Interim Results
Babcock International Group PLC
14 November 2006
14 November 2006
BABCOCK INTERNATIONAL GROUP PLC
2006/7 INTERIM RESULTS
Babcock International Group PLC, the support services company, announces its
interim results for the half year ended 30 September 2006. These results,
including comparatives, are prepared under International Financial Reporting
Standards and include the results of Alstec for five months and Powerlines for
four months.
September September
2006 2005 % Change
Revenue £487.6m £386.7m +26
Operating Profit £29.3m £22.3m +31
Profit before tax £26.4m £18.9m +40
Continuing Earnings per share 9.85p 7.02p +40
Net debt £80.0m £52.3m +53
Dividend - interim proposed 2.40p 1.75p +37
The following additional numbers show the 'underlying' results before amortisation of acquired intangibles of
£2.9 million (2005: £1.6 million) and operating exceptionals of £1.3 million (2005: £nil), and before the
related tax effects of £1.2 million (2005: £0.5 million). We believe that these adjusted results provide a
better comparison of underlying performance.
September September
Underlying 2006 2005 % Change
Operating profit £33.5m £23.9m +40
Profit before tax £30.6m £20.5m +49
Continuing Earnings per share 11.29p 7.56p +49
Highlights
• Strong growth trend continues: revenue up 26%, underlying profit before
tax up 49%
• Underlying operating margin up from 6.2% to 6.9%
• Underlying earnings per share up 49% to 11.29 pence
• Interim dividend increased by 37% to 2.40 pence per share
• Further significant contracts secured to date include National Grid
power transmission lines joint venture, Network Rail signalling framework
contracts and Eskom power line refurbishment contracts
• Alstec and Powerlines acquisitions performing ahead of expectations
• High visibility of long term revenue: order book at £2.3 billion
• Bid pipeline strong
Commenting, Peter Rogers, Chief Executive, said:
'This has been a very strong half year for Babcock with two successful
acquisitions, sustained strong growth in both revenue and profits from our
existing businesses and a continued track record of double-digit growth.
'Our trading environment remains excellent. We have a strong bid pipeline and
are expecting selection of preferred bidder or financial close on a number of
significant contracts over the next six months.
'The Group has built strong momentum over the last four years which we are
confident we can sustain through growing organically and by acquisition. Alstec
and Powerlines are performing ahead of our expectations and we will continue to
look to acquire other businesses in the technically sophisticated area of
support services in which we operate, applying our usual strict disciplines in
assessment of acquisitions in order to ensure that shareholder value is
enhanced.
'Following the Group's strong performance in the first half of the year and our
recent contract wins, the Board now believes that the full year result will be
ahead of our expectations at the time of our trading update in September 2006.'
Contact: Peter Rogers, Chief Executive
Bill Tame, Finance Director
Babcock International Group PLC
Telephone: 020 7291 5000
Andrew Lorenz
Susanne Walker
Financial Dynamics
Telephone: 020 7269 7291
BABCOCK INTERNATIONAL GROUP PLC
2006/7 INTERIM RESULTS
OPERATIONAL AND FINANCIAL REVIEW
INTRODUCTION
Babcock has achieved strong growth in the first half with revenue up 26% and
underlying profit before tax up 49%. We have recently secured a number of
significant contracts including the National Grid power transmission lines joint
venture, Network Rail signalling framework contracts and Eskom power line
refurbishment contracts.
As anticipated, activity levels in all of the markets in which we operate have
continued to increase as our customers maintain and upgrade their asset bases in
the rail, power networks, energy generation and nuclear sectors. In the public
sector, pressure on expenditure budgets continues to drive the rate of switching
to outsourced service provision and this is clearly demonstrated in both our
results and bid pipeline. Our interim results are a reflection of these high
activity levels and our success in exploiting the opportunities presented.
OPERATIONAL REVIEW
Defence Services - Revenue £163.7 million (2005: £121.9 million)
Defence Services achieved an excellent performance in the first half with all
contracts in the division delivering a good performance. The Regional Prime
East contract for Defence Estates was successfully mobilised and is operating
well, as is the Prime South West contract, now in its third year and which will
benefit from an increase in its scope in 2007. Continuing improvement of our
management of the various Multi Activity Contracts led to higher margins.
At HM Naval Base Clyde the certainty resulting from the award of the contract
extension last year has allowed further savings to be realised and we continue
actively to pursue further broadening of the scope of this contract.
The Alstec airports business, part of Alstec Group acquired in May 2006 and
included within Babcock Infrastructure Services, performed ahead of our
acquisition plan targets.
We are currently awaiting the award of an extension to the SLAM contract (SLAM
2) and the announcement of the preferred bidder for Defence Training Review,
package 2, both of which are expected at the end of November. The Royal School
of Military Engineering project continues to progress towards financial close in
2007.
Technical Services - Revenue £85.7 million (2005: £65.7 million)
The completion of the refit of HMS Ark Royal and RFA Fort Rosalie in the period
helped lift profits in Technical Services but the major boost was from very high
levels of demand for design work on the new aircraft carriers (CVF) project and
significant volumes of work from the civil sector, in particular the design of
ship conversions. A number of smaller contracts for supply to the Ministry of
Defence were won by Supply Chain Services during the period and activity both on
the Post Nuclear Contract and planning for the ISOLUS programme remained at good
levels.
Progress towards main-gate approval by the MoD at the end of this calendar year
for the construction phase of the CVF is still on track with Rosyth designated
as the assembly and commissioning site. Negotiations with the Ministry of
Defence and other warship refit providers have led to the award of 3 of the 5
scheduled refits this year to Rosyth. Discussions continue on next year's
programme but we expect the results to be positive.
Babcock, as part of a consortium with Nukem and Stoller, has been selected as
one of the final three bidders for the management of the UK's low level waste
repository at Drigg - a contract valued at some £16 million annually for 5
years.
The results from the Alstec nuclear and defence businesses are included within
Technical Services.
Engineering and Plant Services - Revenue £80.2 million (2005: £68.3 million)
Another excellent six months was achieved in Africa although the result was held
back by currency movements. The economic environment in Southern Africa
continues to be good and this has benefited the Construction Equipment business
in particular. The acquisition of Powerlines was a significant step in
establishing a support services business in Africa. In the first four months of
our ownership the business has performed ahead of our planning assumptions and a
major contract for a new high voltage transmission line valued at some £11
million has just been secured.
Networks - Revenue £42.4 million (2005: £36.7 million)
The activity level on overhead transmission continued to be high throughout the
period and orders secured will result in strong engineering activity over the
remainder of the year. As predicted the expenditure on refurbishment of
overhead transmission lines is growing rapidly and the industry is likely to be
constrained by a shortage of skilled staff in the medium term. We have been
appointed preferred bidder for the West Overhead Line and Cable Alliance in
partnership with Amec and Mott MacDonald which secures our position in this
growing market. The award is for the delivery of National Grid's capital works
programme for overhead transmission lines and cable works in the West of England
and throughout Wales. The contract, worth approximately £250 million to Babcock
for an initial period of five years, renewable for a further five years, is
expected to be finalised in January 2007.
Activity levels in the telecoms business were stable as the network owners
reviewed their own expenditure plans. A boost has been given to this area of
activity, as expected, by the Digital Switch Over programme and we have received
our first 'high-mast' orders. This work will continue through to 2010/2011.
Rail - Revenue £115.6 million (2005: £94.1 million)
The rail business produced excellent revenue growth during the period but, as
indicated in the pre-close trading update, margins were below expectations. The
new information systems that we have put in place within the business are now
largely complete and installed - to plan. A rationalisation of the business to
a regional structure which matches that of Network Rail is being implemented and
benefits will start to flow in the next financial year. During the period the
business continued to win contracts, notably the two signalling framework
contracts which will secure work for the next five years. We have also been
short-listed as one of the final two bidders for the Greater Manchester
Passenger Transport Executive tramways infrastructure bid.
Acquisitions
Alstec was acquired in May 2006 for a net cash consideration of £44.9 million
and since then has contributed £42.2 million in sales and £4.5 million in
operating profit, giving an operating margin of 10.7%. Since acquisition the
business has performed ahead of our original planning assumptions. Alstec's
nuclear expertise was a significant factor in the Babcock consortium being
short-listed amongst the last three bidders for the low level waste repository
project.
The South African Powerlines business which was acquired in June 2006 for £5.2
million is also performing well with contracts already secured. Eskom has
predicted a 'significant' rise in expenditure in Powerlines area of business and
prospects therefore look excellent. Powerlines has contributed £5 million in
sales and £0.6 million in operating profit, an operating margin of 12%. The
need to expand and refurbish the high voltage network in South Africa is acute
and the award of an initial £11 million contract by Eskom for completion in 2006
/2007 is indicative of the opportunity available.
FINANCIAL REVIEW
In this review, unless otherwise stated, revenue, operating profit, operating
margin, profit before tax and earnings per share refer to results from
continuing operations, before amortisation of acquired intangibles and
exceptional items. We believe that these adjusted results provide a better
comparison of underlying performance.
Revenue and Operating Profit
With the underlying operating margin up from 6.2% to 6.9% on revenue up 26% at
£487.6 million (2005: £386.7 million), Group underlying operating profit
increased by 40% to £33.5 million (2005: £23.9 million). The combined
contribution to revenue and operating profit from Alstec and Powerlines was
£47.2 million and £5.1 million respectively. Excluding the effect of
acquisitions, revenue growth was 14% and underlying operating profit growth was
19%. Adverse exchange rate movements against the pound of the Rand reduced
operating profit by approximately £0.6 million when compared to the equivalent
period last year.
Interest, Profit before Tax, Earnings
After a net interest charge of £3.0 million (2005: £3.4 million) and a £0.1
million contribution from joint ventures, Group profit before tax, amortisation
of intangible assets and exceptional items, was £30.6 million, up 49% from £20.5
million last year. The Group's effective rate of tax was slightly lower than
last half year at approximately 22%. Underlying earnings per share increased by
49% to 11.29 pence or by 40% to 9.85 pence per share after amortisation and
exceptional charges.
Acquired Intangible Amortisation and Exceptional Items
Included within exceptional items for the first half year is £0.7 million in
relation to Rail restructuring costs, which we anticipate will increase to
approximately £2 million by the year end. In addition within exceptional items
there is £0.6 million of costs arising from the BAE Systems plc and VT Group plc
aborted bid.
Acquired intangible amortisation at the half year was £2.9 million (2005: £1.6
million).
Pensions
We continue to manage the assets and liabilities of the Group's defined benefit
pension schemes closely and at the half year end the schemes were in a net IAS
19 surplus of £51.5 million (2005: £9.7 million) before the related deferred tax
liability. The IAS 19 net credit to the profit and loss account was £0.7
million (2005: a charge of £1.9 million).
Cash flow and Net Debt
Cash generated from operations of £27.1 million was above our target for cash
conversion of 80% over the medium term and represented 92% of operating profit
(2005: £23.8 million and 105%). Sales growth meant that working capital
increased by a net £9 million compared to an increase of £4.5 million in 2005.
Net expenditure on acquisitions was £51.5 million and on tangible and intangible
assets, £3.2 million. After net interest payments of £2.9 million and taxation
of £2.7 million, net debt was £80 million at the 30 September 2006 (2005: £52.3
million).
Dividend
Following the Group's strong performance in the first half and the Board's
improved expectations for the full year, the interim dividend has been increased
by 37% to 2.40 pence per share.
Outlook
Our trading environment remains excellent. We have a strong bid pipeline and
are expecting selection of preferred bidder or financial close on a number of
significant contracts over the next six months.
The Group has built strong momentum over the last four years which we are
confident we can sustain through growing organically and by acquisition. Alstec
and Powerlines are performing ahead of our expectations and we will continue to
look to acquire other businesses in the technically sophisticated area of
support services in which we operate, applying our usual strict disciplines in
assessment of acquisitions in order to ensure that shareholder value is
enhanced.
Following the Group's strong performance in the first half of the year and our
recent contract wins, the Board now believes that the full year result will be
ahead of our expectations at the time of our trading update in September 2006.
BABCOCK INTERNATIONAL GROUP PLC
GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
Six months ended Six months ended
30 September 2006 30 September 2005
Before Before
acquired acquired
intangible Acquired intangible Acquired
amortisation intangible amortisation intangible
Year and amortisation and amortisation
ended exceptional and exceptional and
31 March items exceptional items exceptional
2006 (unaudited) items Total (unaudited) items Total
Total £m (unaudited) (unaudited) £m (unaudited) (unaudited)
(audited) £m £m £m £m
£m
Note
836.7 Revenue 2 487.6 - 487.6 386.7 - 386.7
46.6 Operating profit 2, 3 33.5 (4.2) 29.3 23.9 (1.6) 22.3
(8.9) Finance costs (4.8) - (4.8) (5.1) - (5.1)
3.7 Finance income 1.8 - 1.8 1.7 - 1.7
Share of profit from
(0.1) joint ventures 2 0.1 - 0.1 - - -
41.3 Profit before tax 30.6 (4.2) 26.4 20.5 (1.6) 18.9
(8.2) Income tax expense 6 (6.7) 1.2 (5.5) (4.9) 0.5 (4.4)
Profit for the period
from continuing
33.1 operations 23.9 (3.0) 20.9 15.6 (1.1) 14.5
Discontinued
operations
Profit/(loss) for
period on discontinued
(3.2) operations 4 - - - 0.2 - 0.2
29.9 Profit for the period 23.9 (3.0) 20.9 15.8 (1.1) 14.7
Attributable to:
Equity holders of the
29.7 parent 20.2 14.6
0.2 Minority interest 0.7 0.1
29.9 20.9 14.7
Earnings per share
from continuing and
discontinued
operations 7
14.49p - Basic 9.85p 7.13p
14.15p - Diluted 9.59p 7.10p
Earnings per share
from continuing
operations 7
16.06p - Basic 9.85p 7.02p
15.68p - Diluted 9.59p 6.98p
BABCOCK INTERNATIONAL GROUP PLC
GROUP BALANCE SHEET
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
As at As at As at
31 March 30 September 30 September
2006 2006 2005
(audited) (unaudited) (unaudited)
£m Note £m £m
Assets
Non-current assets
164.0 Goodwill 200.6 164.5
13.8 Other intangible assets 25.9 14.2
25.3 Property, plant and equipment 27.9 36.1
0.6 Investments in joint ventures 0.9 0.5
64.9 Retirement benefits 59.6 63.0
0.3 Trade and other receivables 2.6 -
4.5 Deferred tax asset - 4.1
273.4 317.5 282.4
Current assets
41.5 Inventories 35.8 35.3
168.5 Trade and other receivables 170.2 179.8
0.2 Income tax recoverable 0.7 0.1
0.1 Other financial assets 1.0 -
109.0 Cash and cash equivalents 10 84.7 30.0
319.3 292.4 245.2
9.6 Assets held for sale 4 - 1.0
602.3 Total assets 609.9 528.6
Equity and liabilities
Equity attributable to equity holders of the parent
125.5 Share capital 125.8 125.3
69.7 Share premium 70.0 69.6
32.3 Other reserves 26.8 30.6
(57.3) Retained earnings (32.4) (82.4)
170.2 190.2 143.1
0.4 Minority interest 1.0 0.2
170.6 Total equity 9 191.2 143.3
Non current liabilities
6.5 Bank and other borrowings 10 4.9 6.8
0.1 Income tax payable - -
35.6 Retirement liabilities 8.1 53.3
12.6 Provisions for other liabilities 11.3 25.2
- Deferred tax liability 4.9 -
54.8 29.2 85.3
Current liabilities
212.9 Trade and other payables 211.6 206.8
7.0 Income tax payable 5.0 9.8
0.2 Other financial liabilities - 0.3
140.7 Bank and other borrowings 10 159.8 75.5
12.3 Provisions for other liabilities 13.1 7.0
373.1 389.5 299.4
3.8 Liabilities held for sale 4 - 0.6
431.7 Total liabilities 418.7 385.3
602.3 Total equity and liabilities 609.9 528.6
BABCOCK INTERNATIONAL GROUP PLC
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
Year ended Six months Six months
31 March ended ended
2006 30 September 30 September
(audited) 2006 2005
£m (unaudited) (unaudited)
Note £m £m
Cash flows from operating activities
54.1 Cash generated from operations 11 27.1 23.8
(5.8) Income tax paid (2.7) (1.4)
(8.9) Interest paid (4.7) (5.2)
3.8 Interest received 1.8 1.7
43.2 Net cash flows from operating activities 21.5 18.9
Cash flows from investing activities
2.5 Disposal of subsidiaries 1.7 1.0
0.9 Proceeds on disposal of property, plant and equipment 0.4 0.5
(6.8) Purchases of property, plant and equipment (2.8) (3.8)
(2.7) Purchases of intangible assets (0.8) (1.1)
- (Purchase)/sale of investment in joint ventures (0.2) 0.1
(4.3) Acquisition of subsidiary net of cash acquired (51.5) -
(10.4) Net cash flows from investing activities (53.2) (3.3)
Cash flows from financing activities
(9.0) Dividends paid (8.7) (5.4)
(3.6) Finance lease principal payments (0.5) (1.5)
(22.5) Bank loans raised/(repaid) 55.9 (12.4)
0.9 Net proceeds on issue of shares 0.5 0.5
- Movement on own shares 0.2 -
(34.2) Net cash flows from financing activities 47.4 (18.8)
(1.4) Net increase/(decrease) in cash, cash equivalents and 15.7 (3.2)
bank overdrafts
26.4 Cash, cash equivalents and bank overdrafts at start of 25.3 26.4
period
0.3 Effects of exchange rate fluctuations (3.0) 0.2
25.3 Cash, cash equivalents and bank overdrafts at end of 13 38.0 23.4
period
BABCOCK INTERNATIONAL GROUP PLC
GROUP STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
Year ended Six months Six months
31 March ended ended
2006 30 September 30 September
(audited) 2006 2005
£m (unaudited) (unaudited)
£m £m
29.9 Profit for the period (including discontinued 20.9 14.7
operations)
1.6 Currency translation differences (5.6) 0.8
42.2 Net actuarial gains in respect of pensions 16.5 28.2
(12.6) Tax on net actuarial gains in respect of pensions (4.9) (8.5)
61.1 Total recognised income and expense 26.9 35.2
Attributable to:
60.8 Equity holders of the parent 26.3 35.1
0.3 Minority interest 0.6 0.1
61.1 26.9 35.2
BABCOCK INTERNATIONAL GROUP PLC
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
1. Basis of preparation
The consolidated interim financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) and International
Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted
by the European Union and with those parts of the Companies Act 1985 applicable
to companies reporting under IFRS. They should be read in conjunction with the
Annual Report for the year ended 31 March 2006 (the 'Annual Report'). The
financial information has been prepared in accordance with the Listing Rules of
the Financial Services Authority. The accounting policies used are consistent
with those used in the Annual Report. The presentation of these consolidated
interim financial statements is consistent with the Annual Report. Where
necessary, the comparatives have been reclassified or extended from the
previously reported interim results to take into account any presentational
changes made in the Annual Report or in these consolidated interim financial
statements including the restatement of discontinued businesses.
The Group has chosen not to early adopt IAS 34, 'Interim Financial Statements',
in preparing its 2006 interim statements.
Statutory accounts for the year ended 31 March 2006 have been delivered to the
Registrar of Companies. The auditors have reported on those accounts, their
report was not qualified and did not contain a statement under section 273(2) or
(3) of the Companies Act 1985.
The interim report for the six months ended 30 September 2006 was approved by
the directors on 13 November 2006.
2. Segmental analysis
Six months ended 30 September 2006 Six months ended 30 September 2005
Operating Operating
profit profit
before before
acquired Acquired acquired Acquired
intangible intangible intangible intangible
amortisation, amortisation amortisation, amortisation
exceptional and exceptional and
items exceptional items exceptional
£m items £m items
£m Group £m Group
Group operating Group operating
revenue profit revenue profit
£m £m £m £m
Continuing operations
Defence Services 163.7 13.6 (0.7) 12.9 121.9 8.9 - 8.9
Technical Services 85.7 7.3 (0.8) 6.5 65.7 5.3 - 5.3
Engineering & Plant 80.2 6.7 - 6.7 68.3 4.0 - 4.0
Services
Networks 42.4 4.8 (0.3) 4.5 36.7 4.0 (0.4) 3.6
Rail 115.6 4.4 (1.8) 2.6 94.1 4.2 (1.2) 3.0
Unallocated - (3.3) (0.6) (3.9) - (2.5) - (2.5)
Total continuing 487.6 33.5 (4.2) 29.3 386.7 23.9 (1.6) 22.3
operations
Discontinued operations
HS&E and other - - - - 4.9 (1.0) - (1.0)
Networks - - - - 12.2 1.2 - 1.2
Total discontinued
operations - - - - 17.1 0.2 - 0.2
Group total 487.6 33.5 (4.2) 29.3 403.8 24.1 (1.6) 22.5
The tax credit related to discontinued operations was £nil (2005: £0.1m).
The share of joint venture results not separately disclosed above is:
Six months ended 30 September 2006 Six months ended 30 September 2005
Operating Tax and Net JV Operating Tax and Net JV
Revenue profit interest results Revenue profit interest results
£m £m £m £m £m £m £m £m
Continuing operations
Defence Services 0.9 0.1 - 0.1 3.8 0.1 - 0.1
Networks 0.1 - - - 0.1 (0.1) - (0.1)
1.0 0.1 - 0.1 3.9 - - -
3 Operating exceptional items and acquired intangible amortisation
In 2006 there were £1.3m operating exceptional items with £0.7m being
reorganisation costs in the Rail segment and £0.6m being bid defence costs
arising out of a possible joint bid from BAE Systems plc and VT Group plc.
Acquired intangible amortisation was £2.9m with £0.3m relating to the Networks
segment, £1.1m relating to the Rail segment, and with the Alstec Group Limited
acquisition giving the following; £0.8m within the Technical Services segment
and £0.7m within the Defence Services segments.
In 2005 there were no operating exceptional items. Acquired intangible
amortisation was £1.6m with £0.4m relating to the Networks segment and £1.2m
relating to the Rail segment. Acquired intangibles are those arising from fair
value adjustments on acquisition of a business.
4. Discontinued operations
Eve Trakway Limited was sold on 4 April 2006 at its held for sale value of £5.8m
after allowing for costs.
5. Acquisitions
On 9 May 2006 the group acquired Alstec Group Limited for net cash consideration
before costs of £44.9m. Goodwill amounted to £36.6m after valuing the acquired
intangibles at £14.6m.
On 1 June 2006 the group acquired certain assets and the high voltage power
lines and mobile telecoms business divisions of ABB South Africa (Pty) Ltd for
£5.2m with the related property purchase of £0.7m completing post half year end.
The total revenue from acquisitions in the period was £47.2m and the related
operating profit was £5.1m.
6. Taxation
The charge for taxation has been based on the estimated effective tax rate, of
22%, for the year ended 31 March 2007. (For September 2005, the charge for tax
was based on an estimated effective tax rate of 24% for the year ended 31 March
2006). A tax credit of £0.9m relates to acquired intangible amortisation and a
tax credit of £0.3m relates to operating exceptional items. For 2005 the tax
charge included a credit of £0.5m, which related to acquired intangible
amortisation.
7. Earnings per share
The calculation of the basic and diluted EPS is based on the following data:
Six months to Six months to
Number of shares 30 September 2006 30 September 2005
Weighted average number of ordinary shares for the purpose of basic 205,336,699 204,360,013
EPS
Effect of dilutive potential ordinary shares: share options 5,600,135 1,022,110
Weighted average number of ordinary shares for the purpose of diluted 210,936,834 205,382,123
EPS
Six months to Six months to
30 September 2006 30 September 2005
Basic per Diluted Basic Diluted
share per per per share
Earnings pence share Earnings share pence
£m pence £m pence
Earnings per share from continuing and discontinued 20.2 9.85 9.59 14.6 7.13 7.10
operations
Add back:
Amortisation of acquired intangible assets, net of tax 2.0 0.98 0.95 1.1 0.54 0.53
Exceptional items 1.0 0.46 0.45 - - -
Earnings before amortisation and exceptionals 23.2 11.29 10.99 15.7 7.67 7.63
Earnings per share from continuing operations 20.2 9.85 9.59 14.3 7.02 6.98
Add back:
Amortisation of acquired intangible assets, net of tax 2.0 0.98 0.95 1.1 0.54 0.53
Exceptional items 1.0 0.46 0.45 - - -
Earnings before discontinued operations, amortisation and
exceptionals 23.2 11.29 10.99 15.4 7.56 7.51
8 Dividends
An interim dividend of 2.40p per 60p ordinary share (2005: 1.75p per 60p
ordinary share) was declared after the balance sheet date and will be paid on 17
January 2007 to shareholders registered on 15 December 2006.
9. Reconciliation of changes of net equity
Year ended Six months ended Six months ended
31 March 30 September 30 September
2006 2006 2005
(audited) (unaudited) (unaudited)
£m £m £m
112.4 Equity at beginning of period 170.6 112.4
0.9 Shares issued in the period 0.5 0.5
61.1 Total recognised income and expense 26.9 35.2
(9.0) Dividends (8.7) (5.4)
1.1 Share based payments 0.9 0.6
4.1 Tax on share based payments 0.8 -
- Movement on ESOP 0.2 -
58.2 Net movement in equity 20.6 30.9
170.6 Equity at end of period 191.2 143.3
Attributable to:
170.2 Equity holders of the parent 190.2 143.1
0.4 Minority interest 1.0 0.2
170.6 191.2 143.3
10. Cash and cash equivalents
In 2005, the group's cash balances were reported net of bank overdrafts
where a cash pool was in operation and the legal right of offset existed. On
adoption of IAS32, netting can only occur to the extent that there is both a
legal ability and the intention to settle net by entity. Although the group's
cash is, where practical, managed on a pooled basis and the interest is charged
or earned on a net basis, there is a grossing up of cash and borrowings in 2006.
If this grossing up had been applied in September 2005 the balances would have
been adjusted by £78.7 million.
11. Reconciliation of operating profit to cash generated from operations
Year ended Six months ended Six months ended
31 March 30 September 30 September
2006 2006 2005
(audited) (unaudited) (unaudited)
£m £m £m
Cash flows from operating activities
46.6 Operating profit 29.3 22.3
(0.6) Profit/(loss) from discontinued operations - 0.2
(0.4) Add back tax on discontinued operations - 0.1
45.6 29.3 22.6
7.1 Depreciation of property plant and equipment 2.7 3.5
3.6 Amortisation and impairment of intangible assets 3.3 1.7
1.1 Equity share-based payments 0.9 0.6
0.3 (Profit)/loss on disposal of property, plant and (0.1) (0.1)
equipment
57.7 Operating cash flows before movement in working capital 36.1 28.3
1.5 Decrease in inventories 7.5 6.1
52.8 (Increase)/decrease in receivables (1.3) 49.8
(49.2) (Decrease) in payables (12.1) (56.4)
(8.7) (Decrease) in provisions (3.1) (4.0)
54.1 Cash generated from operations 27.1 23.8
12. Movement in net debt
Six months Six months
Year ended ended ended
31 March 30 September 30 September
2006 2006 2005
(audited) (unaudited) (unaudited)
£m £m £m
(1.4) Increase/(decrease) in cash in the period 15.7 (3.2)
26.1 Cash flow from the (increase)/decrease in debt and lease (55.4) 13.8
financing
24.7 Change in net funds resulting from cash flows (39.7) 10.6
0.1 Loans and finance leases disposed of with subsidiaries - 0.1
(0.4) New finance leases - (0.4)
0.3 Foreign currency translation differences (2.1) 0.3
24.7 Movement in net debt in the period (41.8) 10.6
(62.9) Net debt at the start of the period (38.2) (62.9)
(38.2) Net debt at the end of the period (80.0) (52.3)
13. Changes in net debt
At At
1 April Acquisitions New 30 September
2006 and disposals finance Exchange 2006
(audited) Cash flow £m leases movement (unaudited)
£m £m £m £m £m
Cash and bank balances 109.0 (21.2) - - (3.1) 84.7
Bank overdrafts (83.7) 36.9 - - 0.1 (46.7)
Cash, cash equivalents and bank
overdrafts at end of period 25.3 15.7 - - (3.0) 38.0
Loans (58.1) (55.9) - - 0.4 (113.6)
Finance leases (5.4) 0.5 - - 0.5 (4.4)
(63.5) (55.4) - - 0.9 (118.0)
Total (38.2) (39.7) - - (2.1) (80.0)
14. The financial information in this interim statement does not constitute
statutory accounts within the meaning of S240 of the Companies Act 1985 (as
amended).
15. Distribution
Copies of this interim report will be distributed to all holders of the
company's ordinary shares. Copies will also be available at the company's
registered office: 2 Cavendish Square, London W1G 0PX. In addition, this report
is available on the company's website: www.babcock.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
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