16th Jan 2007 07:01
Scott Wilson Group plc16 January 2007 Tuesday, 16 January 2007 SCOTT WILSON GROUP PLC Interim Results for the 26 week period ended 29 October 2006 Scott Wilson Group plc, ("Scott Wilson" or "the Group"), the internationalconsultancy offering integrated professional services in the transportation,property, environmental and natural resources sectors, today reports its interimresults for the 26 week period ended 29 October 2006. Financial highlights • Revenues including share of joint ventures rose by 22.8% to £113.2m (2005: £92.1m) • Underlying* operating profit increased by 23.9% to £7.1m (2005: £5.8m) • Profit before tax increased to £8.0m (2005: £3.6m) • Basic earnings per share of 7.60p • Diluted earnings per share of 7.42p • Interim dividend of 1.0p per share, the first as a listed company Operating highlights • Recent key contract wins include the East London Line, London Crossrail, Edinburgh Airport Rail Link, Greece Ionia Odos Motorway, Bahrain Islands Developments and Bath: Combe Down Mine Stabilisation • Significant acquisitions during and after the period have enhanced expertise and coverage in target sectors Prospects • Record order book of £250m following major contract wins • Trading remains strong in buoyant market conditions • Upgraded medium term targets including organic turnover growth of at least 10% per annum and operating margins of 8%. Substantial progress has been made towards achieving these objectives * The Directors believe that the presentation of underlying operating profit andunderlying earnings per share, being these line items within the Group resultsadjusted for the impact in the comparative periods of restructuring costs, thenon-recurring loss relating to Basing View Investments Ltd, the gain arising onretirement benefit plan changes and costs relating to Admission, assists withthe understanding of the underlying results of the Group. A reconciliation ofthese measures to Group operating profit and basic and diluted earnings pershare is included in notes 6 and 14 to this interim announcement. Geoff French, Chairman of Scott Wilson commented: "The strength of our markets combined with our record order book allows us tolook forward to the future with confidence. We now expect results for thisfinancial year to exceed current market expectations. Our recent acquisitionshave broadened the Group's presence in strategically key market sectors in linewith our stated strategy. The integration of these acquisitions is now wellunder way and it is expected that they will help us realise significantoperating synergies." For further information please contact: Scott Wilson Group plc www.scottwilson.comGeoff French, Chairman 01256 310 200Stephen Kimmett, Finance Director Smithfield Consultants 020 7360 4900Reg Hoare/George Hudson/Will Henderson Print resolution images are available for the media to view and download fromwww.vismedia.co.uk Notes to editors: Scott Wilson is an international consultancy group providing expert,sustainable, integrated solutions to meet the planning, engineering, managementand environmental needs of four principal market sectors: transportation,property, environment and natural resources. It was ranked as the ninth largestUK-owned engineering consultant by fee income for the calendar year 2005 in theNew Civil Engineer 2006 annual survey. Scott Wilson has demonstrated strong and sustained growth and now has a globalnetwork of offices in 78 locations, of which 39 are in the UK, employing a totalof 5,215 members of staff with 3,659 based in the UK. The remainder are mainlylocated at Scott Wilson regional centres in China/Hong Kong, Dubai, India,Poland, South Africa and Thailand. On 15 March 2006 Scott Wilson Group plc was admitted to the Official List and totrading on the London Stock Exchange. Post flotation, the Group has made considerable progress with several highprofile contract wins - the most recent being the East London Line with fees of£14m, as well as the Edinburgh Airport Rail Link with fees of £18m, LondonCrossrail with fees of £12m, Greece Ionia Odos Motorway with fees of £12m andBahrain Islands Developments with fees of £10m. Scott Wilson has strong relationships with national governments,non-governmental agencies, multinational companies and supranational fundingbodies. In the financial year ended 30 April 2006, 30 of the Company's clientswere billed over £1 million and the top 50 of the Group's clients accounted foraggregate fees of some £100 million. www.scottwilson.com CHAIRMAN'S STATEMENT Introduction At the time of our flotation the Board set out a clear strategy for achievingsustained growth in revenue, margins and shareholder returns, both organicallyand by acquisition. We were also seeking a better balance across our marketsectors to avoid over-dependence on any single sector. These interim results give a clear indication of the good progress we have madein delivering this strategy. Results Revenue, including our share of joint ventures, increased by 22.8% to £113.2m(2005: £92.1m). Group operating profit increased from £4.9m to £7.1m with the underlying*operating margin remaining at 6.3% and underlying* operating profit increasingby 23.9% to £7.1m (2005: £5.8m). This result was achieved in spite of tradinglosses and restructuring costs of £0.8m incurred in the period in respect of theGroup's businesses in Southern Africa. Profit before tax was £8.0m (2005: £3.6m) giving basic earnings and dilutedearnings per share of 7.60p and 7.42p respectively. On 29 October 2006, net cash and cash equivalents stood at £17.3m, down from£33.1m at 30 April 2006. This reduction is principally the result of specialpension contributions of £16.6m and the funding of continuing growth, partlyoffset by the timing of payroll costs. Dividend The Board has declared an interim dividend of 1.0p per share to be paid on 23February 2007 to ordinary shareholders on the register on 26 January 2007. Pensions The Group has completed all the actions disclosed in the Prospectus, with theexception of a final payment of £0.7m to the Railways Pension Scheme to be madein early May 2007. The gross deficit reduced in the period from £33.6m to£24.4m. This was less than anticipated as external factors (inflation anddiscount rates) moved unfavourably, partially offsetting the special pensionpayment of £16.6m. Acquisitions In May 2006, we acquired the 30% minority interest in Scott Wilson PavementEngineering Ltd, a leading UK consultancy in the evaluation of highways, runwaypavements and rail track beds. In June 2006, the acquisition of Roscoe Postle Associates Inc of Canadasignificantly enhanced our position, client base and geographical coverage inthe mining sub-sector of natural resources. Since the period end we have acquired the following three businesses, at amaximum expected consideration of £41.0m: • Ferguson Mcllveen LLP, a leading Northern Ireland consultancy providing design consultancy services for the property, environment and transport sectors; • Cameron Taylor Group Limited, which has significantly enhanced the Group's presence in the UK property sector; and • DGP International Limited, which has brought new skills within the nuclear, petrochemical and pharmaceuticals sectors. Employees We now have over 5,200 staff in total, up from 3,800 over the last 12 months. Mythanks go to all members of staff for their continuing efforts on behalf ofScott Wilson. They remain critical to the Group's reputation, its continuinginnovation and to the delivery of these record results. Outlook The strength of our markets combined with our record order book means we lookforward to the year with confidence. We now expect results for this financialyear to exceed current market expectations. Our recent acquisitions have broadened the Group's presence in strategicallyimportant market segments in keeping with our stated strategy. The integrationof these acquisitions is now well under way and it is expected that they willhelp us realise significant operating synergies as with previous acquisitions.The Group has renegotiated and increased its existing banking facilities andthus has significant capacity to finance both continued organic growth andfurther selective acquisitions. REVIEW OF OPERATIONS United Kingdom & Ireland Performance of the UK businesses in the period has been strong, with allDivisions exceeding expectations. Revenues including share of joint ventures are21.2% up on last year with significant growth in UK Central, Scotland & Irelandand UK Railways. Underlying* operating profit was up 21.7% with underlying*margins across the Divisions converging towards the upgraded Group benchmark of8%. Of particular note was the underlying* margin improvement in UK South from4.8% to 7.0%. The markets across the four principal sectors continue to be buoyant and this isparticularly evident in Transportation and Property, both public and privatesector. The Divisions have been successful in securing several major projects includingLondon Crossrail, Edinburgh Airport Rail Link, Highways Agency NationalFramework, Bath: Combe Down Stabilisation and the East London Line upgrade. Within UK Railways, this has had the effect of boosting revenue by 40% abovelast year and means that the Division will be sharply focussed on projectdelivery during the second half. The outlook for the remainder of the year is for continued progress, with afocus on delivering added value from acquisitions and ensuring integration isachieved efficiently and smoothly whilst maintaining and sustaining improvementsto performance across the Divisions. International Revenues including share of joint ventures were up 27.4% on last year at £30.7m. A new integrated network of six regional businesses is being established whichallows a unified global strategy, improved financial control and the sharing ofknowledge, resources and clients. Underlying* operating profit increased by 79.4% to £0.4m, a particularlypleasing result as it includes trading losses and the cost of restructuring inSouthern Africa. Resident businesses have been closed in Zimbabwe, Malawi,Botswana and Mozambique and re-focused on a single regional business inJohannesburg. All other regional businesses demonstrated a gradual improvementin performance. The new business model is expected to result in improvedmargins. Major new commissions were awarded including PPP toll road projects in Greece,master planning and infrastructure projects in the Middle East and powerprojects in Africa and South East Asia. Port work continues to expand in Indiaand the UAE and mining advisory projects have been secured in Chile, Colombia,Australia and Mongolia. The RPA acquisition has given the Group access to over 80 global clients for duediligence and investment advisory services with prospects for downstreamcross-selling of engineering. The China business continues to expand with improved margins and is benefitingfrom a recent upsurge in activity in Hong Kong. A particular feature is theincreasing workload in supporting Chinese clients with internationalinfrastructure investment programmes outside China, particularly in Africa andSouth America. Overall, the first half of the year has been positive for the InternationalDivision despite having to absorb trading losses and restructuring costs inSouthern Africa. The underlying improvement in performance is encouraging. CONSOLIDATED INCOME STATEMENT 26 weeks ended 29 October 2006 26 weeks ended 30 October 2005 52 weeks ended 30 April 2006 Unaudited unaudited audited Before Before Before Non-re Non-re Non-re Non-re Non-re Non-re curring curring curring curring curring curring items items items items items items and and and and and and restruct- restruct- restruct- restruct- restruct- restruct- uring uring uring uring uring uring costs costs Total Costs costs Total costs costs Total Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ---------- ---- ------ ---- ------ ------ ----- ------ ------- ------ -------CONTINUINGOPERATIONS:---------- ---- ------ ---- ------ ------ ----- ------ ------- ------ -------REVENUEINCLUDINGSHARE OF JOINTVENTURESREVENUES 113,194 - 113,194 92,148 - 92,148 197,765 - 197,765Less: share ofjoint venturerevenues (4,611) - (4,611) (5,772) - (5,772) (11,841) - (11,841)-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------GROUP REVENUE 108,583 - 108,583 86,376 - 86,376 185,924 - 185,924Cost of sales (69,205) - (69,205) (54,938) - (54,938) (117,964) - (117,964)-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------GROSS PROFIT 39,378 - 39,378 31,438 - 31,438 67,960 - 67,960Administrativeexpenses 3 (32,491) - (32,491) (26,332) (908) (27,240) (58,843) 10,977 (47,866)Share ofresult ofjoint ventures 254 - 254 657 - 657 1,289 - 1,289-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------OPERATINGPROFIT 7,141 - 7,141 5,763 (908) 4,855 10,406 10,977 21,383Finance income 4 5,948 3,972 8,283Finance costs 5 (5,068) (5,237) (10,400)-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------PROFIT BEFORETAXATION 8,021 3,590 19,266Taxation (2,671) (1,685) (6,325)-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------PROFIT FOT THEPERIOD 5,350 1,905 12,941-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------ATTRIBUTABLE TO:Equity holdersof the Company 5,351 1,748 12,527Minorityinterests (1) 157 414-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- ------- 5,350 1,905 12,941-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------EARNINGS PERSHARE:Basic 6 7.60p 6.55p 38.90pDiluted 6 7.42p 6.55p 37.70p-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- -------DIVIDENDSDECLARED:Amount pershare - 2.50p 5.00pTotal amountabsorbed(£'000) - 667 1,334-------- ---- ------ -------- ------ ------ -------- ------ ------- -------- ------- There were no discontinued operations in any period. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Currency translation differences ontranslation of foreign operations (342) (314) (381)Actuarial gains and losses on definedbenefit pension schemes (9,105) (11,346) (4,376)Tax on items recognised directly inequity 2,834 3,498 1,427--------------------------- --------- --------- ---------EXPENSE RECOGNISED DIRECTLY IN EQUITY (6,613) (8,162) (3,330)Profit for the period 5,350 1,905 12,941--------------------------- --------- --------- ---------TOTAL RECOGNISED (EXPENSE)/INCOME FOR THE PERIOD (1,263) (6,257) 9,611--------------------------- --------- --------- --------- ATTRIBUTABLE TO:Equity holders of the Company (1,262) (6,368) 9,221Minority interests (1) 111 390--------------------------- --------- --------- --------- (1,263) (6,257) 9,611--------------------------- --------- --------- --------- CONSOLIDATED BALANCE SHEET 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited Notes £'000 £'000 £'000----------------------- ------ --------- --------- ---------ASSETSNON-CURRENT ASSETSTangible fixed assets 14,192 9,246 13,847Goodwill 8,820 5,839 6,864Other intangible assets 1,546 1,022 1,333Investments in joint ventures 204 457 680Deferred tax assets 12,260 17,901 11,897----------------------- ------ --------- --------- --------- 37,022 34,465 34,621----------------------- ------ --------- --------- ---------CURRENT ASSETSTrade and other receivables 76,818 61,486 65,483Current tax assets 938 - 1,089Cash and cash equivalents 17,366 5,043 33,067----------------------- ------ --------- --------- --------- 95,122 66,529 99,639----------------------- ------ --------- --------- ---------TOTAL ASSETS 132,144 100,994 134,260----------------------- ------ --------- --------- ---------EQUITY AND LIABILITIESEQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANYIssued capital 7 86,291 21,950 86,277Shares to be issued 7 481 - -Other reserves 7 (6,313) (6,479) (6,074)Retained earnings 7 (29,138) (43,136) (28,426)----------------------- ------ --------- --------- --------- 51,321 (27,665) 51,777Minority interests 130 725 971----------------------- ------ --------- --------- ---------TOTAL EQUITY/(DEFICIT) 51,451 (26,940) 52,748----------------------- ------ --------- --------- ---------NON-CURRENT LIABILITIESBorrowings 2,429 12,863 2,304Provisions 570 - -Retirement benefit obligations 24,459 60,333 33,577----------------------- ------ --------- --------- --------- 27,458 73,196 35,881----------------------- ------ --------- --------- ---------CURRENT LIABILITIESTrade and other payables 47,499 35,907 40,531Current tax liabilities 161 543 474Borrowings 3,867 18,288 3,813Provisions 1,708 - 813----------------------- ------ --------- --------- --------- 53,235 54,738 45,631----------------------- ------ --------- --------- ---------TOTAL LIABILITIES 80,693 127,934 81,512----------------------- ------ --------- --------- ---------TOTAL EQUITY AND LIABILITIES 132,144 100,994 134,260----------------------- ------ --------- --------- --------- CONSOLIDATED CASH FLOW STATEMENT 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited Notes £'000 £'000 £'000----------------------- ------ --------- --------- ---------CASH FLOWS FROM OPERATING ACTIVITIESCash generated from operations 8 7,503 5,488 12,629Defined benefit pension plancontributions (20,143) (3,375) (12,069)Dividends received from joint ventures 694 1,164 1,575Tax paid (197) (908) (2,510)----------------------- ------ --------- --------- ---------NET CASH FLOWS FROM OPERATING ACTIVITIES (12,143) 2,369 (375)----------------------- ------ --------- --------- ---------CASH FLOWS FROM INVESTING ACTIVITIESPurchase of tangible fixed assets (1,646) (1,264) (6,946)Purchase of intangible assets (641) (352) (995)Proceeds from sale of tangible fixedassets - 1 6Acquisition of subsidiaries, net ofcash and cash equivalents acquired (1,621) - (606)----------------------- ------ --------- --------- ---------NET CASH FLOWS FROM INVESTING ACTIVITIES (3,908) (1,615) (8,541)----------------------- ------ --------- --------- ---------CASH FLOWS FROM FINANCING ACTIVITIESInterest received 513 389 154Interest and finance charges paid (281) (703) (1,780)Proceeds from issue of OrdinaryShares, net of issue costs of £nil(October 2005: £nil, April 2006:£5.9m) 14 - 62,122Receipt of new loans and finance leaseadvances 2,005 1,606 5,831Repayment of loans and finance leases (1,833) (1,140) (18,871)Dividends paid to equity shareholders - - (1,334)----------------------- ------ --------- --------- ---------NET CASH FLOWS FROM FINANCING ACTIVITIES 418 152 46,122----------------------- ------ --------- --------- ---------NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (15,633) 906 37,206Cash and cash equivalents at start ofperiod 33,067 (4,154) (4,154)Foreign exchange (87) (82) 15----------------------- ------ --------- --------- ---------CASH AND CASH EQUIVALENTS AT END OF PERIOD 9 17,347 (3,330) 33,067----------------------- ------ --------- --------- --------- NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1 GENERAL INFORMATIONThe basis of preparation, methods of computation and accounting policies used inthe interim financial statements are consistent with International FinancialReporting Standards (IFRS) and those followed in the preparation of the Group'sfinancial statements for the year ended 30 April 2006. With effect from 1 May 2006, the Group's annual financial statements will beprepared for 52 or 53 week periods, in order to align them with the operatingperiods for management reporting purposes. Accordingly, the Interim Reportcovers the 26 weeks ended 29 October 2006, with comparative information for the26 weeks ended 30 October 2005 and for the 52 weeks ended 30 April 2006. The financial information in the Interim Report relating to the 52 weeks ended30 April 2006 does not constitute statutory accounts within the meaning of s240of the Companies Act 1985. The statutory accounts of the Group for the yearended 30 April 2006 have been delivered to the Registrar of Companies. Theauditors' opinion on those accounts was unqualified and did not contain astatement made under s237(2) or s237(3) of the Companies Act 1985. 2 SEGMENT ANALYSISThe trading activities and performance of the Group continue to be managedthrough five geographical divisions: UK Central, UK South, Scotland & Ireland,UK Railways and International. Segment revenue and results for the 26 weeks ended 29 October 2006 (unaudited): UK UK Scotland UK Central South & Ireland Railways International Core Total £'000 £'000 £'000 £'000 £'000 £'000 £'000----------------- ------ ------ ------ ------ ------- ------ ------Revenueincludingshare of jointventurerevenues 32,593 21,576 8,047 20,260 30,718 - 113,194----------------- ------ ------ ------ ------ ------- ------ ------Group revenue 28,469 21,576 8,047 20,260 30,231 - 108,583----------------- ------ ------ ------ ------ ------- ------ ------Operatingprofit beforerestructuringandnon-recurringitems 2,920 1,520 675 1,626 400 - 7,141----------------- ------ ------ ------ ------ ------- ------ ------Operatingprofit -segment result 2,920 1,520 675 1,626 400 - 7,141----------------- ------ ------ ------ ------ ------- ------ ------ Segment revenue and results for the 26 weeks ended 30 October 2005 (unaudited): UK UK Scotland UK Central South & Ireland Railways International Core Total £'000 £'000 £'000 £'000 £'000 £'000 £'000---------------- ------- ------ ------- -------- --------- ------ ------Revenueincludingshare of jointventurerevenues 27,308 19,781 6,507 14,449 24,103 - 92,148-------------- ------- ------ ------- -------- --------- ------ ------Group revenue 22,502 19,781 6,507 14,449 23,137 - 86,376------------ ------- ------- ------- -------- --------- ------ -------Operatingprofit beforerestructuringandnon-recurringitems 2,336 952 731 1,521 223 - 5,763------------ ------- ------- ------- -------- --------- ------ -------Operatingprofit -segment result 2,336 739 731 1,521 220 (692) 4,855------------ ------- ------- ------- -------- --------- ------ ------- 2 SEGMENT ANALYSIS (continued)Segment revenue and results for the 52 weeks ended 30 April 2006 (audited,restated): UK UK Scotland UK Central South & Ireland Railways International Core Total £'000 £'000 £'000 £'000 £'000 £'000 £'000-------------- ------- ------ ------- -------- --------- ------ -------Revenueincludingshare of jointventurerevenues 56,679 40,029 13,342 35,144 52,571 - 197,765-------------- ------- ------ ------- -------- --------- ------ -------Group revenue 46,709 40,029 13,342 35,144 50,700 - 185,924------------ ------- ------- ------- -------- --------- ------ --------Operatingprofit beforerestructuringandnon-recurringitems 4,354 1,382 1,112 2,831 727 - 10,406------------ ------- ------- ------- -------- --------- ------ --------Operatingprofit -segment result 4,354 911 1,112 2,831 507 11,668 21,383------------ ------- ------- ------- -------- --------- ------ -------- The segment revenue and results for the 52 weeks ended 30 April 2006 have beenrestated to reflect the transfer of certain operations between segments witheffect from 1 May 2006. The transfers were made in order to better align thoseoperations with the Group's geographical divisions. The restatements are asfollows: Revenue of £5,325,000 and operating profit of £508,000 have been transferredfrom UK South to UK Central; and Revenue of £1,179,000 and operating profit of £160,000 have been transferredfrom UK South to International. 3 Non-recurring items and restructuring costs 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Restructuring costs - (216) (691)Operating loss relating to Basing ViewInvestments Ltd - (692) (780)Gain arising on retirement benefit planchanges - - 13,546Costs relating to Admission - - (1,098)--------------------------- --------- --------- ---------Total - (908) 10,977--------------------------- --------- --------- --------- RESTRUCTURING COSTSIn the 52 weeks ended 30 April 2006, the Group incurred £0.7m of redundancycosts resulting from restructuring in the UK South (£0.5m) and International(£0.2m) divisions. OPERATING LOSS RELATING TO BASING VIEW INVESTMENTS LTDOn 15 March 2006, the Company acquired Basing View Investments Ltd (BVI), whichheld the 34.34% interest in Scott Wilson Holdings Ltd not then held by theCompany and liabilities under various loan and redeemable share instruments. TheCompany immediately purchased, or funded the settlement of, all thoseliabilities. The interim financial statements of the Group consolidate therevenues, costs, assets, liabilities and cash flows of BVI and its subsidiariesthroughout both the period for which they are prepared and the comparative priorperiods. 3 NON-RECURRING ITEMS AND RESTRUCTURING COSTS (continued)GAIN ARISING ON RETIREMENT BENEFIT PLAN CHANGESIn March 2006, the trustees and substantially all of the members of the ScottWilson Pension Scheme (SWPS), a defined benefit arrangement, agreed, conditionalon the Company's Admission to the Official List and the payment of a minimum£16.0m special cash contribution into SWPS, to break the link from 1 October2006 between accrued pensionable service up to that date and future salaryincreases. Additionally, they agreed that from 1 October 2006 active memberswould either pay increased contributions, accrue pension benefit at a reducedrate or switch into the Group's money purchase (defined contribution) section. Also in March 2006, the trustees and substantially all of the members of theScott Wilson Shared Cost Section of the industry-wide Railways Pension Scheme(SWRPS), a defined benefit arrangement, agreed, conditional on the Company'sAdmission to the Official List and the payment of a £2.0m special cashcontribution into SWRPS, to break the link from 1 October 2006 between accruedpensionable service up to that date and future salary increases. The impact of these changes was to reduce the overall gross deficit on theseschemes by £13.5m. COSTS RELATING TO ADMISSIONDuring the 52 weeks ended 30 April 2006, costs of £1.1m were incurred inrelation to the Admission of the Company to the Official List. Additionally,costs of £4.8m were incurred in relation to the issue of additional OrdinaryShares at the time of Admission, which were charged against the share premium. 4 FINANCE INCOME 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Interest income on bank deposits 471 64 345Expected return on pension plan assets 5,477 3,908 7,938--------------------------- --------- --------- --------- 5,948 3,972 8,283--------------------------- --------- --------- --------- 5 FINANCE COSTS 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Interest on bank loans and overdrafts 93 436 723Interest on other loans 59 121 489Finance lease charges 198 110 264Preference shares redemption premium - 316 304Unwind of discount on deferredconsideration 22 - -Interest on retirement benefitobligations 4,696 4,254 8,620--------------------------- --------- --------- --------- 5,068 5,237 10,400--------------------------- --------- --------- --------- 6 EARNINGS PER SHAREBasic earnings per share is calculated by dividing the profit attributable toequity holders of the Company by the weighted average number of Ordinary Sharesin issue during the period, excluding Ordinary Shares held by the Scott WilsonHoldings Ltd Employee Share Ownership Trust. 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Profit attributable to equity holders ofthe Company 5,351 1,748 12,527--------------------------- --------- --------- ---------Weighted average number of OrdinaryShares in issue (thousands) 70,448 26,689 32,203--------------------------- --------- --------- ---------Basic earnings per share (p) 7.60p 6.55p 38.90p--------------------------- --------- --------- ---------Weighted average number of OrdinaryShares in issue (thousands) 70,448 26,689 32,203Dilutive effect of share options(thousands) 1,694 - 1,025--------------------------- --------- --------- ---------Diluted weighted average number ofOrdinary Shares in issue (thousands) 72,142 26,689 33,228--------------------------- --------- --------- ---------Diluted earnings per share (p) 7.42p 6.55p 37.70p--------------------------- --------- --------- --------- 6 EARNINGS PER SHARE (continued)UNDERLYING* EARNINGS PER SHAREUnderlying* earnings per share is calculated by dividing the profit attributableto equity holders of the Company, after adding back non-recurring items andrestructuring costs, by the weighted average number of Ordinary Shares in issueduring the period, excluding Ordinary Shares held by the Scott Wilson HoldingsLtd Employee Share Ownership Trust. 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Profit attributable to equity holders ofthe Company 5,351 1,748 12,527Restructuring costs - 216 691Operating loss relating to Basing ViewInvestments Ltd - 692 780Gain arising on retirement benefit planchanges - - (13,546)Costs relating to Admission - - 1,098Tax relating to non-recurring items andrestructuring costs - (147) 3,623--------------------------- --------- --------- ---------Underlying* profit attributable to equityholders of the Company 5,351 2,509 5,173--------------------------- --------- --------- ---------Weighted average number of OrdinaryShares in issue (thousands) 70,448 26,689 32,203--------------------------- --------- --------- ---------Underlying* basic earnings per share (p) 7.60p 9.40p 16.06p--------------------------- --------- --------- ---------Weighted average number of OrdinaryShares in issue (thousands) 70,448 26,689 32,203--------------------------- --------- --------- ---------Dilutive effect of share options(thousands) 1,694 - 1,025--------------------------- --------- --------- ---------Diluted weighted average number ofOrdinary Shares in issue (thousands) 72,142 26,689 33,228--------------------------- --------- --------- ---------Underlying* diluted earnings per share(p) 7.42p 9.40p 15.57p--------------------------- --------- --------- --------- No options over Ordinary Shares have been awarded since 29 October 2006. 7 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Issued Shares to Retained Other capital be issued Earnings reserves Total £'000 £'000 £'000 £'000 £'000--------------------- ------- ------- ------- ------- -------At 1 May 2006 86,277 - (28,426) (6,074) 51,777Shares issued under shareoption schemes 14 - - - 14Contingently issuableshares relating tobusiness acquisitions - 481 - - 481Expense recogniseddirectly in equity - - (6,374) - (6,374)Profit for the period - - 5,351 - 5,351Equity-settled share-basedcompensation expense - - 217 - 217Fair value adjustments onacquisition of minorityinterests - - 94 - 94Translation differences(net of tax) - - - (239) (239)--------------------- ------- ------- ------- ------- -------At 29 October 2006 86,291 481 (29,138) (6,313) 51,321--------------------- ------- ------- ------- ------- ------- 8 CASH GENERATED FROM OPERATIONS 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Operating profit 7,141 4,855 21,383Gain arising on retirement benefit planchanges - - (13,546)Costs of Admission recognised in theIncome Statement - - 1,098Share of result of joint ventures (254) (657) (1,289)Movement on acquisition of minorityinterests (117) - -Defined benefit pension plan currentservice cost 2,700 2,641 4,757 Depreciation and amortisation 1,655 1,271 2,832Share-based compensation expense 230 - 51Increase in receivables and prepayments (10,788) (14,240) (14,722)Increase in payables and accruals 6,378 11,618 11,433Increase in provisions 558 - 632--------------------------- --------- --------- ---------Cash generated from operations 7,503 5,488 12,629--------------------------- --------- --------- --------- 9 Analysis of net cash/(debt) 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000--------------------------- --------- --------- ---------Cash and cash equivalents 17,366 5,043 33,067Bank overdrafts (19) (8,373) ---------------------------- --------- --------- ---------Net cash and cash equivalents 17,347 (3,330) 33,067Bank loans (7) (3,764) (232)Other loans (1,631) (7,135) (1,849)Obligations under finance leases (4,329) (3,160) (3,726)Preference shares (310) (8,719) (310)--------------------------- --------- --------- ---------Net cash/(debt) 11,070 (26,108) 26,950--------------------------- --------- --------- --------- 10 CONTINGENT LIABILITIESThe Group has issued guarantees in the normal course of business to secureadvance payments on contracts and to meet contractual bid and performance bondobligations. The amount of all such guarantees at 29 October 2006 was £6.7m (30October 2005: £9.5m, 30 April 2006: £10.9m). 11 BUSINESS COMBINATIONSOn 1 June 2006, the Group acquired the entire share capital of Roscoe PostleAssociates Inc (RPA), a Toronto-based mining consultancy business, for a totalpotential consideration of C$5.2m (inclusive of net asset adjustment of C$0.2m).The provisional goodwill arising on the acquisition is £2.1m. RPA contributedrevenue of £1.4m and profit before taxation of £0.3m to the Group's results forthe 26 weeks ended 29 October 2006. 12 INTERIM DIVIDENDThe Directors have declared an interim dividend for the 52 week period ending 29April 2007 of 1.0p per Ordinary Share to be paid on 23 February 2007 toshareholders on the register at 26 January 2007. In accordance with IAS 10, thisinterim dividend has not been recognised in the Interim Report. 13 POST BALANCE SHEET EVENTSACQUISITION OF FERGUSON MCILVEENOn 1 November 2006, the Group acquired the business and assets of FergusonMcIlveen LLP, a Northern Ireland based consultancy business providing designservices for the property, environment and infrastructure sectors, for a totalconsideration of £10.8m. The consideration comprises an initial cash payment of£3.7m and Ordinary Shares in Scott Wilson Group plc to the value of £1.85m,together with deferred cash consideration of £4.05m payable over two years anddeferred consideration to be settled by Ordinary Shares in Scott Wilson Groupplc one year after completion to the value of £1.2m. Scott Wilson Ltd became theprincipal employer of the Ferguson McIlveen final salary pension scheme, whichas at October 2006 had an estimated deficit (net of related deferred tax) of£1.8m. The estimated goodwill/intangibles arising on the acquisition is £10.0m. ACQUISITION OF CAMERON TAYLOROn 7 December 2006, the Group acquired the entire share capital of CameronTaylor Group Limited (Cameron Taylor), a London-based consultancy business withparticular expertise in the property sector, for a total consideration of£15.6m. The consideration comprises an initial cash payment of £9.9m, the issueof loan notes of £1.0m and Ordinary Shares in Scott Wilson Group plc to thevalue of £3.5m, together with deferred consideration to be settled one year fromcompletion by further Ordinary Shares in Scott Wilson Group plc to the value of£1.2m. The estimated goodwill/intangibles arising on the acquisition is £10.1m. ACQUISITION OF DGPOn 7 December 2006, the Group acquired the entire share capital of DGPInternational Limited (DGP), a Manchester-based consultancy business withparticular expertise in the nuclear, petrochemical, pharmaceutical, water andwaste management sectors, for a maximum expected consideration of £14.6m. Theconsideration comprises an initial cash payment of £8.6m and Ordinary Shares inScott Wilson Group plc to the value of £3.5m, together with deferred cashconsideration of up to £2.5m, contingent upon DGP's financial performance in theyear ended 31 December 2006. The estimated goodwill/intangibles arising on theacquisition is £12.9m. 14 RECONCILIATION OF UNDERLYING GROUP RESULTSThe Directors believe that the presentation of underlying operating profit,underlying operating margin and underlying earnings per share for thecomparative periods, assists with the understanding of the results of theGroup. A reconciliation of underlying operating profit to Group operatingprofit is given below. A reconciliation of underlying basic and diluted earningsper share is set out in note 6. Underlying operating margin is calculated as apercentage of Group revenue including share of joint venture revenues. UNDERLYING* OPERATING PROFIT 26 weeks 26 weeks 52 weeks ended ended ended 29 October 30 October 30 April 2006 2005 2006 unaudited unaudited audited £'000 £'000 £'000------------------------ ---------- ---------- ----------Operating profit per Income Statement 7,141 4,855 21,383Restructuring costs - 216 691Non-recurring loss relating to BVI - 692 780Gain arising on retirement benefit planchanges - - (13,546)Costs relating to Admission - - 1,098------------------------ ---------- ---------- ----------Underlying* operating profit 7,141 5,763 10,406------------------------ ---------- ---------- ----------Underlying* operating margin 6.3% 6.3% 5.3%------------------------ ---------- ---------- ---------- INDEPENDENT REVIEW REPORT TO SCOTT WILSON GROUP PLC Introduction We have been instructed by the company to review the financial information forthe 26 weeks ended 29 October 2006 which comprise the consolidated incomestatement, the consolidated statement of recognised income and expense, theconsolidated balance sheet, the consolidated cash flow statement and relatednotes 1 to 14. We have read the other information contained in the interimreport and considered 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 it 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 26 weeks ended29 October 2006. Deloitte & Touche LLPChartered AccountantsLondon 15 January 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Shearwater