Chairman's Statement (2008 Annual Report)
Toby Hayward
Chairman
Overview
In my first period as Chairman, it is my pleasure to report on a year of record underlying financial performance and major strategic development for the Company.In 2008, we have produced higher revenues and underlying profits, a robust balance sheet, good order recruitment and have created new opportunities outside of the UK, for both the short and long term.
Importantly, the Company has moved its focus sufficiently early into those sectors of the UK that have been expanding and has also targeted overseas markets, to counteract the anticipated fall in demand
in some of the major, traditional UK segments.
The integration of Fisher Engineering, acquired in October 2007, has been very successful. Despite the decline of the markets in Ireland, Fisher Engineering remains competitive and busy and it has made a significant contribution to the Company’s overall results, including UK market share advantage development.
The Company is positioning itself to face the challenges of the short term and to take advantage of its strategically strengthened position when economic conditions improve.
Results
Underlying operating profit (before amortisation of acquired intangible assets of £9.2m and the losses on the movements in derivative financial instruments of £0.7m) increased by 29.1% to a record £55.1m (2007: £42.7m) on increased revenue of £394.3m (2007: £300.7m).The underlying operating margin was 14.0% (2007: £14.2%) which in the economic downturn is very commendable.
Following finance costs of £2.6m underlying profit before tax was 22.2% higher at £52.5m (2007: £42.9m) producing an 18.1% increase in underlying basic earnings per share of 42.2p (2007: 35.7p).
Profit after tax was £24.0m (2007: £26.4m), with basic earnings per share of 27.1p (2007: 31.8p), both reflecting non-underlying items.
We ended the year with significantly reduced net borrowings of £15.8m (2007: £48.1m).
Dividend
In November 2008, at the time of the Interim Management Statement, the Board stated its intent to follow a prudent and more sustainable dividend policy.Consequently, we are pleased to recommend a final dividend of 10.00p per share, thus maintaining the total dividend payment for 2008 of 20.00p per share (2007: 20.00p).
The Board’s policy remains to follow this prudent approach in the current year (2009) and continue to monitor the business environment going forward.
Board
At the end of May 2008, Peter Levine retired from his role as Chairman.The Board thanks him for many years of first class contribution to the Company and his role in its development. I had the pleasure of becoming the new Chairman.
At the same time, John Featherstone retired from his position as Non-Executive Director, and the Board number was reduced to seven overall, including three Executive Directors.
Four executives from the Plc Board moved to join four other directors in the Executive Management Committee, which is now effectively focused on strategic and operational performance matters relating to the business.
The new configuration has operated extremely well and provides the Board with clear visibility and engagement in all relevant areas.
People
The Board has met at all our trading business locations across the Group within the past 12 months, engaging with local management and staff who have greatly impressed with their knowledge, attitude and experience. Their work rate and innovation remain key to the Company’s success.Outlook
In January 2008, the Company was one of the first to observe and voice concern at the potential weakening of demand in the retail and commercial sectors in the UK. Since then, it has been following a path of commercial diversification which is proving to be a successful policy.The Company is in robust financial condition and is well equipped for the future. We are confident that even against a poor macroeconomic outlook for the period, we will continue to produce a satisfactory performance in the coming 12 months and that the strong order book and balance sheet will support the Company’s ambitions.
Toby Hayward
Chairman
