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REG-Jarvis PLC Annual Financial Report - Part 4
Released: 14/07/2009
Part 4 : For preceding part double-click [nRn3N5989V]
ensure that it identifies and manages safety risks across all of its operations
as effectively as possible.
Results and Dividends
The loss after taxation for the financial year attributable to Shareholders,
dealt with in the Consolidated Financial Statements, amounted to £9.6m (2008:
profit £11.1m). The Directors recommend that no final dividend be paid in
respect of the period (2008: nil). The loss for the year transferred to reserves
is £9.6m (2008: profit £11.1m).
Share Capital
Details of the Company's authorised and issued share capital are shown in Note
22 to the Consolidated Financial Statements. There were no changes to the share
capital during the year and no shares were held in treasury.
The Company has only one class of share. These confer the following rights and
obligations. Holders of Ordinary Shares are entitled to attend, speak and vote
(subject to certain restrictions outlined later in this report) at general
meetings. In addition, they have the right to be sent notices of general
meetings, a copy of the Company's Annual Report and Accounts, and to appoint one
or more proxies or corporate representatives to attend general meetings and to
exercise voting rights. Subject to meeting certain thresholds, they may also
require Directors to circulate resolutions which may be moved at AGMs and
statements relating to a matter to be dealt with at general meetings, call
general meetings, demand a poll, and require Directors to obtain an independent
report on any poll taken, or to be taken. A shareholder is also entitled, free
of charge, to one certificate for all shares registered in his name.
Analysis of Shareholders at 31 March 2009
Shareholders Number Shareholders % Shares Number Shares
%
Range of holdings of Ordinary 5p Shares
1-10,000 6,730 93.59 3,030,603 1.42
10,001 - 100,000 351 4.88 11,620,562 5.45
100,001 - 250,000 35 0.49 5,357,764 2.51
Over 250,000 75 1.04 193,283,945 90.62
7,191 100 213,292,874 100
Substantial Shareholdings
At 13 July 2009 the Company had been notified, pursuant to the Disclosure and
Transparency Rules (DTR 5), of the following direct or indirect interests in
three per cent or more of the voting rights over the Company's Ordinary Shares:
Gartmore Investment Limited 15.08%
Investeringsselskabet Luxor A/S 9.14%
Barclays plc 7.92%
Legal & General Group plc 3.16%
Restrictions on the Transfer of Shares
The Directors can refuse to register any transfer unless it is in respect of
shares which are fully paid; is in favour of less than four joint holders;
relates to only one class of shares; and meets the usual requirements for
registration under the Articles of Association. In terms of CREST shares,
registration can be refused in the circumstances set out in the uncertificated
securities rules.
Restrictions on Voting
Every member present in person or by proxy at a general meeting has one vote
upon a show of hands or, on a poll, one vote for every share he holds. Where a
court or official claiming jurisdiction to protect people who are unable to
manage their own affairs has made an order about a Shareholder, the person
appointed to act for that Shareholder can vote for him on a show of hands, on a
poll or by appointing a proxy.
If more than one joint Shareholder votes, including voting by proxy, the only
vote which will count is the vote of the person whose name is listed before the
other voters on the Register.
Unless the Directors decide otherwise, a Shareholder cannot attend or vote at
any general meeting or on a poll or exercise any other right conferred by
membership in relation to general meetings or polls if he has not paid all
amounts relating to those shares.
In addition, in the event of non-compliance with a restriction notice, the
shares identified in the notice no longer give the Shareholder any right to
attend or vote, personally or by proxy, at Shareholders' meetings.
Under the Company's Articles of Association, the deadline for submission of
proxy forms is not less than 48 hours before the meeting.
Authority to Allot Securities
At the forthcoming Annual General Meeting, an ordinary resolution will be
proposed in accordance with Section 80 of the Companies Act 1985 to renew the
Directors' authority to allot the authorised but unissued share capital of the
Company. The authority sought will be for a period of five years unless revoked,
renewed or varied and supersedes all previous authorities. Although the
authority will not expire for five years the Directors consider it appropriate
(and in line with current practice) to seek renewal of the authority on an
annual basis and therefore intend to seek renewal of the authority at next
year's Annual General Meeting. Subject to the approval of this ordinary
resolution by the Shareholders, authority will also be sought from Shareholders
to disapply Section 89 of the Companies Act 1985. This authority, which has been
sought from and granted by Shareholders in previous years, will permit the
Directors to issue for cash no more than five per cent of the current issued
share capital of the Company at the date hereof, without first offering them
pro-rata to existing Shareholders. The Directors believe that the resolution,
disapplying Section 89 in this way, is in the best interests of the Company.
Amendment of the Company's Articles of Association
The Company's Articles of Association may be amended by special resolution of
the Company's Shareholders. A resolution will be put to the Annual General
Meeting on 3 September 2009 to adopt new Articles of Association. Details of the
specific changes being proposed are set out in the explanatory notes to the
notice of the 2009 AGM.
Financial Instruments
Details of the Group's financial risk management policies are disclosed in the
Financial Review on page 7.
Directors
The Directors who held office throughout the year were:
Mr R W Entwistle
Ms E Filkin * + ++ (Non-Executive)
Professor B Mellitt * + ++ (Non-Executive)
Mr S J Norris ++
Mr J P O'Kane
Mr C J Rew * + ++ (Non-Executive)
Members of the * Remuneration, + Audit and ++ Nomination Committees. Full
biographical details of the Company's Directors at the date of the report are
given on page 14.
There were no changes to the composition of the Board during the year. In
accordance with the Company's Articles of Association Brian Mellitt, having
served two three year terms, will retire by rotation at the forthcoming AGM.
Richard Entwistle will retire as Chief Executive at the AGM. The present
intention of the Board is to appoint Stuart Laird as a Director in advance of
the AGM and he will therefore retire and stand for election at the AGM. Stuart
Laird does not at present have an Executive Director's service agreement, but
one will shortly be agreed and will be consistent with the Group's current
policies in respect of the remuneration of Executive Directors.
Details of the Directors' remuneration, shareholdings and options over the
shares in the Company and of the Executive Directors' service agreements are
given in the Directors' Remuneration Report on pages 24 to 27 which forms part
of this report.
Powers of Directors
The Directors manage the Company's business and can use all the Company's powers
except where the Memorandum and Articles of Association of the Company or
legislation say that powers can only be used by the Shareholders voting to do so
at a general meeting. The Directors are permitted to delegate any of their
authority and the Company has in place a schedule of Delegated Authorities,
which has been reviewed and updated during the year. The Directors exercise
their powers within the Company's corporate governance framework, which is the
subject of a separate statement on pages 16 to 19 and forms an integral part of
this Directors' Report.
Directors' Indemnities
The Directors are entitled to be indemnified by the Company to the extent
permitted by law and the Company's Articles of Association in respect of all
losses arising out of or in connection with the execution of their powers,
duties and responsibilities. Directors and Officers of the Company and its
subsidiaries have the benefit of a Directors' and Officers liability insurance
policy.
Appointment and Replacement of Directors
Directors may be appointed by the Company by ordinary resolution. Each Director
retires from office at the third annual general meeting after the annual general
meeting at which he was last elected and is then eligible for re-election. In
addition to any powers to remove Directors conferred by legislation the Company
can pass an ordinary resolution to remove any Director before the expiration of
his term of office.
Compensation for Loss of Office
The contracts of employment in respect of the Executive Directors and the
Executive Team (as referred to on page 15 but with the exception of the Group
Director Engineering and HSQE who has separate arrangements under a railways
related scheme which are not relevant for the purposes of this paragraph)
contain provisions relating to compensation for loss of office on a change of
control. In the event that an Executive Director or a member of the Executive
Team (with the exception of the Group Director Engineering and HSQE) is made
redundant because of a takeover then he would receive an additional redundancy
payment. The additional payment would be equal to 12 months' base salary in
respect of an Executive Director and 6 months' base salary in respect of a
member of the Executive Team.
Significant Agreements
There are a number of commercial agreements that take effect, alter or terminate
upon a change of control of the Company following a takeover bid. Save for in
respect of the Group's working capital facilities, none is considered to be
significant in terms of its potential impact on the business of the Group as a
whole. Under the terms of the Group's working capital facilities, if any single
person or group of persons acting in concert (as defined in the City Code on
Takeovers and Mergers) acquires or agrees to acquire control (as defined in
Section 416 of the Income and Corporation Taxes Act 1988) of the Company, the
Company must immediately notify its lenders and, on or before the acquisition
takes effect, prepay the facilities in full, together with prepayment fees,
interest, costs and expenses, and the facilities will be automatically
cancelled.
Creditor Payment Policy
When entering into commitments for the purchase of services and goods, the
Company gives due consideration to quality, delivery, price and the terms of
payment. Suppliers are made aware of these terms. The Company abides by these
terms whenever it is satisfied that suppliers have provided the services or
goods in accordance with agreed terms and conditions. In the event of disputes,
efforts are made to resolve them quickly. During the year ended 31 March 2009,
the Company on average paid its creditors within 60 days (2008: 62 days) of
receipt of invoice.
Employee Share Schemes
Where, under an employee share scheme operated by the Company, participants are
beneficial owners of shares, but not the registered owners, the voting rights
are normally exercised at the discretion of the participants.
Employment Policies
It is the policy of the Group that there shall be no discrimination or less
favourable treatment of employees, workers or job applicants in respect of race,
colour, ethnic or national origins, religious beliefs, sex, sexual orientation,
disability, political beliefs, age or marital status.
Full consideration is given to suitable applications for employment from
disabled persons, where they have the necessary abilities and skills for that
position, and wherever possible to re-train employees who become disabled, so
that they can continue their employment in the same or in another position.
Jarvis plc and its subsidiaries engage, promote, and train staff on the basis of
their capabilities, qualifications and experience, without discrimination,
giving all employees an equal opportunity to progress within the Group.
The Group continues to be committed to the health, safety and welfare of its
employees and to observe the terms of the Health & Safety at Work Act 1974, and
all other relevant regulatory and legislative requirements.
The Directors recognise the need for communication with employees at every
level. All employees have access to a copy of the Annual Report and Accounts,
which together with team briefings and internal noticeboard statements, keeps
them informed of the Group's progress. In addition, information is available on
the Company's intranet and via its collaborative, team-working platform
TeamSpace which was introduced during the year.
Environmental Policy
The Board is fully committed to minimising any adverse effects that the Group's
operations may have on the environment and to finding alternative ways of
operating where its activities may cause environmental damage.
Each of the operating businesses has developed environmental policies and
procedures appropriate to its business and these have been co-ordinated at Group
level in order to ensure that a consistent approach is applied throughout.
Further details and information on the key performance indicators used are
provided in the Corporate Social Responsibility Report on pages 20 to 23, which
also gives information on social and community issues.
Political and Charitable Donations
The Group made charitable donations of £6,350 during the year (2008: £500), and
made no political donations (2008: nil).
Going Concern
After making enquiries, the Directors have formed a judgement at the time of
approving the financial statements that there is a reasonable expectation that
the company and the Group have adequate resources to continue in operational
existence for the foreseeable future.
In common with the majority of other companies, the current economic conditions
create uncertainty, particularly concerning the phasing of revenues. This has
implications for cash generation and also, given that the Group's borrowing
facility is partly secured against receivables, for the timing of working
capital availability.
The Group's trading and cash flow forecasts have been based on bottom up budgets
prepared by divisional management, which have then been subjected to scrutiny
and challenge by the Board. These forecasts have then been used to forecast the
Group's funding requirements and, by using consistent assumptions, to calculate
working capital availability. Management have applied various sensitivities to
these forecasts including delays in obtaining funding on contracts, a general
reduction for unsecured revenues and margins. The forecasts show that the Group
should be able to operate within its cash resources and renewed bank
facilities.
Disclosure of Information to Auditors
Each of the Directors at the date of approving this report confirms that:
- so far as each Director is aware, there is no relevant
audit information of which the auditors are unaware; and
- each Director has taken all the steps that he ought to have
taken as a Director in order to make himself aware of any
relevant information needed by the Company's Auditors in
connection with preparing their report and to establish
that the Company's Auditors are aware of that information.
Auditors
A resolution to reappoint Grant Thornton UK LLP as Auditor and to authorise the
Directors to fix their remuneration will be proposed at the forthcoming Annual
General Meeting.
A Statement of Directors' Responsibilities is given on page 32 and is
incorporated into this report by reference.
This report has been approved by the Board and is signed on its behalf by:
Mark Akinlade
Secretary
13 July 2009
Statement of Directors' Responsibilities
Company law in the United Kingdom requires the Directors to prepare financial
statements for each financial period, which give a true and fair view of the
state of affairs of the Company and the Group and of the profit or loss of the
Group for that period. The Directors are required to prepare the Group Financial
Statements in accordance with IFRS as adopted by the EU and have elected to
prepare the Parent Company Financial Statements in accordance with UK Generally
Accepted Accounting Practice.
In preparing each of the Group and Parent Company Financial Statements, the
Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgments and estimates that are reasonable and
prudent;
- for the Group Financial Statements, state whether they
have been prepared in accordance with IFRS as adopted by
the EU;
- for the Parent Company Financial Statements state whether
applicable UK Generally Accepted Accounting Practice have
been followed; and
- prepare the financial statements on the going concern
basis unless it is inappropriate to assume that the Group
and the Parent Company will continue in business.
The Directors confirm that the financial statements comply with these
requirements.
The Directors are also responsible for:
- ensuring that the Company and the Group maintain proper
accounting records which disclose with reasonable accuracy at
any time the financial position of the Group and Company and
enable them to ensure that the financial statements comply
with the Companies Act 1985;
- safeguarding the assets of the Company and hence taking
reasonable steps for the prevention and detection of fraud
and other irregularities; and
- the maintenance and integrity of the corporate and financial
information on the Group's website.
Legislation in the United Kingdom governing the preparation and dissemination of
the financial statements and other information included in annual reports may
differ from legislation in other jurisdictions.
Directors' Responsibility Statement
We confirm to the best of our knowledge that:
1 the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the
EU, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
and
2 the business review and future developments (which cross
refers to the Chairman's statement) which is incorporated
into the Directors' report includes a fair review of the
development and performance of the business and the position
of the Group, the Company and the undertakings included in
the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they
face.
This statement has been approved by the Board and is signed on its behalf by:
John O'Kane
Group Finance Director
13 July 2009
Consolidated Income Statement
For the year ended 31 March 2009
2009 2008
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items (Note 5) items (Note 5)
Notes £m £m £m £m £m £m
Continuing operations
Revenue 2, 3 345.8 - 345.8 321.9 - 321.9
Cost of sales (315.0) - (315.0) (282.8) (4.7) (287.5)
Gross profit 30.8 - 30.8 39.1 (4.7) 34.4
Administration expenses (23.1) (11.4) (34.5) (29.9) 0.6 (29.3)
Operating profit / (loss) 4 7.7 (11.4) (3.7) 9.2 (4.1) 5.1
Finance income 2.4 - 2.4 4.3 1.1 5.4
Finance expense (5.0) - (5.0) (6.0) - (6.0)
Net finance costs 6 (2.6) - (2.6) (1.7) 1.1 (0.6)
Profit / (loss) before taxation 5.1 (11.4) (6.3) 7.5 (3.0) 4.5
Taxation 8 (3.3) - (3.3) (0.2) 5.4 5.2
Profit / (loss) for the year from continuing operations 1.8 (11.4) (9.6) 7.3 2.4 9.7
Post-tax (loss) / profit from discontinued operations 9 - - - (0.4) 1.8 1.4
(Loss)/Profit for the year attributable to equity shareholders 1.8 (11.4) (9.6) 6.9 4.2 11.1
Basic and diluted (loss) / earnings per share
- Continuing operations (4.5)p 4.7 p
- Discontinued operations - 0.7 p
Total 10 (4.5)p 5.4 p
Consolidated Statement of Recognised Income and Expense
For the year ended 31 March 2009
2009 2008
Notes £m £m
Net actuarial (losses) / gains on defined benefit pension schemes 14.2 (35.8) 1.5
Tax in respect of items taken directly to equity 10.0 -
Net income and expense recognised directly in equity (25.8) 1.5
(Loss) / profit for the year
- From continuing operations (9.6) 9.7
- From discontinued operations - 1.4
Total recognised income and expense for the year attributable to equity shareholders (35.4) 12.6
Consolidated Balance Sheet
At 31 March 2009
2009 2008
Notes £m £m
Non-current assets
Intangible assets 11 5.4 2.8
Property, plant and equipment 12 14.8 18.6
Deferred tax assets 13 7.5 12.7
Retirement benefit assets 14 3.2 40.4
30.9 74.5
Current assets
Inventories 15 2.2 3.3
Trade and other receivables 16 69.5 98.0
Cash and cash equivalents 6.2 3.4
77.9 104.7
Total assets 108.8 179.2
Current liabilities
Borrowings 18 (27.6) (10.6)
Trade and other payables 19 (82.7) (96.1)
Current tax liabilities (1.9) (2.5)
Provisions 20 (16.9) (5.9)
(129.1) (115.1)
Non-current liabilities
Borrowings 18 (0.1) (31.6)
Trade and other payables (0.4) (0.8)
Retirement benefit obligations 14 (9.9) (15.1)
Deferred tax liabilities 13 (3.1) (15.0)
Provisions 20 - (0.1)
(13.5) (62.6)
Total liabilities (142.6) (177.7)
Net (liabilities) / assets (33.8) 1.5
Equity
Share capital 22 10.7 10.7
Share premium 23 63.3 63.3
Special reserve 23 3.7 3.7
Capital redemption reserve 23 7.2 7.2
Other reserve 23 89.7 89.7
Accumulated losses 23 (208.4) (173.1)
Total equity (33.8) 1.5
The Financial Statements were approved by the Board on 13 July 2009 and were signed on its behalf
by:
R Entwistle Chief Executive
J O'Kane Group Finance Director
Consolidated Cash Flow Statement
For the year ended 31 March 2009
2009 2008
Notes £m £m
Operating activities
Cash flows from operating activities 28 24.4 (17.8)
Restructuring costs paid (1.7) (2.2)
Income taxes received - 6.4
Net interest costs paid (4.5) (5.1)
Net cash from / (used in) operating activities 18.2 (18.7)
Investing activities
Purchase of intangible assets (2.0) (2.4)
Purchase of property, plant and equipment (1.2) (0.4)
Disposal of businesses, net of cash and cash equivalents disposed - 1.9
Disposal of property, plant and equipment 2.3 1.2
Net cash (used in) / from investing activities (0.9) 0.3
Financing activities
Net proceeds from issue of ordinary shares - 3.2
Proceeds from new debt 11.2 1.0
Repayment of old debt (25.7) (10.0)
Net cash used in financing activities (14.5) (5.8)
Net increase / (decrease) in cash and cash equivalents 2.8 (24.2)
Opening cash and cash equivalents 3.4 27.6
Closing cash and cash equivalents 6.2 3.4
Cash and cash equivalents comprise:
- Unrestricted cash 2.8 -
- Restricted use cash* 3.4 3.4
6.2 3.4
*Use is restricted to certain contracts in accordance with defined contractual obligations.
Notes to the Consolidated Financial Statements
1 Summary of significant accounting policies
Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) adopted for use in the
European Union and IFRIC interpretations and the Companies Act 1985. The
Company has elected to prepare its Parent Company Financial Statements in
accordance with UK Generally Accepted Accounting Principles (UK GAAP). These are
presented on pages 57 to 60.
The Group has applied all accounting standards and interpretations issued by the
International Accounting Standards Board and the International Financial
Reporting Interpretations Committee (IFRICs) relevant to its operations and
effective for the year ending 31 March 2009.
The Consolidated Financial Statements have been prepared on a going concern
basis. The Directors forming a judgement at the date of approving the financial
statements that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Standards that have been issued in the year but are not yet effective and are
not expected to have a significant impact include:
- IAS 1 (Revised 2007) "Presentation of financial statements",
effective for the year ending 31 March 2010;
- IFRS 2 (Revised) "Share based payments" effective for years
ending 31 March 2010;
- IFRS 3 (Revised 2008) "Business combinations", effective for
the year ending 31 March 2011;
- IFRS 8 "Segmental reporting", effective for the year ending
31 March 2010;
- IAS 27 (Revised 2008) "Consolidated and separate financial
statements", effective for the year ending 31 March 2010;
- IAS 23 (Amendment) "Borrowing costs" effective, for the year
ending 31 March 2010; and
- IAS 32 (Amendment) 2007 "Financial instruments", effective
for the year ending 31 March 2010
Comparative results are presented for the financial year 3 April 2007 to 31
March 2008, the Group having extended its 2007 financial year-end by two days to
incorporate the Placing and Open Offer transaction completed on 2 April 2007.
The Consolidated Financial Statements are prepared on the historical cost basis,
except that share-based payments are measured at their fair value as of the date
of grant, and retirement assets and liabilities are stated at fair value at the
balance sheet date.
1.2 Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of
Jarvis plc and subsidiaries controlled by the Group at each year end.
Subsidiaries are all entities over which the Group has the power to govern the
financial and operating policies. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group, generally where there is a
shareholding of more than one half of the voting rights, and deconsolidated from
the date on which control ceases. The financial statements of subsidiaries are
prepared using accounting polices consistent with those of the Group.
Inter-company balances and transactions including unrealised profits arising
from intra-group transactions have been eliminated in full. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
1.3 Segmental reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. The Group is organised into three main
business segments: Rail, Plant and Accommodation Services. The secondary format
for segmental information is geographical area, which is based on the location
of the Group's operations.
1.4 Taxation
Tax expense represents the sum of the tax currently payable and deferred tax.
(i) Current taxation
The tax currently payable is based on the taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates and laws that
have been enacted or substantively enacted by the balance sheet date.
(ii) Deferred taxation
Deferred taxation is provided in full, using the balance sheet liability method,
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