Final Results - Pre-tax Profit Up 36%
Capita Group PLC
22 February 2000
PRELIMINARY RESULTS FOR THE YEAR TO 31 DECEMBER 1999
ANOTHER YEAR OF EXCELLENT GROWTH
Highlights:
- Strong growth across all markets and opportunities remain at high levels;
- Increased penetration of private sector, now representing 34% of Group
turnover;
- Education now represents 17% of Group turnover and offers significant
growth opportunities;
- Key alliances signed with Microsoft and Oracle/eLoyalty, further
enhancing Capita's position in education and local government.
Financial highlights Year to Year to Change
31 Dec 1999 31 Dec 1998
(restated)
Turnover £327m £238m + 38%
Operating profit £36.4m £27.0m + 35%
before amortising goodwill
Pre-tax profit £36.3m £26.8m + 36%
before amortising goodwill
Earnings per share 12.2 pence 8.9 pence + 37%
before amortising goodwill
Total dividend per share 3.8 pence 2.8 pence + 36%
Operating margins 11% 11% -
Operating cash inflow £34.3m £25.4m + 35%
Announced today:
- Strategic alliance with Microsoft to design and develop e-business, e-
learning and e-assessment solutions for education, to be delivered
through a dedicated education internet portal;
- Partnering agreement with Oracle and eLoyalty to market customer
relationship management (CRM) solutions to local and central government -
having worked successfully together in implementing the first ever fully
integrated CRM solution in the UK public sector for Hertfordshire County
Council;
- Launch of Academy.Direct, a suite of integrated web-enabled applications
that allows flexible, remote access to local authorities;
- Capita's selection by DETR to develop 'Quality Mark' pilot schemes, aimed
at protecting general public from 'cowboy builders'.
Rod Aldridge, Executive Chairman of The Capita Group Plc, commented:
'We have enjoyed excellent growth in 1999, and have made significant
progress with our strategic agenda. There is now an intense focus on areas
where we see substantial growth enabling us to use and enhance our existing
skills and to maximise the position we have in the market, both directly and
through forging new alliances.
'Our current revenues are substantially higher than the corresponding period
12 months ago and our future growth is underpinned by new business
opportunities and our new alliances. We believe shareholders will be
pleased with the results for the coming year and our prospects for further
strong growth thereafter.'
For further information:
The Capita Group Plc
Rod Aldridge OBE, Executive Chairman Tel: 020 7799 1525
Paul Pindar, Chief Executive
Shona Nichols, Group Marketing Director
Hogarth Partnership Limited
James Longfield/John Olsen Tel: 020 7357 9477
Results
Capita has continued to enjoy excellent growth in 1999. We have also made
significant progress with our strategic agenda. We enter the new millennium
strongly positioned for continued success.
In the year ended 31 December 1999, our turnover increased by 38% to £327m
(1998: £238m); operating profits before goodwill amortisation rose by 35% to
£36.4m (1998: £27.0m as restated) and net profits before taxation and
amortisation of goodwill by 36% to £36.3m (1998: £26.8m as restated).
Earnings per share before amortising goodwill advanced by 37% to 12.2p.
Our businesses continue to produce strong operating cashflow with £34.3m
(1998: £25.4m) being generated during the year.
During 1999, Capita has implemented new accounting standards relating to
provisions, contingent liabilities and contingent assets (FRS12) and
financial instruments disclosure (FRS13). In addition, the Group now
amortises goodwill arising from acquisitions over the estimated useful
economic life as outlined in FRS10. Apart from amortising goodwill arising
from acquisitions, none of these changes has had a material impact on the
Group's accounts.
Dividend
The Board is recommending a final dividend of 2.6p net per ordinary share,
making a total of 3.8p net (1998: 2.8p net) for the year. This represents a
36% increase on the dividends paid in respect of the 1998 financial year.
The total dividend for the year is covered 3.2 times by the earnings per
ordinary share, before amortisation of goodwill. The final dividend will be
payable on 27th April 2000 to shareholders on the register at the close of
business on 24th March 2000.
Business Review
Capita provides an integrated range of white collar, professional support
services on long term contracts across the UK's public and private sectors.
Our objective is to improve service quality on behalf of our clients and to
reduce their costs of delivery. The services we provide are essential to
the smooth running and success of our clients' operations. We focus on
sectors where market pressures call for substantial change in service
delivery, delivering benefits through enhancing customer interfaces, re-
engineering business processes and better use of information technology.
Our markets
Our chosen areas of business in both the UK's public and private sectors are
very active. Indeed, it is estimated that the market for outsourcing
services will exceed £8bn by 2002 (source: The Holway Report 1999) and that
the Business Processing Outsourcing element of this market, the major focus
of our business, will grow at an annual rate of 40%. Accordingly, it is
important that we are selective in determining which markets and activities
we choose to pursue and, equally importantly, which we do not. In this
regard, we have continued our withdrawal from activities which are either
maturing or of lower added value. For example, we have transferred
responsibility for a substantial part of our mainframe computer business to
Cap Gemini and we have completely withdrawn from our remaining blue-collar
activities. There is now an intense focus on areas where we see substantial
growth enabling us to use and enhance our existing skills and to maximise
the position we have in the market, either directly or through forging new
alliances.
Local Government
Our local government market is buoyant, driven by the Government's
determination to modernise services and to make local authorities more
responsive and accountable to the communities they serve. In pursuit of
these goals, the Government has adopted a set of policies to address
performance in local government services. The Government has made it clear
in legislation, best value guidance, education intervention activity and in
its messages to local government that it expects the private sector to have
a major involvement in providing services on behalf of local authorities.
Due to our leading market position and innovative style, many authorities
are approaching us to discuss how they might develop wide-ranging
partnerships to meet these objectives. This is exemplified by our
partnership with Norfolk County Council for the delivery of IT, payroll,
pension and exchequer services. Worth £50m over 10 years, the contract
provides the basis for the creation of a Business Centre in Norwich to
provide further services to the County, to the surrounding local authorities
and to other public and private bodies. The contract has started well and
already a number of other opportunities have been identified.
Capita has also implemented, on time and within budget, the first ever local
authority multi-channel customer services call centre for Hertfordshire
County Council, providing the public with a single gateway to council
services. The service, in a contract worth £12m over 5 years, includes the
first integrated customer relationship management (CRM) solution to be fully
implemented in the UK public sector. This truly 'joined-up' service can
respond in a unique way to each customer, resulting in a quality, responsive
information service for the public. Detailed reporting enables the Council
to support, plan and resource their services more effectively. The target
for 70% of all calls to the centre to be resolved immediately without being
referred has been surpassed and currently, with the services we presently
run, stands at 84%. The centre is anticipated to handle 3 million incoming
calls per annum by October 2001 and full internet access will shortly be
available for residents.
This centre has attracted considerable interest throughout local government
and has quickly become a valuable reference site for Capita. We anticipate
designing, building and operating similar centres for other customers.
Recent research has indicated that a further 200 local authorities (50% of
the market) will, in conjunction with the private sector, establish customer
contact centres over the next three years (source: Gartner 1999) and the
preferred model is likely to be the multi-channel service centre. This is
recognised as a core component of the Modernising Government agenda.
As a consequence of our successful collaboration on the Hertfordshire
contract, I am pleased to announce that Capita has signed a partnering
agreement with Oracle, which has extensive e-government experience, and
eLoyalty (a CRM systems integration company, listed on NASDAQ). Joint teams
will market, sell, deliver and administer multi-channel customer service
centres throughout the public sector market, providing quality, responsive
public services with flexible access - whether by phone, paper
correspondence, email, internet or interactive TV.
Our £2.1m internal project to develop a national customer centre to support
our local government operations is nearing completion. Many of the
administrative support transactions which we had previously conducted at
sites throughout the UK are now processed at the centre in Coventry where
customers can contact us through a range of media, spanning paper
correspondence through to email. Transfer of all the services concerned
will be concluded in March 2000 enabling a further improvement in the
quality of services we provide to our clients whilst also creating economies
of scale for the Group.
Initiatives to improve access to public services not only include major step
changes such as call and contact centres, but also key applications which
ensure that existing services and technologies can be accessed by new media
and communication channels. Capita intends to be at the heart of this
process, and accordingly I am pleased to announce the launch of
Academy.Direct. This is a suite of integrated Web-enabled applications
tailored for Local Government within the areas of Revenues, Benefits,
Housing and Finance, allowing remote access through call centres, digital
TV, one stop kiosks, DIP applications and WAP devices, thus giving councils
a single intelligent gateway for all local authority transactions. The
early components of the project are underway with delivery planned in the
fourth quarter of 2000. This product will be available to Academy's
installed base of 500 systems in local authorities and housing associations
and will also be implemented in our national information centre.
Central Government
The Government has also established an intensive modernisation agenda
focused on improving access to central government services and dismantling
traditional service boundaries. Aggressive targets have been set which
require 50% of deliverable services to be accessible electronically by 2005,
with the aim that all services suitable for electronic delivery must be
available via electronic means by 2008. This will require large parts of
central government departments to review the way that they presently deliver
services.
Across the Central Government sector, we have continued to win, deliver and
gain further contracts to design and implement new ways of delivering
services for the Benefits Agency, the Passport Agency, the Department for
Education and Employment (DfEE) and the Department of the Environment,
Transport and the Regions (DETR).
In 1998, the DETR selected Capita to develop its Constructionline service
through a public/private partnership to secure quality property and
construction services to be used by central government departments,
agencies, health authorities and local authorities. This seven year
concession has been a success with over 9,000 contractors and consultants
registered, and is making a real contribution to improving standards within
the construction industry. The register is used by over 550 public sector
authorities.
I am delighted to announce today that Capita has been chosen by the DETR to
support the development and operation of two pilot schemes in Birmingham and
Somerset for the Government's 'Quality Mark' scheme. This is a sister
project to Constructionline, launched with the objective of 'Combating
Cowboy Builders' and aimed at serving the general public. We anticipate
launching the pilots to the public during the second quarter. If the pilots
are successful, the Quality Mark scheme will be rolled out nationally. This
is a major opportunity for Capita to play a key role in a high profile
consumer protection scheme.
Education
The education market, which now represents 17% of the Group's turnover, is
undergoing significant change. Capita intends to play a major role in re-
shaping the way in which services are delivered by Local Education
Authorities and schools. We already hold a significant position in the
market. We are the UK market leader in education support services and we
administer the teacher's pension scheme involving 1.3 million current and
retired teachers. In the fourth quarter, we strengthened our position
further through the acquisitions of Capstan Limited and LHR Education
Limited for an aggregate consideration of £25m. Both of these businesses
specialise in placing supply teachers on short and long term assignments in
schools throughout the UK. The market for supply teachers now exceeds £300m
per annum and is showing strong and consistent growth. Our Learning Network
product developed to train teachers on IT as part of the New Opportunities
Fund (NOF) project has been completed and our sales campaign is progressing
well, increasing our penetration in this market.
In May, we launched TP-Online, an online administration service for
teachers' pensions. This allows schools to transfer information such as
teachers' employment history and salary details securely over the Internet.
This service also enables registered employers to validate online the status
of potential employees against the DfEE's List 99, a register of people
barred from working with children. We have also released software to Web-
enable our schools administration systems, particularly our schools
attendance module, and now provide online comprehensive software support.
To take these and other developments a stage further, I am pleased to
announce today that Capita and Microsoft have formed a strategic alliance to
design and develop e-business solutions for education. The two companies
will be working together on a number of linked initiatives with the aim of
developing a comprehensive ICT based education operating system for UK
schools building on the infrastructure provided for the National Grid For
Learning. All services will be accessed through a dedicated education
internet portal which will co-ordinate and deliver all aspects of e-
learning, e-assessment, e-commerce and e-services.
Private Sector
We continue to increase penetration of the private sector which now
represents 34% of the Group's turnover. The contracts are of a varied
nature covering IT operations, HR services, property services and
consultancy. We have now established business relationships with over 300
substantial corporate clients, creating an ideal platform to extend our
presence in this market. Whilst there still remains less interest than in
the public sector to outsource integrated packages of white-collar services
on long term contracts, we believe that changes in technology and the need
to reduce costs to remain competitive will generate further opportunities
for the Group's wide range of services. This is particularly true in the
insurance industry where 80% of employees work in the back office. Capita
is well placed to benefit from the changes that are taking place through our
20.5% shareholding in the Eastgate Group, the market leader in the
outsourcing of insurance administration.
Operational Review
Our IT service teams have successfully designed, implemented and enhanced a
number of complex projects this year. In July, we reported on the
successful implementation of a newly created public information centre in
Belfast for the BBC, a contract worth £30m over 5 years, enabling the public
to make contact through multiple routes and supporting call advisors through
extensive networked information databases. The service, which is
operational 365 days a year, 24 hours a day, handles over 2 million contacts
from the public each year. Capita also designed and implemented the IT
infrastructure for a new booking system for the Driving Standards Agency
(DSA) for practical and theory driving tests. For the Society of Motor
Manufacturers and Traders, a completely new IT system was recently provided,
involving the decommissioning of its mainframe and the migration to a client
server system allowing on-line browsing of national reports. Both systems
are designed to increase efficiency and enhance services to the public.
Our Human Resources activities, spanning payroll, pensions, recruitment and
outplacement, have enjoyed an outstanding year. The business has been
developed to provide a portfolio of complementary HR activities to mirror
those found within client organisations. It has expanded successfully into
the private sector from its public sector roots.
During the year, our business development team has secured many notable new
customers in the private sector including British Airports Authority, CIS,
Tate & Lyle and British Airways. Contract extensions have also been secured
with the Shipbuilders Industry Pension Scheme and Bookers. In addition to
this, Capita RAS, our recruitment business, has had a highly successful year
winning large scale recruitment projects to assist the Greater London
Authority, the University for Industry and the Working Family Credit Unit.
Capita RAS is now responsible for 40% of all public sector recruitment and
placement activity serviced by external providers.
We created our HR business in 1995 and in its first year it generated
revenues of £3m. Four years later, our policy of seeking strong organic
growth, allied with small selective acquisitions, has created a division
with annual revenues in excess of £100m with a further substantial increase
already underpinned for the year 2000. We have not only broadened our
service offering, but also entered new market sectors including IT, project
management and supply teacher placement.
Our Property services are similarly well positioned for the new millennium.
Having completed our withdrawal from blue-collar service lines, our strategy
of offering a broad portfolio of property consultancy disciplines has been
enhanced with the acquisitions of Edward Roscoe Associates, a leading
telecommunications engineering consultancy, and MPM Adams, a project
management company, for an aggregate £9m. We have secured many prestigious
assignments during the year including work for Cellnet, Orange and Ericsson
in the mobile phone market, Asda, BT, Barclays Bank, Capital Shopping
Centres, Railtrack, Standard Life and the Department of Social Security. EU
and UK legislation concerning environmental and energy management issues has
led to increased demand for our specialist skills in these areas. The new
requirements for improved access for the disabled have resulted in two major
local authority consultancy projects for Hertfordshire and Worcestershire
County Councils. We are also retained as a consultant to the DETR and DTI
funded Environmental and Energy helpline, designed to help companies
formulate modern efficient energy strategies.
Our people
Capita's success is founded upon the collective skills and commitment of its
6,700 staff, the majority of whom have transferred from the public sector.
There is a strong culture of delivering service excellence to customers
which underpins our whole business and creates considerable value for
shareholders. On behalf of the Board, I would like to extend my warm thanks
to all of our staff for their energy and commitment and for the important
role that each plays in the continued success of the Group.
Prospects
We start the new millennium with confidence, strongly placed to take
advantage of market developments. Our current revenues are substantially
higher than the corresponding period 12 months ago and our future growth is
underpinned by new business opportunities and our new alliances. We believe
shareholders will be pleased with the results for the year and our prospects
for further strong growth thereafter.
R. M. Aldridge OBE
Executive Chairman
21st February 2000
Group Profit and Loss Account
for the year ended 31st December 19981999
1999 1998
(restated)
Goodwill Goodwill
Before Amorti- Before Amorti-
Note Goodwill sation Total Goodwill sation Total
£'000's £'000's £'000's £'000's £'000's £'000's
Turnover 1
Continuing 285,768 - 285,768 237,802 - 237,802
operations
Acquisitions 41,431 - 41,431 - - -
----------------------------------------------------------
327,199 - 327,199 237,802 - 237,802
Cost of 221,815 - 221,815 160,727 - 160,727
sales
----------------------------------------------------------
Gross profit 105,384 - 105,384 77,075 - 77,075
Administrat- 69,594 2,992 72,586 50,427 986 51,413
ive expenses
----------------------------------------------------------
Operating
profit
Continuing 32,608 (2,992) 29,616 26,648 (986) 25,662
operations
Acquisitions 3,182 - 3,182 - - -
----------------------------------------------------------
Group 35,790 (2,992) 32,798 26,648 (986) 25,662
operating
profit
Share of 639 - 639 372 - 372
operating
profit in
associates
Amortisation - (1,123) (1,123) - - -
of goodwill
arising on
acquisition
of associate
----------------------------------------------------------
Total 36,429 (4,115) 32,314 27,020 (986) 26,034
operating
profit:
Group and
share of
associate
Net interest (114) - (114) (220) - (220)
payable
----------------------------------------------------------
Profit on 1 36,315 (4,115) 32,200 26,800 (986) 25,814
ordinary
activities
before
taxation
Tax on 11,273 - 11,273 8,708 - 8,708
profit on
ordinary
activities
----------------------------------------------------------
Profit on 25,042 (4,115) 20,927 18,092 (986) 17,106
ordinary
activities
after
taxation
Minority 54 - 54 804 - 804
interest
(Equity and
non equity)
----------------------------------------------------------
Profit for 24,988 (4,115) 20,873 17,288 (986) 16,302
the
financial
year
Dividends 7,921 - 7,921 5,511 - 5,511
----------------------------------------------------------
Retained 17,067 (4,115) 12,952 11,777 (986) 10,791
profit for
the year
==========================================================
Earnings per 2 12.20p (2.01)p 10.19p 8.90p (0.51)p 8.39p
share
- Basic
==========================================================
- Diluted 2 11.85p (1.95)p 9.90p 8.68p (0.51)p 8.17p
==========================================================
Balance Sheets
at 31st December 19981999
Group Company
1999 1998 1999 1998
(restated)
£000's £000's £000's £000's
Fixed assets
Intangible assets 95,175 34,073 - -
Tangible assets 22,252 17,512 148 190
Investments 27,340 1,228 205,989 120,338
------------------------------------------------
144,767 52,813 206,137 120,528
Current assets
Trade investments 224 219 207 219
Debtors due within one 74,863 65,691 19,225 20,571
year
Debtors due beyond one 2,867 2,574 - -
year
Cash at bank and in 1,710 3,642 - -
hand
-----------------------------------------------
79,664 72,126 19,432 20,790
Creditors: amounts 101,074 84,592 32,002 23,205
falling due within one
year
-----------------------------------------------
Net current liabilities (21,410) (12,466) (12,570) (2,415)
-----------------------------------------------
Total assets less 123,357 40,347 193,567 118,113
current liabilities
Creditors: amounts 6,562 658 4,000 -
falling due after more
than one year
Provisions for 987 2,162 - -
liabilities and charges
-----------------------------------------------
115,808 37,527 189,567 118,113
===============================================
Capital and reserves
Called up share capital 4,176 3,958 4,176 3,958
Shares to be issued 630 - 630 -
Share premium account 131,283 80,499 131,283 80,499
Merger reserve - - 20,893 7,150
Profit and loss account (20,956) (47,605) 32,585 26,506
(net of goodwill
written off)
-----------------------------------------------
Shareholders' funds 115,133 36,852 189,567 118,113
(Equity)
Minority interest (Non 675 675 - -
equity)
-----------------------------------------------
115,808 37,527 189,567 118,113
===============================================
Group Statement of Total Recognised Gains and Losses
for the year ended 31st December 1999
1999 1998
£ 000's £ 000's
Profit attributable to the members of the 20,873 16,302
parent undertaking as restated
Exchange adjustments (46) 2
----------------------
Total recognised gains and losses 20,827 16,304
=========
Prior year adjustments (2,736)
-----------
Total recognised gains and losses since last 18,091
annual report
===========
Group Cash Flow Statement
for the year ended 31st December 19981999
1999 1998
£000's £000's £000's £000's
Cash flow from operating 34,349 25,353
activities
Returns on investments and
Servicing of finance
Dividends paid to minorities (43) (693)
in subsidiaries
Interest received 513 605
Interest element of finance (48) (86)
lease payments
Interest paid (822) (670)
-------- --------
Net cash outflow from returns
on
investments and servicing of (400) (844)
finance
Taxation paid (10,864) (6,954)
Capital expenditure and
financial investment
Purchase of tangible fixed (12,283) (9,357)
assets
Purchase of shares by Employee - (1,728)
Benefit Trust
Purchase of trade investments (63) (58)
Purchase of fixed asset (6,500) -
investments
Proceeds on sale of fixed 1,695 475
assets
-------- --------
Net cash outflow from capital
expenditure and financial (17,151) (10,668)
investment
Acquisitions and disposals
Purchase of subsidiary (24,815) (7,537)
undertakings
Sale of subsidiary undertakings 120 -
Cash / (Overdraft) acquired (1,925) 625
with subsidiary undertakings
Cash sold with subsidiary (519) -
undertaking
Purchase of business - (1,615)
Pre acquisition deferred
consideration paid by (950) -
subsidiary undertaking
Purchase of interest in (20,647) -
associated undertaking
Sale of interest in associated 100 -
undertaking
-------- --------
Net cash outflow from
acquisitions and disposals (48,636) (8,527)
Equity dividends paid (6,252) (4,447)
--------------------------------------
Net cash flow before use of (48,954) (6,087)
financing
Financing
Issue of ordinary share 48,076 660
capital
Share issue costs (855) -
Redemption of subsidiary - (2,451)
undertakings preference shares
Capital element of finance (199) (226)
lease rental payments
Repayment of long term loans - (999)
-------- --------
Net cash flow from financing 47,022 (3,016)
--------------------------------------
Decrease in cash in the period (1,932) (9,103)
======================================
Notes to the Accounts
for the year ended 31st December 19981999
(1) Segmental information
Turnover and profit on ordinary activities before taxation
Class of Business
Human Systems &
Customer Resources Software Property Strategic
Services Services Services Services Services Total
£000's £000's £000's £000's £000's £000's
Turnover
1999
Continuing 80,091 70,057 35,768 37,270 78,253 301,439
operations
Acquisitions - 35,496 - 5,935 - 41,431
--------------------------------------------------------
80,091 105,553 35,768 43,205 78,253 342,870
Inter- (108) (1,345) (721) (256) (13,241) (15,671)
segment
sales
--------------------------------------------------------
Third party 79,983 104,208 35,047 42,949 65,012 327,199
sales
========================================================
1998
Continuing 51,244 63,218 28,463 37,814 69,747 250,486
operations
Inter- (75) (1,100) (561) (207) (10,741) (12,684)
segment
sales
--------------------------------------------------------
Third party 51,169 62,118 27,902 37,607 59,006 237,802
sales
========================================================
Profit before tax
1999
Continuing 5,671 9,497 3,360 4,612 9,441 32,581
operations
Acquisitions - 2,384 - 711 - 3,095
---------------------------------------------------------
Segment 5,671 11,881 3,360 5,323 9,441 35,676
profit
-----------------------------------------------
Associated 639
undertakings
Goodwill (4,115)
amortised
--------
Total 32,200
========
1998 (restated)
Continuing 3,988 6,575 3,698 4,419 8,102 26,782
operations
Associated 18
undertakings
Goodwill (986)
amortised
--------
Total 25,814
========
Net assets
1999
Continuing 2,296 391 4,080 5,572 1,892 14,231
operations
Acquisitions - 718 - 906 - 1,624
---------------------------------------------------------
2,296 1,109 4,080 6,478 1,892 15,855
-----------------------------------------------
Associated 20,145
undertakings
Goodwill 95,175
Non- (15,367)
operating
liabilities
--------
115,808
========
1998 (restated)
Continuing 3,296 4,001 1,798 2,423 3,802 15,320
operations
Associated (164)
undertakings
Goodwill 34,073
Non- (11,702)
operating
liabilities
--------
37,527
========
The results of the Group are now reported under five business units, rather
than simply two divisions. This change reflects our customers' increasing
demands to buy integrated services from across the Group and to reflect the
internal management of operations. For the analysis of profit before
taxation by business unit, the associated undertakings comparative result
has been adjusted to exclude businesses that are now subsidiary undertakings
of the Group. The effect of this adjustment has been to increase the 1998
Customer Services profit before tax by £401,000.
Included in turnover from acquisitions is £29,367,000 in respect of Capita
Tomkins Limited, £5,268,000 in respect of MPM Capita Limited, £6,129,000 in
respect of Capstan Limited and £667,000 in respect of Roscoe Capita Limited.
LHR Education Limited was purchased on the 30th December 1999 and
consequently there is no impact on the results for the year.
Since acquisition the acquired businesses of EMIS Limited and Dolphin
Computer Systems (Holdings) Limited have been completely integrated within
existing businesses of the Group. Accordingly it is not possible to
determine their post acquisition results.
Included in 'Continuing operations' above within the Property segment is
£2,070,000 (1998 £1,867,000) of turnover generated in Europe, and £387,000
loss before tax (1998 £287,000 profit before tax) generated in Europe. All
other turnover and profit before tax was generated within the United
Kingdom. The net assets of the Group are all based in the United Kingdom,
except for net liabilities of £259,000 (1998 assets of £257,000) in Europe.
Non operating liabilities comprise taxation and dividend liabilities.
(2) Earnings per share
Earnings per share is calculated on the basis of earnings of £20,873,000
(1998 restated £16,302,000) and on the weighted average of 204,824,000 (1998
194,306,000) shares in issue during the year, excluding the shares held in
the Employee Benefit Trust.
The diluted profit for the year is based on profit for the year of
£20,927,000 (1998 £16,345,000), being profit for the year after adjusting
for dividends payable of £54,000 (1998 £43,000) on the convertible
preference shares of a subsidiary undertaking. The number of ordinary shares
of 211,323,000 (1998 199,742,000) is calculated as follows:
1999 1998
000's 000's
Basic weighted average number of shares 204,824 194,306
Dilutive potential ordinary shares:
Employee share options 5,501 4,490
Shares to be issued in respect of 52 -
deferred consideration
Convertible preference shares of a 946 946
subsidiary undertaking
---------------------
211,323 199,742
=====================
The additional earnings per share figures shown on the Profit and Loss are
calculated based on earnings before the impact of goodwill amortisation.
They are included as they provide a better understanding of the underlying
trading performance of the Group.
(3) Reconciliation of operating profit to net cash inflow from operating
activities
1999 1998
(restated)
£000's £000's
Operating profit before interest 32,798 25,662
Depreciation charge 6,757 3,927
Amortisation of goodwill 2,992 986
Provision against trade investments 75 -
Employee Benefit Trust amortisation 533 500
(Profit)/Loss on sale of fixed assets (35) 38
Utilisation of provisions (1,226) (942)
Increase in provisions - 708
Decrease/(Increase) in debtors 4,926 (22,548)
(Decrease)/Increase in creditors (12,471) 17,022
---------------------
34,349 25,353
=====================
(4) Reconciliation of net cash flow to movement in net funds
Acqui-
Net funds sitions Non cash Net funds
at 1 Jan In 1999 Cash flow flow At 31
1999 (Exc.cash) Movements Movements Dec 1999
£ 000's £000's £ 000's £ 000's £ 000's
Cash at bank and 3,642 - (1,932) - 1,710
in hand
Factored debts - (1,186) - - (1,186)
Loan notes - (16,128) - - (16,128)
Finance leases (413) (424) 199 (173) (811)
-------- -------- -------- -------- --------
Total 3,229 (17,738) (1,733) (173) (16,415)
======== ======== ======== ======== ========
Acqui-
Net funds sitions Non cash Net funds
at 1 Jan In 1998 Cash flow flow At 31
1998 (Exc.cash) Movements Movements Dec 1998
£ 000's £000's £ 000's £ 000's £ 000's
Cash at bank and 12,745 - (9,103) - 3,642
in hand
Other debt (999) - 999 - -
Finance leases (578) (37) 226 (24) (413)
-------- -------- -------- -------- --------
Total 11,168 (37) (7,878) (24) 3,229
======== ======== ======== ======== ========
(5) Preliminary Announcement
The preliminary announcement is prepared on the same basis as set out in
previous year's annual accounts, except for the adoption of new accounting
standards and changes in accounting policy. FRS12 'Provisions and
Contingencies', and FRS13 'Derivatives and other Financial Instruments:
Disclosures' have been adopted from the beginning of the year. To reflect
the changes necessary to comply with FRS12 the Group has changed its
accounting policy on surplus properties, in addition the Group has changed
its policy on Goodwill. Opening balances and comparatives have been
restated where applicable.
The preliminary announcement was approved by a duly appointed and authorised
committee of the Board of Directors on 21st February 2000.
This announcement represents non statutory accounts within the meaning of
S240 of the Companies Act 1985. The statutory Annual Accounts for the year
ended 31st December 1999, upon which an unqualified audit opinion has been
given and which did not contain a statement under section 237(2) or 237(3)
of the Companies Act 1985, will be sent to the Registrar of Companies.
Copies of this announcement can be obtained from the Company's registered
office at 71 Victoria Street, Westminster, London SW1H OXA.
It is intended that the Annual Report and Accounts will be posted to
shareholders on 20th March 2000 and will be available to members of the
public at the registered office of the Company from that date.
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