REG - Hill & Smith Hdgs. - Final Results <Origin Href="QuoteRef">HILS.L</Origin> - Part 2
08/03/2017 07:06
- Part 2: For the preceding part double click ID:nRSH7980Ya
part of the Zinkinvent acquisition in 2007. These
liabilities do not represent future cash tax payments and will unwind as the
brand names, customer relationships, contractual arrangements and properties
are amortised.
Earnings per share
The Board believes that underlying earnings per share ('UEPS') gives the best
reflection of performance in the year as it strips out the impact of
non-underlying items (as described in note 3). UEPS for the period under
review increased by 27% to 65.9p (2015: 51.7p), driven by organic revenue
growth in the Group's core markets, continuing improvements in underlying
operating margins, currency translation benefits and the impact of active
management of the Group's portfolio. The diluted UEPS was 65.1p (2015: 51.3p).
Basic earnings per share was 43.0p (2015: 30.9p). The weighted average number
of shares in issue was 78.5m (2015: 78.1m) with the diluted number of shares
at 79.3m (2015: 78.8m) adjusted for the outstanding number of dilutive share
options.
Pensions
The Group operates a number of defined contribution and defined benefit
pension plans in the UK, the USA and France. The IAS19 deficit of the defined
benefit plans as at 31 December 2016 was £27.3m, significantly higher than the
£14.6m reported at 31 December 2015. The deterioration in the deficit relates
principally to the UK scheme and was largely driven by a reduction in the
discount rate, in line with substantial falls in UK corporate bond yields
particularly towards the end of the year, and was exacerbated by an increase
in future inflation assumptions reflecting current expectations of higher UK
inflation in the medium term.
At 31 December 2015 the Group operated two UK defined benefit pension schemes,
The Hill & Smith Executive Pension Scheme and the Hill & Smith Pension Scheme.
In March 2016 the Group completed a merger of these two schemes into one new
scheme, The Hill & Smith 2016 Pension Scheme (the 'Scheme'), which remains the
largest employee benefit obligation within the Group. As part of this merger,
certain members of the Scheme accepted the Group's offer to crystallise their
pension entitlement by payment of a winding up lump sum, which resulted in a
settlement gain of £0.2m.
In common with many other UK companies, the Scheme is mature having
significantly more pensioners and deferred pensioners than active
participating members and is closed to new members. The IAS19 deficit of the
Scheme as at 31 December 2016 was £22.4m (2015: £11.1m). The Group is actively
engaged in dialogue with the Scheme's Trustees with regard to management,
funding and investment strategy, and has an agreed deficit recovery plan that
requires cash contributions amounting to £2.3m per annum until 5 April 2020. A
formal valuation of the newly merged scheme, dated 5 April 2016, is currently
underway.
Acquisitions
In May 2016 the Group completed the acquisition of Safety and Security Barrier
Holdings Limited, the parent company of Hardstaff Barriers Limited, for a net
cash consideration of £10.4m. Intangible assets arising on the acquisition
comprise goodwill of £6.8m, customer relationships of £3.0m and contractual
arrangements of £1.4m. The acquired business, based in Nottingham, UK, will
complement the Group's existing UK temporary road safety barrier business.
In July 2016 we completed the acquisition of Technocover Limited for a net
cash consideration of £9.2m. Intangible assets arising on the acquisition
comprise goodwill of £1.8m, the brand name of £0.3m, customer relationships of
£3.9m and contractual arrangements of £1.8m. The acquired business, based in
Welshpool, will complement and enhance the Group's existing product offering
into its UK utilities markets.
In August 2016 we acquired Signature Limited, a UK business specialising in
the development and manufacture of street lighting columns, road signage and
traffic management systems, for a net cash consideration of £12.6m. Intangible
assets arising on the acquisition comprise goodwill of £3.0m, brand names of
£0.5m, customer relationships of £4.4m and contractual arrangements of £1.7m.
The acquired business will complement and has been integrated with the Group's
existing UK lighting column business.
The Group also completed two smaller acquisitions during the year:
· In January we acquired E.T. Techtonics, Inc., a US-based designer of
composite bridge products that complements our existing US composites
business, Creative Pultrusions. Consideration for the acquisition was £1.5m.
· In April we acquired FMK Trafikprodukter AB, a Swedish producer of
equipment for the Scandinavian roads markets. FMK has been integrated with our
existing ATA business, providing an expanded suite of traffic management
products. Consideration for the acquisition was £4.0m, of which £0.8m is
deferred and contingent on future performance and product development
targets.
The level of headroom that the Group maintains in its principal banking
facilities enables us to continue to seek opportunities for acquisitive growth
where potential returns exceed the Group's benchmark performance targets.
Treasury management
All treasury activities are co-ordinated through a central treasury function,
the purpose of which is to manage the financial risks of the Group and to
secure short and long term funding at the minimum cost to the Group. It
operates within a framework of clearly defined Board-approved policies and
procedures, including permissible funding and hedging instruments, exposure
limits and a system of authorities for the approval and execution of
transactions. It operates on a cost centre basis and is not permitted to make
use of financial instruments or other derivatives other than to hedge
identified exposures of the Group. Speculative use of such instruments or
derivatives is not permitted. Liquidity, interest rate, currency and other
financial risk exposures are monitored weekly. The overall indebtedness of the
Group is reported on a daily basis to the Group Finance Director.
Derek Muir Mark Pegler
Group Chief Executive Group Finance Director
8 March 2017
Consolidated Income Statement
Year ended 31 December 2016
2016 2015
Notes Underlying £m Non- Total £m Underlying £m Non-underlying*£m Total £m
underlying*
£m
Revenue 2 540.1 - 540.1 467.5 - 467.5
Trading profit 70.6 - 70.6 56.0 - 56.0
Amortisation of acquisition intangibles 3 - (2.6) (2.6) - (1.6) (1.6)
Business reorganisation costs 3 - (10.5) (10.5) - (0.3) (0.3)
Pension settlement gains 3 - 0.2 0.2 - - -
Impairment of intangible assets 3 - (4.1) (4.1) - (15.7) (15.7)
Acquisition costs 3 - (1.8) (1.8) - (1.0) (1.0)
Loss on sale of properties - - - - (0.1) (0.1)
Operating profit 2 70.6 (18.8) 51.8 56.0 (18.7) 37.3
Financial income 4 0.4 - 0.4 0.5 - 0.5
Financial expense 4 (3.0) (0.9) (3.9) (3.5) (1.1) (4.6)
Profit before taxation 68.0 (19.7) 48.3 53.0 (19.8) 33.2
Taxation 5 (16.3) 1.8 (14.5) (12.6) 3.5 (9.1)
Profit for the year attributable to owners of the parent 51.7 (17.9) 33.8 40.4 (16.3) 24.1
Basic earnings per share 6 65.9p 43.0p 51.7p 30.9p
Diluted earnings per share 6 65.1p 42.5p 51.3p 30.6p
Dividend per share - Interim 7 8.5p 7.1p
Dividend per share - Final proposed 7 17.9p 13.6p
Total 26.4p 20.7p
* The Group's definition of non-underlying items is included in note 1 to the
Financial Statements.
Consolidated Statement of Comprehensive Income
Year ended 31 December 2016
2016£m 2015 £m
Profit for the year 33.8 24.1
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of overseas operations 36.5 1.8
Exchange differences on foreign currency borrowings denominated as net investment hedges (9.5) (0.4)
Effective portion of changes in fair value of cash flow hedges - (0.1)
Transfers to the income statement on cash flow hedges 0.2 0.4
Taxation on items that may be reclassified to profit or loss - (0.1)
Items that will not be reclassified subsequently to profit or loss
Actuarial (loss)/gain on defined benefit pension schemes (14.1) 5.0
Taxation on items that will not be reclassified to profit or loss 2.1 (1.2)
Other comprehensive income for the year 15.2 5.4
Total comprehensive income for the year attributable to owners of the parent 49.0 29.5
Consolidated Statement of Financial Position
Year ended 31 December 2016
Notes 2016£m 2015 £m
Non-current assets
Intangible assets 166.5 126.4
Property, plant and equipment 149.7 129.2
316.2 255.6
Current assets
Assets held for sale 1.1 -
Inventories 71.6 57.7
Trade and other receivables 112.9 98.8
Cash and cash equivalents 9 15.6 12.9
201.2 169.4
Total assets 517.4 425.0
Current liabilities
Trade and other liabilities (105.1) (87.8)
Current tax liabilities (11.2) (8.7)
Provisions for liabilities and charges (2.6) (0.2)
Interest bearing borrowings 9 (0.3) (0.3)
(119.2) (97.0)
Net current assets 82.0 72.4
Non-current liabilities
Other liabilities (0.4) (0.2)
Provisions for liabilities and charges (3.2) (2.7)
Deferred tax liability (7.8) (7.9)
Retirement benefit obligation (27.3) (14.6)
Interest bearing borrowings 9 (127.3) (104.1)
(166.0) (129.5)
Total liabilities (285.2) (226.5)
Net assets 232.2 198.5
Equity
Share capital 19.7 19.6
Share premium 33.5 32.8
Other reserves 4.8 4.6
Translation reserve 29.3 2.3
Hedge reserve - (0.2)
Retained earnings 144.9 139.4
Total equity 232.2 198.5
Consolidated Statement of Changes in Equity
Year ended 31 December 2016
Notes Share capital £m Share premium£m Otherreserves†£m Translation reserves £m Hedge reserves£m Retained earnings£m Totalequity£m
At 1 January 2015 19.5 31.7 4.5 0.9 (0.4) 125.3 181.5
Comprehensive income
Profit for the year - - - - - 24.1 24.1
Other comprehensive income for the year - - - 1.4 0.2 3.8 5.4
Transactions with owners recognised directly in equity
Dividends 7 - - - - - (14.1) (14.1)
Credit to equity of share-based payments - - - - - 0.9 0.9
Satisfaction of long term incentive payments - - - - - (1.8) (1.8)
Own shares held by employee benefit trust - - - - - 0.9 0.9
Transfers between reserves - - 0.1 - - (0.1) -
Tax taken directly to the Consolidated Statement of Changes in Equity 5 - - - - - 0.4 0.4
Shares issued 0.1 1.1 - - - - 1.2
At 31 December 2015 19.6 32.8 4.6 2.3 (0.2) 139.4 198.5
Comprehensive income
Profit for the year - - - - - 33.8 33.8
Other comprehensive income for the year - - - 27.0 0.2 (12.0) 15.2
Transactions with owners recognised directly in equity
Dividends 7 - - - - - (16.2) (16.2)
Credit to equity of share-based payments - - - - - 1.1 1.1
Satisfaction of long term incentive payments - - - - - (1.4) (1.4)
Own shares held by employee benefit trust - - - - - (0.6) (0.6)
Transfers between reserves - - 0.2 - - (0.2) -
Tax taken directly to the Consolidated Statement of Changes in Equity 5 - - - - - 1.0 1.0
Shares issued 0.1 0.7 - - - - 0.8
At 31 December 2016 19.7 33.5 4.8 29.3 - 144.9 232.2
† Other reserves represent the premium on shares issued in exchange for shares
of subsidiaries acquired and £0.2m (2015: £0.2m) capital redemption reserve.
At 31 December 2015 the Group had purchased 86,732 of its own shares, which
were held in an employee benefit trust for the purposes of settling awards
granted to employees under equity-settled share based payment plans. The cost
of these shares, amounting to £0.5m, was included within retained earnings at
that date. In March 2016, these shares were issued in settlement of awards to
employees together with an additional 11,754 shares purchased in 2016. A
further 103,246 shares were purchased in 2016 at a cost of £1.1m and are held
at 31 December 2016.
Consolidated Statement of Cash Flows
Year ended 31 December 2016
2016 2015
£m £m £m £m
Profit before tax 48.3 33.2
Add back net financing costs 3.5 4.1
Operating profit 51.8 37.3
Adjusted for non-cash items:
Share-based payments 1.6 0.9
Gain on disposal of non-current assets (0.2) -
Depreciation 17.3 15.5
Amortisation of intangible assets 3.7 2.5
Impairment of non-current assets 4.1 15.7
26.5 34.6
Operating cash flow before movement in working capital 78.3 71.9
(Increase)/decrease in inventories (4.3) 1.1
Increase in receivables (0.6) (3.0)
Increase/(decrease) in payables 4.8 (0.6)
Decrease in provisions and employee benefits - (3.3)
Net movement in working capital (0.1) (5.8)
Cash generated by operations 78.2 66.1
Income taxes paid (15.7) (12.6)
Interest paid (3.2) (3.5)
Net cash from operating activities 59.3 50.0
Interest received 0.4 0.5
Proceeds on disposal of non-current assets 3.6 1.2
Purchase of property, plant and equipment (19.9) (14.8)
Purchase of intangible assets (1.8) (1.2)
Acquisitions of subsidiaries (36.9) (16.6)
Deferred consideration in respect of prior year acquisitions (0.5) -
Net cash used in investing activities (55.1) (30.9)
Issue of new shares 0.8 1.2
Purchase of shares for employee benefit trust (2.0) (0.9)
Dividends paid (16.2) (14.1)
Costs associated with refinancing of revolving credit facility (1.0) -
New loans and borrowings 46.1 46.0
Repayment of loans and borrowings (31.7) (45.0)
Repayment of obligations under finance leases - (0.1)
Net cash used in financing activities (4.0) (12.9)
Net increase in cash 0.2 6.2
Cash at the beginning of the year 12.9 6.7
Effect of exchange rate fluctuations 2.5 -
Cash at the end of the year 15.6 12.9
Notes to the Consolidated Financial Statements
1. Basis of preparation
Hill & Smith Holdings PLC is a company incorporated in the UK.
New IFRS standards and interpretations adopted during 2016
In 2016 the following amendments had been endorsed by the EU, became effective
and therefore were adopted by the Group:
- Amendments to IFRS 11 - Accounting for Acquisitions of Interests in
Joint Operations.
- Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods
of Depreciation and Amortisation.
- Amendments to IAS 27 - Equity Method in Separate Financial
Statements.
- Annual Improvements to IFRSs - 2012-2014 Cycle.
- Disclosure Initiative - Amendments to IAS 1.
The adoption of these standards and amendments has not had a material impact
on the Group's Financial Statements.
The following standards and interpretations which are not yet effective and
have not been early adopted by the Group will be adopted in future accounting
periods:
- IFRS 15 'Revenue from Contracts with Customers' (effective 1 January
2018).
- IFRS 9 'Financial Instruments' (effective 1 January 2018).
- IFRS 16 'Leases' (effective 1 January 2019).
The impact of IFRS 16, which was issued in January 2016, is currently being
assessed. None of the other standards or amendments above are expected to have
a material impact on the Group.
Exchange rates
The principal exchange rates used were as follows:
2016 2015
Average Closing Average Closing
Sterling to Euro (£1 = EUR) 1.22 1.17 1.38 1.36
Sterling to US Dollar (£1 = USD) 1.35 1.23 1.53 1.48
Sterling to Swedish Krona (£1 = SEK) 11.57 11.14 12.90 12.50
Non-underlying items
Non-underlying items are disclosed separately in the Consolidated Income
Statement where the quantum, nature or volatility of such items would
otherwise distort the underlying trading performance of the Group. The
following are included by the Group in its assessment of non-underlying
items:
- Gains or losses arising on disposal, closure, restructuring or
reorganisation of businesses that do not meet the definition of discontinued
operations.
- Amortisation of intangible fixed assets arising on acquisitions.
- Expenses associated with acquisitions.
- Impairment charges in respect of tangible or intangible fixed assets.
- Changes in the fair value of derivative financial instruments.
- Significant past service items or curtailments and settlements
relating to defined benefit pension obligations resulting from material
changes in the terms of the schemes.
- Net financing costs or returns on defined benefit pension
obligations.
- Costs incurred as part of significant refinancing activities.
The tax effect of the above is also included.
Details in respect of the non-underlying items recognised in the current and
prior year are set out in note 3 to the Financial Statements.
2. Segmental information
Business segment analysis
The Group has three reportable segments which are Infrastructure Products -
Utilities, Infrastructure Products - Roads and Galvanizing Services. Several
operating segments that have similar economic characteristics have been
aggregated into these reporting segments. The Group's internal management
structure and financial reporting systems differentiate between these segments
on the basis of the following economic characteristics:
- The Infrastructure Products - Utilities segment contains a group of
businesses supplying products characterised by a degree of engineering
expertise, to public and private customers involved in the construction of
facilities serving the Utilities markets or in the maintenance of such
facilities;
- The Infrastructure Products - Roads segment contains a group of
companies supplying permanent and temporary safety products to customers
involved in the construction or maintenance of national roads infrastructure;
and
- The Galvanizing Services segment contains a group of companies
supplying galvanizing and related materials coating services to companies in a
wide range of markets including construction, agriculture and infrastructure.
Income Statement
2016 2015
Revenue £m Result £m Underlyingresult* £m Revenue £m Result £m Underlyingresult* £m
Infrastructure Products - Utilities 207.6 4.0 13.0 193.9 (7.1) 10.5
Infrastructure Products - Roads 168.1 10.9 19.6 131.6 15.6 16.0
Infrastructure Products - Total 375.7 14.9 32.6 325.5 8.5 26.5
Galvanizing Services 164.4 36.9 38.0 142.0 28.8 29.5
Total Group 540.1 51.8 70.6 467.5 37.3 56.0
Net financing costs (3.5) (2.6) (4.1) (3.0)
Profit before taxation 48.3 68.0 33.2 53.0
Taxation (14.5) (16.3) (9.1) (12.6)
Profit after taxation 33.8 51.7 24.1 40.4
* Underlying result is stated before non-underlying items as defined in note
1, and is the measure of segment profit used by the Chief Operating Decision
Maker, who is the Chief Executive. The Result columns are included as
additional information.
Galvanizing Services provided £4.7m (2015: £5.2m) revenues to Infrastructure
Products - Roads and £1.4m (2015: £1.6m) revenues to Infrastructure Products -
Utilities. Infrastructure Products - Utilities provided £5.4m (2015: £3.0m)
revenues to Infrastructure Products - Roads. These internal revenues, along
with revenues generated from within their own segments, have been eliminated
on consolidation.
Geographical analysis
Revenue (irrespective of origin)
2016£m 2015£m
UK 264.5 235.8
Rest of Europe 89.1 73.4
North America 156.9 135.0
The Middle East 8.1 7.2
Asia 11.5 13.3
Rest of World 10.0 2.8
Total Group 540.1 467.5
Total assets
2016£m 2015£m
UK 217.4 175.5
Rest of Europe 106.1 88.3
North America 173.1 144.3
Asia 16.4 15.5
Rest of World 4.4 1.4
Total Group 517.4 425.0
3. Non-underlying items
Non-underlying items included in operating profit comprise the following:
- Business reorganisation costs of £10.5m (2015: £0.3m) relating to the
closure or reorganisation of three of the Group's businesses as set out
below.
· On 9 March 2016 the Group announced its intention to exit its non-US
Pipe Supports business, involving cessation of manufacturing in the UK and
Thailand, the closure of its sales office in China and the transfer of work to
its facility in India. An initial provision of £9.2m was made in respect of
the estimated costs of closure. Subsequently £1.4m of this provision has been
released following the favourable settlement of certain matters resulting in a
net charge to the income statement of £7.8m.
· Following the acquisition of Signature Limited on 3 August 2016, the
Group has commenced a reorganisation of the business as part of its
integration with Mallatite Limited, the Group's existing lighting column
operation. The cost of the reorganisation and restructuring plan is £0.8m. The
plan includes a reduction in the number of operating sites of the integrated
business from five to three.
· In December 2016 the Group committed to the closure of Hill & Smith
Infrastructure Products India Pvt. Limited, our Roads business in India. The
cost of the closure is expected to be £1.9m, which has been provided for in
full in the year to 31 December 2016. Closure is expected to be completed in
the first quarter of 2017.
- An impairment charge of £4.1m (2015: £15.7m). In recent years CA
Traffic Limited has generated levels of profitability that are below those
anticipated when the business was acquired in 2006. The current and forecast
financial performance of the business (part of the Infrastructure Products -
Roads segment) is below that assumed in the impairment reviews performed at 31
December 2015 and 30 June 2016. As a result, a further impairment review was
performed at the end of the year based on the Board's revised expectation of
future profitability and cash generation. The impairment review concluded that
the carrying values of the assets of the business were less than their
recoverable amount (determined by reference to the Value in Use) by £4.1m,
representing the value of the goodwill arising on acquisition. The basis for
determining the Value in Use, including the discount rate, was consistent with
that used in the annual impairment review performed as at 31 December 2015.
- Amortisation of acquired intangible fixed assets of £2.6m (2015:
£1.6m).
- Acquisition expenses of £1.8m (2015: £1.0m) principally relating to
acquisitions made by the Group during the year.
- A gain of £0.2m relating to the settlement of certain defined benefit
pension obligations during the year.
Non-underlying items included in financial expense represent the net financing
cost on pension obligations of £0.5m (2015: £0.7m) and a £0.4m charge in
respect of amortisation of costs associated with refinancing (2015: £0.4m).
4. Net financing costs
Underlying£m Non-underlying£m 2016£m Underlying£m Non-underlying£m 2015£m
Interest on bank deposits 0.4 - 0.4 0.5 - 0.5
Financial income 0.4 - 0.4 0.5 - 0.5
Interest on bank loans and overdrafts 3.0 - 3.0 3.5 - 3.5
Total interest expense 3.0 - 3.0 3.5 - 3.5
Financial expenses related to refinancing - 0.4 0.4 - 0.4 0.4
Interest cost on net pension scheme deficit - 0.5 0.5 - 0.7 0.7
Financial expense 3.0 0.9 3.9 3.5 1.1 4.6
Net financing costs 2.6 0.9 3.5 3.0 1.1 4.1
5. Taxation
2016£m 2015 £m
Current tax
UK corporation tax 5.4 4.0
Overseas tax at prevailing local rates 12.9 10.1
Adjustments in respect of prior periods (1.6) (2.4)
16.7 11.7
Deferred tax
UK deferred tax (0.4) 0.3
Overseas tax at prevailing local rates - (3.7)
Adjustments in respect of prior periods - 0.1
Effect of change in tax rate (1.8) 0.7
Tax on profit in the Consolidated Income Statement 14.5 9.1
Deferred tax
Relating to defined benefit pension schemes (2.1) 1.2
Relating to financial instruments - 0.1
Tax on items taken directly to Other Comprehensive Income (2.1) 1.3
Current tax
Relating to share-based payments (0.6) (0.3)
Deferred tax
Relating to share-based payments (0.4) (0.1)
Tax taken directly to the Consolidated Statement of Changes in Equity (1.0) (0.4)
The tax charge in the Consolidated Income Statement for the period is higher
(2015: higher) than the standard rate of corporation tax in the UK. The
differences are explained below:
2016£m 2015 £m
Profit before taxation 48.3 33.2
Profit before taxation multiplied by the effective rate of corporation tax in the UK of 20% (2015: 20.25%) 9.7 6.7
Expenses not deductible/income not chargeable for tax purposes 1.4 0.4
Non-deductible goodwill impairment 0.8 1.6
Benefits from internal financing arrangements (1.4) (1.3)
Local tax incentives (0.9) (0.9)
Utilisation of brought forward tax losses not recognised (0.1) -
Overseas profits taxed at higher/(lower) rates 6.3 3.7
Overseas losses not relieved 1.6 0.4
Withholding taxes 0.5 0.1
Impact of rate changes (1.8) 0.7
Adjustments in respect of prior periods (1.6) (2.3)
Tax charge 14.5 9.1
6. Earnings per share
The weighted average number of ordinary shares in issue during the year was
78.5m (2015: 78.1m), diluted for the effects of the outstanding dilutive share
options 79.3m (2015: 78.8m). Underlying earnings per share have been shown
because the Directors consider that this provides valuable additional
information about the underlying performance of the Group.
2016 2015
Penceper share £m Penceper share £m
Basic earnings 43.0 33.8 30.9 24.1
Non-underlying items* 22.9 17.9 20.8 16.3
Underlying earnings 65.9 51.7 51.7 40.4
Diluted earnings 42.5 33.8 30.6 24.1
Non-underlying items* 22.6 17.9 20.7 16.3
Underlying diluted earnings 65.1 51.7 51.3 40.4
* Non-underlying items as detailed in note 3.
7. Dividends
Dividends paid in the year were the prior year's interim dividend of £5.5m
(2015: £5.0m) and the final dividend of £10.7m (2015: £9.1m). Dividends
declared after the year end date are not recognised as a liability, in
accordance with IAS10. The Directors have proposed the following interim
dividend and final dividend for the current year, subject to shareholder
approval:
2016 2015
Penceper share £m Penceper share £m
Equity shares
Interim 8.5 6.7 7.1 5.5
Final 17.9 14.1 13.6 10.6
Total 26.4 20.8 20.7 16.1
8. Acquisitions
On 13 May 2016 the Group acquired the share capital of Safety and Security
Barrier Holdings Limited, the parent company of Hardstaff Barriers Limited.
Details of this acquisition are as follows:
Safety and Security Barrier Holdings Limited Pre acquisition carrying amount£m Policy alignment and fair value adjustments£m Total£m
Intangible assets - 4.4 4.4
Property, plant and equipment 1.9 (0.7) 1.2
Inventories 0.2 - 0.2
Current assets 0.7 - 0.7
Cash and cash equivalents 0.3 - 0.3
Total assets 3.1 3.7 6.8
Current trade and other liabilities (0.8) (0.2) (1.0)
Current tax liabilities (0.2) (0.8) (1.0)
Deferred tax liabilities (0.3) (0.6) (0.9)
Total liabilities (1.3) (1.6) (2.9)
Net assets 1.8 2.1 3.9
Consideration
Consideration in the year 10.7
Goodwill 6.8
Cash flow effect
Consideration 10.7
Cash and cash equivalents acquired with the business (0.3)
Net cash consideration shown in the Consolidated Statement of Cash Flows 10.4
Contractual and customer relationships have been recognised as specific
intangible assets as a result of the acquisition. The residual goodwill
arising primarily represents the assembled workforce, market share and
geographical advantages afforded to the Group. Fair value adjustments have
been made to better align the accounting policies of the acquired business
with the Group's accounting policies and to reflect the fair value of assets
and liabilities acquired.
Post acquisition the acquired business has contributed £2.6m revenue and £0.4m
underlying operating profit, which are included in the Group's Consolidated
Income Statement. If the acquisition had been made on 1 January 2016, the
Group's results for the year would have shown revenue of £541.2m and
underlying operating profit of £70.8m.
On 13 July 2016 the Group acquired the share capital of Technocover Limited.
Details of this acquisition are as follows:
Technocover Limited Pre acquisition carrying amount£m Policy alignment and fair value adjustments£m Total£m
Intangible assets 0.1 5.9 6.0
Property, plant and equipment 2.4 (0.1) 2.3
Inventories 0.5 - 0.5
Current assets 1.7 - 1.7
Cash and cash equivalents 1.0 - 1.0
Total assets 5.7 5.8 11.5
Current trade and other liabilities (1.7) - (1.7)
Current tax liabilities (0.2) - (0.2)
Deferred tax liabilities (0.1) (1.1) (1.2)
Total liabilities (2.0) (1.1) (3.1)
Net assets 3.7 4.7 8.4
Consideration
Consideration in the year 10.2
Goodwill 1.8
Cash flow effect
Consideration 10.2
Cash and cash equivalents acquired with the business (1.0)
Net cash consideration shown in the Consolidated Statement of Cash Flows 9.2
Brands, contractual and customer relationships have been recognised as
specific intangible assets as a result of the acquisition. The residual
goodwill arising primarily represents the assembled workforce, market share
and geographical advantages afforded to the Group. Fair value adjustments have
been made to better align the accounting policies of the acquired business
with the Group's accounting policies and to reflect the fair value of assets
and liabilities acquired.
Post acquisition the acquired business has contributed £4.6m revenue and £0.2m
underlying operating profit, which are included in the Group's Consolidated
Income Statement. If the acquisition had been made on 1 January 2016, the
Group's results for the year would have shown revenue of £546.2m and
underlying operating profit of £71.3m.
On 3 August 2016 the Group acquired the share capital of Signature Limited.
Details of this acquisition are as follows:
Signature Limited Pre acquisition carrying amount£m Policy alignment and fair value adjustments£m Total£m
Intangible assets - 6.6 6.6
Property, plant and equipment 3.5 (0.1) 3.4
Inventories 1.7 (0.2) 1.5
Current assets 2.5 (0.1) 2.4
Cash and cash equivalents - - -
Total assets 7.7 6.2 13.9
Current interest bearing liabilities (0.2) - (0.2)
Current trade and other liabilities (3.2) (0.2) (3.4)
Current tax liabilities (0.2) - (0.2)
Deferred tax liabilities - (1.1) (1.1)
Total liabilities (3.6) (1.3) (4.9)
Net assets 4.1 4.9 9.0
Consideration
Consideration in the year 12.0
Goodwill 3.0
Cash flow effect
Consideration 12.0
Refund of consideration due 0.4
Net overdraft acquired with the business 0.2
Net cash consideration shown in the Consolidated Statement of Cash Flows 12.6
Brands, contractual and customer relationships have been recognised as
specific intangible assets as a result of the acquisition. The residual
goodwill arising primarily represents the assembled workforce, market share
and geographical advantages afforded to the Group. Fair value adjustments have
been made to better align the accounting policies of the acquired business
with the Group's accounting policies and to reflect the fair value of assets
and liabilities acquired.
Post acquisition the acquired business has contributed £4.8m revenue and £0.2m
underlying operating profit, which are included in the Group's Consolidated
Income Statement. If the acquisition had been made on 1 January 2016, the
Group's results for the year would have shown revenue of £548.6m and
underlying operating profit of £72.0m.
The Group has also made two other smaller acquisitions during the year:
- The trade and certain assets of E.T. Techtonics, Inc. ('ETT'),
acquired in January 2016; and
- The share capital of FMK Trafikprodukter AB ('FMK') , acquired in
April 2016.
Details of these acquisitions are set out below:
ETTPre acquisition carrying amount£m FMKPre acquisition carrying amount£m Policy alignment and fair value adjustments£m Total£m
Intangible assets - - - -
Property, plant and equipment - - - -
Inventories - 1.3 (0.1) 1.2
Current assets 0.1 0.2 - 0.3
Cash and cash equivalents - - - -
Total assets 0.1 1.5 (0.1) 1.5
Current trade and other liabilities - (0.2) - (0.2)
Deferred tax liabilities - - - -
Total liabilities - (0.2) - (0.2)
Net assets 0.1 1.3 (0.1) 1.3
Consideration
Consideration in the year 5.5
Goodwill 4.2
Cash flow effect
Consideration 5.5
Contingent consideration (0.8)
Cash and cash equivalents acquired with the business -
Net cash consideration shown in the Consolidated Statement of Cash Flows 4.7
The goodwill arising primarily represents the market share and know-how
afforded to the Group. Fair value adjustments have been made to better align
the accounting policies of the acquired businesses with the Group's accounting
policies and to reflect the fair value of assets and liabilities acquired.
Contingent consideration relates to the acquisition of FMK and is the maximum
amount payable dependent on the achievement of performance and product
development targets.
Post acquisition the acquired businesses have contributed £3.8m revenue and
£nil underlying operating profit, which are included in the Group's
Consolidated Income Statement. If the acquisitions had been made on 1 January
2016, the Group's results for the year would have shown revenue of £540.5m and
underlying operating profit of £70.5m.
9. Cash and borrowings
2016£m 2015 £m
Cash and cash equivalents in the Consolidated Statement of Financial Position
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