RNS Number:7200M
Hyder Consulting PLC
27 November 2006
Hyder Consulting PLC (HYC.L)
Interim Results for the six months ended 30 September 2006
Hyder Consulting PLC is an engineering design, planning, environmental and
management consultancy operating in the UK, Europe, Middle East, and Asia
Pacific regions. We work with and advise national and regional government
agencies and private sector commercial enterprises, undertaking increasingly
sophisticated infrastructure and property projects.
Financial Highlights
* Results well ahead of last year and ahead of expectations
* Revenue for the period up 20% to #97.2m (2005: #80.9m)
* Operating profit up 184% to #8.8m (2005: #3.1m)
* Adjusted operating profit* up 42% to #5.1m (2005: #3.6m)
* Basic earnings per share up 170% to 19.56p (2005: 7.25p)
* Adjusted earnings per share* up 43% to 12.44p (2005: 8.67p)
* Interim dividend up 71% to 0.60p (2005: 0.35p)
* Order book up 13% to #246m (2005: #218m)
* before amortisation of business combinations and exceptionals
Sir Alan Thomas, Chairman of Hyder Consulting PLC commented:
"We are very pleased with our first half results. Our markets are strong, our
margins are improving and we are successfully integrating our acquisitions.
We are continuing to pursue infill acquisitions utilising the new equity raised
last month.
With our strong order book and steadily improving margins, we anticipate another
successful year."
Press contacts:
Hyder Consulting PLC
Tim Wade, Chief Executive Tel: +44 (0)20 7904 9011
Simon Hamilton-Eddy, Financial Director Tel: +44 (0)20 7904 9011
Biddicks
Shane Dolan Tel: +44 (0)20 7448 1000
Chairman's Statement
I am very pleased to report that our interim results are well ahead of the same
period last year and ahead of expectations.
Results
Revenue for the period increased by 20% to #97.2m (2005: #80.9m) reflecting
strong market conditions in all our trading regions. Net revenue, after
accounting for direct project costs, increased by 24% to #80.3m (2005: #64.9m).
The order book increased by a healthy 13% to #246m (2005: #218m) in spite of an
increasing proportion of shorter horizon advisory work being secured as part of
our margin improvement strategy.
Operating profit increased by 184% to #8.8m (2005: #3.1m). Exceptional gains of
#4.3m were recognised during the period as a result of our continuing programme
of actions and initiatives to restructure the Acer Group Pension Scheme (AGPS)
and reduce the IAS19 deficit. Profit before tax increased by 212% to #8.1m
(2005: #2.6m).
Adjusted operating profit (before amortisation of business combinations and
exceptionals) increased by 42% to #5.1m (2005: #3.6m). Adjusted operating profit
margin increased to 5.2% (2005: 4.4%). The adjusted operating margin on net
revenue, after accounting for work by sub-consultants, increased to 6.4% (2005:
5.5%).
Basic earnings per share increased to 19.56p (2005: 7.25p). Adjusted earnings
per share (before amortisation of business combinations and exceptionals)
increased by 43% to 12.44p (2005: 8.67p).
Net debt amounted to #4.3m at 30 September 2006, compared to net funds of #6.2m
at 31 March 2006 and net debt of #0.2m at 30 September 2005. The movement is a
result of acquisitions made during the period (#4m), special pension
contributions (#2m), the seasonal effect of increased debtor collections at the
year end, and increases in working capital related to higher revenues. Interest
cover increased to 13.4 times from 5.9 times for the period ended 30 September
2005.
Taxation
The effective rate of tax is 19.2% (2005: 6.3%) as a result of deferred tax
charges on the pension scheme settlement and curtailment gains in the period.
Excluding the effects of this the tax rate amounts 3.75% reflecting low rates in
the Middle East and Research and Development tax credits in the UK.
Dividend
The Board has declared an interim dividend of 0.60p (2005: 0.35p) payable on 8
January 2007 to shareholders on the register at 8 December 2006.
Strategy
We continue to pursue our strategy of improving margins through higher value
work and selective infill acquisitions. During the period we acquired
environmental consultant Cresswell Associates in the UK, which made a
significant contribution over the period, largely as a result of seasonal work
undertaken over the summer months. In addition we acquired highways design
consultancy Munnich Projekt in Germany, and planning and landscape architects
ACLA in Hong Kong and China, which we expect to make useful contributions in the
second half.
Fundraising
In October we placed 2,569,255 new shares, raising a further #7.6m, net of fees,
enabling us to continue to pursue our acquisition pipeline. We are conducting
negotiations on a number of acquisitions and hope to complete several by the
financial year end.
Pension Fund
Following actions taken by the Group, the deficit in the AGPS as reported under
IAS19 has reduced significantly to #25.6m net of deferred tax (31 March 2006:
#32.1m).
During the period a pensionable salary freeze of up to five years was
implemented for active members, resulting in an immediate reduction in the
deficit as reported under IAS19 of #4.0m. In addition, further acceptances from
deferred members of the Company's offer to transfer out of the scheme resulted
in an additional gain of #0.8m being recognised in the period. The Group has
further increased its contributions to the scheme, contributing #3.9m in the
period, including an initial #2m special contribution funded through a 15 year
unsecured loan facility and #0.7m in lieu of member contributions, as a result
of the scheme becoming non contributory through salary sacrifice. Following the
recent consultation exercise, new offers have been made to members to enable
them to transfer out of the AGPS.
Board changes
Peter Higgins retired from the Board on 30 September 2006, his intention to do
so having been announced in our last annual report. I would like to take this
opportunity to thank Peter most warmly for his valued contribution to the Board
during his tenure.
I am delighted to welcome Paul Withers to the Board as a new Non-Executive
Director and my colleagues and I very much look forward to working with him.
Regional Review
UK / Europe
Revenue increased to #52.1m (2005: #44.7m) whilst operating profits increased to
#3.4m (2005: #2.5m).
Sales in the year to date have continued to be strong with new project wins
including a number of framework contracts that provide long-term income
potential. Notable awards include our six year appointment as client's agent for
the procurement of the #5 billion M25 widening project, and in 32
classifications of the UK Ministry of Defence Framework Agreement for Technology
Services (FATS). We have also secured three year appointments to both Severn
Trent Water's Leakage Consultancy Framework and the Scientific Services
Framework for the London Low Emission Zone, and a five year framework for
English Partnerships.
Our fast-growing environmental team has been further strengthened with the
acquisition of ecology specialist, Cresswell Associates, at the beginning of
April 2006. Their performance has been strong over the period, largely as a
result of the volume of seasonal work undertaken over the summer months. We have
secured a place on the specialist services support framework for highways
ecology and environmental impact services in the UK, and a project for SNIFFER
(The Scotland and Northern Ireland Forum for Environmental Research) examining
ways in which interested parties in Scotland hold flooding data.
In the areas of water supply and treatment, our joint venture in Ireland was
successful on two significant projects, the Navan Mid-Meath Water Supply Scheme
and sewerage upgrades to the north west of Dublin.
Our strategy for the 2012 London Olympics, highlighted in our annual report, has
started to pay dividends with a commission for the clearance and preparation of
the northern portion of the Olympic Park prior to construction work starting in
mid-2008. As part of our wider strategic objective for getting involved in
development projects at an earlier stage, we have also made strides in the
private sector, notably with some large housing developers.
In the highways and transport market, we are well placed to respond to the
increasing demand for technological solutions to issues such as road congestion,
funding and transport integration. We have continuing work on a number of large
highways schemes and have won new appointments on projects in Ireland and in the
European Union accession states, as part of our strategic development of
alternative highways markets. Our UK highways team is also busy supporting a
number of major projects in other regions, notably the Middle East.
Sales in Germany have started to improve, with some key wins with industry
sector clients. After the acquisition of civil engineers, traffic and highway
planners, Munnich Projekt, further acquisitions are in the pipeline to
strengthen our market position in target business segments.
Middle East
Revenue increased to #19.9m (2005: #15.9m) whilst operating profits increased to
#1.3m (2005: #0.9m).
The level of activity in the region is such that our biggest challenge is
resourcing the increasing volume of work. Although staff numbers in the region
have increased to over 1,000, our 'one company' approach allows us to make full
use of our global team and capabilities to support projects and the number of
secondments into the region has increased.
Tourism-based development continues to be a major portion of new work
opportunities. New commissions in the period included the infrastructure design
for the 24.7 million square foot Arabian Legends development in Dubai, the
Versace Hotel in Dubai, the design of the sewage treatment plant for Dubai
Sports City, and further infrastructure and tower design work for the Sorouh
development in Abu Dhabi. We also won the structural, facades and building
services design for two new 30 and 35 storey commercial towers for the Dubai
Chamber of Commerce and Industry. Within the region we are currently working on
four live projects of over 100 storeys.
The scale of the projects within the region is placing additional demands on
existing public transport infrastructure, much of which will need to be upgraded
in the coming years. The scope of our involvement in the widening of the Dubai
to Al Ain Highway has recently been substantially increased. We have also
started work on a number of highways improvement schemes in Abu Dhabi and have
begun to assist the State of Bahrain in reviewing options for an intelligent
transport system (ITS) network, as well as acting as project manager for the
improvement of the busiest highway network in Bahrain - along North Manama.
Our work in the Middle East covers the range from master planning through design
to supervision. The proportion of higher value, 'front end' work is increasing.
The recent acquisition of ACLA in Hong Kong and China included an office in
Dubai which is responsible for the landscape planning for Dubai Medical City.
ACLA's knowledge and experience will help us to increase our contact with
clients at the early stage of land development projects.
Asia Pacific
Revenue increased to #25.3m (2005: #20.4m) whilst operating profits increased to
#1.8m (2005: #1.3m).
Our Australasian business has again grown profitably and is taking steps to
capitalise further on its brand position. Senior level recruits are helping us
to develop a strong regional management structure.
In Queensland, Australia's fastest growing state, the integration of the
business of Weathered Howe (which we acquired in 2005) has been progressing
satisfactorily but the level of infrastructure work secured to date is less than
anticipated. New appointments include a role on the Townsville Cruise Ship
Terminal. Previous work advising the organisers of the V8 Sports Car and Indy
Car events has expanded to take in a number of feasibility studies for new
events in Queensland and other States. We were also commissioned to support
Brisbane's bid for the 2011 World Athletics Championship.
In New Zealand, we have developed a strong niche position in the transportation
market, advising and working on projects relating to road pricing and tolling.
Similarly, our regional environmental team has integrated recent acquisitions
and strengthened its market positioning. An unusual but high profile commission
was an appointment to advise government bodies in a campaign to reduce litter
from cigarette butts.
In Hong Kong and China, we have successfully reorganised and completed our first
acquisition in the region, the Hong Kong based master planning and landscape
architecture consultancy, ACLA.
Three major bridge projects in China, two in Tianjin and one in Ningbo, are
continuing. The majority of new commissions in the period within the region have
been smaller in scale or linked to term projects, largely in the transport
infrastructure and public buildings markets.
Outlook
Economic conditions are good in all our major markets. We are also encouraged by
the prospects in a number of growing areas of business for the Group, notably in
the environmental, nuclear decommissioning, tourism and leisure, and urban
planning sectors. Following the normal seasonal pattern we expect improved cash
flow in the second half.
Our infill acquisition pipeline is healthy and we hope to be able to maintain
our momentum during the remainder of this financial year and beyond.
I am pleased that our overall rate of progress is being sustained and, with our
order book strong, we anticipate another successful year.
Sir Alan Thomas
Chairman
27 November 2006
Consolidated Income Statement for the six months ended 30 September 2006
(unaudited)
+----------------------------+----+---------+--+----------+--+----------+
| | | Six| |Six months| | |
| | | months| | ended 30| | |
| | | ended 30| | September| |Year ended|
| | |September| | 2005| | 31 March|
| | | 2006| | | | 2006|
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| |Note| #'000| | #'000| | #'000|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Revenue | 2 | 97,226 | | 80,943 | | 171,314|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Cost of sales | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Direct project costs | | (16,900)| | (16,041)| | (32,101)|
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Other operating costs | | (57,293)| | (47,004)| | (98,863)|
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Gross profit | | 23,033 | | 17,898 | | 40,350 |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Administration expenses | | (14,256)| | (14,802)| | (30,584)|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Group operating profit | 2 | 8,777 | | 3,096 | | 9,766 |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Analysed as: | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|EBITA (pre-exceptional | | 5,554 | | 3,991 | | 9,333 |
|items) | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Amortisation of intangible | | | | | | |
|assets | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|- Software | | (415) | | (438) | | (953)|
+----------------------------+----+---------+--+----------+--+----------+
|- Business combinations | | (659) | | (257) | | (671)|
+----------------------------+----+---------+--+----------+--+----------+
|Pension scheme settlements | | 4,297 | | - | | 2,299 |
|and curtailments | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Singapore office closure | | - | | (200) | | (242)|
|costs | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Group operating profit | | 8,777 | | 3,096 | | 9,766 |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Interest payable and similar| 3 | (773) | | (805) | | (1,701)|
|charges | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Interest receivable | 3 | 120 | | 278 | | 274 |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Profit before taxation | | 8,124 | | 2,569 | | 8,339 |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Taxation | | (1,561)| | (163)| | (1,230)|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Profit for the financial | | 6,563 | | 2,406 | | 7,109 |
|period | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Profit attributable to | | 114 | | 62 | | 177 |
|minority interests | | | | | | |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Profit attributable to | | 6,449 | | 2,344 | | 6,932|
|equity shareholders | | | | | | |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Earnings per share (pence) | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Basic | 4 | 19.56| | 7.25| | 21.44|
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Diluted | 4 | 19.09| | 7.11| | 20.97|
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
+----------------------------+----+---------+--+----------+--+----------+
|Equity - Ordinary 10p shares| | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Dividends (#'000) - paid | 5 | 296| | 178 | | 291|
+----------------------------+----+---------+--+----------+--+----------+
|Dividend per share (pence) | 5 | 0.90| | 0.55| | 0.90|
+----------------------------+----+---------+--+----------+--+----------+
|Dividends (#'000) - proposed| 5 | 197| | 113 | | 294 |
+----------------------------+----+---------+--+----------+--+----------+
|Dividend per share (pence) | 5 | 0.60| | 0.35| | 0.90|
+----------------------------+----+---------+--+----------+--+----------+
Consolidated Statement of Recognised Income and Expense (unaudited)
Six Six Year
months months ended 31
ended 30 ended 30 March
September September 2006
2006 2005
#'000 #'000 #'000
Profit for the financial period 6,563 2,406 7,109
Exchange adjustments (884) 970 394
Cash flow hedges recognised - - 61
Actuarial gains / (losses) on
defined benefit pension schemes 863 (5,616) (10,040)
Deferred taxation on actuarial
(gains) / losses (258) 1,676 2,940
Net expense not recognised in the
Income Statement (279) (2,970) (6,645)
Total recognised income /
(expense) for the year 6,284 (564) 464
Fair value of swaps - - (95)
6,284 (564) 369
Equity shareholders 6,170 (626) 287
Minority interests 114 62 177
6,284 (564) 464
Consolidated Balance Sheet as at 30 September 2006 (unaudited)
+----------------------------+----+---------+--+----------+--+----------+
| | | As at 30| | As at 30| | As at 31|
| | |September| | September| |March 2006|
| | | 2006| | 2005| | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | #'000| | #'000| | #'000|
+----------------------------+----+---------+--+----------+--+----------+
|Non-current assets | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Intangible assets | | 18,073 | | 9,248 | | 12,332|
+----------------------------+----+---------+--+----------+--+----------+
|Property, plant and | | 8,649 | | 8,189 | | 8,364|
|equipment | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Deferred taxation assets | | 13,037 | | 12,477 | | 15,171|
+----------------------------+----+---------+--+----------+--+----------+
| | | 39,759 | | 29,914 | | 35,867 |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Current assets | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Trade and other receivables | | 76,295 | | 60,721 | | 67,579 |
+----------------------------+----+---------+--+----------+--+----------+
|Corporation tax recoverable | | 1,365 | | 467 | | 426 |
+----------------------------+----+---------+--+----------+--+----------+
|Cash and cash equivalents | | 8,611 | | 7,375 | | 13,166 |
+----------------------------+----+---------+--+----------+--+----------+
| | | 86,271 | | 68,563 | | 81,171 |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Current liabilities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Trade and other payables | | (50,131)| | (31,696)| | (45,040)|
+----------------------------+----+---------+--+----------+--+----------+
|Current taxation liabilities| | (1,758)| | (1,805)| | (2,801)|
+----------------------------+----+---------+--+----------+--+----------+
|Financial liabilities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|- Borrowings | | (6,185)| | (3,487)| | (3,100)|
+----------------------------+----+---------+--+----------+--+----------+
|Provisions | | (2,956)| | (3,744)| | (3,272)|
+----------------------------+----+---------+--+----------+--+----------+
| | | (61,030)| | (40,732)| | (54,213)|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net current assets | | 25,241 | | 27,831| | 26,958 |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Non-current liabilities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Financial liabilities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|- Borrowings | | (6,710)| | (4,137)| | (3,852)|
+----------------------------+----+---------+--+----------+--+----------+
|Post employment benefits | 7 | (37,400)| | (44,670)| | (45,320)|
+----------------------------+----+---------+--+----------+--+----------+
|Provisions | | (1,104)| | - | | (1,072)|
+----------------------------+----+---------+--+----------+--+----------+
|Deferred taxation | | (3,436)| | (1,773)| | (3,009)|
|liabilities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Other non-current | | (1,338)| | (970)| | (1,621)|
|liabilities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | (49,988)| | (51,550)| | (54,874)|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net assets | 2 | 15,012 | | 6,195 | | 7,951|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Shareholders' equity | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Called up ordinary share | | 3,320 | | 3,233 | | 3,266|
|capital | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Share premium account | | 13,860 | | 11,740 | | 12,515|
+----------------------------+----+---------+--+----------+--+----------+
|Retained earnings | | (1,455)| | (9,865) | | (8,232)|
+----------------------------+----+---------+--+----------+--+----------+
|Other reserves | | (812) | | 877 | | 72|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Total shareholders' equity | | 14,913 | | 5,985 | | 7,621|
+----------------------------+----+---------+--+----------+--+----------+
|Minority interests in equity| | 99 | | 210 | | 330|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Total equity | 8 | 15,012 | | 6,195 | | 7,951|
+----------------------------+----+---------+--+----------+--+----------+
The Interim Statements on pages 5 to 17 were approved by the Board of Directors
on 27 November 2006 and were signed on its behalf by:
Simon Hamilton-Eddy
Financial Director
27 November 2006
Consolidated statement of cash flows (unaudited)
+----------------------------+----+---------+--+----------+--+----------+
| | | Six| |Six months| |Year ended|
| | | months| | ended 30| | 31 March|
| | | ended 30| | September| | 2006|
| | |September| | 2005| | |
| | | 2006| | | | |
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| |Note| #'000| | #'000| | #'000|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Cash flows from operating | | | | | | |
|activities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Cash (used) / generated from| 6 | (1,855)| | (600)| | 11,032 |
|operations | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Interest received | | 120 | | 278 | | 274 |
+----------------------------+----+---------+--+----------+--+----------+
|Interest paid | | (322)| | (250)| | (593)|
+----------------------------+----+---------+--+----------+--+----------+
|Taxation (paid) / received | | (2,103)| | 27 | | (443)|
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net cash (used) / generated | | (4,160)| | (545)| | 10,270 |
|from operating activities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Cash flows from investing | | | | | | |
|activities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Acquisition of subsidiaries | | (3,604)| | (1,705)| | (3,984)|
|(net of cash acquired) | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Proceeds from sale of | | 5 | | 22 | | 46 |
|property, plant and | | | | | | |
|equipment | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Purchase of minority | | (375)| | - | | - |
|interests | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Proceeds from sale of | | - | | - | | 4 |
|investment | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Purchase of property, plant | | (1,292)| | (436)| | (1,548)|
|and equipment | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net cash used in investing | | (5,266)| | (2,119)| | (5,482)|
|activities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Cash flows from financing | | | | | | |
|activities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net proceeds from issue of | | 156| | 39 | | 45 |
|ordinary share capital | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Finance lease principal | | (717)| | (534)| | (1,064)|
|payments | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net proceeds from issue of | | 7,613| | 1,486 | | 1,354 |
|new borrowings | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Repayment of borrowings | | (1,566)| | (543)| | (1,424)|
+----------------------------+----+---------+--+----------+--+----------+
|Dividends paid to | | (296)| | (178)| | (291)|
|shareholders | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net cash from financing | | 5,190| | 270 | | (1,380)|
|activities | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Effects of exchange rate | | (319)| | 210 | | 199 |
|fluctuations | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Net (decrease) / increase in| | (4,555)| | (2,184)| | 3,607 |
|cash and cash equivalents | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Cash and cash equivalents at| | 13,166| | 9,559 | | 9,559 |
|1 April | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
| | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
|Cash and cash equivalents at| | 8,611| | 7,375 | | 13,166 |
|period end | | | | | | |
+----------------------------+----+---------+--+----------+--+----------+
Notes to the Consolidated Financial Statements (unaudited)
1. General information
(a) Basis of preparation
The Interim Financial Statements which are abridged and unaudited are for the
six months ended 30 September 2006. They have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU, and
those parts of the Companies Act 1985 related to reporting under IFRS that the
Directors expect to be applicable as at 31 March 2007. IFRS are subject to
amendment or interpretation by the International Accounting Standards Board and
there is an ongoing process of review and endorsement by the EU. For these
reasons, it is possible that the information presented in this report may be
subject to change. The Group has chosen not to adopt IAS34, 'Interim Financial
Statements' in the preparation of these financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Although these estimates are based on management's best knowledge of the
amount, events or actions, actual results ultimately may differ from those
estimates.
The financial information does not constitute statutory accounts within the
meaning of section 240 of the Companies Act 1985. The financial information
relating to the year ended 31 March 2006 has been delivered to the Registrar of
Companies. The report of the auditors on these accounts was unqualified and did
not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
(b) Principal Accounting Policies
The Group's significant accounting policies under IFRS are available on the
corporate website www.hyderconsulting.com within the 'investors' section.
2. Segmental analysis by location of operations
Reflecting the Group's management and internal reporting structure, primary
segmental information is presented within the Financial Statements in respect of
geographical segments. The Group manages its business on a global basis with
operations in three main geographical regions, UK and Europe, Asia Pacific and
the Middle East. The UK is the home country of the parent. Inter-segment revenue
relates to contracts priced on an arm's length basis. The secondary reporting
format is by business segment. The Directors consider that there is only one
business segment, being engineering design, planning, environmental and
management consultancy. Therefore, the disclosures for the secondary segment
have already been given in these Financial Statements.
(a) Segment revenue
Six Six
Inter- months months Year
segment ended 30 ended 30 ended 31
revenue September September March
2006 2006 2006 2005 2006
#'000 #'000 #'000 #'000 #'000
UK / Europe
- Continuing
operations 49,990 (216) 49,774 44,683 93,116
- Acquisitions 2,336 - 2,336 - -
Asia Pacific
- Continuing
operations 25,952 (1,074) 24,878 20,398 42,843
- Acquisitions 385 - 385 - -
Middle East 25,776 (5,923) 19,853 15,862 35,355
104,439 (7,213) 97,226 80,943 171,314
(b) Segment results
Six months Six months Year
ended 30 ended 30 ended 31
September September March
2006 2005 2006
#'000 #'000 #'000
Regional operating profit
UK / Europe
- Continuing operations 2,607 2,468 6,527
- Acquisitions 743 - -
Asia Pacific
- Continuing operations 1,689 1,270 2,382
- Acquisitions 73 - -
Middle East 1,296 867 1,817
Corporate overheads (1,269) (1,052) (2,346)
5,139 3,553 8,380
Amortisation of business combinations
UK / Europe
- Continuing operations (179) (74) (196)
- Acquisitions (182) - -
Asia Pacific
- Continuing operations (192) (98) (303)
- Acquisitions (50) - -
Middle East (56) (85) (172)
Pension scheme curtailments 4,000 - -
Pension scheme settlements 787 - 3,711
Associated pension costs (490) - (1,412)
Singapore office closure - (200) (242)
costs
Group operating profit 8,777 3,096 9,766
The gain on pension curtailments is a result of a pensionable salary freeze of
up to five years for active members of the AGPS being implemented during the
period. The gain on pension settlements reflects further gains in relation to
deferred members transferring out of the Scheme during the period.
(c) Segment assets and liabilities
UK / Asia Middle Total
Europe Pacific East
#'000 #'000 #'000 #'000
As at 30 September 2006
Segment assets 69,301 31,031 25,698 126,030
Segment liabilities (73,129) (17,673) (20,216) (111,018)
(3,828) 13,358 5,482 15,012
As at 30 September 2005
Segment assets 57,959 22,406 18,112 98,477
Segment liabilities (71,135) (10,749) (10,398) (92,282)
(13,176) 11,657 7,714 6,195
As at 31 March 2006
Segment assets 67,823 26,939 22,276 117,038
Segment liabilities (76,701) (17,108) (15,278) (109,087)
(8,878) 9,831 6,998 7,951
(d) Other information
UK / Asia Middle Total
Europe Pacific East
#'000 #'000 #'000 #'000
As at 30 September 2006
Capital expenditure 970 349 365 1,684
Depreciation 616 257 108 981
Amortisation of software 298 80 37 415
Amortisation of business
combinations 361 242 56 659
As at 30 September 2005
Capital expenditure 369 1,827 152 2,348
Depreciation 528 166 74 768
Amortisation of software 340 46 52 438
Amortisation of business
combinations 74 98 85 257
As at 31 March 2006
Capital expenditure 1,063 1,987 283 3,333
Depreciation 1,048 431 127 1,606
Amortisation of software 720 128 105 953
Amortisation of business
combinations 196 303 172 671
3. Net finance costs
Six months Six months Year ended
ended 30 ended 30 31 March
September September 2006
2006 2005
#'000 #'000 #'000
Bank borrowings (206) (128) (281)
Interest rate swaps (29) (33) (66)
Finance leases (87) (89) (238)
Bond facilities - - (8)
Unwinding of discounts in
provisions (45) (51) (68)
Unwinding of discounts in
deferred and contingent
consideration (72) - (88)
Notional interest on pension
liabilities (334) (504) (952)
Interest payable and similar
charges (773) (805) (1,701)
Investment interest income 93 92 164
Interest income received on tax
refunds 27 186 110
Interest receivable 120 278 274
Net finance costs (653) (527) (1,427)
4. Earnings per share
(a) Number of shares
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2006 2005 2006
Weighted average number of shares
in issue 32,962,749 32,334,217 32,338,690
Effect of dilution
Share options 814,082 636,117 715,776
Weighted average shares (diluted)33,776,831 32,970,334 33,054,466
(b) Earnings used in the calculation of earnings per share
Six months Six months Year ended
ended 30 ended 30 31 March
September September 2006
2006 2005
#'000 #'000 #'000
Earnings used for the calculation 6,449 2,344 6,932
of basic earnings per share
Less pension settlements gain and
associated costs (4,297) - (2,299)
Add back tax on pension
settlements gain and costs at 30% 1,289 - 690
Add back Singapore office closure
costs - 200 242
Add back amortisation of business
combinations 659 257 671
Adjusted earnings 4,100 2,801 6,236
(c) Earnings per share
Six months Six months Year
ended 30 ended 30 ended 31
September September March
2006 2005 2006
Pence Pence Pence
Basic earnings per share 19.56 7.25 21.44
Pension settlements gain and
associated costs (13.03) - (7.11)
Tax on pension settlements and
costs at 30% 3.91 - 2.13
Singapore office closure costs - 0.62 0.75
Amortisation of business
combinations 2.00 0.80 2.07
Adjusted basic earnings per share 12.44 8.67 19.28
Six months Six months Year
ended 30 ended 30 ended 31
September September March
2006 2005 2006
Pence Pence Pence
Diluted earnings per share 19.09 7.11 20.97
Pension settlements gain and
associated costs (12.72) - (6.96)
Tax on pension settlements and
costs at 30% 3.82 - 2.09
Singapore office closure costs - 0.61 0.73
Amortisation of business
combinations 1.95 0.78 2.03
Adjusted diluted earnings per
share 12.14 8.50 18.86
5. Dividends
Six months Six months Year
ended 30 ended 30 ended 31
September September March
2006 2005 2006
#'000 #'000 #'000
Dividends charged to equity in the
period 296 178 291
Equity - Ordinary 10p shares
Final dividend paid 0.90 0.55 0.55
Interim dividend paid - - 0.35
The Directors are proposing an interim dividend of 0.60p per share (2005:
0.35p). In accordance with IFRS the interim dividend has not been recognised in
the Interim Statements but will be paid on 8 January 2007 to shareholders on the
register as at 8 December 2006.
6. Notes to the Cash Flow Statement
(a) Reconciliation of operating profit to net cash flows from operating
activities
Six months Six months Year
ended 30 ended 30 ended 31
September September March
2006 2005 2006
#'000 #'000 #'000
Profit for the financial period 6,563 2,406 7,109
Adjustments for:
Taxation 1,561 163 1,230
Depreciation 981 768 1,606
(Profit) / loss on disposal of
property, plant and equipment (3) (17) 7
Amortisation of software 415 438 953
Amortisation of business
combinations 659 257 671
Interest receivable (120) (278) (274)
Interest payable and similar
charges 773 805 1,701
Amendments to fair value of
consideration - - (21)
Share option costs 105 62 114
Decrease in provisions (299) (247) (360)
Defined benefit scheme charges 1,754 801 1,649
Pension scheme curtailments (4,000) - -
Pension scheme settlements (787) - (3,711)
Changes in working capital
(excluding effects of
acquisitions):
Increase in trade and other
receivables (7,426) (6,631) (12,015)
Increase in trade and other
payables 2,164 2,160 15,037
Contributions to defined benefit
schemes (4,195) (1,287) (2,664)
Cash (used) / generated from
operations (1,855) (600) 11,032
(b) Reconciliation of movement in net funds / (debt)
At 30 At 1 Cash Acquisition Non cash Exchange At 30
Sept April flow (excluding movement movement Sept
2005 2006 cash and 2006
overdrafts)
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Cash at bank 7,375 13,166 (4,236) - - (319) 8,611
Debt due
within 1
year (2,535) (1,955) (2,795) - (299) 16 (5,033)
Debt due
after 1 year (1,910) (1,839) (3,252) - 299 30 (4,762)
Finance
leases due
within 1
year (952) (1,145) 600 (6) (609) 8 (1,152)
Finance
leases due
after 1 year (2,227) (2,013) 117 - (76) 24 (1,948)
(7,624) (6,952) (5,330) (6) (685) 78 (12,895)
(249) 6,214 (9,566) (6) (685) (241) (4,284)
7. Pension commitments
Employees of the Group participate in a number of pension schemes both in the UK
and overseas. The principal scheme in the UK is the Acer Group Pension Scheme
(AGPS) which is a defined benefit scheme. The amounts included in the balance
sheet for post employment benefits are as follows:
As at 30 As at 30 As at 31
September September March
2006 2005 2006
#'000 #'000 #'000
AGPS (34,217) (42,100) (42,285)
Unfunded annuitants scheme (781) (784) (799)
Overseas schemes (2,402) (1,786) (2,236)
Post employment benefits (37,400) (44,670) (45,320)
AGPS
The Group has further increased its contributions to the AGPS, contributing
#3.9m in the period, including a #2m special contribution funded through an
unsecured loan facility, and #0.7m in lieu of member contributions, as a result
of the scheme becoming non contributory through a salary sacrifice scheme, which
was offset by an increase in the current service cost. During the period a
pensionable salary freeze of up to five years was implemented for active members
of the AGPS generating an immediate reduction in the deficit as reported under
IAS19 of #4.0m. In addition, further deferred members have accepted the
Company's offer to transfer out their liabilities from the AGPS resulting in an
additional savings against the deficit of #0.8m being recognised in the period.
As at 30 As at 30 As at 31
September September March
2006 2005 2006
AGPS Principal assumptions: % % %
Rate of increase in salaries 2.90 2.91 2.90
Rate of increase to pensions in
payment:
- Index linked pensions with max 3%
per annum increases 2.85 2.91 2.85
- Other index linked pensions 2.90 2.91 2.90
Discount rate 5.10 5.20 5.00
Inflation assumptions 2.90 2.91 2.90
Expected rates of return on scheme
assets:
Equities 8.00 8.00 8.00
Bonds 5.20 6.20 5.20
Other 4.50 4.75 4.50
The amounts included in the balance
sheet for the AGPS are as follows: #'000 #'000 #'000
At 1 April (42,285) (36,598) (36,598)
Current service costs (1,201) (497) (945)
Notional interest on pension
liability (314) (483) (931)
Contributions by employers 3,939 1,074 2,226
Actuarial gain / (loss) 857 (5,596) (9,748)
Curtailments 4,000 - -
Settlements 787 - 3,711
Deficit in AGPS (34,217) (42,100) (42,285)
Related deferred tax asset 8,579 10,087 10,177
Net pension deficit (25,638) (32,013) (32,108)
8. Post balance sheet event
On 5 October 2006 the Company raised approximately #7.6m net of expenses by way
of a cash placing of 2,569,255 new ordinary shares of 10 pence each at 305 pence
per share. Of the total shares placed 2,508,360 have been placed with
institutional clients and 60,895 have been placed with Hill Samuel Offshore
Trust Company Limited, the trustee of the Hyder Consulting PLC Employee Benefit
Trust. These shares were acquired in order to be able to partly satisfy awards
made under the Hyder Consulting PLC 2006 Long Term Incentive Plan. The #7.6m
raised has the effect of increasing the Group's total equity by that amount to
#22.6m (2005: #6.2m).
9. Further information
Copies of the Interim Statement have been sent to shareholders. Further copies
are available from the Company's registered office at 29 Bressenden Place,
London SW1E 5DZ. In addition, an electronic version of the Interim Statement and
31 March 2006 financial statements can be viewed on the corporate web site:
www.hyderconsulting.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Hyder Consulting (LSE:HYC)
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