------------------------------------------------------------------------Cash generated by operations 66.2 63.5 183.7Income taxes paid (3.1) (6.0) 9.7)--------------------------------------------------------------------------------Net cash flow from operatingactivities 63.1 57.5 174.0-------------------------------------------------------------------------------- Dividends received from associates - 0.4 0.4Purchase of property, plant andequipment (52.9) (29.9) (72.6)Purchase of intangible assets (0.4) (0.5) (0.7)Proceeds from disposal of property,plant and equipment 1.3 1.0 3.3Interest received 19.9 10.9 36.4Interest paid (39.5) (20.4) (50.6)Interest element of finance leasespaid (0.9) (0.2) (2.0)Preference dividends paid - (1.9) (1.9)--------------------------------------------------------------------------------Free cashflow (9.4) 16.9 86.3-------------------------------------------------------------------------------- Share of profit from associates in 2005 includes discontinued operations whichare included within profit after tax from discontinued operations on the face ofthe income statement. 9. FINANCIAL CALENDAR The preliminary announcement of results for the year ending 31 December 2006will be made in late February 2007. INDEPENDENT REVIEW REPORT TO BBA GROUP PLC INTRODUCTION We have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprises the income statement, balancesheet, cash flow statement, statement of total recognised income and expenses,reconciliation of movements in total shareholders' equity and related notes 1 to9. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. DIRECTORS' RESPONSIBILITIES The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. REVIEW WORK PERFORMED We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. REVIEW CONCLUSION On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. DELOITTE & TOUCHE LLPChartered AccountantsLondon 31 August 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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