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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Integra Resources Corp | TG:IRV | Tradegate | Ordinary Share |
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RNS Number:6604I
Interserve PLC
13 March 2003
Embargoed until 7.00 am 13.03.2003
INTERSERVE PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002
Underlying profit before tax* #49.1m up 6.5%
Underlying earnings per share* 31.5p up 10.1%
Underlying operating margin* 4.8% up from 4.3%
Total dividend 13.0p up 5.7%
Net debt #42.8m reduced from #62.8m
Diluted earnings per share 21.5p 2001: 21.6p
Forward orders at #3.2 billion with a further #0.5 billion in the pipeline
Forward orders and pipeline provide nearly 80% of 2003 budgeted turnover
Over 75% of forward orders in public & privatised sectors
Interest covered 13 times by underlying operating profits
Proposed total dividend covered 2.4 times by underlying earnings per share
PFI/PPP portfolio increased to 18 projects (including three at preferred bidder stage)
Chairman Mike Bottjer commented, "Our 2002 results reflect the progress made in our strategic development. We have
continued to realign our activities to focus on better quality work which relies on our ability to add real value and
contribute towards the success of our clients."
For further information please contact:
Giles Scott, Head of Corporate Communications
0118 932 0123 giles.scott@interserveplc.co.uk
CHAIRMAN'S STATEMENT 2002
Our 2002 results show that for the ninth consecutive year the Group has generated growth in underlying profits before
tax. In addition net debt at the year-end has significantly reduced. This performance has been achieved in the face of
the more difficult general economic conditions which emerged during the year.
As shown below you will see that underlying profits before tax (*) for 2002 increased by 6.5 % to #49.1 million (2001:
#46.1 million). Resultant earnings per share improved by 10.1% to 31.5p (2001: 28.6p).
2002 2001
Profits before tax (Before Exceptional Items and Goodwill Amortisation) #49.1m #53.6m
Items included in 2001 profits not available in 2002
Pension Credit under SSAP 24 #0.0m #4.0m
Profits from Discontinued Operations #0.0m #3.5m
Underlying Profits before Tax #49.1m #46.1m
Reflecting our strategy to focus on better quality work, turnover reduced to #1.1 billion (2001: #1.2 billion).
Net debt at the year-end reduced to #42.8 million (2001: #62.8 million). Net interest payable of #4.0 million (2001:
#6.7 million) was covered a healthy 13 times by underlying operating profits.
The directors are recommending a final dividend of 9.0p (2001: 8.5p) bringing the total for the year to 13.0p (2001:
12.3p), an increase of 5.7%. The total dividend is covered 2.4 times by underlying earnings per share.
Subject to the approval of the shareholders at the Annual General Meeting the final dividend will be paid on 1 July
2003 to shareholders on the register at the close of business on 21 March 2003.
During the course of the year three small businesses were sold, none of which fitted with our future strategy. The
aggregate proceeds from the disposal of West's Engineering Design, Climate Equipment and Tilbury Phoenix amounted to
#11.4 million. Operating Profits from discontinued operations were #nil (2001: #3.5 million). The profits and losses
on the sale of these businesses, together with the termination of certain operations resulted in an exceptional loss of
#1.2 million (2001 profit #1.2 million).
Exceptional costs of #1.0 million were charged in arriving at total operating profit relating to the reduction of the
cost base predominantly in Industrial Services so as to further align the business with its markets and strategic
direction.
A net pension credit of #4.0 million was taken in the 2001 accounts in accordance with SSAP24. Due to the reduction in
equity values that figure has reduced to #nil in the 2002 accounts. Under the transitional arrangements for the new
pension accounting standard, FRS17, the incremental charge to pre-tax profits in 2002 would have been #7.7 million.
Under this standard there would be a pension fund deficit, net of tax, of #79 million. A triennial review of our
defined benefit schemes, now largely closed to new entrants, will be carried out this year and will determine future
contribution levels.
Operations
Underlying operating profits marginally increased to #53.1 million (2001: #52.8 million) and the operating margin was
4.8% (2001: 4.3%).
Progress continued in Facilities Services with significant growth in underlying operating profits to #15.8 million
(2001: #13.6 million) and an operating margin of 4.0% (2001: 3.3%). Emphasis remains on the public sector with health,
education, defence and local authority work being at the forefront.
Industrial Services performed satisfactorily given the more difficult market conditions experienced in this sector but
saw a decrease in underlying operating profits to #10.0 million (2001: #14.4 million). The operating margin was 6.7%
(2001: 8.1%). Much of the activity in this division is centred on maintenance work in the petro-chemical,
pharmaceutical and energy sectors and whilst a number of clients have indicated an easing of the pressure that reduced
maintenance spending in 2002, we remain cautious about short-term prospects.
There was further progress in Project Services where underlying profits grew significantly to #18.0 million (2001:
#13.3 million) and the operating margin increased to 3.8% (2001: 2.5%). This result is above the expected average
growth rate for underlying operating profits mainly as a consequence of the incidence of profit recognition on certain
significant contracts which reached completion or substantial completion in the period. The strategy of focussing on
better quality work continues with concentration largely on framework agreements, work on Group PFI/PPP contracts,
partnering and term maintenance contracts.
Equipment Services performed satisfactorily in most of its markets but the Far East remained difficult and was a major
factor contributing to the decrease in underlying operating profits to #13.6 million (2001: #15.9 million).
Nevertheless the operating margin held up relatively well at 18.3% (2001: 21.4%).
PFI Investments showed an increase in underlying operating profits to #2.4 million (2001: #1.9 million) as further
projects reached the operational stage.
Group Services costs which amongst other things include the cost of bidding for PFI contracts increased to #6.7 million
(2001: #6.3 million).
People
We employ some 11,600 people and I am delighted once again to thank each and every one of them for their professional
application to their work and for the part they have played in the continuing successful development of the Group.
Most encouraging has been the enthusiasm with which many of our people have approached the opportunity of the internal
and external training that we offer and which enables them to develop and the Group to optimise their contribution.
Board
In November we announced changes to our Board, in particular Adrian Ringrose was appointed Deputy Chief Executive with
effect from 1 January 2003 with a view to his becoming Chief Executive on 1 July 2003. At the forthcoming Annual
General Meeting David Keys will retire and his position as Non Executive Deputy Chairman will be taken by John Padovan.
David retires after 12 years excellent service and I would like to express my thanks to him for his most valuable
contribution and support. William Rogers retired from the Board as a non-executive director on 31 December 2002 and I
would also like to express my thanks to him for his most valuable contribution during his 6 years in office. I am
pleased to welcome Patrick Balfour who joined the Board as a non-executive director on 1 January 2003.
Outlook
Interserve stands to benefit further from public sector investment in health, education, defence, the prison service
and infrastructure. Elsewhere it is focussed especially on water, power, process and energy where, as in the public
sector, there is increasing demand for bundled or integrated services and for the use of long term framework and
maintenance agreements.
The forward order book at the year-end amounted to #3.2 billion (2001: #3.3 billion), of which over 75% is in the
public and privatised sectors, and we have approximately #0.5 billion of orders in the pipeline. At 31 December we had
secured some 70% of our budgeted turnover for 2003 with an anticipated further 10% coming from the pipeline.
The order book includes work on the 15 PFI/PPP contracts in our portfolio. In 13 of these we have a significant equity
stake in which we have invested #14.3 million with a further commitment of #14.8 million over the next two years. At
the year-end we were preferred bidder on a further 3 PFI/PPP contracts, namely Peterborough Prison, the Army Training
Estate, and Tyrone Colleges. Peterborough Prison has since reached financial close on 14 February 2003 and we have
reached preferred bidder status on Defence Sixth Form College in January 2003.
Although the prevailing economic conditions are difficult, the directors remain confident that the excellent visibility
derived from our forward order book and the encouraging flow of opportunities for the future place the Group in a
strong position to achieve long-term growth.
Mike Bottjer
Chairman
12 March 2003
(*)Underlying figures are stated before the impact of exceptional operating charges (#1.0m; 2001 #5.8m), profits or
losses on sale or termination of operations (-#1.2m; 2001 #1.2m), goodwill amortisation (#9.7m; 2001 #9.7m), operating
profit from discontinued operations (#nil; 2001 #3.5m), and the effect of SSAP24 net pension credit (#nil; 2001 #4.0m).
The profits before tax after including these items are #37.2m (2001: #39.3m).
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2002
Before exceptional Exceptional
items and goodwill items and
amortisation goodwill 2002
amortisation Total
Notes #million #million #million
TURNOVER 2
Continuing operations 1,111.3 - 1,111.3
Discontinued operations* 11.6 - 11.6
1,122.9 - 1,122.9
Less: Share of joint ventures-PFI investments (23.7) - (23.7)
1,099.2 - 1,099.2
Cost of sales (958.6) - (958.6)
GROSS PROFIT 140.6 - 140.6
Net operating expenses 3 (93.6) (10.6) (104.2)
Operating profit
Continuing operations 47.0 (10.6) 36.4
Discontinued operations* - - -
47.0 (10.6) 36.4
Share of joint ventures-PFI investments - and
associated undertakings
6.1 (0.1) 6.0
TOTAL OPERATING PROFIT 2 53.1 (10.7) 42.4
Exceptional items
Net (loss) profit on sale or termination of
operations - discontinued (2001 -discontinued) - (1.2) (1.2)
Net interest payable (4.0) - (4.0)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 49.1 (11.9) 37.2
Tax on profit on ordinary activities 5 (13.1) 0.5 (12.6)
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION AND
PROFIT FOR THE FINANCIAL YEAR ATTRIBUTABLE TO
MEMBERS OF INTERSERVE PLC 36.0 (11.4) 24.6
Dividends 6 (14.7) - (14.7)
PROFIT FOR THE YEAR TRANSFERRED TO RESERVES 8 21.3 (11.4) 9.9
p p P
Basic earnings per share 7 21.6
Adjust for exceptional items and goodwill
amortisation 10.1
ADJUSTED EARNINGS PER SHARE 31.7
ANALYSIS OF ADJUSTED EARNINGS PER SHARE:
- Continuing operations 31.5
- Discontinued operations 0.2
- SSAP 24 credit -
DILUTED EARNINGS PER SHARE 21.5
# Certain comparative figures have been restated due to the adoption of FRS 19.
* Discontinued operations principally represent the results of How Fire, West's Engineering Design, Tilbury Phoenix and
Climate Equipment which were sold with effect from 24 October 2001, 11 January 2002, 25 March 2002 and 4 October 2002
respectively.
CONSOLIDATED PROFIT AND LOSS
For the year ended 31 December 2002
Before
exceptional Exceptional
items and items and
goodwill goodwill 2001
amortisation amortisation Total
Restated# Restated# Restated#
Notes #million #million #million
TURNOVER 2
Continuing operations 1,227.4 - 1,227.4
Discontinued operations * 45.9 - 45.9
1,273.3 - 1,273.3
Less: Share of joint ventures-PFI investments (23.0) - (23.0)
1,250.3 - 1,250.3
Cost of sales (1,096.9) - (1,096.9)
GROSS PROFIT 153.4 - 153.4
Net operating expenses 3 (97.8) (15.5) (113.3)
Operating profit
Continuing operations 52.1 (15.5) 36.6
Discontinued operations * 3.5 - 3.5
55.6 (15.5) 40.1
Share of joint ventures-PFI investments and
associated undertakings 4.7 - 4.7
TOTAL OPERATING PROFIT 2 60.3 (15.5) 44.8
Exceptional items
Net profit/(loss) on sale or termination of
operations - discontinued (2001 discontinued) - 1.2 1.2
Net interest payable (6.7) - (6.7)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 53.6 (14.3) 39.3
Tax on profit on ordinary activities 5 (16.1) 1.3 (14.8)
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION AND
PROFIT FOR THE FINANCIAL YEAR ATTRIBUTABLE TO MEMBERS
OF INTERSERVE PLC 37.5 (13.0) 24.5
Dividends 6 (13.9) - (13.9)
PROFIT FOR THE YEAR TRANSFERRED TO RESERVES 8 23.6 (13.0) 10.6
P p P
BASIC EARNINGS PER SHARE 7 21.9
Adjust for exceptional items and goodwill
amortisation 11.4
ADJUSTED EARNINGS PER SHARE 33.3
Analysis of adjusted earnings per share:
- Continuing operations 28.6
- Discontinued operations 2.3
- SSAP 24 credit 2.4
DILUTED EARNINGS PER SHARE 21.6
# Certain comparative figures have been restated due to the adoption of FRS 19.
* Discontinued operations principally represent the results of How Fire, West's Engineering Design, Tilbury Phoenix and
Climate Equipment which were sold with effect from 24 October 2001, 11 January 2002, 25 March 2002 and 4 October 2002
respectively.
BALANCE SHEET
At 31 December 2002
2002 2001
Notes #million #million
Restated#
FIXED ASSETS
Intangible fixed assets - goodwill 163.9 173.6
Tangible fixed assets 100.7 101.4
Investments
Joint ventures-PFI investments
Share of gross assets 241.6 192.9
Share of gross liabilities (226.3) (181.3)
Net 15.3 11.6
Associated undertakings 10.9 9.6
290.8 296.2
CURRENT ASSETS
Stocks and work in progress 14.9 29.0
Debtors 235.6 262.1
Pension scheme prepayment 4 32.3 32.0
Investments 0.5 0.6
Short term deposits 6.4 1.3
Cash at bank and in hand 7.0 8.7
296.7 333.7
CREDITORS FALLING DUE WITHIN ONE YEAR
Bank loans 0.4 1.6
Bank overdrafts 4.0 1.3
Unsecured loan notes 16.0 21.8
Trade creditors 158.6 190.2
Sundry creditors 137.9 139.1
316.9 354.0
NET CURRENT (LIABILITIES) ASSETS (20.2) (20.3)
TOTAL ASSETS LESS CURRENT LIABILITIES 270.6 275.9
CREDITORS FALLING DUE AFTER MORE THAN ONE YEAR
Bank and other loans (35.1) (47.8)
Other creditors (2.4) (2.0)
PROVISIONS FOR LIABILITIES AND CHARGES (29.4) (30.0)
NET ASSETS 203.7 196.1
CAPITAL AND RESERVES
Called up share capital 11.3 11.4
Share premium account 106.4 106.1
Capital redemption reserve 0.1 -
Acquisition reserve 16.4 16.4
Profit and loss account 69.4 62.1
SHAREHOLDERS' FUNDS - EQUITY INTEREST 2&8 203.6 196.0
Minority interest - equity interest 0.1 0.1
203.7 196.1
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2002
2002 2001
#million #million
Profit for the financial year attributable to members of Interserve Plc 24.6 24.5
Currency translation differences on foreign current net investments (0.9) (0.8)
Total recognised gains and losses in the year 23.7 23.7
Prior period adjustment (10.6) -
Total recognised gains and losses since the last annual report 13.1 23.7
# Certain comparative figures have been restated due to the adoption of FRS 19.
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2002
2002 2001
Notes #million #million
NET CASH INFLOW FROM OPERATING ACTIVITIES (i) 53.1 40.2
DIVIDENDS RECEIVED FROM ASSOCIATED UNDERTAKINGS 2.1 2.5
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest received 7.0 7.9
Interest paid (9.5) (12.9)
(2.5) (5.0)
Taxation (15.5) (6.5)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (28.3) (23.2)
Sale of tangible fixed assets 18.7 10.4
(9.6) (12.8)
ACQUISITIONS AND DISPOSALS
Investment in joint ventures-PFI investments (3.0) (4.1)
Sale of subsidiary undertaking net of costs 11.4 11.6
Purchase of shares and net debt acquired in subsidiary undertaking - (0.4)
8.4 7.1
EQUITY DIVIDENDS PAID (14.1) (13.1)
CASH INFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING 21.9 12.4
MANAGEMENT OF LIQUID RESOURCES (4.9) 6.4
FINANCING (21.4) (21.5)
(Decrease) in cash in the year (4.4) (2.7)
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the year (4.4) (2.7)
Cash flow from (decrease) in liquid resources 4.9 (6.4)
Cash flow from decrease in debt 13.9 25.4
Repayment of unsecured loan notes 5.8 0.8
Cash flow from finance lease rentals 0.2 0.2
Change in net debt resulting from cash flows 20.4 17.3
Inception of new finance leases (0.6) -
Translation differences 0.2 -
Movement in net debt in year 20.0 17.3
Net debt at 1 January (62.8) (80.1)
Net debt at 31 December (42.8) (62.8)
# Certain comparative figures have been restated due to the adoption of FRS 19.
NOTES ON CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2002
2002 2001
#million #million
(i) NET CASH INFLOW FROM OPERATING ACTIVITIES
Operating profit before exceptional items and goodwill amortisation 47.0 55.6
Exceptional items (2.3) (4.0)
Pension scheme contribution (0.3) -
Pension scheme surplus - (4.0)
Profit on sale of fixed assets (6.2) (4.9)
Depreciation charges 14.8 14.3
(Increase) in stocks and work in progress (1.0) (0.8)
Decrease (increase) in debtors 20.2 (13.2)
(Decrease) in creditors (20.2) (2.5)
Currency adjustments 1.1 (0.3)
53.1 40.2
NOTES ON THE PRELIMINARY ANNOUNCEMENT
For the year ended 31 December 2002
1. ACCOUNTING POLICIES
The preliminary announcement has been prepared in accordance with accounting policies set out in the Group's
2001 statutory accounts with the exception of those set out as follows. During the year the Group adopted
FRS 19 'Deferred taxation'. The effects of FRS 19 are set out in notes 5 and 8. The transitional
arrangements under FRS 17 'Retirement Benefits' have been adopted, but have had no effect upon the results
for the year, as set out in note 4b.
Pre-contract costs
In compliance with UTIF 34 pre-contract costs are recognised as expenses as incurred, except that directly
attributable costs are recognised as an asset when it is virtually certain that a contract will be obtained
and the contract is expected to result in future net cash flows. This accounting policy was applied in the
Group's 2001 statutory accounts.
2. SEGMENTAL ANALYSIS
The turnover, total operating profit (before exceptional items and goodwill amortisation) and net assets
(less minority interest) attributable to the different classes of the Group's business are:
Total operating profit
(loss) (excluding
exceptional items
and goodwill Net assets (less
Turnover (external) amortisation) minority interest)
2002 2001 2002 2001 2002 2001
#million #million #million #million #million #million
#Restated
By business segment:
Facilities services (note i) 396.0 409.4 15.8 13.6 (34.0) (28.8)
Industrial services (note ii) 148.5 178.7 10.0 14.4 54.4 50.1
Project services (note iii) 467.9 537.8 18.0 13.3 (51.4) (56.6)
Equipment services (note ii) 74.5 74.2 13.6 15.9 68.6 67.1
1,086.9 1,200.1 57.4 57.2 37.6 31.8
Joint ventures-PFI investments 23.7 23.0 2.4 1.9 15.3 11.6
Group services 0.7 4.3 (6.7) (6.3) (2.7) (3.5)
1,111.3 1,227.4 53.1 52.8 50.2 39.9
SSAP 24 credit (note iv) - - - 4.0 32.3 32.0
1,111.3 1,227.4 53.1 56.8 82.5 71.9
Discontinued operations 11.6 45.9 - 3.5 - 13.3
1,122.9 1,273.3 53.1 60.3 82.5 85.2
Goodwill 163.9 173.6
Net debt (42.8) (62.8)
203.6 196.0
By geographical area:
United Kingdom 1,032.0 1,146.2 45.1 45.2 (23.5) (28.1)
Rest of Europe 14.6 14.7 2.9 3.7 12.7 11.9
Middle East & Africa 4.8 3.0 3.9 2.9 10.6 10.0
Australasia 15.3 13.4 4.0 2.7 12.8 9.5
Far East 18.7 21.7 1.0 2.7 21.1 24.7
South America 1.5 1.1 0.5 - 3.9 3.8
1,086.9 1,200.1 57.4 57.2 37.6 31.8
Joint ventures - PFI investments -
United Kingdom 23.7 23.0 2.4 1.9 15.3 11.6
Group services 0.7 4.3 (6.7) (6.3) (2.7) (3.5)
1,111.3 1,227.4 53.1 52.8 50.2 39.9
SSAP 24 credit (note iv) - - - 4.0 32.3 32.0
1,111.3 1,227.4 53.1 56.8 82.5 71.9
Discontinued operations 11.6 45.9 - 3.5 - 13.3
1,122.9 1,273.3 53.1 60.3 82.5 85.2
Goodwill 163.9 173.6
Net debt (42.8) (62.8)
203.6 196.0
# Certain comparative figures have been restated due to the adoption of FRS 19.
(i) Facilities services turnover includes #118.0million in respect of works bills (2001: #121.7). Works bills are
costs relating to services and materials procured on behalf of the Ministry of Defence on which no margin is allowed
but for which a management fee is received.
(ii) With effect from July 2001 the Access business was transferred from Equipment services to Industrial services.
For ease of comparison the segmental analysis above has been restated as if the transfer had taken place on 1 January
2001. The effect of this has been to transfer #19.0million of turnover and #1.1million of operating profit from
Equipment services to Industrial services for the period to the date of transfer.
(iii) Project services profit disclosed above is before taking account of net interest received of #3.7million (2001:
#4.7million).
(iv) SSAP 24 credit refers to the Net Pension Scheme Credit on the UK Defined Benefit Scheme.
3. ANALYSES OF CONTINUING AND DISCONTINUED COST OF SALES AND NET OPERATING EXPENSES
Exceptional 2002
items and
goodwill
amortisation
Continuing Discontinued
operations operations
Total
#million #million #million #million
Cost of sales 949.2 9.4 - 958.6
Net operating expenses
Distribution costs 27.4 - - 27.4
Administrative expenses
Total excluding exceptional items and
goodwill amortisation 64.8 2.2 - 67.0
Exceptional items-reorganisation costs
predominantly relating to Industrial
Services - - 1.0 1.0
Goodwill amortisation - - 9.6 9.6
Total 64.8 2.2 10.6 77.6
Other operating income
Net rental income (0.8) - - (0.8)
91.4 2.2 10.6 104.2
2001
#million #million #million #million
Cost of sales 1,062.5 34.4 - 1,096.9
Net operating expenses
Distribution costs 29.8 - - 29.8
Administrative expenses
Total excluding exceptional items and
goodwill amortisation 61.5 8.0 - 69.5
Exceptional items-reorganisation costs
relating to the acquisition of B&P Holdings
Ltd and Interserve branding - - 4.0 4.0
Exceptional items-provision for potential
irrecoverable claims from Independent
Insurance - - 1.8 1.8
Goodwill amortisation - - 9.7 9.7
Total 61.5 8.0 15.5 85.0
Other operating income
Net rental income (0.6) - - (0.6)
Other income (0.9) - - (0.9)
89.8 8.0 15.5 113.3
4a. PENSION SCHEME - SSAP 24 DISCLOSURES
(a) The net pension (credits) costs for the year are made up as follows:
2002 2001
#million #million
UK Defined Benefit Scheme:
Regular cost 7.1 9.6
Amortisation of experience surplus and interest (7.1) (13.6)
Other UK Schemes 2.3 2.8
Other:
Overseas and other pension contributions 0.5 0.5
2.8 (0.7)
(b) The pension scheme prepayment of #32.3million (2001: #32.0million) shown in the balance sheet
represents the amortisation of the experience surplus less pension cost credited to profit and loss
account. The latest actuarial valuation of the Interserve Pension Scheme was at 31 March 2000. At the date
of that actuarial valuation the market value of the Scheme's assets was #283.6million and represented
approximately 129% of the benefits that had accrued to members, after allowing for expected future
increases in earnings. Since the date of the valuation, on the recommendation of the actuary, the
companies have continued to suspend contributions.
4b. PENSION SCHEME - FRS 17 DISCLOSURES
The principal pension schemes within the Group have been valued for the purposes of the transitional arrangements under
FRS 17. The valuation used for FRS 17 disclosures has been based on the most recent actuarial valuation on 31 March
2000 and updated by Lane Clark & Peacock, qualified independent actuaries, to take account of the requirements of FRS
17 in order to assess the liabilities of the scheme at 31 December 2002.
Scheme assets are stated at their market value at 31 December 2002.
The financial assumptions used to calculate scheme liabilities under FRS17 are:
2002 2001
Projected Projected
Valuation method Unit Unit
Discount Rate 5.9% 6.0%
Inflation Rate 2.3% 2.5%
Increases in Pensions
LPI/RPI 2.3% 2.5%
Fixed 5% 5.0% 5.0%
3% or RPI if higher (capped at 5%) 3.4% 3.5%
Salary increases 3.05-3.8% 3.25-4.5%
Long-term Long-term
rate of rate of
expected 2002 expected 2001
return #million return #million
Equities 8.0% 227.5 8.0% 283.3
Bonds/cash 5.6% 4.3 5.0% 4.5
Other 5.6% 7.5 6.0% 3.3
Total market value of assets 239.3 291.1
Present value of scheme liabilities (352.1) (310.5)
Deficit in scheme (112.8) (19.4)
Related deferred tax asset 33.8 5.8
Net pension liability (79.0) (13.6)
Analysis of amount which would be charged to operating profit: Incremental
impact
2002 2002
#million #million
Employer's part of current service cost 12.8 12.8
Other schemes (note 4a) 2.8 -
Curtailment on discontinued operations (1.0) (1.0)
Total operating charge 14.6 11.8
Analysis of the amount which would be credited/(charged) to other finance Incremental
income: impact
2002 2002
#million #million
Expected return on pension scheme assets 22.9 22.9
Interest on pension scheme liabilities (18.8) (18.8)
4.1 4.1
The incremental cost to the Group, if FRS 17 had been applied in full instead of SSAP 24 would have been
#7.7 million.
Analysis of amounts which would be recognised in the statement of total recognised gains and losses ('
STRGL'):
2002
#million
Actual return less expected return on pension scheme assets (93.0)
Experience gains arising on the scheme liabilities 1.3
Changes in assumptions underlying the present value of scheme liabilities 5.3
Actuarial loss recognised in the statement of total recognised gains and losses (86.4)
2002 2001
#million #million
Net assets
Net assets per balance sheet (excluding minority interest) 203.6 196.0
Less: Pension scheme prepayment (32.3) (32.0)
Add: Deferred tax on pension scheme prepayment 9.6 9.6
Net Assets excluding pension scheme prepayment 180.9 173.6
Pension liability net of deferred tax (79.0) (13.6)
Net Assets including pension liability 101.9 160.0
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
2002 2001
#million #million
UK Corporation tax at 30% (2001 - 30%) 9.4 8.0
Overseas taxation 1.7 2.7
Advance corporation tax - (1.3)
Adjustments in respect of prior periods (0.4) 1.3
Total current tax 10.7 10.7
Deferred taxation - current year 1.7 4.1
- prior period 0.2 -
12.6 14.8
Adoption of FRS 19 has required a change in the method of accounting for deferred tax. As a result the comparative
figure for the tax on profit on ordinary activities for 2001 has been restated from the previously reported amount of
#1.4million to #4.1million. The impact of adopting FRS 19 on the 2002 results is #nil.
6. DIVIDENDS
2002 2001
#million #million
The interim dividend of 4.0p per share (2001: 3.8p) was paid to shareholders on 1
November 2002
4.5 4.3
The proposed final dividend is 9.0p per share (2001: 8.5p) 10.2 9.6
14.7 13.9
7. EARNINGS PER SHARE
The calculation of adjusted earnings per share is based on the weighted average number of shares in issue throughout
the year which totalled 113,473,523 (2001: 112,614,074) and a profit after taxation and minority interest excluding
Exceptional Items and Goodwill Amortisation of #36.0million (2001: #37.5million). This is disclosed in addition to the
Basic earnings per share as the directors consider it more fairly represents the performance of the Group. Basic
earnings per share is calculated on attributable profit after Exceptional Items and Goodwill Amortisation of
#24.6million (2001: #24.5million).
The calculation of earnings per share attributed to discontinued operations takes into account both loss of operating
profit for the whole of 2001 and 2002 and notional interest for the same period from the proceeds of sale.
Diluted earnings per share for the year is based on the weighted average number of shares, including dilutive potential
shares relating to option schemes, which totalled 114,230,394 (2001: 113,939,755) and a profit after taxation and
minority interest of #24.6million (2001: #24.5million).
8. RECONCILIATION OF MOVEMENT IN SHAREHODLERS' FUNDS
2002 2001
#million #million
Profit for the financial year attributable to the members of Interserve Plc 24.6 24.5
Dividends (14.7) (13.9)
9.9 10.6
Other recognised gains and losses for the year (0.9) (0.8)
New share capital subscribed 0.3 9.2
Repurchase of company shares (1.7) -
Contribution to QUEST scheme - (1.5)
Net addition to shareholders' funds 7.6 17.5
Opening shareholders' funds - as previously stated 196.0 186.4
Prior period adjustment - (7.9)
Opening shareholders' funds as restated 196.0 178.5
Closing shareholders' funds 203.6 196.0
General note
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31
December 2002 and 2001 but is derived from those statutory accounts. Statutory accounts for 2001 have been delivered
to the Registrar of Companies, and those for 2002 will be delivered following the Company's Annual General Meeting.
The auditors have reported on those accounts; their reports were unqualified and did not contain statements under
section 237(2) or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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