TIDMROK
RNS Number : 7290O
Rok PLC
12 March 2009
Press Release
12 March 2009
Rok plc
Preliminary results for the year ended 31 December 2008
Rok plc, the property repair and maintenance specialist, announces its results
for the year ended 31 December 2008.
Operational summary
+---------------------------------------------------------------------------+
| * Strong organic growth of 16% in both planned and response maintenance |
| * |
| Cost base reduced by GBP30m per annum* |
| GBP2.7bn (2007: GBP2.2bn) of visible future revenues* |
| Acquisition of Richardson Projects * |
| Closure of property development division* |
| Banking facilities secured to 2012 |
| |
+---------------------------------------------------------------------------+
Financial summary
+-------------------------------+-------------+------------------+
| Continuing operations | 2008 | 2007 |
| | | |
+-------------------------------+-------------+------------------+
| * Revenue | GBP1,011.2m | GBP874.7m |
+-------------------------------+-------------+------------------+
| * Operating profit* | GBP21.5m | GBP26.7m |
+-------------------------------+-------------+------------------+
| * Profit before tax* | GBP20.4m | GBP27.2m |
+-------------------------------+-------------+------------------+
| * Profit before tax | GBP5.9m | GBP24.5m |
+-------------------------------+-------------+------------------+
| * Earnings per share* | 8.1p | 11.2p |
+-------------------------------+-------------+------------------+
| * Dividend per share | 2.4p | 3.4p |
+-------------------------------+-------------+------------------+
* before intangible asset charges and one off restructuring costs
+-------------------------------------------+--+----------------------------+---------+
| | | | |
+-------------------------------------------+--+----------------------------+---------+
Commenting on the results, Stephen Pettit, Chairman, said:
"Whilst 2008 was a challenging year in many respects, we have responded swiftly
to the changing economic climate and taken the necessary action to address our
cost base accordingly. We have also accelerated the change in our business mix
to a greater proportion of higher margin repair and maintenance activities."
On the future prospects of the Group, Stephen Pettit continued:
"The increasing forward visibility of our anticipated revenues in 2009 and
beyond is encouraging.
"We believe that the actions we have taken leave us well positioned in the
current market conditions whilst ready to take advantage of the upturn that
will emerge in time."
Enquiries to:
+---------------------------------------------+----------------------------+
| Rok plc | www.rokgroup.com |
+---------------------------------------------+----------------------------+
| Garvis Snook, Group Chief Executive | Tel: 020 7977 7982 |
| | garvis.snook@rokgroup.com |
+---------------------------------------------+----------------------------+
| Ashley Martin, Group Finance Director | Tel: 020 7977 7984 |
| | ashley.martin@rokgroup.com |
+---------------------------------------------+----------------------------+
| Redleaf Communications Ltd | Tel: 020 7566 6700 |
| Emma Kane/ Kathryn Hurford/ Rebecca | rok@redleafpr.com |
| Sanders-Hewett | |
+---------------------------------------------+----------------------------+
| Notes to Editors: |
| * |
| Rok plc's shares are listed on the Official List of the London Stock |
| Exchange under the symbol ROK.* |
| The Group specialises in relationship based service delivery |
| providing building, repairs and refurbishment, and response |
| maintenance services that are tailored to local needs and customers' |
| wishes supported by the resources and expertise of one of the |
| industry's leading players.* |
| Rok is one of the UK's leading providers of services to the social |
| housing sector.* |
| Further information on the Group can be accessed at |
| www.rokgroup.com. |
| |
+--------------------------------------------------------------------------+
| | |
+---------------------------------------------+----------------------------+
Financial Summary
+-----------------------------------------+--------------+--------------+----------+
| Continuing operations | Year ended | Year ended | Change |
| | 31 December | 31 December | |
| | 2008 | 2007 | |
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Revenue | GBP1,011.2m | GBP874.7m | +16% |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Operating profit - Planned repairs & | GBP16.8m | GBP15.0m | +12% |
| refurbishment | | | |
+-----------------------------------------+--------------+--------------+----------+
| - Response maintenance | GBP7.4m | GBP5.7m | +30% |
+-----------------------------------------+--------------+--------------+----------+
| - New build | GBP2.2m | GBP10.1m | -78% |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Profit before tax* | GBP20.4m | GBP27.2m | -25% |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Exceptional restructuring charges | GBP12.2m | - | |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Profit before tax | GBP5.9m | GBP24.5m | -76% |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Earnings per share* | 8.1p | 11.2p | -28% |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Earnings per share | 2.1p | 10.1p | -79% |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Dividend per share (p) | | | |
+-----------------------------------------+--------------+--------------+----------+
| * Interim* | 1.15p | 1.05 | +10% |
| Final | | | |
| | 1.25p | 2.35 | -47% |
+-----------------------------------------+--------------+--------------+----------+
| | 2.40p | 3.40 | -29% |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Operating cash flow** | GBP4.3m | GBP28.0m | |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Net assets | GBP107.0m | GBP127.3m | |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Net debt | GBP43.7m | GBP5.3m | |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| Discontinued operations | | | |
+-----------------------------------------+--------------+--------------+----------+
| | | | |
+-----------------------------------------+--------------+--------------+----------+
| (Loss)/profit from Development | GBP(18.6)m | GBP2.4m | |
| operations net of tax relief | | | |
+-----------------------------------------+--------------+--------------+----------+
* before intangible asset charges and one-off restructuring costs
** before pension scheme contributions and one off restructuring costs
Statement by the Chief Executive, Garvis Snook
2008 was a challenging year for the Group as the downturn in business confidence
led to a rapid slow down in demand for new capital works. This was compounded by
the banking crisis in the autumn that led to a lack of liquidity for a number of
our customers which impacted our trading performance in the second half of the
year.
For some time now our strategy has been to re-position the business away from
its greater dependence on low-margin contracting into higher-margin repairs and
maintenance activities where the business model is based on long-term framework
agreements with good visibility of forward revenues. In response to the
increasingly competitive market for new capital works we accelerated this
re-positioning and the transition is now virtually complete. We also took the
decision to close our property development operations during the year as we
believe this market is unlikely to deliver adequate returns for the Group in the
foreseeable future.
Results
Group revenue for the year from continuing operations increased 16% to
GBP1,011.2m (2007: GBP874.7m) while pre tax profits before amortisation of
intangibles and one-off restructuring costs were 25% lower at GBP20.4m (2007:
GBP27.2m). The strong growth experienced in both our planned and response
maintenance businesses was offset by a significant reduction in profitability
from our new build operations as anticipated revenues for the last quarter fell
due to deteriorating economic conditions ahead of the removal of costs.
In anticipation of a tougher outlook for our sector, particularly in new build
activities, we restructured the business, the costs of which totalled GBP12.2m
which includes GBP8.3m in respect of some 700 redundancies and GBP3.9m for
property related provisions. We have now scaled back on the number and size of
premises from which the Group will operate. These actions have resulted in us
reducing the ongoing operational costs in the business by GBP30m per annum.
After intangible asset charges and one-off restructuring charges, pre tax
profits fell to GBP5.9m (2007: GBP24.5m). Adjusted earnings per share before
amortisation of intangible assets and restructuring costs were 8.1p (2007:
11.2p).
The closure of Rok Development, our property development operation, resulted in
a GBP16.0m loss, most of which related to non-cash charges for land and work in
progress provisioning and goodwill impairment. Together with the operating
losses during the period, this discontinued activity impacted the Group's
results by GBP18.6m, net of tax relief.
The total finance costs of GBP3.9m (2007: GBP2.4m) comprise interest of GBP0.9m
and net pension scheme finance charges of GBP0.2m on continuing activities
together with interest attributable to the funding of the discontinued
development business of GBP2.8m. The increased finance charges are attributable
to the funding of acquisitions and the planned change in business mix. Total
interest cover on continuing underlying profits is 5.8 times.
The tax charge for the year on continuing operations of GBP2.2m represents an
effective rate of 38% (2007: 30%). This increase primarily relates to the non
deductibility of share option charges and other disallowable items on a lower
overall profit chargeable to tax. Excluding exceptional items the effective tax
rate is 31%.
The change in business mix over the course of 2008 where we have scaled back our
new build contracting operations and continued to grow response maintenance has
impacted our working capital requirements. This is reflected in a cash inflow
from operations, before pension scheme contribution and restructuring costs
of GBP4.3m in 2008 compared to GBP28.0m in the prior year. In addition
cash restructuring costs of GBP5.9m and pension contributions of GBP3.6m were
included in the overall net cash outflow from operations. Net capital
expenditure of GBP5.0m principally reflects further investment in information
systems. The cash cost of acquisitions totalled GBP17.3m net of the cash
balances in the acquired businesses.
Net debt at 31 December 2008 was GBP43.7m, up from GBP5.3m at the previous year
end principally due to the acquisitions of Richardson Projects and Pitkerro
together with the impact of the change in business mix. Average net debt during
the year was GBP61.1m (2007: GBP24.2m). Our core building and maintenance
operations had net cash at the year end of GBP34.8m (2007: GBP47.1m). The Group
net debt position is due to the cost of acquisitions in the holding company and
funding of the remaining assets in Rok Development. Given the current climate we
are continuing to place an increased emphasis on cash and working capital
management.
We have successfully renegotiated and extended our banking facilities under a
club arrangement with three major banks and now have GBP90m of long term
facilities expiring in March 2012 which will amortise by a minimum of GBP16m
over the three year period.
This will underpin our balance sheet as we further transition our business model
to a greater proportion of repair and maintenance activities.
Dividend
Our dividend policy is to maintain dividend growth broadly in line with
underlying EPS growth whilst maintaining dividend cover between 3 and 3.5 times.
Since EPS has fallen this year, the Board is proposing a final dividend for the
year of 1.25p, resulting in a total dividend for the year of 2.40p, a reduction
of 1.00p from last year. If approved at the forthcoming AGM, the final dividend
will be paid on 15 May 2009 to shareholders on the register at 3 April 2009. The
total dividend is 3.4 times covered by underlying earnings, compared to 3.3
times in 2007.
New build
Our new build division undertakes both public and private sector projects with a
relatively low value which averaged GBP2.7m in 2008. During 2008 we
progressively reduced the number of private sector commercial and industrial new
build projects in response to the current economic climate and increased our
exposure to public sector projects with local authorities and housing
associations, many of which are operated under long-term framework agreements.
In particular we undertake a significant volume of new build social housing
whilst not taking any development risk or exposure to private sales. Central to
this strategy was the acquisition of Richardson Projects earlier in the year, a
specialist provider of new build and refurbishment services to the social
housing sector, based in the north of England.
Revenue in the new build division increased by 7% to GBP563.6m (2007:
GBP526.1m) and within this total our social housing new build activities have
grown by 9% to GBP130.3m, as a result of the acquisition of Richardson Projects.
New build operating profits fell to GBP2.2m (2007: GBP10.1m) as revenues
anticipated for the last quarter of the year, principally in the private sector,
fell sharply in response to the crisis in the banking sector and ahead of the
removal of costs from the business. Operating margins as a result fell to 0.4%
(2007: 1.9%).
Within our new build division both social housing and education performed
relatively well, underpinned by long-term framework agreements. New customer
wins in the period totalled GBP340m and included Coastline, Derby Homes, Home
Group Central, JV North, Lancashire County Council, Sanctuary Housing, Smarte
East, Spirit Partnership, Quantum Consortium and Wakefield MBC. Since the year
end we have been appointed by Guinness Trust, which provides accommodation
throughout the country in over 50,000 homes.
We scaled back our activity in the new build commercial division during the year
consolidating the number of branches carrying out new build construction work
from twenty to five. The proportion of total revenues going forward is therefore
budgeted to reduce from 43% to 24% and the cost base is now aligned
with anticipated future revenue.
Public sector works have been the first area to stabilise and we expect it
to grow again as the Government's financial stimulus package begins to take
effect. For 2009 95% of our expected revenues are either secure or highly
probable under framework agreements. These agreements will also provide a
substantial underpin to our revenues through to 2013. Nevertheless, the general
level of activity in new build has slowed sharply and we expect the market to
continue to be competitive.
Planned repairs and refurbishment
Our planned repairs and refurbishment division provides building improvement
works, repairs and maintenance and plumbing, heating and electrical services
principally to housing associations, local authorities, and to the education,
health, and the leisure sectors. We experienced another strong year, with
revenue increasing by 29% to GBP328.6m (2007: GBP254.9m). On a like-for-like
basis, organic revenue growth was 16%. Operating profit increased by 12% to
GBP16.8m (2007: GBP15.0m). Operating margins of 5.1% (2007: 5.9%) were affected
by a number of cut backs in volume in the last quarter which have since
stabilised.
The estimated spend in the UK last year on urgent and planned repairs to social
housing was in the region of GBP7bn to GBP8bn. This level of spending has been
on a gently rising trend for some years and growth currently shows no signs of
abating, despite the general economic uncertainty. We undertake a large
proportion of this type of work using our own directly employed technicians and
as a result Rok is now one of the UK's leading service providers to this
market. Much of this work is carried out under framework agreements for the
Government's Decent Homes initiative.
We enjoyed good growth last year in the education sector, where we worked with
new partners including Derwentside District Council, LHC Network, Smarte East
and the University of the West of England. Our activities have included
extending or converting a large number of schools, colleges and universities,
where the ability to carry out time-critical repairs was in high demand. We also
continue to enjoy a strong working relationship with BAA and have recently
signed a further long-term framework agreement covering all seven BAA owned
airports in the UK, where we provide smaller building repair and
maintenance services. We have permanent units in five of these airports.
Our ability to work effectively in customer-occupied premises with our own
directly employed labour force provides a major competitive advantage. This
enables building works to be scheduled, undertaken and completed when the
customer wants being less reliant on co-ordinating numerous sub-contractors.
This is a key factor in us continuing to win new business in this area.
New framework agreements awarded last year totalled over GBP330m and included
BAA, Circle Anglia, Fusion 21, Home Group South, London and Quadrant Group
and Northern Housing Consortium. As a result, the proportion of total revenue
arising from our planned activities is budgeted to increase from 32% in 2008 to
39% in 2009.
Plumbing Heating and Electrical
In September 2008 we formed Rok Plumbing Heating and Electrical (PHE)
incorporating five companies, all of which had been acquired in the previous 24
months, including the January 2008 acquisition of Pitkerro. As a result of these
strategic acquisitions, we now have a strong, unified PHE business operating
under one national brand and directly employing some 750 skilled technicians
with a wealth of experience in installation, repair and maintenance services.
Around 25% of the cost of all building projects is accounted for by plumbing,
heating and electrical activities the margin for which is usually passed to sub
contractors. The formation of this specialist division ensures that we retain
this margin and are well placed to provide high-quality workmanship and ongoing
long term servicing and repairs for our customers.
It is fundamental to our strategy that we grow our footprint nationally and,
following the formation of Rok PHE, we now have a very strong position in
Scotland and the north of England. We plan to roll out this activity across the
rest of the UK in time.
Response maintenance
Response maintenance comprises our insurance driven repair activities (under Rok
Insurance Services) and our other national and local urgent response
services. As with our planned maintenance activities, there is a strong focus
throughout on our unique brand of customer service delivered locally by our
directly employed technicians. This is a key differentiator for us.
This business stream performed very well in 2008, continuing the good growth we
have seen in recent years. Revenue increased by 27% to GBP119.0 m (2007:
GBP93.7m). Like for like organic revenue growth was 16%. Insurance repairs
accounted for 74% of this division's revenue in 2008. Operating profit rose to
GBP7.4m, an increase of 30% on the GBP5.7m achieved in 2007, and the operating
margin again showed an improvement, up to 6.2% from 6.1% in the prior year.
Our growth in this division continues the strong trend we have established over
the past four years and has not experienced any impact from the current
recession. We have built our unique position in the UK market in response
maintenance services through a directly employed workforce. This approach,
coupled with the quality of service provided, is leading to continued referrals
from many of our customers. The improvement in operating margins was even more
notable, given the investments we continue to make in this division.
Our insurance business has long-term framework agreements in place with seven of
the top ten UK insurance companies where Rok provides urgent repairs and support
to policyholders when they make claims. We are currently the second largest
provider of these services to the insurance market and the only one with the
capability to directly deliver across the UK. We are also the only building
repairs business that handles insurance claims to offer a three-year quality
assurance guarantee for the repairs we undertake. Our new claims centre in
Mansfield which we opened in October 2008 is at the heart of these insurance
activities and is fully scalable as demand grows. During 2008 we won new
business from AXA, Fortis and Nationwide, and also renewed a five-year contract
with Zurich valued at GBP200m.As a result our response maintenance activities,
as a proportion of total revenues, are budgeted to increase from 12% in 2008 to
18% in 2009.
The non-insurance activities of our response maintenance teams comprise
national, regional and local delivery of urgent repairs to a wide variety of end
users. These include national organisations with large property portfolios, or
smaller, more locally-based organisations such as housing associations or local
councils. We believe our differentiated service provided through a national
brand and delivered through a network of offices embedded in their local
communities is a compelling one.
One of our largest national customers is Anchor Trust, which is the largest
not-for-profit provider of housing, support and care in the UK, providing
housing to more than 50,000 people nationally. We have recently been appointed
by Leisure Connection to carry out maintenance, alterations and urgent repairs
in more than 70 fitness clubs, and the leisure and arts centres it manages
across the country.
We continue to see major opportunities for this business, driven by the
continuing trend of outsourcing by major corporates, Government bodies, and
housing associations.
Closure of development activities
For the past two years we have been actively reducing the amount of money
invested in commercial property development activities in recognition that the
high returns historically achieved would start to fall. The market deteriorated
rapidly at the beginning of 2008 and we took the decision at the half year to
close Rok Development as we could not see adequate returns being made from this
activity for the foreseeable future. The closure of Rok Development resulted in
a cost to the income statement of GBP18.6m net of tax relief of GBP2.9m. The
gross charge for discontinued operations of GBP21.5m comprises an operating loss
of GBP2.7m, closure costs including land and work in progress write downs of
GBP12.2m, interest of GBP2.8m and a goodwill write-off of GBP3.8m. At the year
end the remaining development assets held for sale totalled GBP22.6m. These
assets principally comprise thirteen sites where we have land with outline
planning permission or completed buildings. There is currently a lack of
liquidity in the investment market which has impacted our ability to dispose of
these sites in accordance with our original plan. We have written down the
values of the remaining sites to estimated recoverable amounts once normal
market conditions return.
Board changes
On 3 December 2008, following the restructuring of our operations, we announced
the appointment of Rob Olorenshaw as the Company's new Chief Operating Officer
(COO) to take responsibility for a number of the Group's support functions. Rob
formally joined the Board on 1 January 2009. We believe he is an excellent
addition to the management team and are confident that he will help increase
efficiency and effectiveness across the business. The creation of the role of
COO reflects the Group's increasing emphasis on planned and response
maintenance, and it will also enable me to have a much closer day-to-day contact
with our regional managing directors.
John Samuel stepped down as a director on 3 December 2008 following the
re-organisation, and we would like to thank John for the substantial
contribution he made and wish him well in his future career. Sue Moore stepped
down as a director on 31 March 2008 to pursue other business interests, and we
also wish her every success in her future career.
People
Our people and the service they provide is a key focus area for Rok and
therefore it was particularly difficult to make redundancies at the end of last
year. That action however had to be taken for the overall health of the Group.
I would like to thank all those people, both current and past employees who have
contributed to the success of the Group over recent years and for responding so
positively to the challenges we faced in 2008.
Safety, health and environment
The Board is determined that Rok becomes recognised as the safest place to work
in the building and maintenance industry. In the autumn of 2009 each of our
five regions will be re-assessed by the British Safety Council under their 'Five
Star' audit process. Previously two regions achieved 'Four Star' status and the
others 'Three Star'. This is a tremendous achievement and a testament to the
determined efforts of all our people. Whilst we believe this already
substantially exceeds the achievements of many national construction companies
we will continue to strive towards 'Five Star' status and more importantly, zero
accidents. To further improve our accident performance we have set up a 'Near
Miss and Confidential Helpline' to enable simple and timely reporting of these
incidents.
As part of our continuing commitment to safety, health and the environment we
further strengthened our in-house team and changed our philosophy from
'inspector' to 'coach'. As a consequence we were awarded six International
Safety Awards by The British Safety Council in recognition of our achievements,
reduced our accident rate for the third consecutive year, to 0.31 per 100,000
man hours and had three accident free months. We also retained our entry in the
FTSE4Good Index and significantly improved our environmental performance across
the whole Group by enhancing the visibility of our waste statistics. In 2008 we
achieved 58% of non-hazardous waste segregated on site and diverted from
landfill. With the introduction of environmental awareness training for our
operational teams, certificated by The Chartered Institute of Environmental
Health (CIEH), we have also improved the awareness of environmental issues
across the Group.
Acquisitions
The Group completed two acquisitions during 2008, compared with seven in 2007.
Both acquisitions were designed to add to the Group's skill base and its
geographic footprint.
In January 2008 the Group acquired Pitkerro Ltd, employing more than 100 people
providing plumbing and heating services principally in Tayside, Scotland. Total
consideration for the acquisition was GBP3.0m, which was settled by the issue of
766,447 Rok shares and GBP2.1m in cash which was paid from existing Group
facilities.
In April 2008 the Group acquired Richardson Projects Holdings Ltd which operates
across the north of England, and specialises in providing new build and
refurbishment services to the social housing sector, principally under a number
of long-term framework agreements. Richardson also operated a private housing
development division which is being wound down. The financial risks and rewards
of this division remain with the vendors through adjustments to the deferred
consideration payable. The initial consideration of GBP22.5m was settled by the
issue of 1,914,894 Rok shares and GBP20.25m in cash, which was met from existing
facilities. Deferred consideration of GBP2.9m has been paid during the year.
Current trading and prospects
Following the swift remedial action taken in the last quarter of 2008 to
significantly reduce our cost base and to restrict our new build construction
activities, we now believe that the business is well placed. There is no doubt
that we experienced a sharp setback last year but acted promptly and decisively
to plan for the reduced revenue expectations. Some 70% of our revenues now
derive from the public and regulated sectors and more than two thirds of our
gross profits going forward are now expected to emanate from our higher margin
response maintenance and planned maintenance and refurbishment services. Clearly
the immediate outlook for many businesses operating in the UK will be testing
but we believe the actions we have taken have made the business more resilient
to the challenges that lie ahead.
Our future revenues are significantly underpinned by framework agreements
having secured new awards last year totalling GBP875m (2007: GBP780m). To date
in 2009 we have won further framework agreements amounting to GBP250m. The total
value of expected future revenues both in committed orders and framework
agreements currently is GBP2.7bn (2007: GBP2.2bn) and some 87% of our total
anticipated revenue for 2009 is now either secure or highly probable under such
agreements.
The pipeline of future work opportunities, particularly in the public sector, is
strong and we are currently engaged in the selection process for 172 new
framework agreements with a total potential value of GBP2.1bn. GBP1.2bn of this
is at the pre-qualification stage, GBP0.6bn at bid stage and GBP0.3bn at final
interview.
Our transition to a more differentiated direct delivery and service based
business model is virtually complete with staff morale high despite the setbacks
of last year. We believe we are now well placed to ride out the current economic
turmoil and are ready take advantage of the opportunities that will undoubtedly
arise in the coming years.
Garvis Snook
Chief Executive
12 March 2009
Consolidated income statement
For the year ended 31 December 2008
+------------------------------------------------+-------++------------++--------------+
| Continuing operations |Notes | 2008 | 2007 |
| | | GBPm | GBPm |
| | | | Represented* |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Group revenue | 2 | 1,011.2 | 874.7 |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Gross profit | | 95.4 | 91.2 |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Administrative expenses | | (88.4) | (67.2) |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+--------+------------+---------------+
| Profit from operations | | 7.0 | 24.0 |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Analysed as: | | | |
+------------------------------------------------+-------+--------------+--------------+
| Adjusted operating profit | | 21.5 | 26.7 |
+------------------------------------------------+-------+--------------+--------------+
| Intangible asset charges | | (2.3) | (2.7) |
+------------------------------------------------+-------+--------------+--------------+
| Restructuring costs | 4 | (12.2) | - |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Finance (costs) income | 5 | (1.1) | 0.5 |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+--------+------------+---------------+
| Profit before tax | | 5.9 | 24.5 |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Income tax expense | 6 | (2.2) | (7.2) |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+--------+------------+---------------+
| Profit for the year from continuing operations | | 3.7 | 17.3 |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Discontinued operations | | | |
+------------------------------------------------+-------+--------------+--------------+
| (Loss) profit for the year after tax from | 7 | (18.6) | 2.4 |
| discontinued operations | | | |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+--------+------------+---------------+
| (Loss) profit for the year | | (14.9) | 19.7 |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Earnings per share | | | |
| Continuing operations | | | |
+------------------------------------------------+-------+--------------+--------------+
| Basic earnings per share | 8 | 2.1p | 10.1p |
+------------------------------------------------+-------+--------------+--------------+
| Diluted earnings per share | 8 | 2.1p | 9.8p |
+------------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------------+-------+--------------+--------------+
| Continuing and discontinued operations | | | |
+------------------------------------------------+-------+--------------+--------------+
| Basic (loss) earnings per share | 8 | (8.5p) | 11.5p |
+------------------------------------------------+-------+--------------+--------------+
| Diluted (loss) earnings per share | 8 | (8.4p) | 11.2p |
+------------------------------------------------+-------++------------++--------------+
Consolidated statement of recognised income and expense
For the year ended 31 December 2008
+-----------------------------------------+--------------+------------+--------------+
| | 2008 | 2007 |
| | GBPm | GBPm |
+--------------------------------------------------------+------------+--------------+
| | | |
+--------------------------------------------------------+------------+--------------+
| Actuarial (losses) gains on defined benefit pension | (2.5) | 7.6 |
| schemes | | |
+--------------------------------------------------------+------------+--------------+
| Deferred tax thereon | 0.7 | (2.3) |
+--------------------------------------------------------+------------+--------------+
| Tax rate adjustment to brought forward actuarial | - | (0.2) |
| losses | | |
+--------------------------------------------------------+------------+--------------+
| | | |
+--------------------------------------------------------+------------+--------------+
| Net (loss) income recognised directly in equity | (1.8) | 5.1 |
+--------------------------------------------------------+------------+--------------+
| (Loss) / profit for the year | (14.9) | 19.7 |
+--------------------------------------------------------+------------+--------------+
| | | |
+-----------------------------------------+--------------+---------------------------+
| Total recognised income and expense | (16.7) | 24.8 |
+-----------------------------------------+--------------+------------+--------------+
* represented to adjust for discontinued operations
Consolidated balance sheet
As at 31 December 2008
+------------------------------------------------+-------+------------+--------------+
| |Notes | 2008 | 2007 |
| | | GBPm | GBPm |
| | | | Represented* |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Assets | | | |
+------------------------------------------------+-------+------------+--------------+
| Intangible assets | | 146.5 | 125.3 |
+------------------------------------------------+-------+------------+--------------+
| Property, plant and equipment | | 19.6 | 21.3 |
+------------------------------------------------+-------+------------+--------------+
| Investments | | 0.1 | - |
+------------------------------------------------+-------+------------+--------------+
| Investments in joint ventures | | - | 4.6 |
+------------------------------------------------+-------+------------+--------------+
| Deferred tax assets | | 7.6 | 5.9 |
+------------------------------------------------+-------+------------+--------------+
| Total non-current assets | | 173.8 | 157.1 |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Inventories | | 13.4 | 42.1 |
+------------------------------------------------+-------+------------+--------------+
| Trade and other receivables | | 201.1 | 224.4 |
+------------------------------------------------+-------+------------+--------------+
| Cash and cash equivalents | | 39.1 | 43.0 |
+------------------------------------------------+-------+------------+--------------+
| Assets classified as held for sale | 7 | 22.6 | - |
+------------------------------------------------+-------+------------+--------------+
| Total current assets | | 276.2 | 309.5 |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Total assets | | 450.0 | 466.6 |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Liabilities | | | |
+------------------------------------------------+-------+------------+--------------+
| Interest-bearing loans and borrowings | | 75.0 | 45.7 |
+------------------------------------------------+-------+------------+--------------+
| Retirement benefit obligations | | 10.1 | 11.0 |
+------------------------------------------------+-------+------------+--------------+
| Deferred tax liabilities | | 1.8 | 2.9 |
+------------------------------------------------+-------+------------+--------------+
| Total non-current liabilities | | 86.9 | 59.6 |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Interest-bearing loans and borrowings | | 7.8 | 2.6 |
+------------------------------------------------+-------+------------+--------------+
| Trade and other payables | | 246.0 | 270.9 |
+------------------------------------------------+-------+------------+--------------+
| Income tax payable | | 1.8 | 6.2 |
+------------------------------------------------+-------+------------+--------------+
| Liabilities associated with the assets held | 7 | 0.5 | - |
| for sale | | | |
+------------------------------------------------+-------+------------+--------------+
| Total current liabilities | | 256.1 | 279.7 |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Total liabilities | | 343.0 | 339.3 |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Net assets | | 107.0 | 127.3 |
+------------------------------------------------+-------+------------+--------------+
| | | | |
+------------------------------------------------+-------+------------+--------------+
| Equity | | | |
+------------------------------------------------+-------+------------+--------------+
| Issued share capital | 10 | 3.6 | 3.5 |
+------------------------------------------------+-------+------------+--------------+
| Share premium | 10 | 18.2 | 18.2 |
+------------------------------------------------+-------+------------+--------------+
| Other reserves | 10 | 58.2 | 55.1 |
+------------------------------------------------+-------+------------+--------------+
| Retained earnings | 10 | 27.0 | 50.5 |
+------------------------------------------------+-------+------------+--------------+
| Total equity | | 107.0 | 127.3 |
+------------------------------------------------+-------+------------+--------------+
* represented to adjust for discontinued operations
Consolidated statement of cash flows
For the year ended 31 December 2008
+-----------------------------------------------+-------+-----------+--------------+
| | Notes | 2008 | 2007 |
| Continuing operations | | GBPm | GBPm |
| | | | Represented* |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Profit before tax | | 5.9 | 24.5 |
+-----------------------------------------------+-------+-----------+--------------+
| Adjustments for: | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Depreciation | | 6.7 | 5.0 |
+-----------------------------------------------+-------+-----------+--------------+
| Intangible asset charges | | 2.3 | 2.7 |
+-----------------------------------------------+-------+-----------+--------------+
| Gain on disposal of plant and equipment | | (0.2) | (0.1) |
+-----------------------------------------------+-------+-----------+--------------+
| Expense in respect of share options | | 2.3 | 1.2 |
+-----------------------------------------------+-------+-----------+--------------+
| Finance income (cost) | | 1.1 | (0.5) |
+-----------------------------------------------+-------+-----------+--------------+
| Restructuring costs | | 12.2 | - |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash generated from operations before changes | | 30.3 | 32.8 |
| in working capital | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Decrease (increase) in trade and other | | 9.0 | (20.8) |
| receivables | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Increase in other work in progress | | (3.8) | (0.7) |
+-----------------------------------------------+-------+-----------+--------------+
| (Decrease) increase in trade and other | | (31.2) | 16.7 |
| payables | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash generated from operations before defined | | 4.3 | 28.0 |
| benefit pension scheme contributions and | | | |
| exceptional costs | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Defined benefit pension scheme contributions | | (3.6) | (3.3) |
+-----------------------------------------------+-------+-----------+--------------+
| Restructuring costs | | (5.9) | - |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash generated from operations | | (5.2) | 24.7 |
+-----------------------------------------------+-------+-----------+--------------+
| Income tax paid | | (3.4) | (3.9) |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash generated from operating activities | | (8.6) | 20.8 |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Investing activities | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Acquisition of subsidiaries, net of cash | | (17.3) | (23.0) |
| acquired | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Acquisition of property, plant and equipment | | (7.3) | (9.1) |
+-----------------------------------------------+-------+-----------+--------------+
| Proceeds from disposal of plant and equipment | | 2.3 | 1.4 |
+-----------------------------------------------+-------+-----------+--------------+
| Interest (paid) received | | (0.9) | 0.9 |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash flows from investing activities | | (23.2) | (29.8) |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Financing activities | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Purchases of own shares | | (2.5) | (3.5) |
+-----------------------------------------------+-------+-----------+--------------+
| Proceeds from non-current borrowings | | 36.0 | 19.2 |
+-----------------------------------------------+-------+-----------+--------------+
| Repayment of loan notes | | - | (2.4) |
+-----------------------------------------------+-------+-----------+--------------+
| Repayment of obligations under finance leases | | (1.5) | (1.7) |
+-----------------------------------------------+-------+-----------+--------------+
| Dividends paid | | (6.3) | (4.6) |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash flows from financing activities | | 25.7 | 7.0 |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Net decrease in cash and cash equivalents | | (6.1) | (2.0) |
| from continuing operations | | | |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Discontinued operations | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash flows from (used in) discontinued | | | |
| operations | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash flows from operating activities | | 6.2 | 7.8 |
| (discontinued operations) | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Cash flows from investing activities | | (4.0) | (5.5) |
| (discontinued operations) | | | |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Net increase in cash and cash equivalents | | 2.2 | 2.3 |
| from discontinued operations | | | |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Net (decrease) increase in cash and cash | 11 | (3.9) | 0.3 |
| equivalents | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Net cash and cash equivalents at beginning of | 11 | 43.0 | 42.7 |
| year | | | |
+-----------------------------------------------+-------+-----------+--------------+
| | | | |
+-----------------------------------------------+-------+-----------+--------------+
| Net cash and cash equivalents at end of year | | 39.1 | 43.0 |
+-----------------------------------------------+-------+-----------+--------------+
* represented to adjust for discontinued operations
Notes to the preliminary announcement
1. Basis of accounting and accounting policies
The financial information set out in this preliminary announcement does not
constitute statutory financial statements for the years ended 31 December 2008
or 2007, for the purpose of the Companies Act 1985, but is derived from
those financial statements. Statutory financial statements for 2007 have been
filed with the Registrar of Companies and those for 2008 will be filed following
the Annual General Meeting to be held on 7 May 2009. The Group's auditors have
reported on those accounts; their reports were unqualified and did not contain
statements under s. 237(2) or (3) Companies Act 1985.
Whilst the financial information included in this preliminary announcement has
been prepared in accordance with International Financial Reporting Standards as
adopted for use in the European Union ("IFRS"), this announcement does not
itself contain sufficient information to comply with IFRS. The accounting
policies applied in preparing this financial information are consistent with the
Group's financial statements for the year ended 31 December 2007.
2. Segment reporting
In the opinion of the directors the Group's core activities comprise three
material business segments being; new build, planned repairs and maintenance and
response maintenance and reflects the profiles of the risks, rewards and
internal reporting structures within the Group. The Group was also previously
involved in Property Development which was reported as a separate primary
segment in prior period financial statements. The Group's Development activities
were discontinued with effect from 4 June 2008 (see note 7) and comparative
figures have been represented accordingly.
All activities were conducted within the United Kingdom and it is the opinion of
the directors that this represents one geographical segment.
The following table provides details of revenue and profit by business segment:
+------------------------------------------------------+-----------+--------------+
| Revenue | 2008 | 2007 |
| | GBPm | GBPm |
| | | Represented* |
+------------------------------------------------------+-----------+--------------+
| New build | 563.6 | 526.1 |
+------------------------------------------------------+-----------+--------------+
| Planned repairs and maintenance | 328.6 | 254.9 |
+------------------------------------------------------+-----------+--------------+
| Response maintenance | 119.0 | 93.7 |
+------------------------------------------------------+-----------+--------------+
| | | |
+------------------------------------------------------+-----------+--------------+
| | 1,011.2 | 874.7 |
+------------------------------------------------------+-----------+--------------+
| | | |
+------------------------------------------------------+-----------+--------------+
| Operating profit | | |
+------------------------------------------------------+-----------+--------------+
| New build | 2.2 | 10.1 |
+------------------------------------------------------+-----------+--------------+
| Planned repairs and maintenance | 16.8 | 15.0 |
+------------------------------------------------------+-----------+--------------+
| Response maintenance | 7.4 | 5.7 |
+------------------------------------------------------+-----------+--------------+
| Group activities | (4.9) | (4.1) |
+------------------------------------------------------+-----------+--------------+
| | | |
+------------------------------------------------------+-----------+--------------+
| Segment adjusted operating profit | 21.5 | 26.7 |
+------------------------------------------------------+-----------+--------------+
| Restructuring costs | (12.2) | - |
+------------------------------------------------------+-----------+--------------+
| Intangible asset charges | (2.3) | (2.7) |
+------------------------------------------------------+-----------+--------------+
| | | |
+------------------------------------------------------+-----------+--------------+
| Profit from operations | 7.0 | 24.0 |
+------------------------------------------------------+-----------+--------------+
| Finance (cost) income | (1.1) | 0.5 |
+------------------------------------------------------+-----------+--------------+
| Income tax expense | (2.2) | (7.2) |
+------------------------------------------------------+-----------+--------------+
| | | |
+------------------------------------------------------+-----------+--------------+
| Profit for the year from continuing operations | 3.7 | 17.3 |
+------------------------------------------------------+-----------+--------------+
| (Loss) profit for the year from discontinued | (18.6) | 2.4 |
| operations | | |
+------------------------------------------------------+-----------+--------------+
| | | |
+------------------------------------------------------+-----------+--------------+
| (Loss) profit for the year from continuing and | (14.9) | 19.7 |
| discontinued operations | | |
+------------------------------------------------------+-----------+--------------+
* represented to adjust for discontinued operations
Notes to the preliminary announcement (continued)
3. Acquisition of subsidiaries
The principal acquisition in the year was on 3 April 2008 when the Group
acquired 100% of the share capital of Richardson Projects Holdings Limited and
its trading subsidiary Richardson Projects Limited for a consideration of
GBP25.4 million. The Group also acquired 100% of the share capital of Pitkerro
Limited on 8 January 2008 for a consideration of GBP3.0 million.
Acquisitions in the year had the following effect on the Group's assets and
liabilities:
+-------------------------------------+--------+------+------+-------------+------------+
| | Book | Provisional | Deferred | Fair |
| | value | accounting | tax | value to |
| | | and fair | impact | Group |
| | | value | | |
| | | adjustments | | |
+-------------------------------------+--------+-------------+-------------+------------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------+--------+-------------+-------------+------------+
| | | |
+-----------------------------------------------------+--------------------+------------+
| Property, plant and equipment | 2.1 | (0.1) | - | 2.0 |
+-------------------------------------+--------+-------------+-------------+------------+
| Investments | 0.1 | - | - | 0.1 |
+-------------------------------------+--------+-------------+-------------+------------+
| Trade receivables | 7.6 | (0.1) | - | 7.5 |
+-------------------------------------+--------+-------------+-------------+------------+
| Cash and cash equivalents | 8.4 | - | - | 8.4 |
+-------------------------------------+--------+-------------+-------------+------------+
| Trade payables | (13.4) | (3.3) | 0.3 | (16.4) |
+-------------------------------------+--------+-------------+-------------+------------+
| | | |
+-----------------------------------------------------+--------------------+------------+
| Total identifiable assets and | 4.8 | (3.5) | 0.3 | 1.6 |
| liabilities | | | | |
+-------------------------------------+--------+-------------+-------------+------------+
| | | | | |
+-------------------------------------+--------+-------------+-------------+------------+
| Provisional goodwill on acquisition | | | | 27.3 |
+-------------------------------------+--------+-------------+-------------+------------+
| | | |
+-----------------------------------------------------+--------------------+------------+
| | | | | 28.9 |
+-------------------------------------+--------+-------------+-------------+------------+
| | | |
+-----------------------------------------------------+--------------------+------------+
| Discharged by: | | | | |
+-------------------------------------+--------+-------------+-------------+------------+
| Cash consideration | | | | 22.3 |
+-------------------------------------+--------+-------------+-------------+------------+
| Deferred consideration | | | | 2.9 |
+-------------------------------------+--------+-------------+-------------+------------+
| Rok plc shares | | | | 3.2 |
+-------------------------------------+--------+-------------+-------------+------------+
| Costs of acquisition | | | | 0.5 |
+-------------------------------------+--------+-------------+-------------+------------+
| | | |
+-----------------------------------------------------+--------------------+------------+
| | | | | 28.9 |
+-------------------------------------+--------+------+------+-------------+------------+
4. Restructuring costs
During the year the Group's continuing operations incurred exceptional
restructuring costs as follows:
+-------------------------------------+-------+------+------+-------------+------------+
| | | | 2008 | 2007 |
+-------------------------------------+-------+-------------+-------------+------------+
| | | | GBPm | GBPm |
+-------------------------------------+-------+-------------+-------------+------------+
| | | |
+----------------------------------------------------+--------------------+------------+
| Redundancy and restructuring costs | | | 8.3 | - |
+-------------------------------------+-------+-------------+-------------+------------+
| Onerous property and rental costs | | | 2.4 | - |
+-------------------------------------+-------+-------------+-------------+------------+
| Leasehold improvement write offs | | | 1.5 | - |
+-------------------------------------+-------+-------------+-------------+------------+
| | | |
+----------------------------------------------------+--------------------+------------+
| | | | 12.2 | - |
+-------------------------------------+-------+------+------+-------------+------------+
Notes to the preliminary announcement (continued)
5. Finance costs
+-------------------------------------------------------+-----+-----+-----+----------+
| | 2008 | 2007 |
+-------------------------------------------------------+-----------+----------------+
| | GBPm | GBPm |
+-------------------------------------------------------+-----------+----------------+
| Interest; | | |
+-------------------------------------------------------+-----------+----------------+
| Interest payable on bank loans and overdrafts | (0.9) | 0.9 |
+-------------------------------------------------------+-----------+----------------+
| Other finance income; | | |
+-------------------------------------------------------+-----------+----------------+
| Expected return on pension scheme assets | 4.5 | 4.1 |
+-------------------------------------------------------+-----------+----------------+
| Other finance charges; | | |
+-------------------------------------------------------+-----------+----------------+
| Interest on pension scheme liabilities | (4.7) | (4.5) |
+-------------------------------------------------------+-----------+----------------+
| | | |
+-------------------------------------------------------------+-----------+----------+
| Total finance (cost) income | (1.1) | 0.5 |
+-------------------------------------------------------+-----+-----+-----+----------+
All finance income and charges relate to continuing operations
6. Income tax expense
+-------------------------------------------------------+-----+-----+-----+----------+
| | 2008 | 2007 |
+-------------------------------------------------------+-----------+----------------+
| | GBPm | GBPm |
+-------------------------------------------------------+-----------+----------------+
| Current tax expense: | | |
+-------------------------------------------------------+-----------+----------------+
| Current year | (1.0) | 7.7 |
+-------------------------------------------------------+-----------+----------------+
| Over provided in prior years | (0.4) | (0.9) |
+-------------------------------------------------------+-----------+----------------+
| | | |
+-------------------------------------------------------------+-----------+----------+
| | (1.4) | 6.8 |
+-------------------------------------------------------+-----------+----------------+
| | | |
+-------------------------------------------------------+-----------+----------------+
| Deferred tax expense: | | |
+-------------------------------------------------------+-----------+----------------+
| Origination and reversal of temporary differences | 1.1 | 1.2 |
+-------------------------------------------------------+-----------+----------------+
| (Over) under provided in prior years | (0.4) | 0.6 |
+-------------------------------------------------------+-----------+----------------+
| | 0.7 | 1.8 |
+-------------------------------------------------------+-----------+----------------+
| | | |
+-------------------------------------------------------------+-----------+----------+
| Total income tax (credit) expense | (0.7) | 8.6 |
+-------------------------------------------------------+-----------+----------------+
| Analysed as: | | |
+-------------------------------------------------------+-----------+----------------+
| Continuing operations | 2.2 | 7.2 |
+-------------------------------------------------------+-----------+----------------+
| Discontinued operations | (2.9) | 1.4 |
+-------------------------------------------------------+-----------+----------------+
| | | |
+-------------------------------------------------------------+-----------+----------+
| | (0.7) | 8.6 |
+-------------------------------------------------------+-----+-----+-----+----------+
+-------------------------------------------------+------+-----+-----+-----+----------+
| Reconciliation of effective tax rate | | | |
+-------------------------------------------------+------+-----------+----------------+
| | | | |
+-------------------------------------------------+------+-----------+----------------+
| Profit before tax on continuing operations | | 5.9 | 24.5 |
+-------------------------------------------------+------+-----------+----------------+
| (Loss) profit before tax on discontinued | | (21.5) | 3.8 |
| operations | | | |
+-------------------------------------------------+------+-----------+----------------+
| | | |
+--------------------------------------------------------------+-----------+----------+
| (Loss) profit before tax | | (15.6) | 28.3 |
+-------------------------------------------------+------+-----------+----------------+
| | | | |
+-------------------------------------------------+------+-----------+----------------+
| Income tax at the UK corporation tax rate of | | (4.4) | 8.5 |
| 28% (2007: 30%) | | | |
+-------------------------------------------------+------+-----------+----------------+
| | | | |
+-------------------------------------------------+------+-----------+----------------+
| Share of results of joint ventures | | 0.3 | 0.1 |
+-------------------------------------------------+------+-----------+----------------+
| Unrecognised tax losses | | 1.9 | - |
+-------------------------------------------------+------+-----------+----------------+
| Non-deductible expenses | | 2.3 | 0.3 |
+-------------------------------------------------+------+-----------+----------------+
| Over provided in prior years | | (0.8) | (0.3) |
+-------------------------------------------------+------+-----------+----------------+
| | | |
+--------------------------------------------------------------+-----------+----------+
| | (0.7) | 8.6 |
+-------------------------------------------------+------+-----+-----+-----+----------+
Notes to the preliminary announcement (continued)
7. Discontinued operations
The Group's Development operation was discontinued on 4 June 2008 and it has
been classified separately in the balance sheet, income statement and cash flow
statement. The Development segment was not classified as discontinued or held
for sale at 30 June 2007 or 31 December 2007 and the comparative income
statement has been re-presented to show the discontinued operation separately
from continuing operations.
+-------------------------------------------------------+------------++-------------+
| Results of discontinued operation | 2008 | 2007 |
| | GBPm | GBPm |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+-------------+-------------+
| Revenue (including share of joint ventures) | 31.6 | 75.4 |
+-------------------------------------------------------+------------+--------------+
| Less: share of joint ventures' revenue | (0.2) | (2.6) |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+-------------+-------------+
| Revenue | 31.4 | 72.8 |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+------------+--------------+
| Gross (loss) profit | (0.2) | 11.3 |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+------------+--------------+
| Administrative expenses | (2.1) | (4.4) |
+-------------------------------------------------------+------------+--------------+
| Exceptional closure costs | (16.0) | - |
+-------------------------------------------------------+------------+--------------+
| Share of post tax losses from joint ventures | (0.4) | (0.2) |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+-------------+-------------+
| Operating (loss) profit from discontinued operations | (18.7) | 6.7 |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+------------+--------------+
| Analysed as: | | |
+-------------------------------------------------------+------------+--------------+
| Underlying operating (loss) profit | (2.7) | 7.4 |
+-------------------------------------------------------+------------+--------------+
| Work in progress impairment | (8.6) | - |
+-------------------------------------------------------+------------+--------------+
| Other closure costs | (3.6) | - |
+-------------------------------------------------------+------------+--------------+
| Intangible asset charges | (3.8) | (0.7) |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+------------+--------------+
| Finance costs | (2.8) | (2.9) |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+-------------+-------------+
| (Loss) profit before tax | (21.5) | 3.8 |
+-------------------------------------------------------+------------+--------------+
| Income tax credit (expense) | 2.9 | (1.4) |
+-------------------------------------------------------+------------+--------------+
| | | |
+-------------------------------------------------------+-------------+-------------+
| (Loss) profit for the year from discontinued | (18.6) | 2.4 |
| operations | | |
+-------------------------------------------------------+------------++-------------+
+-----------------------------------------------+--+----+--+------------+--+------------+
| Assets and associated liabilities held for | | | 2008 | 2007 |
| sale | | | GBPm | GBPm |
+-----------------------------------------------+--+----+------------------+------------+
| | | | | |
+-----------------------------------------------+--+----+------------------+------------+
| The assets and liabilities classified as held for sale are: |
| |
+---------------------------------------------------------------------------------------+
| Investments in joint ventures | | | 3.6 | - |
+-----------------------------------------------+--+----+------------------+------------+
| Inventories | | | 19.0 | - |
+-----------------------------------------------+--+----+------------------+------------+
| | | |
+----------------------------------------------------------+------------+---------------+
| | | | 22.6 | - |
+-----------------------------------------------+--+----+------------------+------------+
| | | | | |
+-----------------------------------------------+--+----+------------------+------------+
| Trade and other payables | | | 0.5 | - |
+-----------------------------------------------+--+----+--+------------+--+------------+
Earnings per share - discontinued operations
+--------------------------------------------+---------+----+----+----+----+---------+----+
| The calculation of earnings per share, | 2008 | 2007 |
| together with the adjusted earnings per | | |
| share is based on the following: | | |
+--------------------------------------------+-------------------+-------------------+
| | Basic |Diluted | Basic |Diluted |
+--------------------------------------------+---------+---------+---------+---------+
| | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------------+---------+---------+---------+---------+
| | | |
+-----------------------------------------------------------+---------+-------------------+
| (Loss) profit attributable to ordinary | (18.6) | (18.6) | 2.4 | 2.4 |
| shareholders | | | | |
+--------------------------------------------+---------+---------+---------+---------+
| Add Goodwill write off, not taxable | 3.8 | 3.8 | 0.7 | 0.7 |
+--------------------------------------------+---------+---------+---------+---------+
| | | |
+-----------------------------------------------------------+---------+-------------------+
| Adjusted earnings | (14.8) | (14.8) | 3.1 | 3.1 |
+--------------------------------------------+---------+---------+---------+---------+
| | | | | |
+--------------------------------------------+---------+---------+---------+---------+
| | pence | pence | pence | pence |
+--------------------------------------------+---------+---------+---------+---------+
| (Loss) earnings per share | (10.6) | (10.5) | 1.4 | 1.4 |
+--------------------------------------------+---------+---------+---------+---------+
| Adjusted (loss) earnings per share | (8.5) | (8.4) | 1.8 | 1.8 |
+--------------------------------------------+---------+----+----+----+----+---------+----+
Notes to the preliminary announcement (continued)
8. Earnings per share
The calculation of basic and diluted earnings per share, together with the
adjusted earnings per share for each is based on the following:
+-------------------------------------------+---------+----+----+----------+----+-------+
| From continuing operations | 2008 | 2007 |
+-------------------------------------------+-------------------+-----------------------+
| | Basic | Diluted | Basic | Diluted |
+-------------------------------------------+---------+---------+----------+------------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------------+---------+---------+----------+------------+
| | | |
+----------------------------------------------------------+--------------------+-------+
| Earnings, being profit attributable to | 3.7 | 3.7 | 17.3 | 17.3 |
| ordinary shareholders | | | | |
+-------------------------------------------+---------+---------+----------+------------+
| Add intangible asset charges, net of tax | 1.6 | 1.6 | 1.9 | 1.9 |
+-------------------------------------------+---------+---------+----------+------------+
| Add restructuring costs, net of tax | 8.8 | 8.8 | - | - |
+-------------------------------------------+---------+---------+----------+------------+
| | | |
+----------------------------------------------------------+--------------------+-------+
| Adjusted earnings | 14.1 | 14.1 | 19.2 | 19.2 |
+-------------------------------------------+---------+----+----+----------+----+-------+
+-------------------------------------------+---------+-----+-----+-----+-----+---------+
| From continuing and discontinued | 2008 | 2007 |
| operations | | |
+-------------------------------------------+---------------------+---------------------+
| | Basic | Diluted | Basic | Diluted |
+-------------------------------------------+---------+-----------+-----------+---------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------------+---------+-----------+-----------+---------+
| | | |
+-----------------------------------------------------------+-----------+---------------+
| Earnings, being profit attributable to | (14.9) | (14.9) | 19.7 | 19.7 |
| ordinary shareholders | | | | |
+-------------------------------------------+---------+-----------+-----------+---------+
| Add Goodwill write off, not taxable | 3.8 | 3.8 | 0.7 | 0.7 |
+-------------------------------------------+---------+-----------+-----------+---------+
| Add intangible asset charges, net of tax | 1.6 | 1.6 | 1.9 | 1.9 |
+-------------------------------------------+---------+-----------+-----------+---------+
| Add restructuring costs, net of tax | 8.8 | 8.8 | - | - |
+-------------------------------------------+---------+-----------+-----------+---------+
| | | |
+-----------------------------------------------------------+-----------+---------------+
| Adjusted earnings | (0.7) | (0.7) | 22.3 | 22.3 |
+-------------------------------------------+---------+-----+-----+-----+-----+---------+
+-------------------------------------------+---------+-----+-----+-----+-----+-------+
| | m | m | m | m |
+-------------------------------------------+---------+-----------+-----------+-------+
| | | |
+-----------------------------------------------------------+-----------+-------------+
| Issued ordinary shares at 1 January | 176.6 | 176.6 | 170.8 | 170.8 |
+-------------------------------------------+---------+-----------+-----------+-------+
| Effect of shares issued in the year | 2.1 | 2.1 | 2.6 | 2.6 |
+-------------------------------------------+---------+-----------+-----------+-------+
| Effect of own shares held | (3.3) | (3.3) | (2.0) | (2.0) |
+-------------------------------------------+---------+-----------+-----------+-------+
| Weighted average number of shares | 175.4 | 175.4 | 171.4 | 171.4 |
+-------------------------------------------+---------+-----------+-----------+-------+
| Effect of share options | - | 1.7 | - | 4.2 |
+-------------------------------------------+---------+-----------+-----------+-------+
| Weighted average number of shares used | 175.4 | 177.1 | 171.4 | 175.6 |
+-------------------------------------------+---------+-----------+-----------+-------+
| | | | | |
+-------------------------------------------+---------+-----------+-----------+-------+
| From continuing operations | pence | pence | pence | pence |
+-------------------------------------------+---------+-----------+-----------+-------+
| | | |
+-----------------------------------------------------------+-----------+-------------+
| Earnings per share | 2.1 | 2.1 | 10.1 | 9.8 |
+-------------------------------------------+---------+-----------+-----------+-------+
| Adjusted earnings per share | 8.1 | 8.0 | 11.2 | 10.9 |
+-------------------------------------------+---------+-----------+-----------+-------+
| | | | | |
+-------------------------------------------+---------+-----------+-----------+-------+
| From continuing and discontinued | pence | pence | pence | pence |
| operations | | | | |
+-------------------------------------------+---------+-----------+-----------+-------+
| | | |
+-----------------------------------------------------------+-----------+-------------+
| (Loss) earnings per share | (8.5) | (8.4) | 11.5 | 11.2 |
+-------------------------------------------+---------+-----------+-----------+-------+
| Adjusted (loss) earnings per share | (0.4) | (0.4) | 13.0 | 12.7 |
+-------------------------------------------+---------+-----+-----+-----+-----+-------+
Notes to the preliminary announcement (continued)
9. Dividends
+------------------------------------------------------+-------------+-----------+
| | 2008 | 2007 |
| | GBPm | GBPm |
+------------------------------------------------------+-------------+-----------+
| | | |
+------------------------------------------------------+-------------+-----------+
| Final paid 2007: 2.35p (2006: 1.94p) per 2p ordinary | 4.2 | 3.3 |
| share | | |
+------------------------------------------------------+-------------+-----------+
| Interim paid 2008: 1.15p (2007: 1.05p) per 2p | 2.1 | 1.8 |
| ordinary share | | |
+------------------------------------------------------+-------------+-----------+
| | | |
+------------------------------------------------------+-------------+-----------+
| | 6.3 | 5.1 |
+------------------------------------------------------+-------------+-----------+
Subject to approval by shareholders, a final dividend of 1.25p per share (2007:
2.35p) will be paid on 15 May 2009 to members on the register at 3 April 2009.
A dividend reinvestment plan ('the Plan') is available which enables
shareholders to reinvest their cash dividend in Rok plc ordinary shares. Details
of the Plan are contained in a leaflet which can be found on the Company's
website - www.rokgroup.com - under Investor Relations/Accounts & Circulars/Other
Circulars/Dividend Reinvestment Plan or which may be obtained from the
Registrars. Shareholders who have already lodged a mandate and who wish to
remain in the Plan need take no action, whereas those who wish to cancel an
existing mandate and receive a cash dividend should advise the Registrars in
writing of this by 23 April 2009. Shareholders who have not yet completed a
mandate but who wish to reinvest the dividend need to complete a mandate and
return this to the Registrars to arrive by 23 April 2009.
The Registrars, Computershare Investor Services PLC, can be contacted at The
Pavilions, Bridgwater Road, Bristol BS99 7NH or on 0870 707 1274.
10. Capital and reserves
Summarised reconciliation of movement in capital and reserves
+----------+----------+----------+----------+----------+----------+----------+----------+
| | Share | Share | Other | Retained |
| | capital | premium | reserves | earnings |
| | GBPm | GBPm | GBPm | GBPm |
+---------------------+----------+---------------------+----------+---------------------+
| Balance at 31 | 3.5 | 18.2 | 55.1 | 50.5 |
| December 2007 as | | | | |
| previously reported | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| Loss for the year | - | - | - | (14.9) |
+---------------------+----------+---------------------+----------+---------------------+
| Other recognised | - | - | - | (1.8) |
| losses | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| Dividends | - | - | - | (6.3) |
+---------------------+----------+---------------------+----------+---------------------+
| Purchase of own | - | - | - | (2.5) |
| shares held | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| Share based | - | - | - | 2.3 |
| payments charge | | | | |
| reversal | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| Tax on share based | - | - | - | (0.3) |
| payments | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| Shares issued for | 0.1 | - | 3.1 | - |
| acquisitions | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| | | |
+--------------------------------+---------------------+----------+
| Balance at 31 | 3.6 | 18.2 | 58.2 | 27.0 |
| December 2008 | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| | | | | |
+---------------------+----------+---------------------+----------+---------------------+
| | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+
The number of shares in issue at 31 December 2008 was 179,303,672 (2007:
176,579,016).
Notes to the preliminary announcement (continued)
11. Reconciliation of net cash flow to movement in net debt
+------------------------------------------------------+-------------+-------------+
| | 2008 | 2007 |
| | GBPm | GBPm |
+------------------------------------------------------+-------------+-------------+
| | | |
+------------------------------------------------------+-------------+-------------+
| (Decrease) / increase in cash and cash equivalents | (3.9) | 0.3 |
| in the year | | |
+------------------------------------------------------+-------------+-------------+
| Cash inflow from change in debt | (34.5) | (15.1) |
+------------------------------------------------------+-------------+-------------+
| | | |
+------------------------------------------------------+-------------+-------------+
| Change in net debt resulting from cash flows | (38.4) | (14.8) |
+------------------------------------------------------+-------------+-------------+
| Debt acquired | - | (2.1) |
+------------------------------------------------------+-------------+-------------+
| | | |
+------------------------------------------------------+-------------+-------------+
| Movement in net debt | (38.4) | (16.9) |
+------------------------------------------------------+-------------+-------------+
| Net (debt) cash at 1 January | (5.3) | 11.6 |
+------------------------------------------------------+-------------+-------------+
| | | |
+------------------------------------------------------+-------------+-------------+
| Net debt at 31 December | (43.7) | (5.3) |
+------------------------------------------------------+-------------+-------------+
Cautionary statement
This Preliminary Report has been prepared solely to provide additional
information to shareholders to assess the Group's strategies and the potential
for those strategies to succeed. The Preliminary Report should not be relied on
by any other party or for any other purpose.
The Preliminary Report contains certain forward looking statements. These
statements are made by the directors in good faith based on the information
available to them up to the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such forward
looking information.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DBGDXLDBGGCB
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