Half year report for six mont
MORGAN SINDALL GROUP plc
('Morgan Sindall Group' or 'the Group')
Half year report for the six months to 30 June 2010
Morgan Sindall Group plc, the construction and regeneration group, today announces half year results.
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2010 |
2009 |
Change |
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Revenue |
£0.98bn |
£1.14bn |
-14% |
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Adjusted profit before tax¹ |
£23.1m |
£23.9m |
-3% |
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Profit before tax |
£18.4m |
£20.5m |
-10% |
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Cash balance |
£138m |
£89m |
+55% |
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Average cash for the period |
£61m |
£21m |
+190% |
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Adjusted basic earnings per share¹ |
42.0p |
42.6p |
-1% |
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Basic earnings per share |
30.9p |
34.6p |
-11% |
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Interim dividend per share |
12.0p |
12.0p |
N/C |
¹ Adjusted for amortisation of intangible assets (£2.8m) and non-recurring costs (£1.9m).
Group Highlights
· Strong performance achieved through broad range of activities across multiple sectors
· Significant strategic development achieved through:
o Construction and Infrastructure Services being combined into a new division, increasing efficiency and delivering a more integrated service to clients
o Acquisition of Powerminster Gleeson Services ('Powerminster'), expanding Affordable Housing division's response maintenance scope and capabilities
· Continued focus on cost reduction; further £16m of annualised savings realised, in addition to £38m of annualised savings previously announced
· Financially strong; net cash balance of £138m, £100m undrawn banking facilities, no material pension deficit
· Maintained interim dividend at 12.0p, reflects optimism about future prospects and strong balance sheet
Outlook
· Forward order book improved by £0.5bn since the start of year to £3.7bn
· Outlook remains challenging, but broad spread of activities provides resilience
· Continued focus on adapting Group businesses to current market environment
· Well placed to increase profitable market share
· Positive start continuing which underpins our confidence of meeting our expectations for the full year
John Morgan, Executive Chairman, commented:
"These results demonstrate our continued strategic and operational progress.
"Whilst we are conscious that market conditions remain challenging, our financial strength, breadth of capabilities and leading positions across a range of market sectors leave us well placed to capture further market share. We look to the future with confidence."
Divisional highlights
Divisional operating profit is profit from operations before the amortisation of intangible assets and non-recurring costs.
Construction & Infrastructure
· Construction and Infrastructure Services divisions combined to provide a more integrated service to clients; division reported on a combined basis for the first time
· Merger rationale client focussed, but expected to deliver annualised cost savings of £6.0m, with £1.0m realised to date
· Operating profit of £12.2m* (2009: £15.0m) on revenue of £612m (2009: £797m)
· Blended margin improved to 2.0% (2009: 1.9%)
· Record first half operating profit contribution from division's construction businesses, up 11% to £6.3m (2009: £5.7m), with margin improved to 1.8% (2009: 1.5%); operating profit of £5.9m (2009: £9.3m) on maintained margin of 2.2% (2009: 2.2%) from infrastructure businesses
· Outlook remains challenging; reasonable pipeline of construction opportunities and a number of major infrastructure opportunities being tendered; order book up £0.5bn to £2.1bn, a 31% increase, since the start of the year
* Stated before non-recurring costs of restructuring of £1.7m
Fit Out
· Strong performance in challenging market conditions with revenue increasing 12% to £179m (2009: £160m), driven by greater demand for larger projects from professional and financial services sectors in London
· Operating profit of £6.9m (2009: £7.4m), with margin of 3.9% (2009: 4.6%)
· Market share maintained; focus on profitable work rather than chasing revenue
· Order book up 25% since start of the year at £213m (2009: £150m); revenue in second half of year expected to exceed that achieved in first half
· Growth targeted in retail banking, education and hotel sectors
Affordable Housing
· Comparable performance to same period last year; operating profit of £6.9m* (2009: £7.1m) on revenue of £173m (2009: £178m)
· Operating margin maintained at 4.0% (2009: 4.0%)
· Demand for new build social housing and refurbishment remained robust; open market sales continue to be impacted by lack of mortgage availability
· Strategic acquisition of Powerminster on 30 June 2010 extends division's response maintenance capability and geographic reach
· Secured first project under HCA's Delivery Partner Panel and secured £5m of funding under first phase of HCA's Kickstart programme
· Order book increased to £1.4bn (2009: £1.3bn); outlook remains robust for new build social housing, refurbishment and response maintenance in short to medium-term
· Continuing to pursue next round of social housing PFIs
* Stated before non-recurring transaction costs of the acquisition of £0.2m
Urban Regeneration
· £62m of capital employed in the business; average ROCE of 20% through the cycle
· Improved performance due to slight improvement in activity levels and stronger sales from division's residential schemes
· Operating profit of £0.8m (2009: loss of £1.1m) on revenue of £15m (2009: £5m)
· Market expected to improve slowly through 2011, driven by increased tenant and investor demand
· Long-term pipeline remains strong with £1.4bn share of development pipeline
Investments
· Directors' valuation of portfolio £51m (2009: £36m)
· Achieved financial close on schemes valued at over £300m, including Hull BSF, Tayside Mental Health PFI and two further tranches of NHS LIFT schemes
· Total equity and committed debt in investments of £26m (£14m invested, £12m committed)
· Unit continues to pursue a number of schemes
· Investment-led opportunities expected to continue to present themselves due to pressures on public finances
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ENQUIRIES: |
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Morgan Sindall Group plc |
Tel: 020 7307 9200 |
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John Morgan, Executive Chairman |
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Paul Smith, Chief Executive |
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David Mulligan, Finance Director |
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Blythe Weigh Communications |
Tel: 020 7138 3204 |
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Tim Blythe |
Mobile: 07816 924626 |
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Paul Weigh |
Mobile: 07989 129658 |
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Morgan Sindall Group plc will hold its half year report presentation for analysts and institutional investors at 9.30am on 9 August 2010 at Kent House, 14-17 Market Place, London W1W 8AJ.
A copy of the presentation and an audio webcast will be available from 12 noon at www.morgansindall.com/investors
This half year report and other information about Morgan Sindall Group plc are available on its website www.morgansindall.com via the link to the corporate site.
Half year report
Our results for the six months to 30 June 2010 show a good performance given the challenging market conditions. Underlying profit before tax, amortisation of intangible assets and non-recurring costs was £23.1m (2009: £23.9m) on revenue of £0.98bn (2009: £1.14bn). Non-recurring costs of £1.9m have been incurred relating to the merger of the Construction and Infrastructure Services divisions and the acquisition of Powerminster Gleeson Services ('Powerminster'). Adjusted earnings per share on the same basis were 42.0p (2009: 42.6p).
Profit before tax for the period (after amortisation of intangible assets and non-recurring costs) was £18.4m (2009: £20.5m). Reflecting our optimism about the future prospects for the Group and the strong balance sheet, the Board has declared a maintained interim dividend of 12.0p (2009: 12.0p).
The Group remains financially strong with net cash at 30 June 2010 of £138m (2009: £89m) and with £100m of undrawn banking facilities. Average cash during the six months to 30 June 2010 was much improved at £61m (2009: £21m) with average cash increasing since the end of the period to £66m at the end of July.
Strategic developments
Our strategy continues to be the achievement of leading positions in all our chosen markets through the delivery of the highest quality construction service in close collaboration with our clients.
In line with this strategy, and in order to deliver a more integrated service to a number of clients who procure both civil engineering and building work, in April we announced the combination of theConstruction and Infrastructure Services divisions to create a single, enlarged division trading under the Morgan Sindall name. We are already seeing the benefits of this combination with the division currently bidding and delivering a number of integrated construction and infrastructure projects.
In June, the Group's Affordable Housing division extended its response maintenance capability with the acquisition of Powerminster. Powerminster provides a range of facilities management services that include both planned and response maintenance to housing associations and housing PFI schemes. This acquisition significantly enhances our maintenance capability and creates a UK-wide business delivering planned and response maintenance and estates management services under the Lovell brand. The acquisition will leave the division better placed to bid for contracts that package planned and response maintenance requirements together.
Securing opportunities in challenging markets
Although the construction and regeneration markets remain challenging, the Construction & Infrastructure division has been successful during the first half of the year in securing a good level of new business and reaching financial close on two major construction projects, namely the Hull BSF programme and the Tayside Mental Health PFI, in conjunction with our Investments unit. As expected, the division has experienced some softening of demand from public sector clients as changes to spending commitments have begun to take effect.
Fit Out has seen improved market conditions and has benefitted from a recovery in demand for larger projects in London, with the professional and financial services sectors leading the increase in activity.
In Affordable Housing, demand for new build social housing and refurbishment has remained firm although the private housing market remains constrained by the lack of availability of mortgage finance.
Urban Regeneration has seen a slight pick up in activity albeit tenant and investor demand remains subdued.
Overall, the Group is well positioned to face the challenges in the markets in which we operate. This position is derived from a number of factors:
· The Group has a wide breadth of capabilities and skills and an ability to manage complex construction projects
· Our activities are spread across the construction and regeneration markets giving us exposure to a large number of market sectors with varying cycles of activity
· We are financially strong, with a significant cash balance, extensive unused banking facilities, access to performance bonds and guarantees and a relatively immaterial defined benefit pension deficit
· Our pursuit of operational excellence through our Perfect Delivery quality programme is proving to be a key differentiator in terms of the service we provide to our clients
· Our order book, which stood at £3.7bn on 30 June 2010, gives us good visibility on our future workload
Finally we continue to keep a firm control on our costs without compromising our operational effectiveness. A further £16m of annualised overhead savings were realised in the first six months of 2010, of which £1m relates to the merger of the two divisions. This is in addition to the £38m of annualised savings realised since the start of 2008. A further £5m of annualised savings are targeted in the second half of 2010 from the merger of two divisions, detailed below.
Divisional performance
The performance of each of the operating divisions for the six months to 30 June 2010 is set out below. Divisional operating profit is profit from operations before the amortisation of intangible assets and non-recurring costs.
Construction & Infrastructure
The newly merged Construction & Infrastructure division is reported for the first time on a combined basis. It made an underlying operating profit of £12.2m (2009: £15.0m) on revenue of £612m (2009: £797m). This profit is stated before restructuring costs of £1.7m, represents an improved underlying operating margin of 2.0% (2009: 1.9%) and reflects continued operational improvement. Revenue is lower due to a slight fall in demand for construction services, delays in the procurement of major infrastructure projects and the impact of the transition between regulatory periods in the utility services sector.
The result for the period includes an operating profit from the division's construction businesses of £6.3m (2009: £5.7m) on revenue of £345m (2009: £378m), representing an improved operating margin of 1.8% (2009: 1.5%). The operating profit from its infrastructure businesses was £5.9m (2009: £9.3m) on revenue of £267m (2009: £419m) representing a maintained operating margin of 2.2% (2009: 2.2%).
The construction and infrastructure activities have been merged to create a more integrated service to clients who procure both civil engineering and building work, for example BAA and Network Rail. The division will operate as Morgan Sindall, which will also give the Group a stronger identity in the market, with the senior management of the two merged divisions being integrated into a single team. The total cost of integration is expected to be £6.0m of which £4.0m will be incurred in the current year (£1.7m incurred as at 30 June 2010). It is expected that £6.0m of annualised overhead savings will be realised (with £1.0m realised to date) with savings of £1.5m benefitting the current year.
The division now encompasses a full service capability from design, through delivery of complex construction and civil engineering projects, to maintenance of infrastructure assets, working across a number of sectors, including transport, water, energy, pharmachem, health, education, defence and retail.
During the first half of the year the division has been successful in converting all of its preferred bidder opportunities (£0.9bn) brought forward at the start of the year. This includes the Hull BSF programme (valued at £200m), the Tayside Mental Hospital PFI scheme (£95m), the Lee Tunnel project for Thames Water (valued at £209m to the Group), the ten-year infrastructure alliance with E.ON Central Networks (£500m) and a framework with Yorkshire Water under AMP5 (£60m). Other notable contract wins include, in the education sector, Lowestoft College (£19m), Teesside University Academic Facility (£8m) and student accommodation at the Royal Veterinary College (£16m) and in the defence sector new facilities for the Kings Troop at Woolwich (£16m).
The outlook for the division remains challenging albeit it currently has a reasonable pipeline of construction opportunities and a number of large infrastructure projects including Crossrail and the Second Forth Road Crossing being tendered. Uncertainty remains over the precise levels of future public sector demand and we await the outcome of the Comprehensive Spending Review to gain a clear understanding of specific departmental plans for future public spending. The forward order book at 30 June 2010 was £2.1bn (2009: £2.1bn), an increase of £0.5bn since the start of the year, with broadly the same balance between the Construction (£0.6bn) and Infrastructure (£1.5bn) elements of the forward order book.
Fit Out
Fit Out delivered an operating profit of £6.9m (2009: £7.4m) with an operating margin of 3.9% (2009: 4.6%) on increased revenue of £179m (2009: £160m). This is an improved performance compared with the second six months of last year and is pleasing given the highly competitive market conditions.
The division's market leadership in the delivery of larger projects has led to the increase in revenue, as it has secured a number of significant contracts in the London professional and financial services sectors. The division's growing presence in retail banking was further strengthened with appointments to Lloyds Banking Group's and Royal Bank of Scotland's frameworks. Conversely, demand for fit out services from public sector clients is currently at a low ebb, representing less than 10% of the division's revenue in the first half of the year compared with 20-30% historically. The division continues to prove it is highly adaptable to the rapidly changing market conditions with overheads being managed tightly, although with improving levels of activity the division has recommenced staff recruitment.
It is expected that revenue for the second half of the year will exceed that achieved in the first half, albeit the market remains competitive. The division's short-term outlook remains healthy with a reasonable pipeline of opportunities for the remainder of 2010, although we are cautious about the sustainability of the recovery and prospects for 2011. The forward order book at 30 June 2010 was £213m (2009: £150m), an increase of 25% since the start of the year.
Affordable Housing
Affordable Housing delivered a similar performance to that in the same period last year with an underlying operating profit of £6.9m (2009: £7.1m) on revenue of £173m (2009: £178m). The operating margin was maintained at 4.0% (2009: 4.0%). The division incurred £0.2m of one-off costs in the period relating to the transaction costs of the acquisition of Powerminster, which are now expensed following changes to accounting standards.
Since the start of the year demand for new build social housing and refurbishment has held up reasonably well. Open market sales continue to be constrained by the lack of mortgage availability and the division continues to offer shared equity as a route to home ownership for first time buyers.
On 30 June 2010 the Group acquired Powerminster Gleeson Services Limited for a total cash consideration of £6.6m. Powerminster currently has net assets of £2.3m including £1.8m of cash. The acquisition significantly enhances the division's maintenance capability and creates a UK-wide business delivering planned and response maintenance and estates management services. The acquisition leaves it better placed to bid for contracts that package planned and response maintenance requirements together.
During the period the division secured contracts in each of its core service areas. In new build social housing the division secured a contract to build 189 new houses on the Velmore Estate near Eastleigh, Hampshire for First Wessex Housing Group (£21m). It also secured a 'packaged' 5-year contract for both planned and response maintenance for Gloucester City Homes (£30m) as well as a Decent Homes contract for Hackney Homes (£16m). In mixed tenure the division has commenced development of the Mildmay scheme in Islington (£36m) delivering 31 apartments for affordable rent, 14 apartments for shared ownership and 91 apartments for open market sale. Other notable contracts secured include its first project under the HCA's Delivery Partner Panel at Longfield Drive, Bradford (£6m) as well as securing £5m of funding under the first phase of the HCA's Kickstart programme over six development schemes.
The division's order book has increased slightly to £1.4bn (2009: £1.3bn) due to the acquisition of Powerminster. In the short-term, the market for new build social housing, refurbishment and response maintenance is expected to remain reasonably robust. In the medium-term we expect Government funding for social housing to reduce with some of the gap filled by greater borrowing by Registered Social Landlords. In addition potential alternative sources of funding may become available as private institutions seek ways to invest in the sector. Also, we do not expect any significant improvement in conditions for open market housing in the short-term but we do expect to see mixed tenure opportunities increase in the medium-term as the cross subsidy from open market housing provides funds for social housing provision. In the long-term the plans to retrofit social housing to achieve a higher environmental standard is an exciting opportunity as well as further expansion of our facilities management capability. The division is also pursuing the next wave of social housing PFIs that are expected to be procured over the next year or so.
Urban Regeneration
Urban Regeneration achieved an operating profit in the period of £0.8m (2009: loss of £1.1m) on revenue of £15m (2009: £5m). The improved performance is due to a slight improvement in the levels of activity and stronger sales from the division's residential elements of regeneration schemes.
Though levels of commercial property activity remain low, the Group's financial strength means that the division is well equipped to capitalise on opportunities when they arise. For example, in the period Muse purchased its partners' interests in three joint ventures, which will help to underpin performance in the medium-term.
The division also continues to progress its major regeneration schemes. Construction is expected to commence shortly on the next phases of schemes at Doncaster and Wakefield. Additionally, planning permission has been received on the development scheme at Blackpool and the English Cities Fund (a Muse joint venture) has received planning permission for a major regeneration project at Salford.
We expect market conditions to remain subdued for some time albeit tenant and investor interest is expected to improve slowly through 2011. The outlook for the division has remained largely unchanged over the last six months. The division's share of the future development pipeline at 30 June 2010 was £1.4bn (2009: £1.6bn), which will mainly be delivered through joint ventures.
Investments
The Investments unit comprises the Group's project finance activities and includes the cost of bidding for investment opportunities as well as the income generated from the management of existing investments and returns on equity invested in those investments. For the six months to 30 June 2010 the unit achieved an operating loss of £0.4m (2009: loss of £2.0m), representing its net bidding costs, on revenue of £3m (2009: £3m), which includes its share of operating profits of equity accounted joint ventures of £0.5m (2009: £nil).
The improvement in performance compared with the same period last year was primarily due to the unit achieving financial close on Tayside Mental Health PFI and the Hull BSF programme in conjunction with the Construction & Infrastructure division. In addition the unit has achieved preferred bidder status on the West Sussex Express LIFT scheme and the Bournemouth Town Centre regeneration project, and closed the third tranche of both the Barnsley NHS LIFT and the Doncaster NHS LIFT health schemes.
The directors' valuation of the unit's portfolio of investments is £51m (2009: £36m) using discount rates of 7-9%. This increase in value of the portfolio is mainly as a result of schemes achieving financial close, as referred to above. The valuation is based on discounting expected future cash flows but does not include potential refinancing gains or projects at preferred bidder stage or profits made by Investments from providing services or profit made by other parts of the Group in performing construction, maintenance or facilities management work. Committed, but not currently invested, subordinated debt is added to this discounted cash flow value to give the directors' valuation. At 30 June 2010 the Group had total equity and committed debt in its investments of £26m (2009: £19m), of which £14m is invested and £12m is committed.
In the short-term, the unit continues to pursue a number of opportunities, including the next wave of social housing PFIs, Express LIFT schemes in England and schemes requiring project finance that can harness an integrated approach with the construction capabilities of the Group. We believe the pressure on the public finances will mean that investment-led projects will become increasingly important and yield new opportunities in the medium-term.
Financial review
Revenue for the six months to 30 June 2010 was £0.98bn (2009: £1.14bn), a fall of 14% on the same period last year. The fall is primarily due to lower levels of activity in Construction & Infrastructure partly offset by an increase in revenue at Fit Out and Urban Regeneration. Underlying operating profit from operations prior to the amortisation of intangible assets and non-recurring costs was £22.7m (2009: £23.6m) reflecting slightly lower levels of profitability at Fit Out and Construction & Infrastructure offset by improvements at Urban Regeneration and Investments, as well as the benefit of cost saving actions previously implemented.
Net finance income was £0.4m (2009: £0.3m), the effect of higher average cash balances being tempered by lower interest rates. Profit before tax, amortisation of intangible assets and non-recurring costs was £23.1m (2009: £23.9m). The income tax expense was £5.3m (2009: £5.9m) reflecting a tax rate of 29.0% (2009: 28.8%). Profit after tax was £13.1m (2009: £14.6m) with an increased shareholders' equity of £209m (2009: £196m).
Cash at 30 June 2010 was £138m (2009: £89m). Net cash inflow from operating activities was £44.1m (2009: outflow of £15.2m) reflecting strong operating cash conversion and improvements in working capital. There were net payments of £7.4m (2009: £1.1m) for the acquisition of subsidiaries in the period (see note 5 to the condensed financial statements for further details). The overall net increase in cash during the period was £20.4m (2009: decrease of £31.6m). Average cash during the six months to 30 June 2010 was much improved at £61m (2009: £21m) with average cash increasing since the end of the period to £66m at the end of July. The higher level of average cash reflects the increase in revenue at Fit Out and careful management of housing inventories at Affordable Housing. In addition to its cash resources the Group has £100m of undrawn, committed bank facilities through to mid-2012.
Outlook
The Group's forward order book currently stands at £3.7bn, an increase of £0.5bn since 31 December 2009. We expect that the construction market will remain challenging but the Group's broad spread of activities will provide some resilience to the changes in the market. In addition, we will continue our focus on resource levels and ensure that our businesses remain efficient in the current market environment. Nevertheless, the size and length of the Group's forward order book coupled with our financial strength leaves us well positioned to navigate our way through these challenges, to take advantage of the opportunities presented by the market and to grow profitable market share. The positive start to the year continues, we expect to achieve the targets we set ourselves and remain optimistic about the future prospects for the Group.
Principal risks and uncertainties
The directors consider that the principal risks which may have a material impact on the Group's performance in the remaining six months of the year, as explained in more detail in the 2009 annual report and accounts, continue to be as follows:
Market and economic environment- the market sectors in which the Group operates are affected to varying degrees by general macroeconomic conditions and changes in Government spending priorities. The Group is particularly focused at present on managing the impact of the challenging economic conditions, continuing to invest for the long-term and to be prepared for opportunities as they arise. The Group notes the planned changes in the Emergency Budget and in recent announcements and awaits the details of the Comprehensive Spending Review in the autumn.
Regulatory environment - the Group operates within a constantly challenging regulatory environment governed by legislation and industry specific regulation. Non-compliance with legislation or regulations can damage the Group's reputation, market standing and ability to secure new business and may lead to financial penalties.
Health, safety and environmental risks- the Group's health and safety and environmental performance affects employees, subcontractors and the public and, in turn, can affect its reputation and commercial performance.
Developing talent - the ability of the Group to deliver projects successfully to clients, grow in profitability and develop strong, sustained financial performance relies on the quality of its employees. It is critical that talented individuals are attracted, developed and retained.
Contractual risks - the Group undertakes several hundred contracts each year and it is important that contractual terms reflect risks arising from the nature and complexity of the works and duration of the contract.
Acquisitions - the Group regularly identifies and evaluates potential acquisitions and it is important that acquisitions deliver the planned benefits.
Counterparty and liquidity risks - the terms on which the Group trades with counterparties affect its liquidity. Without sufficient liquidity, the Group's ability to meet its liabilities as they fall due would be compromised, which could ultimately lead to its failure to continue as a going concern.
Forward looking statements
This half year report has been prepared solely to assist shareholders in assessing the strategies of the board and in gauging their potential to succeed. It should not be relied on by any other party or for other purposes. Forward looking statements have been made by the directors in good faith using information available up until the day that they approved this half year report. Forward looking statements should be regarded with caution because of the inherent uncertainties in economic trends and business risks.
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Condensed consolidated income statement
for the six months to 30 June 2010 (unaudited)
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|
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Unaudited six months to 30 June 2010 |
Unaudited Six months to 30 June 2009 |
Year ended 31 December 2009 |
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Notes |
£m |
£m |
£m |
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Continuing operations |
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Revenue |
1 |
982.1 |
1,140.6 |
2,213.5 |
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Cost of sales |
|
(877.2) |
(1,031.5) |
(1,993.0) |
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Gross profit |
|
104.9 |
109.1 |
220.5 |
|
|
|
|
|
|
|
Amortisation of intangible assets |
1 |
(2.8) |
(3.4) |
(6.8) |
|
Non-recurring costs |
1 |
(1.9) |
- |
- |
|
Other administrative expenses |
|
(82.5) |
(85.7) |
(170.1) |
|
Total administrative expenses |
|
(87.2) |
(89.1) |
(176.9) |
|
Share of net profit of equity accounted joint ventures |
1 |
0.3 |
0.2 |
0.1 |
|
Profit from operations |
1 |
18.0 |
20.2 |
43.7 |
|
Finance income |
|
1.3 |
1.6 |
3.3 |
|
Finance costs |
|
(0.9) |
(1.3) |
(2.3) |
|
Net finance income |
1 |
0.4 |
0.3 |
1.0 |
|
Profit before income tax expense |
1 |
18.4 |
20.5 |
44.7 |
|
Income tax expense |
2 |
(5.3) |
(5.9) |
(11.8) |
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Profit for the period |
|
13.1 |
14.6 |
32.9 |
|
|
|
|
|
|
|
Attributable to: |
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|
|
|
|
Owners of the Company |
|
13.1 |
14.6 |
33.0 |
|
Non-controlling interests |
|
- |
- |
(0.1) |
|
|
|
13.1 |
14.6 |
32.9 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Earnings per share |
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From continuing operations |
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Basic |
4 |
30.9p |
34.6p |
77.9p |
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Diluted |
4 |
30.6p |
34.2p |
77.1p |
There were no discontinued activities in either the current or comparative periods.
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Condensed consolidated statement of comprehensive income
for the six months to 30 June 2010 (unaudited)
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Unaudited six months to 30 June 2010 |
Unaudited Six months to 30 June 2009 |
Year ended 31 December 2009 |
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|
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£m |
£m |
£m |
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Profit for the period |
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13.1 |
14.6 |
32.9 |
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Other comprehensive (expense)/income: |
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|
|
|
|
Actuarial losses arising on defined benefit obligation |
|
- |
- |
(0.6) |
|
Movement on cash flow hedges in equity accounted joint ventures |
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(1.5) |
0.3 |
0.6 |
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Other comprehensive (expense)/income for the period, net of income tax |
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(1.5) |
0.3 |
- |
|
|
|
|
|
|
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Total comprehensive income for the period |
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11.6 |
14.9 |
32.9 |
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|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Owners of the Company |
|
11.6 |
14.9 |
33.0 |
|
Non-controlling interests |
|
- |
- |
(0.1) |
|
|
|
11.6 |
14.9 |
32.9 |
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Condensed consolidated statement of financial position
at 30 June 2010 (unaudited)
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|
|
Unaudited six months to 30 June 2010 |
Unaudited Six months to 30 June 2009 |
Year ended 31 December 2009 |
|
|
|
£m |
£m |
£m |
|
Non-current assets |
|
|
|
|
|
Goodwill |
|
188.7 |
184.4 |
184.4 |
|
Other intangible assets |
|
14.6 |
20.0 |
16.6 |
|
Property, plant and equipment |
|
30.1 |
30.9 |
31.3 |
|
Investment property |
|
2.5 |
- |
1.8 |
|
Investments in equity accounted joint ventures |
|
44.4 |
54.0 |
50.2 |
|
Investments |
|
0.8 |
0.1 |
0.1 |
|
Shared equity loan receivables |
|
11.4 |
- |
9.0 |
|
Deferred tax assets |
|
3.8 |
2.7 |
3.8 |
|
|
|
296.3 |
292.1 |
297.2 |
|
Current assets |
|
|
|
|
|
Inventories |
|
147.3 |
166.4 |
141.2 |
|
Amounts due from construction contract customers |
|
223.5 |
256.8 |
179.7 |
|
Trade and other receivables |
|
222.6 |
201.8 |
155.1 |
|
Cash and cash equivalents |
|
138.1 |
88.7 |
117.7 |
|
|
|
731.5 |
713.7 |
593.7 |
|
Total assets |
|
1,027.8 |
1,005.8 |
890.9 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(670.7) |
(678.8) |
(576.3) |
|
Amounts due to construction contract customers |
|
(89.5) |
(77.3) |
(49.0) |
|
Current tax liabilities |
|
(30.1) |
(22.4) |
(27.3) |
|
Finance lease liabilities |
|
(1.7) |
(1.8) |
(1.8) |
|
|
|
(792.0) |
(780.3) |
(654.4) |
|
Net current liabilities |
|
(60.5) |
(66.6) |
(60.7) |
|
Non-current liabilities |
|
|
|
|
|
Trade and other payables |
|
- |
(0.1) |
(0.1) |
|
Finance lease liabilities |
|
(6.9) |
(7.2) |
(7.1) |
|
Retirement benefit obligation |
|
(3.0) |
(2.8) |
(3.2) |
|
Provisions |
|
(16.6) |
(19.6) |
(16.8) |
|
|
|
(26.5) |
(29.7) |
(27.2) |
|
Total liabilities |
|
(818.5) |
(810.0) |
(681.6) |
|
Net assets |
|
209.3 |
195.8 |
209.3 |
|
Equity |
|
|
|
|
|
Share capital |
|
2.2 |
2.2 |
2.2 |
|
Share premium account |
|
26.7 |
26.6 |
26.7 |
|
Capital redemption reserve |
|
0.6 |
0.6 |
0.6 |
|
Own shares |
|
(5.9) |
(6.0) |
(6.0) |
|
Hedging reserve |
|
(3.2) |
(2.0) |
(1.7) |
|
Retained earnings |
|
189.0 |
174.4 |
187.6 |
|
Equity attributable to owners of the Company |
|
209.4 |
195.8 |
209.4 |
|
Non-controlling interests |
|
(0.1) |
- |
(0.1) |
|
Total equity |
|
209.3 |
195.8 |
209.3 |
|
|
|
|
|
|
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Condensed consolidated statement of cash flows
for the six months to 30 June 2010 (unaudited)
|
|
|
Unaudited six months to 30 June 2010 |
Unaudited Six months to 30 June 2009 |
Year ended 31 December 2009 |
|
|
Note |
£m |
£m |
£m |
|
Net cash inflow/(outflow) from operating activities |
6 |
44.1 |
(15.2) |
25.0 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Interest received |
|
1.5 |
1.8 |
3.4 |
|
Dividend from joint ventures |
|
1.4 |
2.0 |
2.2 |
|
Proceeds on disposal of property, plant and equipment |
|
0.9 |
1.1 |
1.0 |
|
Purchases of property, plant and equipment |
|
(1.5) |
(2.4) |
(7.5) |
|
Payments to acquire interests in joint ventures |
|
(3.2) |
(2.5) |
(4.2) |
|
Payments to acquire trade investment |
|
(0.7) |
- |
- |
|
Payments for the acquisition of subsidiaries |
|
(7.4) |
(1.1) |
(1.1) |
|
Net cash outflow from investing activities |
|
(9.0) |
(1.1) |
(6.2) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Net payments to acquire own shares |
|
- |
- |
(0.1) |
|
Dividends paid |
|
(12.7) |
(12.7) |
(17.7) |
|
Repayments of obligations under finance leases |
|
(2.0) |
(2.6) |
(3.7) |
|
Proceeds on issue of share capital |
|
- |
- |
0.1 |
|
Net cash outflow from financing activities |
|
(14.7) |
(15.3) |
(21.4) |
|
Net increase/(decrease) in cash and cash equivalents |
|
20.4 |
(31.6) |
(2.6) |
|
Cash and cash equivalents at the beginning of the period |
|
117.7 |
120.3 |
120.3 |
|
Cash and cash equivalents at the end of the period |
|
|
|
|
|
Bank balances and cash |
|
138.1 |
88.7 |
117.7 |
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Condensed consolidated statement of changes in equity
for the six months to 30 June 2010 (unaudited)
|
|
Share capital |
Share premium account |
Capital redemption reserve |
Reserve for own shares held |
Cash flow hedging reserve |
Retained earnings |
Total |
Non-controlling interests |
Total equity |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Balance at 1 January 2010 |
2.2 |
26.7 |
0.6 |
(6.0) |
(1.7) |
187.6 |
209.4 |
(0.1) |
209.3 |
|
Total comprehensive income for the period: |
|
|
|
|
|
|
|
|
|
|
Net profit |
- |
- |
- |
- |
- |
13.1 |
13.1 |
- |
13.1 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
Movement on cash flow hedges in equity accounted joint ventures |
- |
- |
- |
- |
(1.5) |
- |
(1.5) |
- |
(1.5) |
|
Total comprehensive income for the period, net of income tax |
- |
- |
- |
- |
(1.5) |
13.1 |
11.6 |
- |
11.6 |
|
Share-based payments |
- |
- |
- |
- |
- |
1.1 |
1.1 |
- |
1.1 |
|
Exercise of share options |
- |
- |
- |
0.1 |
- |
(0.1) |
- |
- |
- |
|
Dividends paid: |
|
|
|
|
|
|
|
|
|
|
Final dividend for 2009 |
- |
- |
- |
- |
- |
(12.7) |
(12.7) |
- |
(12.7) |
|
Balance at 30 June 2010 |
2.2 |
26.7 |
0.6 |
(5.9) |
(3.2) |
189.0 |
209.4 |
(0.1) |
209.3 |
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Condensed consolidated statement of changes in equity
for the six months to 30 June 2010 (unaudited) (continued)
|
|
Share capital |
Share premium account |
Capital redemption reserve |
Reserve for own shares held |
Cash flow hedging reserve |
Retained earnings |
Total |
Non-controlling interests |
Total equity |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Balance at 1 January 2009 |
2.2 |
26.6 |
0.6 |
(6.4) |
(2.3) |
171.6 |
192.3 |
- |
192.3 |
|
Total comprehensive income for the year: |
|
|
|
|
|
|
|
|
|
|
Net profit |
- |
- |
- |
- |
- |
14.6 |
14.6 |
- |
14.6 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
Movement on cash flow hedges in equity accounted joint ventures |
- |
- |
- |
- |
0.3 |
- |
0.3 |
- |
0.3 |
|
Total comprehensive income for the year, net of income tax |
- |
- |
- |
- |
0.3 |
14.6 |
14.9 |
- |
14.9 |
|
Share-based payments |
- |
- |
- |
- |
- |
1.3 |
1.3 |
- |
1.3 |
|
Exercise of share options |
- |
- |
- |
0.4 |
- |
(0.4) |
- |
- |
- |
|
Dividends paid: |
|
|
|
|
|
|
|
|
|
|
Final dividend for 2008 |
- |
- |
- |
- |
- |
(12.7) |
(12.7) |
- |
(12.7) |
|
Balance at 30 June 2009 |
2.2 |
26.6 |
0.6 |
(6.0) |
(2.0) |
174.4 |
195.8 |
- |
195.8 |
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Condensed consolidated statement of changes in equity
for the six months to 30 June 2010 (unaudited) (continued)
|
|
Share capital |
Share premium account |
Capital redemption reserve |
Reserve for own shares held |
Cash flow hedging reserve |
Retained earnings |
Total |
Non-controlling interests |
Total equity |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Balance at 1 January 2009 |
2.2 |
26.6 |
0.6 |
(6.4) |
(2.3) |
171.6 |
192.3 |
- |
192.3 |
|
Total comprehensive income for the period: |
|
|
|
|
|
|
|
|
|
|
Net profit |
- |
- |
- |
- |
- |
33.0 |
33.0 |
(0.1) |
32.9 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
Actuarial losses arising on defined benefit obligation |
- |
- |
- |
- |
- |
(0.6) |
(0.6) |
- |
(0.6) |
|
Movement on cash flow hedges in equity accounted joint ventures |
- |
- |
- |
- |
0.6 |
- |
0.6 |
- |
0.6 |
|
Total comprehensive income for the period, net of income tax |
- |
- |
- |
- |
0.6 |
32.4 |
33.0 |
(0.1) |
32.9 |
|
Share-based payments |
- |
- |
- |
- |
- |
1.0 |
1.0 |
- |
1.0 |
|
Issue of shares at a premium |
- |
0.1 |
- |
- |
- |
- |
0.1 |
- |
0.1 |
|
Exercise of share options |
- |
- |
- |
0.5 |
- |
(0.5) |
- |
- |
- |
|
Movement on deferred tax asset on share-based payments |
- |
- |
- |
- |
- |
0.8 |
0.8 |
- |
0.8 |
|
Own shares acquired in the year |
- |
- |
- |
(0.1) |
- |
- |
(0.1) |
- |
(0.1) |
|
Dividends paid: |
|
|
|
|
|
|
|
|
|
|
Final dividend for 2008 |
- |
- |
- |
- |
- |
(12.7) |
(12.7) |
- |
(12.7) |
|
Interim dividend for 2009 |
- |
- |
- |
- |
- |
(5.0) |
(5.0) |
- |
(5.0) |
|
Balance at 31 December 2009 |
2.2 |
26.7 |
0.6 |
(6.0) |
(1.7) |
187.6 |
209.4 |
(0.1) |
209.3 |
Morgan Sindall Group plc
Half year report for the six months to 30 June 2010
Notes to the condensed consolidated financial statements (unaudited)
Basis of preparation and accounting policies
The information for the year ended 31 December 2009 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The Group's activities and the key risks facing its future development, performance and position are set out in the half year report. The directors have reviewed the current and projected position of the Group and have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half year condensed consolidated financial statements.
The annual financial statements of Morgan Sindall Group plc are prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. The condensed consolidated financial statements included in this half year report have been prepared in accordance with International Accounting Standard ('IAS') 34 'Interim Financial Reporting', as adopted by the European Union. This half year report has not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'.
The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as applied in the Group's latest annual report and accounts for the year ended 31 December 2009, except as described below.
Changes in accounting policy
In the current financial year, the Group has adopted IFRS 3 'Business Combinations' (revised 2008), IAS 27 'Consolidated and Separate Financial Statements' (revised 2008) and IFRIC 12, 'Service Concession Arrangements'.
The most significant changes to the Group's previous accounting policies for business combinations are as follows:
· Acquisition related costs which previously would have been included in the cost of a business combination are included in administrative expenses as they are incurred
· Any pre-existing equity interest in the entity acquired is remeasured to fair value at the acquisition date, with any resulting gain or loss included in profit or loss
· Any changes in the Group's ownership interest subsequent to the date of obtaining control are recognised directly in equity, with no adjustment to goodwill, and
· Any changes to the cost of an acquisition, including contingent consideration, resulting from events after the date of the acquisition are recognised in profit or loss.
The adoption of IFRS3 'Business Combinations' is not considered to have had a material impact in the period.
IFRIC12 addresses the accounting by private sector operators involved in the provision of public sector infrastructure assets and services where the assets are not controlled by the operator, typically under PPP and PFI arrangements. Under IFRIC 12 infrastructure assets are not recognised as property, plant and equipment of the operator but recognised as a financial asset as the operator has an unconditional right to receive a specified amount of cash or other financial asset over the life of the agreement. As a consequence of this treatment the operator now recognises investment income in respect of the financial asset on an effective interest basis. Additionally, the timing of profit recognition changes over the lifetime of the contract. Importantly, there is no change in the overall project cash flows arising, or on the directors' valuation. IFRIC 12 has been adopted in the period with retrospective effect. The effect of adoption on comparative amounts was immaterial, and so comparative amounts have not been restated.
Operating segments
The Group has merged its Construction and Infrastructure Services segments, which are now reported in the new Construction & Infrastructure segment. Comparative results for the six months to 30 June 2009 and the year to 31 December 2009 have been restated. Revenue is generated from each of the Group's operating segments as follows:
· Construction & Infrastructure: provision of construction and civil engineering services ranging from small works, repairs and maintenance to large-scale complex projects
· Fit Out: provision of fit out and refurbishment services in the commercial property, education, retail, banking and hotel sectors
· Affordable Housing: development and construction of social and open market affordable housing, and planned and response maintenance of social housing
· Urban Regeneration: development through partnership agreements of large-scale mixed use urban regeneration projects with a view to letting and/or sale
· Investments: provision of project finance and investment management expertise to the Group's PPP/PFI activities and investment portfolio
· Group Activities: represents costs and income arising from corporate activities which cannot be allocated to the operating segments. These include costs for central activities such as treasury management, corporate tax coordination, insurance management, pension administration and company secretarial and legal services
Seasonality
The Group's Construction & Infrastructure, Fit Out, Affordable Housing, Urban Regeneration and Investment activities are generally not subject to significant seasonal variation.
1 Business segments
Information regarding the Group's operating segments is reported below. Amounts reported for the prior year have been restated to conform to the current segmentation.
The following is an analysis of the Group's revenue and results by reportable segment in the six months ended 30 June 2010:
Unaudited for the six months to 30 June 2010
|
|
Construction & Infrastructure |
Fit Out |
Affordable Housing |
Urban Regen-eration |
Invest-ments £m |
Group Activities |
£m |
Eliminations £m |
Total |
|
Revenue: external |
611.7 |
179.3 |
172.6 |
15.1 |
3.4 |
- |
982.1 |
- |
982.1 |
|
Revenue: inter-segment |
- |
0.3 |
- |
- |
- |
- |
0.3 |
(0.3) |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before amortisation and non-recurring costs |
12.2 |
6.9 |
7.1 |
0.8 |
(0.9) |
(3.7) |
22.4 |
- |
22.4 |
|
Share of net (loss)/ profit of equity accounted joint ventures |
- |
- |
(0.2) |
- |
0.5 |
- |
0.3 |
- |
0.3 |
|
Profit/(loss) from operations before amortisation and non-recurring costs |
12.2 |
6.9 |
6.9 |
0.8 |
(0.4) |
(3.7) |
22.7 |
- |
22.7 |
|
Amortisation of intangible assets |
(0.3) |
- |
- |
(2.5) |
- |
- |
(2.8) |
- |
(2.8) |
|
Non-recurring costs |
(1.7) |
- |
(0.2) |
- |
- |
- |
(1.9) |
- |
(1.9) |
|
Profit/(loss) from operations |
10.2 |
6.9 |
6.7 |
(1.7) |
(0.4) |
(3.7) |
18.0 |
- |
18.0 |
|
Net finance income |
|
|
|
|
|
|
0.4 |
|
0.4 |
|
Profit before income tax expense |
|
|
|
|
|
|
18.4 |
|
18.4 |
Inter-segment sales are charged at prevailing market prices.
1 Business segments (continued)
Unaudited for the six months to 30 June 2009 (restated)
|
|
Construction & Infrastructure |
Fit Out |
Affordable Housing |
Urban Regen-eration |
Invest-ments £m |
Group Activities |
£m |
Eliminations £m |
Total |
|
Revenue: external |
797.0 |
159.6 |
178.1 |
5.4 |
0.5 |
- |
1,140.6 |
- |
1,140.6 |
|
Revenue: inter-segment |
3.9 |
- |
- |
- |
- |
- |
3.9 |
(3.9) |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before amortisation |
15.0 |
7.4 |
7.1 |
(1.3) |
(2.0) |
(2.8) |
23.4 |
- |
23.4 |
|
Share of net profit of equity accounted joint ventures |
- |
- |
- |
0.2 |
- |
- |
0.2 |
- |
0.2 |
|
Profit/(loss) from operations before amortisation |
15.0 |
7.4 |
7.1 |
(1.1) |
(2.0) |
(2.8) |
23.6 |
- |
23.6 |
|
Amortisation of intangible assets |
(0.8) |
- |
- |
(2.6) |
- |
- |
(3.4) |
- |
(3.4) |
|
Profit/(loss) from operations |
14.2 |
7.4 |
7.1 |
(3.7) |
(2.0) |
(2.8) |
20.2 |
- |
20.2 |
|
Net finance income |
|
|
|
|
|
|
0.3 |
|
0.3 |
|
Profit before income tax expense |
|
|
|
|
|
|
20.5 |
|
20.5 |
Inter-segment sales are charged at prevailing market prices.
Year ended 31 December 2009 (restated)
|
|
Construction & Infrastructure |
Fit Out |
Affordable Housing |
Urban Regen-eration |
Invest-ments £m |
Group Activities |
£m |
Eliminations £m |
Total |
|
Revenue: external |
1,513.2 |
291.2 |
373.8 |
31.9 |
3.4 |
- |
2,213.5 |
- |
2,213.5 |
|
Revenue: inter-segment |
13.1 |
- |
- |
- |
6.1 |
- |
19.2 |
(19.2) |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before amortisation |
30.1 |
13.8 |
14.9 |
0.6 |
(3.0) |
(6.0) |
50.4 |
- |
50.4 |
|
Share of net profit of equity accounted joint ventures |
- |
- |
- |
0.1 |
- |
- |
0.1 |
- |
0.1 |
|
Profit/(loss) from operations before amortisation |
30.1 |
13.8 |
14.9 |
0.7 |
(3.0) |
(6.0) |
50.5 |
- |
50.5 |
|
Amortisation of intangible assets |
(1.5) |
- |
- |
(5.3) |
- |
- |
(6.8) |
- |
(6.8) |
|
Profit/(loss) from operations |
28.6 |
13.8 |
14.9 |
(4.6) |
(3.0) |
(6.0) |
43.7 |
- |
43.7 |
|
Net finance income |
|
|
|
|
|
|
1.0 |
|
1.0 |
|
Profit before income tax expense |
|
|
|
|
|
|
44.7 |
|
44.7 |
Inter-segment sales are charged at prevailing market prices.
2 Income tax expense
Income tax for the six month period is charged at 29.0% (2009: 28.8%), being the estimated annual effective tax rate expected for the full financial year, applied to the profit before income tax expense excluding the share of net profit/loss of equity accounted joint ventures for the six month period (which are stated net of income tax).
3 Dividends
Amounts recognised as distributions to equity holders in the period:
|
|
Unaudited |
Year ended |
|
|
|
2010 |
2009 |
31 December 2009 |
|
|
|
|
|
|
Interim dividend in place of a final dividend for the year ended 31 December 2009 of 30.0p (2008: final dividend of 30.0p) per share |
12.7 |
12.7 |
12.7 |
|
Interim dividend for the year ended 31 December 2009 of 12.0p per share |
- |
- |
5.0 |
|
|
12.7 |
12.7 |
17.7 |
Proposed interim dividend:
|
|
Unaudited |
Year ended |
|
|
|
2010 |
2009 |
31 December 2009 |
|
|
|
|
|
|
Interim dividend in place of a final dividend for the year ended 31 December 2009 of 30.0p |
- |
- |
12.7 |
|
|
|
|
|
|
Interim dividend for the period to 30 June 2010 of 12.0p (2009: 12.0p) per share |
5.2 |
5.2 |
- |
The proposed interim dividend was approved by the Board on 9 August 2010 and has not been included as a liability at 30 June 2010.
The interim dividend of 12.0p (2009: 12.0p) per share will be paid on 17 September 2010 to shareholders on the register at 20 August 2010. The ex-dividend date will be 18 August 2010.
4 Earnings per share
There are no discontinued operations in either the current or comparative periods.
The calculation of the basic and diluted earnings per share is based on the following data:
|
|
Unaudited |
Year ended |
|
|
Earnings |
2010 |
2009 |
31 December 2009 |
|
Earnings before taxation |
18.4 |
20.5 |
44.7 |
|
Deduct: taxation expense per the income statement |
(5.3) |
(5.9) |
(11.8) |
|
Add back: non-controlling interests |
- |
- |
0.1 |
|
Earnings for the purpose of basic and dilutive earnings per share being net profit attributable to equity holders of the parent company |
13.1 |
14.6 |
33.0 |
|
Add back: pre-tax amortisation expense non-recurring costs |
2.8 1.9 |
3.4 - |
6.8 - |
|
Earnings for the purposes of adjusted basic and dilutive earnings per share being net profit attributable to equity holders of the parent company adjusted for amortisation expense and non-recurring costs |
17.8 |
18.0 |
39.8 |
|
|
Unaudited |
Year ended |
|
|
Number of shares |
2010 |
2009 |
31 December 2009 |
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
42,383 |
42,236 |
42,281 |
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
Share options |
43 |
142 |
92 |
|
Conditional shares not vested |
382 |
332 |
332 |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
42,808 |
42,710 |
42,705 |
|
|
Unaudited |
Year ended |
|
|
|
2010 |
2009 |
31 December 2009 |
|
Basic and diluted earnings per share: |
|
|
|
|
Basic earnings per share |
30.9p |
34.6p |
77.9p |
|
Diluted earnings per share |
30.6p |
34.2p |
77.1p |
|
Basic and diluted earnings per share adjusted for amortisation expense and non-recurring costs: |
|
|
|
|
Basic earnings per share |
42.0p |
42.6p |
93.9p |
|
Diluted earnings per share |
41.6p |
42.1p |
93.0p |
A total of 3,604,457 share options that could potentially dilute earnings per share in the future were excluded from the above calculations because they were anti-dilutive at 30 June 2010 (June 2009: 2,970,893; December 2009: 2,820,160).
5 Acquisition of subsidiary
On 30 June 2010, the Group acquired 100% of the issued ordinary share capital of Powerminster Gleeson Services Limited (renamed Lovell Powerminster Limited) for cash consideration of £4.8m (net of £1.8m of cash acquired), which included £0.8m for a non-compete agreement. The transaction has been accounted for using the purchase method of accounting. In addition to the non-compete agreement, provisional goodwill of £4.3m has arisen on the transaction.
In the period, the Group acquired the investments of its partners in three joint ventures for a consideration of £2.6m (net of £1.9m cash acquired). These companies are now wholly owned subsidiaries and are no longer accounted for using the equity method. No goodwill arose on these transactions.
At 30 June 2010 certain fair value adjustments in relation to these acquisitions are subject to finalisation.
6 Cash flows from operating activities
|
|
Unaudited |
Year ended |
|
|
|
2010 |
2009 |
31 December 2009 |
|
Cash flows from operating activities |
|
|
|
|
Profit from operations for the period |
18.0 |
20.2 |
43.7 |
|
Adjusted for: |
|
|
|
|
Amortisation of fixed life intangible assets |
2.8 |
3.4 |
6.8 |
|
Share of net profit of equity accounted joint ventures |
(0.3) |
(0.2) |
(0.1) |
|
Depreciation of property, plant and equipment |
4.5 |
5.0 |
9.3 |
|
Expense in respect of share options |
1.1 |
1.3 |
1.0 |
|
Defined benefit plan payment |
(0.3) |
(0.3) |
(0.7) |
|
Defined benefit plan charge |
0.1 |
0.1 |
0.3 |
|
(Gain)/loss on disposal of property, plant and equipment |
(0.4) |
0.2 |
(0.4) |
|
Increase in shared equity loan receivables |
(2.4) |
- |
(9.0) |
|
Write downs in work in progress recognised as an expense |
- |
- |
1.0 |
|
(Decrease)/increase in provisions |
(0.2) |
1.3 |
(1.5) |
|
Operating cash flows before movements in working capital |
22.9 |
31.0 |
50.4 |
|
(Increase)/decrease in inventories |
(6.3) |
4.9 |
29.1 |
|
(Increase)/decrease in receivables |
(106.6) |
(60.0) |
62.3 |
|
Increase/(decrease) in payables |
125.5 |
2.0 |
(122.7) |
|
Movements in working capital |
25.2 |
(53.1) |
(31.3) |
|
Cash generated/(utilised) in operations |
48.1 |
(22.1) |
19.1 |
|
Income taxes (paid)/received |
(3.4) |
8.0 |
7.7 |
|
Interest paid |
(0.6) |
(1.1) |
(1.8) |
|
Net cash inflow/(outflow) from operating activities |
44.1 |
(15.2) |
25.0 |
Additions to leased property, plant and equipment during the year amounting to £0.7m (2009: £2.0m) and additions to leasehold property amounting to £nil (2009: £0.2m) were financed by new finance leases. Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.
7 Contingent liabilities
Group banking facilities and surety bond facilities are supported by cross guarantees and indemnities given by the Company and participating companies in the Group. There are contingent liabilities in respect of bonds, guarantees and claims under contracting and other arrangements, including joint arrangements and joint ventures entered into in the normal course of business.
8 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its jointly controlled entities are disclosed below.
Trading transactions
During the period, Group companies entered into transactions to provide construction and property development services with related parties, all of which were joint ventures, not members of the Group.
Transactions and amounts owed in the period are as follows:
|
|
Unaudited |
Year ended |
|
|
|
2010 |
2009 |
31 December 2009 |
|
Provision of goods and services to related parties |
21.5 |
15.1 |
31.6 |
|
Net amounts owed by/(owing to) related parties |
1.2 |
(2.1) |
2.3 |
Responsibility statement
The directors confirm that to the best of their knowledge:
(a) the condensed consolidated financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting';
(b) the half year report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the half year report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein)
By order of the Board
Paul Smith David Mulligan
Chief Executive Finance Director
9 August 2010
This information is provided by RNS
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