Final Results
Galliford Try PLC
06 September 2007
GALLIFORD TRY PLC
PRELIMINARY STATEMENT FOR THE YEAR ENDED 30 JUNE 2007
HIGHLIGHTS
2007 2006 Increase
£m £m
• Revenue 1,410 852 +65%
• Profit before tax
- Pre exceptional * 53.0 32.5 +63%
- Post exceptional 60.2 34.5 +75%
• Earnings per share pence pence
- Pre exceptional * 12.5 9.7 +29%
- Post exceptional 14.3 10.8 +32%
• Dividend per share 3.0 2.5 +20%
• Results ahead of expectations from Morrison Construction and Chartdale
Homes in the first full year following acquisition.
• Good performance from Linden Homes since acquisition; integration going
well with synergies exceeding forecast.
• Year end net debt of £99 million, representing gearing of 32%,
significantly better than expectations.
• Current construction order book maintained at £2.1 billion.
• Record housebuilding completions of 1,526 units and landbank of 11,200
plots. Encouraging sales during summer period with current sales in hand at
£323 million.
• 90% revenue growth in affordable housing and regeneration activities.
* Stated before a net exceptional gain of £7.2 million (2006: £2.0 million)
Commenting on the results, Greg Fitzgerald, Chief Executive said:
'Galliford Try has had an excellent year. We have delivered significant profit
growth across all our businesses, with the acquisitions we made in the prior
year and Linden Homes, acquired in March 2007, performing ahead of expectations.
With all our divisions delivering strong performances and a rapidly growing
affordable housing and regeneration business, we are confident that our strategy
will continue to deliver sustainable growth.'
For further enquiries please contact:
Greg Fitzgerald, Chief Executive Galliford Try plc 01895 855219
Frank Nelson, Finance Director Galliford Try plc 01895 855226
Ann marie Wilkinson / Dan de Belder Bell Pottinger Corporate & Financial 020
7861 3232
CHIEF EXECUTIVE'S REVIEW
Overview
Galliford Try has had an excellent year. On revenue up 65% to £1.4 billion the
Group achieved a pre exceptional profit before tax up 63% to £53.0 million with
post exceptional profits up 75% to £60.2 million. Earnings per share (pre
exceptional) increased 29% to 12.5 pence with post exceptional up 32% to 14.3
pence.
The two acquisitions made in our previous financial year have both delivered
profits ahead of expectations. The Chartdale Homes landbank has continued to
grow and Morrison Construction's skills have significantly broadened the
resource and expertise available to the Group leading to good growth,
particularly in our water, highways and renewable energy businesses.
Linden Homes, acquired in March 2007, has exceeded its profit expectations for
the first four months of our ownership. The integration is going well and we are
already seeing the benefits of our greater critical mass across the south of
England. The synergy savings projected are ahead of our forecasts at the time of
acquisition, with restructuring costs remaining in line.
With our construction and housebuilding divisions performing very well, we are
harnessing the skills we have across the Group to grow our presence in the
expanding affordable housing and regeneration market where we have a competitive
advantage and are rapidly becoming an industry leader on the larger, more
complex schemes.
Financial Review
Group revenue for the year to 30 June 2007 was £1,410 million (2006: £852
million). Profit from operations (stated before finance costs, exceptional
items, amortisation and share of joint venture interest and tax) increased from
£38.3 million to £62.8 million.
Construction profit from operations was up 67% to £22.1 million representing a
margin of 2.1% on revenue. Within this the profit from operations of our
building division was £12.3 million, representing a margin of 1.8% and of our
infrastructure division was £9.8 million, representing a margin of 2.4%. Income
received from concession management contributed to a significant reduction in
our loss from operations in PPP Investments from £1.6 million to £1.1 million in
the year despite, as planned, there being no sales of investments during the
period. Our housebuilding division's profit from operations rose 52% to £48.9
million representing a margin of 14.1 %.
In March 2007 the Group raised £150.3 million by a placing and open offer and
acquired Linden Holdings plc, purchasing the shares for £108.5 million and
assuming £160.0 million of debt. £63.0 million of the consideration was paid in
cash during the period with the remainder secured by loan notes, of which £13.0
million is deferred and conditional on the securing of planning consents and the
absence of any warranty claims. The results stated above include the four
month's trading to 30 June 2007, contributing a profit from operations of £7.8
million on revenue of £66.3 million.
For the first time we have extracted the revenue and profit from operations
resulting from our affordable housing and regeneration activities from our
construction and housebuilding segments. This demonstrates the potential of this
element of our business which contributed a profit from operations of £6.1
million on revenue, including joint ventures, up 90% in the year to £128.4
million.
The Group has recorded a net exceptional gain of £7.2 million. An exceptional
gain of £3.9 million resulted from property rationalisation, including a profit
on the sale and leaseback of Group premises net of the cost of terminating
operating leases on premises no longer required.
The Group's defined benefit pension scheme closed to future service accrual
during the year, resulting in an exceptional curtailment credit of £5.2 million.
The Group made a one off payment of £10 million into the scheme following the
closure, making a total of £13.1 million contributed to reducing the scheme
deficit in the year and has agreed to make further deficit reduction payments
totalling £7 million annually. At 30 June the deficit, net of deferred tax, was
£18 million. There are no arrangements remaining within the Group under which
employees are accruing pension on a defined benefit basis.
The exceptional gains were partly offset by £1.9 million of costs, in line with
our forecasts, arising from the reorganisation of the Group's housebuilding
structure in the south east of England following the acquisition of Linden
Homes.
The return on average shareholders' funds in the year was 28% and shareholders'
funds at 30 June 2007 were £306.6 million. The Group's construction businesses
continued to generate excellent cash flows throughout the year and, despite the
assumption of Linden Homes' debt, at the year end the Group's net debt was £99
million, well below market forecasts and representing gearing of 32%, compared
to net cash at the previous year end of £16 million.
Dividend
The directors have taken into account the current performance and their
confidence in the future prospects for the Group in determining an appropriate
level of dividend. Accordingly, the directors are recommending a final dividend
of 2.2 pence per share, an increase of 22% on 2006, resulting in a total
dividend up 20% to 3.0 pence. The final dividend will be paid on 16 November
2007 to shareholders on the register on 19 October 2007. The directors remain
committed to a progressive dividend policy which takes into account earnings
growth as well as the need for continued investment in the business.
Construction Overview
Our construction activities have been organised for the first time this year as
two divisions, building and infrastructure. Overall we carried out £1.08 billion
of work on which profit from operations was £22.1 million, representing a margin
of 2.1%. The Group's construction order book is £2.1 billion, of which 90% has
been secured on a basis other than by pure price competition and 80% is in the
public and regulated sector.
Building
Profit from operations of £12.3 million on revenue of £667 million, including
joint ventures, represented an operating margin of 1.8%, underpinned by the
generation of substantial cash balances throughout the year. During the year the
integration of the building activities of Morrison Construction, acquired in
March 2006, was completed with the business in Scotland performing particularly
well and the contracts previously carried out in England absorbed into Galliford
Try's existing operations.
The division is midway through its two major multi school PFI projects - 41
schools for Northamptonshire County Council and 11 schools for the Highlands
Council in Scotland. Both projects are performing well, generating anticipated
profit levels and good cash balances. Having initially secured two contracts for
Marks and Spencer as part of their store rebuilding and refurbishment programme,
we are in discussions on potential further work. There are also a number of new
opportunities we are pursuing under our prisons framework, where Government
expenditure continues to be focused.
Work at the All England Lawn Tennis Club at Wimbledon is progressing to plan,
with the major rebuild of the centre court stadium completed for the 2007
championships and the structural work on schedule for the installation of the
fixed perimeter roof to be completed for the 2008 championships and the
retractable translucent central element for 2009.
We have made good progress in growing our business in the north of England.
Based on the existing strength of both Galliford Try and Morrison Construction
in the area, we opened a new office in Warrington during the year and recently
secured the £41 million National Museum of Liverpool, to be built on the
quayside in the centre of the city.
The current order book stands at £1 billion of which 68% is in the public
sector.
Infrastructure
Profit from operations of £9.8 million was achieved on revenue of £410.7
million, including joint ventures, representing a margin of 2.4%. The division
also performed well on cash management with good cash balances held throughout
the year. Having integrated the infrastructure operations of Galliford Try with
those of Morrison Construction, the division has successfully established itself
as a major provider of infrastructure services in its chosen markets by winning
significant new work during the year.
In water, the division works for seven of the largest water utilities in the UK
through framework agreements under Asset Management Programme 4 - long term
agreements that are currently in mid term, thereby providing visibility to our
future workload. Our performance with the water utilities enables us to be
considered for additional work outside the existing frameworks and during the
year we secured a number of new projects, such as a £50 million water treatment
works in joint venture with Imtec for Anglian Water.
In the highways sector we have over £100 million of road projects currently
under construction. We are working on several projects under the early
contractor involvement scheme of procurement for the Highways Agency in England
and are under consideration for a number of projects in Scotland, including a
joint venture for the M74 project in Glasgow. We recently secured our first rail
contract in Scotland, work on station, bridge and other infrastructure projects
for the railways through framework contracts for Network Rail and are one of
British Waterway's key framework contractors on the canals.
In the remediation sector our framework at Olympic Park in east London for the
Olympic Development Authority is progressing well. We secured the construction
contract for Europe's largest on shore wind farm at Whitelee in Scotland in our
renewable energy business and were appointed as one of the Environment Agency's
four contractors on a four year framework for its £500 million flood defence,
waterways and water resources programme.
Despite carrying out a significant value of work in our existing frameworks, we
maintained our overall order book at £1.1 billion by securing new frameworks and
other additional contracts.
PPP Investments
The integration of the Morrison PFI team into Galliford Try Investments was
completed, and the Company acquired the PFI equity interests in Highland Schools
and Defence Housing Estates, Portsmouth during the year. Our strategy is to
build up our PFI portfolio for the future, and despite there being no sales of
investments during the year, as planned, income received from concession
management contributed to a reduction in the net loss from operations to £1.1
million from £1.6 million in the previous year.
The director's valuation of the Group's PFI/PPP portfolio, carried out for the
first time during the year, has been updated to 30 June 2007 and based on a
discounted cash flow basis, the valuation was £17.9 million which compares to
the carrying value of £6.9 million. Following a review of the overall potential
of the business to the Group, we implemented a policy of taking significant
equity stakes in projects at the commencement of the bidding process of up to
100%, in light of the superior returns and control of the process that this
practice gives compared to minority equity participation. Decisions on equity
sales can then be taken at the most appropriate time to realise best value.
Projects in the construction phase in which we have significant investment
include Defence Estates (Portsmouth) and Highland Schools. Preferred bidder
status was awarded and we are working towards financial close on the £25 million
PFI project for community health facilities at St Andrews in Scotland. We
achieved financial close on the South East Essex LIFT following the year end
which is expected to provide up to £100 million of work over several tranches,
and have been shortlisted for Birmingham's 'Building Schools for the Future'
project where a preferred bidder is expected to be selected during 2008.
Housebuilding
Profit from operations was up 52% from £32.1 million to £48.9 million on revenue
up 54% from £224 million to £346 million, including joint ventures, representing
a margin of 14.1%. Completions for the year were up 45% at 1,526 at an average
sales price up 3% to £219,000. In the more challenging markets we now face,
sales over the summer period have been encouraging, with our current sales in
hand standing at £323 million.
The acquisition of Linden Homes in March 2007 significantly increased the
Group's market presence and critical mass in the south and south east of
England, enabling the Group to establish a target of completing 3,000 homes per
annum. The results include four months trading from Linden Homes which
contributed a profit from operations of £7.8 million on a revenue of £66.3
million, ahead of expectations. The integration is progressing well, with the
synergies anticipated at acquisition already exceeding our forecasts. All the
Group's operations in the south east of England have been rebranded as Linden
Homes to maximise the benefits of our market presence in the region. Chartdale
Homes, acquired in the previous financial year, exceeded expectations in its
first full financial year since acquisition, is growing strongly and has been
rebranded in line with our plans as Stamford Homes North to provide one
consistent brand in the eastern counties. Midas Homes, in the south west,
maintained excellent progress as a leading developer of homes in the region
across the mainstream market and, through Gerald Wood Homes, to small
developments of individual properties in attractive rural locations.
The Group has historically operated off relatively short landbanks. However, a
continuing competitive market for land, and the increasing time it now takes to
take potentially developable land through the planning process, means that it is
becoming more important to plan our operations further ahead and to structure
our landbank accordingly. The acquisition of Linden Homes added 4,800 plots to
our landbank which currently stands at 11,200 units compared to 4,115 at the end
of August last year. We continue to develop opportunities from our long term
strategic land, which currently stands at 1,500 acres.
We have an excellent track record in brownfield land development which accounted
for 70% of our 2007 completions. Going forward, over 80% of our landbank is
brownfield. Our individual designs and developments, not relying on standard
house types or on consortium sites puts us in a good position to continue to
develop homes that differentiate themselves from the competition. We continue to
achieve industry leading scores in independent customer research, with over 90%
of our purchasers stating that they would recommend us to their best friend.
This helps minimise our after sales costs and supports our reputation among home
buyers generally in the market.
We received a number of industry awards during the year, including several for
sustainable development and design, and the Building 'medium size homebuilder of
the year' for the third year running with Midas Homes securing the 2007 award.
Regeneration and Affordable Housing
For the first time, the Group is reporting separately the revenue and profit
from operations generated from the affordable housing and regeneration
activities included within the divisional results for construction and
housebuilding. In the financial year to 30 June 2007, these activities generated
£6.1 million of profit from operations on revenue, including joint ventures, up
90% to £128.4 million.
Affordable housing contracting generated substantially higher revenues and
profit during the year, and we now have 25 long term frameworks for affordable
housing providers.
Our acquisition of Linden Homes has increased our project base with English
Partnerships and affordable housing providers across the south of England. We
are currently working on seven English Partnership projects and are shortlisted
for a further two. We secured the 430 homes Turner Village scheme in Colchester,
the 700 homes Epsom Cluster hospital scheme in Surrey in joint venture, and the
123 homes scheme in Millbay, Plymouth. We are carrying out a 440 home
regeneration scheme in Grimsby with Shoreline Housing Partnership having been
appointed preferred development partner in the year and have entered into a
development agreement for a 500 homes scheme to regenerate council estates in
Plymouth with Westco Properties, part of Devon and Cornwall Housing Association.
Our schemes won a number of the major industry awards in the year, including
best affordable housing development in the British Homes awards, best
sustainable development and best medium sized housebuilder in the Housing Design
awards as well as the Housing Corporation Award for our development at Bude in
Cornwall.
There are few businesses with the spread and depth of resources required to
deliver the range of services required for these projects and, using the skill
sets across its infrastructure, building and housebuilding divisions, Galliford
Try aims to take an increasing share of this expanding market. We have the
capability to remediate sites, put in any necessary infrastructure, carry out
major building works, undertake conversions and develop homes and apartments for
sale.
Health, Safety & Environment
The Group continues to have a major focus on health, safety and the environment.
During the year we carried out a complete review of our health and safety
management structure to match the growth in the business, changing the way in
which we provide advisory services to our businesses and implemented new
policies and standards across all our operations. This has resulted in increased
visibility and more focus on every incident and dangerous occurrence in the
Group, leading to a slight increase in reportable accidents, with our accident
incident rate rising to 8.6 incidents for each 1000 persons at risk. This
compares to 7.11 in the previous year, with the increase largely as the result
of the number of minor incidents.
Outlook
The market for construction is expected to continue at buoyant levels for the
foreseeable future. The spread of our work, much of it directed to the
programmes essential for the public and regulated sectors to improve the
country's infrastructure, is well balanced across sectors that are growing and
in which we are one of a limited number of qualified providers.
In housebuilding, our new critical mass in our areas of operation, combined with
our business model of developing individual quality developments, and not
relying on consortium sites, is serving us well. With encouraging sales over the
summer period, we are well positioned to deliver a good performance in the more
challenging markets that we now face.
Our increasing focus on affordable housing and regeneration is proving its value
as we continue to win significant schemes, demonstrating the additional
potential of our successful construction and housebuilding business model. The
opportunities exist to increase our market share significantly.
We are confident that our strategy will continue to deliver sustainable growth.
Greg Fitzgerald
6 September 2007
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2007
------------------------- ------- --------- ---------
Notes 2007 2006
£'000 £'000
------------------------- ------- --------- ---------
Continuing operations
Revenue 1,409.7 851.5
Cost of sales (1,275.8) (763.4)
------------------------- ------- --------- ---------
Gross profit 133.9 88.1
Administrative expenses (67.0) (48.9)
Share of post tax profit/(losses) from joint
ventures 1.4 0.3
------- --------- ---------
-------------------------
Profit before finance costs 68.3 39.5
------------------------- ------- --------- ---------
Profit before finance costs, amortisation and
exceptional items: 62.5 38.0
Amortisation of intangibles (1.4) (0.5)
Net exceptional item: 3 7.2 2.0
------------------------- ------- --------- ---------
Profit before finance costs 68.3 39.5
------------------------- ------- --------- ---------
Finance costs:
Interest receivable 4 9.3 0.7
Interest payable 4 (17.4) (5.7)
Income from investments
------------------------- ------- --------- ---------
Profit on ordinary activities before tax 60.2 34.5
Taxation 5 (16.6) (9.1)
------------------------- ------- --------- ---------
Profit for the financial period 43.6 25.4
------------------------- ------- --------- ---------
Earnings per ordinary share
- basic 6 14.3p 10.8p
- diluted 6 14.1p 10.6p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 30 June 2007
------------------------- --------- ---------
2007 2006
£m £m
------------------------- --------- ---------
Profit for the financial period 43.6 25.4
Gains on revaluation of available for sale investment
taken
to equity 2.0 -
Actuarial gains and losses in pension scheme 3.9 (5.1)
Deferred tax on items charged to equity (1.9) 2.2
Current tax on items charges to equity 0.9 1.4
------------------------- --------- ---------
Net gains/(losses) recognised directly in equity 4.9 (1.5)
------------------------------ --------- ---------
Total recognised income for the period 48.5 23.9
------------------------- --------- ---------
CONSOLIDATED BALANCE SHEET
at 30 June 2007
2007 2006
£m £m
------------------------- --------- ---------
Non-current assets
Intangible assets 12.0 2.3
Goodwill 109.2 57.2
Property, plant and equipment 5.8 8.0
Investments in joint ventures 6.4 3.3
Financial assets
- Available for sale investments 3.2 1.2
- Derivative financial assets 1.0 -
Trade and other receivables 4.7 0.2
Deferred tax assets 10.0 15.7
------------------------- --------- ---------
Total non-current assets 152.3 87.9
Current assets
Inventories 0.6 0.9
Developments 704.9 283.8
Trade and other receivables 278.5 184.1
Financial assets
- Derivative financial assets 0.4 0.1
Cash and cash equivalents 39.5 21.7
------------------------- --------- ---------
Total current assets 1,023.9 490.6
------------------------- --------- ---------
Total assets 1,176.2 578.5
------------------------- --------- ---------
Current liabilities
Financial liabilities - borrowings (50.0) (3.8)
Trade and other payables (653.4) (344.5)
Current tax liabilities (6.2) (3.1)
Provisions for liability and charges (2.3) (2.0)
------------------------- --------- ---------
Total current liabilities (711.9) (353.4)
------------------------- --------- ---------
Net current assets 312.0 137.2
------------------------- --------- ---------
Non- current liabilities
Financial liabilities - borrowings (88.2) (1.9)
Retirement benefit obligations (25.0) (47.1)
Deferred tax liabilities (20.3) (13.5)
Other liabilities (24.0) (42.1)
Provisions for liability and charges (0.2) (0.4)
------------------------- --------- ---------
Total non-current liabilities (157.7) (105.0)
------------------------- --------- ---------
Total liabilities (869.6) (458.4)
------------------------- --------- ---------
Net assets 306.6 120.1
------------------------- --------- ---------
Shareholders' equity
Share capital 18.8 13.7
Share premium 190.6 48.7
Other reserves 6.7 4.7
Retained earnings 90.5 53.0
------------------------- --------- ---------
Total shareholders' equity 306.6 120.1
------------------------- --------- ---------
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2007
--------------------------- ------ --------- ---------
Notes 2007 2006
£'000 £'000
--------------------------- ------ --------- ---------
Cashflows from operating activities:
Net cash from operations 9 10.4 18.2
Interest received 8.0 0.7
Interest paid (16.3) (5.3)
Tax paid (10.0) (10.3)
--------------------------- ------ --------- ---------
Net cash (used in)/generated from operations (7.9) 3.3
Cash flows from investing activities:
Acquisition of subsidiary (net of cash acquired) 40.1 (24.8)
Acquisition of investments in joint ventures (2.7) (1.0)
Income from investments in joint ventures 0.2 0.1
Acquisition of available for sale investments - (0.7)
Proceeds from sale of joint ventures 0.3 -
Purchase of property, plant and equipment (2.0) (1.6)
Proceeds from sale of property, plant and equipment 19.6 11.1
--------------------------- ------ --------- ---------
Net cash generated from/(used in) investing activities 55.5 (16.9)
Cash flows from financing activities:
Net proceeds from issue of ordinary share capital 147.0 48.8
Purchase of treasury shares (3.0) (1.9)
Repayment of borrowings (1.7) (0.1)
New bank borrowings 99.7 -
Repayment of borrowing acquired with subsidiary (261.0) -
Dividends paid to group shareholders (7.1) (4.9)
Available for sale financial asset - 3.4
--------------------------- ------ --------- ---------
Net cash (used in)/generated from financing activities (26.1) 45.3
--------------------------- ------ --------- ---------
Net increase in cash and cash equivalents 21.5 31.7
--------------------------- ------ --------- ---------
Cash and cash equivalents at 1 July 18.0 (13.7)
--------------------------- ------ --------- ---------
Cash and cash equivalents at 30 June 10 39.5 18.0
--------------------------- ------ --------- ---------
NOTES TO THE PRELIMINARY STATEMENT
1 Basis of preparation
This consolidated financial information has been prepared in accordance with the
Listing Rules of the Financial Services Authority and uses International
Financial Reporting Standards (IFRS) accounting policies consistent with those
described in the Annual Report and Financial Statements 2006. The financial
information set out in this document does not constitute statutory accounts for
the years ended 30 June 2006 or 30 June 2007 but is derived from the 2007 Annual
Report and Financial Statements. The Annual Report and Financial Statements for
2006 have been delivered to the Registrar of Companies and the Annual Report and
Financial Statements for 2007 will be delivered to the Registrar of Companies in
due course. The auditors have reported on those accounts and have given an
unqualified report which does not contain a statement under section 237(2) or
(3) of the Companies Act 1985.
2 Business segment reporting
Segment reporting is presented in the consolidated financial statements in
respect of the Group's business segments which are the primary basis of segment
reporting. The business segment reporting reflects the Group's management and
internal reporting structure. Segment results include items directly
attributable to the segment as well as those that can be allocated on a
reasonable basis. As explained in the financial statements for 30 June 2006,
with effect from 1 July 2006 the Construction activities have operated as two
divisions, Building and Infrastructure, hence the business segments have been
amended accordingly. Due to the complexity of the integration of the Morrison
Construction and PFI divisions into the Group for part of the previous year, the
comparative figures have not been restated as it is impracticable. As the Group
has no material activities outside the UK, segmental reporting is not required
by geographical region. Inter-segment revenue is not material.
Construction PPP
------- -------- --------
Building Infrastructure Total Investments Housebuilding Group Total
£m £m £m £m £m £m £m
Year ended 30 June 2007
Group revenue
and share of
joint venture
revenue 667.0 410.7 1,077.7 3.5 345.9 1.1 1,428.2
Share of joint
ventures'
revenue (2.1) (9.5) (11.6) (1.1) (5.8) - (18.5)
-------------- ------- -------- -------- -------- -------- ------- --------
Revenue 664.9 401.2 1,066.1 2.4 340.1 1.1 1,409.7
-------------- ------- -------- -------- -------- -------- ------- --------
Segment result:
Profit/(loss)
before joint
ventures 12.2 9.8 22.0 (1.6) 47.8 (7.1) 61.1
Share of joint
ventures'
profit 0.1 - 0.1 0.5 1.1 - 1.7
-------------- ------- -------- -------- -------- -------- ------- --------
Profit/(loss)
from
operations * 12.3 9.8 22.1 (1.1) 48.9 (7.1) 62.8
Share of joint
ventures'
interest and
tax - - - 0.4 (0.7) - (0.3)
-------------- ------- -------- -------- -------- -------- ------- --------
Profit/(loss)
before finance
costs,
amortisation
and
exceptional
items 12.3 9.8 22.1 (0.7) 48.2 (7.1) 62.5
Amortisation
of intangibles (0.4) (0.3) (0.7) - (0.7) - (1.4)
Exceptional
items 1.6 1.4 3.0 - (1.9) 6.1 7.2
-------------- ------- -------- -------- -------- -------- ------- --------
Profit/(loss)
before finance
costs 13.5 10.9 24.4 (0.7) 45.6 (1.0) 68.3
Finance
income/(costs) 3.4 0.7 4.1 (0.3) (22.5) 10.6 (8.1)
-------------- ------- -------- -------- -------- -------- ------- --------
Profit before
tax 16.9 11.6 28.5 (1.0) 23.1 9.6 60.2
Income taxes (16.6)
-------------- ------- -------- -------- -------- -------- ------- --------
Profit for the
year from
continuing
operations 43.6
-------------- ------- -------- -------- -------- -------- ------- --------
Included within the above segments the following amounts relate to regeneration and affordable housing
Group revenue and share of joint venture revenue 128.4
Share of joint ventures' revenue (0.9)
Revenue 127.5
Profit from operations * 6.1
2 Business segment reporting (continued)
Construction PPP Investments Housebuilding Group Total
£m £m £m £m £m
Year ended 30
June 2006
Group revenue
and share of
joint venture
revenue 628.8 0.9 223.8 0.6 854.1
Share of joint
ventures'
revenue (2.5) - (0.1) - (2.6)
-------------- -------- -------- -------- ------- -------
Revenue 626.3 0.9 223.7 0.6 851.5
-------------- -------- -------- -------- ------- -------
Segment result:
Profit/(loss)
before joint
ventures 13.2 (1.5) 31.4 (5.4) 37.7
Share of joint
ventures'
profit/(loss) - (0.1) 0.7 - 0.6
-------------- -------- -------- -------- ------- -------
Profit/(loss)
from
operations * 13.2 (1.6) 32.1 (5.4) 38.3
Share of joint
ventures'
interest and
tax (0.1) 0.3 (0.5) - (0.3)
-------------- -------- -------- -------- ------- -------
Profit/(loss)
before finance
costs,
amortisation
and
exceptional
items 13.1 (1.3) 31.6 (5.4) 38.0
Amortisation
of intangibles (0.5) - - - (0.5)
Exceptional
items 0.4 - 1.4 0.2 2.0
-------------- -------- -------- -------- ------- -------
Profit/(loss)
before finance
costs 13.0 (1.3) 33.0 (5.2) 39.5
Finance
income/costs 1.3 (0.1) (11.4) 5.2 (5.0)
-------------- -------- -------- -------- ------- -------
Profit before
tax 14.3 (1.4) 21.6 - 34.5
Income taxes (9.1)
-------------- -------- -------- -------- ------- -------
Profit for the
year from
continuing
operations 25.4
-------------- -------- -------- -------- ------- -------
Included within the above segments the following amounts relate to
regeneration and affordable housing
Group revenue and share of joint venture revenue 67.6
Share of joint ventures revenue -
Revenue 67.6
Profit from operations * 3.8
* Profit from operations is stated before finance costs, exceptional items,
amortisation of intangible assets and share of joint ventures' interest and tax.
2 Business segment reporting (continued)
Building Infrastructure Construction PPP Investments Housebuilding Group Total
Total
£m £m £m £m £m £m £m
Year ended 30 June 2007
Assets
Goodwill 17.9 37.2 55.1 1.9 52.2 - 109.2
Intangibles 0.4 1.2 1.6 - 10.4 - 12.0
Investment in
joint ventures 0.4 - 0.4 4.9 1.1 - 6.4
Other assets 162.4 103.2 265.6 3.8 729.1 10.6 1,009.1
-------------- ------ ---------- -------- -------- -------- ------- -------
181.1 141.6 322.7 10.6 792.8 10.6 1,136.7
Cash and cash
equivalents 39.5
-------------- ------ ---------- -------- -------- -------- ------- -------
Consolidated
total assets 1,176.2
-------------- ------ ---------- -------- -------- -------- ------- -------
Liabilities
Other
liabilities 272.0 126.9 398.9 2.9 274.4 55.2 731.4
-------------- ------ ---------- -------- -------- -------- -------
Gross debt 138.2
-------------- ------ ---------- -------- -------- -------- ------- -------
Consolidated
total
liabilities 869.6
-------------- ------ ---------- -------- -------- -------- ------- -------
Net
assets/(liabil
ities)
excluding net
debt, goodwill
and
intangibles (109.2) (23.7) (132.9) 5.8 455.8 (44.6) 284.1
Goodwill and
intangibles 18.3 38.4 56.7 1.9 62.6 - 121.2
-------------- ------ ---------- -------- -------- -------- ------- -------
Net
assets/(liabil
ities)
excluding net
debt (90.9) 14.7 (76.2) 7.7 518.4 (44.6) 405.3
-------------- ------ ---------- -------- -------- -------- -------
Net cash/(debt) (98.7)
-------------- ------ ---------- -------- -------- -------- ------- -------
Net assets 306.6
-------------- ------ ---------- -------- -------- -------- ------- -------
Year ended 30 June 2006
Assets
Goodwill 55.3 1.9 - - 57.2
Intangibles 2.3 - - - 2.3
Investments in
joint ventures 0.3 1.2 1.8 - 3.3
Other assets 179.6 1.5 291.1 21.8 494.0
-------------- ------ ---------- -------- -------- -------- ------- -------
237.5 4.6 292.9 21.8 556.8
Cash and cash
equivalents 21.7
-------------- ------ ---------- -------- -------- -------- ------- -------
Consolidated
total assets 578.5
-------------- ------ ---------- -------- -------- -------- ------- -------
Liabilities
Other
liabilities 256.8 2.1 149.4 44.4 452.7
-------------- ------ ---------- -------- -------- -------- -------
Gross debt 5.7
-------------- ------ ---------- -------- -------- -------- ------- -------
Consolidated
total
liabilities 458.4
-------------- ------ ---------- -------- -------- -------- ------- -------
Net
assets/(liabil
ities)
excluding net
debt, goodwill
and
intangibles (76.9) 0.6 143.5 (22.6) 44.6
Goodwill and
intangibles 57.6 1.9 - - 59.5
-------------- ------ ---------- -------- -------- -------- ------- -------
Net
assets/(liabil
ities)
excluding net
debt (19.3) 2.5 143.5 (22.6) 104.1
-------------- ------ ---------- -------- -------- -------- ------- -------
Net cash 16.0
-------------- ------ ---------- -------- -------- -------- ------- -------
Net assets 120.1
-------------- ------ ---------- -------- -------- -------- ------- -------
3 Net exceptional item
The net exceptional credit is made up of the following:
(i) Profit from property rationalisation of £3.9million (2006: £3.9million)
which includes the profit on sale and leaseback of Group property net of the
cost of terminating operating leases relating to Group properties that are no
longer required.
(ii) Restructuring costs of £1.9million (2006: £1.9million)
which relate to the costs associated with the restructuring of the Group
following the acquisition of Linden Homes in 2007 and of Morrison Construction
and Chartdale in 2006.
(iii) During the year the Group closed it's final salary pension
scheme to future service accruals. As a result of the changes in actuarial
assumptions which arise on this closure, a curtailment credit arose of
£5.2million.
These amounts have been treated as exceptional items in accordance with the
Group's accounting policy. The income tax expense associated with the net
exceptional item amounts to £1.8million (2006: £0.5million credit).
4 Net finance costs
------------------------ ----------- ----------- ---------
2007 2006
£m £m
------------------------ ----------- ----------- ---------
Interest payable on borrowings (10.9) (2.6)
Unwinding of discounted payables (5.1) (2.4)
Net finance cost on retirement benefit
obligations (0.7) (0.7)
Other (0.7) -
------------------------ ----------- ----------- ---------
Finance costs (17.4) (5.7)
Interest receivable on bank deposits 7.9 -
Interest receivable from joint ventures 0.7 0.7
Fair value gains on financing activities - interest rate
swaps 0.7 -
--------------------------------- ----------- ---------
Finance income 9.3 0.7
------------------------ ----------- ----------- ---------
Net finance costs (8.1) (5.0)
------------------------ ----------- ----------- ---------
5 Taxation
The tax charge for the year is set out below:
Analysis of charge in year 2007 2006
£m £m
--------------------------------- ---------- ---------
Current years' income tax
Current tax 17.1 9.7
Deferred tax (0.4) 0.2
Adjustment in respect of prior years
Current tax (0.1) (0.8)
--------------------------------- ---------- ---------
Income tax expense 16.6 9.1
--------------------------------- ---------- ---------
Tax on items charged to equity 2007 2006
£m £m
--------------------------------- ---------- ---------
Current tax credit on share based payments (0.9) (1.4)
Deferred tax credit for share based payments (0.9) (0.2)
Deferred tax charge/(credit) on retirement benefit 2.2 (1.5)
obligations
Deferred tax on revaluations 0.6 (0.5)
--------------------------------- ---------- ---------
1.0 (3.6)
--------------------------------- ---------- ---------
Total taxation 17.6 5.5
--------------------------------- ---------- ---------
The income statement tax charge for the year of £16.6million is 27.6% of profit
on ordinary activities before tax. This is lower than (2006: lower) the standard
rate of corporation tax in the UK of 30%. The differences are explained below:
---------- ---------
2007 2006
£m £m
--------------------------------- ---------- ---------
Profit before taxation 60.2 34.5
--------------------------------- ---------- ---------
Profit before taxation multiplied by the standard
rate in the UK of 30% (2006: 30%) 18.1 10.3
--------------------------------- ---------- ---------
Effects of:
Expenses not deductible for tax purposes 0.6 0.9
Change in rate of deferred tax (0.4) -
Capital gains tax indexation adjustment (0.6) -
Utilisation of capital gains tax losses (0.1) (1.1)
Adjustments in respect of previous years (0.1) (0.8)
Other (0.9) (0.2)
--------------------------------- ---------- ---------
Income tax expense 16.6 9.1
--------------------------------- ---------- ---------
6 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year, excluding those held by the employee share trust,
which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares. The Group has two classes of potentially dilutive ordinary shares: those
share options granted to employees where the exercise price is less than the
average market price of the Company's ordinary shares during the year and the
contingently issuable shares under the group's long term incentive plan.
2007 2006
------------------ ----------------
Earnings Weighted Per share Earnings Weighted Per share
£m average amount £m average amount
number pence number pence
of shares of shares
---------------- ------- -------- -------- ------- -------- -------
Basic
Earnings
attributable
to ordinary
shareholders 43.6 305,428,612 14.3 25.4 235,209,936 10.8
Effect of dilutive securities:
Options 4,194,331 (0.2) 3,076,310 (0.2)
---------------- ------- -------- -------- ------- -------- -------
Diluted 43.6 309,622,943 14.1 25.4 238,286,246 10.6
---------------- ------- -------- -------- ------- -------- -------
Earnings adjusted for post tax exceptional items of £5.4million (2006:
£2.5million) amount to £38.2 million (2006: £22.9million). The basic earnings
per share calculated on this adjusted basis is 12.5p (2006: 9.7p) (diluted:
12.3p (2006: 9.6p)).
7 Dividends
The following dividends were paid by the Company:
Year to 30 June 2007 Year to 30 June 2006
£m Pence per £m Pence per
share share
-------------------------- --------- --------- --------- ---------
Previous year final 5.0 1.8 3.3 1.5
Current period interim 2.1 0.8 1.6 0.7
-------------------------- --------- --------- --------- ---------
Dividend recognised in
the year 7.1 2.6 4.9 2.2
-------------------------- --------- --------- --------- ---------
The following dividends were declared by the Company in respect of each accounting period
presented:
Year to 30 June 2007 Year to 30 June 2006
£m Pence per £m Pence per
share share
---------------------------- --------- --------- --------- ---------
Interim 2.1 0.8 1.6 0.7
Final 8.3 2.2 5.0 1.8
---------------------------- --------- --------- --------- ---------
Dividend relating to the
year 10.4 3.0 6.6 2.5
---------------------------- --------- --------- --------- ---------
The directors are proposing a final dividend in respect of the financial year
ending 30 June 2007 of 2.2p per share bringing the total dividend in respect of
2007 to 3.0p (2006: 2.5p). The final dividend will absorb an estimated
£8.3million of shareholders' funds. Subject to shareholder approval at the
Annual General Meeting to be held on 9 November 2007, the final dividend will be
paid on 16 November 2007 to shareholders on the register at the close of
business on 19 October 2007.
8 Acquisitions
On 28 July 2006, the Group acquired the entire share capital of Rasen Estates
Limited (Rasen Estates) for £1.4million which was settled in cash. The Rasen
Estates net assets acquired amounted to £1.4million and there was no difference
between the book value and the fair value. No goodwill arose on this
acquisition.
On 6 March 2007, the Group acquired the entire share capital of Linden Holdings
plc, the holding company of the Linden Group of companies ('Linden Homes').
The consideration payable, including expenses, for these acquisitions was as
follows:
£m
Linden Homes 110.8
Rasen Estates 1.4
------------------------- --------------------------
112.2
------------------------- --------------------------
From the date of acquisition to 30 June 2007 the acquisitions contributed £66.3
million of turnover and £7.5 million to profit before interest and intangible
amortisation and £3.2 million to profit before tax.
All intangible assets were recognised at their respective fair values. No
goodwill arose on the acquisition of Rasen Estates. Details of the fair values
relating to Linden Homes and the associated goodwill arising on the acquisition
are given below:
Carrying value Fair value Provisional
pre adjustments fair value
acquisition* ----------- -----------
----------
£m £m £m
Intangibles - 11.1 11.1
Property, plant and equipment 6.4 3.4 9.8
Developments 272.6 49.0 321.6
Trade and other receivables 23.8 - 23.8
Current tax recoverable 2.2 - 2.2
Derivative financial assets 0.6 - 0.6
Cash and cash equivalents 104.4 - 104.4
Bank loans and overdrafts (261.0) - (261.0)
Loan notes (3.2) - (3.2)
Trade and other payables (105.7) (34.0) (139.7)
Deferred taxation (0.9) (10.1) (11.0)
----------------------------- ---------- ----------- -----------
Net assets acquired 39.2 19.4 58.6
Goodwill 52.2
----------------------------- ---------- ----------- -----------
Consideration 110.8
----------------------------- ---------- ----------- -----------
* Stated under IFRS
The fair value adjustment relates to alignment of accounting policies and
recognition on tangible assets.
The intangible assets acquired as part of the acquisition of Linden Homes can be
analysed as follows:
£m
Brand 10.3
Customer contracts 0.8
-------------------------------- -----------
11.1
-------------------------------- -----------
The outflow of cash and cash equivalents and borrowings on the acquisition of
Linden Homes is calculated as follows:
£m
Cash consideration 62.9
Cash acquired (104.4)
Borrowings acquired 261.0
-------------------------------------- -----------
Net cash outflow 219.5
-------------------------------------- -----------
9 Cashflow from operating activities
2007 2006
£m £m
-------------------------------- ----------- -----------
Cash generated from operations
Continuing operations
Profit for the year 43.6 25.4
Adjustments for:
Income tax 16.6 9.1
Depreciation 2.3 1.5
Amortisation of intangible assets 1.4 0.5
Share based payments 1.1 0.5
Profit on sale and leaseback of property, plant and (4.8) (3.9)
equipment
(Profit)/loss on disposal of property, plant and equipment (0.6) 0.3
Profit on sale of joint venture (0.5) -
Finance income (9.3) (0.7)
Finance cost 17.4 5.7
Share of results of joint ventures before taxation (1.4) (0.3)
Movement in retirement benefit obligations (18.2) (4.2)
Increase in provisions for liabilities and charges 0.1 1.9
-------------------------------- ----------- -----------
47.7 35.8
Changes in working capital (excluding the effects of
acquisition of subsidiaries)
Decrease in inventories 0.3 0.5
Increase in developments (98.1) (1.2)
Increase in trade and other receivables (73.2) (0.2)
Increase/(decrease) in payables 133.7 (16.7)
-------------------------------- ----------- -----------
Cash generated from continuing operations 10.4 18.2
-------------------------------- ----------- -----------
10 Reconciliation of net cash
Net (debt )/cash
-------------------------------- ----------- ------------
2007 2006
£m £m
-------------------------------- ----------- ------------
Cash and cash equivalents 39.5 18.0
Current borrowings
Bank loan (11.5) (0.1)
Unsecured loan notes (38.5) -
Non - current borrowings
Bank loans (88.2) (0.9)
Unsecured loan notes - (1.0)
-------------------------------- ----------- ------------
Net (debt)/cash (98.7) 16.0
-------------------------------- ----------- ------------
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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