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PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 MARCH 2008

VT Group plc, the defence and support services company, today announces its preliminary results for the year ended 31 March 2008. These results are prepared under International Financial Reporting Standards.

Results Summary - Continuing Operations: 

		2008		2007		Change
Turnover*		£1,201.0 m		£1,004.6 m		+ 20%
Revenue Excluding Joint Ventures		£1,020.0 m		£852.5 m		+ 20 %
Underlying Profit Before Taxation**		£89.1 m		£74.2 m		+ 20 %
Profit Before Taxation		£71.3 m		£53.8 m		+ 33 %
Adjusted Earnings Per Share (p)***		35.5 p		30.9p		+ 15 %
Basic Earnings Per Share		32.2 p		25.4p		+ 27 %
Full Year Dividend Per Share (p)		13.1 p		11.9 p		+ 11 %

* Includes share of revenue from equity accounted joint ventures and associates

** Excludes intangible amortisation arising from business combinations (£9.9m; 2007: £7.7m), share of joint venture taxation (£7.9m; 2007: £6.7m) and non-recurring charges in respect of exiting businesses (£nil; 2007: £6m)

*** Before intangible amortisation arising from business combinations and non-recurring charges in respect of exiting businesses

These definitions apply throughout this statement

.  Highlights:

Financial - 

• Turnover up by 20 per cent and underlying profit up by 20 per cent

• Closing order book £4.9 billion (up 32 per cent from last year)

Strategic - 

• Continuing organic growth of the business

• Expansion into new areas of engineering support services: nuclear and waste 

• Framework agreement signed for shipbuilding and naval support Joint Venture

Operational - 

• Contract signed for Future Strategic Tanker Aircraft (FSTA) programme - £1bn

• UK Military Flying Training System (MFTS) contract expected shortly

• Lewisham BSF contract signed, worth up to £325 million

• Good operating cash conversion 

Outlook

VT Group Chairman Michael Jeffries said: 'The Group continues to make excellent progress with strong results shown by all our divisions. 

'Our strategy of focusing on developing engineering support businesses has seen us move into new sectors of high growth activity through nuclear services and waste management.

 

'We continue to grow the order book and we have achieved significant milestones in aviation support with the signing of the Future Strategic Tanker Aircraft (FSTA) programme and the Military Flying Training System expected shortly.

 

'BVT Surface Fleet Limited, our Joint Venture in shipbuilding and naval support with BAE Systems, is ready to be implemented as soon as the Government confirms the placement of the manufacturing contract for the Royal Navy's new aircraft carriers (CVF). 

We have a well planned strategy to grow our engineering support services activities and we are also in a good position to benefit from excellent visibility of earnings, strong operating cash flow and good order pipeline. The Board remains confident for the current year and beyond.'

  

Chairman's Statement 

This has been another successful year for the Group. We have enhanced the long-term visibility of our business and expanded the range of our engineering support services into new high growth sectors.

Turnover increased by 20 per cent to £1,201 million (2007: £1,005m). Underlying profit before taxation improved by 20 per cent to £89.1 million (2007: £74.2m) with the corresponding adjusted earnings per share improving by 15 per cent to 35.5p (2007: 30.9p). Operating cash conversion during the period was 81 per cent. This performance has enabled the Board to recommend a final dividend of 9.55 pence, giving a total dividend for the year of 13.1p pence per share, an increase of 11 per cent over last year.

It is pleasing to note that of the 20 per cent increase in turnover achieved across all our divisions, over half was attributable to organic growth.

We continue to be encouraged by the performance of the Group, the dedication and capability of its employees and the strong culture of working together that prevails across the Group and with our key customers. These are important strengths as we become involved in larger programmes and engage with new customers.

Our strategy will continue to concentrate upon engineering-based support services which utilise our technical and project management skills. Our focus on higher value services will remain an important driver as we continue to grow our existing business organically and identify further suitable acquisition targets.

All our divisions have made significant progress over the past year and we have plans to increase our presence in areas such as nuclear services and waste management.

The Group has won important roles in some of the largest defence Private Finance Initiative (PFI) and support services programmes placed by the Ministry of Defence, namely the Future Strategic Tanker Aircraft (FSTA) and UK Military Flying Training System (MFTS). We expect the latter to reach contract close shortly.

Our emphasis on engineering support services will increase when we form the shipbuilding and naval support Joint Venture with BAE Systems (BVT Surface Fleet Limited). We have been reassured by the recent statements from HM Government and comments from the Prime Minister that the aircraft carrier project will go ahead. It has also been positive to see significant long lead forward orders being placed for equipment and steel for the ships. We understand that the Ministry of Defence is now in the final stages of its spending decision planning and we are optimistic that an announcement will be made shortly. 

The formation of BVT will create a world class company that will serve the interests of the UK market and will successfully address overseas markets, securing the future for the industry and benefiting the UK. VT and BAE Systems are ready to implement the joint venture once approval is given for the CVF manufacturing programme.

Our shipbuilding business continues to perform well. We will complete our contribution to the Type 45 destroyer programme on time by the end of this year and the export orders for Oman and Trinidad and Tobago provide us with a workload until 2011. We also have encouraging further export prospects.

Our support services businesses have all contributed to the progress of the Group with VT Communications maintaining good profit margins; VT Education and Skills showing marked improvement in underlying operating profit and margins; VT Support Services strengthening its position in key markets; and in the US we grew margins by developing higher value technical services.

Board and People

In November last year, we were delighted to welcome Philip Harrison to the Board as Group Financial Director. Phil took over the financial reins from Chris Cundy, who had been temporarily fulfilling the role of Finance and Commercial Director. His arrival means that Chris is now free to concentrate on his commercial role which has become increasingly important to the Group as we become involved in larger programmes.  

This month's Board meeting also saw David Thorpe step down as a non-executive director after five years serving VT Group. David has been a valued member of the board and we thank him for his important contribution to VT's progress. 

In his place we welcome Balfour Beatty Chief Executive Officer Ian Tyler.   Ian joined Balfour Beatty as Finance Director in 1996. He subsequently became Chief Operating Officer and took over as CEO in 2005. Ian's business knowledge and experience, especially in Balfour Beatty's development as a major services provider, will be of great benefit as we continue to implement the Group strategy.

Peter McIntosh has rejoined VT after a two-year spell on secondment as Chief Executive of the Aircraft Carrier Alliance. Peter has returned to the Board and is responsible both for our shipbuilding business and for our new activities in the nuclear and waste sectors.

The continuing success of our business can only be achieved through our people: their drive and enthusiasm is fundamental to our unique VT culture. In our management teams, we have the experience and expertise to pursue our corporate strategy and to drive the business forward.

  STRATEGY AND PROSPECTS

The progress of the Group and the growth of our order book to £4.9 billion reflect the continuing successful implementation of our corporate strategy. We intend to concentrate on the organic development of new business in engineering support services whilst maintaining a well planned acquisition policy.

The formation of BVT will provide us with a further opportunity to take the Group forward. Our continuing development into a broader based support services group will capitalise on the engineering-based heritage that has been the foundation for VT's success. We will continue to apply this expertise to markets which are critical to the success of our customers, primarily in Government sectors. This model has been evident in our two most recent acquisitions, VT Aepco in the United States and VT Nuclear Services.

The Future Strategic Tanker Aircraft (FSTA) and the forthcoming Military Flying Training System (MFTS) projects are good examples of our ability to augment our organic business by securing long-term programmes which provide excellent visibility of earnings. As pressure mounts on defence and other UK Government budgets, we believe that our position as a leading support services company will be enhanced as HM Government looks increasingly to the private sector to provide efficient, cost-effective support activities.

In the immediate future, we are competing for further programmes including Whole Fleet Management (WFM), New Dimensions and Search and Rescue (Helicopter) where our capability means that we are well placed to provide the solution which the customer is seeking.

Customer requirements for more efficient, more affordable support also place us in a good position to expand our role in new markets, including nuclear services and waste management. The £75 billion budget for decommissioning nuclear facilities that is projected until 2035 was an important factor in our acquisition of VT Nuclear Services, formerly British Nuclear Group Project Services, and this move has been further highlighted by the Government identifying nuclear power as a fundamental part of future energy requirements in the UK.

Having achieved preferred bidder status in the competition to provide a Private Finance Initiative (PFI) waste management and recycling facility in the Metropolitan Borough of Wakefield, Yorkshire, several other opportunities have now emerged as local authorities look to reduce their dependence on landfill schemes to meet EU regulatory requirements. 

Environmental services businesses offer a considerable opportunity as we move towards becoming a broadly based engineering support services business. 

VT Communications will benefit from providing information, communications and technology services to both the FSTA and MFTS programmes and the business continues to strengthen its position in the provision of new media distribution and digital transmission.  It has also secured business in relation to the television switchover from analogue to digital signalling. VTC's organic growth is expected to be strengthened by the extension of its Government contract. 

VT Education and Skills (VTE&S) has shown an improvement in profit. The division has expanded its work in providing education services and has also exploited an opportunity to strengthen its position in supplying engineering training for the automotive industry.   Further potential exists to improve our market share in this sector. VTE&S continues to address new Building Schools for the Future opportunities, concentrating on its role as a specialist provider of education services. 

Education and skills remains a challenging market but we believe that VT is now recognised as a significant player in the sector and can leverage this position to further develop the business. The planned acquisition of the rest of Flagship Training, through the BVT JV agreement, will make VTE&S the UK's biggest education and training provider. 

The acquisition of VT Aepco in the US has strengthened our links with the US Army and the US Government. We have already seen the benefits of the acquisition through the continued improvement in margins of the US business and this strategy to increase returns from the activities of VT Services Inc. will continue. 

VT Support Services continues to make good progress and the addition of FSTA and MFTS will provide further long-term organic growth. With several major prospects, the division is set to maintain its role as a leading provider of support services in the defence, emergency services and commercial markets. 

VT Shipbuilding continues to develop prospects for work overseas. We are working closely with our Greek partners, Elefsis Shipbuilding, to secure a further order from the Hellenic Navy for fast attack craft and prospects in Saudi Arabia and Libya are progressing.

Operating and Financial Review

VT COMMUNICATIONS

	31 March
	2008 £m	2007 £m
Turnover	£107.2 m	£99.2m
Underlying Operating profit	£17.7 m	£15.7m
Margin	16.5%	15.8%

Highlights

• New business won for FSTA 

• Defence High Frequency Communications Service (DHFCS) delivered six months ahead of schedule

• Potential extension to a Government contract

• Delivery for Arqiva of UK digital switch-over

VT Communications (VTC) has again achieved double digit growth in profits and also good progress on margins. The order book has good visibility through the business' ICT (Information Communications Technology) involvement in the FSTA and forthcoming MFTS programmes. FSTA is valued at over £100 million to VTC.

Further business is expected following an invitation to discuss extending VTC's Government contract. A five-year extension to the existing agreement is expected to be finalised by the end of the financial year.

In Defence and Security, in-service date for the MoD's DHFCS contract has been achieved six months early. The 15-year, £220 million Public Private Partnership (PPP) contract, has seen VTC combine all the UK's existing fixed military high frequency systems worldwide into a single, integrated pan-defence network, while continuing to provide day-to-day operational services.

DHFCS has delivered substantial benefits to the MoD including a significant increase in system availability and quality of service. The project has epitomised the partnering relationship between VTC, MoD and other suppliers, enabling key milestones to be brought forward and operational capabilities to be delivered early.

VTC's Broadcast business has leveraged its expertise in wireless infrastructure, engineering and programme management to secure a multi-million pound contract from Arqiva to source, deploy and commission low power Digital Terrestrial TV (DTTV) transmitter cabins at television relay sites as part of the UK programme to deliver Digital Switchover (DSO). 

The Media Management Centre (MMC), the control centre for VTC's Global Media Network which delivers broadcast and media content globally across multiple platforms, is now operational in VTC's new headquarters on London's Southbank.   The MMC will further enhance our potential to attract commercial broadcast business.

VT EDUCATION AND SKILLS

	31 March
	2008 £m	2007 £m
Turnover	£124.9 m	£112.1m
Underlying Operating profit	£5.6 m	£3.8m
Margin	4.5%	3.4%

Highlights

• Expanded market share in engineering training

• Education services contract win in Waltham Forest

• Good progress in Lewisham BSF scheme

Following the integration of the vocational training businesses acquired in 2006, the resulting reduction in cost base has helped VT Education and Skills (VTE&S) to produce growth in profit and margin. 

While offering potential for our support model, the education and skills sector remains challenging.  However, VTE&S has taken advantage of an opportunity to strengthen its engineering vocational training business by securing contracts to provide the Apprentice Learning Programme for Volkswagen Group and Subaru UK.

Good progress has been made on the Building Schools for the Future (BSF) programme in Lewisham where VTE&S is teamed with Costain in the Learning21 consortium. Construction of the first two schools, Catford High and Sedgehill, is well underway and they are scheduled to open early in 2009. Construction of the third school is due to start in the Autumn. VTE&S is already providing ICT support to five schools in the Borough of Lewisham, with up to six further schools also set to come on stream.

In Greenwich, where VT is a Strategic Partner Organisation (SPO) with the Borough Council, negotiations with a construction company continue with a view to construction on the first batch of schools starting by the end of the year.

Our future BSF strategy will be to concentrate on providing education services to a prime contractor or as part of a consortium. Using this model, we are part of a consortium which is one of two remaining bidders for the programme in the Borough of Luton.

In addition, VTE&S extended its education services from 1 April by delivering school improvement services to the London Borough of Waltham Forest similar to those already provided to schools in Surrey and Reading. The contract is worth approximately £30 million over four years.

Careers Guidance Services are undergoing significant changes with several Connexions Partnerships being brought in-house under the control of local authorities, often without a competitive bidding process. This trend has led to VTE&S ceasing to provide careers guidance activities in three major locations but we have secured new business in East Sussex and also secured longer term agreements with other local authorities.  We remain one of the country's leading providers of careers guidance services.

  VT SERVICES INC.

	31 March
	2008 £m	2007 £m
Turnover	£241.4 m	£193.2m
Underlying Operating profit	£9.2 m	£5.9m
Margin	3.8%	3.1%

Highlights

• Profits and margins continue to improve

• VT Aepco providing higher value technical services

Following the acquisition at the beginning of this calendar year, the military aviation support specialists Advanced Engineering and Planning Corporation Inc. (AEPCO) have been successfully integrated into the VT Services organisation. This acquisition has further contributed to the growth in margins in our US business.

We expect margins to improve further during the current year as we concentrate on offering higher-value technical services such as those provided by VT Aepco, through its management of helicopter support programmes, and VT Milcom, through its Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) installation and integration services.

The mobilisation of US Forces deploying to Afghanistan and Iraq continues to sustain a high demand for VT Griffin's base operations services in the US. Should these overseas operations scale down, we are likely to see continuing high level of demand for our services as the US military resettles its assets into its home bases.

Certain of our low-margin base operations contracts are no longer available to us under the US Government policy of set-aside where work is reserved for categories of small business. We are therefore changing the position of our business to focus on larger opportunities that embrace more diverse requirements and greater scale. As a result of not renewing set aside contracts, turnover reduced in VT Griffin by approximately £20 m. 

  VT SUPPORT SERVICES

	31 March
	2008 £m	2007 £m
Turnover	£483.8 m	£436.1m
Underlying Operating profit	£50.2 m	£44.0m
Margin	10.4 %	10.1%

Highlights

• Double digit growth in profits

• FSTA contract finalised and MFTS reaching contract close

• New helicopter support and Army training contracts implemented

• Environmental services activities provide excellent opportunities

Following contract award for FSTA, VT Support Services (VTSS) is on site at RAF Brize Norton, Oxfordshire to manage development of the FSTA facilities to support the fleet of Airbus A-330 aircraft.  Construction of a new hanger and administration complex will commence this summer and VTSS will provide ground support once the fleet is operational. 

Through a combination of its shareholding in the operating company, AirTanker Services Limited, and direct sub-contracts with Group business units, VT expects to benefit from business in excess of £1 billion during the 27-year lifespan of the programme.  

Through Ascent, the Joint Venture between VT Group and Lockheed Martin UK, VTSS will provide military flying training to the UK Armed Forces for the next 25 years under MFTS. We expect this contract to be signed shortly.

The total programme cost is estimated at up to £6 billion and will commence with initial service provision to support Advanced Jet Training operations.  Thereafter, other training capabilities will be subsumed incrementally until full service provision is achieved.  

In addition to UKMFTS, a bid has been submitted for the follow-on to the Light Aircraft Flying Task (LAFT), which we already provide.  In future, this will be expanded to include both University Air Squadron support and Elementary Flying Training with a combined value in excess of £130 million.

VTSS is in the process of implementing the £40 million contract with Agusta Westland to provide maintenance support to Sea King helicopters (SKIOS) used by the RAF and Royal Navy for Search and Rescue (SAR) duties around the UK Coast and Falkland Islands. This activity has seen the successful recruitment of over 200 technical support personnel.

April also saw the start of our £32 million five-year contract to provide Training, Maintenance and Support Services (TMASS) to the British Army at Bovington Garrison, Dorset. In naval support, we have started delivering support for the Trinidad and Tobago Coastguard, linked to our shipbuilding contract.

VT Critical Services has achieved a successful transition to a new support facility at Heathrow's Terminal 5 in its role of enabling availability of the British Airways fleet of 4,000 ground support vehicles at Heathrow. This has included procuring over £30 million worth of new support equipment for BA, delivered on time and within budget. Our contract to maintain the Metropolitan Police's vehicle fleet also had a successful first 12 months.

Later this year, we expect to hear the result of a tender to provide logistics support, maintenance and management of the New Dimensions fleet of emergency response vehicles and specialist equipment. These vehicles are used by the Fire Authorities in the event of disasters and emergencies. 

We also await the result of a down select in the competition to provide a harmonised Search and Rescue helicopter service around the UK Coast.  We are teamed with Lockheed Martin and British International Helicopters in the AirKnight consortium for this programme. 

Future opportunities for major MoD programmes include Whole Fleet Management, where we are one of four potential providers of long-term support for the MoD's substantial vehicle fleet.

Integration of the nuclear services business, formerly known as British Nuclear Group Project Services and now re-named VT Nuclear Services, is underway. The business is positioning itself for the nuclear power new build and de-commissioning programmes to which the UK Government is now committed.

Discussions continue in Wakefield with a view to finalising a contract by the end of the calendar year to design, build, finance and operate waste management and recycling facilities. 

Flagship Training has added to its apprentice training programme for Network Rail by securing a similar agreement with British Energy Generation to train its annual intake of engineering apprentices utilising Royal Navy facilities near Fareham. The five-year contract will be worth nearly £10 million. Flagship has also expanded its customer base for facilities management work after being appointed preferred bidder by the Department for Communities and Local Government to provide management services at nine new Regional Fire Control Centres. The work is worth nearly £30 million over seven years. 

Our Fleet Support Limited (FSL) joint venture continues to enjoy a busy workload. Having completed the refit of the frigate HMS Iron Duke, work has started on refitting the destroyer HMS York. The Surface Ship Support (SSS) Alliance, the initiative with other UK Naval Bases that agrees the distribution of available work, continues to operate well.

  VT SHIPBUILDING

	31 March
	2008 £m	2007 £m
Turnover	£243.7 m	£164.0m
Underlying Operating profit	£16.3 m	£13.1m
Margin	6.7%	8.0%

Highlights

• Work started on Oman and Trinidad and Tobago contracts

• Good progress on Type 45 project 

• Assembly hall extension completed

• Prospects in Greece, Saudi Arabia and Libya

Production has started on the First of Class ships for the programmes to build Ocean Patrol Vessels for the Royal Navy of Oman and Offshore Patrol Vessels for the Government of Trinidad and Tobago. Manufacture of the subsequent ships will start later this year.  These contracts provide VT Shipbuilding (VTS) with an order book of six ships extending to 2011. 

To facilitate this work and the future construction of the Royal Navy's CVF aircraft carriers, a 70-metre extension to the existing main ship assembly hall has been completed and is now in operation.

Productivity improvements continue in the manufacture of the Type 45 destroyer. The bow section for ship five has left the assembly hall and will be shipped to BAE Systems' facilities at Glasgow in June. Ship set six is also nearing completion and will be delivered in late 2008. VTS has improved productivity, measured from ship set one to ship set six, by over 30 per cent and delivery of the final ship set later this year will mean that our part of the programme will have been completed on time.

The current phase of work on our Technology Transfer programme in Greece for five fast attack craft is progressing well, with three ships in service. We are now working with Elefsis Shipyard to secure a contract extension for an additional two fast attack craft, which would be worth over £100 million.

We believe that discussions on UK defence spending plans are close to resolution and will lead to the Government's commitment to the start of manufacturing on the Royal Navy aircraft carrier (CVF) programme, which would provide a considerable boost to our shipbuilding order book. 

At VT Halmatic, the composites division has seen a major restructure and re-focus of the business, including closure of parts of the site and integration with the shipbuilding business. 

  FINANCIAL PERFORMANCE

Building Value for Shareholders

To ensure we are building value for shareholders we focus on a number of key measures

• Profit before taxation, intangible amortisation arising from acquisitions, taxation of joint venture and associates profit, and non-recurring charges of exiting businesses (underlying profit)

• Underlying earnings per share

• Order intake level

• Cash generation from operating activities

Collectively they form an integral part of building value for our shareholders on a consistent basis over the long term

Summary of financial results

Financial performance is measured under International Financial Reporting Standards ('IFRS').

	2008	2007
	£m	£m
Turnover (including Group share of equity accounted investments)	1,201.0	1,004.6
Profit before taxation - excluding non-recurring charges	71.3	59.8
Non-recurring charges	-	(6.0)
Total profit before taxation	71.3	53.8
Taxation	(13.3)	(7.7)
Profit for the year	58.0	46.1

Turnover growth in the business has continued with an increase of 20% to a total of £1.2bn. This growth has been achieved across all business units via a combination of organic growth (£111.2m) and a targeted acquisition strategy (£85.2m).

Profit before tax, has increased by 33% to £71.3m (2007: £53.8m), with each business division achieving an increase in reported profits for the year. Profit before tax in the prior year included a one-off charge in respect of exiting certain marine product businesses of £6m.

Net finance costs for the year have increased to £9.9m (2007: £8.3m) as a result of further acquisitions, both in the UK and USA, with consideration of £74m paid during the current year.

The effective tax rate on profit before taxation is 18.7% (2007: 14.3%). If the IFRS presentation relating to taxation on equity accounted investment profits was shown as taxation rather than share of post tax earnings of equity accounted investments, the effective tax rate would have been 26.8% (2007:23.7%).

 

Underlying profit

The Group uses underlying profit before taxation (i.e. profit before taxation, amortisation of intangible assets arising from business combinations, JV taxation and non-recurring charges of exiting businesses) as a key measure of performance. The increase year on year was 20%.

	2008	2007	Increase
	£m	£m	%
Profit before taxation as reported	71.3	53.8	33
Amortisation of intangible assets arising from business combinations	9.9	7.7
Taxation charge relating to equity accounted investments	7.9	6.7
Non-recurring charges of exiting businesses	-	6.0
Underlying profit	89.1	74.2	20

Underlying profit growth has been achieved across all business divisions, both via organic business growth and from acquisitions made in the current and prior year. The acquisitions have also contributed to the increase in the intangible amortisation charge noted, to a total of £9.9m (2007: £7.7m).

 

Taxation charges in respect of equity accounted investments have increased to £7.9m (2007: £6.7m), an effective rate of 30% (2007: 30%) on the group share of profits arising.

An analysis of underlying profit by business division is as follows:

	2008	2007	% increase
Communications	17.7	15.7	13
Education & Skills	5.6	3.8	47
Shipbuilding	16.3	13.1	24
Support Services	50.2	44.0	14
VT Services Inc	9.2	5.9	56
	99.0	82.5
Net finance costs	(9.9)	(8.3)
Underlying profit	89.1	74.2	20

Our Education and Skills division reports a significant increase in profit despite the prevailing challenging market conditions. This has been achieved in part from the benefits of the rationalisation performed during the prior year.

Our US business continues to show both improved overall profit along with increased operating margins, in line with our strategy to focus on higher value added services.

The Shipbuilding business had a strong year with contributions from the two recent export contracts from Oman and Trinidad and Tobago, adding to the existing Type 45 contract for the MoD.

The Communications division continues to build on the success of the significant MoD contracts, particularly the DHFCS contract for which the capital enhancement phase was completed during the current year.

Our Support Services business has built on the existing business and continues to take advantage of opportunities arising from prior year acquisitions. Within Support Services we have invested £1.5m in our waste and management business and acquired VT Nuclear Services for a consideration of £47.6m, which together form part of our expansion into engineering support services.  The VT Nuclear Services business did not contribute profit to the group in the current financial year as a restructuring exercise was commenced following acquisition at an estimated expense of £1m.  

Order book

The closing order book of the Group, including share of work to be performed by equity accounted investments, has increased to £4.9bn (2007: £3.7bn), driven by key contract wins of FSTA, Lewisham Building Schools for the Future and the Trinidad and Tobago OPV contract, supplemented by current contract and scope amendments and renewals. The size and long-term nature of the order book provides good visibility of future prospects.

Cash and net debt

The Group's operating cash conversion of operating profit to operating cash was 81% (2007: 173%). The prior year conversion rate reflected significant advance payments received on shipbuilding contracts which were not repeated in the current year.

Overall the Group's net debt position at 31 March 2008 was £144.9m (2007: £71.4m). The increase noted is largely due to the acquisition of Aepco and VT Nuclear Services for net consideration of £74.3m. The summary movement in net debt is as follows:

	2008	2007
	£m	£m
Cash flow from operating activities	65.7	107.4
Tax paid	(11.4)	(12.9)
Net interest paid	(9.8)	(8.0)
Net capital expenditure	(24.2)	(18.6)
Dividends paid	(23.4)	(19.6)
Purchase of businesses	(74.3)	(106.9)
Other	3.9	2.5
Movement in net debt	(73.5)	(56.1)

The Group's principal source of funding is a £305m revolving credit facility, of which £145m was utilised at 31 March 2008. £80m of this facility is available to the Group until September 2009 with the remainder available until November 2011.

The interest cover ratio in respect of servicing this debt stands at 9:1 (2007: 13:1), calculated as a percentage of EBITDA in accordance with bank covenant requirements.

Pensions

The VT Group has 5 pension schemes accounted for as defined benefit pension schemes with deficits, net of related deferred tax assets, of £7m (2007: £26.3 m) included within the consolidated balance sheet. The decrease in the year is largely due to changes in actuarial assumptions applied, predominantly an increase in the discount rate used to calculate scheme liabilities, which is driven by bond yields.

Underlying earnings per share

Underlying earnings per share is calculated on profits before amortisation of intangible assets arising from business combinations and non-recurring charges of exiting businesses. For the year ended 31 March 2008 the underlying earnings per share was 35.5p (2007: 30.9p) an increase of 15%. The average number of shares in issue during the year was 176.5m (2007: 174.9m).

Dividend

The proposed final dividend of 9.55p per share, coupled with the interim dividend of 3.55p per share paid in January 2008, gives a cumulative dividend for 2008 of 13.1p (2007: 11.85p), an increase of 11% on the prior year. The total dividend is covered 2.7 times by earnings before intangible amortisation arising from business combinations and non-recurring charges of exiting businesses (2007: 2.7 times). The increase in dividend for the year reflects the Board's confidence in the future prospects of the Group and its strong financial position.

Subject to approval at the Annual General Meeting, VT Group plc will pay a final dividend of 9.55p per share for the year ended 31 March 2008 on 6 August 2008 to shareholders on the register at 20 June 2008.

 

 

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2008

				Before non-recurring costs of exiting business		Non-recurring costs of exiting business		Total
	Notes	2008 £m		2007 £m		2007 £m		2007 £m
Combined turnover of group and share of equity accounted investments	2	1,201.0		1,004.6		-		1,004.6
Less: adjustment for share of equity accounted investments	2	(181.0)		(152.1)		-		(152.1)
Revenue – continuing operations		1,020.0		852.5		-		852.5
Cost of sales		(856.2)		(706.1)		(5.0)		(711.1)
Gross profit – continuing operations		163.8		146.4		(5.0)		141.4
Administrative expenses		(100.7)		(93.8)		(1.0)		(94.8)
Group operating profit –continuing operations	2	63.1		52.7		(6.0)		46.6
Share of results of equity accounted investments		18.1		15.5		-		15.5
Operating profit before amortisation of intangible assets arising from business combinations and taxation expense of equity accounted investments		99.0		82.5		(6.0)		76.5
Amortisation of intangible assets arising from business combinations		(9.9)		(7.7)		-		(7.7)
Taxation expense of equity accounted investments		(7.9)		(6.7)		-		(6.7)
Operating profit – continuing operations	2	81.2		68.1		(6.0)		62.1
Finance income		6.1		4.8		-		4.8
Finance expenses		(16.0)		(13.1)		-		(13.1)
Net financing costs		(9.9)		(8.3)		-		(8.3)
Profit from continuing operations before taxation		71.3		59.8		(6.0)		53.8
Income tax expense	3	(13.3)		(9.5)		1.8		(7.7)
Profit for the year		58.0		50.3		(4.2)		46.1
Attributable to:
Equity holders of the parent		56.8		48.6		(4.2)		44.4
Minority interest		1.2		1.7		-		1.7
		58.0		50.3		(4.2)		46.1
Basic earnings per share	4	32.2p						25.4p
Diluted earnings per share	4	31.4p						24.8p

  CONSOLIDATED BALANCE SHEET

As at 31 March 2008

					Notes		2008  £m		2007 (restated -note 5)  £m
ASSETS
Non-current assets
Property, plant and equipment					5		171.4		155.8
Investment property					5		0.7		0.8
Goodwill					5		250.8		206.1
Other intangible assets					5		70.7		51.2
Equity accounted investments							30.3		27.1
Financial assets							0.4		0.2
Other receivables							4.1		4.2
Deferred tax assets							17.7		24.4
Total non-current assets							546.1		469.8
Current assets
Inventories							31.1		28.4
Trade and other receivables							203.1		163.0
Income tax receivable							6.1		8.1
Financial assets							2.1		0.2
Assets classified as held for sale							0.8		4.3
Cash and cash equivalents					10		60.1		75.2
Total current assets							303.3		279.2
TOTAL ASSETS							849.4		749.0
LIABILITIES
Current liabilities
Interest-bearing loans and borrowings					6		18.6		39.7
Trade and other payables							294.6		288.0
Income tax payable							3.9		5.0
Other financial liabilities							0.5		0.4
Provisions					7		9.6		11.3
Total current liabilities							327.2		344.4
Non-current liabilities
Interest-bearing loans and borrowings					6		186.7		106.9
Other payables							2.8		0.9
Other financial liabilities							1.3		-
Employee benefits					8		9.7		37.6
Provisions					7		15.9		13.8
Deferred tax liabilities							43.0		43.1
Total non-current liabilities							259.4		202.3
TOTAL LIABILITIES							586.6		546.7
NET ASSETS							262.8		202.3
EQUITY
Issued share capital					9		8.9		8.8
Share premium					9		40.6		34.0
Hedging reserve					9		(1.0)		-
Translation reserve					9		(2.0)		(2.4)
Retained earnings					9		213.6		159.3
							260.1		199.7
Equity attributable to equity holders of the parent
Minority interest					9		2.7		2.6
TOTAL EQUITY							262.8		202.3

  CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March 2008

			Notes		2008 £m		2007 £m
Cash flow from operating activities			10		65.7		107.4
Tax paid					(11.4)		(12.9)
Net cash inflow from operating activities					54.3		94.5
Cash flows from investing activities
Interest received					4.4		4.8
Disposal of property, plant and equipment					1.3		0.9
Proceeds from assets held for resale					3.2		-
Sale of subsidiary undertaking (net of cash disposed of)					-		2.1
Purchase of subsidiary undertakings (net of cash acquired)			5		(74.3)		(76.5)
Investment in equity accounted investments					(0.1)
Loans advanced					(0.3)		-
Purchase of investment					-		(0.1)
Sale of investment					-		1.0
Purchase of property, plant and equipment			5		(27.7)		(17.4)
Payments to acquire intangible fixed assets			5		(1.0)		(2.1)
Net cash outflow from investing activities					(94.5)		(87.3)
Cash flows from financing activities
Interest paid					(14.2)		(12.8)
Dividends paid to equity shareholders of the parent			9		(21.4)		(19.2)
Dividends paid to minority interests			9		(2.0)		(0.4)
Proceeds from issue of share capital			9		5.3		3.4
New borrowings			6		91.0		37.3
Purchase of treasury shares			9		(2.0)		(1.6)
Repayment of loans arising on acquisition					-		(32.5)
Repayment of loans			6		(32.0)		(16.7)
Net cash inflow / (outflow) from financing activities					24.7		(42.5)
Net decrease in cash and cash equivalents			10		(15.5)		(35.3)
Cash and cash equivalents at the beginning of the year			10		75.2		112.0
Net foreign exchange movements			10		0.4		(1.5)
Cash and cash equivalents at the end of the year			10		60.1		75.2

  CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

For the year ended 31 March 2008

			Notes		2008 £m		2007   £m
Profit for the year					58.0		46.1
Other recognised income and expense for the year:
Exchange differences on retranslation of foreign operations					0.5		(4.3)
Derivative financial instruments - effective cash flow hedges					(1.4)		0.5
Actuarial gains losses arising on group pension obligations			8		22.1		23.2
Current tax on items taken directly to equity					2.8		-
Deferred tax on items taken directly to equity					(4.1)		(5.8)
					19.9		13.6
Other recognised income and expense in respect of joint ventures and associates:
Actuarial (loss) / gain on share pension obligations					(1.5)		2.7
Tax on gain on share of pension obligations					0.4		(0.8)
Effective cash flow hedges - net of deferred tax					(0.3)		-
Net income recognised directly in equity					18.5		15.5
Total recognised income and expense for the year					76.5		61.6
Attributable to:
Equity holders of the parent					74.4		58.5
Minority interest					2.1		3.1
Total recognised income and expense for the year					76.5		61.6

  

1.    Accounting policies

The financial information in this statement contains extracts from the VT Group plc ('the Group') 2008 Annual Report 

Which will be issued in June 2008 and are prepared in accordance with International Financial Reporting Standards 

('IFRS') as adopted by the European Union.

2.    Segment reporting    

Year ended 31 March 2008 - Continuing operations

	Communications	Education and Skills	Shipbuilding	Support Services	VT Services Inc	Elimination	Total
	£m	£m	£m	£m	£m	£m	£m
Turnover - external customers	107.2	124.9	243.7	483.8	241.4	-	1,201.0
Less: share of equity accounted investments	-	(12.7)	-	(165.4)	(2.9)	-	(181.0)
Revenue	107.2	112.2	243.7	318.4	238.5	-	1,020.0
Inter-segment revenue	1.5	-	4.1	6.5	-	(12.1)	-
Segment revenue	108.7	112.2	247.8	324.9	238.5	(12.1)	1,020.0
Results
Segment result before non-recurring charges and amortisation of intangible assets arising from business acquisitions	17.7	5.3	16.3	24.2	9.0	-	72.5
Share of joint venture profit before taxation and amortisation arising from business combinations	-	0.3	-	26.0	0.2	-	26.5
	17.7	5.6	16.3	50.2	9.2	-	99.0
Amortisation of intangible assets arising from business combinations	-	(2.4)	-	(5.2)	(2.3)	-	(9.9)
Taxation of joint venture profits	-	(0.1)	-	(7.8)	-	-	(7.9)
Operating profit	17.7	3.1	16.3	37.2	6.9	-	81.2
Net finance costs							(9.9)
Profit before taxation							71.3
Income tax expense							(13.3)
Net profit for year							58.0
Included in the above:
Group Operating Profit - continuing operations	17.7	2.9	16.3	19.5	6.7		63.1

2.    Segment Reporting (continued)    

Year ended 31 March 2007 - Continuing operations

	Communications	Education and Skills	Shipbuilding	Support Services	VT Services Inc	Elimination	Total
	£m	£m	£m	£m	£m	£m	£m
Turnover - external customers	99.2	112.1	164.0	436.1	193.2	-	1,004.6
Less: share of equity accounted investments	-	(2.2)	-	(144.1)	(5.8)	-	(152.1)
Revenue	99.2	109.9	164.0	292.0	187.4	-	852.5
Inter-segment revenue	1.9	0.1	12.3	1.8	-	(16.1)	-
Segment revenue	101.1	110.0	176.3	293.8	187.4	(16.1)	852.5
Results
Segment result before non-recurring charges and amortisation of intangible assets arising from business combinations	15.7	3.4	13.1	22.0	5.6	-	59.8
Share of joint venture profit before taxation and amortisation arising from business combinations	-	0.4	-	22.0	0.3	-	22.7
	15.7	3.8	13.1	44.0	5.9	-	82.5
Non-recurring charges	-	-	(6.0)	-	-		(6.0)
Amortisation of intangible assets arising from business combinations	-	(2.4)	-	(4.4)	(0.9)	-	(7.7)
Taxation of joint venture profits	-	(0.2)	-	(6.4)	(0.1)	-	(6.7)
Operating profit	15.7	1.2	7.1	33.2	4.9	-	62.1
Net finance costs							(8.3)
Profit before taxation							53.8
Income tax expense							(7.7)
Net profit for year							46.1
Included in the above:
Group Operating Profit - continuing operations	15.7	0.9	7.1	18.2	4.7		46.6

 

3.   Taxation

Tax charged in the income statement

				2008 £m		2007 £m
Current tax expense
UK Corporation tax				12.3		7.8
Foreign tax				0.7		2.3
Income tax charge in relation to current year				13.0		10.1
Adjustments in relation to prior year tax				1.4		(2.6)
Total current income tax				14.4		7.5
Deferred tax expense
Origination and reversal of temporary differences				(1.1)		0.2
Tax charge in the income statement				13.3		7.7

    

4.    Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity

Holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders

of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted

average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares

into ordinary shares.

The following reflects the income and share date used in the basic and diluted earnings per share computations:

			2008 £m		2007 £m
Net profit attributable to equity holders of the parent			56.8		44.4

			2008 No.		2007 No.
Basic weighted average number of shares (excluding treasury shares)			176,469,027		174,922,425
Dilutive potential ordinary shares - employee share options			4,471,147		4,182,458
Diluted weighted average number of shares			180,940,174		179,104,883

			2008		2007
Basic earnings per share			32.2p		25.4p
Diluted earnings per share			31.4p		24.8p

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date

and the date of completion of these financial statements.

Underlying earnings per share

Earnings per share before amortisation of intangible assets acquired from business combinations and non-recurring

charges of exiting businesses, which the directors consider gives a useful additional indicator of performance, is 

calculated on earnings for the period as follows:

		2008 £m		2007 £m
Net profit attributable to equity holders of the parent
Charges / (credits) included in profit:		56.8		44.4
Amortisation of intangible assets arising from business combinations		9.9		7.7
Non-recurring charges		-		6.0
Tax on charges included in profit		(4.0)		(4.2)
Adjusted earnings attributable to equity holders of the parent		62.7		53.9
Weighted average number of shares		176,469,027		174,922,425
Adjusted basic earnings per share		35.5p		30.9p
Adjusted diluted earnings per share		34.7p		30.1p

 

5.   Capital expenditure

 

			Property, plant and equipment  £m	Investment property £m	Other intangible assets £m	Goodwill £m
Balance at 1 April 2006 as previously stated			122.5	0.8	20.6	170.3
Foreign currency adjustment			(0.3)	-	(0.5)	(1.1)
Additions			17.4	-	2.1	-
Arising from business combinations			39.2	-	38.1	33.4
Disposals			(0.8)	-	-	-
Disposal of subsidiary			(0.3)	-	(0.2)	(1.7)
Depreciation and amortisation			(21.9)	-	(8.9)	-
Balance at 31 March 2007			155.8	0.8	51.2	200.9
Fair value adjustments to prior year acquisition			-	-	-	5.2
Balance at 31 March 2007 restated			155.8	0.8	51.2	206.1
Foreign currency adjustment			-	-	(0.1)	(0.1)
Additions			27.7	-	1.0	-
Arising from business combinations			7.0	-	29.5	44.8
Disposals			(2.0)	-	-	-
Depreciation and amortisation			(17.1)	(0.1)	(10.9)	-
Balance at 31 March 2008			171.4	0.7	70.7	250.8

                

During the year the Group made two business acquisitions, BNFL Project Services Limited for a consideration of £47.6m

and Aepco Corporation for a consideration of £36.7m. Goodwill of £44.8m and intangible assets of £29.5m arose from 

these transactions. The businesses have contributed £0.9m to the Group profit for the year, before amortisation of intangible

assets arising from the acquisitions.

In accordance with IFRS 3 the Group has reassessed the provisional fair values and purchase consideration in respect of the

acquisition of Milcom Systems Corporation made in the prior financial year. As a result of this reassessment goodwill arising 

from the transaction has been increased by £5.2m from that previously assessed. In addition, trade and other receivables were

increased by £0.1m, deferred tax assets increased by £0.5m, trade and other payables increased by £3.5m, provisions increased

by £1.7m and taxation receivable decreased by £0.5m. There was no effect on the reported profit of the prior year.

6.   Borrowings and loans

		2008 £m		2007 £m
Non-current		186.7		106.9
Current		18.6		39.7
		205.3		146.6

Movements in borrowings are analysed as follows:

		2008 £m		2007 £m
Opening amount at 1 April		146.6		127.3
Foreign currency adjustment		(0.3)		(1.3)
New borrowings		91.0		37.3
Arising on acquisition of subsidiary		-		32.5
Repayment of borrowings		(32.0)		(49.2)
		205.3		146.6

7.   Provisions for liabilities and charges

	Contingent consideration £m	Contract and warranty provisions £m	Chester Street provision £m	Reorganisation and redundancy £m	Total £m
At 1 April 2007:
Current	-	6.2	0.9	2.5	9.6
Non-current	-	5.2	8.6	-	13.8
	-	11.4	9.5	2.5	23.4
Prior year adjustment (note 5)	-	1.7	-	-	1.7
At 1 April 2007 as restated	-	13.1	9.5	2.5	25.1
Exchange differences	-	-
Created during the year	1.8	3.9	-	1.3	7.0
Arising on business acquisitions	-	0.5	-	2.1	2.6
Utilised	-	(2.8)	(0.8)	(1.2)	(4.8)
Unused amounts reversed	-	(3.4)	-	(1.0)	(4.4)
At 31 March 2008	1.8	11.3	8.7	3.7	25.5
Analysed as:
Current	1.8	4.9	1.1	1.8	9.6
Non-current	-	6.4	7.6	1.9	15.9

Contingent consideration

Contingent consideration may be payable in respect of the acquisition of Aepco Systems Corporation, made during the

current financial year. The final consideration will be determined with reference to revenue and profit performance in the 

period to 31 December 2008.  The above provision represents management's best estimate of the consideration payable

based upon forecast business performance.

Contract and warranty provisions

Provisions are made when contracts are put to sales to cover expected warranty claims. Provisions are based on an 

assessment of future claims with reference to past experience. Such costs are generally incurred within one to five years

post delivery.

Reorganisation and redundancy

Provisions are made to cover costs to be incurred in respect of committed programmes and other liabilities arising from

such reorganisations. Such liabilities are generally incurred within one year of the balance sheet date, however, certain 

employee termination costs may lead to commitments for payments to be made after more than one year from the

balance sheet date.

Chester Street provision

Provision has been made for potential liabilities following a previous group insurance carrier entering a Scheme of Arrangement.

8.   Post employment benefits

The group provides employee benefits under various arrangements, including through defined benefit and defined

contribution pension plans. Details of defined benefit pension schemes are provided below:

		2008 £m		2007 £m
Total market value of assets		346.7		356.7
Present value of obligations		(356.4)		(394.3)
Deficit in schemes		(9.7)		(37.6)
Related deferred tax asset		2.7		11.3
Net pension liability		(7.0)		(26.3)

The expense recognised in the consolidated income statement consists of the current service costs, interest on the

 obligation for employee benefits and the expected return on plan assets. For the year ended 31 March 2008, the group

 recognised an expense of £11.5m (2007: £14.0m) in respect of defined benefit pension plans.

The movement in the pension liability during the year was as follows:

		2008 £m		2007 £m
Deficit in defined benefit pension liability at 1 April		37.6		62.3
Actual return on assets below / (above) expected return		45.8		(1.9)
Income statement expense		11.5		14.0
Employer contributions		(17.3)		(15.5)
Other actuarial gains and losses		(67.9)		(21.3)
Net pension liability		9.7		37.6

Principal actuarial assumptions at the date of the most recent actuarial assessments of the schemes were as follows:

		2008 %		2007 %
Discount rate		6.7		5.3
Expected return on plan assets - equities		8.0		8.0
Expected return on plan assets - corporate bonds		6.9		6.9
Expected return on plan assets - Government bonds		4.5		4.5
Future salary increases		4.6		4.1
Future pension increases		3.4		2.9
Inflation assumption		3.5		3.0

9.  Reconciliation of movements in equity

Attributable to equity holders of the parent

	Share capital £m	Share premium £m	Hedging reserve £m	Translation reserve £m	Retained earnings £m	Total £m
Balance at 1 April 2006	8.7	30.7	(0.4)	1.0	116.0	156.0
Total recognised income and expense	-	-	0.4	(3.4)	61.5	58.5
Share option exercised by employees	0.1	3.3	-	-	-	3.4
Purchase of treasury shares	-	-	-	-	(1.6)	(1.6)
Equity-settled transactions	-	-	-	-	2.6	2.6
Dividends to shareholders	-	-	-	-	(19.2)	(19.2)
Balance at 31 March 2007	8.8	34.0	-	(2.4)	159.3	199.7
Total recognised income and expense	-	-	(1.0)	0.4	75.0	74.4
Share option exercised by employees	0.1	5.2	-	-	-	5.3
Purchase of treasury shares	-	1.4	-	-	(3.4)	(2.0)
Equity-settled share-based transactions	-	-	-	-	4.1	4.1
Dividends to shareholders	-	-	-	-	(21.4)	(21.4)
Balance at 31 March 2008	8.9	40.6	(1.0)	(2.0)	213.6	260.1

  Minority interest    

						£m
Balance at 1 April 2006						(0.1)
Total recognised income and expense						3.1
Dividends paid						(0.4)
Balance at 31 March 2007						2.6
Total recognised income and expense						2.1
Dividends paid						(2.0)
Balance at 31 March 2008						2.7

10.   Additional cash flow information

Cash flow from operating activities

			2008  £m		2007 £m
Profit before taxation expense			71.3		53.8
Finance income			(6.1)		(4.8)
Finance expenses			16.0		13.1
Operating profit - continuing operations			81.2		62.1
Adjustments to reconcile operating profit to net cash inflows from operating activities:
Share of post tax earnings of equity accounted investments			(18.1)		(15.5)
Depreciation of property, plant and equipment			17.1		20.0
Depreciation of investment property			0.1		-
Impairment of assets held for resale			0.3		-
Restructuring impairment charge			-		2.0
Amortisation of intangible assets			10.9		8.9
Foreign currency differences			(2.4)		(0.2)
Loss / (profit) on sale of property, plant and equipment			0.7		(0.2)
Dividends received from joint ventures and associates			13.6		13.8
Changes in fair value of financial instruments			(0.1)		0.2
Equity settled share-based payment expenses			4.1		2.7
Difference between pension contributions paid and amounts recognised in the income statement			(5.8)		(1.4)
Decrease/(increase) in inventories			(1.8)		2.8
Decrease / (increase) in trade and other receivables			(12.3)		0.7
Increase/ (decrease) in trade and other payables			(17.8)		20.0
(Decrease) in provisions			(4.0)		(8.5)
Cash from operating activities			65.7		107.4

Analysis of net debt as defined by the group

		1 April 2007 £m	Arising on acquisition £m	Cash flow £m	Exchange differences £m	Non-cash Movements £m	31 March 2008 £m
Cash and cash equivalents		75.2	8.2	(23.7)	0.4	-	60.1
Loans receivable		-	-	0.3		-	0.3
Interest bearing loans - non current		(106.9)	-	(91.0)	0.3	10.9	(186.7)
Interest bearing loans - current		(39.7)	-	32.0	-	(10.9)	(18.6)
		(71.4)	8.2	(82.4)	0.7	-	(144.9)
Analysed as:
Recourse net funds debt		(50.4)					(124.9)
Non-recourse net debt		(21.0)					(20.0)
		(71.4)					(144.9)

11.    Basis of information

The financial information set out above does not constitute the group's statutory accounts for the year ended 31 March 2008

 and 31 March 2007, but is derived from those accounts. Statutory accounts for the year ended 31 March 2007 have been 

delivered to the Registrar of Companies. Those for the year ended 31 March 2008 will be delivered following the Company's

Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified and did not contain

statements under S237(2) or (3) of the Companies Act 1985.

ENDFR FLLLFVEBFBBE