28th Mar 2006 07:10
White Young Green PLC28 March 2006 For Immediate Release 28 March 2006 WHITE YOUNG GREEN PLC Interim results for the six months ended 31 December 2005 White Young Green Plc, consultant to the built, natural and social environment,announces its interim results for the six months ended 31 December 2005. Highlights: - 19% increase in gross revenue to £78.6m (2004: £65.8m)- 14% increase in net revenue to £62.3m (2004: £54.4m)- 10% underlying organic growth- 14% increase in operating profit to £6.4m (2004: £5.6m)- 10.3% operating margin on net revenue maintained (2004: 10.3%)- 12% increase in adjusted earnings per share to 9.5p (2004: 8.5p)- 10% increase in earnings per share to 9.3p (2004: 8.5p)- 8% increase in interim dividend to 2.6p (2004: 2.4p)- 27% increase in net order book to a record of £280m (2004: £220m)- Four acquisitions completed since July 2005- International diversification gathering pace- Significant post period project wins Commenting on the results, Chairman Peter Wood said: "I am pleased to report another strong set of results for White Young Green(WYG) characterised by double digit organic growth, double digit operatingmargins on net revenue and double digit order book growth. The acquisitions announced today provide an exciting platform for future growthand development in their respective skill areas. Trading conditions remain favourable across the Group and WYG enters the secondhalf of the financial year with growing confidence and optimism." For further information, please contact: WHITE YOUNG GREEN PLC Tel: 0113 278 7111John Purvis, Chief ExecutiveBob Hartley, Finance Director BUCHANAN COMMUNICATIONS Tel: 020 7466 5000Tim Anderson / Rebecca Skye Dietrich CHAIRMAN'S STATEMENT Summary I am pleased to report another strong set of results for White Young Green("WYG") in the period to 31 December 2005, characterised by double digit organicgrowth, double digit operating margins on net revenue and double digit orderbook growth. These characteristics underpin confidence that WYG's growth profilewill be sustained through to the full year and beyond, particularly whencombined with favourable trading conditions and the successful completion of anumber of strategically important acquisitions since 1 July 2005 in key areas ofbusiness opportunity. The acquisitions announced today, and in recent weeks, introduce costconsultancy services to the Group in England, Scotland and Wales, provide accessto the town planning markets in Scotland and in Ireland, offer the opportunityto penetrate the regional market in North West Ireland and significantlystrengthen WYG's engineering presence in the critically important London market.They therefore provide an exciting platform for future growth and development ineach of those skill areas and geographic locations. The successful strategy ofcombining strong and sustainable organic growth with earnings enhancing, addedvalue acquisitions will therefore continue into the future. WYG International continues to grow and diversify. Real progress has been madein generating opportunities in new markets of particular interest to WYG's moretraditional skills. Property and infrastructure related projects have alreadybeen secured in Turkey, Syria and Russia and the pipeline of future projects isstrong. The core socio-economic management consultancy business within WYGInternational has also delivered double digit revenue and order book growth inthe period whilst maintaining its margin. Trading conditions around the Group remain favourable and opportunities areincreasing in all key areas of business activity. In recent weeks a major PFIhospital project has reached financial and contractual close, anothersignificant highway project has been won and long term framework contracts havebeen secured with QinetiQ, South West Regional Development Agency, DEFRA andEricsson. WYG therefore enters the second half of the year with growingconfidence and optimism, supported by an order book at record levels and clearopportunities for future long term sustainable growth. Results In the six month period, gross revenue grew by 19% to £78.6m (2004: £65.8m). Netrevenue attributable to in-house services increased by 14% to £62.3m (2004:£54.4m). This increase has been generated by a mixture of acquisitive andorganic growth. Excluding the contribution from acquisitions made in 2005,underlying organic growth was 10%. Operating profit also increased by 14% to £6.4m (2004: £5.6m). Operating profitmargin on net revenue remained in line with that achieved last year at 10.3%(2004: 10.3%). Earnings per share before amortisation of intangible assets increased by 12% to9.5p (2004: 8.5p) whilst earnings per share increased by 10% to 9.3p (2004:8.5p). The average number of shares in issue increased by 4% following the issueof shares in satisfaction of consideration for acquisitions and share optionarrangements. Balance sheet management continues to be of the utmost priority to the Group andit is encouraging to note that in a period when revenues increased by 19%,investment in work in progress and debtors only increased by 16%. Workingcapital days were maintained at 88 days (2004: 88 days). Net debt at 31 December 2005 was £18.1m (2004: £17.8m) giving a level of gearingof 32% (2004: 36%). It was positively impacted by cash generated from operationsincreasing by 34% to £4.5m (2004: £3.3m). Interest cost is covered 6.1 times(2004: 6.0 times) by operating profit. Dividend The interim dividend is being increased by 8% to 2.6p (2004: 2.4p). This will bepaid on 9 May 2006, to shareholders on the register at 18 April 2006. IFRS Impact The results as presented are the first to be prepared under InternationalFinancial Reporting Standards ("IFRS") and the comparative figures have beenadjusted accordingly. A number of detailed reconciliations are included in notes8 and 9 of the Interim Results and the impact of the principal changes in thecomparative figures for operating profit and net assets at 31 December 2004 aresummarised in the table below. ------------------------------ ----------- ----------- 31 December 31 December 2005 2004 £'000 £'000 ------------------------------ ----------- ----------- Total operating profit under UK GAAP 4,045Goodwill amortisation written back 925Pension fund movement 113Employee benefits 581Other adjustments (88)------------------------------ ----------- -----------Operating profit under IFRS 6,380 5,576------------------------------ ----------- ----------- Net assets under UK GAAP 51,011Goodwill amortisation written back 925Pension fund deficit, net of tax (2,197)Elimination of accrued dividend 954Employee benefits (1,423)Other adjustments 186------------------------------ ----------- -----------Net assets under IFRS 56,961 49,456------------------------------ ----------- ----------- Review Of Operations WYG has enjoyed another six months of successful trading with order book up 27%to £280m (2004: £220m) and prospects strengthening across all three principalareas of business activity. Engineering 6 months to 6 months to December 2005 December 2004 £'000 £'000Gross revenue 36,008 32,572Net revenue 33,287 30,581Operating profit 2,355 2,258Net operating margin 7% 7% Engineering revenues grew in the period by 10.5% to £36.0m (2004: £32.6m) whichrepresents 46% of total Group revenue. Operating margin on net revenue wasmaintained at 7% whilst organic growth, exclusive of acquisitions, was anencouraging 9.5%. Areas of engineering business activity delivering strong sustainable growth atthe present time include major highways, rail infrastructure, health andeducation, nuclear decommissioning and private sector commercial development. In the major highways market WYG has consolidated its position as a key supplychain service provider to the Highways Agency and is now supporting that clienton the M1 Junction 19 Improvement, A46 West Midlands Package and the A46 HobbyHorse Roundabout Improvement. In addition WYG is designer to Laing O'Rourke onthe A1 Morpeth to Felton and the A453 M1 to Nottingham ECI (Early ContractorInvolvement) projects. The latter project was awarded by the Highways Agency inMarch 2006 and both projects are supported by the relevant Regional TransportBoards. Government expenditure on transportation is forecast to grow over thenext four years and this will be boosted further by an additional £10 billionfrom the Transport Innovation Fund designed to encourage innovation in local andregional transport strategies. Activity in the rail sector has shown real recovery in the first half of theyear after a period of relative stagnation in the placing of new ordersfollowing changes in the operational structure of Network Rail. As a consequenceWYG has experienced a 13% increase in the average monthly volume of new businesssecured in the period compared to the previous year which is reflected inincreased revenues. New projects include extensive trackbed investigation worksthroughout the UK and station enhancement and inspection work at Paddington,Kings Cross and Victoria. This increase in activity is expected to gather paceas Network Rail delivers on the commitment in its 2004 Business Plan to spend£20.5 billion on renewals over the next four years in addition to the plannedexpenditure on the West Coast Route Modernisation. Health and education continue to attract significant investment in line withGovernment spending priorities from which WYG benefits as a fully embedded keysupply chain partner to many of the principal service providers in theseimportant areas of public sector commitment. In the field of healthcare HullOncology has reached financial and contractual close in recent weeks whilstBirmingham Hospital is rapidly approaching a similar stage. These are majorprojects with a combined capital value well in excess of £600m on which WYG isproviding engineering design services to the successful contractors. In theeducation sector, the Government's 'Building Schools for the Future' ten yearprogramme is gaining momentum and is scheduled to provide more than £2 billionof additional capital investment in the current year alone. WYG is wellpositioned with a number of major contractors to benefit from this investment. WYG has provided engineering consultancy services to the nuclear industry overmany years and has an office in Cumbria which provides dedicated front lineservices to British Nuclear Group at Sellafield. WYG has recently secured amajor Tier Two framework contract as leader of the successful CMC (CivilMaintenance Consortium) at Sellafield which includes asset inspections,development control and secondments in addition to project work. The scale ofthe UK's nuclear decommissioning programme, with the majority of plannedexpenditure focused on Sellafield, will provide a growing range of opportunitiesfor WYG well into and beyond the next decade. Private sector investment continues to strengthen in both the UK and Irelandwith a reported reduction in office availability in London in 2005 likely tofurther strengthen the private sector commercial market through 2006 and 2007.WYG's balanced portfolio of clients across both the public and private sectorsis enabling the Group to take full advantage of this trend with new work in theperiod from Wilson Bowden, ING Real Estate Development UK, St George, TerraceHill and Langtree Developments. Management Services 6 months to 6 months to December December 2005 2004 £'000 £'000Gross revenue 24,380 21,031Net revenue 14,661 13,873Operating profit 1,918 1,858Net operating margin 13% 13% Management Services revenues grew in the period by 15.9% to £24.4m (2004:£21.0m) which represents 31% of total Group revenue. This comprised £6.0m ofrevenue from the traditional management services business streams in the UK andIreland and £18.4m of revenue from WYG International, formerly IMC Consulting. WYG International, the Management Consultancy arm of WYG providing high levelsocial and economic regeneration services to the aid funded development market,has had another successful period of trading with order book up 12.1% to £38.1m(2004: £34.0m) net revenue up 17.6% to £10.0m (2004: £8.5m) and operating marginon net revenue being maintained at 13%.In addition WYG International is beginning to see the fruits of its investmentin diversifying into more technically focused EU and World Bank projects bytaking advantage of the traditional skills of WYG's core business. In Turkey,WYG is now managing the rehabilitation of the historic Fener and Balat districtsof Istanbul. This includes improvement to housing conditions through restorationand the establishment of a comprehensive waste management strategy. In Syria,WYG is supporting municipal development through the provision of propertymanagement skills and systems, the preparation of urban plans, the introductionof GIS systems, public transport strategies and a major solid waste managementplan. Of particular interest is the preparation of an integrated developmentplan for the old city of Damascus. Both of these projects are EU funded. Inaddition WYG have secured a private sector project in Russia to assist McDonaldswith the implementation of a major store development programme. WYG is also currently shortlisted for water and highway projects in Poland, awater distribution network improvement project in Turkey, a major bridgeengineering project in Bulgaria and a rail infrastructure planning project inRomania. In the UK, WYG Management Services has recently secured a long term partneringframework agreement with QinetiQ covering a wide range of property and projectmanagement skills. Similar services have also been procured in the period fromWYG by the Home Office Prison and Immigration Services, the Ministry of Defenceand Sheffield City Council. This is in addition to long term property managementcontracts already in place with the Department of Constitutional Affairs and theHome Office Civil Estate amongst others. Following today's announcement of the acquisition of Tweeds, WYG ManagementServices in the UK will be re-organised into a new business unit around six keybusiness streams; project management, property management, health safety andsecurity consultancy, dispute avoidance and resolution, management consultancyand cost consultancy services. This will provide WYG with a vibrant, diverse andcomplementary set of management services skills capable of significant furthergrowth and development. In Ireland, WYG Management Services continues to trade strongly providing costconsultancy, building surveying and project management services to clients inboth Northern Ireland and the Republic of Ireland. The economy in Irelandremains buoyant and opportunities for further growth are significant. In theperiod WYG Management Services secured a number of new major projects includingPhase 2B of the Royal Victoria Hospital redevelopment in Belfast, St Anne'sSquare development, also in Belfast, and Disability Discrimination Act audits inLimerick and Tipperary. The Environment 6 months to 6 months to December 2005 December 2004 £'000 £'000Gross revenue 18,185 12,223Net revenue 14,344 9,972Operating profit 2,107 1,460Net operating margin 15% 15% WYG helps to support and sustain the environment through the application of awide range of technology based environmental sciences and through the provisionof professional town planning services. Collectively these services representthe fastest growing element of WYG's business and now provide 23% of total Grouprevenue. Revenues from these business streams grew in the period by 49% to£18.2m (2004: £12.2m) whilst operating margin on net turnover was maintained at15%. Organic revenue growth, exclusive of acquisitions, was a very encouraging26% with organic operating profit growth also strong at 23%. The environmental market has grown rapidly over recent years and is forecast togrow even further as the focus on climate change, the carbon agenda, wastemanagement and energy utilisation increases. Key drivers for growth willcontinue to be the volume and complexity of regulations and legislation, backedup by more vigorous enforcement, together with an increasing general awarenessof the imminent danger to future generations.WYG is being pro-active and creative in this important area of socialresponsibility and in March 2006 launched the WYG Sustainability Bureau. Thepurpose of this initiative is to provide a single portal into a wide range ofintegrated and innovative sustainability solutions and thereby offer greaterassistance to those organisations wishing to fully embrace a viable andeffective sustainability philosophy through their projects and operations. Keyskills cover energy, waste, transport, planning, resource management andregeneration, whilst typical outputs include community plans, energy strategies,investment appraisals and validation assessments. The WYG Sustainability Bureautherefore offers a comprehensive consultancy service to handle the fulldiversity of an organisation's needs from remediation to refurbishment,Environmental Impact Assessment to energy procurement and socio-economicanalysis to building physics. WYG's environmental skills have been utilised by a wide range of clients in theperiod including the London Development Agency on work associated with the 2012Olympic Games, English Partnerships, Highways Agency, National Grid, West SussexCounty Council and WRG, the waste management and energy recovery group. WYG's town planning business has grown significantly since the inception of WYGPlanning in April 2001 and is now the eighth largest professional planningconsultancy in the UK with offices in ten locations providing services to majornational clients such as Sainsbury's, Linden Homes, Barratt and Ericsson. Thebusiness has been further strengthened today by the acquisition of FarninghamMcCreadie with offices in Edinburgh and Belfast. This acquisition of asuccessful dynamic business provides the opportunity to replicate the organicgrowth experienced over the last five years in England in the new market areasof Scotland and Ireland. WYG's planning and environmental skills are also brought together to offerclients a comprehensive urban design and landscape architecture service in anarea of activity where planning and design are inextricably linked. A typicalexample is the recently secured Temple Quay Phase 2 project in Bristol forBarratt on which WYG Planning will be carrying out those services. Acquisitions WYG has completed four acquisitions since 1 July 2005 for a total initialconsideration of £15.7m, comprising Doy Webster in November 2005, J C Warnock inFebruary 2006, and Farningham McCreadie and Tweeds in March 2006. The financialdetails of these acquisitions are contained in note 7 of the interim financialinformation. The acquisition of Doy Webster further strengthened WYG's business in thestrategically important South East of England and increased capacity in buildingservices at a time of increased opportunity in that area. J C Warnock, a civil and structural engineering consultancy based in Londonderryadds an increased geographical range to WYG's business in Ireland. The acquisitions of Tweeds and Farningham McCreadie were announced today. Tweedssignificantly expands WYG's Management Services business in the UK addingcomplementary skill sets in cost management, project management, health andsafety management and building surveying. It operates from six offices in the UKand will enhance the range of services offered to all clients of the business.Farningham McCreadie, a town planning consultancy based in Edinburgh andBelfast, expands the geographical coverage of WYG's successful town planningbusiness bringing with it an excellent reputation and a strong client base. Employees WYG now employs over 2,000 staff across the business. The continued success ofthe Group is a reflection of the hard work and commitment of all staff and Itake this opportunity to thank them for their contribution. I also reiterate theGroup's intention, through initiatives such as the WYG business excellence model'Fast Forward', to devote significant resource to investing in our people sothat the ambitious future growth strategy of WYG can be achieved. Outlook WYG enters the second half of the financial year with growing confidence andoptimism. The order book is at record levels boosted by recent significantproject wins and new framework contracts in growth markets. Three importantacquisitions have been successfully completed since 1 January 2006 which willenhance both earnings and reputation, whilst also broadening the range of keyskills available to clients from within the Group. WYG's internationalmanagement consultancy business continues to strengthen in its traditionalsocio-economic markets whilst also generating exciting opportunities for theGroup's core technical skills in new areas of opportunity. Key drivers forgrowth in the UK and Ireland include a strengthening private sector, continuedpublic sector investment in health, education and transportation, legislationand awareness in the environmental and planning sectors and, of course, thedemands and opportunities flowing from London 2012. Trading conditions thereforeremain favourable across the Group and current trading is in line withexpectations. PETER S WOODChairmanWhite Young Green Plc28 March 2006 Unaudited Consolidated Profit and Loss Accountfor the six months ended 31 December 2005 Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 * 2005 * Notes £000 £000 £000---------------------- ----- ---------- ---------- ---------ContinuingOperationsRevenue 1 78,573 65,826 143,906Operating expenses (72,193) (60,250) (132,636)---------------------- ----- ---------- ---------- ---------Group operatingprofit 1 6,380 5,576 11,270Finance costs (1,039) (927) (1,883)---------------------- ----- ---------- ---------- ---------Profit before tax 5,341 4,649 9,387Tax 5 (1,513) (1,288) (2,638)---------------------- ----- ---------- ---------- ---------Profit for theperiod 3,828 3,361 6,749 Earnings per share 6Basic 9.3p 8.5p 16.9pDiluted 9.1p 8.2p 16.5p Adjusted earningsper share 6Basic 9.5p 8.5p 17.0pDiluted 9.3p 8.2p 16.6p---------------------- ----- ---------- ---------- --------- * restated under IFRS (see note 8) Unaudited Consolidated Statement of Recognised Income and Expensefor the six months ended 31 December 2005 Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 * 2005 * Notes £000 £000 £000---------------------- ----- ---------- ---------- ---------Exchangedifferences ontranslation offoreign operations 80 (75) (440)Actuarial losseson defined benefitpension schemes - - (2,145)Tax on items takendirectly to equity 199 198 863---------------------- ----- ---------- ---------- ---------Netincome/(expense)recogniseddirectly in equity 279 123 (1,722)Profit for theperiod 3,828 3,361 6,749---------------------- ----- ---------- ---------- ---------Total recognisedincome and expensefor the period 4,107 3,484 5,027---------------------- ----- ---------- ---------- --------- * restated under IFRS (see note 8) Dividends recognised in the period amounted to £1.7m (six months ended 31December 2004: £1.5m, year ended 30 June 2005: £2.4m), or 4.1p per share (sixmonths ended 31 December 2004: 3.7p per share, year ended 30 June 2005: 6.1p pershare).The interim dividend proposed but not recognised in these financial statementsamounted to £1.1m (six months ended 31 December 2004: £1.0m), or 2.6p per share(six months ended 31 December 2004: 2.4p per share). Unaudited Consolidated Balance SheetAs at 31 December 2005 As at As at As at 31 December 2005 31 December 2004 * 30 June 2005 * £000 £000 £000-------------------- ----------- ----------- -----------Non-current assetsGoodwill 38,942 34,030 36,675Other intangibleassets 1,176 926 985Property, plant andequipment 9,663 7,901 9,097Deferred tax assets 2,455 1,426 2,224-------------------- ----------- ----------- ----------- 52,236 44,283 48,981-------------------- ----------- ----------- -----------Current assetsWork in progress 25,583 23,559 28,772Trade and otherreceivables 41,486 34,206 39,505Tax recoverable 435 395 289Cash and cashequivalents 8,676 7,707 5,579-------------------- ----------- ----------- ----------- 76,180 65,867 74,145-------------------- ----------- ----------- -----------Current liabilitiesTrade and otherpayables (37,521) (30,486) (42,806)Tax liabilities (1,701) (1,505) (1,561)Obligations underfinance leases (2,506) (2,571) (2,547)Bank overdraft andloans (438) (16,160) (4,500)-------------------- ----------- ----------- ----------- (42,166) (50,722) (51,414)-------------------- ----------- ----------- ------------------------------- ----------- ----------- -----------Net current assets 34,014 15,145 22,731-------------------- ----------- ----------- ----------- Non-currentliabilitiesBank loans (20,830) (3,646) (10,811)Retirement benefitobligation (5,291) (3,138) (5,336)Deferred taxliabilities (125) (75) (100)Obligations underfinance leases (3,043) (3,113) (3,143)-------------------- ----------- ----------- ----------- (29,289) (9,972) (19,390)-------------------- ----------- ----------- ------------------------------- ----------- ----------- -----------Net assets 56,961 49,456 52,322-------------------- ----------- ----------- ----------- Shareholders' equityShare capital 2,079 1,998 2,050Shares to be issued 1,700 2,299 1,550Share premium account 35,296 30,784 33,554Cumulativetranslation reserve (360) (75) (440)Retained earnings 18,246 14,450 15,608-------------------- ----------- ----------- -----------Total shareholders'equity 56,961 49,456 52,322-------------------- ----------- ----------- ----------- * restated under IFRS (see note 8) Unaudited Consolidated Statement of Changes in Shareholders' Equityfor the six months ended 31 December 2005 Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 * 2005 * £000 £000 £000--------------------------- ---------- ---------- --------Profit for the period 3,828 3,361 6,749Exchange differenceson translation offoreign operations 80 (75) (440)Actuarial losses ondefined benefitpension schemes - - (2,145)Share-based payments 292 229 433New share capitalissued, net ofexpenses 1,771 110 2,933Shares to be issued 150 (134) (883)Tax on items takendirectly to equity 199 198 863Equity dividends paid (1,681) (1,468) (2,423)--------------------------- ---------- ---------- --------Net addition toequity 4,639 2,221 5,087Opening equityattributable toequity shareholdersof the Company 52,322 47,235 47,235--------------------------- ---------- ---------- --------Closing equityattributable toequity shareholdersof the Company 56,961 49,456 52,322--------------------------- ---------- ---------- -------- * restated under IFRS (see note 8) Unaudited Cash Flow Statementfor the six months ended 31 December 2005 Six months ended Six months ended Year ended 31 December 2005 31 December 2004 30 June 2005 £000 £000 £000-------------------------- ---------- ---------- --------Operating activitiesCash generated fromoperations 4,489 3,338 12,756Interest paid (627) (736) (1,557)Tax paid (1,617) (1,223) (2,673)-------------------------- ---------- ---------- --------Net cash from operatingactivities 2,245 1,379 8,526-------------------------- ---------- ---------- -------- Investing activitiesProceeds on disposal ofproperty, plant andequipment 130 132 196Purchases of property,plant and equipment (832) (928) (1,989)Purchases of subsidiaryundertakings (975) (207) (1,521)Purchases of intangibleassets (325) (395) (673)(Overdraft)/cash balancesacquired withsubsidiaries (23) - 143-------------------------- ---------- ---------- --------Net cash used ininvesting activities (2,025) (1,398) (3,844)-------------------------- ---------- ---------- -------- Financing activitiesProceeds on issue ofshares 121 51 70Equity dividends paid (1,681) (1,468) (2,423)Repayment of borrowings (6,084) (874) (8,763)Drawdown of loanfacilities 14,000 - 7,873Repayments of obligationsunder finance leases (1,446) (1,317) (2,832)-------------------------- ---------- ---------- --------Net cash from/(used in)financing activities 4,910 (3,608) (6,075)-------------------------- ---------- ---------- -------- Net increase/(decrease)in cash and cashequivalents 5,130 (3,627) (1,393)-------------------------- ---------- ---------- --------Cash and cash equivalentsat beginning of period 3,108 4,501 4,501 -------------------------- ---------- ---------- --------Cash and cash equivalentsat end of period 8,238 874 3,108-------------------------- ---------- ---------- -------- Unaudited Analysis of Net Debtfor the six months ended 31 December 2005 Other At non 31 At cash December 1 July Cash Acquisitions items 2005 2005 flows £000 £000 £'000 £000 £000-------------------- -------- -------- -------- -------- ---------Cash and bankbalances 5,579 3,097 - - 8,676Bank overdrafts (2,471) 2,056 (23) - (438)Debt due within oneyear (2,029) 2,029 - - -Debt due after oneyear (10,811) (9,945) - (74) (20,830)Finance leases andhire purchasecontracts (5,690) 1,446 - (1,305) (5,549)-------------------- -------- -------- -------- -------- ---------Total (15,422) (1,317) (23) (1,379) (18,141)-------------------- -------- -------- -------- -------- --------- 1. Company Details WYG is an international business providing consultancy services to the built,natural and social environment. 2. General Information The interim financial information is unaudited. The financial information doesnot constitute statutory accounts within the meaning of section 240 of theCompanies Act 1985. The UK GAAP financial information relating to the year ended30 June 2005 is an extract from the latest published accounts which have beendelivered to the Registrar of Companies; the report of the auditors on theseaccounts was unqualified. 3. Accounting Policies The interim financial information has been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion. The same accounting policies and methods of computation are followed inthe interim financial statements as published by the Company on 30 November2005, which are available on the company's website at www.wyg.com.The accounting policies used in the interim financial information are consistentwith those the Directors intend to use in the annual financial statements, butsome changes to these policies may be necessary if the EU fails to endorse allof the proposed standards for financial reporting in 2006, if any new or revisedstandards are issued, or if any further interpretation guidance is published. 4. Segmental Analysis For management purposes, the Group is currently organised into three operatingbusiness segments - Engineering, Management Services and The Environment. Thesebusiness segments are the basis on which the Group reports its primary segmentinformation. The segment results for the six months ended 31 December 2005 are as follows: Engineering Management The Group Services Environment £'000 £'000 £'000 £'000REVENUEExternal sales 38,165 24,548 18,653 81,366Inter-segment sales (2,157) (168) (468) (2,793) -------- --------- --------- --------Total revenue 36,008 24,380 18,185 78,573 -------- --------- --------- -------- RESULTOperating profit 2,355 1,918 2,107 6,380 -------- --------- --------- Finance costs - net (1,039) -------- Profit before tax 5,341Tax (1,513) --------Profit for the period 3,828 -------- 4. Segmental Analysis (Continued) The segment results for the six months ended 31 December 2004 are as follows: Engineering Management The Group Services Environment £'000 £'000 £'000 £'000REVENUEExternal sales 34,173 21,116 12,495 67,784Inter-segment sales (1,601) (85) (272) (1,958) -------- --------- --------- --------Total revenue 32,572 21,031 12,223 65,826 -------- --------- --------- -------- RESULTOperating profit 2,258 1,858 1,460 5,576 -------- --------- --------- Finance costs - net (927) -------- Profit before tax 4,649Tax (1,288) --------Profit for the period 3,361 -------- 5. Tax The tax charge for the six months ended 31 December 2005 has been calculated at28%, the estimated effective tax rate for the year ended 30 June 2006. 6 Earnings Per Share Adjusted earnings per share is calculated after adding back intangible assetamortisation of £0.06m (2004: £nil), giving adjusted earnings of £3.89m (2004:£3.36m) which are divided by the average number of shares in issue during theperiod ranking for dividend of 41,102,590 (2004: 39,707,534). Earnings per share is calculated on the profit after tax of £3.83m (2004:£3.36m) and the average number of shares in issue disclosed above. Diluted earnings per share is calculated by taking the earnings as disclosedabove and the average number of shares that would be issued on the full exerciseof outstanding share options and the issue of shares in respect of deferredconsideration of 42,053,213 (2004: 40,874,380). 7. Acquisitions On 1 November 2005 the Group acquired the entire issued share capital of DoyWebster Holdings Limited. The initial consideration was £1.8m comprising £0.7min cash and 326,120 shares in White Young Green Plc at a market value of £3.373.Further consideration of up to £0.7m is payable if certain performance targetsare met. The additional consideration will be paid in either shares or loannotes at the option of the Group.On 2 February 2006 the Group acquired the business and certain assets of J CWarnock Consulting Engineers. The initial consideration was £0.66m comprising£0.13m in cash and 151,293 shares in White Young Green Plc at a market value of£3.463. Further consideration of up to £0.28m is payable if certain performancetargets are met. The additional consideration will be paid in either shares orcash at the option of the Group. On 28 March 2006 the Group acquired the entire issued share capital of TweedsLimited. The initial consideration was £11.0m comprising £7.1m in cash, £0.2m ininterest bearing loan notes and 970,023 shares in White Young Green Plc at amarket value of £3.763. Further consideration of up to £1.25m is payable ifcertain performance targets are met. The additional consideration will be paidin either shares or cash at the option of the Group. On 28 March 2006 the Group acquired the entire issued share capital ofFarningham McCreadie Partnership Limited. The initial consideration was £2.2mcomprising £1.6m in cash and 159,456 shares in White Young Green Plc at a marketvalue of £3.763. Further consideration of up to £1.0m is payable if certainperformance targets are met. The additional consideration will be paid in eithershares or loan notes at the option of the Group. 8. Explanation of Transition to IFRS The Group's financial statements for the year ended 30 June 2006 will be thefirst annual financial statements prepared under IFRS. The following disclosuresare required in the year of transition. The last financial statements under UKGAAP were for the year ended 30 June 2005 and the date of transition to IFRS wastherefore 1 July 2004. Reconciliation of equity and net assets as at 1 July 2004 (date of transition toIFRS) As Pensions Goodwill Dividends Employee Share-based Other As reported amortisation benefits payments restated under under UK GAAP IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Audited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited (i) (ii) (iii) (iv) (v) (vi) (vii) Non-currentassetsGoodwill 34,010 - - - - - - 34,010Otherintangibleassets - - - - - - 781 781Property,plant andequipment 7,135 - - - - - (781) 6,354Deferred taxassets 164 925 - - - 85 12 1,186 ------- 41,309 925 - - - 85 12 42,331------------ -------- ------- -------- ------- ------- ------- ------- ------- CurrentassetsWork inprogress 24,030 - - - - - - 24,030Trade andotherreceivables 33,699 - - - - - - 33,699Taxrecoverable 538 - - - - - - 538Cash and cashequivalents 4,586 - - - - - - 4,586 ------- 62,853 - - - - - - 62,853 CurrentliabilitiesTrade andother (34,048) - - 1,468 (1,830) (22) - (34,432)payablesTaxliabilities (1,565) - - - - - - (1,565)Obligationsunder financeleases (2,127) - - - - - - (2,127)Bankoverdraft (1,847) - - - - - - (1,847)and loans ------------ -------- ------- -------- ------- ------- ------- ------- ------- (39,587) - - 1,468 (1,830) (22) - (39,971) ------- -------Net currentassets 23,266 - - 1,468 (1,830) (22) - 22,882------------ -------- ------- -------- ------- ------- ------- ------- ------- Non-currentliabilitiesBank loans (12,011) - - - - - - (12,011)Retirementbenefitobligation - (3,084) - - - - - (3,084)Deferred taxliabilities - - - - - - (50) (50)Obligationsunder financeleases (2,833) - - - - - - (2,833) ------- ------- (14,844) (3,084) - - - - (50) (17,978)------------ -------- ------- -------- ------- ------- ------- ------- ------- -------Net assets 49,731 (2,159) - 1,468 (1,830) 63 (38) 47,235------------ -------- ------- -------- ------- ------- ------- ------- ------- Shareholders'equityShare 1,995 - - - - - - 1,995capitalShares to beissued 2,433 - - - - - - 2,433Share premiumaccount 30,676 - - - - - - 30,676Cumulative - - - - - - - -translationreserveRetainedearnings 14,627 (2,159) - 1,468 (1,830) 63 (38) 12,131 -------Totalshareholders'equity 49,731 (2,159) - 1,468 (1,830) 63 (38) 47,235------------ -------- ------- -------- ------- ------- ------- ------- ------- 8. Explanation of Transition to IFRS (Continued) Reconciliation of equity and net assets as at 30 June 2005 As Pensions Goodwill Dividends Employee Share-based Other As reported amortisation benefits payments restated under under UK GAAP IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Audited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited (i) (ii) (iii) (iv) (v) (vi) (vii) Non-currentassetsGoodwill 34,917 - 1,883 - - - (125) 36,675Otherintangibleassets - - - - - - 985 985Property,plant andequipment 9,999 - - - - - (902) 9,097Deferred taxassets 193 1,601 - - - 339 91 2,224 ------- 45,109 1,601 1,883 - - 339 49 48,981----------- -------- ------- -------- ------- ------- ------- ------- ------- CurrentassetsWork inprogress 28,772 - - - - - - 28,772Trade andotherreceivables 39,505 - - - - - - 39,505Taxrecoverable 289 - - - - - - 289Cash and cashequivalents 5,579 - - - - - - 5,579 ------- 74,145 - - - - - - 74,145 CurrentliabilitiesTrade andother (42,176) - - 1,681 (2,213) (98) - (42,806)payablesTaxliabilities (1,676) - - - 115 - - (1,561)Obligationsunder financeleases (2,547) - - - - - - (2,547)Bankoverdraft (4,500) - - - - - - (4,500)and loans ----------- -------- ------- -------- ------- ------- ------- ------- ------- (50,899) - - 1,681 (2,098) (98) - (51,414)----------- -------Net currentassets 23,246 - - 1,681 (2,098) (98) - 22,731----------- -------- ------- -------- ------- ------- ------- ------- ------- Non-currentliabilitiesBank loans (10,811) - - - - - - (10,811)Retirementbenefitobligation - (5,336) - - - - - (5,336)Deferred taxliabilities - - - - - - (100) (100)Obligationsunder financeleases (3,143) - - - - - - (3,143) ------- (13,954) (5,336) - - - - (100) (19,390)----------- -------- ------- -------- ------- ------- ------- ------- ------- -------Net assets 54,401 (3,735) 1,883 1,681 (2,098) 241 (51) 52,322----------- -------- ------- -------- ------- ------- ------- ------- ------- Shareholders'equityShare 2,050 - - - - - - 2,050capitalShares to beissued 1,550 - - - - - - 1,550Share premiumaccount 33,554 - - - - - - 33,554Cumulativetranslationreserve - - - - - - (440) (440)Retainedearnings 17,247 (3,735) 1,883 1,681 (2,098) 241 389 15,608 -------Totalshareholders'equity 54,401 (3,735) 1,883 1,681 (2,098) 241 (51) 52,322----------- -------- ------- -------- ------- ------- ------- ------- ------- 8. Explanation of Transition to IFRS (Continued) Reconciliation of equity and net assets as at 31 December 2004 As Pensions Goodwill Dividends Employee Share-based Other As reported amortisation benefits payments restated under under UK GAAP IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Audited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited (i) (ii) (iii) (iv) (v) (vi) (vii)Non-currentassetsGoodwill 33,105 - 925 - - - - 34,030Otherintangibleassets - - - - - - 926 926Property,plant andequipment 8,827 - - - - - (926) 7,901Deferred taxassets 164 941 - - - 309 12 1,426 ------- 42,096 941 925 - - 309 12 44,283----------- -------- ------- -------- ------- ------- ------- ------- ------- CurrentassetsWork inprogress 23,559 - - - - - - 23,559Trade andotherreceivables 34,206 - - - - - - 34,206Taxrecoverable 395 - - - - - - 395Cash and cashequivalents 7,707 - - - - - - 7,707 ------- 65,867 - - - - - - 65,867 CurrentliabilitiesTrade andother (30,131) - - 954 (1,249) (60) - (30,486)payablesTaxliabilities (1,331) - - - (174) - - (1,505)Obligationsunder financeleases (2,571) - - - - - - (2,571)Bankoverdraft (16,160) - - - - - - (16,160)and loans ----------- -------- ------- -------- ------- ------- ------- ------- ------- (50,193) - - 954 (1,423) (60) - (50,722) -------Net currentassets 15,674 - - 954 (1,423) (60) - 15,145----------- -------- ------- -------- ------- ------- ------- ------- ------- Non-currentliabilitiesBank loans (3,646) - - - - - - (3,646)Retirementbenefitobligation - (3,138) - - - - - (3,138)Deferred taxliabilities - - - - - - (75) (75)Obligationsunder financeleases (3,113) - - - - - - (3,113) ------- (6,759) (3,138) - - - - (75) (9,972)----------- -------- ------- -------- ------- ------- ------- ------- ------- -------Net assets 51,011 (2,197) 925 954 (1,423) 249 (63) 49,456----------- -------- ------- -------- ------- ------- ------- ------- ------- Shareholders'equityShare 1,998 - - - - - - 1,998capitalShares to beissued 2,299 - - - - - - 2,299Share premiumaccount 30,784 - - - - - - 30,784Cumulativetranslationreserve - - - - - - (75) (75)Retainedearnings 15,930 (2,197) 925 954 (1,423) 249 12 14,450 -------Totalshareholders'equity 51,011 (2,197) 925 954 (1,423) 249 (63) 49,456----------- -------- ------- -------- ------- ------- ------- ------- ------- 8. Explanation of Transition to IFRS (Continued) Reconciliation of reported profits for the six months ended 31 December 2004 As Pensions Goodwill Employee Share-based Other As reported amortisation benefits payments restated under under UK GAAP IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Audited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited (i) (ii) (iv) (v) (vi) (vii) ContinuingOperationsRevenue 65,826 - - - - - 65,826 Operatingexpenses (61,781) 113 925 581 (88) - (60,250) -------- -------- -------- -------- -------- -------- -------- Operatingprofit 4,045 113 925 581 (88) - 5,576 Finance (760) (167) - - - - (927)costs -------- -------- -------- -------- -------- -------- -------- Profitbefore 3,285 (54) 925 581 (88) - 4,649tax Tax (1,132) 16 - (174) 27 (25) (1,288) -------- -------- -------- -------- -------- -------- -------- -Profitfor the 2,153 (38) 925 407 (61) (25) 3,361year -------- -------- -------- -------- -------- -------- -------- Earnings per shareBasic 5.4p (0.1p) 2.4p 1.0p (0.2p) - 8.5pDiluted 5.3p (0.1p) 2.2p 1.0p (0.2p) - 8.2p -------- -------- -------- -------- -------- -------- -------- Adjusted earnings per shareBasic 7.8p (0.1p) - 1.0p (0.2p) - 8.5pDiluted 7.5p (0.1p) - 1.0p (0.2p) - 8.2p -------- -------- -------- -------- -------- -------- -------- 8. Explanation of Transition to IFRS (Continued) Reconciliation of reported profits for the year ended 30 June 2005 As Pensions Goodwill Employee Share-based Other As reported amortisation benefits payments restated under under UK GAAP IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Audited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited (i) (ii) (iv) (v) (vi) (vii) ContinuingOperationsRevenue 143,906 - - - - - 143,906 Operatingexpenses (134,209) 227 1,883 (383) (112) (42) (132,636) -------- -------- -------- -------- -------- -------- -------- Operatingprofit 9,697 227 1,883 (383) (112) (42) 11,270 Finance (1,549) (334) - - - - (1,883)costs -------- -------- -------- -------- -------- -------- -------- Profitbefore 8,148 (107) 1,883 (383) (112) (42) 9,387tax Tax (2,849) 33 - 115 34 29 (2,638) -------- -------- -------- -------- -------- -------- -------- -Profitfor the 5,299 (74) 1,883 (268) (78) (13) 6,749year -------- -------- -------- -------- -------- -------- -------- Earnings per shareBasic 13.2p (0.2p) 4.8p (0.7p) (0.2p) - 16.9pDiluted 13.0p (0.2p) 4.6p (0.7p) (0.2p) - 16.5p -------- -------- -------- -------- -------- -------- -------- Adjusted earnings per shareBasic 18.0p (0.2p) - (0.7p) (0.2p) 0.1p 17.0pDiluted 17.6p (0.2p) - (0.7p) (0.2p) 0.1p 16.6p -------- -------- -------- -------- -------- -------- -------- 9. Explanation of Reconciling Items between UK GAAP and IFRS (i) Under IFRS, the Group measures pension commitments and other relatedbenefits in accordance with IAS 19 "Employee Benefits" which adopts a balancesheet approach, bringing the deficit/surplus of the pension/post-retirementbenefits schemes onto the balance sheet. There were no provisions or prepaymentspreviously recognised under UK GAAP to reverse.(ii) Under IFRS 3 "Business Combinations" annual amortisation is no longerrequired. Instead goodwill must be allocated to each income generating unitacquired, and an annual impairment review must be performed for each discreteunit in accordance with IAS 36 "Impairment of Assets". The Group has elected notto apply IFRS 3 "Business Combinations" retrospectively and restate businesscombinations completed prior to the date of transition. As a result, in theopening balance sheet, goodwill arising from past business combinations remainsas stated under UK GAAP at 1 July 2004. (iii) Under IAS 10 "Events After the Balance Sheet Date" proposed ordinarydividends do not meet the definition of a liability until such time as they havebeen approved. In the case of a final dividend this approval is by shareholdersat the Annual General Meeting. (iv) IAS 19 "Employee Benefits" requires employers to recognise the total costof all short term employee benefits expected to be paid in exchange foremployee's services in the accounting period. This includes holiday pay (the WYGholiday year runs from 1 January to 31 December and does not therefore coincidewith the 30 June statutory financial year end) and all bonus entitlements, bothof which have previously been accounted for as incurred. (v) Under UK GAAP the cost of awards to employees through the Long TermIncentive Plan and the Investment Bonus Plan were charged to the incomestatement over the period to which the employees' performance related.Historically provision has been made for the cost of awards based on the shareprice ruling at grant date. All of the Group's share options have an exerciseprice equivalent to the fair value at the date of award, therefore there was norequirement to recognise any expense under UK GAAP. Under IFRS 2 "Share-basedPayment" all share awards will be measured at fair value at grant date andrecognised as an expense over the vesting period, subject to performancecriteria and vesting levels. (vi) IAS 12 "Income Taxes" requires deferred tax to be based on temporarydifferences, being the difference between the carrying value of an asset orliability and its tax base. In addition to the impacts in respect of the pensionand share based payment adjustments noted above, a deferred tax liability isseparately recognised in respect of the temporary difference between thecarrying value of tax deductible goodwill and its tax base. An additionaldeferred tax asset in respect of other sundry temporary differences is alsorecognised. (vii)Under UK GAAP, all capitalised software is included within tangible fixedassets as plant and equipment. Under IFRS, only computer software that isintegral to a related item of hardware should be included as plant andequipment. All other computer software should be recorded as an intangibleasset. Accordingly a reclassification of the net book value amount ofcapitalised software has been made between property, plant and equipment andintangible assets. There is no effect on net assets. 10. Availability of Interim ReportThe interim report will be posted to shareholders on 11 April 2006 and copieswill be available at the Company's registered office at Arndale Court,Headingley, Leeds LS6 2UJ, or on the Company's website www.wyg.com. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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