Interim Results
Senior PLC
04 August 2005
Thursday 4 August 2005
Senior plc
Interim Results for the half-year ended 30 June 2005
FINANCIAL HIGHLIGHTS Notes Half-year to 30 June
--------------------
2005 2004
-------------------------------------------------------------------------------
REVENUE FROM CONTINUING OPERATIONS £166.9m £157.1m +6.2%
-------------------------------------------------------------------------------
OPERATING PROFIT FROM CONTINUING OPERATIONS £9.5m £8.3m +14.5%
-------------------------------------------------------------------------------
PROFIT BEFORE TAXATION FROM CONTINUING
OPERATIONS £7.2m £6.2m +16.1%
-------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE FROM CONTINUING
OPERATIONS 1.92p 1.73p +11.0%
-------------------------------------------------------------------------------
ADJUSTED EARNINGS PER SHARE 7 1.99p 1.85p +7.6%
-------------------------------------------------------------------------------
INTERIM DIVIDEND PER SHARE 0.65p 0.65p -
-------------------------------------------------------------------------------
FREE CASH FLOW 9b £1.4m £7.1m
-------------------------------------------------------------------------------
NET BORROWINGS £59.1m £57.9m
-------------------------------------------------------------------------------
Commenting on the results, James Kerr-Muir, Chairman of Senior plc, said:
'Senior has had a good first half. In Aerospace demand strengthened, in
Industrial the benefits of the rationalisations undertaken in 2004 came through
strongly and in Automotive further enquiries were received for the Group's new
high-pressure diesel products, which start production in late 2006. Group profit
before tax from continuing operations grew 16% and prospects for healthy organic
growth in the medium-term are encouraging.'
For further information please contact:
Senior plc
----------
Graham Menzies, Group Chief Executive 01923 714702
Mark Rollins, Group Finance Director 01923 714738
Finsbury Group
--------------
James Murgatroyd/Charlotte Hepburne-Scott 020 7251 3801
This announcement, together with other information on Senior plc may be found
at: www.seniorplc.com
Note to Editors:
Senior is an international manufacturing group with operations in 11 countries.
Senior designs, manufactures and markets high technology components and systems
for the principal original equipment producers in the worldwide aerospace,
automotive and specialised industrial markets.
Interim Statement
-----------------
Senior has had a good first half. In Aerospace demand strengthened, in
Industrial the benefits of the rationalisations undertaken in 2004 came through
strongly and in Automotive further enquiries were received for the Group's new
high-pressure diesel products, which start production in late 2006. Group profit
before tax from continuing operations grew 16% and prospects for healthy organic
growth in the medium-term are encouraging.
Financial Results
-----------------
Companies listed on security exchanges within the European Union are required to
adopt International Financial Reporting Standards (IFRS) for accounting periods
beginning on or after 31 December 2004. Consequently, the Group's interim
accounts for 2005 are the first time the Group has reported under IFRS. Unless
otherwise stated, all figures included in this commentary and all amounts in the
2005 Interim Accounts themselves, including comparatives, have been prepared
using accounting policies consistent with IFRS. Comparative figures included in
this commentary are for the first six months of 2004 unless otherwise stated.
In the six months to 30 June 2005, Group revenues from continuing operations were
£166.9m, an increase of 6.2% over the comparable period in 2004 (£157.1m).
Operating profit from continuing operations was £9.5m and represented an
improvement of 14.5% over the £8.3m reported for the first half of 2004.
Compared to the first six months of 2004, currency effects on the translation of
overseas revenues and earnings into sterling were not significant.
Operating profit is reported after a loss on disposal of fixed assets of £0.2m
(2004: £nil) and reorganisation and redundancy costs of £0.3m (2004: £1.1m).
Finance costs, consisting of interest payable of £2.5m (2004: £2.4m) and
interest on defined benefit pension obligations of £0.5m (2004: £0.6m), remained
unchanged at £3.0m. Investment income reduced slightly to £0.7m (2004: £0.9m) as
the prior period benefited from a one-off recovery of interest from the USA tax
authorities.
Profit before tax from continuing operations improved by 16.1% to £7.2m
(2004: £6.2m) and, with an effective tax rate of 18.1% (2004: 14.5%), profit
after tax from continuing operations was £5.9m (2004: £5.3m). Basic earnings per
share from continuing operations of 1.92p was 11.0% ahead of the equivalent
figure for 2004 (1.73p).
In addition to the statutory information, the Group has consistently reported an
adjusted earnings per share figure in order to reflect the underlying
performance of the business. This is calculated before profit/loss on disposal
of fixed assets and before profit/loss on disposal of operations but includes
the operating results of discontinued operations up to their point of disposal.
Adjusted earnings per share for the first half of 2005 was 1.99p, 7.6% ahead of
the comparative period in 2004 (1.85p).
Cash Flow and Borrowings
------------------------
Free cash flow (net cash flow from operating activities after net capital
expenditure, interest and tax but before acquisitions, disposals, share issues
and dividend payments) was £1.4m (2004: £7.1m). The reduced cash flow was
largely due to supplementary pension payments of £1.2m (2004: £nil) and the
higher level of gross capital expenditure. This amounted to £9.1m compared to
£5.0m for the first half of 2004, as the Group began to invest in the plant and
equipment required to manufacture the new heavy duty diesel products in North
America.
The US $ strengthened from $1.92 : £1 at the end of December 2004 to $1.77 : £1
at the end of June 2005. The Group has most of its borrowings in US $, as a match
against its US $ assets, and the strengthening US $ caused the reported sterling
net debt to increase by £5.1m in the period.
In total, net debt increased by £8.5m in the six month period to stand at £59.1m
at the end of June 2005. The increase was due to the £5.1m adverse currency
movement discussed above, an additional £0.7m of debt being brought onto the
balance sheet in accordance with IAS 39 (the International Accounting Standard
dealing with Financial Instruments), which was implemented by the Group with
effect from 1 January 2005, and dividend payments of £4.1m. These were partially
offset by the free cash inflow of £1.4m.
Dividend
---------
The Board has declared an unchanged interim dividend of 0.65p. This will be
paid on 25 November 2005 to shareholders on the register on 28 October 2005.
Aerospace
---------
Sales in the Aerospace Division for the first six months of 2005 increased by
6.4% to £74.5m (2004: £70.0m) and operating profit, before the loss on disposal
of fixed assets of £0.2m (2004: £nil), increased by 21.2% to £6.3m (2004:£5.2m).
On the same basis, operating margins improved to 8.5% (2004: 7.4%).
The civil aerospace industry increased build rates during the period, as demand
from the airlines improved. The Airbus A380 recently flew for the first time and
production is currently in the process of ramping up. Boeing and Airbus
collectively delivered 344 aircraft in the six months, up 10% from the 312
aircraft delivered in the first half of 2004. Order intake was strong, with
their combined order book at the end of June 2005 of 2,938 aircraft being
21% ahead of June 2004. The engine builders saw similar increases.
It is anticipated that the civil aerospace industry will remain strong for the
foreseeable future, fuelled by recovering confidence and growing markets
particularly in the Middle East and Far East, including India and China.
Elsewhere, there was weakness in the regional jet market but a strengthening
demand among the business jet builders. The defence and military sectors
remained solid. Revenue is now being generated from the pre-production
development phase of the Joint Strike Fighter programme although full production
volumes remain a number of years away.
A facility improvement programme commenced at Bird Bellows, UK, and new
machining capability is being installed at Jet Products and Ketema, both in
California. Overall, capital expenditure in the period amounted to 65% of
depreciation.
Automotive
----------
Sales in the Automotive Division rose by 4.9% to £68.1m (2004: £64.9m) but
operating profit, as anticipated, reduced to £3.7m (2004: £5.0m). The operating
margin was 5.4% (2004: 7.7%). The Division improved its performance compared
to the second half of 2004, when sales were £58.0m and operating profit, before
profit on disposal of fixed assets of £0.5m, was £3.0m. The main reason for the
improving trend was the fact that the Group's French automotive facility, which
had operational problems in the second half of 2004, returned to profit during
the second quarter of 2005.
The principal automotive markets remained flat - North American passenger
vehicle sales were up year on year by 2% whilst those in Europe were down by
1%. The 'Big 3' continued to see their market share eroded in North America
and diesel continued to gain market share in Europe.
Capital investment was 2.4 times depreciation for the Division. This is mainly
due to the high level of plant and equipment currently being installed in North
America to manufacture the new heavy duty diesel engine products. These are
required as a result of the industry converting to 'common rail' diesel
technology to meet more stringent emission standards from 1 January 2007.
In addition to this booked volume for heavy duty vehicles, the North American
passenger car assemblers have started to develop diesel engine options for their
larger vehicles. If a market for medium size diesel engines materialises, volume
production would commence between 2008 and 2010. This offers Senior Automotive a
potentially significant additional opportunity for its diesel products.
Consequently, the engineering resource necessary to service the many enquiries
being received is currently being enhanced.
Industrial
----------
Sales in the Industrial Division grew by 10.7% to £24.9m (2004: £22.5m) with a
significantly improved operating profit of £1.8m being reported (2004: £0.2m).
The reason for the dramatic profit increase was the turnaround at Pathway,
Texas, a world leader in the design and manufacture of metal and fabric
expansion joints. There were two major factors - a significantly lower cost
base as a result of the factory rationalisation carried out during 2004 and
improved markets, principally for oil and gas.
Outlook
-------
The aerospace industry is expected to continue its recovery. Airlines, whilst
not universally profitable, are reporting increased passenger numbers and are
ordering new aircraft at a faster rate than a year ago. The Group's aerospace
order book, following that of its customers, continues to strengthen as a
result.
Automotive markets are expected to be stable, both in North America and Europe.
The future growth of Senior Automotive, however, will come from supplying the
growing market for high specification diesel engine products. Revenues are
already resulting from the pre-production and prototype phase of the new heavy
duty diesel products and full production is scheduled to commence in late 2006.
In the meantime, capital expenditure is at a high level and the Division's
engineering resource is being expanded to meet the growth expectations.
Having completed the rationalisations last year, the improved performance of
the Industrial Division is expected to be maintained, with the high oil price
and tougher power generation emission standards contributing to a healthy
market place.
Senior remains committed to its strategy of improving the value of the Group
through product and process design and development in conjunction with
operational improvement and cost control. The results of this strategy,
particularly the new business now being won by the Group, allow the directors to
view the medium-term prospects with confidence.
James Kerr-Muir Graham Menzies
Chairman Chief Executive
3 August 2005
Senior plc
Consolidated income statement
-----------------------------
For the half-year ended 30 June 2005 (unaudited)
Notes Half-year Half-year Year
ended ended ended
30 June 2005 30 June 2004 31 Dec 2004
(restated) (restated)
------- ------- --------
£m £m £m
Continuing operations
Revenue 3 166.9 157.1 306.8
------- ------- --------
Trading profit 9.7 8.3 16.3
(Loss)/profit on sale of fixed assets (0.2) - 0.5
------- ------- --------
Operating profit 3 9.5 8.3 16.8
Investment income 0.7 0.9 2.1
Finance costs (3.0) (3.0) (6.2)
------- ------- --------
Profit before tax 7.2 6.2 12.7
Tax 4 (1.3) (0.9) (1.6)
------- ------- --------
Profit for the period
from continuing operations 5.9 5.3 11.1
Discontinued operations
Profit/(loss) for the period
from discontinued operations 5 - 0.4 (4.4)
------- ------- --------
Profit for the period 5.9 5.7 6.7
======= ======= ========
Attributable to:
Equity holders of the parent 5.9 5.7 6.7
======= ======= ========
Earnings per share
From continuing operations
Basic 7 1.92p 1.73p 3.62p
======= ======= ========
Diluted 7 1.89p 1.70p 3.57p
======= ======= ========
From continuing and
discontinued operations
Basic 7 1.92p 1.85p 2.19p
======= ======= ========
Diluted 7 1.89p 1.83p 2.16p
======= ======= ========
The comparative figures for the half-year ended 30 June 2004 have been restated
to reflect the adoption of International Financial Reporting Standards. See Note
11 for details.
The comparative figures for the year ended 31 December 2004 have been restated
to reflect the proposed amendment to International Accounting Standard 21 'The
Effects of Changes in Foreign Exchange Rates'. See Note 2 for details.
Consolidated statement of recognised income and expense
-------------------------------------------------------
For the half-year ended 30 June 2005 (unaudited)
Half-year Half-year Year
ended ended ended
30 June 2005 30 June 2004 31 Dec 2004
(restated) (restated)
------- ------- --------
£m £m £m
Initial recognition of
financial instruments (0.2) - -
Losses on cash flow hedges (0.7) - -
Exchange differences on
translation of foreign
operations 0.9 0.2 (0.3)
Actuarial (losses)/gains
on retirement benefit
obligations (0.3) 2.6 (0.3)
Tax on items taken directly
to equity (0.9) 0.4 1.0
------- ------- --------
Net (loss)/income recognised
directly in equity (1.2) 3.2 0.4
Amounts transferred to
profit or loss on cash flow
hedges (0.1) - -
Profit for the period 5.9 5.7 6.7
------- ------- --------
Total recognised income and
expense for the period 4.6 8.9 7.1
======= ======= ========
Attributable to:
Equity holders of the parent 4.6 8.9 7.1
======= ======= ========
The net liability of £0.2m shown on the initial recognition of financial
instruments comprises a £0.5m asset related to forward contracts taken out as
cash flow hedges of future transactions and a £0.7m liability related to an
interest rate instrument.
The comparative figures for the half-year ended 30 June 2004 have been restated
to reflect the adoption of International Financial Reporting Standards. See Note
11 for details.
The comparative figures for the year ended 31 December 2004 have been restated
to reflect the proposed amendment to International Accounting Standard 21 'The
Effects of Changes in Foreign Exchange Rates'. See Note 2 for details.
Consolidated balance sheet
---------------------------
For the half-year ended 30 June 2005 (unaudited)
Notes 30 June 2005 30 June 2004 31 Dec 2004
(restated) (restated)
------- ------- -------
£m £m £m
Non-current assets
Goodwill 76.1 75.8 73.1
Other intangible assets 1.1 1.4 1.2
Property, plant and equipment 72.7 73.4 68.8
Deferred tax assets 0.1 0.1 0.1
Trade and other receivables 3.9 0.9 3.8
------- ------- -------
Total non-current assets 153.9 151.6 147.0
------- ------- -------
Current assets
Inventories 44.9 41.8 38.4
Construction contracts 5.1 5.4 4.5
Trade and other receivables 62.9 62.1 55.5
Cash and cash equivalents 8.2 12.4 7.4
------- ------- -------
Total current assets 121.1 121.7 105.8
------- ------- -------
Total assets 275.0 273.3 252.8
======= ======= =======
Current liabilities
Trade and other payables 70.8 64.5 59.6
Tax liabilities 10.0 6.4 9.5
Obligations under finance leases 0.2 0.2 0.3
Bank overdrafts and loans 2.3 3.0 2.6
------- ------- -------
Total current liabilities 83.3 74.1 72.0
------- ------- -------
Non-current liabilities
Bank and other loans 62.1 65.8 52.6
Retirement benefit obligations 10 41.2 42.0 41.4
Deferred tax liabilities 1.9 1.3 0.9
Obligations under finance leases 1.7 1.9 1.8
Others 0.2 0.6 0.3
------- ------- -------
Total non-current liabilities 107.1 111.6 97.0
------- ------- -------
Total liabilities 190.4 185.7 169.0
======= ======= =======
Net assets 84.6 87.6 83.8
======= ======= =======
30 June 2005 30 June 2004 31 Dec 2004
(restated) (restated)
------- ------- -------
£m £m £m
Equity
Issued share capital 30.8 30.7 30.7
Share premium account 3.5 3.5 3.5
Equity reserve 0.3 0.1 0.1
Other reserve 17.0 17.0 17.0
Hedging and translation reserve (0.3) 0.6 0.7
Retained earnings 34.6 37.0 33.1
Own shares (1.3) (1.3) (1.3)
------- ------- -------
Equity attributable to equity
holders of the parent 84.6 87.6 83.8
------- ------- -------
Total equity 84.6 87.6 83.8
======= ======= =======
The comparative figures for the half-year ended 30 June 2004 have been restated
to reflect the adoption of International Financial Reporting Standards. See Note
11 for details.
The comparative figures for the year ended 31 December 2004 have been restated
to reflect the proposed amendment to International Accounting Standard 21 'The
Effects of Changes in Foreign Exchange Rates'. See Note 2 for details.
Consolidated cash flow statement
--------------------------------
For the half-year ended 30 June 2005 (unaudited)
Notes Half-year Half-year Year
ended ended ended
30 June 2005 30 June 2004 31 Dec 2004
------- ------- -------
£m £m £m
Net cash from operating
activities 9a) 9.0 10.7 17.7
------- ------- -------
Investing activities
Interest received 0.8 1.3 2.5
Disposal of subsidiary - - 4.7
Proceeds on disposal of property,
plant and equipment 0.7 0.1 0.7
Purchases of property, plant
and equipment (9.0) (4.6) (9.8)
Purchases of intangible assets (0.1) (0.1) (0.2)
Acquisition of subsidiary (0.1) (0.1) (0.2)
------- ------- -------
Net cash used in investing activities (7.7) (3.4) (2.3)
------- ------- -------
Financing activities
Dividends paid (4.1) (4.1) (6.1)
Repayment of borrowings (0.1) (6.2) (18.9)
Repayments of obligations
under finance leases (0.1) (0.1) (0.3)
Share issues 0.1 - -
New loans raised 5.4 - -
Net cash (outflow)/inflow on
forward contracts (0.4) 4.3 4.5
------- ------- -------
Net cash from/(used in)
financing activities 0.8 (6.1) (20.8)
------- ------- -------
Net increase/(decrease) in
cash and cash equivalents 2.1 1.2 (5.4)
Cash and cash equivalents
at beginning of period 5.9 11.5 11.5
Effect of foreign exchange rate changes - (0.4) (0.2)
------- ------- -------
Cash and cash equivalents
at end of period 9c) 8.0 12.3 5.9
======= ======= =======
Notes to the interim financial statements
-----------------------------------------
For the half-year ended 30 June 2005 (unaudited)
1. General Information
----------------------
The information for the year ended 31 December 2004 does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. A copy
of the statutory accounts (reported under UK GAAP) for that year has been
delivered to the Registrar of Companies. The Auditors' report on those accounts
was unqualified.
These interim financial statements, which were approved by the Board of
Directors on 3 August 2005, have not been audited or reviewed by the Auditors.
2. Accounting policies
----------------------
The Company issued an announcement on 17 June 2005 entitled 'Adoption of
International Financial Reporting Standards (IFRS), Restatement of 2004
Financial Information'. This document can be viewed on the Company's
website, www.seniorplc.com.
The document includes a description of the significant accounting polices to be
adopted under IFRS. These interim financial statements have been prepared using
those accounting policies and methods of computation.
When the restated figures for 2004 were prepared, an unrealised gain of £0.2m
arising on long-term intercompany loans was credited to the income statement in
order to comply with IAS 21. However, it should be noted that on 30 June 2005
the International Accounting Standards Board published an update following its
June meeting. This indicated that IAS 21 'The Effects of Changes in Foreign
Exchange Rates' will be amended. The suggested amendment will result in this
item being credited directly to the Statement of Recognised Income and Expense,
which is consistent with the previous treatment under UK GAAP. These interim
financial statements have been prepared in accordance with the proposed
amendment to IAS 21 and the December 2004 comparatives have been adjusted
accordingly.
3. Business segments
--------------------
For management purposes, the Group is organised into three operating divisions
according to the market segments that they serve. These divisions are the basis
on which the Group reports its primary segment information. The three divisions
are Aerospace, Automotive and Industrial. The Industrial Hose operations,
previously reported within Industrial, were sold in August 2004. Note 5
provides further information on the discontinued operations.
Segment information for revenue, operating profit and a reconciliation to entity
net profit is presented below.
Inter Inter
External segment Total Segment External segment Total Segment
revenue revenue revenue result revenue revenue revenue result
Half-year Half-year Half-year Half-year Half-year Half-year Half-year Half-year
ended ended ended ended ended ended ended ended
June June June June June June June June
2005 2005 2005 2005 2004 2004 2004 2004
------ ------ ------ ------ ------- ------ ------- ------
£m £m £m £m £m £m £m £m
Aerospace 74.3 0.2 74.5 6.1 70.0 - 70.0 5.2
Automotive 67.8 0.3 68.1 3.7 64.7 0.2 64.9 5.0
Industrial 24.8 0.1 24.9 1.8 22.4 0.1 22.5 0.2
------ ------ ------ ------ ------- ------ ------- ------
Sub total 166.9 0.6 167.5 11.6 157.1 0.3 157.4 10.4
Eliminations (0.6) (0.6) (0.3) (0.3)
Central costs (2.1) (2.1)
------ ------ ------ ------ ------- ------ ------- ------
Total continuing
operations 166.9 - 166.9 9.5 157.1 - 157.1 8.3
====== ====== ====== ======= ====== =======
Investment income 0.7 0.9
Finance costs (3.0) (3.0)
------ ------
Profit before tax 7.2 6.2
Tax (1.3) (0.9)
Profit for the period from
discontinued operations - 0.4
------ ------
Profit after tax and
discontinued operations 5.9 5.7
====== ======
Segment results shown above are stated after charging £0.2m (2004: £ nil) loss
on sale of fixed assets, attributed wholly to the Aerospace segment.
The total group revenue was £166.9m (2004: £173.7m), with discontinued
operations contributing £ nil (2004: £16.6m). Details of the profit for the 2004
half-year from discontinued operations are shown in note 5.
4. Tax charge
-------------
Half-year Half-year
ended ended
30 June 2005 30 June 2004
------- -------
£m £m
Current tax:
UK corporation tax - -
Foreign tax 1.2 1.0
------- -------
1.2 1.0
Deferred tax:
Current year 0.1 -
------- -------
1.3 1.0
======= =======
Continuing operations 1.3 0.9
Discontinued operations - 0.1
------- -------
1.3 1.0
======= =======
Corporation tax for the interim period is charged at 18.1% (2004: 14.9%),
representing the best estimate of the weighted average annual corporation tax
rate expected for the full financial year.
5. Discontinued operations
--------------------------
There have been no disposals in 2005.
In August 2004, the Group's five Industrial Hose operations, comprising the
share capitals of Senior Flexonics Limited, Flexonics SAS, Senior Flexonics
B.V., Teknofluor Holding A.B. and the trade and assets of the US Hose Division
of Senior Operations Inc, were sold.
The results of the discontinued operations which have been included in the
consolidated income statement, were as follows:
Half-year
ended
30 June 2004
-------
£m
Revenue 16.6
Expenses (16.1)
-------
Profit before tax 0.5
Attributable tax expense (0.1)
-------
Profit after tax 0.4
Loss on disposal of discontinued operations -
-------
Net profit attributable to discontinued operations 0.4
=======
During the half-year ended 30 June 2005, discontinued operations used £nil
(2004: £1.0m) of the Group's net operating cash flows, paid £nil (2004: £0.2m)
in respect of investing activities and paid £nil (2004: £nil) in respect of
financing activities.
6. Dividends
------------
Half-year Half-year
ended ended
30 June 2005 30 June 2004
------- -------
£m £m
Amounts recognised as distributions to equity
holders in the period:
Final dividend for the year ended
31 December 2004 of 1.35p (2003: 1.35p) per share 4.1 4.1
======= =======
A proposed interim dividend, as follows, was approved by the Board of Directors
on 3 August 2005. This proposed dividend has not been included as a liability in
these financial statements.
Proposed interim dividend for the year ended
31 December 2005 of 0.65p (2004: 0.65p) per share 2.0 2.0
======= =======
7. Earnings per share
---------------------
The calculation of the basic and diluted earnings per share is based on the
following data:
Number of shares
Half-year Half-year
ended ended
30 June 2005 30 June 2004
------- -------
000's 000's
Weighted average number of ordinary shares
for the purposes of basic earnings per share 306,700 306,500
Effect of dilutive potential ordinary shares:
Share options 4,800 4,400
------- -------
Weighted average number of ordinary shares
for the purposes of diluted earnings per share 311,500 310,900
======= =======
Earnings and earnings per share
Half-year ended Half-year ended
30 June 2005 30 June 2004
Earnings EPS Earnings EPS
------- ------- ------- -------
£m pence £m pence
Profit for the period from
continuing operations 5.9 1.92 5.3 1.73
Profit for the period from
discontinued operations - - 0.4 0.12
------- ------- ------- -------
Profit for the period from
continuing and discontinued
operations 5.9 1.92 5.7 1.85
Adjust:
Loss on sale of fixed assets net of
tax of £nil (2004: £nil) 0.2 0.07 - -
------- ------- ------- -------
Adjusted earnings after tax 6.1 1.99 5.7 1.85
======= ======= ======= =======
Earnings per share
- basic continuing 1.92p 1.73p
- basic discontinued - 0.12p
------- -------
- basic 1.92p 1.85p
======= =======
- diluted 1.89p 1.83p
- adjusted 1.99p 1.85p
- adjusted and diluted 1.96p 1.83p
The effect of dilutive shares on the earnings for the purposes of diluted
earnings per share is £nil (2004: £nil).
The denominators used for all basic, diluted and adjusted earnings per share are
as detailed in the 'Number of shares' table above.
The provision of an adjusted earnings per share, derived in accordance with the
table above, has been included to identify the performance of operations, from
the time of acquisition or until the time of disposal, prior to the impact of
the following items:
- gains or losses arising from the disposal of fixed assets
- gains or losses arising from the disposal of discontinued operations
- charges for the impairment of goodwill
8. Acquisitions
---------------
The amount of £0.1m (2004: £0.1m) shown in the consolidated cash flow
statement relates to deferred consideration payable in respect of previous
acquisitions.
9. Notes to the cash flow statement
-----------------------------------
a) Reconciliation of operating profit to net cash from operating activities
Half-year Half-year
ended ended
30 June 2005 30 June 2004
------- -------
£m £m
Operating profit from continuing operations 9.5 8.3
Discontinued operations profit before tax - 0.5
Adjustments for:
Depreciation of property, plant and equipment 5.7 7.0
Amortisation of intangible assets 0.3 0.2
Share options 0.2 -
Loss on disposal of property, plant and equipment 0.2 -
Pension payments in excess of service cost (1.2) -
------- -------
Operating cash flows before movements in
working capital 14.7 16.0
Increase in working capital (3.5) (3.5)
------- -------
Cash generated by operations 11.2 12.5
Income taxes (paid)/received (0.1) 0.7
Interest paid (2.1) (2.5)
------- -------
Net cash from operating activities 9.0 10.7
======= =======
b) Free cash flow
Free cash flow, a non statutory item, highlights the total net cash generated by
the Group prior to corporate activity such as acquisitions and disposals and
transactions with shareholders. It is derived as follows:
Half-year Half-year Year
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
------- ------- -------
£m £m £m
Net cash from operating activities 9.0 10.7 17.7
Interest received 0.8 1.3 2.5
Proceeds on disposal of property,
plant and equipment 0.7 0.1 0.7
Purchases of property, plant
and equipment - cash (9.0) (4.6) (9.8)
- finance leases - (0.3) (0.4)
Purchases of intangible assets (0.1) (0.1) (0.2)
------- ------- -------
Free cash flow 1.4 7.1 10.5
======= ======= =======
c) Analysis of net debt
At Cashflow Non cash Exchange At
1 January Items movement 30 June
2005 2005
------- ------- ------- ------- -------
£m £m £m £m £m
Cash 7.4 0.8 - - 8.2
Overdrafts (1.5) 1.3 - - (0.2)
------- ------- ------- ------- -------
Cash and cash equivalents 5.9 2.1 - - 8.0
Debt due within one year (1.1) (0.8) (0.2) - (2.1)
Debt due after one year (52.6) (4.5) (0.5) (4.5) (62.1)
Finance leases (2.1) 0.1 - 0.1 (1.9)
Forward exchange
contract losses (0.7) 0.4 - (0.7) (1.0)
------- ------- ------- ------- -------
Total (50.6) (2.7) (0.7) (5.1) (59.1)
------- ------- ------- ------- -------
Debt due within one year shown above includes short-term bank borrowings of
£1.9m (1 January 2005: £1.1m).
The forward exchange contract losses shown above are included in current
liabilities within trade and other payables.
Non cash items shown above relate to the recognition of financial instruments
under IAS 39.
Additions to property, plant and equipment during the period of £nil (2004
half-year: £0.3m) were financed by new finance leases.
10. Retirement benefit schemes
------------------------------
Defined Benefit Schemes
Aggregate post-retirement benefit liabilities are £41.2m (31 December 2004:
£41.4m, 30 June 2004: £42.0m). The primary components of this liability are the
Group's UK pension plan and US pension plans, with deficits of £32.9m and £5.0m
respectively. These values have been assessed by an independent actuary using
current market values and discount rates.
11. Explanation of transition to IFRS
--------------------------------------
The reconciliations of equity at 1 January 2004 (date of transition to IFRS) and
at 31 December 2004 (date of last UK GAAP financial statements) and the
reconciliation of income statement for 2004, as required by IFRS 1, including
the significant accounting policies and notes to 31 December 2004, were included
in an announcement on 17 June 2005. A copy of the announcement may be found on
the Company's website www.seniorplc.com.
a) Reconciliation of equity at 30 June 2004
Notes UK GAAP Adjustment IFRS
(restated)
-------- -------- --------
£m £m £m
Non-current assets
Goodwill (i) 73.2 2.6 75.8
Intangible assets (ii) - 1.4 1.4
Property, plant and equipment (ii) 74.8 (1.4) 73.4
Deferred tax assets 0.1 0.1
Trade and other receivables 0.9 0.9
-------- -------- --------
Total non-current assets 149.0 2.6 151.6
-------- -------- --------
Current assets
Inventories 41.8 41.8
Construction contracts 5.4 5.4
Trade and other receivables 62.1 62.1
Cash and cash equivalents 12.4 12.4
-------- -------- --------
Total current assets 121.7 - 121.7
-------- -------- --------
Total assets 270.7 2.6 273.3
-------- -------- --------
Liabilities
Trade and other payables (iii) 66.5 (2.0) 64.5
Current tax liabilities 6.4 6.4
Obligations under finance leases 2.1 2.1
Interest bearing loans 68.8 68.8
Retirement benefit obligations (iv) 41.8 0.2 42.0
Deferred tax liabilities (v) 0.7 0.6 1.3
Others 0.6 0.6
-------- -------- --------
Total liabilities 186.9 (1.2) 185.7
-------- -------- --------
Total assets less total liabilities 83.8 3.8 87.6
======== ======== ========
Equity
Issued share capital 30.7 30.7
Share premium account 3.5 3.5
Equity reserve (vi) - 0.1 0.1
Other reserve (vii) 17.7 (0.7) 17.0
Hedging and translation reserve (vii) - 0.6 0.6
Retained earnings 33.2 3.8 37.0
Own shares (1.3) (1.3)
-------- -------- --------
Total equity 83.8 3.8 87.6
======== ======== ========
The Group equity under UK GAAP as at 30 June 2004 has been restated to reflect
the adoption of Financial Reporting Standard No 17 'Retirement Benefits'.
Notes to the reconciliation of equity at 30 June 2004
(i) Goodwill amortisation
Under UK GAAP, goodwill arising on acquisitions subsequent to 1 January 1998 was
capitalised and amortised over a period of up to 20 years. Under IFRS, goodwill
is held at its carrying value (the UK GAAP net book value as at 31 December
2003) and subjected to annual impairment testing. Hence the goodwill
amortisation charge of £2.6m has been reversed, leading to an equivalent
increase in the goodwill value on the balance sheet at 30 June 2004 under IFRS.
(ii) Intangible assets
IFRS requires computer software to be recorded as an intangible asset and
amortised over its useful life. Accordingly, £1.4m of net book value has been
transferred from within plant and equipment to intangible assets.
(iii) Dividends
Under UK GAAP, any dividend proposed in respect of a period is recognised in the
profit and loss account and provided for in the closing balance sheet. Under
IFRS, a declared dividend does not constitute an adjusting post balance sheet
event. Hence, the provision for the interim dividend of £2.0m at 30 June 2004
under UK GAAP has been reversed under IFRS.
(iv) Retirement benefit obligations
IFRS requires that invested assets be valued at bid price, rather than at
mid-price as required by FRS17, under UK GAAP. This revaluation causes the
assets held by the funded plans to reduce in value by £0.2m, and consequently
the net balance sheet pension deficit to increase by the same amount.
(v) Deferred tax
IFRS changes the focus of deferred tax from the income statement to the balance
sheet and to the differences between the book value and tax base of assets and
liabilities. Under IFRS, deferred tax is provided on all temporary differences,
albeit that deferred tax assets are only recognised to the extent that they may
be regarded as recoverable. The Group has recognised a net increase in deferred
tax liabilities of £0.6m relating to the taxation of deferred foreign exchange
gains arising in overseas territories.
(vi) Share based payments
Under IFRS, there is an aggregate provision of £nil in respect of cash settled
share option plans, and a provision of £0.1m in respect of equity settled share
option plans.
(vii) Share capital and reserves
In line with the available exemptions in IFRS 1, the cumulative translation
differences were set to zero at the transition date. An amount of £0.6m has
arisen in the period. Also, as allowed under IFRS 1 exemptions, the existing UK
GAAP value of property, plant and equipment was taken as the deemed cost for
IFRS. Hence, the revaluation reserve has been reset to zero, with the previous
balance of £0.7m having been transferred to the profit and loss reserve.
b) Reconciliation of income statement for the half-year ended 30 June 2004
Notes UK GAAP Adjustment IFRS
(restated and
reformatted)
--------- -------- --------
£m £m £m
Continuing operations
Revenue 157.1 157.1
--------- -------- --------
Trading profit (i),(ii) 8.4 (0.1) 8.3
Amortisation of goodwill (iii) (2.6) 2.6 -
--------- -------- --------
Operating profit 5.8 2.5 8.3
Interest receivable (iv) 1.0 (0.1) 0.9
Interest payable and
similar charges (iv) (2.5) 0.1 (2.4)
Finance cost of net pension
liability (0.6) (0.6)
--------- -------- --------
Profit before tax 3.7 2.5 6.2
Tax (v) (1.0) 0.1 (0.9)
--------- -------- --------
Profit for the period from
continuing operations 2.7 2.6 5.3
--------- -------- --------
Discontinued operations
Profit from operations
before tax (i) 0.4 0.1 0.5
Tax (v) - (0.1) (0.1)
--------- -------- --------
Profit for the period from
discontinued operations 0.4 - 0.4
--------- -------- --------
Profit for the period 3.1 2.6 5.7
========= ======== ========
The Group income statement under UK GAAP for the half-year ended 30 June 2004
has been restated to reflect the adoption of Financial Reporting Standard No. 17
'Retirement Benefits'.
Notes to the reconciliation of income statement for the half-year ended
30 June 2004
(i) Trading profit
Trading profit of continuing businesses is reduced by £0.1m, which is offset by
the equivalent improvement in discontinued businesses. This relates to £0.1m of
central cost previously allocated to discontinued operations. Central costs will
now be disclosed separately within the segmental analysis, rather than being
allocated to segments as occurred previously under UK GAAP.
(ii) Share based payments
Share based payment arrangements exist in relation to share and share option
schemes offered to senior management. Share options were issued in March 2003
and it is considered that these may ultimately vest. No cost was included in UK
GAAP accounts as the intrinsic value was £nil. A small cost (less than £0.1m)
has been included in the IFRS accounts. This expense has been based on the fair
value at the date of the award, as calculated according to the Black-Scholes
pricing model.
(iii) Goodwill amortisation
Under UK GAAP, goodwill arising on acquisitions subsequent to 1 January 1998 was
capitalised and amortised over a period of up to 20 years. Under IFRS, goodwill
is held at its carrying value (the UK GAAP net book value as at 31 December
2003) and subjected to annual impairment testing. Hence the goodwill
amortisation charge of £2.6m for 2004 under UK GAAP has been reversed for IFRS
purposes.
iv) Interest receivable and interest payable
A benefit of £0.1m arising from interest rate swap agreements was previously
shown as interest receivable. This has now been offset against the related
interest payable amount.
(v) Tax charge
The tax charge has been analysed between that attributable to continuing
operations and that attributable to discontinued operations.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 3 minutes ago Informa
- 1 hour ago Dowlais Group
- 1 hour ago RS Group
- 1 hour ago Howden Joinery Group
- 1 hour ago Mears Group