Langley Holdings plc Annual Report & Accounts 2012

Transcription

1 Langley Holdings plc Annual Report & Accounts 2012 langleyholdings.com

2 Mission: To provide world-class engineering, building mutually beneficial long-term relationships.

3 Contents Section 1 Company Overview Group Overview... 2 Piller Division... 4 Claudius Peters Division... 6 ARO Division... 8 Other Businesses Global Locations Section 2 IFRS Annual Report and Accounts 2012 Company Information Key Highlights Chairman s Review Geographical Distribution Directors Report Independent Auditor s Report to the Member Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Company Statement of Financial Position Company Statement of Changes in Equity Consolidated Statement of Cash Flows Company Statement of Cash Flows Notes to the Accounts

4 Group Overview The Langley Group is a global, multi-disciplined engineering organisation whose capital equipment technologies form the core of many industrial and commercial processes around the world. Cutting-edge technology and a systems-based approach continue to ensure that the Group s businesses are either outright market leaders or key niche players in their particular fields. Established in 1975 by current Chairman and CEO Mr Tony Langley, the Group remains financially independent and still under the ownership of its founding family. 2 GROUP OVERVIEW 2012

5 True to its original vision, the Group takes pride in operating a highly transparent business, making annual and interim reports readily available to all of its trading partners and employees as well as respecting their right to know who is behind the companies with which they are engaged. Langley Holdings comprises 4 divisions, based principally in Germany, France and the UK but also with a substantial presence in the United States. These divisions are supported by an international network of subsidiaries in The Americas, Europe, The Far East and Australasia. In 2012 the Group employed 2,264 people worldwide. In 2012 the Langley sponsored Gladiator competed in premier grand-prix yacht racing circuit, the TP52 Super Series. Inset: Tony Langley receives 3rd place trophy in the Copa Del Rey in Palma de Mallorca from Prince Philippe of Spain. 3

6 Piller Division Piller Power Systems is Europe s leading producer of uninterruptable power supply (UPS) and backup systems for high-end data centres. The company was founded in 1909 by Anton Piller and remained in the ownership of the Piller family until 1993, when it was acquired by German utility RWE AG. It became part of the Langley Group in GROUP OVERVIEW 2012 With modern manufacturing facilities at Osterode and state-of-the-art testing facilities at Bilshausen, Piller is now universally acknowledged as the leader in the field of high-end rotary power protection. Piller systems

7 Frankfurt Financial District where Piller uninterruptible power protection systems (UPS) protect 90% of institutions. Photo: Frank Hebeisen. Location: Germany Activity: Power protection systems Airport ground power systems Naval military systems Revenue 2012: Revenue 2011: 196.6m 189.8m Employees: 764 piller.com support the global banking and finance community, broadcasters, telecommunications networks, healthcare as well as other sectors. Piller also manufactures ground power systems for civil and military airports and on-board electrical systems for surface and submarine naval military applications. Piller Nothing protects quite like Piller 5

8 Claudius Peters Division For over a century, Claudius Peters has been producing innovative materials handling and processing systems for the global cement and gypsum industries, as well as coal pulverising and injection systems for the world s steel industry. The company s aerospace division manufactures aircraft stringers (longitudinal supports) which are to be found in every Airbus aircraft currently in service anywhere in the world. 6 GROUP OVERVIEW 2012

9 Claudius Peters serves its global markets via a network of overseas subsidiaries. The division s vigorous research, development and test programme at nearby Buxtehude has helped ensure it remains the leader in its field. Claudius Peters was a division of the UK s Babcock International plc until it was acquired by Langley in Claudius Peters We know how Claudius Peters stockyard system, just one of the techniks supplied to a turnkey cement plant in Peru. Location: Germany Activity: Process plant equipment Aerospace components Revenue 2012: Revenue 2011: 139.6m 135.4m Employees: 540 claudiuspeters.com 7

10 ARO Division The ARO Welding Technologies Group provides the automotive manufacturing industry with advanced robotic, manual and stationery welding technology and is widely regarded as the world leader in resistance welding technology. 8 GROUP OVERVIEW 2012 ARO was founded by M. Albert Rolland in 1949 to produce welding machines for the auto body repair market. The company became part of the German MDAX engineering group IWKA AG and then part of the Langley Group in December 2006.

11 Location: France Activity: Automotive welding technology Revenue 2012: Revenue 2011: 136.2m 109.7m Employees: 498 ARO widely regarded as the world leader in resistance welding technology. arotechnologies.com Headquartered near Le Mans, France, today, ARO produces state-of-the-art welding equipment in the US and China, serving its global automotive clients via a network of subsidiaries in Belgium, Germany, Mexico, Spain, Sweden, Slovakia and the UK. ARO La qualité sans compromis 9

12 Other Businesses Other businesses within The Langley Group (operating at various locations in the US and the UK) include: The Clarke Chapman Group: Acquired by Langley from Rolls Royce plc in December 2000, Clarke Chapman produces specialised cranes for the nuclear, military and other sectors. The Clarke Chapman Group operates principally from the UK cities of Newcastle, Leeds, Wolverhampton and Bristol. Bradman Lake Group: A part of the Langley Group since October 2007, CLARKE CHAPMAN GROUP Bradman Lake Group produces integrated cartoning, wrapping and endof-line packaging systems for the food industry. Bradman Lake clients include some of the world s leading food companies. The group operates BRADMAN LAKE GROUP from East Anglia and Bristol in the UK and Rock Hill, South Carolina in the US. JND PROTRAN PEI READER OAKDALE HOMES 10 GROUP OVERVIEW 2012

13 Smaller units within the Other Businesses division: JND: specialising in rotary thermal technologies Protran: a fabricator of liquefied compressed gas road transport vehicles PEI: a builder of pressure vessels and heat exchangers Reader: a blender of cement grouts and grout machinery Oakdale Homes: a regional UK house builder All of these business units have their own websites which can be accessed through the main portal: High integrity mechanical handling equipment at Torness Nuclear Plant, Scotland, UK supplied by Clarke Chapman s Wellman Booth division. Location: Activity: UK & USA Diverse capital equipment Construction Revenue 2012: Revenue 2011: 54.7m 59.8m Employees:

14 Global Locations ASIA PACIFIC SINGAPORE I AUSTRALIA SYDNEY I BELGIUM BRUSSELS I BRAZIL SAO PAULO I CHINA BEIJING, HONG KONG, WUHAN I FRANCE LE MANS, MULHOUSE, PARIS I GERMANY HAMBURG, HANOVER, AUGSBURG I INDIA MUMBAI I ITALY BERGAMO, MILAN I MEXICO PUEBLA I ROMANIA SIBIU I RUSSIA MOSCOW I SLOVAKIA BRATISLAVA I SPAIN BARCELONA, MADRID I SWEDEN FJÄRÅS I USA ROCK HILL (SOUTH CAROLINA), DALLAS, NEW YORK, DETROIT I UNITED KINGDOM VARIOUS LOCATIONS GROUP OVERVIEW 2012

15 Dallas, USA New York, USA Detroit, USA Le Mans, France Hamburg, Germany Mulhouse, France Principal office locations Manufacturing plants Hanover, Germany Retford, UK

16 IFRS Annual Report and Accounts 2012

17 LANGLEY HOLDINGS plc Company Information DIRECTORS: SECRETARY: REGISTERED OFFICE: A J Langley Chairman J J Langley Non-Executive B A Watson B A Watson Enterprise Way Retford Nottinghamshire DN22 7HH England REGISTERED IN ENGLAND NUMBER: AUDITORS: PRINCIPAL BANKERS: Nexia Smith & Williamson Statutory Auditor Chartered Accountants Portwall Place Portwall Lane Bristol BS1 6NA England Barclays Bank plc PO Box 3333 One Snowhill Snowhill Queensway Birmingham B4 6GN England Deutsche Bank AG Adolphsplatz Hamburg Germany

18 LANGLEY HOLDINGS plc Key Highlights Year ended Year ended 31 December 31 December REVENUE 527, ,670 OPERATING PROFIT 115,992 73,132 NON-RECURRING ITEMS 25,158 PRE TAX PROFIT 121,253 76,312 NET ASSETS 382, ,852 NET CASH 208, ,728 ORDERS ON HAND 238, ,977 No. No. EMPLOYEES 2,264 2,225

19 Chairman s Review In the year to 31 December 2012 the Group recorded revenues of million (2011: million) and generated an operating profit before non-recurring items of 90.8 million (2011: 73.1 million). Of this, rental income contributed 3.9 million (2011: 1.1 million) and income from finance activities added 5.5 million (2011: 3.4 million). During the period there was a non-recurring gain of 25.2 million (2011: nil). This all resulted in a profit before tax of million (2011: 76.3 million) and a profit after tax of 85.4 million (2011: 56.4 million). At 31 December 2012, net cash was million (2011: million) and net assets million (2011: million). Orders on hand at the year-end were million (2011: million). In my review at the half-year, I said that I was expecting 2012 to be another record year for the Langley Group. That has proven to be the case, with these results surpassing those of 2008 and At million, revenues were up by 6.5% on 2011 with operating profits excluding exceptional gains increased by 24.2% on the previous year, as our factories reached unprecedented levels of utilisation. For some years now the Group has been operating debt free and with substantial cash reserves. Recently, we have invested some of our surplus cash to acquire business premises occupied by our subsidiaries. The most significant real estate purchase in this programme so far occurred in February 2012, when the Group purchased the million-plus square foot headquarters and manufacturing facilities of related company, Manroland Sheetfed GmbH, in Offenbach, Germany. As rental income from our subsidiaries and related companies is now a material amount we have identified this within operating profit for the first time this year. The Offenbach purchase gave rise to a fair value adjustment of 25.2 million which is shown as a non-recurring gain in these Accounts.

20 LANGLEY HOLDINGS plc CHAIRMAN S REVIEW (CONTINUED) PILLER DIVISION Revenue: 196.6m. (2011: 189.8m) Headquarters: Germany. Employees: 764 (2011: 748) Piller Division was the principal driver of the 2012 result. Piller is a leading producer of advanced power conditioning and back-up systems for data centres, together with aircraft ground power equipment and naval military electrical systems. From its headquarters and manufacturing facilities near Hanover, in Germany, the division recorded revenues of million (2011: million). The excellent performance of Piller was brought about principally by strong demand for data centre systems, which in turn gave rise to very high utilisation of the production facilities, coupled with a favourable business mix. Revenues from the higher margin aftermarket have increased by around 50% over recent years and represented approximately 30% of total revenues in A slight shortfall in expected revenues in the US subsidiary was made up by the UK and German companies, while Piller France, Italy and Spain performed in line with expectations in a subdued market. Piller Australia had another very successful year, experiencing continued strong demand, mainly from the data centre sector in Australia. Piller Singapore, the company we established in 2009 to service the Pacific Rim, also performed well. Notably, Piller has achieved the current levels of business without material contribution from the BRIC countries and in 2012 management began to examine these markets, in order to develop business in these areas for the future. Claudius Peters Division Revenue: 139.6m. (2011: 135.4m) Headquarters: Germany. Employees: 540 (2011: 548) Claudius Peters (CP), headquartered near Hamburg in Germany, has two quite separate revenue streams. The principal activity is the design and manufacture of plant and machinery for the cement, steel and alumina industries. The company also produces stringers for the Airbus programme and celebrated thirty years of this activity in 2012, having supplied these components to every Airbus ever built. The division overall experienced a satisfactory trading year with sales of million (2011: million). The CP subsidiary in China saw a slow down after several years of strong demand, as did Brazil which had performed well in In the US, the business, which had been languishing since the financial crisis, picked up in 2012 whereas subsidiaries in Spain, Italy and the UK, not unexpectedly, reported continued weak demand. This was compensated by Germany and the markets it serves directly. CP France continued to trade at a historically high level on the strength of materials handling contracts in former French dependencies, but operating margins were impacted by a problematic contract which left the business only marginally profitable. However, all losses on that contract are now fully provided for. CP s aerospace division meanwhile, managed moderate growth over the previous year and maintained margins. Orders on hand at the year end for the CP division were 76.5 million (2011: million).

21 CHAIRMAN S REVIEW (CONTINUED) ARO Division Revenue: 136.2m. (2011: 109.7m) Headquarters: France. Employees: 498 (2011: 451) ARO Division, which is based near Le Mans in central France and operates a second manufacturing plant in Detroit in the US, is the leading producer of resistance welding equipment to the automotive sector. The division experienced a remarkably successful year in 2012 as both European and US automobile producers continued to invest in new production lines. Despite the malaise in European car sales, investment in new production lines outside of Europe was extremely buoyant and the trend, which resulted in a record year in 2011, continued and strengthened in 2012 to reach an all-time high revenue of 136 million. This resulted in a very healthy operating margin of 18%, largely due to extremely high utilisation of the factories in both France and the US. Management viewed 2012, like 2011, as an exceptional year and although the current level of activity looks set to continue until mid-2013, the business is forecasting a slow-down in the second half. At the year end the division had orders on hand of 38.1 million (2011: 34.0 million). Other Businesses Revenue: 54.7m. (2011: 59.8m) Located: United Kingdom & United States. Employees: 462 (2011: 478) Other businesses had a reasonably satisfactory year overall. Bradman Lake, the packaging machinery specialist, experienced a slower year than in 2011 but nevertheless made a positive contribution, its operations in both the UK and the US reporting a slow down after a record year in Clarke Chapman had a similar year to 2011 and remained acceptably profitable as did JND. Oakdale Homes, which represents less than 1% of total group revenues, was the only business unit to make a negative contribution, although I expect 2013 will see it return to profit. The other businesses closed the year with order books of 19.7 million (2011: 21.3 million). Manroland Sheetfed In the interim trading statement I reported that in February 2012, the Group had funded the acquisition of German printing press manufacturer, Manroland Sheetfed GmbH and that after five months the new business was trading within expectations and standing on its own feet financially. That continued to be the case through the second half and the business which was re-structured during the year, reached an underlying operating break-even in the last quarter. The restructuring was completed during 2012 and all related costs were accounted for in 2012, as were non-recurring gains arising from the acquisition. In 2013 the Manroland Sheetfed Group, which includes some forty subsidiaries world-wide, is now structured to break even on revenue of 350 million. At this level the production facilities in Germany would be operating at around one third of capacity and at 80% utilisation with

22 LANGLEY HOLDINGS plc CHAIRMAN S REVIEW (CONTINUED) Manroland Sheetfed HQ in Germany: the most significant real estate purchase to date. current manning levels. Considering demand for printing presses remains depressed and there is currently significant overcapacity in the market, this is a satisfactory situation. As the business achieved slightly over this volume in a year which saw much upheaval, I would expect to see something of an improvement in Manroland Sheetfed will report its trading results to 31st December 2012 in March. Summary unaudited figures are shown in the table below. This also gives an indication of how the existing Group and Manroland Sheetfed would have looked had they been combined at 31 December The Manroland trading result for 2012 includes substantial non-recurring costs and gains and now that trading has been normalised, it is planned to incorporate the press builder as a division of Langley Holdings plc in Manroland Sheetfed Group Langley Holdings plc Total Year ended Year ended Year ended 31 December December December s 000 s 000 s Revenue 358, , ,097 Operating Profit 71, , ,392 NET Finance (2,548)* 5,261 2,713 (Cost)/INCOME Profit Before Tax 68, , ,105 Net Assets 80, , ,649 Cash 46, , ,613 Employees 1,740 2,264 4,004 *Payable to Langley Holdings plc

23 CHAIRMAN S REVIEW (CONTINUED) Our People As is customary, no review of our Group would be complete without mention of our many employees around the world who, through their hard work and determination, make the Group the success that it is today. Although not yet formally part of the group I would like to take this opportunity of welcoming to our family of businesses, those people in over forty countries around the world that comprise the Manroland Sheetfed group was a year that saw fundamental culture change in that business and I have been impressed by the enthusiasm with which the Langley culture has been embraced. Finally, I would like to especially welcome to the Group, Mr Bernard Langley, my eldest son. Bernard joined the company in October 2012 to become the fifth generation of the family to come into the engineering business. Bernard Langley joined the Group in October CONCLUSION & OUTLOOK was a remarkably successful year for our Group. Our businesses, with only minor exceptions, have performed ahead of expectation and much credit is due to our divisional management for this achievement. At the group level much of our attention in 2012 has been focused on re-aligning the Manroland business in readiness to become a part of the Group. Looking to 2013, the outlook is positive for our businesses although I do not expect to reach the 2012 heights, or for Manroland Sheetfed to make a substantial contribution; that will come later. Capital equipment, the majority of our Group s engagement, is a notoriously cyclical business and although the diversity of our activities in theory means that peaks and troughs are less pronounced, 2012 was a year which saw the majority of our businesses at a high point and I would not expect this to be repeated. Carry-over of orders on hand at the year-end of million is healthy enough but compared with million at the end of 2011, is an indication that 2013 will not be as remarkable as Anthony J Langley Chairman 31 January 2013

24 LANGLEY HOLDINGS plc Geographical Distribution REVENUE BY DIVISION SITU OF FIXED ASSETS OTHER BUSINESSES 10% ARO 26% PILLER 37% Other EU 0.5% France 11.5% USA 14% Rest of World 1% CLAUDIUS PETERS 27% UK 16% Germany 57% REVENUE BY ORIGIN REVENUE BY DESTINATION UK 14% UK 14% REST OF WORLD 14% REST OF WORLD 26% EU 39% USA 17% EU 55% USA 21%

25 Directors Report The Directors present their report together with the audited Accounts of the Group for the year ended 31 December PRINCIPAL ACTIVITIES The principal activity of the Company continued to be that of a managing and parent company for a number of trading subsidiaries organised in divisions and business units engaged principally in the engineering sector. The specifi c activities of the subsidiary undertakings are as disclosed in note 16 to the Accounts. RESULTS AND DIVIDENDS The results of the Group for the year are set out on page 28. The profi t attributable to the shareholder for the fi nancial year was 85,426,000 ( ,387,000). Dividends of nil per share were paid to the ordinary shareholders during the year ( nil). No fi nal dividend was proposed at the year end. BUSINESS REVIEW (a) Development performance and position The Directors are satisfied with the trading results of the Group for the year. The Chairman s review on pages 17 to 21 contains an analysis of the development and performance of the Group during the year and its position at the end of the year. (b) Principal risks and uncertainties There are a number of risks and uncertainties which may affect the Group s performance. A risk assessment process is in place and is designed to identify, manage and mitigate business risks. However it is recognised that to identify, manage and mitigate risks is not the same as to eliminate them entirely. The Group ensures that it limits its exposure to any downturn in its traditional trading sector by continuing to diversify its activities, identifying opportunities for existing product offerings into new markets and for new products for all markets. The Group has a wide range of customers which limits exposure to any material loss of revenue. The Group s exposure to the volatility of exchange rates is mitigated through its geographical spread of operations. (c) Going Concern The Group s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman s Review on pages 17 to 21. The financial position of the Group, its cash flows and liquidity position are also described in the Chairman s Review. In addition, note 34 to the Accounts includes the Group s policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments, and its exposures to credit risk and liquidity risk. The Group has considerable financial resources together with long-term contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. Thus they continue to adopt the going concern basis of accounting in preparing the annual Accounts.

26 LANGLEY HOLDINGS plc Directors Report (continued) (d) Key performance indicators (KPI s) The Board uses a number of tools to monitor the Group s performance including a review of key performance indicators (KPI s) on a regular and consistent basis across the Group. Examples of KPI s currently used include: Targets Regular monthly monitoring of sold and developed contract margins Minimum return on capital, being profit before tax for the year as a percentage of equity, of 25% Minimum return on sales, being profit before tax for the year as a percentage of sales, of 8% Return on Capital 32% 26% Return on Sales 23% 15% The Board also considers the following non-financial key performance indicators: Staff turnover Orders on hand These are reviewed monthly on information provided to the Board and details are shown on page 16. (e) Research and development The Group is committed to innovation and technical excellence. The Group, through its divisions, maintains a programme of research and development to ensure that it remains at the forefront of respective technologies in its key sectors. EMPLOYMENT POLICY The Group is committed to a policy of recruitment and promotion on the basis of aptitude and ability, without discrimination of any kind, and to training for the existing and likely needs of the business. It is the Group s policy to keep its employees informed on matters affecting them and actively encourage their involvement in the performance of the Group. FINANCIAL RISK MANAGEMENT Prudent liquidity risk management implies maintaining suffi cient cash on deposit and the availability of funding through an adequate amount of committed credit facilities. The Directors are satisfi ed that cash levels retained in the business, committed credit facilities and surety lines are more than adequate for future foreseeable requirements. Further details are set out in note 34 to the Accounts. POLICY ON THE PAYMENT OF CREDITORS The Group seeks to maintain good relations with all of its trading partners. In particular, it is the Group s policy to abide by the terms of payment agreed with each of its suppliers. The average number of days purchases included within trade creditors for the Group at the year end was 30 days ( days). DIRECTORS INTERESTS The Directors of the Company in offi ce during the year and their benefi cial interests in the issued share capital of the Company were as follows:

27 Directors Report (continued) DIRECTORS INTERESTS (continued) At 31 Dec 2012 At 31 Dec 2011 Ordinary shares Ordinary shares of 0.10 each of 0.10 each A J Langley (Chairman) 1,000,000 1,000,000 J J Langley (Non-Executive) - - B A Watson - - The shareholding of Mr A J Langley represents 100% of the issued share capital of the Company. DISCLOSURE OF INFORMATION TO AUDITORS In the case of each person who was a Director at the time this report was approved: so far as that Director was aware there was no relevant available information of which the Company s auditors were unaware; and that Director had taken all steps that the Director ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company s auditors were aware of that information. This confi rmation is given and should be interpreted in accordance with the provision of s418 of the Companies Act STATEMENT OF DIRECTORS RESPONSIBILITIES The Directors are responsible for preparing the Directors Report and the Accounts in accordance with applicable law and regulations. Company law requires the Directors to prepare Accounts for each fi nancial year. Under that law the Directors have elected to prepare the Accounts in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the Parent Company Accounts, as applied in accordance with the provisions of the Companies Act Under company law the Directors must not approve the Accounts unless they are satisfi ed that they give a true and fair view of the state of affairs of the Company and of the Group and of the profi t of the Group for that period. In preparing these Accounts, the Directors are required to: select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state that the Accounts comply with IFRSs as adopted by the European Union; prepare the Accounts on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records that are suffi cient to show and explain the Company s transactions and disclose with reasonable accuracy at any time the fi nancial position of the Company and enable them to ensure that the Accounts comply with the Companies Act They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. By order of the Board B A WATSON Company Secretary Langley Holdings plc Registered in England and Wales Company number January 2013

28 LANGLEY HOLDINGS plc Independent Auditor s Report to the Member We have audited the Accounts of Langley Holdings plc for the year ended 31 December 2012 which comprise the Consolidated Income Statement and Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statement of Changes in Equity, the Consolidated and Company Statement of Cash Flows and the related notes 1 to 40. The fi nancial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the Parent Company Accounts, as applied in accordance with the provisions of the Companies Act This report is made solely to the Company s member in accordance with Chapter 3 of Part 16 of the Companies Act Our audit work has been undertaken so that we might state to the Company s member those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s member, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As explained more fully in the Statement of Directors Responsibilities, set out on page 25, the Directors are responsible for the preparation of the Accounts and for being satisfi ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the Accounts in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s (APB s) Ethical Standards for Auditors. SCOPE OF THE AUDIT OF THE ACCOUNTS A description of the scope of an audit of Accounts is provided on the APB s website at OPINION ON ACCOUNTS In our opinion: the Accounts give a true and fair view of the state of the Group s and the Parent Company s affairs as at 31 December 2012 and of the Group s profit for the year then ended; the Group Accounts have been properly prepared in accordance with IFRSs as adopted by the European Union; the Parent Company Accounts have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the Accounts have been prepared in accordance with the requirements of the Companies Act 2006.

29 Independent Auditor s Report to the Member (continued) OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion the information given in the Directors Report for the fi nancial year for which the Accounts are prepared is consistent with the Accounts. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or the Parent Company Accounts are not in agreement with the accounting records and returns; or certain disclosures of Directors remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Michael Neale Portwall Place Senior Statutory Auditor, for and on behalf of Portwall Lane Nexia Smith & Williamson Bristol BS1 6NA Statutory Auditor Chartered Accountants 31 January 2013

30 LANGLEY HOLDINGS plc Consolidated Income Statement Note REVENUE 2 527, ,670 Cost of sales 3 (348,985) (339,991) GROSS PROFIT 178, ,679 Net operating expenses 3 (62,088) (81,547) OPERATING PROFIT 4 115,992 73,132 OPERATING PROFIT BEFORE NON-RECURRING ITEMS 90,834 73,132 NON-RECURRING ITEMS 5 25, ,992 73,132 Finance income 7 5,488 3,359 Finance costs 8 (227) (179) PROFIT BEFORE TAXATION 121,253 76,312 Income tax expense 12 (35,827) (19,925) PROFIT FOR THE YEAR 85,426 56,387 All of the activities of the Group are classed as continuing. Profi t for the year is attributable to the Equity holder of the Parent Company. The notes on pages 36 to 84 form part of these accounts

31 Consolidated Statement of Comprehensive Income Note Profi t for the year 85,426 56,387 Other comprehensive income: Actuarial loss on defi ned benefi t pension schemes 31 (553) (475) Deferred tax relating to actuarial loss (426) (357) Other deferred tax movements Gain on revaluation of properties 15 2,263 - Deferred tax on revaluation surplus (855) - Exchange differences on translation of foreign operations 416 2,115 Other comprehensive income for the year 1,451 1,876 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 86,877 58,263 The notes on pages 36 to 84 form part of these accounts

32 LANGLEY HOLDINGS plc Consolidated Statement of Financial Position AS AT 31 DECEMBER Note NON-CURRENT ASSETS Intangible assets 14 2,553 2,774 Property, plant and equipment 15 63,263 57,099 Investment property 17 48,448 - Trade and other receivables Deferred income tax assets 32 8,891 8,401 Income tax recoverable ,915 68,848 CURRENT ASSETS Inventories 20 78,038 66,670 Trade and other receivables , ,936 Cash and cash equivalents , ,728 Current income tax recoverable 24 2,747 3, , ,595 CURRENT LIABILITIES Current portion of long term borrowings Current income tax liabilities 27 10,168 8,939 Trade and other payables , ,835 Provisions 26 20,164 25, , ,122 NET CURRENT ASSETS 300, ,473 Total assets less current liabilities 424, ,321 NON-CURRENT LIABILITIES Provisions 26 2,479 3,170 Long term borrowings Trade and other payables 30 11,029 10,713 Retirement benefi t obligations 31 9,436 7,780 Deferred income tax liabilities 32 18,685 10,766 41,649 32,469 NET ASSETS 382, ,852 EQUITY Share capital Revaluation reserve 37 4,363 3,058 Retained earnings , ,631 TOTAL EQUITY 382, ,852 Approved by the Board of Directors on 31 January 2013 and signed on its behalf by A J LANGLEY Director J J LANGLEY Director The notes on pages 36 to 84 form part of these accounts

33 Consolidated Statement of Changes in Equity Share Revaluation Retained capital reserve earnings Total AT 1 JANUARY , , ,589 Profi t for the year ,387 56,387 Depreciation transfer - (40) Currency exchange difference arising on retranslation - 1 2,114 2,115 Actuarial losses on defi ned benefi t schemes net of deferred tax - - (357) (357) TOTAL COMPREHENSIVE INCOME - (39) 58,302 58,263 Dividends paid AT 31 DECEMBER , , ,852 Profi t for the year ,426 85,426 Depreciation transfer - (106) Currency exchange difference arising on retranslation Gain on revaluation of properties - 2,263-2,263 Deferred tax on revaluation surplus - (855) - (855) Actuarial losses on defi ned benefi t schemes net of deferred tax - - (426) (426) TOTAL COMPREHENSIVE INCOME - 1,305 85,572 86,877 Dividends paid AT 31 DECEMBER , , ,729 The notes on pages 36 to 84 form part of these accounts

34 LANGLEY HOLDINGS plc Company Statement of Financial Position AS AT 31 DECEMBER Note NON-CURRENT ASSETS Property, plant and equipment 15 8,005 6,214 Investments 16 7,669 6,958 Deferred income tax assets ,799 13,322 CURRENT ASSETS Inventories Trade and other receivables ,496 20,951 Cash and cash equivalents 23 77,341 99,272 Current income tax recoverable , ,540 CURRENT LIABILITIES Trade and other payables 25 3,369 3,205 3,369 3,205 NET CURRENT ASSETS 179, ,335 Total assets less current liabilities 194, ,657 NET ASSETS 194, ,657 EQUITY Share capital Revaluation reserve Retained earnings , ,448 TOTAL EQUITY 194, ,657 Approved by the Board of Directors on 31 January 2013 and signed on its behalf by A J LANGLEY Director J J LANGLEY Director The notes on pages 36 to 84 form part of these accounts

35 Company Statement of Changes in Equity Share Revaluation Retained capital reserve earnings Total AT 1 JANUARY , ,505 Profi t for the year ,313 28,313 Depreciation transfer - (10) 15 5 Currency exchange differences arising on retranslation TOTAL COMPREHENSIVE INCOME - (8) 29,160 29,152 Dividends paid AT 31 DECEMBER , ,657 Profi t for the year ,404 65,404 Depreciation transfer - (11) 17 6 Currency exchange differences arising on retranslation - 1 (1,151) (1,150) TOTAL COMPREHENSIVE INCOME - (10) 64,270 64,260 Dividends paid AT 31 DECEMBER , ,917 The notes on pages 36 to 84 form part of these accounts

36 LANGLEY HOLDINGS plc Consolidated Statement of Cash Flows Note CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 40 75,035 80,321 Bank and loan interest paid (227) (120) Interest received 5,488 3,359 Income taxes paid (26,630) (18,128) NET CASH FROM OPERATING ACTIVITIES 53,666 65,432 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of intangible assets - (77) Purchase of investment property (23,290) - Purchase of property, plant and equipment (11,613) (7,443) Proceeds from sale of property, plant and equipment Amounts loaned to related undertaking (55,635) - NET CASH USED IN INVESTING ACTIVITIES (90,233) (7,322) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of amounts borrowed (20) (20) NET CASH USED IN FINANCING ACTIVITIES (20) (20) Net (decrease)/increase in cash and cash equivalents (36,587) 58,090 Cash and cash equivalents at 1 January , ,835 Effects of exchange rate changes on cash and cash equivalents (918) 803 Cash and cash equivalents at 31 December , ,728 CASH AND CASH EQUIVALENTS CONSISTS OF: Cash in hand, at bank and short term deposits , ,728 The notes on pages 36 to 84 form part of these accounts

37 Company Statement of Cash Flows Note CASH FLOWS FROM OPERATING ACTIVITIES Cash (used in) / generated from operations 40 (11,137) 11,949 Interest paid (25) (16) Interest received 4,897 1,871 Income taxes (paid) / received (225) 11 NET CASH (USED IN) / FROM OPERATING ACTIVITIES (6,490) 13,815 CASH FLOWS FROM INVESTING ACTIVITIES Dividends received 61,567 26,966 Amounts loaned to group company (21,838) - Amounts loaned to related undertaking (54,674) - Purchase of property, plant and equipment (2,265) (320) Proceeds from sale of property, plant and equipment Purchase of subsidiary undertakings (536) (77) NET CASH (USED IN) / FROM INVESTING ACTIVITIES (17,689) 26,592 Net (decrease)/increase in cash and cash equivalents (24,179) 40,407 Cash and cash equivalents at 1 January ,272 58,360 Effects of exchange rate changes on cash and cash equivalents 2, Cash and cash equivalents at 31 December ,341 99,272 CASH AND CASH EQUIVALENTS CONSISTS OF: Cash in hand, at bank and short term deposits 23 77,341 99,272 The notes on pages 36 to 84 form part of these accounts

38 LANGLEY HOLDINGS plc Notes to the Accounts 1 ACCOUNTING POLICIES a b Basis of preparation Langley Holdings plc is a Company incorporated in the United Kingdom. The Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as approved for use in the European Union applied in accordance with the provisions of the Companies Act The Accounts have been prepared on a historical cost basis, except for the revaluation of property, plant and equipment and investment properties. New and amended standards which became effective during the year There were a number of Amendments to Standards dealing with disclosures of transfers of fi nancial instruments, fi rst time adoption of IFRS and accounting for deferred tax, but none of these had a material impact on the group in the current period. New and amended standards which are not effective for the current period IFRS 9, Financial instruments, is in issue but not yet effective and has not yet been approved by the European Union. IFRS 10, Consolidated Financial Statements, IFRS 11, Joint Arrangements, IFRS 12, Disclosures of Interests in Other Entities, and IFRS 13, Fair Value Measurement, are in issue but are not yet effective and have been approved by the European Union. A number of Amendments, Improvements and Interpretations have also been issued but are not yet effective including dealing with presentation and disclosure of fi nancial instruments and other comprehensive income, accounting for defi ned benefi t pension schemes and termination costs. The directors are currently assessing the impact of these new Standards, Interpretations and Amendments on the Group s fi nancial statements. Consolidation The Consolidated Accounts incorporate the Accounts of the Company and all of its subsidiary undertakings for the year ended 31 December 2012 using the purchase method and exclude all intra-group transactions. Assets, liabilities and contingent liabilities of acquired companies are measured at fair value at the date of acquisition. Any excess or defi ciency between the cost of acquisition and fair value is treated as positive or negative goodwill as described below. Where subsidiary undertakings are acquired or disposed of during the year, the results and turnover are included in the Consolidated Income Statement from, or up to, the date control passes. The Company has taken advantage of the exemption granted by Section 480 of the Companies Act 2006 from presenting its own Income Statement (note 13).

39 Notes to the Accounts (continued) 1 ACCOUNTING POLICIES (continued) c d e Goodwill When the fair value of the consideration for an acquired undertaking exceeds the fair value of its separable net assets, the difference is treated as purchased goodwill and is recognised as an asset at cost and reviewed for impairment annually. Any impairment is recognised immediately in the Consolidated Income Statement and is not reversed in subsequent years. Where the fair value of the separable net assets exceeds the fair value of the consideration for an acquired undertaking the difference is credited to the Consolidated Income Statement in the year of acquisition. Impairment of intangible assets Assets that have an indefi nite useful life are not subject to amortisation and are reviewed for impairment annually and when there are indications that the carrying value may not be recoverable. Assets that are subject to amortisation are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifi able cash fl ows (cash-generating units). The amortisation charged on those intangible assets that do not have an indefi nite useful life is calculated as follows: Patents and licenses - 2 to 10 years straight line Property, plant and equipment Property, plant and equipment is stated at cost of purchase or valuation, net of depreciation and any impairment provision. Freehold land - not depreciated Freehold buildings - 50 years straight line Vehicles - 4 to 10 years straight line Plant and machinery - 4 to 20 years straight line Computers - 3 to 8 years straight line Revaluations of land and buildings are made with suffi cient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the year end.

40 LANGLEY HOLDINGS plc Notes to the Accounts (continued) 1 ACCOUNTING POLICIES (continued) f g h i Investment properties Investment properties are accounted for in accordance with IAS 40 Investment Property under the fair value model. No depreciation is provided in respect of such properties. All gains and losses are recognised through the Consolidated Income Statement. Financial instruments Financial assets and fi nancial liabilities are recognised in the Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. Trade receivables Trade receivables do not carry any interest and are initially measured at their fair value as reduced by appropriate allowances for estimated irrecoverable amounts, and subsequently at their amortised cost. Borrowings Interest-bearing loans and overdrafts are recorded initially when the proceeds are received. Finance charges are accounted for at amortised cost using the effective interest rate method. Trade payables Trade payables are non-interest bearing and are initially measured at their fair value and subsequently at their amortised cost. Investments Investments represent the Parent Company s holdings in its subsidiaries and are presented as non current assets and stated at cost less any impairment in value. Any impairment is charged to the Company Income Statement. Inventories and work in progress Inventories are valued at the lower of cost and net realisable value. Cost is calculated as follows: Raw materials and consumables - cost of purchase on fi rst in, fi rst out basis. Finished goods - cost of raw materials and labour together with attributable overheads. Work in progress - cost of raw materials and labour together with attributable overheads. Net realisable value is based on estimated selling price less further costs to completion and disposal.

41 Notes to the Accounts (continued) 1 ACCOUNTING POLICIES (continued) j k Construction contracts Contract costs are recognised when incurred. When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profi table, contract revenue is recognised over the period of the contract. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. The Group uses the percentage of completion method to determine the appropriate amount to recognise in a given period. The stage of completion is measured by reference to either the contract costs incurred up to the year end as a percentage of total estimated costs for each contract, or by reference to milestone conditions as defi ned in the contracts, as appropriate to the circumstances of the particular contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion, and are presented as inventories, prepayments or other assets, depending on their nature. The Group presents as an asset the gross amount due from customers for contract work for all contracts in progress for which costs incurred plus recognised profi ts (less recognised losses) exceeds progress billings. Progress billings not yet paid by customers and retentions are included within trade and other receivables. The Group presents as a liability the gross amount due to customers for contract work for all contracts in progress for which progress billings exceed costs incurred plus recognised profi ts (less recognised losses). Taxes Income tax expense represents the sum of the income tax currently payable and deferred income tax. Deferred income tax is provided, using the liability method, on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Accounts. Deferred income tax assets relating to the carry-forward of unused tax losses are recognised to the extent that it is probable that future taxable profi ts will be available against which the unused tax losses can be utilised. Current and deferred income tax assets and liabilities are offset when the income taxes are levied by the same taxation authority and when there is a legally enforceable right to offset them.

42 LANGLEY HOLDINGS plc Notes to the Accounts (continued) 1 ACCOUNTING POLICIES (continued) l Foreign currencies (a) Transactions and balances Transactions in currencies other than euro are recorded at the rates of exchange prevailing on the dates of the transactions. At each year end, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at the year end. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in net profi t or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity. (b) Accounts of overseas operations On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. m Revenue recognition Revenue from sale of goods is recognised when the Group has delivered the products and the customer has accepted them, and is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Revenue from construction contracts is recognised in accordance with the Group s accounting policy on construction contracts. n Cash and cash equivalents Cash and cash equivalents comprise cash in hand, cash at bank and short-term deposits with banks and similar fi nancial institutions with a maturity of six months or less, and bank overdrafts.