TIDMHYC
RNS Number : 2321F
Hyder Consulting PLC
13 June 2012
Hyder Consulting PLC
13 June 2012
Hyder Consulting PLC (HYC.L)
Final Results Announcement
Annual results for the year ended 31 March 2012
Strong results; confident for the year ahead
Hyder Consulting, the multi-national design and engineering
consultancy, today announces its results.
Business highlights
-- Order book up 16% to GBP363m
-- Revenues of GBP277.3m (2011: GBP290.3m)
-- Adjusted operating profit* of GBP21.0m (2011: GBP20.3m)
-- Adjusted pre tax profit* of GBP21.6m (2011: GBP20.3m)
-- Net operating margins of 8.7% (2011: 8.1%)
-- Adjusted diluted earnings per share* of 44.34p (2011: 43.34p)
-- Full year dividend up 16% to 9.00p per share (2011: 7.75p)
-- Net cash balances of GBP15.6m (2011: GBP13.1m)
Statutory reporting
-- Operating profit of GBP17.1m (2011: GBP18.2m)
-- Pre tax profit of GBP17.6m (2011: 18.2m)
-- Diluted earnings per share of 35.96p (2011: 38.63p)
*Adjusted numbers exclude exceptional items, acquisition costs
and amortisation of acquired intangibles
Commenting on the results Sir Alan Thomas, Chairman, said:
"The large proportion of our revenues and profits earned
overseas has enabled the group to perform well in mixed market
conditions. Hyder's strong order book, balance sheet and
prospective opportunities give us confidence for the year
ahead."
Contacts:
Hyder Consulting PLC
Ivor Catto, Chief Executive Tel: +44 (0)20 7904
9011
Russell Down, Group Finance Director Tel: +44 (0)20 7904
9020
Citigate Dewe Rogerson
Ginny Pulbrook Tel: +44 (0)20 7282
2945
There will be a results presentation for stockbroking analysts
today at 9.00am, to be held at Citigate Dewe Rogerson, 3 London
Wall Buildings, London Wall, EC2M 5SY
Chairman's Statement
I am pleased to report another good set of results in what have
been mixed market conditions.
Results
The order book increased substantially to GBP362.8m (2011:
GBP312.3m) following a number of large and important contract
awards in the second half year. Approximately 60% of the current
year's forecast revenue is in the order book.
Revenue amounted to GBP277.3m (2011: GBP290.3m); net revenue,
after deduction of sub-consultant costs, was GBP241.8m (2011:
GBP251.4m).
Adjusted operating profit was GBP21.0m (2011: GBP20.3m), after
absorbing GBP1.5m of redundancy costs (2011: GBP2.9m), and after
foreign currency translation gains of GBP0.9m. The adjusted net
operating profit margin grew to 8.7% (2011: 8.1%). During the year
exceptional costs of GBP1.5m were incurred (2011: GBPNil) in
relation to (i) vacant properties in the UK (GBP1.3m) and (ii) the
closure of the UK defined benefit scheme to future accrual
(GBP0.2m). Operating profit was GBP17.1m (2011: GBP18.2m).
Adjusted profit before tax rose to GBP21.6m (2011: GBP20.3m).
Profit before tax was GBP17.6m (2011: GBP18.2m).
Adjusted diluted earnings per share increased to 44.34p (2011:
43.34p). Diluted earnings per share were 35.96p (2011: 38.63p).
Funding
At 31 March 2012 the group had net cash of GBP15.6m (2011:
GBP13.1m). Cash balances at the year end amounted to GBP23.2m with
unutilised facilities of GBP45.8m.
Operating cash flow was GBP15.6m (2011: GBP19.2m), after making
contributions of GBP3.9m towards the pension deficit (2011:
GBP3.0m). Cash conversion for the year was 76% before accounting
for these contributions, reflecting the greater working capital
requirements of the Middle East operations where our order book has
grown significantly.
The UK pension scheme was closed to future accrual on 30 April
2011. At 31 March 2012 the deficit had reduced to GBP16.3m (2011:
GBP17.3m).
We look to expand both organically and through strategic
acquisitions which will enhance our professional expertise and
competitiveness in core markets and sectors. We completed three
acquisitions during the year at a net cost of GBP2.5m; ESR
Technology, a specialist energy, water and space consultant
operating in the UK and Abu Dhabi; SAK infrastructure consultants
in Saudi Arabia; and GW Engineers, a resources consultancy in
Australia. All three are performing well.
Dividend
In recognition of the group's financial performance, the board
proposes an increase in the final dividend to 7.00p per share
(2011: 6.00p). The full year dividend amounts to 9.00p per share
(2011: 7.75p), an increase of 16.1% this year and a doubling over
the last three years. The full year dividend is covered 4.9 times
by adjusted diluted earnings per share (2011: 5.6 times).
Operating highlights
Asia-Pacific.
Regional revenues were GBP112.2m (2011: GBP114.0m); adjusted
operating profits were GBP14.7m (2011: GBP14.4m).
In Australia, our transport division performed well in the
second half. We have secured significant new highway and rail
contracts, and continued to work successfully on a number of
Alliance contracts. Our commercial property division completed work
on the Sydney Centrepoint development which was opened during the
year; market conditions remain subdued and competitive. We have
grown our resources business organically and acquired a local
resources consultancy, GW Engineers. We are confident of good
growth in this market in the coming year. In China and Vietnam we
have invested in growing our geographical and market presence,
including the opening of a new office in Chongqing, China.
Middle East.
Revenue was GBP63.8m (2011: GBP65.5m); adjusted operating
profits increased by 50.0% to GBP3.9m (2011: GBP2.6m).
Results have improved as work begins on new contracts and our
investment in key clients comes to fruition. In Qatar we have
secured important projects with Ashghal, Kahramaa and Qatar Metro
as part of the country's 2030 infrastructure development goals and
in preparation for the 2022 FIFA World Cup. In Saudi Arabia we have
recently completed the acquisition of SAK, building our market
presence and increasing our exposure to the growing infrastructure
market there. We have already started benefiting from this
increased presence in the Kingdom through the recent award of a
three year advisory commission from Jeddah Municipality.Elsewherewe
have undertaken major utilities projects including Step Tunnel in
Abu Dhabi and Muharraq waste water treatment works in Bahrain.
Europe
Revenue was GBP101.2m (2011: GBP110.8m); adjusted operating
profits were GBP5.5m (2011: GBP6.6m).
In the UK we have grown our rail business in a competitive
market and have been appointed designers on London Bridge station,
undertaken further work for Crossrail, and implemented platform
extension works for Network Rail. The highways market has been
particularly challenging with lower workload which affected
utilisation rates. More recently we have won a number of projects
with the Highways Agency under framework agreements. Results in the
utilities sector have improved as workload has built up during the
AMP5 programme. In Germany results are ahead of last year, with
Ingenieur Consult, and our industrial property business performing
ahead of expectations.
People
We now employ 3,774 people across our regions, an increase of
2.1% on the previous year. We have increased headcount in the
Middle East by 8.2% as our workload there has grown, offset by a
reduction in numbers in the challenging UK market.
After a period of restructuring we have given particular
attention to the training and development of our people and, where
practical, provide them with opportunities to gain experience in
different geographies and sectors, thereby strengthening the skills
base and widening opportunity.
Outlook
The large proportion of our revenues and profits earned overseas
has enabled the group to perform well in mixed market conditions.
Hyder's strong order book, balance sheet and prospective
opportunities give us confidence for the year ahead.
I would like to express our appreciation to our clients for
their confidence in us and to thank every member of Hyder's staff
for their efforts and for their contribution to another year of
strong results.
Sir Alan Thomas
Chairman
13 June 2012
Business review
Hyder is a leading multinational design and engineering
consultancy with a 150 year heritage. Whilst our headquarters is in
London, our business is managed through three primary regions:
Asia-Pacific (Australia and Asia), the Middle East, and Europe (UK
and Germany).
Asia-Pacific
2012 2011
------------------------- -------------------------
Australia Asia Total Australia Asia Total
Revenue (GBPm) 90.2 22.1 112.3 91.8 22.2 114.0
Adjusted operating
profit (GBPm) 13.8 0.9 14.7 13.9 0.5 14.4
Margin 15.3% 4.1% 13.1% 15.1% 2.3% 12.6%
Order book (GBPm) 58.1 34.5 92.6 47.7 29.7 77.4
People 719 457 1,176 733 433 1,166
Regional revenues were GBP112.3m (2011: GBP114.0m) and adjusted
operating profit GBP14.7m (2011: GBP14.4m), although the latter was
5.4% lower on a constant currency basis after absorbing GBP0.5m of
redundancy costs.
Australia
Our results improved in the second half year following the award
of infrastructure projects which had previously been delayed as a
result of state elections and the effect of the Queensland
flooding.
Our transport division has performed particularly well in the
second half following major project wins including two sections of
the Pacific Highway upgrade; from Titenbar to Ewingsdale, and
Oxsley to Kempsey, and the Southern Expressway in Adelaide. We have
continued to work on Alliance contracts for the M80 motorway in
Victoria, and the Hunter Expressway in New South Wales which have
again contributed to the good results. The Westgate Freeway Upgrade
Alliance in Melbourne, completed in the last financial year, was
awarded the Australian construction achievement award. We have
invested in developing our rail business and recently started work
on a significant regional rail link project in Melbourne.
In the property sector we successfully completed our work on the
Eclipse Tower and Centrepoint Tower in Sydney, and the Hilton Hotel
on the Gold Coast. We have secured new work on the Eastland's
shopping centre in Melbourne and the Fiona Stanley hospital in
Perth. Though the private property sector remains subdued, the
division is working with clients in the resources sector,
completing several townships and mining camps for Alpha Coal, among
others.
Our utilities business has grown and we are now working on
projects across Australia. We have won important new projects in
the Queensland coal seam gas sector.
Following recent project awards our forward order book has
increased to GBP58.1m, up 21.8% from GBP47.7m the previous year.
This combined with the recent acquisition of GW Engineers in the
resources sector positions us well for the year ahead.
Asia
In Hong Kong, we have secured further Greening Masterplan
projects in the New Territories, and a framework contract for the
Hong Kong housing association. In mainland China our revenue has
grown, and we have invested in growing our market presence opening
a new office in Chongqing during the year.
Major projects
-- Regional Rail Link package E, Australia
-- Southern Expressway, Adelaide, Australia
-- Pacific Highway Upgrade, Oxley highway to Kempsey, Australia
-- Titenbar to Ewingsdale Upgrade, Australia
-- Kenya North coal seam gas projects, Australia
-- Eastland's shopping centre, Melbourne, Australia
-- Fiona Stanley hospital, Perth, Australia
-- Alpha Coal village and rail camps design, Australia
-- Greening Masterplans, New Territories, Hong Kong
-- Hong Kong Housing Authority slope maintenance term consultancy, Hong Kong
Middle East
2012 2011
------ ------
Revenue (GBPm) 63.8 65.5
Adjusted operating
profit (GBPm) 3.9 2.6
Margin 6.1% 4.0%
Order book
(GBPm) 135.2 100.8
People 1,110 1,026
Regional revenues were GBP63.8m (2011: GBP65.5m), up 0.3% on a
constant currency basis. Adjusted operating profits increased 50.0%
to GBP3.9m (2011: GBP2.6m), after absorbing GBP0.3m of redundancy
costs.
We have opened new and larger offices in Qatar and Saudi Arabia,
which are investing heavily in new infrastructure programmes for
our key clients. This investment temporarily suppressed margins,
but led to improved profitability in the second half, and our order
book increased by 34.1% to GBP135.2m (2011: GBP100.8m). In the
second half of the year, we were awarded a number of large new
contracts in Qatar with Ashghal, to undertake all infrastructure
design and supervision services for a 75 square kilometre area
north of Doha over the next five years, and with Kahramaa, to
design a number of mega reservoirs to increase the security of
water supply. In Saudi Arabia, following the recent acquisition of
SAK, we have recently secured a framework contract with Jeddah
Municipality to provide engineering consultancy services for the
next three years. The acquisition is integrating well and providing
new opportunities for the group in the Kingdom.
We have grown our rail expertise in the region during the year
and particularly in Qatar as the country develops new schemes in
advance of the 2022 FIFA World Cup. We are currently working on a
number of tender design packages for Qatar Metro.
Working capital in the region has increased slightly over the
year due to slower payment terms with public sector clients on new
contracts in Qatar and Saudi Arabia. We have received GBP7.9m from
a client in Qatar subsequent to the year end, and made good
progress in resolving delayed contract settlements in the
region.
Major projects
-- Ashghal contract 2, Qatar
-- Kahramaa mega reservoirs, Qatar
-- Qatar Metro tender design, Qatar
-- Qatar Integrated Rail Programme, Qatar
-- Bright Start Resort, Dubai
-- Hydraulic network modelling, Abu Dhabi
-- Jeddah municipality engineering consultancy services framework, Saudi Arabia
Europe
2012 2011
------------------------ ------------------------
UK Germany Total UK Germany Total
Revenue (GBPm) 75.0 26.2 101.2 87.2 23.6 110.8
Adjusted operating
profit (GBPm) 4.0 1.5 5.5 5.5 1.1 6.6
Margin 5.3% 5.7% 5.4% 6.3% 4.7% 6.0%
Order book (GBPm) 106.2 28.8 135.0 98.9 35.2 134.1
People 1,084 404 1,488 1,139 366 1,505
Regional revenues were 8.7% lower at GBP101.2m (2011:
GBP110.8m). Adjusted operating profits were GBP5.5m (2011:
GBP6.6m), 16.7% lower reflecting the challenging market conditions
in the UK.
UK
In the UK, we have performed well in what has been a competitive
rail market, winning new contracts with Crossrail, TfL, Network
Rail, and for London Bridge station with Costain. In the highways
sector whilst we had secured new frameworks with the Highways
Agency at the end of the prior year, workload was slow in the first
half which affected utilisation rates. Later in the year we won a
number of commissions under framework agreements including design
works on the managed motorway delivery hub and site assurance
works.
We have been appointed sole provider of consultancy services to
British Waterways under a framework agreement. This supplements our
work in the water sector, notably on AMP5 frameworks with South
West Water, Thames Water and Severn Trent Water. In addition, we
have continued to support Thames Water in damage assessment and
mitigation measures relating to those assets critical to the supply
of energy and water-related utilities which will be affected by
Crossrail's tunnels and stations, and by the proposed Thames
Tunnel. We are continuing to support major Thames Tideway upgrade
projects at Crossness and Beckton sewage treatment works. Our
profile in the utilities sector continues to grow as a result of
these important project awards.
In the property and environment sectors, the market has been
subdued, although we have been appointed to frameworks in both
existing and new market segments, including with the National Grid.
Planning applications were approved on substantial Infrastructure
Planning Commission and urban regeneration schemes, which will
provide good future workload.
Germany
Operating profits improved, and we carried out assignments for a
number of Hyder's key accounts including Siemens, BMW, Hochtief and
Deutsche Bahn, the latter on the ICE high speed rail, section 21.
Our international presence is giving us opportunities to work with
these clients outside Germany, for example in Qatar and in China,
and in the rail sector more widely. Our property division performed
particularly well during the year and Ingenieur Consult, which we
acquired last year, was integrated successfully and performed ahead
of our expectations.
Major projects secured
-- London Bridge station, UK
-- British Waterways engineering term contract, UK
-- Sussex train lengthening package 3, UK
-- Managed motorway delivery hub, UK
-- Traffic management technology framework, UK
-- Crossrail Thames Water delivery partner, UK
-- ICE high speed rail, section 21, Germany
Financial review
The group's geographic diversity has enabled us to report
another good set of financial results, in what have been mixed
market conditions. Our Australian business has continued to perform
well and benefited from the strength of the Australian dollar. In
the Middle East our results have improved as new projects have been
secured, following our investments in Qatar and Saudi Arabia. The
UK, and particularly the highways sector has been challenging,
however our results have held up well and we are now well
positioned for the year ahead.
Cash balances have improved in spite of the current liquidity
pressures, and more onerous payment terms that exist with public
sector clients in the Middle East, where we are growing. At the
year end our net cash balances were GBP15.6m, up from GBP13.1m the
year before.
Revenue and profit
Revenue for the year was GBP277.3m (2011: GBP290.3m), 4.5%
lower. Net revenue, after deduction of sub-consultant costs, was
3.8% lower at GBP241.8m (2011: GBP251.4m). On a constant currency
basis revenue and net revenue decreased by 6.1% and 5.5%
respectively. The reduction in revenue is principally due to the
challenging market conditions in the UK, and particularly the
highways market.
In presenting the group's adjusted profit below, amortisation of
acquired assets, acquisition costs and exceptional items have been
excluded as the directors believe that this assists with
understanding the underlying performance of the group:
2012 2011 Change
%
GBP'000 GBP'000
-------- -------- --------
Operating profit 17,070 18,156 (6.0%)
Add back :
Amortisation on acquired intangibles
and acquisition costs 2,462 2,147 14.7%
Exceptional items 1,499 - -
-------- -------- --------
Adjusted operating profit 21,031 20,303 3.6%
Net finance costs (353) (443) (20.3%)
Net pension interest income 929 466 99.4%
-------- -------- --------
Adjusted profit before taxation 21,607 20,326 6.3%
======== ======== ========
Adjusted operating profit increased 3.6% to GBP21.0m (2011:
GBP20.3m). The adjusted operating margin on net revenue increased
to 8.7% from 8.1%.
Redundancy costs of GBP1.5m (2011: GBP2.9m) have been absorbed
within adjusted operating profit following actions to more closely
align our resource levels with the mix of projected workload. The
redundancy costs were primarily incurred in the UK (GBP0.6m),
Australia (GBP0.5m), and the Middle East (GBP0.3m). Foreign
exchange gains of GBP0.9m have been recognised within operating
profit from translation of overseas profits, largely in
Australia.
Adjusted profit before taxation increased 6.3% to GBP21.6m
(2011: GBP20.3m).
Exceptional items
Exceptional items incurred in the current year relate to UK
vacant properties (GBP1.3m) and costs related to the closure of the
UK defined benefit pension scheme to future accrual (GBP0.2m). The
vacant property costs in the UK comprise rental costs for the
remaining life of the lease where due to structural changes the
offices are no longer required for future use. The exceptional cost
taken in the current year will lead to overhead savings in future
years. In order to reduce the rate of growth of the UK defined
benefit scheme's liabilities, and the volatility of the deficit,
the scheme was closed to future benefit accrual on 30 April 2011.
This resulted in closure costs of GBP0.2m being incurred. There
were no exceptional items in the prior year.
Taxation
The taxation charge for the year was GBP3.7m (2011: GBP3.3m),
equating to a tax rate of 21.1% (2011: 18.1%). The tax rate on
adjusted profit before tax was 20.5% (2011: 17.9%).
The increase in the tax rate is a result of a change in the mix
of the group's profits, with more of the group's profit being
earned in higher rate jurisdictions. The current rate is lower than
the UK tax of 26% reflecting research and development tax credits
in both Australia and the UK, and lower tax rates in the Middle
East.
Earnings per share
Basic earnings per share amounted to 36.48p (2011: 39.29p);
diluted earnings per share was 35.96p (2011: 38.63p). The weighted
average number of ordinary shares during the year was 38.2m (2011:
37.9m), reflecting the shares issued to satisfy options exercised
during the year offset by shares purchased by the company's
employee benefit trust. After adjusting for the amortisation of
acquired intangibles, acquisition costs and exceptional items,
fully diluted earnings per share increased by 2.3% to 44.34p (2011:
43.34p).
Dividends
In recognition of the group's financial performance, the board
has proposed a 16.1% increase in the full year dividend to 9.0p
(2011: 7.75p). A final dividend of 7.0p per share (2011: 6.0p) is
proposed for the year to 31 March 2012 which, if approved by the
shareholders, will be paid on 10 August 2012 to shareholders on the
register at 13 July 2012. The full year dividend is covered 4.9
times by adjusted fully diluted earnings per share (2011: 5.6
times).
Acquisitions
In the current financial year the group made three acquisitions
for cash consideration of GBP3.1m; ESR, a specialist energy, water
and space consultant operating in the UK and Abu Dhabi; SAK
infrastructure consultants in Saudi Arabia (GBP1.1m); and GW
Engineers, a resources consultancy in Australia (GBP2.0m). Further
contingent consideration of GBP2.6m may be payable in relation to
the acquisition of GW Engineers dependent on business
performance.
The charge for amortisation of acquired intangibles was GBP1.8m
(2011: GBP2.1m). In the current year GBP0.7m (2011: GBPNil) of
costs were incurred in relation to legal and due diligence fees on
completed acquisitions.
Goodwill on acquired businesses is carried forward at cost, and
reviewed annually for impairment. There has been no impairment to
the carrying value of goodwill this financial year and details of
the assumptions used in the calculations are shown in the Annual
Report.
Capital structure
During the year the company issued 94,250 10p ordinary shares in
relation to exercised share options. As at 31 March 2012 there were
38,634,530 (2011: 38,540,280) fully paid 10p ordinary shares in
issue.
During the year to 31 March 2012 shareholders' equity increased
by 6.8% to GBP86.9m (2011: GBP81.4m) primarily reflecting retained
earnings for the year.
Shareholder return
At 31 March 2012 the net asset value per share was 225p (2011:
211p). The closing share price on 31 March 2012 was 414p per share
(2011: 362p); market capitalisation was GBP159.9m (2011:
GBP139.5m).
Financing
At the year end the group had net cash balances of GBP15.6m
(2011: GBP13.1m). Cash balances increased to GBP23.2m (2011:
GBP22.2m) and total borrowings reduced to GBP7.6m (2011: GBP9.1m)
providing substantial headroom against available facilities.
The group's principal committed banking facilities totalling
GBP47.6m are with HSBC and Barclays in the UK which include
revolving credit facilities of GBP22.5m and GBP18.0m expiring in
December 2015 and February 2013 respectively, and other long term
facilities of GBP7.1m. In addition the group has access to a number
of overseas and on demand facilities of a further GBP5.3m, and
leasing facilities of GBP0.5m. Total facilities amount to GBP53.4m,
all of which are unsecured.
Under the terms of its principal banking facilities the group is
required to operate within certain financial covenants. In line
with market practice these are related to net debt, EBITDA, debt
service costs and interest cover. The group had significant
headroom within all of these covenants throughout the year.
The net finance costs of the group, before pension interest
income, amounted to GBP0.4m (2011: GBP0.4m). Pension interest
income amounted to GBP0.9m (2011: GBP0.5m) and is discussed in
further detail below.
Cash flow
Net cash was GBP15.6m at 31 March 2012 (2011: GBP13.1m) the
movement is shown below:
2012 2011
GBPm GBPm
------ ------ ------ ------
Net cash 1 April 13.1 3.6
EBITDA 25.8 25.5
Working capital movements (5.9) (2.6)
Other movements (0.4) (0.7)
Cash from operations before pension
deficit contributions 19.5 22.2
Pension deficit contributions (3.9) (3.0)
------ ------ ------ ------
Cash from operations 15.6 19.2
Interest (0.5) (0.3)
Tax (4.5) (4.5)
Acquisitions (2.5) (0.4)
Capital expenditure (net) (2.2) (2.2)
Dividend (3.0) (2.4)
FX / Other (0.4) 0.1
------ ------
Net cash 31 March 15.6 13.1
====== ======
Cash generated from operations before pension deficit
contributions of GBP3.9m (2011: GBP3.0m) was GBP19.5m (2011:
GBP22.2m). The proportion of EBITDA converted into operating cash
flow in the year was 76% (2011: 87%).
The working capital outflow amounted to GBP5.9m during the year
(2011: GBP2.6m), principally due to settlement of prior year
payables, accruals and liabilities acquired. Underlying trade
debtor and work in progress balances reduced by GBP4.0m, before
inclusion of acquired balances of GBP1.8m, largely in the UK and
Europe offset by an increase in the Middle East due to slow
contract settlements. We have received GBP7.9m from a client in
Qatar subsequent to the year end, and made good progress in
resolving delayed contract settlements in the region.
Tax payments in the year, principally in Australia, amounted to
GBP4.5m (2011: GBP4.5m). Cash consideration paid for acquisitions
was GBP3.1m (2011: GBP1.1m) with cash balances acquired of GBP0.6m
(2011: GBP0.7m).
Post-employment benefits
The group operates both defined benefit and defined contribution
schemes as detailed in the Annual Report.
The principal defined benefit scheme is the AGPS, for which the
sponsoring employer is Hyder Consulting (UK) Limited. There are no
group guarantees in place in relation to the AGPS. Following a
consultation period with members the scheme's trustees consented to
close the scheme to future accrual with effect from 30 April
2011.
The gross deficit in the scheme at 31 March 2012 reduced to
GBP16.3m (2011: GBP17.3m); the deficit net of deferred tax reduced
to GBP13.1m (2011: GBP13.5m). The reduction in the deficit reflects
better than expected asset returns and deficit contributions of
GBP3.9m in the year, offset by actuarial losses due to reduced
discount rates. A triennial valuation of the scheme as at 1 April
2011 has recently been concluded. Fixed contributions for the
current year will amount to GBP1.8m; in the next two years fixed
contributions increase by GBP0.1m per annum; increased by RPI plus
1% thereafter. Contingent contributions may become payable annually
up to a cap of GBP0.7m, dependent on the cash performance of the UK
business.
The main assumptions in valuing the deficit are disclosed in
note 7. The sensitivities of the AGPS scheme liabilities to changes
in these assumptions are shown below:
Assumption Change in assumption Indicative effect on scheme
liabilities
------------------ --------------------- ----------------------------
Increase / decrease Decrease / increase by
Discount rate by 0.5% 9%
Increase / decrease Increase / decrease by
Rate of inflation by 0.5% 6%
Longevity Increase by 1 year Increase by 2-3%
The group also operates certain overseas post employment benefit
schemes, which principally relate to benefits payable to staff when
they leave in the Middle East which have been actuarially valued
for the first time this year. Net liabilities in relation to
overseas and annuitants schemes increased to GBP7.9m (2011:
GBP6.7m) as a result of ongoing service costs, a reduction in
discount rates and the acquisition of SAK during the year.
The net finance income for pension schemes amounted to GBP0.9m
in the year (2011: GBP0.5m). In 2013 this is anticipated to reduce
to GBP0.7m. The application of the proposed changes to IAS 19,
'Employee Benefits', from 2014 will affect the pension financing
charge; if the change were applied in 2013 this would result in a
pro-forma pension financing charge of approximately GBP1.0m.
Consolidated income statement for the year ended 31 March
2012
2012 2011
Note GBP'000 GBP'000
---------- ----------
Revenue 2(a) 277,309 290,297
Net operating costs (260,239) (272,141)
---------- ----------
Operating profit 2(b) 17,070 18,156
---------- ----------
Finance costs 3 (847) (910)
Finance income 3 1,423 933
---------- ----------
Profit before taxation 17,646 18,179
---------- ----------
Analysed as:
Adjusted profit before taxation 21,607 20,326
Amortisation of acquired intangibles and
acquisition costs (2,462) (2,147)
Exceptional items (1,499) -
Profit before taxation 17,646 18,179
---------- ----------
Taxation (3,723) (3,297)
---------- ----------
Profit for the year 13,923 14,882
========== ==========
Profit/(loss) attributable to:
Equity holders of the parent 13,933 14,882
Non-controlling interests (10) -
---------- ----------
13,923 14,882
========== ==========
Earnings per share (p)
Basic 4 36.48 39.29
Diluted 4 35.96 38.63
Adjusted basic 4 44.99 44.08
Adjusted diluted 4 44.34 43.34
------------------------------------------ ----- ---------- ----------
Consolidated statement of comprehensive income for the year
ended 31 March 2012
2012 2011
GBP'000 GBP'000
-------- --------
Profit for the year 13,923 14,882
Other comprehensive (expense)/income for
the year
Foreign exchange movements (1,342) (1,795)
Cash flow hedges (48) 133
Actuarial (loss)/gain on defined benefit
pension schemes (4,507) 2,705
-------- --------
Total other comprehensive (expense)/income
for the year (5,897) 1,043
-------- --------
Total comprehensive income for the year 8,026 15,925
======== ========
Attributable to:
Equity holders of the parent 8,034 15,925
Non-controlling interests (8) -
-------- --------
8,026 15,925
======== ========
All balances are stated net of taxation.
Consolidated statement of changes in equity for the year ended
31 March 2012
Share Share Retained Other Total Non-controlling Total
capital premium earnings reserves interest
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- --------- --------- ---------- ---------- -------- ---------------- --------
At 1 April 2010 3,837 29,281 21,059 13,442 67,619 - 67,619
Profit for the year - - 14,882 - 14,882 - 14,882
Foreign exchange movements - - - (1,795) (1,795) - (1,795)
Cash flow hedges - - - 133 133 - 133
Actuarial gain on post employment
benefit schemes - - 2,705 - 2,705 - 2,705
New shares issued 17 - - - 17 - 17
Premium on new shares
issued - 308 - - 308 - 308
Dividends paid 5 - - (2,358) - (2,358) - (2,358)
Share based payments - - 414 - 414 - 414
Employee trust purchase
of own shares - - - (559) (559) - (559)
Transfer of own shares
from EBT - - (96) 96 - - -
Non-controlling interest - - - - - - -
acquired
--------- --------- ---------- ---------- -------- ---------------- --------
At 31 March 2011 3,854 29,589 36,606 11,317 81,366 - 81,366
Profit for the year - - 13,933 - 13,933 (10) 13,923
Foreign exchange movements - - - (1,344) (1,344) 2 (1,342)
Cash flow hedges - - - (48) (48) - (48)
Actuarial loss on post employment
benefit schemes - - (4,507) - (4,507) - (4,507)
New shares issued 9 - - - 9 - 9
Premium on new shares
issued - 200 - - 200 - 200
Dividends paid 5 - - (3,027) - (3,027) - (3,027)
Share based payments - - 660 - 660 - 660
Employee trust purchase
of own shares - - - (361) (361) - (361)
Transfer of own shares
from EBT - - (19) 19 - - -
Non-controlling interest
acquired in business
combinations - - - - - 399 399
--------- --------- ---------- ---------- -------- ---------------- --------
At 31 March 2012 3,863 29,789 43,646 9,583 86,881 391 87,272
========= ========= ========== ========== ======== ================ ========
All balances are stated net of taxation.
Consolidated balance sheet at 31 March 2012
2012 2011
Note GBP'000 GBP'000
--------- ---------
Assets
Non-current assets
Goodwill 36,082 30,458
Intangible assets 7,045 8,585
Property, plant and equipment 7,106 7,550
Deferred tax assets 10,373 10,079
--------- ---------
60,606 56,699
--------- ---------
Current assets
Trade and other receivables 118,165 111,747
Corporation tax recoverable 179 602
Cash and cash equivalents 23,218 22,220
--------- ---------
141,562 134,569
--------- ---------
Liabilities
Current liabilities
Borrowings (1,018) (1,469)
Trade and other payables (67,660) (64,816)
Current tax liabilities (3,372) (4,469)
Provisions (3,958) (4,201)
--------- ---------
(76,008) (74,955)
--------- ---------
Net current assets 65,554 59,614
--------- ---------
Non-current liabilities
Borrowings (6,557) (7,655)
Post employment benefit obligations 7 (24,235) (23,954)
Provisions (1,254) (619)
Deferred tax liabilities (950) (731)
Other non-current liabilities (5,892) (1,988)
--------- ---------
(38,888) (34,947)
--------- ---------
Net assets 87,272 81,366
========= =========
Equity
Called up ordinary share capital 3,863 3,854
Share premium 29,789 29,589
Retained earnings 43,646 36,606
Other reserves 9,583 11,317
--------- ---------
Equity attributable to equity holders
of the parent 86,881 81,366
Non-controlling interest 391 -
Total equity 87,272 81,366
========= =========
Consolidated cash flow statement for the year ended 31 March
2012
2012 2011
Note GBP'000 GBP'000
-------- ---------
Cash flows from operating activities
Cash generated from operations 6 15,630 19,164
Net finance costs (527) (319)
Taxation paid (4,501) (4,522)
-------- ---------
Net cash generated from operating activities 10,602 14,323
-------- ---------
Cash flows from investing activities
Acquisition of subsidiaries (net of
cash acquired) (2,536) (440)
Proceeds from disposal of property, plant
and equipment (incl. software) 107 229
Purchase of property, plant and equipment
(incl. software) (2,268) (2,382)
-------- ---------
Net cash used in investing activities (4,697) (2,593)
-------- ---------
Cash flows from financing activities
Proceeds on issue of shares 209 325
Shares issued to non-controlling interest 50 -
Employee trust purchase of own shares (361) (559)
Repayments of obligations under finance
leases (837) (995)
Net movement on borrowings (891) (7,680)
Dividends paid 5 (3,027) (2,358)
-------- ---------
Net cash used in financing activities (4,857) (11,267)
-------- ---------
Net increase in cash and cash equivalents 1,048 463
-------- ---------
Cash and cash equivalents at 1 April 22,220 21,399
Effects of exchange rate fluctuations (50) 358
Cash and cash equivalents at 31 March 23,218 22,220
======== =========
Reconciliation of net cash
2012 2011
Note GBP'000 GBP'000
-------- --------
Net increase in cash and cash equivalents 1,048 463
Decrease in debt 1,555 8,675
Effect of exchange rate changes (56) 325
-------- --------
Change in net cash during the year 2,547 9,463
-------- --------
Net cash at 1 April 13,096 3,633
-------- --------
Net cash at 31 March 6(b) 15,643 13,096
======== ========
Notes to the Financial Statements
1. General information
(a) Basis of preparation
The information within this final results announcement does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 and should be read in conjunction with the
group's statutory accounts for the year ended 31 March 2012. While
the financial information in these Final Results has been prepared
in accordance with International Financial Reporting Standards
(IFRS), these results do not in isolation contain sufficient
information to comply with IFRS.
The statutory accounts for the financial year ended 31 March
2012 will be delivered to the Registrar of Companies following the
company's annual general meeting. The auditors have given an
unqualified report on those accounts which does not contain an
emphasis of matter paragraph or any statement under section 498
(2), (3) or (4) of the Companies Act 2006. The company's annual
report and accounts for the financial year ending 31 March 2012 is
expected to be posted to shareholders on 2 July 2012 and will be
available for viewing on the company's website at
www.hyderconsulting.com thereafter.
The condensed consolidated financial statements have been
prepared on a going concern basis under the historical cost
convention, as modified by the valuation of intangible assets
acquired on business combinations, financial instruments and
pension assets and liabilities which are measured at fair value.
The statements are prepared in accordance with IFRS as adopted by
the EU, and those parts of the Companies Act 2006 related to
reporting under IFRS. 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 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.
(b) Principal accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 March 2011, as
described in those financial statements.
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
Operating segments are reported in a manner consistent with the
internal reporting provided to the board (the chief operating
decision maker) which is responsible for allocating resources and
assessing performance of the operating segments.
Reflecting the group's management and internal reporting
structure, segmental information is presented within the Financial
Statements in respect of geographical segments. The group manages
its business internationally with operations in three main
geographical regions, Asia-Pacific, the Middle East, and Europe.
The UK is the home country of the parent. Inter-segment revenue
relates to contracts priced on an arm's length basis.
The group's revenue is derived from the provision of engineering
consultancy services.
(a) Segment revenue
Year ended 31 March 2012 Year ended 31 March 2011
-------------------------------------------- ----------------------------------------------
Revenue Revenue
Total from from external
segment Inter-segment external Total segment Inter-segment customers
revenue revenue customers revenue revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------------- ------------- -------------- -------------- --------------
Australia 91,301 (1,123) 90,178 92,102 (338) 91,764
Asia 22,336 (277) 22,059 22,721 (466) 22,255
------------- -------------- ------------- -------------- -------------- --------------
Asia-Pacific 113,637 (1,400) 112,237 114,823 (804) 114,019
Middle
East 67,362 (3,525) 63,837 66,716 (1,229) 65,487
UK 75,985 (945) 75,040 87,799 (604) 87,195
Germany 26,273 (78) 26,195 23,626 (30) 23,596
------------- -------------- ------------- -------------- -------------- --------------
Europe 102,258 (1,023) 101,235 111,425 (634) 110,791
------------- -------------- ------------- -------------- -------------- --------------
283,257 (5,948) 277,309 292,964 (2,667) 290,297
============= ============== ============= ============== ============== ==============
(b) Segment results
2012 2011
GBP'000 GBP'000
-------- --------
Australia 13,821 13,912
Asia 889 547
-------- --------
Asia-Pacific 14,710 14,459
Middle
East 3,882 2,605
UK 3,981 5,460
Germany 1,545 1,105
-------- --------
Europe 5,526 6,565
Corporate overheads (3,087) (3,326)
-------- --------
Adjusted operating
profit 21,031 20,303
Amortisation of acquired
intangibles (1,781) (2,147)
Acquisition costs (681) -
-------- --------
(2,462) (2,147)
Exceptional Items
UK Vacant property (1,349) -
costs
UK AGPS closure (150) -
costs
-------- --------
(1,499) -
Operating profit 17,070 18,156
======== ========
3. Net finance income
2012 2011
GBP'000 GBP'000
-------- --------
Bank borrowings (474) (463)
Finance leases (63) (89)
Interest rate financial instruments (151) (234)
Amortisation of arrangement fees (18) -
Unwinding of discounts on provisions and
other liabilities (141) (124)
-------- --------
Finance costs (847) (910)
-------- --------
Investment income 285 467
Interest received on settlement of contracts 133 -
Unwinding of discounts on trade receivables 76 -
Net finance income on post employment benefit
schemes 929 466
-------- --------
Finance income 1,423 933
-------- --------
Net finance income 576 23
======== ========
4. Earnings per share
(a) Number of shares
2012 2011
----------- -----------
Weighted average number of shares in
issue 38,195,119 37,876,301
Effect of dilution
Share options 551,891 645,467
Weighted average shares (diluted) 38,747,010 38,521,768
=========== ===========
(b) Earnings used in the calculation of earnings per share
2012 2011
GBP'000 GBP'000
-------- --------
Profit attributable to equity shareholders 13,933 14,882
Add back amortisation of acquired intangibles
and acquisition costs 2,462 2,147
Exceptional items 1,499 -
Less tax on adjusted items (712) (333)
-------- --------
Adjusted earnings 17,182 16,696
======== ========
(c) Earnings per share
2012 2011
p p
------- -------
Basic earnings per share 36.48 39.29
Add back amortisation of acquired intangibles
and acquisition costs 6.45 5.67
Exceptional items 3.92 -
Add back tax on adjusted items (1.86) (0.88)
------- -------
Adjusted basic earnings per share 44.99 44.08
======= =======
2012 2011
p p
------- -------
Diluted earnings per share 35.96 38.63
Add back amortisation of acquired intangibles
and acquisition costs 6.35 5.57
Exceptional items 3.87 -
Add back tax on adjusted items (1.84) (0.86)
------- -------
Adjusted diluted earnings per share 44.34 43.34
======= =======
5. Dividends
2012 2011
GBP'000 GBP'000
-------- --------
Dividends charged to equity in the year 3,027 2,358
======== ========
Equity - Per Ordinary 10p share
Final dividend paid (pence) 6.00 4.50
Interim dividend paid (pence) 2.00 1.75
As at 31 March 2012, the employee benefit trust had an agreement
in place to waive dividends on 801,976 ordinary shares (2011:
710,719). This arrangement reduced the dividends paid in year by
GBP59,000 (2011: GBP45,000).
The directors are proposing a final dividend of 7.00p per share
(2011: 6.00p). In accordance with IFRS the dividend has not been
recognised in the financial statements but if approved by
shareholders will be paid on 10 August 2012 to shareholders on the
register as at 13 July 2012.
6. Cash flow note
(a) Cash flows from operating activities
2012 2011
GBP'000 GBP'000
-------- --------
Profit for the financial
year 13,923 14,882
Adjustments for:
Taxation 3,723 3,297
Depreciation 3,051 3,473
Amortisation - Software 1,722 1,755
Amortisation - Acquisitions 1,781 2,147
Acquisition costs 681 -
Exceptional items 1,499 -
Interest receivable (1,423) (933)
Interest payable and similar
charges 847 910
-------- --------
EBITDA 25,804 25,531
Profit on disposal of property,
plant and equipment 9 680
Fair value gain on financial
instruments (30) (19)
Share option costs 660 414
Decrease in provisions (960) (920)
Increase / (decrease) in post
employment benefits (13) (898)
Deficit contributions to the AGPS defined
benefit pension scheme (3,919) (3,030)
Changes in working capital:
(Increase) / decrease in trade
and other receivables (3,841) 6,531
Decrease in trade and
other payables (2,080) (9,125)
-------- --------
Cash generated from operations 15,630 19,164
======== ========
(b) Reconciliation of movement in net cash
At 1 April Non-cash Exchange At 31 March
2011 Cash flow movement movement 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ---------- --------- --------- ------------
Cash at bank 22,220 1,048 - (50) 23,218
Debt due within 1 year (887) 891 (762) (1) (759)
Debt due after 1 year (7,100) - 762 - (6,338)
Finance leases due within
1 year (582) 837 (507) (7) (259)
Finance leases due after
1 year (555) - 334 2 (219)
----------- ---------- --------- --------- ------------
(9,124) 1,728 (173) (6) (7,575)
----------- ---------- --------- --------- ------------
13,096 2,776 (173) (56) 15,643
=========== ========== ========= ========= ============
The cash at bank balance includes GBP3.0m (2011: GBP2.5m) that
is restricted and not available to the group for general use.
Net non-cash movements comprise GBP173,000 of finance leases
acquired with ESR Technology Limited.
7. Post employment benefits
The group's net liabilities in respect of post employment
benefits comprise the following:
2012 2011
GBP'000 GBP'000
-------- --------
AGPS 16,305 17,267
Overseas and unfunded
annuitants schemes 7,930 6,687
-------- --------
24,235 23,954
======== ========
The assets and liabilities in the AGPS and the expected rates of
return are as follows:
Long term Long term
rate of Value rate of Value
return expected at 31 return expected at 31
at 31 March March at 31 March March
2012 2012 2011 2011
% per annum GBP'000 % per annum GBP'000
----------------- ---------- ----------------- ----------
Equities 7.10 87,869 8.15 79,777
Bonds 4.30 40,153 5.35 34,342
Other 0.50 514 0.50 621
---------- ----------
Total market value of
assets 128,536 114,740
Present value of scheme
liabilities (144,841) (132,007)
---------- ----------
Deficit in the scheme (16,305) (17,267)
Related deferred tax asset 3,233 3,809
Net pension deficit (13,072) (13,458)
========== ==========
The key assumptions used 2012 2011
were:
----------- -----------
Rate of increase in salaries N/A 3.20%
Rate of increase to pensions
in payment:
- Index linked pensions with max
3% per annum increases 2.45% 2.55%
- Other index linked pension 3.15% 3.40%
Discount rate 4.70% 5.50%
Inflation assumptions
(RPI) 3.30% 3.60%
Inflation assumptions
(CPI) 2.30% 3.00%
Longevity at age 65 for
current pensioners
- Men 23.2 years 23.3 years
- Women 24.9 years 25.3 years
Longevity at age 65 for
future pensioners
- Men 25.4 years 25.4 years
- Women 27.4 years 27.2 years
8. Going concern
After making enquiries, the directors have a reasonable
expectation that the company and the group have adequate resources
to continue in operational existence for the foreseeable future and
therefore continue to adopt the going concern basis in preparing
the financial statements.
9. Risks and uncertainties
The group faces a number of risks, which are regularly monitored
by the board. Risk management and internal control systems provide
a means of identifying, evaluating and managing the significant
risks facing the group. The group's principal risks and
uncertainties will be described in the group's Annual Report and
Accounts. However these systems can only operate to mitigate risk
rather than eliminate it completely. These relate to changes in
market conditions, management of projects, contractual disputes and
claims, recruitment, utilisation and retention of key staff,
management of working capital, defined benefit pension schemes,
business continuity, health and safety, foreign exchange movements
and the global regulatory environment.
10. Cautionary Statement
This final results announcement contains certain forward-looking
statements with respect to the financial condition, performance,
results, strategy and objectives, operations and businesses of the
group. By their nature, these statements involve uncertainty
because they relate to future events and circumstances which are
beyond the group's control. As a result the group's actual future
financial condition, performance and results may differ materially
from the plans or expectations expressed or implied within any
forward-looking statement. Any forward-looking statements reflect
knowledge and information available at the date of preparation of
this final results announcement and the company assumes no
obligation to update or revise any forward-looking statement,
resulting from new information, future events or otherwise.
Liability arising from anything in this final results announcement
shall be governed by English law. Nothing in this final results
announcement should be construed as a profit forecast.
11. Statement of directors' responsibilities
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The responsibility statement below has been prepared in
connection with and is included in the company's full Annual Report
and Accounts for the year ended 31 March 2012. Certain parts of
that report are not included within this final results
announcement:
"The directors confirm that to the best of their knowledge:
-- the group and company financial statements in this Annual
Report, which have been prepared in accordance with IFRS and UK
GAAP respectively, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the group and
the company taken as a whole;
-- the management report (which comprises the Chairman's
statement and the Directors' Report), includes a fair review of the
development and performance of the business and the position of the
group and the company taken as a whole, together with a description
of the principal risks and uncertainties that they face. "
The directors of Hyder Consulting PLC at the date of this
announcement are listed below:
Sir Alan Thomas
Ivor Catto
Russell Down
Jeffrey Hume
Paul Withers
This responsibility statement was approved by the board and
signed on its behalf by
Ivor Catto Russell Down
Chief Executive Group Finance Director
13 June 2012 13 June 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
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