Mears Regulatory News (MER)

21 Mar 2006 07:01

Mears Group PLC21 March 2006 MEARS GROUP PLC PRELIMINARY ANNOUNCEMENT YEAR ENDED 31 DECEMBER 2005 Mears Group PLC is once again pleased to announce record results for the yearended 31 December 2005. The highlights for the year include: • Operating result pre share option charges £10.3m (2004: £7.5m), up 37.1% • Diluted EPS - normalised pre share option charges 11.41p (2004: 8.45p), up 35.0% • Dividend per share 2.6p (2004: 1.9p), up 36.8% • Order book £1 billion (2004: £815m) • Net cash inflow £4.1 million (2004: £0.9m) • Margins increased across all business segments • Market forecast turnover for 2006 is 87% secured Bob Holt, Chairman, said: "We're now moving into a period of particularly rapid growth. There are enormousopportunities ahead - the greatest ever for Mears. I remain absolutely committedto the Group and I'm looking forward to leading the team that takes Mears to thenext level." For further information contact Stuart Black07971 151320 David Robertson07887 705357 Chairman's Statement Mears was listed on the Alternative Investment Market of the London StockExchange (AIM) in October 1996. We had 83 employees and turnover of £12 million.Since then we have achieved an average annual compound growth rate in profits of42%. In 2005 our performance was recognised with the Decade of Excellence and BestPerforming Share over 5 Years awards at the AIM Awards dinner. It's taken a lotof effort to achieve our results and the team deserves accolades like these. We've continued our strong growth this year. In line with market expectations,turnover was up 17.2%, operating profit before share option charges was up 37.1%and dividend was up 36.8%. We now employ 2,300 people and we have an order bookin excess of £1 billion. It's another very strong, very consistent set ofresults that stand out in our sector. Consistent qualities We've been through enormous changes over ten years but the same four qualitieshave remained: • We have strong financial management across the entire business. • We have an open and honest approach to partnership - with clients, with tenants, with suppliers and with advisers. • We know how to work together effectively. • We are not afraid of hard work. The £1 billion order book is an important indicator of our strengths. Yes, thequantity of future revenue involved is impressive, but I believe it's thequality of those orders that's most significant. These are long-term agreementswith clients based on the right key performance indicators. We have never takenon short-term contracts simply to create more flattering figures. We're buildinga robust business here, a business based on real partnerships. The big challenge - the right people One of the questions I am always asked is 'Can you continue to manage growth?'I've been asked that every year since I became Chairman. I think our figuresdemonstrate we meet our challenges head on. We're now moving into a period of particularly rapid growth and I'm sure wewill, once again, manage change successfully. The key is to recruit early andbring in the right people before you need them. We also need to have the rightnumber of excellent people in place, even though there is a skills shortage.We're developing innovative training, development and apprenticeship schemes tomeet that challenge. For example, in 2006 every tradesperson within the companywill have the opportunity to study towards a professional qualification - afirst for Mears. Over the last 12 months Stuart Black has had an immediate effect as ChiefOperating Officer and we've recognised this by appointing him as ChiefExecutive. Stuart is enhancing the professionalism of the Group and isintroducing a wide range of measures based on strong processes. It's exactlywhat we need. The finance team has continued its excellent work - how many companies canachieve earnings growth of around the 40% mark and still generate cash? Inaddition, Stuart has introduced an experienced management team across areas suchas IT, marketing and HR. Improving communities is part of our DNA Corporate social responsibility is not just a set of policies here - it's at theheart of this Group. I believe our work should help to improve daily life forpeople. I say our job is to make tenants smile. That belief runs through our repairs and refurbishments work and the additionalprojects we're involved in. Our 100 Days in the Community programme included 120separate projects where Mears employees used their time, skills and energy tomake a difference. We'll do even more in 2006. Many of our employees come from the communities they serve and throughapprenticeship schemes we're helping to increase employment and opportunity indeprived areas. We're planning to make our workforce even more reflective of ourcommunities, employing more elderly people to work with elderly people. Our community work has a real effect on people's lives. For example, Mearsemployees have been helping the Whitechapel homeless mission in East London byrenovating part of the building and carrying out volunteer work. I am alsopersonally supporting the Clean-up London campaign against anti-social behaviourand Mears branches are involved in everything from graffiti removal tosupporting youth sports schemes. A strong position in a great market I see excellent prospects in social housing. We're continuing to see a trend forlarger, longer-term contracts and that plays to our strengths as the leader inour market. We can maximise our advantages in terms of quality of service,scale, innovation and our proven commitment to working in partnership. I see no signs that change in the political climate will affect our marketsignificantly. The Decent Homes initiative was scheduled to end in 2010 - thoughwe expect that to stretch to 2015. We are very strong in the buoyant repairs andmaintenance market and see no difficulty in continuing to build the emphasis ofour business as Decent Homes ends. I've been in support services for 25 years and it has always surprised me thatthere has been relatively little consolidation in social housing. It remains arelatively fragmented sector, with competitors and potential entrants showing noreal appetite for merger so far. Mears is in a good position in terms of anyfuture consolidation. We have robust organic growth, but we are also well placedto make acquisitions if and when the right opportunities emerge. Looking ahead I would like to thank everyone at Mears for their commitment and hard work in2005. My hope for 2006 is that the excellent team here will raise their gameonce again. I want everyone within this Group to get the most from the careeropportunities they have and to be ambitious for themselves and the business. There are enormous opportunities ahead - the greatest ever for Mears. I remainabsolutely committed to this Group and I'm looking forward to leading the teamthat takes Mears to the next level. Bob Holtbob.holt@mearsgroup.co.ukChairman20 March 2006 Operating and Financial Review We describe ourselves as the leader in the social housing market. What definesleadership for us? • We continually demonstrate thought leadership and innovation. • We have the most repair and maintenance contracts in our sector. • We have the best margins in our sector. • We have the strongest cash generation in our sector. We believe our strong financial performance in 2005 underlines our strengths anddemonstrates once again that we are able to deliver impressive and sustainablegrowth. Before we review our performance we would like to note that we now prepareaccounts in accordance with International Financial Reporting Standards (IFRS)as adopted by the EU. The comparatives in the results below have been restatedto reflect this change. The details of these restatements are disclosed withinthe Group's website at www.mearsgroup.co.uk. Turnover In 2005 we grew turnover to £203.5m (2004: £173.7m), an increase of 17.2%.Within this overall figure social housing turnover was up 38.4%, reflecting astrong performance in winning new business. Operating result We achieved an operating result before share option charges of £10.3m (2004:£7.5m) - a 37.1% increase. We increased operating margins in our social housingactivities to 5.5% (2004: 5.2%) despite major increases in the operationaldemands placed on us by new work from contracts secured in late 2004 and 2005.Our Mechanical and Electrical division also achieved an improvement in marginsat 3.8% (2004: 2.8%). United Fleet Distribution (UFD) increased its operatingmargin to 4.8% (2004: 4.2%). Our ongoing investment in Group infrastructureprovides scope for better margins and even greater customer satisfaction. Share option charges The share option charge for 2005 was £0.5m, up from £0.3m in 2004. There is nocash impact from this new expense which arises from the adoption of IFRS. Finance The Group again maintained its broadly neutral cash position throughout 2005 andincurred a net finance charge of £0.02m (2004: £0.07m). Tight working capitalcontrol remains paramount given the tremendous scale of growth we're generating. Tax expense £2.5m has been provided for corporation tax (2004: £1.8m). The effective rate in2005 of 26.1% (2004: 24.7%) is low due to the impact of a corporation taxdeduction received on the exercise of share options and the utilisation of taxlosses. Earnings per share Normalised diluted earnings per share (EPS) before share option chargesincreased 35.0% to 11.41p (2004: 8.45p). This is calculated after applying afull tax. We consider this to be the fairest method of consistently evaluatingthe performance of Mears management. Dividend The dividend increase is in line with our earnings growth. A final dividend of1.9p per share is proposed which combined with the 0.7p interim dividend gives atotal dividend of 2.6p per share (2004: 1.9p). In accordance with IFRS, thefinal dividend has not been recognised within the preliminary announcement as itdid not represent an obligation at the balance sheet date. The dividend is payable on 3 July 2006 to shareholders on the register on 16June 2006. Cash flow The cash flow position continues to underline our strength as a business. A netcash inflow of £4.1m was achieved in the year (2004: £0.9m inflow). The Groupconverted 90.8% of EBITDA into operating cash flow (2004: 77.6%). A net £2.8mwas invested in new technology and operational bases, with 10 new sites openedin the year. The settlement of deferred consideration on previous acquisitionsabsorbed £0.8m of cash. Our net cash position at 31 December 2005 was £6.9m, upfrom £2.8m a year ago. Acquisitions The painting businesses we have acquired are now integrated into our socialhousing division and are focused on developing the significant growthopportunities in this sector. Excellent market opportunities in social housing mean that organic growth islikely to fuel our momentum, but we continue to seek out quality businesses withthe potential to help us further our strategic objectives and improve or broadenour services. Order book The visibility of our earnings continues to improve. £315m of new work wassecured in the year from 14 customers. Our order book now stands at £1 billion(2004: £815m). The element of market forecast turnover secured for 2006 is 87%. We continue to place great emphasis on winning good quality contracts that canprovide clear and sustainable margins. We also hold a healthy mix of DecentHomes and repairs and maintenance work, giving us a balanced position in thesocial housing market that is not reliant on clients' future discretionaryspending. Total equity Total shareholders' equity value rose by £8.2m in the year rose from £19.9m to£28.1m at 31 December 2005. Within this overall increase, £1.4m is due to therecognition under IFRS of the deferred tax asset in relation to share options. Major contract wins We achieved a number of major successes, winning contracts valued at £315m intotal. Highlights included: • Brighton & Hove City CouncilFive year gas servicing and repair contract. • London Borough of GreenwichFive year Decent Homes contract. • Kensington Housing TrustFive year responsive repair and voids contract. • London Borough of Kingston upon ThamesSeven year response and voids maintenance contract. • Leeds City HomesFive year Decent Homes contract. • Nottingham City HomesFive year Decent Homes contract. • Portsmouth City CouncilThree year response and maintenance contract. • Shoreline Housing PartnershipFive year Decent Homes contract. • Thames Valley Housing TrustFive year responsive repair and voids contract. • Wakefield & District HousingFive year Decent Homes contract. Risks The two most significant risks we face are damage to our reputation as a resultof a service failure and a shortage of appropriately skilled employees placinglimits on our growth. In response, we have upgraded our risk practices in linewith the growth of the business and invested significant time and resources instrengthening our approach to risk. Of course, the risk of service failure is best mitigated through a very strongfocus on service delivery and innovation and this is embedded in our operationalapproach - the One Mears Way. A skills shortage is best addressed throughinnovative recruitment and development programmes and an excellent workingenvironment with great rewards and opportunities. Our market We address two main market areas within social housing: ongoing repairs andmaintenance contracts with Local Authorities and contracts for capitalprogrammes generated by the Decent Homes Standard. Central Government is committing at least £3.5bn per annum to achieve the DecentHomes Standard and we believe this commitment is likely to last until 2015. Morethan one million homes do not yet meet the standard. 58 of the scheduled 192local authorities missed the Government's deadline of July 2005 to start theprocess by submitting options appraisals. Clearly, there is still plenty ofopportunity, including long-term partnership agreements involving joint ventureagreements or TUPE transfer. The repair and maintenance market is thriving and we have identified anaddressable market opportunity of around £5bn a year. The trend is for largerand longer-term contracts with clients looking to form partnerships withsuppliers able to provide innovative business and service models. Everythingfrom full-scale outsourcing to joint ventures is on the agenda. We believe thesecontracts play to our strengths as a market leader with a flexible andinnovative approach. Authorities in some of the larger conurbations in the North of England and theMidlands are now considering the option of joint working arrangements with theprivate sector for repair and maintenance work. We are also seeing interest inour repair and maintenance services from clients in Scotland and Wales - tworelatively early-stage markets with great potential. Local Authorities are experiencing greater scrutiny from Central Government withthe audit commission paying particular attention to the delivery of repair andmaintenance services. A new key line of enquiry has been introduced focusing onthe value for money and efficiency of maintenance services. In response we'rehelping individuals within the sector to share their insight and experiencesthrough our Thought Leader conferences, the first of which looked at theEfficiency Agenda. Our strategy Social housing continues to offer the biggest and best long-term growthopportunities. Our focus is firmly on this sector, with particular emphasis onlarger, longer-term contracts and other forms of innovative partnerships. Our specific strategic priorities are: • To recruit, retain and develop excellent people. • To develop close partnerships with clients and communities. • To constantly search for new and better ways to support clients and help tenants. In 2005 we strengthened our approach across all areas of the business in linewith our strategy. Here are some examples. • We established a Group Executive Set up in March, the Group Executive is responsible for all day-to-dayoperations. The members of this team are drawn from our key operational unitsand our support functions. The team is responsible to the PLC board fordelivering the Group's strategic business objectives and reports every month. • We enhanced our operating units Our operating units are three regional social housing operating units coveringthe North and Scotland, the Midlands and Wales, and the South; Haydon, ourMechanical and Electrical business; and United Fleet Distribution. Eachoperating unit now has its own dedicated managing director who is part of theGroup Executive. This integrated management structure has created opportunitiesfor cross-selling Haydon's services within social housing, generating excellentnew business for Haydon outside its established London market. • We further strengthened the senior team We made senior appointments in Marketing and Sales, HR, IT, Procurement andOperations. This has increased the breadth of our management team and is a majorstep forward in terms of introducing experienced management and robust processesacross all areas of the business. • We linked incentives to performance The rewards for our management teams are based on a clear set of performancecriteria. These include progress against the achievement of defined financialand strategic objectives, including customer and employee satisfaction levels. • We integrated our acquisitions We are very pleased with the progress of recently acquired businesses. We havenow integrated Scion and the smaller painting companies into our coreactivities. Scion operates as part of Haydon and the painting companies are nowpart of our social housing team. • We improved our support infrastructure We introduced a number of new systems and processes in HR, Finance, Sales and IThelping us to manage and support growth and generate more effective andefficient ways of working. People - our most valuable differentiator We said this last year and we will say it again: what really sets us apart as abusiness is the quality and spirit of our people. This is extremely important for two key reasons. First, Mears people areface-to-face with clients, tenants and the wider community each day, so our workmakes an immediate and lasting impression. Second, there is a skills shortageand it is vital that we can attract new people, retain good people and have thetraining and development programmes in place to turn good people into greatpeople. In 2005 we started an initiative whereby our 1,500 trades people can all nowtrain for a professional qualification. We also launched a national programme ofemployee development, together with structured work experience and training forprospective employees. Most of our employees live in the community they support. Recruiting locallyenables us to grow quickly, to attract people with local understanding and togive something back to our communities, many of which have profound unemploymentproblems. Our belief that community should be at the heart of Mears is strongerthan ever. You can see it in the way we recruit, the way we carry out work andthe time we all give to supporting community projects. Outlook The social housing market is robust. The forward order book is extremelyhealthy, both in terms of quantity and quality of future work. Our relationshipswith clients are excellent. We are a powerful competitor for all new contracts,especially those based on scale, quality and innovation. We have a well-balancedbusiness involved in Decent Homes and repairs and maintenance work. We haveopportunities for strong organic growth and growth through acquisition. TheMears appetite for hard work is as strong as ever. We believe we are in good shape and we are looking forward to another year ofImproving Homes, Improving Neighbourhoods, Improving Lives. Stuart Black David Robertsonstuart.black@mearsgroup.co.uk david.robertson@mearsgroup.co.ukChief Executive Finance Director20 March 2006 20 March 2006 Consolidated Income Statementfor the year ended 31 December 2005 2005 2005 2004 2004 Note £'000 £'000 £'000 £'000------------------------- ---- -------- -------- -------- --------Sales revenue 2 203,543 173,685Cost of sales (144,954) (128,766)------------------------- ---- -------- -------- -------- --------Gross profit 58,589 44,919Other administrative expenses (48,302) (37,417)Operating result beforeshare-based payments 2 10,287 7,502Share option charges (515) (315)------------------------- ---- -------- -------- -------- --------Total administrative costs (48,817) (37,732)------------------------- ---- -------- -------- -------- --------Operating result 9,772 7,187Share of operating result in associate - 4Finance income 70 16Finance costs (92) (84)------------------------- ---- -------- -------- -------- --------Result for the year before tax 9,750 7,123Tax expense 3 (2,540) (1,760)------------------------- ---- -------- -------- -------- --------Net result for the year 7,210 5,363------------------------- ---- -------- -------- -------- -------- Attributable to minority interests - 5Attributable to shareholdersof Mears Group PLC 7,210 5,358------------------------- ---- -------- -------- -------- -------- 7,210 5,363------------------------- ---- -------- -------- -------- -------- Earnings per share Pence Pence Basic 5 12.40 9.32------------------------- ---- -------- -------- -------- --------Diluted 5 11.45 8.71------------------------- ---- -------- -------- -------- -------- All activities are continuing. Consolidated Balance Sheetat 31 December 2005 2005 2004 £'000 £'000------------------------------- ------ ------Assets Non-currentGoodwill 10,647 11,069Property, plant and equipment 5,827 4,450Equity accounted investments - 49Deferred tax asset 3,500 2,100------------------------------- ------ ------ 19,974 17,668CurrentInventories 5,363 4,628Trade and other receivables 29,511 28,996Construction contracts 2,341 1,414Cash at bank and in hand 9,774 8,078------------------------------ ------ ------ 46,989 43,116------------------------------- ------ ------Total assets 66,963 60,784------------------------------- ------ ------ EquityEquity attributable to the shareholders of Mears Group PLCCalled up share capital 588 579Share premium account 3,960 3,362Share-based payment reserve 1,040 525Retained earnings 22,466 15,312------------------------------- ------ ------ 28,054 19,778 Minority interests - 95------------------------------- ------ ------Total equity 28,054 19,873------------------------------- ------ ------ 2005 2004 £'000 £'000------------------------------- ------ ------Liabilities Non-currentLong term financial liabilities - 7Other liabilities 855 2,953------------------------------- ------ ------ 855 2,960CurrentShort term borrowings and overdrafts 2,832 5,260Trade and other payables 33,215 31,184Current tax liabilities 1,764 1,365Pension and other employee benefits 243 142------------------------------- ------ ------Current liabilities 38,054 37,951 ------------------------------- ------ ------Total liabilities 38,909 40,911------------------------------- ------ ------------------------------------- ------ ------Total equity and liabilities 66,963 60,784------------------------------- ------ ------ Consolidated Statement of Recognised Income and Expensefor the year ended 31 December 2005 2005 2004 £'000 £'000----------------------------------- -------- -------- Actuarial losses on defined benefit pension scheme (101) (54)Increase in deferred tax asset 1,270 1,105----------------------------------- -------- --------Net income recognised directly to equity 1,169 1,051Profit for the financial period 7,210 5,363----------------------------------- -------- --------Total recognised income and expense for the period 8,379 6,414----------------------------------- -------- -------- Attributable to:----------------------------------- -------- --------Equity shareholders 8,379 6,409Minority interests - 5----------------------------------- -------- -------- 8,379 6,414----------------------------------- -------- -------- Consolidated Statement of Cash Flowsfor the year ended 31 December 2005 note 2005 2004 £'000 £'000----------------------------------- ------ -------- --------Operating activities Result for the year before tax 9,750 7,123Adjustments 6 1,974 1,494Change in inventories (735) (2,043)Change in operating receivables (1,442) (5,235)Change in operating payables 1,120 5,322----------------------------------- ------ -------- --------Cash inflow from operating activities before taxes paid 10,667 6,661Taxes paid (2,271) (1,312)----------------------------------- ------ -------- -------- 8,396 5,349 Investing activities Additions to property, plant and equipment (3,125) (2,540)Proceeds from disposals of property, plant andequipment 330 11Acquisition of subsidiary undertaking, net of cash (755) (1,088)Interest received 67 16----------------------------------- ------ -------- -------- (3,483) (3,601) Financing activities Proceeds from share issue 607 330Discharge of finance lease liability (75) (210)Interest paid (96) (87)Dividends paid (1,225) (864)----------------------------------- ------ -------- -------- (789) (831) Cash and cash equivalents, beginning of year 2,818 1,901Net increase in cash and cash equivalents 4,124 917----------------------------------- ------ -------- --------Cash and cash equivalents, end of year 6,942 2,818----------------------------------- ------ -------- -------- Cash and cash equivalents is comprised as follows:Cash at bank and in hand 9,774 8,078Short term borrowings and overdrafts (2,832) (5,260)----------------------------------- ------ -------- --------Cash and cash equivalents 6,942 2,818----------------------------------- ------ -------- -------- Notes to the preliminary announcementfor the year ended 31 December 2005 1. Basis of preparation and transition to International Financial Reporting Standards The preliminary announcement contains extracts from the full financialstatements. The full financial statements have been prepared in accordance with applicableInternational Financial Reporting Standards and as adopted by the EU and underthe historical cost convention. The principal accounting polices of the Group have changed due to the adoptionof International Financial Reporting Standards (IFRS). The accounting policiesof the Group under IFRS are disclosed within the Group's website atwww.mearsgroup.co.uk. The transition from United Kingdom GAAP to IFRS has been made in accordance withIFRS1, First-time Adoption of International Financial Reporting Standards. The Group's consolidated financial statements for 2005 and the comparativespresented for 2004 comply with all presentation and disclosure requirements ofIFRS applicable for accounting periods commencing on or after 1 January 2005. The remeasurement of the consolidated balance sheet items at the IFRS openingbalance sheet date and at 31 December 2004, together with the reconciliation ofthe Group's equity reported under previous GAAP to its equity under IFRS as at 1January 2004 and 31 December 2004 is disclosed within the Group's website atwww.mearsgroup.co.uk. 2. Segment reporting The Group operates three business segments: the social housing segment, themechanical and electrical (M&E) segment and the vehicle distribution segment.All of the Group's activities are carried out within the United Kingdom. The table below forms an extract of that to be included within the Group'sstatutory accounts: 2005 Business Social M&E Vehicle Total segments housing distribution -------- ------- ------- ------------ -------Revenue 144,086 50,820 8,637 203,543 -------- ------- ------- ------------ -------Operating result pre share based payments 7,964 1,908 415 10,287 -------- ------- ------- ------------ ------- 2004 Business Social M&E Vehicle Total segments housing distribution -------- ------- ------- ------------ -------Revenue 104,086 58,684 10,915 173,685-------- ------- ------- ------------ -------Operating result preshare based payments 5,395 1,653 458 7,506-------- ------- ------- ------------ ------- 3. Tax expense The tax charge represents: 2005 2004 £'000 £'000--------------------------------------- ------- -------Total current tax 2,670 1,855Reversal of deferred tax timing differences (130) (95)--------------------------------------- ------- -------Tax expense 2,540 1,760--------------------------------------- ------- ------- 4. Dividends The following dividends were declared on ordinary shares in the year. 2005 2004 £'000 £'000--------------------------------------- ------- -------- final 2004 dividend of 1.40p (2004: final 2003 dividend of 1.00p) per share 815 573- interim dividend of 0.70p (2004: 0.50p) per share 410 290--------------------------------------- ------- ------- 1,225 863--------------------------------------- ------- ------- The proposed final dividend of 1.9p per share has not been included within theGroup preliminary results as no obligation existed at 31 December 2005. 5. Earnings per share Basic earnings per share is based on equity earnings of £7.21m (2004: £5.36m)and 58.16m (2004: 57.57m) ordinary shares at 1p each, being the average numberof shares in issue during the year. For diluted earnings per share the average number of shares in issue isincreased to 62.97m (2004: 61.56m) to reflect the potential dilution effect ofemployee share schemes. A normalised pre share-based payments earnings per share is disclosed in orderto show performance undistorted by share based payments and the tax effect ofshare options. The normalised pre share-based payments earnings per share isbased on equity earnings of £7.19m (2004: £5.20m). Basic Diluted --------- --------- 2005 2004 2005 2004 p p p P----------------------------- ------ -------- ------- --------Earnings per share 12.40 9.32 11.45 8.71Effect of eliminating share-based payments 0.66 0.38 0.61 0.36Effect of full tax adjustment (0.70) (0.66) (0.65) (0.62)---------------------------- ------ ------- -------- -------Normalised pre share-based paymentsearnings per share 12.36 9.04 11.41 8.45---------------------------- ------ ------- -------- ------- 6. Notes to Consolidated Cash Flow Statement The following non operating adjustments have been made to the pre-tax result forthe year: 2005 2004 £'000 £'000--------------------------------------- -------- --------Depreciation 1,458 1,082(Profit)/loss on disposal of fixed assets (21) 33Share option charges 515 315Result from equity accounted investments - (4)Finance income (70) (16)Finance cost 92 84--------------------------------------- -------- -------- 1,974 1,494--------------------------------------- -------- -------- 7. Publication of Non-Statutory Accounts The financial information set out in the announcement does not constitute theGroup's statutory accounts for the years ended 31 December 2005 or 2004. Thefinancial information for the year ended 31 December 2004 is derived from thestatutory accounts for that year which have been delivered to the Registrar ofCompanies, as subsequently restated under IFRS. A summary of restatements ispublished on the Group's website. The auditors reported on those accounts; theirreport was unqualified and did not contain a statement under s.237(2) or (3)Companies Act 1985. The statutory accounts for the year ended 31 December 2005will be finalised on the basis of the financial information presented by thedirectors in this preliminary announcement and will be delivered to theRegistrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange