2002 Report And Accounts - Guinness Peat Group plc

Financial ReviewIntroductionOther than the adoption of FRS 19 relating todeferred taxation, there have been no changes inaccounting policies during the year.Operating ResultsThe Group’s results show a total operating profit(before exceptionals) of £6.5m (2001: £2.8m). Thisis due to a very strong performance fromDickinson Legg, which has benefited this yearfrom two large Korean orders won in 2001.●●Continuing operationsTurnover and Group operating profit (beforeexceptionals) have both increased comparedto the prior year, by £11.0m (24%) and £2.4m(61%) respectively, with the main contributorDickinson Legg, increasing turnover by 34%and operating profit by 60%. The Webbusiness of Spooner saw a small increasein turnover but managed to turn the £0.3mloss of the previous year into a small profit.Operating profit (after exceptionals) was £4.5mcompared to the prior year of £1.0m.Discontinued operationsDuring the year the Group disposed of itsinterest in Elite Cameron Limited. This businessmade a loss of £266,000 in the first half andthe Group’s 52.5% shareholding was sold on25th January 2002 for £250,000.Discontinued operations also contain theresults of Marshaide Limited, a gravel pitoperator which ceased business during theyear and Cameron Equipment which ceasedtrading: a profit of £369,000 was generatedby the release of excess provisions in thesebusinesses.Exceptional ItemsDuring the year, the Group sold its interest inElite Cameron at a net loss of £356,000 (beforededucting goodwill of £567,000 written off inprior years).Exceptional items within operating profit principallyinclude:(a) Restructuring costs of £678,000 whichincludes redundancy costs relating to thetermination of the head office activities atChippenham. These include £100,000 paidas compensation for loss of office toMr R J Petersen and an accrual of £390,000for the redundancy payment arising from theproposed closure of the corporate head officein Chippenham.(b) Costs of £768,000 borne up to 30th June2002 in relation to the proposed transactionwith the Guinness Peat Group.(c) The write off of £587,000 of developmentcosts in Dickinson Legg on a project whererecent trials have provided inconclusive results.Full details of the exceptional items are givenin note 3 to the financial statements.InterestNet interest costs were £0.6m (2001: £2.5m).Included within this amount is interest andrepayment premium paid on the Group’s 6.5%unsecured loan notes of £141,000. These loannotes were repaid in November 2001. The 2001figures included a one off exceptional arrangementfee paid to the Group’s previous bankers.TaxationOverall a tax charge of £431,000 (2001: £684,000credit) is shown in the profit and loss account.The adoption of FRS 19 has meant that the prioryear’s tax charge has been restated by twofactors. Firstly, £350,000 of Advance CorporationTax (“ACT”) has been put on the balance sheet asat 30th June 2001 and £600,000 as at 30th June2002. This is due to its recoverability against futureprofits. Secondly, FRS 19 states that a deferredtax provision has to be established in relation tothe pension prepayment calculated in accordancewith SSAP 24. Hence a £6,682,000 deferred taxprovision has been included at 30th June 20027