Interim Results
Babcock International Group PLC
15 November 2005
Tuesday 15 November 2005
BABCOCK INTERNATIONAL GROUP PLC
2005/6 INTERIM RESULTS
Babcock International Group PLC, the Support Services company, announces its
interim results for the half year ended 30 September 2005. These results,
including comparatives, are prepared under International Financial Reporting
Standards and include the results of the Peterhouse acquisition for a full six
months (2004 - three and a half months).
September September %
2005 2004 Change
Sales £398.9m £332.8m 20
Operating profit £23.6m £13.4m 76
Profit before tax £20.2m £11.2m 80
Continuing Earnings per share 7.53p 4.80p 57
Net debt £52.3m £71.1m
Dividend - interim declared 1.75p 1.35p 30
The following additional numbers show the 'underlying' results before
amortisation of acquired intangibles £1.6 million (2004: £1.6 million) and
operating exceptionals £nil (2004: £5.9 million loss), and before the related
tax effects of credit £0.5 million (2004: credit £1.6 million). We believe that
these adjusted results provide a better comparison of underlying performance.
Underlying September September %
2005 2004 Change
Operating profit £25.2m £20.9m 21
Profit before tax £21.8m £18.7m 17
Continuing Earnings per share 8.06p 8.21p (2)
Business Highlights
• Sales and profits continue double-digit growth
• Significant contract wins in Defence and Rail
• Order book at £2 billion
• Cash conversion again excellent - net debt at £52.3 million
• First half margins maintained above 6%
• Interim Dividend raised by 30%
Commenting, Peter Rogers, Chief Executive, said:
The first half of the year fully met our expectations, again producing
double-digit growth in sales and profits and a significantly increased order
book, which for the first time passed the £2 billion mark. Major contract wins
in Defence (Regional Prime Contract East and the extension to the contract for
HMNB Clyde) and Rail (High Output 3) further underpin our future prospects.
We continue to look for new opportunities to exploit our core skills further and
to continue the pattern of growth established over the last few years.
We expect further progress to be made in the second half and the full year
result to be ahead of our original expectations.
Contact: Peter Rogers, Chief Executive
Bill Tame, Finance Director
Babcock International Group plc
Telephone: 020 7291 5000
Andrew Lorenz
Rob Gurner
Financial Dynamics
Telephone: 020 7269 7291
BABCOCK INTERNATIONAL GROUP PLC
2005/6 INTERIM RESULTS
OPERATIONAL REVIEW
INTRODUCTION
A good first half of the financial year continued to provide double-digit growth
in both sales and profits with sales from continuing operations increasing by
almost 20% and underlying operating profits (pre amortisation of acquired
intangibles and exceptional items) from continuing operations rising by just
over 20%.
During the period we secured the expected extension to the contract for
management of HM Naval Base, Clyde, and won the contract for management of the
Ministry of Defence estate in the East of England (Regional Prime Contract
East). The contract to manage the third of Network Rail's High Output equipment
was also won during the period. We have, in addition, won a number of smaller
contracts with Network Rail and National Grid Transco. Progress has been made
on the Royal School of Military Engineering PFI and on our bid for the Defence
Training Review, which is due for submission this month.
The broadened customer base we secured with the acquisition of Peterhouse Group
is providing the benefits we forecast and we continue to be well positioned for
future growth.
DEFENCE SERVICES TURNOVER £121.9 MILLION (2004: £107.5 MILLION)
Defence Services continued its pattern of profitable growth with sales up by 13%
and underlying operating profits increasing by 16%. These figures reflect the
running rate of contracts started last financial year which are now fully on
stream.
The award of the Regional Prime Contract East (RPCE) was an excellent
achievement - Babcock is the only company to have a share in two (of the five)
Regional Prime Contracts and more than justifies our commitment to bidding on
all of these. Equally welcome was the certainty brought to the business by the
extension to the contract to manage HM Naval Base Clyde. We will be using this
stability to broaden our activities.
We continue to make progress on the Royal School of Military Engineering which
is now scheduled for 'Main Gate' (ministry approval) in the first half of 2006.
We have committed a significant amount of time and resource to our bid for the
Defence Training Review and that bid was submitted on November 14. We do not
expect selection of Preferred Bidder until late 2006.
TECHNICAL SERVICES TURNOVER £65.7 MILLION (2004: £81.7 MILLION)
The decline in activity at Rosyth continued, as predicted, through the period.
The Naval refit programme is approaching its low point and will now pick up
gradually. We have continued to manage the cost-base at Rosyth to ensure that
it remains profitable with this lower level of refit work.
We are participating in discussions on the Future Aircraft Carrier and with the
Ministry of Defence on the Maritime Industrial Strategy. No clear picture has
yet emerged of the possible outcomes but we will continue to judge proposals on
the basis of shareholder value.
The module construction work on Terminal 5 has now ended - we are looking for
further opportunities in similar fields and are hopeful that the construction
work for the 2012 Olympics will employ similar techniques.
Design and Technology, Supply Chain Services and the post-nuclear programmes
continue to perform satisfactorily and the action we took last year to reduce
costs in the FBM business has restored it to profitability.
ENGINEERING AND PLANT SERVICES TURNOVER £68.3 MILLION (2004: £52.5 MILLION)
Our African business continues to grow rapidly with the market for construction
equipment remaining strong. Parts sales are developing as anticipated and the
improved margin on these sales is helping to drive up margins. Eskom (the power
generation monopoly) has announced a substantial investment programme over the
next decade in which we would expect to participate.
The small US pipeline business (Eagleton) has had a much improved first half.
Initially the improvement was driven by the increased investment resulting from
higher oil prices but the destruction caused by Hurricane Rita has also resulted
in a high level of demand for the services which Eagleton provide.
NETWORKS TURNOVER £48.9 MILLION (2004: £28.7 MILLION)
A good first half for networks was underpinned by the 3G roll out and increasing
investment in infrastructure by National Grid. We continue to secure contracts
with the network operators through both Eve and the Turner and Partners
business.
A number of trials have been carried out with customers on the 'CARE' system
developed by Eve. This system logs assets and predicts asset condition
dependent on the environment in which those assets operate. We are optimistic
that revenues from this product will increase over the next three years.
RAIL TURNOVER £94.1 MILLION (2004: £62.4 MILLION)
The award of the second high output contract to our joint venture First
Swietelsky was the high point of the first six months. We are now responsible
for the operation of two out of three of the most modern track reinstatement
facilities in the UK, with framework contracts in place until 2009
While track replacement work has been maintained at very high levels the start
of the period was very slow in signalling work. However the volume of work now
being placed by Network Rail will ensure that we remain busy in this area for
the balance of the year.
We continue to reduce overheads in this business and the plan to consolidate the
Glasgow operations into a single, lower-cost facility is on track. We will also
take the opportunity to consolidate our data centres into the new facility.
The Scottish Executive have provided considerable sums of money in their 10 year
plan for work on railways including airport links for both Glasgow and Edinburgh
airports and the reopening of a number of rail lines. We would expect to play a
significant part in any such projects.
FINANCIAL REVIEW
IFRS
The Group results for the six months to 30 September 2005 are the first to be
presented under IFRS. All comparative values for the previous year have been
restated to align with IFRS requirements. A reconciliation between comparative
values under IFRS and as reported under UK Generally Accepted Accounting
Principles (UK GAAP) has been published previously and is available on the
Group's website at www.babcock.co.uk. The information provided also includes a
restatement of segmental performance and details of accounting policies adopted
by the Group under IFRS.
OPERATING RESULTS FROM CONTINUING BUSINESSES
Sales revenue increased 20% to £398.9 million (2004: £332.8 million) and
included a full six months trading from the Rail and Networks businesses
acquired with the Peterhouse Group in June 2004. Operating profit, stated
before amortisation of acquired intangibles and exceptional items ('underlying
operating profit'), was £25.2 million, an increase on last year of 21% and
representing an operating margin of 6.3% (2004: 6.3%). After amortisation of
acquired intangibles £1.6 million (2004: £1.6 million) and exceptional items,
which were zero in the first six months (2004: £5.9 million loss), operating
profit was £23.6 million (2004: £13.4 million).
Significant growth was achieved in all sectors bar Technical Services and more
than compensated for the anticipated downturn in warship refit work in that
business. Defence Services underlying operating profit was £8.9 million (2004:
£7.7 million) on sales up 13% to £121.9 million. Networks sales grew 70% to
£48.9 million and generated underlying operating profit of £5.3 million (2004:
£2.8 million) whilst the Rail businesses returned £4.2 million (2004: £3.2
million) of underlying operating profit on sales up 51% at £94.1 million.
Engineering and Plant Services also continued to deliver strong growth with
sales up 30% at £68.3 million and underlying operating profit up 67% to £4.0
million (2004: £2.4 million) on significantly enhanced margins.
Cash conversion was again strong at 84% of operating profit in the first half
leaving net debt at £52.3 million at the end of September.
Net interest payable (finance costs less finance income) increased to £3.4
million from £2.4 million last year on monthly average net borrowings throughout
the period of £76.3 million (2004: £55.9 million). Average net borrowings were
adversely affected by delays, now resolved, in collecting receivables in the
Rail division.
Profit before tax from continuing operations, pre amortisation of acquired
intangibles and exceptional items, was £21.8 million, up from £18.7 million last
year, an increase of 17%.
TAX
Based on the expected full year rate, the Group's effective rate of tax on
profit before exceptional items and amortisation was 24% (2004: 24%) as a result
of differential tax rates on overseas earnings.
DISCONTINUED OPERATIONS
The Group's Health, Safety and Environmental businesses have been classified as
discontinued operations following the disposal of Pivotal Services, as explained
in note 5 to the interim accounts and the ongoing disposal process for IETG. The
combined post tax loss incurred by these operations in the first six months was
£0.8 million (2004: £0.5 million loss). No profit or loss arose on disposal of
the Pivotal business.
EARNINGS PER SHARE
Fully diluted earnings per share, after amortisation and exceptional items, from
continuing operations increased 56% to 7.49 pence (2004: 4.80 pence).
Underlying, fully diluted earnings per share, before amortisation and
exceptional items, which is a more comparable measure, decreased slightly to
8.02 pence from 8.19 pence last year. The one-off increase in interest charges
explained above and the effect of including the low activity months of April and
May for the Networks businesses were the principal causes.
DIVIDEND
The Group's stated medium term target dividend cover of 2.5 to 3.0 times was
reviewed in light of the change to IFRS accounting conventions and the Board has
confirmed that this target should remain in place, measured on the basis of
profits after tax before exceptional items and amortisation of acquired
intangibles.
Consequently, the Directors are pleased to declare an interim dividend of 1.75
pence per ordinary share. This represents an increase of 30% from last year
including an element of re-alignment following the significant increase in the
2004/05 final dividend.
SUMMARY AND PROSPECTS
The first half of the year has fully met our expectations and the continuing
growth in both sales and profits is highly satisfactory. Contract activity and
opportunities in Rail and Networks are strong and there is now significant
activity in bidding for Ministry of Defence business. We continue to look for
other opportunities where our skills would be appropriately valued. Overall we
are confident that we are well placed to remain a major force in public sector
outsourcing markets and in other technically demanding areas.
We expect further progress to be made in the second half and the full year
result to be ahead of our original expectations.
BABCOCK INTERNATIONAL GROUP PLC
SUMMARISED GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005
Six months ended Six months ended
30 September 2005 30 September 2004
Before Before
acquired acquired
intangible Acquired intangible Acquired
amortisation intangible amortisation intangible
and amortisation and amortisation
exceptional and exceptional and
Year items exceptional items exceptional
ended (unaudited) items (unaudited) items
31 March (unaudited) (unaudited)
2005 £m £m £m £m
Total Total Total
(unaudited) (unaudited) (unaudited)
£m Note £m £m
745.3 Revenue 398.9 - 398.9 332.8 - 332.8
35.9 Operating profit 25.2 (1.6) 23.6 20.9 (7.5) 13.4
(8.5) Finance costs (5.1) - (5.1) (3.7) - (3.7)
2.5 Finance income 1.7 - 1.7 1.3 - 1.3
Share of profit from
0.2 joint ventures - - - 0.2 - 0.2
30.1 Profit before tax 21.8 (1.6) 20.2 18.7 (7.5) 11.2
(8.3) Income tax expense 6 (5.2) 0.5 (4.7) (4.4) 1.6 (2.8)
Profit for the year
from continuing
21.8 operations 16.6 (1.1) 15.5 14.3 (5.9) 8.4
Discontinued 5
operations
Current year loss
after tax on
(1.0) discontinued (0.8) - (0.8) (0.5) - (0.5)
operations
(1.6) Loss on disposals - - - - (1.6) (1.6)
19.2 Profit for the period 15.8 (1.1) 14.7 13.8 (7.5) 6.3
Attributable to:
19.1 Equity holders of the 14.6 6.3
parent
0.1 Minority interest 0.1 -
Earnings per share
from continuing and
discontinued
operations 7
10.08 - Basic 7.13p 3.62p
10.07 - Diluted 7.10p 3.62p
Earnings per share
from continuing
operations 7
11.47 - Basic 7.53p 4.80p
11.45 - Diluted 7.49p 4.80p
BABCOCK INTERNATIONAL GROUP PLC
GROUP BALANCE SHEET
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005
As at
31 March As at As at
2005 30 September 30 September
Total 2005 2004
(unaudited) (unaudited) (unaudited)
£m Note £m £m
Assets
Non-current assets
36.0 Property, plant and equipment 36.1 36.9
161.3 Goodwill 164.5 161.3
14.8 Other intangible assets 14.2 16.4
0.6 Investments in joint ventures 0.5 0.5
0.1 Other investments - 5.2
41.5 Retirement benefits 63.0 38.5
0.4 Trade and other receivables - 0.3
11.8 Deferred tax assets 4.1 17.9
266.5 282.4 277.0
Current assets
40.6 Inventories 35.3 23.0
231.7 Trade and other receivables 179.8 205.2
0.3 Income tax recoverable 0.1 1.2
0.5 Other financial assets - 0.4
33.1 Cash and cash equivalents 12 30.0 39.1
306.2 245.2 268.9
- Assets held for sale 5 1.0 -
572.7 Total assets 528.6 545.9
Equity and liabilities
Equity attributable to equity holders of the parent 9
125.0 Share capital 125.3 124.6
69.3 Share premium 69.6 69.0
30.6 Other reserves 30.6 30.6
(112.6) Retained earnings (82.4) (125.4)
112.3 143.1 98.8
0.1 Minority interest 0.2 -
112.4 Total equity 143.3 98.8
Non current liabilities
2.1 Long-term borrowings 12 1.8 0.5
6.2 Obligations under finance leases 12 5.0 6.7
61.8 Retirement liabilities 53.3 68.4
23.4 Provisions for other liabilities 25.2 18.2
93.5 85.3 93.8
Current liabilities
260.8 Trade and payables 206.8 226.7
6.2 Income tax payable 9.8 9.2
2.2 Other financial liabilities 0.3 0.9
2.3 Obligations under finance leases 12 2.4 3.1
85.4 Bank overdrafts and loans 12 73.1 99.9
9.9 Provisions for other liabilities 7.0 13.5
366.8 299.4 353.3
- Liabilities held for sale 5 0.6 -
460.3 Total liabilities 385.3 447.1
572.7 Total equity and liabilities 528.6 545.9
BABCOCK INTERNATIONAL GROUP PLC
SUMMARISED GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005
Year ended
31 March Six months Six months
2005 ended ended
30 September 30 September
Total 2005 2004
(unaudited) (unaudited) (unaudited)
£m Note £m £m
Cash flows from operating activities
43.5 Cash generated from operations 10 23.8 25.2
(4.8) Income tax paid (1.4) (2.5)
(8.4) Interest paid (5.2) (3.4)
2.5 Interest received 1.7 1.3
32.8 Net cash flows from operating activities 18.9 20.6
Cash flows from investing activities
5.0 Proceeds on disposal of investments - 0.1
(3.2) Disposal of subsidiaries 1.0 (1.5)
4.9 Proceeds on disposal of property, plant and equipment 0.5 3.5
(4.5) Purchases of property, plant and equipment (3.8) (2.3)
(1.4) Purchases of intangible assets (1.1) (0.6)
- Sale/(purchase) of investments 0.1 (0.3)
(26.5) Acquisition of subsidiary net of cash acquired - (23.2)
(25.7) Net cash flows from investing activities (3.3) (24.3)
Cash flows from financing activities
(7.0) Dividends paid (5.4) (4.3)
(3.3) Finance lease principal payments (1.5) (1.1)
23.1 Bank loans (repaid)/ raised (12.4) 35.7
- Net proceeds on issue of shares 0.5 (0.7)
0.3 Movement on own shares - 0.1
13.1 Net cash flows from financing activities (18.8) 29.7
20.2 Net (decrease)/ increase in cash and cash equivalents (3.2) 26.0
6.3 Net cash and cash equivalents at start of period 26.4 6.3
(0.1) Effects of exchange rate fluctuations on cash held 0.2 -
26.4 Net cash and cash equivalents at end of period 12 23.4 32.3
BABCOCK INTERNATIONAL GROUP PLC
GROUP STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005
Year ended
31 March Six months Six months
2005 ended ended
Total 30 September 30 September
(unaudited) 2005 2004
£m (unaudited) (unaudited)
Note £m £m
19.2 Profit for the period (including discontinued operations) 14.7 6.3
0.1 Currency translation differences 0.8 0.1
(34.8) Net actuarial gains/( losses) in respect of pensions 28.2 (37.9)
10.4 Tax on items taken directly to reserves (8.5) 11.4
(5.1) Net income recognised directly in equity 35.2 (20.1)
- Adoption of IAS 39 at 1 April 2005 13 - -
(5.1) Total recognised income and expense 35.2 (20.1)
Attributable to:
(5.2) Equity holders of the parent 35.1 (20.1)
0.1 Minority interest 0.1 -
BABCOCK INTERNATIONAL GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005
1. Accounting policies
As an EU-listed company, Babcock are required to adopt International Financial
Reporting Standards (IFRS) with effect from 1 April 2005. The results for the
six months to September 2005 represent the group's first interim financial
statements prepared in accordance with the basis as set out in note 2 below.
The group's first Annual Report under IFRS will be for the year ended 31 March
2006. Previously, Babcock reported under UK generally accepted accounting
policies (UK GAAP). A description of how the group's reported results and
financial position are affected by this change in accounting policy, including
reconciliations from UK GAAP to IFRS for prior year results and the revised
summary of significant accounting policies under IFRS, is shown on the group's
website at www.babcock.co.uk.
As permitted by IFRS 1 ' First Time Adoption of International Reporting
Standards', the group has elected not to restate comparative information for the
Financial Instrument standards IAS 32 and IAS 39. The impact of adopting IAS 32
and IAS 39 is included in note 13, with the opening balance sheet at 1 April
2005 restated.
2. Basis of preparation
The group is required to present its interim financial statements in accordance
with the relevant standards anticipated to be in effect at the first reporting
date which is 31 March 2006. The interim financial statements have been
prepared on the assumption that all IFRS statements, including Standing
Interpretations Committee Interpretations (SICs) and International Reporting
Interpretations Committee Interpretations (IFRICs) issued by the International
Accounting Standard Board (IASB) as effective for 2006 reporting will be
endorsed by the EU. These are subject to ongoing review and endorsement by the
EU or possible amendment by interpretive guidance from the IASB and are
therefore still subject to change. It is possible, therefore, that further
changes will be required to the comparative financial information restated in
accordance with IFRS, as well as the 2005 information presented in these 2005
interim financial statements, before the 2006 Annual Report is published. The
directors have anticipated that the revised versions of IAS 39 'Financial
Instruments: Recognition and Measurement' and IAS 19 'Employee Benefits' which
have yet to be formally adopted for use in the EU, will be adopted in time to be
applicable to the next annual accounts.
Statutory accounts for the year ended 31 March 2005, prepared under UK GAAP 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 2005 was approved by
the directors on 14 November 2005.
3. Segmental analysis
Six months ended 30 September 2005 Six months ended 30 September 2004
Revenue Operating Profit Revenue Operating Profit
Before Acquired Before Acquired
acquired intangible acquired intangible
intangible amortisation Group intangible amortisation Group
Group amortisation and operating Group amortisation and Operating
revenue exceptionals exceptionals profit revenue exceptionals exceptionals profit
£m £m £m £m £m £m £m £m
Continuing operations
Defence Services 121.9 8.9 - 8.9 107.5 7.7 - 7.7
Technical Services 65.7 5.3 - 5.3 81.7 7.5 (5.6) 1.9
Engineering & Plant 68.3 4.0 - 4.0 52.5 2.4 - 2.4
Services
Networks 48.9 5.3 (0.4) 4.9 28.7 2.8 (0.2) 2.6
Rail 94.1 4.2 (1.2) 3.0 62.4 3.2 (0.2) 3.0
Unallocated - (2.5) - (2.5) - (2.7) (1.5) (4.2)
Total continuing 398.9 25.2 (1.6) 23.6 332.8 20.9 (7.5) 13.4
operations
Discontinued operations
HS&E and other 4.9 (1.0) - (1.0) 4.7 (0.6) (1.6) (2.2)
Group total 403.8 24.2 (1.6) 22.6 337.5 20.3 (9.1) 11.2
The tax credit related to discontinued operations was £0.2m (2004: £0.1m).
The share of turnover and profit after tax, not included above, relating to
joint ventures was as follows: Turnover £3.9m (2004: £2.1m), profit after tax of
£nil (2004: £0.2m) of which £0.1m (2004: £0.1m) was from Defence Services, £nil
(2004: £0.2m) from Technical Services, and a loss of £0.1m (2004: £0.1m) from
Networks.
4. Operating exceptional items and acquired intangible amortisation
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.
In 2004 operating exceptional items were £5.9m. This related to £0.8m of
restructuring costs and £4.8m of goodwill write-off within the Technical
Services segment, £10.0m credit relating to the transfer of rail maintenance
back to Network Rail, offset by £8.8m of exceptional acquired intangible
amortisation relating to rail maintenance, and a £1.5m charge relating to the
closure costs of the Peterhouse head office in the unallocated segment.
Acquired intangible amortisation was £1.6m with £0.2m relating to the Networks
segment and £1.4m relating to the Rail segment.
5. Discontinued operations
On 22 July 2005, the group sold the trade and assets of the Pivotal Services
Group. The business of IETG was transferred to assets held for sale as the
Group is currently actively pursuing a disposal. The trade of these two
companies comprises the HS&E segment which is therefore shown as discontinued.
The net assets disposed of for the Pivotal Services Group were £1.7m with gross
consideration of £4.5m. After provision for costs and an allowance for price
adjustments there was no profit on disposal.
6. Taxation
The charge for taxation has been based on the estimated effective tax rate, of
24%, for the year ended 31 March 2006. A tax credit of £0.5m relates to
acquired intangible amortisation. For 2004 the tax charge included a credit of
£1.6m, of which £0.5m related to acquired intangible amortisation, and £1.1m to
operating exceptional items.
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 2005 30 September 2004
Weighted average number of ordinary shares for the purpose of 204,360,013 174,971,031
basic EPS
Effect of dilutive potential ordinary shares: share options 1,022,110 259,322
Weighted average number of ordinary shares for the purpose of 205,382,123 175,230,353
diluted EPS
Six months to Six months to
30 September 2005 30 September 2004
Basic Diluted Basic Diluted
per Per per per
share share share share
Earnings pence pence Earnings pence pence
£m £m
Earnings per share from continuing and discontinued 14.6 7.13 7.10 6.3 3.62 3.62
operations
Add back:
Amortisation of acquired intangible assets, net of 1.1 0.54 0.53 1.1 0.65 0.65
tax
Exceptional items - - - 6.4 3.70 3.68
Earnings before amortisation and exceptionals 15.7 7.67 7.63 13.8 7.97 7.95
Earnings per share from continuing operations 15.4 7.53 7.49 8.4 4.80 4.80
Add back:
Amortisation of acquired intangible assets, net of 1.1 0.53 0.53 1.1 0.65 0.65
tax
Exceptional items - - - 4.8 2.76 2.74
Earnings before discontinued operations,
amortisation and exceptionals 16.5 8.06 8.02 14.3 8.21 8.19
8. Dividends
An interim dividend of 1.75p per 60p ordinary shares (2004: 1.35p per 60p
ordinary share) was declared after the balance sheet date and will be paid on 20
January 2006 to shareholders registered on 16 December 2005.
9. Reconciliation of changes of net equity
Year ended Six months Six months
31 March ended ended
2005 30 September 30 September
(unaudited) 2005 2004
(unaudited) (unaudited)
£m £m £m
58.6 Equity at beginning of period 112.4 58.6
65.6 Shares issued in the period 0.5 64.9
(5.1) Total recognised income and expense 35.2 (20.1)
(7.0) Dividends (5.4) (4.3)
- Movement on minority interest - -
0.3 Movement on ESOP reserve 0.6 (0.3)
53.8 Net movement in equity 30.9 40.2
112.4 Equity at end of period 143.3 98.8
Attributable to:
112.3 Equity holders of the parent 143.1 98.8
0.1 Minority interest 0.2 -
10. Reconciliation of operating profit to cash generated from operations
Year
ended Six months ended Six months ended
31 March 30 September 30 September
2005 2005 2004
(unaudited) (unaudited) (unaudited)
£m £m £m
35.9 Operating profit 23.6 13.4
(1.0) Loss from discontinued operations (0.8) (0.5)
(0.3) Add back tax on discontinued operations (0.2) (0.1)
34.6 22.6 12.8
7.4 Depreciation of property plant and equipment 3.5 3.2
19.0 Amortisation and impairment of intangible assets 1.7 16.1
0.9 Equity based payments 0.6 0.4
0.9 (Gain)/loss on disposal of property, plant and equipment (0.1) 0.5
62.8 Operating cash flows before movement in working capital 28.3 33.0
(6.0) Decrease/(increase) in inventories 6.1 11.7
(30.9) Decrease/(increase) in receivables 49.8 (2.6)
18.2 (Decrease)/increase in payables (56.4) (18.3)
(0.6) (Decrease)/increase in provisions (4.0) 1.4
43.5 Cash generated from operations 23.8 25.2
11. Movement in net debt
Year ended Six months ended Six months ended
31 March 30 September 30 September
2005 2005 2004
(unaudited) (unaudited) (unaudited)
£m £m £m
20.2 (Decrease)/increase in cash in the period (3.2) 26.0
(19.8) Cash flow from the decrease/(increase) in debt 13.8 (34.6)
and lease financing
0.4 Change in net funds resulting from cash flows 10.6 (8.6)
Loans and finance leases/(acquired)/disposed of
(47.2) with subsidiaries 0.1 (47.1)
(0.9) New finance leases (0.4) -
0.2 Foreign currency translation differences 0.3 -
(47.5) Movement in net debt in the period 10.6 (55.7)
(15.4) Net debt at the start of the period (62.9) (15.4)
(62.9) Net debt at the end of the period (52.3) (71.1)
12. Changes in net debt
At At
1 April New 30 September
2005 Acquisitions finance Exchange 2005
(unaudited) Cash flow and disposals leases movement (unaudited)
£m £m £m £m £m £m
Cash and bank balances
Bank overdrafts 33.1 (3.3) - - 0.2 30.0
(6.7) 0.1 - - - (6.6)
26.4 (3.2) - - 0.2 23.4
Debt (80.8) 12.3 - - 0.2 (68.3)
Finance leases (8.5) 1.5 0.1 (0.4) (0.1) (7.4)
(89.3) 13.8 0.1 (0.4) 0.1 (75.7)
Total (62.9) 10.6 0.1 (0.4) 0.3 (52.3)
13. First time adoption of IAS 39 at 1 April 2005
The group has taken advantage of the exemption not to restate comparatives for
IAS 32 'Financial Instruments': 'Disclosure and Presentation' (IAS 32) and IAS
39 'Financial Instruments: Recognition and Measurement' (IAS 39) but to apply
these from 1 April 2005. As a result the comparative information is presented
on the existing UK GAAP basis. The following table shows the impact of adopting
IAS 32 and IAS 39.
IAS 39
Book value at Transition Book value at
31 March 2005 adjustments 1 April 2005
£m £m £m
Assets
Non-current assets
Property, plant and equipment 36.0 - 36.0
Goodwill 161.3 - 161.3
Other intangible assets 14.8 - 14.8
Investments in joint ventures 0.5 - 0.5
Other investments 0.2 - 0.2
Retirement benefits 41.5 - 41.5
Trade and other receivables 0.4 - 0.4
Deferred tax assets 11.8 (0.1) 11.7
266.5 (0.1) 266.4
Current assets
Inventories 40.6 - 40.6
Trade and other receivables 231.7 0.3 232.0
Income tax recoverable 0.3 - 0.3
Other financial assets 0.5 0.1 0.6
Cash and cash equivalents 33.1 - 33.1
306.2 0.4 306.6
Total assets 572.7 0.3 573.0
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 125.0 - 125.0
Share premium 69.3 - 69.3
Other reserves 30.6 - 30.6
Retained earnings (112.6) - (112.6)
112.3 - 112.3
Minority interest 0.1 0.1
Total equity 112.4 - 112.4
Non-current liabilities
Long-term borrowings 2.1 2.1
Obligation under finance leases 6.2 6.2
Retirement liabilities 61.8 61.8
Provisions for other liabilities 23.4 23.4
93.5 93.5
Current liabilities
Trade and payables 260.8 2.1 262.9
Income tax payable 6.2 - 6.2
Other financial liabilities 2.2 (1.8) 0.4
Obligations under finance leases 2.3 - 2.3
Bank overdrafts and loans 85.4 - 85.4
Provisions for other liabilities 9.9 - 9.9
366.8 0.3 367.1
Total liabilities 460.3 0.3 460.6
Total equity and liabilities 572.7 0.3 573.0
On adopting IAS 39 prospectively from 1 April 2005, net assets have decreased by
£5,000 principally resulting from restating financial assets and liabilities to
fair value or an amortised cost basis.
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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