FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Rule 13a
- 16 or 15d - 16 of
The Securities and Exchange Act of 1934
For the Month of December, 2005
HANSON PLC
1 Grosvenor Place, London, SW1X 7JH, England
[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40F.]
Form 20-F X Form 40-F
[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.]
Yes No X
December 20, 2005
Hanson PLC Trading Statement
Hanson PLC, the international building materials company, is issuing this trading statement in advance of the February 23, 2006
announcement of its preliminary results for the year ending December 31, 2005.
Overview
Hanson anticipates reporting an increase in profit before tax1 for 2005 of 11% to 13% compared to 2004 (2004: £377.1m after
adjustment2), subject to the year end revaluation of certain items within finance costs and the completion of further property
disposals before year end.
Operating profit1 is expected to increase by a similar percentage (2004: £423.9m after adjustment2) and includes property profits
of £13 million completed to date (2004: £21.4m).
Alan Murray, Chief Executive, said "Hanson has delivered significant growth this year through increased earnings, increased
acquisition spend and increased total shareholder return.
We have achieved a double digit increase in earnings despite significant cost inflation and a difficult second half for the UK
housing market. Importantly, the increased selling prices in the first half of the year have been maintained in almost all markets.
We continue to work to deliver high quality products and services to our customers at prices which, whilst competitive, reflect the
increased costs faced by us and the industry at large."
Trading update
Hanson Aggregates North America
Full year underlying earnings for the division, excluding property profits of around £3 million (2004: £14.3m), are expected to show
a strong increase against 2004. Price increases of around 8% in aggregates and over 10% across other product lines have been achieved
for the full year, offsetting increased costs. Aggregates volumes for the year are expected to be approximately 4% below last year,
in part reflecting the strong volumes in the second half of 2004.
Hanson Building Products North America
Pipe and pre-cast concrete product volumes have remained strong. Brick volumes continue below last year, primarily due to ongoing
weakness in the Canadian market. Selling prices in the second half continue to increase, largely recovering the increases in costs.
Hanson Aggregates UK
Selling prices have been held during the second half and cost savings of £10 million, resulting from the 2004 reorganisation, have
been achieved this year as planned. Volumes continue to trend below last year for aggregates and ready-mixed concrete, whilst full
year asphalt volumes are expected to be slightly ahead of 2004. Excluding property profits of approximately £9 million (2004: £1.9m),
full year earnings and margins are expected to be significantly above 2004.
Hanson Building Products UK
Good increases in selling prices were achieved for the year despite a significant reduction in volumes, particularly bricks. Full
year demand in the UK brick market is now expected to be more than 10% below last year. In addition, energy costs continued to
increase although the earnings impact was mitigated by forward hedging of gas prices. Consequently, the additional earnings from
acquisitions this year are expected to be offset by a reduction in underlying heritage profitability and full year earnings are
expected to be broadly in line with 2004.
Hanson Australia and Asia Pacific
The performance of our Australian businesses in 2005 has been very good. Trading conditions remained strong in the second half of
this year and aggregate and ready-mixed concrete prices were above those achieved in the first half. First half earnings improvements
in the Cement Australia associate have continued in the second half and full year earnings, including the group's share of joint
ventures' and associates' profit after tax, is expected to be comfortably ahead of 2004. In Asia, trading in Hong Kong and Malaysia
remains subdued.
Hanson Continental Europe
Second half trading patterns remained similar to the first half of the year. Aggregates volumes are below last year, most notably in
Spain. Ready-mixed concrete volumes are also lower, particularly in The Netherlands. Price increases and ongoing cost saving
initiatives have mitigated the impact of cost inflation, but overall earnings are expected to continue the first half trend and
remain below last year.
Corporate development
A further five acquisitions have been completed to date in the second half of the year for a total cost of approximately £35 million.
Acquisition spend for the year to date is now £340 million and the pipeline of potential acquisitions for 2006 is encouraging. We
will continue to prioritise bolt-on acquisitions in our main countries of operation.
Financial update
International Financial Reporting Standards (IFRS) require a year end revaluation of certain items included in net finance costs, and
these are consequently subject to variation. The underlying tax rate for 2005, excluding one off adjustments, is expected to be below
20% (2004: 21%).
Net debt at the end of the year is anticipated to be approximately £900 million, compared to net debt of £1,063.2 million at June 30,
2005 and £695.2 million at December 31, 2004.
In the second half of the year to date, Hanson has bought back 6.835 million of its shares for £38.7 million. This programme is
ongoing, and a total of 14.335 million shares have now been repurchased for £70.1 million since it started in October 2004.
Discontinued items
The majority of the discontinued item charge relates to approximately £20 million after tax to top up the eight year provision for
asbestos.
Asbestos
New asbestos claimants in the second half are expected to be around 4,000 compared to 6,700 in the first half of 2005 (full year
2004: 18,700). Approximately 5,000 claimants are expected to be resolved in the period, over 90% by dismissal, resulting in a net
reduction in outstanding claimants of 1,000 to 132,500.
The gross cost of settlements and legal fees for the second half of the year is expected to be similar to the first half of the year
(US$22m) and significantly below last year (full year 2004: $59.3m). It is too early to determine whether this new level is
sustainable and at this stage the best estimate of the average underlying annual gross cost over the next eight years remains at $60
million (equivalent to approximately £20m post tax).
Hanson continues to negotiate and litigate for additional insurance, and remains supportive of efforts to introduce Federal Reform in
the US.
Outlook
Hanson expects to make further progress in 2006 based on strong market positions, value adding bolt-on acquisition opportunities and
continued financial discipline. In the near term demand weakness in the UK and ongoing energy cost increases may impact the first
half of 2006 against a strong first half in 2005.
A conference call for analysts, hosted by Alan Murray (Chief Executive) and Jonathan Nicholls (Finance Director), will take place
today at 8.00am (GMT). The dial-in number is +44 (0)20 8901 6901. A recording of the conference call will be available for 48 hours
from 11.30am (BST) today. The dial-in number is +44 (0)20 8515 2499 , PIN number 686989# or, for US investors, +1 303 590 3000, PIN
number 11044733#.
Further information on Hanson can be found at www.hanson.biz
| Inquiries: | |||
| Nick Swift / Hilary Reid Evans | |||
| Hanson PLC | Tel: +44 (0)20 7245 1245 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
HANSON PLC
By:
/s/ Graham Dransfield
Date: December 20, 2005