5th Mar 2007 07:02
Ricardo PLC05 March 2007 5th March 2007 Ricardo plc Interim results for the six months ended 31 December 2006 Ricardo plc is the leading UK independent automotive consultancy, employing over1,800 people worldwide. The company has centres in the UK, USA, Germany, CzechRepublic and Asia, and has a client list that includes the world's leadingautomotive OEMs. HIGHLIGHTS •Revenue up 3% to £83.8m (H1 2005: £81.1m) •Profit before tax up 10% to £4.6m (H1 2005: £4.2m) •Order book up 15% to £77.7m (H1 2005: £67.4m) •Basic earnings per share up 20% to 8.9p (H1 2005: 7.4p) •Interim dividend increased by 7% to 2.9p (H1 2005: 2.7p) •Profit turnaround in Germany; growth in Asia underpins the increase in UK profits but has driven increases in working capital •A good start to the second half with good order intake from the key major markets of Europe, USA and Asia across all divisions of the company •Pipeline of prospects remains healthy (£371m at end of January) Commenting on the results, Dave Shemmans, Chief Executive said: "I am pleased with the solid improvement in performance in the first half, yetagain demonstrating the importance of our strategy to be diversified acrossgeographical and technical sectors. The UK's good first half performance coupledwith the German business returning to profit balanced the anticipated slow startof Strategic Consulting, coming off a very strong prior year, and thedisappointing result from the US business. Our investments in technology andgeographical expansion have resulted in increased business from advancedtransmissions, electronics and fuel economic engines, in particular from Asiaand Germany. The business level for USA diesel activity is particularly pleasingand points towards an emerging market segment. "The second half has started well and order prospects continue to build withgreater forward visibility. Although we have not changed our outlook for thefull year, our confidence continues to grow." Further enquiries: Ricardo plcDave Shemmans, Chief Executive 01273 455611Paula Bell, Group Finance Director 01273 455611Website: www.ricardo.com Gavin Anderson & CompanyFergus Wylie 020 7554 1400Daniel Hunter 07917 218 453 INTERIM RESULTS AND DIVIDEND Overall the 2006-7 financial year has started satisfactorily, again showing thebenefit of being more geographically, sectorally and technically diversified.Germany has experienced a profit turnaround, and the UK has had a good firsthalf, handling the majority of the increased Asian work. These two markets haveprovided a good balance to the anticipated slow start for Strategic Consultingand the disappointing trading levels in the US. The first half group profitbefore tax was 10% ahead of prior year and with the order book up by 15% wecontinue to anticipate that the full year 2006-7 will be one of steady progress.The strategy of providing value added, investment led technology and strategicconsulting to a global client base is providing a good platform for furthergrowth and risk mitigation. Turnover for the six months to 31 December 2006 was £83.8m (2005: £81.1m). Groupprofit before tax in the period was £4.6m (2005: £4.2m). Basic earnings pershare increased to 8.9p (2005: 7.4p). The order book at 31 December 2006 stoodat £77.7m (2005: £67.4m). Net borrowings increased from prior year to £18.7m dueto increased working capital requirements driven largely by the growing Asianbusiness. This was accentuated as trade creditors closed at a particularly highbalance in December 2005 as a result of amounts received in advance on severalcontracts. By the end of December 2006 these contracts had been delivered andtrade creditors reduced accordingly. The pension deficit has reduced by £0.9m to £22.7m since June 2006 and £11.5m inthe last 12 months. We have capped increases in pensionable salaries toinflation and we plan to eliminate the deficit over a nine-year period,commencing from 2005, by making additional cash payments to the scheme. The calculation of the interim tax charge is based on a forecast of the fullyear effective tax rate. Our underlying tax rate, assuming ongoing R&D taxationcredits, is 15% - 20%. However, further retrospective claims for R&D taxationcredits are now envisaged which will reduce this and next year's effective taxrate to a single figure percentage. We are increasing the interim dividend to2.9p (2005: 2.7p) now that our cover is restored and we have decided to alignourselves more closely with the market place by setting our interim dividendaround 30% of the full year amount. The dividend will be paid on 20 April 2007to shareholders on the register at close of business on 23 March 2007. STRATEGIC OVERVIEW Overall the strategy of broadening the technical and strategic offering,together with an expansion in client, sector and geographic base continues asplanned and is delivering the expected benefits. Through our continuing R&D, we have delivered new capabilities in core areassuch as diesel emissions, dual clutch transmissions and control and electronics.We have offered these capabilities to our customers and won additional work.Strategic Consulting has strengthened its presence in Asia, and we have seenstrong growth in the engineering business in India and Japan. In China we haveappointed an engineering director to expand our ability to support our Chinesecustomers. As the automotive landscape changes in terms of technology, geography and motormanufacturers, we will continue to invest in appropriate areas to reduce overallbusiness volatility and provide a platform for sustainable growth. The Group order book is increasing with all areas of the business contributingto growing order intake and lists of opportunities. Orders from Asia,specifically India, Japan and China, have been strong in the period togetherwith a solid improvement of orders from the German market place. UK Our UK business increased its turnover and profits on the prior year, with asubstantially increased order book over the last six months following a numberof significant contract wins. The new orders reflect our continued success fromAsian markets, with India, China and Japan all winning increased level of work.We have also seen an increased level of business from European clients,including pass through work from our busy German business and programmes fromother parts of mainland Europe. The project wins have also been spreadtechnically with contracts for dual clutch transmission system development, newdiesel and gasoline engines, military contracts for both vehicle andtransmissions together with a variety of new control & electronics projects. Weare actively recruiting in the areas of transmissions, engines and electronicsto service the demand and our test beds continue to be well utilised. The engines business has continued to be underpinned by diesel projects in boththe commercial vehicle and passenger car sectors. Emissions legislation,competitive pressure on fuel economy and the introduction of new products to theUS continue to be major drivers. Our diesel engine expertise is being deployedon programmes for European, American, Chinese, Indian and Japanese clients withthe quality of delivery demonstrated by the world record breaking JCB DieselMaxlast summer. The level of gasoline engine business has been steady in the periodwith new business coming from the passenger car and motorcycle sectors forEuropean and Chinese customers in particular. The transmissions and drivelinebusiness is strong as we start to see previous research into torque vectoring,next generation dual clutch technology, advanced hybrid systems and new controland electronic strategies for emerging transmission systems bearing fruit interms of large programmes. On the motorsport side of the transmissions businesswe have secured new wins in both the F1 and GT racing markets, further growingour presence in the motor sport arena. The vehicle business continues to beunderpinned by military and special vehicle contracts and continuing businessfrom established European automotive customers. New opportunities in vehicle areappearing in Asia from the commercial vehicle markets. The control & electronicsbusiness continues to grow with programmes focused on advanced automotiveapplications, such as hybrids and sophisticated vehicle based control systems. Our Prague engineering facility, which is managed by the UK, continues todevelop and expand with a team now in excess of 115, providing services to thewhole group. This high quality eastern European centre covers disciplinesincluding software, design, simulation, analysis and electronic design andserves global customers with programmes covering transmissions, engines andhybrids for passenger car and commercial vehicle sectors. The Prague technicalcentre is increasingly providing IT support services for the whole group. USA The domestic North American car industry remains in transition with a number ofautomotive manufacturers and their related suppliers under market and financialstress. However, such competitive market conditions can create goodopportunities for Ricardo even though project volatility may be increased.Against this background and our active market diversification into thecommercial vehicle and military sectors, the US business recorded its highestfirst half order intake for five years generating a healthy order book at thehalf year. However, as the order flow was second quarter weighted, it did not come quicklyenough to mitigate poor order intake during the second half of the prior year.Trading in the first half this year was disappointing, particularly compared tolast year where we benefited from a large military project, which was deliveredin a short time period. With a healthy order book and well-utilised test beds weare expecting a significantly improved second half and will continue to drivefor further growth during the traditionally strong third quarter order intakeperiod. Our software product business, managed by the US division, has had a good firsthalf of the year with increased sales and profits. The growth was generated froman expansion of our global marketing and the introduction of new products, whichimprove the quality and robustness of powertrain design while reducing time tomarket. GERMANY Whilst the prior financial year was a difficult one for our German business,exacerbated by the weakness in the German automotive industry, the first half of2006-7 has continued the turnaround into profitability. Our strategy and actionsto invest in high quality people, engineering talent, tools and facilities(increasing capacity and capability) are delivering to plan with increasingprofits, client base, order book and prospects. Moreover, we are seeing initialsigns of recovery in the German market place and our increased value addedofferings, delivered from a local base in the native language, are being wellrecognised. We now have the major automotive passenger car OEMs in Germany as clients,together with Tier 1s and premium players in other sectors such as motorcycle,off highway, marine and power generation. We service highly respected customersin the German market place who are widely respected for their technology,quality, products and global brands. We are extremely pleased to be buildingrelationships with these clients, as they are well matched to the Ricardophilosophy of delivering value through innovation. Our niche high performance exhaust business has also had a good first half withgood demand for prototype systems and the ramp up of a low volume productionprogramme for a premium automotive manufacturer. ASIA Our operation in Japan continues to grow as deepening relationships with majorJapanese OEMs, bring increased order intake and regular senior level nativetongue dialogue. Japan has a business culture heavily based around relationship,delivery and technical value. Therefore it is particularly pleasing to see ourbusiness from this region grow year on year, with projects of increasing valuebeing delivered primarily from the UK but with an increasing local content. Asour clients continue to experience significant success across the globe thisdemands new product development and technologies for different geographicalmarkets. These demands are in many cases outstripping client in-house capacityand drives increasing requests for additional support. Our activities in Japancover both diesel and gasoline engines, advanced transmissions and electronics.Japan is also a major market for our advanced software products. Moreover, weare increasingly being invited to participate with on-site strategic planningand delivery teams. We see this as a positive sign of trust and acceptance ofour value. In the coming half year we will be relocating our Tokyo office closeto our customer base to improve our support and response to the customer. Our focus on the Indian market increased in the period and we are pleased tohave secured a number of significant wins to develop engines for the lightcommercial vehicle sector. India is a unique market with many unique productsand thus served mainly by domestic automotive players, rather than globalimports. It is important that we develop close relationships with the domesticIndian automotive industry and our efforts will increase in this region. Korea continues to be an active market for us with business and opportunitiesunder discussion covering strategic consulting, electronics, hybrids,transmissions and engine development. Our development of a Shanghai based engineering centre, in response to strongclient requests and the large market opportunity, continues with its relocationinto larger premises and the introduction of an engineering office. Theengineering office will focus, as in Prague, on desk based engineering coveringa similar wide range of disciplines with the added function of local programmesupport and project management. The head of the engineering office has beenseconded from the UK and we are recruiting Chinese national engineers fromindustry and Chinese universities. These engineers will spend a period of timein the UK to gain experience before returning to the Ricardo Shanghai centre orcustomer sites as part of our medium term development plan for the Chinesemarket. Relationships and business with our Chinese customers continue todevelop well with repeat business from established customers. The ShanghaiAutomotive programme has successfully launched its first product in China underthe brand name Roewe, with Ricardo's role being openly credited. Therelationship with Shanghai Automotive is excellent and we continue to worktogether on a wide range of new product developments. RICARDO (2010) CONSULTANTS LTD ("Ricardo 2010") Following a highly successful twenty-month period of development by Ricardo 2010(a Ricardo subsidiary set up solely for this purpose) of new products for SAICMotor Company and of a world-class engineering organisation, SAIC exercised itsoption in January 2007 to take ownership of this venture as planned at a nominalsum of £1. The transfer of ownership of Ricardo 2010 will have no commercialimpact for Ricardo plc in the financial year ending 30 June 2007. STRATEGIC CONSULTING Our Strategic Consulting practice has progressed according to plan during theperiod. Following an unusually high contribution last year underpinned by twolarge contracts, which concluded in the summer, the business focused onrebuilding the order book in the first quarter of this financial year. It hasnow returned to more normal levels of utilisation. In the second quarter, thebusiness has received strong order intake from a diverse European, Asian andAmerican customer base covering a broad portfolio of products. We are recruitingto serve demand and build critical mass to move to the next stage of thebusiness' development. The market progress and client feedback further supportsthe strategy of offering technical and management consulting in unison, thusdifferentiating Ricardo's deep content management consulting from other industryplayers. Our activities continue to focus on generating additional profit to ourcustomers through product cost down, warranty reduction, business improvementand restructuring. We are also seeing an increasing number of projects relatingto product and technology strategy and acquisition activities. Our client basecontinues to be of premium quality with high levels of customer satisfaction andrepeat business. RESEARCH & DEVELOPMENT Ricardo continues to apply its intellectual capital and investment inforecasting, validating and delivering technology and innovation to solve theautomotive industry's key issues. The drivers of the business continue tosurround global emissions reduction, fuel price and energy security, automotivesafety and defence expenditure. Our major technical developments regarding fueleconomy, emissions reduction and enhanced automotive safety include lowemissions diesel engine technology for world application, fuel efficientgasoline engine technology, active dynamic transmissions, advanced hybridpowertrains and electronic architectures enabling drive by wire and safetyrelated benefits such as "Artificial horizon". This technology takes many inputssuch as driver commands, GPS, traffic statistics, car radar and vehicle tovehicle communications and through the sophisticated electronic architecture andsafety critical software can apply active dynamics calibration to be ready forupcoming corners, hills, traffic, intersections. We are also developingtechnologies, tools and processes to improve the development cycles ofcustomers' products taking significant time out of programmes and improvingrobustness and quality - all targeted at improving product profitability andrapid time to market introduction. Specific technical highlights in the periodinclude our world record breaking JCB DieselMax programme over the summer, ourcontinued hybrid research work on the Efficient-C programme which drives low CO2emissions, the launch of our active torque vectoring transmission technology andthe co-ordination of two large European government funded programmes evaluatingintelligent information based transport systems and the generation of a road mapfor the exploitation of new energy sources. PEOPLE The Group has continued to strengthen its management team with recruitment ofhigh calibre individuals. Paula Bell has joined as Group Finance Director fromBAA and Karina Morley has joined Ricardo in the US from Visteon as GlobalProduct Group Director for Control & Electronics. The Ricardo China office hasgrown with additional expatriate engineering resource and appointments for theopening of an Indian office are underway. We have also strengthened the globalfinancial team with a number of new local senior appointments in Germany, UK andAsia. In addition a number of senior executives have taken on new roles inproduct group management, gasoline engineering, business development and projectmanagement as part of their development and strengthening of our organisationalcapability. OUTLOOK Overall, the 2006-7 financial year has started satisfactorily, again showing thebenefit of being geographically and technically diversified. The solidperformance in the UK and the profit recovery in Germany have provided goodbalance to the anticipated slow start for Strategic Consulting and thechallenges in North America. The second half has started well and order prospects continue to build withgreater forward visibility. Although we have not changed our outlook for thefull year, our confidence continues to grow. Dave ShemmansChief Executive5 March 2007 Consolidated income statementfor the six months ended 31 December 2006 (unaudited) Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 (restated)All from continuing activities Notes £m £m £m Revenue 2 83.8 81.1 173.1 Operating profit excluding pensions credit(underlying) 2 5.1 4.9 12.1 Pensions credit 1 - - 3.7------------------------------------------------------------------------------------------------Operating profit 3 5.1 4.9 15.8 Finance income 0.9 0.9 1.4 Finance costs (1.4) (1.6) (2.7)------------------------------------------------------------------------------------------------Profit before taxation 4.6 4.2 14.5------------------------------------------------------------------------------------------------Profit before tax excluding pensions credit(underlying) 4.6 4.2 10.8Pensions credit 1 - - 3.7-------------------------------------------------------------------------------------------------Taxation 5 (0.1) (0.5) (2.3)-------------------------------------------------------------------------------------------------Profit for the period 4.5 3.7 12.2-------------------------------------------------------------------------------------------------Profit for the period excluding pensions credit(underlying) 4.5 3.7 9.6Pensions credit 1 - - 2.6-------------------------------------------------------------------------------------------------Profit attributable to minority interest - - 0.1Profit attributable to equity shareholders 4.5 3.7 12.1------------------------------------------------------------------------------------------------- 4.5 3.7 12.2------------------------------------------------------------------------------------------------- Earnings per share 6 Basic 8.9p 7.4p 24.0pDiluted 8.9p 7.3p 23.9p------------------------------------------------------------------------------------------------- Consolidated statement of recognised income and expensefor the six months ended 31 December 2006 (unaudited) Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £m £m £m Currency translation differences on (1.0) - (0.2)net investment in foreign operations Fair value gain/(loss) on net investment hedge 0.4 - (0.4)Actuarial (losses)/gains on the defined benefit pension scheme (0.4) 0.4 6.7Tax on items recognised directly inequity - (0.1) (2.0)-------------------------------------------------------------------------------------------------- Net income and expense recognised directly in equity (1.0) 0.3 4.1 Profit for the period 4.5 3.7 12.2------------------------------------------------------------------------------------------------- Total recognised income and expense forthe period 3.5 4.0 16.3------------------------------------------------------------------------------------------------- Attributable to minority interest - - 0.1Attributable to equity shareholders 3.5 4.0 16.2------------------------------------------------------------------------------------------------- Consolidated balance sheetas at 31 December 2006 (unaudited) 31 December 31 December 30 June 2006 2005 2006 (restated) £m £m £m Assets Non current assetsGoodwill 15.6 15.9 15.9Other intangible assets 1.7 1.2 1.5Property, plant and equipment 44.0 45.2 45.2Deferred tax assets 9.3 10.6 8.7---------------------------------------------------------------------------------------------- 70.6 72.9 71.3----------------------------------------------------------------------------------------------Current assets Inventories 8.3 7.7 7.0Trade and other receivables 53.6 48.7 47.3Current taxation 0.3 0.3 0.2Deferred tax assets 0.6 - 0.6Cash and cash equivalents 18.0 11.8 49.8Assets classified as held for sale 6.7 1.9 7.5---------------------------------------------------------------------------------------------- 87.5 70.4 112.4----------------------------------------------------------------------------------------------Total assets 158.1 143.3 183.7---------------------------------------------------------------------------------------------- Liabilities Current liabilities Bank overdrafts (12.4) (1.0) (37.1)Bank loans (12.7) (1.6) (7.9)Trade and other payables (33.8) (41.1) (38.9)Current tax liabilities (2.2) (3.5) (2.5)Deferred tax liabilities (0.6) - (0.6)Provisions (0.4) (0.8) (0.5)--------------------------------------------------------------------------------------------- Liabilities directly associated with (6.7) (1.9) (7.5)assets classified as held for sale--------------------------------------------------------------------------------------------- (68.8) (49.9) (95.0)---------------------------------------------------------------------------------------------Net current assets 18.7 20.5 17.4--------------------------------------------------------------------------------------------- Non current liabilities Bank loans (11.6) (17.6) (10.6)Retirement benefit obligations (22.7) (34.2) (23.6)Deferred tax liabilities (4.6) (2.5) (4.4)--------------------------------------------------------------------------------------------- (38.9) (54.3) (38.6)---------------------------------------------------------------------------------------------Total liabilities (107.7) (104.2) (133.6)---------------------------------------------------------------------------------------------Net assets 50.4 39.1 50.1--------------------------------------------------------------------------------------------- Shareholders' equity Ordinary shares 12.7 12.6 12.7Share premium 13.3 12.9 13.3Other reserves - 2.0 0.6Retained earnings 23.8 11.1 22.9----------------------------------------------------------------------------------------------Total shareholders' equity 49.8 38.6 49.5Minority interest in equity 0.6 0.5 0.6----------------------------------------------------------------------------------------------Total equity 50.4 39.1 50.1---------------------------------------------------------------------------------------------- Consolidated cash flow statementfor the six months ended 31 December 2006 (unaudited) Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £m £m £m Cash flows from operating activities Cash generated from/(used by) operations (note 7) (4.4) 8.7 20.0Interest received 0.9 0.9 1.4Interest paid (1.4) (1.6) (2.7)Tax (paid)/refunded (0.8) (0.5) (1.4)----------------------------------------------------------------------------------------- Net cash (used)/received in operating activities (5.7) 7.5 17.3---------------------------------------------------------------------------------------- Cash flows from investing activities Proceeds of sale of property, plant and equipment - 0.1 0.3Purchases of intangible assets (0.4) (0.3) (1.1)Purchases of property, plant and equipment (3.7) (2.6) (7.3) ------------------------------------------------------------------------------------------Net cash used in investing activities (4.1) (2.8) (8.1)-----------------------------------------------------------------------------------------Cash flows from financing activities Net proceeds from issue of ordinary share capital - 0.9 1.3 Net proceeds from issue of new bank loan 9.0 - -Repayment of borrowings (2.8) - (0.5)Dividends paid to shareholders (3.4) (3.2) (4.6)-----------------------------------------------------------------------------------------Net cash received/(used) in financing activities 2.8 (2.3) (3.8)-----------------------------------------------------------------------------------------Effects of exchange rate changes (0.1) 0.6 (0.5)-----------------------------------------------------------------------------------------Net (decrease)/increase in cash and cash equivalents (7.1) 3.0 4.9 Cash and cash equivalents at beginning of period 12.7 7.8 7.8-----------------------------------------------------------------------------------------Cash and cash equivalents at end of period 5.6 10.8 12.7----------------------------------------------------------------------------------------- Notes to the interim accountsfor the six months ended 31 December 2006 (unaudited) 1. Basis of preparation As a UK Listed company Ricardo plc has been required to adopt InternationalFinancial Reporting Standards as adopted in the EU ("IFRS") with effect from 1July 2005. The results for the six months ended 31 December 2006 represent thegroup's second interim financial statements prepared in accordance with itsaccounting policies under IFRS. The group's first IFRS Annual Report andAccounts was for the year ending 30 June 2006. These interim financial statements have been prepared by the group in accordancewith the disclosure requirements of the Listing Rules of the Financial ServicesAuthority, policies published in the financial statements for the year ended 30June 2006 and using those reporting standards it expects to be endorsed andapplicable when the accounts are prepared for the year ending 30 June 2007.There has been no change to the accounting policies as a result of new standardsor amendments and interpretations to existing standards that have been publishedand are mandatory from 1 July 2006. The Group has chosen not to adopt early IAS34 'Interim Financial Statements' in the preparation of these interim financialstatements. The financial information herein does not amount to full statutory accountswithin the meaning of Section 240 of the Companies Act 1985 (as amended). Thefigures for the year to 30 June 2006 have been extracted from the 2006 AnnualReport and Accounts which has been filed with the Registrar of Companies and onwhich the auditors gave an unqualified audit report and did not include astatement under section 237(2) or (3) of the Companies Act 1985. The incomestatement for the year ended 30 June 2006 includes a pensions credit of £3.7m(£2.6m net of tax). This relates to the capping of pensionable salaries tofuture price inflation, which is regarded as an exceptional profit and is notpart of the underlying results as defined in the Group's accounting policies. Ricardo 2010 is a wholly owned subsidiary created in May 2005 under an agreementwith SAIC. Under that agreement SAIC has exercised its option to acquire Ricardo2010 for £1 and this is expected to be completed within the current financialyear. Accordingly Ricardo 2010 has been classified as an asset held for sale anda discontinued operation under IFRS 5 'Non-current Assets Held for Sale andDiscontinued Operations'. No profit or loss on disposal is anticipated. Inaccordance with IFRS 5 the aggregate assets and liabilities of Ricardo 2010 areseparately disclosed on the face of the balance sheet under assets classified asheld for sale and liabilities directly associated with assets classified as heldfor sale. The figures for the six months to 31 December 2005 have been extracted from the2005 Interim Report but adjusted for the treatment of Ricardo 2010 as an assetheld for sale and a discontinued operation under IFRS 5, and have been restatedfor an immaterial reclassification of revenue and administration expenses andfor other minor matters. 2. Segmental reporting (a) by business segment, with revenue reflecting sales to external customers Revenue Operating profit (1)------------------------------------------------------------------------------------------------------------ Six months Six months Year Six months Six months Year ended ended ended ended ended ended 31 December 31 December 30 June 31 December 31 December 30 June 2006 2005 2006 2006 2005 2006 (restated) (restated) £m £m £m £m £m £m ---------------------------------------------------------------------------------------------------------- Technical Consulting 80.0 70.9 155.4 4.6 3.5 9.5Strategic Consulting 3.8 10.2 17.7 0.5 1.4 2.6----------------------------------------------------------------------------------------------------------- 83.8 81.1 173.1 5.1 4.9 12.1----------------------------------------------------------------------------------------------------------- (b) by business unit reflecting the revenue and profit generated by the staff inthose businesses Revenue Operating profit (1)------------------------------------------------------------------------------------------------------------ Six months Six months Year Six months Six months Year ended ended ended ended ended ended 31 December 31 December 30 June 31 December 31 December 30 June 2006 2005 2006 2006 2005 2006 (restated) (restated) £m £m £m £m £m £m--------------------------------------------------------------------------------------------------------------Technical ConsultingUK 48.6 39.6 98.6 4.1 2.9 8.5North America 18.1 20.5 35.4 0.5 1.2 2.2Germany 12.8 12.4 24.1 0.4 (0.2) (0.5)Rest of the world 0.7 0.3 1.1 (0.4) (0.4) (0.7)-------------------------------------------------------------------------------------------------------------- 80.2 72.8 159.2 4.6 3.5 9.5Strategic Consulting 3.6 8.3 13.9 0.5 1.4 2.6------------------------------------------------------------------------------------------------------------- 83.8 81.1 173.1 5.1 4.9 12.1------------------------------------------------------------------------------------------------------------- (1) Excluding a pensions credit of £3.7m in the year ended 30 June 2006 3. Operating profit Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 (restated) £m £m £m Revenue 83.8 81.1 173.1Cost of Sales (57.6) (55.4) (117.7)-----------------------------------------------------------------------------------------Gross profit 26.2 25.7 55.4----------------------------------------------------------------------------------------Gross profit excluding pensions credit(underlying) 26.2 25.7 53.3 Pensions credit - - 2.1----------------------------------------------------------------------------------------Administration expenses (21.1) (20.8) (39.6)-----------------------------------------------------------------------------------------Operating profit 5.1 4.9 15.8----------------------------------------------------------------------------------------Operating profit excluding pensions credit (underlying) 5.1 4.9 12.1 Pensions credit - - 3.7---------------------------------------------------------------------------------------- 4. Ordinary Dividends Six months Six months Six months Six months ended ended ended ended 31 December 31 December 31 December 31 December 2006 2005 2006 2005 pence/share pence/share £m £m---------------------------------------------------------------------------------------Amounts distributed in the period 6.7p 6.3p 3.4 3.2Proposed interim dividend 2.9p 2.7p 1.5 1.4--------------------------------------------------------------------------------------- 5. Taxation Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £m £m £m UK (0.5) - 0.8Overseas 0.6 0.5 1.5--------------------------------------------------------------------------------Tax charge on profit 0.1 0.5 2.3-------------------------------------------------------------------------------- 6. Earnings per share Basic earnings per share is calculated by dividing the profit attributable toequity shareholders of £4.5m (31 December 2005: £3.7m; 30 June 2006: £12.1m) bythe weighted average number of shares in issue of 50,694,907 (31 December 2005:50,089,893; 30 June 2006: 50,357,997), after deducting the shares held by theLong Term Incentive Plan ("LTIP") Trustee. For diluted earnings per share, theweighted average number of shares in issue is adjusted for the effects ofdilutive options and is accordingly 50,795,901 (31 December 2005: 50,483,695; 30June 2006: 50,472,732). 7. Cash generated from operations Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 (restated) £m £m £m Continuing operations Profit from operations before pensions credit 5.1 4.9 12.1Adjustments for: Share-based payments 0.1 0.1 0.3Depreciation and amortisation 4.4 4.7 9.0----------------------------------------------------------------------------------------Operating cash flows before movements in working capital 9.6 9.7 21.4(Increase)/decrease in inventory (1.4) (0.7) -(Increase)/decrease in trade and other receivables (6.9) (5.6) (4.3)(Decrease)/increase in payables (4.3) 5.1 3.5(Decrease)/increase in provisions (0.1) 0.3 0.1Pension payments in excess of pension costs (1.3) (0.1) (0.7)-----------------------------------------------------------------------------------------Cash (used)/generated by operations (4.4) 8.7 20.0----------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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