15th Sep 2005 14:14
BPB PLC15 September 2005 15 September 2005 BPB plc ("BPB") Superior growth justifies a premium rating BPB has noted Saint-Gobain's announcement of yesterday in response to theposting of BPB's Circular. BPB finds the statement that "Saint-Gobain was aware of the key elements"surprising. The Circular contained a detailed full year 2005/06 profit forecast,with underlying proforma EPS up by almost a third on 2004/05, exceeding marketexpectations - a point acknowledged by Saint-Gobain. The Circular also containeddetailed information on BPB's markets, planned capacity increases and growthplans which had not been previously published. It also appears that Saint-Gobain's methodology is to value BPB by convenientlyexcluding companies with EPS growth rates similar to BPB simply on the basisthat those peer companies trade at higher multiples. This fails to recognise therelationship between superior growth and premium rating. The European companies within the peer group (excluding BPB) have an average2005/06 EPS growth forecast of 9.3%. By comparison, the US peer group companieshave a significantly higher average forecast EPS growth of 27.5%. Thisillustrates that the capital markets generally attribute premium ratings tocompanies with superior growth prospects. BPB's comparable EPS growth rate putsit at the upper end of its peer group, which of itself justifies a premiumrating to the current year average PE multiple of 14.3x. In addition, as set out in the Circular, BPB believes the following factorsfurther support the case for a premium rating: • BPB is in the top quartile for prospective earnings growth in its peer group• It is one of the few companies in its peer group with a global footprint and a No.1 market position worldwide• It operates in a market where volume growth consistently and significantly exceeds GDP• It operates in a consolidated environment where potential new entrants face high start-up costs in terms of technology, brand and intellectual property Sir Ian Gibson, Chairman of BPB, said: "BPB has exceptional growth prospects anda compelling case for a premium rating as an independent company. Saint-Gobain'soffer of 720p fails to recognise this and fundamentally undervalues BPB." Enquiries James Murgatroyd / Faeth Birch, FinsburyTel: +44 (0)20 7251 3801 N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulatedin the United Kingdom by the Financial Services Authority, is acting as thefinancial adviser to BPB and no-one else in connection with the matters referredto herein and will not be responsible to anyone other than BPB for providing theprotections afforded to clients of Rothschild or for giving advice in relationto such matters. This announcement contains statements that are or may be forward-looking withrespect to the financial condition, results of operations and businesses of BPB.These forward-looking statements include risk and uncertainty because theyrelate to events and depend on circumstances that will occur in the future.There are a number of factors which could or may cause actual results ordevelopments to differ materially from those expressed or implied by suchforward-looking statements. APPENDIX Bases of Calculation and Sources of Information 1.1 Unless otherwise stated, the information contained in this announcement has been sourced from the circular to BPB shareholders dated 14 September 2005 (the "Circular"). 1.2 The reference to BPB's peer group is based on the comparator group of 20 UK and international quoted construction and building materials companies identified by BPB's remuneration committee and stated in BPB's annual report and accounts for the year ended 31 March 2005, but excluding HeidelbergCement AG following the announcement by Spohn Cement GmbH on 10 June 2005 of its intention to submit a takeover bid to the shareholders of HeidelbergCement AG. The reference to BPB's peer group current year average PE multiple of 14.3x is therefore calculated by reference to the following 19 companies: Boral Ltd, Compagnie de Saint-Gobain SA, CSR Ltd, Florida Rock Industries Inc, Italcementi SpA, Kingspan Group plc, Martin Marietta Materials Inc, Rinker Group Ltd, Vulcan Materials Company, Cemex SA de CV, CRH plc, Eagle Materials Inc, Hanson plc, Holcim Ltd, James Hardie Industries Ltd, Lafarge SA, Pilkington plc, Societe Ciments Francais SA and Wienerberger AG. Share prices have been sourced from the London Stock Exchange Daily Official List, in the case of BPB and the other companies listed on the London Stock Exchange, and Bloomberg, in the case of the other companies, in each case as at the close of business in London on 9 September 2005 (being the latest practicable business day before publication of the Circular), except in relation to US traded shares, for which prices were sourced at the close of business in New York on 8 September 2005. The EPS figure for BPB for the year ending 31 March 2006 has been sourced from the profit forecast set out in the Circular. EPS figures for the 19 comparable companies reflect consensus analyst estimates which have been sourced from Reuters (calendarised to a 31 March year end where appropriate). 1.3 The 2005/06 EPS growth rates for the 19 comparator companies referred to in this announcement, are sourced from consensus analyst estimates for EPS from Reuters (calendarised to a 31 March year end where appropriate). 1.4 The EPS growth forecasts of European companies are calculated by reference to the following companies: Kingspan, Ciments Francais, Wienerberger, Lafarge, CRH, Saint-Gobain, Italcementi, Pilkington, Holcim and Hanson. 1.5 The EPS growth forecasts of US companies are calculated by reference to the following companies: Eagle Materials, Florida Rock, Martin Marietta and Vulcan. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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