Interim Results
04 December 2003 - 6:02PM
UK Regulatory
KELDA GROUP PLC
Interim Results Announcement
for the six months ended 30 September 2003
HIGHLIGHTS
* Group turnover from continuing operations increased 5.2% to �358.8m.
* Group operating profit from continuing operations increased 5.2% to �146.0m.
* Group profit before taxation and exceptional items increased 5.8% to �99.7m.
* Exceptional profit of �17.1m on sale of shares in Waste Recycling Group plc.
* Adjusted earnings per share (excluding deferred tax) increased 0.9% to 22.2p.
* Continued good performance from UK/US water businesses.
* Interim dividend increased to 8.10p (2002: 7.86p).
KEY FIGURES
2003 2002 Increase
Group turnover from continuing operations �358.8m �341.2m 5.2%
Group operating profit from continuing �146.0m �138.8m 5.2%
operations
Profit before taxation and exceptional items �99.7m �94.2m 5.8%
Adjusted earnings per share (excluding 22.2p 22.0p 0.9%
deferred tax)
Interim dividend per share 8.10p 7.86p 3.0%
Commenting on the results, Kelda Chairman John Napier said:
"Kelda has made a good start to the year. Strong operational and financial
performance in the Yorkshire Water business and solid performance in the US by
Aquarion contributed to growth in operating profit of 5.2%".
For further information contact
4 December Martin Towers, Kelda Group 020 7568 2128
David Trenchard/Tim Lynch, Tulchan 020 7353 4200
Communications
After 4 December Kelda Group Press Office 01274 692954
A copy of this preliminary results announcement will be available on the Kelda
Group website from 8am this morning at www.keldagroup.com
CHAIRMAN'S STATEMENT
Kelda has made a good start to the year with a strong first half performance.
Group profit before tax at �114.3 million was 21% ahead of prior year. This
result benefited from an exceptional gain made on the disposal of our
shareholding in Waste Recycling Group plc (WRG) of �14.6 million (net). More
importantly the underlying performance of the continuing operations improved,
mainly driven by a strong Yorkshire Water performance, with operating profit
5.2% up on prior year. EPS adjusted for exceptional items and deferred tax, is
up 0.9% on a comparable basis. The interim dividend has been increased to
8.10p from 7.86p.
The group continues to benefit from the strategic focus on water and management
focus on performance. This has seen the disposal of our shareholding in WRG
and a closure of the small timber operations which were part of the US Aquarion
water business. Yorkshire Water Projects also formally signed the MoD
Aquatrine 'A' water contract which is one of the largest water contracts ever
awarded in the UK, estimated to generate revenue of approximately �1 billion
over 25 years.
Our continuing ambition to be placed in the top quartile for overall
performance in the UK has led to a continuous review of our effectiveness
across a wide range of activity from client service, operating and capital cost
efficiencies, compliance and environmental performance and wider corporate and
social responsibility objectives. Some of the noteworthy achievements by
Yorkshire Water include -
* An industry leading performance in reducing operating expenditure in real terms
since 1998/99.
* A second place ranking in Ofwat's annual overall performance assessments for
the 2nd successive year.
* Successful investment in the development and implementation of information
technology improving management operational information and customer support
services which has been recognised externally by a national award for best use
of technology for customer services.
* Continuing investment in management development and training for all employees
to create a positive work environment focused on performance excellence and
service delivery.
* Success in obtaining an interim price determination from Ofwat which covers the
period from April 2003 to March 2005.
The separation of the chair and the executive has been successfully completed
and the Board further strengthened with the appointment of Christopher Fisher
as a non executive director. The Chief Executive, Kevin Whiteman, has
developed a first class management team. Finance Director, Martin Towers, who
joined the Board in March 2003 is now well established and there has been a
general strengthening of the financial management function. There have been
other planned senior management changes in the UK and US to accelerate best
practice management across the group. The success of the company reflects the
commitment of staff at all levels to work cohesively, seeking better ways of
working to meet customer and stakeholder expectations.
The company is particularly pleased with its continued improvements in drinking
water compliance and environmental outputs which has seen best ever river water
and bathing beach standards. The company plans a zero incident culture to
ensure that management and staff are focused at all times in these key areas.
The fact that incidents do occur, linked with the move to the policy of 'name
and shame' and the use of increased fines from regulatory agencies may attract
more adverse publicity to these areas in the future, despite the company's
track record of continuing improvement.
The dry weather conditions set some water management challenges which the
company has successfully overcome by a combination of water resource and
capacity management and reduced leakage levels. Although winter is now here, a
further long period of low rainfall will set new challenges of water resource
and river flow management as environmental and habitat factors have to be
balanced with domestic and industry demand. These factors are under continuing
review with the relevant regulatory agencies, but currently no water supply
restrictions are foreseen for this or next year.
Given the interim price determination and our control of operating and capital
performance we expect to maintain progress in the second half. The balance
sheet of the company remains strong. The net proceeds after related borrowings
of the sale of the non-water assets in WRG are in the process of being
redistributed via a share buyback.
A start has been made to the process of the 2005 price review which should
result with an Ofwat public announcement being made in November 2004 with
respect to the regulatory decisions on prices for the period 2005-2010. In
general there remains a positive industry, government, regulatory and
stakeholder interface. There is general recognition of the issues and the
importance of any future price determination to give the ability of the
industry to finance future investment demands. Forecast capital expenditure
levels remain high for the next regulatory period. There is a need to maintain
and sustain essential infrastructure, deliver improvements in quality and
environmental outputs on a sustainable basis. The effectiveness of the next
price determination will depend on this balance being positively maintained.
In conclusion the company intends to maintain its focus strategy on water and
water related activities. It has achieved commendable increases in all output
areas, and has a well motivated and effective management team. We expect to
set standards that will allow us to remain in the upper quartile of industry
performance.
CHIEF EXECUTIVE'S REVIEW
Group financial performance
The group has made further progress during this period in enhancing operational
and financial performance. Turnover from continuing operations increased by
5.2% to �358.8m (2002: �341.2m), with operating profit from continuing
operations increasing by 5.2% to �146.0m (2002: �138.8m).
The improved results are largely driven by Yorkshire Water reporting an
increase in turnover following the 6% price increase from April, a proportion
of which results in improved profitability to help finance the ongoing capital
expenditure programme.
The group's shareholding in WRG was disposed of during this period as commented
upon in the Chairman's statement, realising �142.7m in cash net of expenses.
The group's share of WRG's operating profit was �8.2m (2002: �7.6m) from
turnover of �78.9m (2002: �69.1m) up to the point of sale. Arising from the
disposal is an overall exceptional profit of �14.6m of which �17.1m arose from
the sale of shares.
Net interest payable was little changed in this period at �54.5m (2002: �
53.3m). The proceeds from the WRG disposal were received in August and had
modest impact in this period upon the interest expense.
In summary, group profit before taxation of �114.3m (2002: �94.2m) includes a
net exceptional profit of �14.6m (2002: Nil).
Taxation
The group's effective taxation charge of �17.9m (2002: �21.4m) has been
calculated by considering the expected rate for the full year. A higher current
tax charge of �13.8m (2002: �9.0m) arises from the higher level of
profitability and the absence of a prior year credit. The deferred tax charge
has fallen to �4.1m (2002: �12.4m) as a consequence of changes in discount
rates.
Earnings per share
Basic earnings per share (EPS) has increased to 24.9p (2002: 18.8p) whilst
adjusted EPS excluding exceptional items and deferred tax is 22.2p (2002:
22.0p). The relatively modest increase in adjusted EPS arises with the higher
current tax charge this year.
Interim dividend
An interim dividend of 8.10p per share (2002: 7.86p) will be paid on 27
February 2004 to shareholders on the register on 23 January 2004, an increase
in line with inflation. The full cost of the dividend will be met by Yorkshire
Water.
Cash flow and net debt
Group net debt at 30 September 2003 of �1,565.2m is �155.2m below the 31 March
2003 figure of �1,720.4m following receipt of the WRG proceeds of a similar
amount.
During this period the net cash inflow from operating activities was �244.4m
(2002: �232.8m) helping to finance group capital expenditure of �156.7m (2002:
�200.7m). Net interest payments on the group's debt were �61.3m (2002: �
52.0m).
Towards the end of the period, a share buyback programme was carried out
resulting in the purchase of 3.9m shares at an average price of 414.4p per
share at a cash cost of �16.2m.
At 30 September 2003, balance sheet gearing declined to 47% from 50% at 31
March 2003, but is likely to increase over the next six months period in line
with normal seasonal trends. With this low level of gearing by industry
standards, the group remains soundly financed.
Yorkshire Water
Turnover increased by 5.3% to �300.7m (2002: �285.5m) following the interim
price determination which became effective in April. Operating profit
increased by 6.6% to �127.5m (2002: �119.6m). The company is on target to
deliver �100m of operating cost and 10% capital cost out-performance in the
current price determination period. The capital programme is on target and the
company is on track to deliver all outputs within this current review period.
The company was once again ranked second in Ofwat's Overall Performance
Assessment, which compares the levels of service provided by the UK's ten major
water and sewerage companies. It was the second consecutive year Yorkshire
Water had finished runner-up.
A separate report published by Ofwat showed that at the same time as delivering
improvements in the company's all-round service offering, Yorkshire Water had
managed to reduce total operating expenditure by 12% since 1998/99, the biggest
reduction of all the UK's water and sewerage companies.
Ofwat also confirmed that the company had out-performed its leakage reduction
target for the eighth year running. This continued reduction in leakage
coupled with the Company's ability to manage water resources on a region-wide
basis has ensured that security of water supply has been maintained during the
extremely dry summer and autumn period. Water stocks, although lower than in
an average year, remain robust and security of supply for the foreseeable
future is assured. The Company does, however, take its environmental
responsibilities very seriously and is in constant dialogue with the
Environment Agency to ensure that if the long dry period continues, any actions
required this winter will be taken to ensure that river flows will be protected
next summer.
These operational improvements were matched by similar advances in the area of
customer service. The new Integrated Customer and Operations Management (ICOM)
system continued to deliver significant benefits, winning national and
international acclaim. ICOM won the 'Best Use of Technology in Customer
Service' category at the National Customer Service awards and beat off stiff
competition from several multi-national companies in Europe, the Middle East
and Africa to clinch the prestigious 'Gartner Customer Relationship Management
(CRM) Excellence Award 2003'.
As well as winning recognition for good operational and customer service,
Yorkshire Water's ongoing work to protect and enhance the environment was
acknowledged by another of the industry's regulators, the Environment Agency
(EA). The EA's 'Spotlight on Business Environmental Performance 2002' showed
that Yorkshire Water had achieved 100% compliance with its discharge consents
for the fourth time in five years.
Ongoing investment in Yorkshire's sewerage infrastructure and improved
operating procedures ensured that Yorkshire Water was also one of only a
handful of water and sewerage companies to show a year on year reduction in
pollution incidents.
The Environment Agency went on to report a 9% increase since 1990 in the number
of rivers in Yorkshire classified as 'good or fair'.
Fifteen of Yorkshire's twenty-two East Coast bathing waters also attained the
EU's higher 'guideline' water quality standard, a record for the region.
During the first six months of the year Yorkshire Water spent �124.7m on
improvements to the region's water and waste water services. The investment was
targeted predominantly at relining and replacing underground water mains and
upgrading sewer overflows.
In September, Yorkshire Water submitted to Ofwat its draft business plan for
the period 2005 to 2010 in which the company outlined its plans to invest a
further �1.3 billion on improvements to assets and services. The strategy
behind the plan is to provide a fair and balanced approach with the aim of
providing best value to customers while securing the financial and operational
sustainability of the business. Minimum price increases of 3.6% per annum
above inflation would be needed to assist in funding the investment.
Constructive discussions are ongoing with Ofwat with a view to Yorkshire Water
submitting its final business plan in April 2004. Ofwat will announce its final
determination in November 2004.
Yorkshire Water Projects
The results of Yorkshire Water Projects are reported within other activities.
The 25 year Aquatrine A contract to operate and maintain water and wastewater
assets for over 1,100 Ministry of Defence sites commenced on 1 December as
planned. Income attributable to associates and joint ventures has declined
from last year due to the write off (in accordance with UITF 34) of bid costs
associated with pre-qualifying for the Aquatrine bid.
The Aquatrine A contract, coupled with the existing provision of waste water
treatment facilities in the Aberdeen area utilises the core skills of the group
and fits comfortably into the strategy of focussing upon water and water
related activities. The group will continue to explore opportunities in this
area of business.
Aquarion
Turnover increased by 1.8% to �51.1m (2002: �50.2m) through a number of
influences. Aquarion Services, the company's contract operations business,
increased turnover following commencement of the new Bridgeport contract. The
water businesses were adversely affected by cool and rainy weather conditions
and their turnover was unchanged from the comparative period.
Turnover and operating profit growth were hindered by the weakness of the
dollar with the results on translation into sterling being reported in this
period at $1.62 by comparison with $1.51 in the comparative period.
Operating profit from continuing operations declined by �1.4m to �19.6m (2002:
�21.0m), due to the weakness of the dollar on translation into sterling. The
underlying performance in dollar terms was therefore stable.
During the period, the planned succession of senior management in the US took
place. Charles Firlotte, who was originally Chief Operating Officer of
Aquarion and has spent three years in the UK running Yorkshire Water's water
supply business, returned to the US as CEO of Aquarion. This succession will
create even closer ties between the UK and US operations and facilitate further
best practice transfer.
The company enhanced its customer service by the final implementation of its
"AquariOnline" electronic bill payment service that allows customers to enrol
in the system, view and pay water bills directly via the Internet. Aquarion's
water utility received its highest customer satisfaction ranking in a decade
from the Connecticut economic regulatory authority that compiles such reports
annually.
During this period the Timco US timber business was closed and its results are
reported as a discontinued operation with turnover of �3.5m (2002: �5.6m) and a
break-even result (2002: �0.1m loss). The company completed the sale of Timco's
assets in October.
KeyLand Developments
Turnover for the first half at �1.3m, (2002: �0.8m), and operating profit at �
0.5m, (2002: �0.3m), were both ahead of last year. These increases resulted
from the disposal of an office building on the Midpoint development and from
residential sales within a joint venture at Whitby. A second office building
at Midpoint was successfully let to Loop during September.
Planning delays continue to affect the timing of sales. Further residential
sales, together with a number of land disposals already in progress, are
expected to underpin the second half results.
Loop Customer Management
Turnover increased to �9.1m in the period (2002: �8.5m), including �0.9m (2002
: �0.8m) from external contracts. Loop continues to attract interest from
potential clients for their services. It is creating a distinctive reputation
for quality customer service provision and is the only company in its sector to
feature in the Sunday Times 100 Best Companies to Work For rankings.
Recently, agreement has been reached with one of the largest UK energy
suppliers, to provide acquisition and retention services. This contract
commenced in October 2003 and will expand to full operation in accordance with
a build plan agreed with the client, which will ultimately result in Loop
taking on 250 new members of staff to add to the 600 currently employed in the
business.
Independent review report to Kelda Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2003 which comprises the Group Profit and
Loss Account, Group Balance Sheet, Group Cash Flow Statement, Group Statement
of Total Recognised Gains and Losses, and the related notes 1 to 10. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
figures should be consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for them, are
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4 'Review of interim financial information' issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial data and base thereon assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Accounting Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modification that
should be made to the financial information as presented for the six months
ended 30 September 2003.
Ernst & Young LLP
Leeds
4 December 2003
Group profit & loss account
Year Six months ended
ended
31 March Note 30 September 2003 30 September
2003 2002
�m �m �m
838.1 Turnover: group and share of 2 445.0 419.1
associates and joint ventures
(147.6) Share of associates' and joint (82.7) (72.3)
ventures' turnover
---- ---- ----
690.5 Group turnover 362.3 346.8
---- ---- ----
680.8 Continuing operations 358.8 341.2
9.7 Discontinued operations 3.5 5.6
---- ---- ----
265.3 Group operating profit 146.0 138.7
---- ---- ----
267.1 Continuing operations 146.0 138.8
(1.8) Discontinued operations - (0.1)
---- ---- ----
18.8 Share of associates' and joint 8.2 8.8
ventures' operating profit
(7.0) Share of associates' exceptional (2.5) -
items
---- ---- ----
277.1 Operating profit: group and share 2 151.7 147.5
of associates and joint ventures
(3.9) Exceptional items 3 17.1 -
---- ---- ----
273.2 Profit on ordinary activities 168.8 147.5
before interest
(98.1) Net interest - group (48.8) (48.1)
payable
(10.8) - associates and (5.7) (5.2)
joint ventures
---- ---- ----
164.3 Profit on ordinary activities 114.3 94.2
before taxation
Taxation on profit on ordinary
activities
(7.0) - current taxation 5 (13.8) (6.7)
(29.0) - deferred tax 6 (4.1) (12.4)
(2.0) - share of associates and joint 5 - (2.3)
ventures
---- ---- ----
126.3 Profit on ordinary activities after 96.4 72.8
taxation
(0.2) Equity minority interests (0.1) (0.2)
---- ---- ----
126.1 Profit attributable to shareholders 96.3 72.6
(100.8) Dividends (31.1) (30.4)
---- ---- ----
25.3 Retained profit for the period 65.2 42.2
---- ---- ----
32.7p Basic earnings per share 8 24.9p 18.8p
34.6p Adjusted earnings per share 8 21.1p 18.8p
42.4p Adjusted earnings per share 8 22.2p 22.0p
(excluding deferred tax)
32.6p Diluted earnings per share 8 24.8p 18.8p
26.05p Dividends per share 8.10p 7.86p
Group balance sheet
At 31 Note At 30 September 2003 At 30 September
March 2002
2003
�m �m �m
Fixed assets
243.8 Intangible assets 243.7 242.9
3,606.7 Tangible assets 3,646.5 3,513.7
118.6 Investments in associated 13.7 122.0
undertakings and joint
ventures
19.5 Other investments 18.7 22.8
---- ---- ----
3,988.6 3,922.6 3,901.4
---- ---- ----
Current assets
1.5 Stocks 2.0 2.5
198.2 Debtors 202.1 206.9
328.0 Cash and short term deposits 443.4 123.0
---- ---- ----
527.7 647.5 332.4
(370.3) Creditors: amounts falling (384.6) (461.2)
due within one year
---- ---- ----
157.4 Net current assets 262.9 (128.8)
(liabilities)
---- ---- ----
4,146.0 Total assets less current 4,185.5 3,772.6
liabilities
(2,241.3) Creditors: amounts falling (2,215.2) (1,865.6)
due after more than one year
Provisions for liabilities
and charges
(183.1) - deferred tax 7 (186.3) (166.7)
(3.7) - other (3.4) (7.5)
---- ---- ----
1,717.9 Net assets 1,780.6 1,732.8
---- ---- ----
1,717.3 Equity shareholders' funds 1,780.0 1,732.2
0.6 Non-equity minority 0.6 0.6
interests
---- ---- ----
1,717.9 Capital employed 1,780.6 1,732.8
---- ---- ----
Statement of group total recognised gains and losses
Year Six months ended
ended
31 March 30 September 2003 30 September
2003 2002
�m �m �m
126.1 Profit attributable to shareholders 97.4 72.6
1.5 Exchange adjustments (1.8) (0.4)
---- ---- ----
127.6 Total recognised gains and losses 95.6 72.2
relating to the period
Group cash flow statement
Year Six months ended
ended
31 March 30 September 2003 30 September
2003 2002
�m Note �m �m
441.4 Net cash inflow from operating 9 244.4 232.8
activities
2.5 Dividends received from - 0.8
associated undertakings
(82.1) Returns on investments and (61.3) (52.0)
servicing of finance
(34.4) Taxation (3.7) (24.7)
(372.1) Capital expenditure and (156.7) (200.7)
financial investment
(76.3) Acquisitions and disposals 10 142.3 (72.1)
(99.0) Equity dividends paid - -
(189.8) Management of liquid resources (89.8) 15.8
347.6 Financing (44.6) 43.4
---- ---- ----
(62.2) Increase (decrease) in cash in 30.6 (56.7)
the period
---- ---- ----
Analysis of movement in net debt
Year Six months ended
ended
31 March 30 September 2003 30 September
2003 2002
�m �m �m
(62.2) Increase (decrease) in cash in the period 30.6 (56.7)
(2.6) Decrease (increase) in short term debt 11.0 (69.7)
(341.1) Decrease (increase) in long term debt 18.9 28.2
189.8 Increase (decrease) in liquid resources 89.8 (15.8)
(82.0) Debt acquired with subsidiary - (81.9)
undertakings
14.2 Currency translation differences 4.9 14.3
---- ---- ----
(283.9) Movement in net debt in the period 155.2 (181.6)
(1,436.5) Net debt at the beginning of the period (1,720.4) (1,436.5)
---- ---- ----
(1,720.4) Net debt at the end of the period (1,565.2) (1,618.1)
---- ---- ----
Notes to the accounts
The figures for the year ended 31 March 2003 have been extracted from the
statutory accounts which have been filed with the Registrar of Companies and
which contained an unqualified audit report and did not include a statement
under section 237 (2) or (3) of the Companies Act 1985. The financial
information contained in the interim financial statements does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.
The Interim Statement was approved by the board of directors on 4 December
2003.
1 Basis of Preparation
The interim results have been prepared using the accounting policies disclosed
in the Annual Report and Accounts 2003.
2 Segmental analysis of turnover and operating profit
Turnover Operating profit
Six months ended Six months ended
30 30 September 30 September 30
September September
2002 2003
2003 2002
�m �m �m �m
Water services
- UK regulated 300.7 285.5 127.5 119.6
- US continuing operations 51.1 50.2 19.6 21.0
Other activities
- group 7.0 5.5 1.3 0.6
- associates and joint ventures 3.8 3.2 - 1.2
Discontinued operations
- group 3.5 5.6 - (0.1)
- WRG (associate) 78.9 69.1 8.2 7.6
---- ---- ---- ----
445.0 419.1 156.6 149.9
Corporate costs (2.4) (2.4)
---- ---- ---- ----
Total: group and share of 445.0 419.1 154.2 147.5
associates and joint ventures
(before exceptional items)
Exceptional items
- Share of WRG exceptional - - (2.5) -
items (discontinued associate)
---- ---- ---- ----
Total: group and share of 445.0 419.1 151.7 147.5
associates and joint ventures
3 Non operating exceptional items
A profit of �17.1m arose in the period from the sale of the group's investment
in Waste Recycling Group plc. No taxation arose on the sale.
An exceptional loss of �3.9m before tax (�3.0m after tax) was incurred in the
year ended 31 March 2003 on the closure of Timco in the US.
Exchange rates
4
The results of the group's US operations have been translated using average
exchange rates ruling during the period. The results of Aquarion have been
translated using an average exchange rate of $1.62 to the pound (2002: $1.51).
Exchange rates used to translate assets and liabilities at the balance sheet
date were $1.66 (2002: $1.57).
5 Current taxation
Six months ended
30 September 30 September
2003 2002
�m �m
UK Corporation tax charge 9.3 5.1
Overseas taxation - current year 4.5 4.8
- adjustments in - (3.2)
respect of prior years
Associates and joint ventures - 2.3
---- ----
13.8 9.0
---- ----
The group's current taxation charge comprises both mainstream corporation tax
and overseas tax calculated at the estimated effective tax rates for the year.
6 Deferred tax
Six months ended
30 September 30 September
2003 2002
�m �m
Full deferred tax charge 16.3 18.2
Discount (12.2) (1.6)
Deferred tax asset - (4.2)
---- ----
4.1 12.4
---- ----
7 Deferred tax provision
At 30 September At 30
September
2003
2002
�m �m
At 1 April 183.1 149.9
Deferred tax charged to the profit and loss 4.1 12.4
account
Acquisition of operations - 6.2
Exchange difference (0.9) (1.8)
---- ----
Discounted provision for deferred tax 186.3 166.7
---- ----
Undiscounted provision for deferred tax 528.2 504.6
Discount (341.9) (337.9)
---- ----
Discounted provision for deferred tax 186.3 166.7
---- ----
8 Earnings per share
The weighted average number of shares used in the calculation of basic earnings
per share (EPS) is 386.7m (2002: 385.8m) and of diluted EPS is 387.9m (2002:
386.9m).
Diluted EPS adjusts basic EPS for the effect of the exercise (at their option
price) of all dilutive outstanding share options under the group's sharesave
schemes.
Adjusted EPS is considered by the directors to give a better indication of the
group's underlying performance, and is adjusted for exceptional items (net of
tax). Adjusted EPS is also presented excluding the charge for deferred tax.
9 Reconciliation of operating profit to net cash inflow from operating activities
Six months ended
30 September 30 September
2003 2002
�m �m
Group operating profit 146.0 138.7
Depreciation 77.9 71.4
Amortisation of goodwill 0.5 0.5
Release of grants and contributions (1.7) (1.6)
Exchange and other adjustments 10.9 19.2
(Increase) decrease in stocks (0.4) 0.6
Increase in debtors (20.9) (4.6)
Increase in creditors 32.1 8.6
---- ----
Net cash inflow from operating activities 244.4 232.8
---- ----
10 Acquisitions and disposals
Six months ended
30 September 30 September
2003 2002
�m �m
Payments relating to acquisitions of subsidiary (0.4) (78.1)
undertakings
Net cash acquired with subsidiary undertakings - 2.0
Receipts from sale of operations 142.7 4.0
---- ----
Net cash inflow/outflow for acquisitions and 142.3 (72.1)
disposals
---- ----
ENDS
END
