Interim Statement 2004/2005

Transcription

1 Interim Statement 2004/2005

2 Financial Summary 2004/ /2004 m m Turnover Operating profit before goodwill amortisation and exceptional items Profit before tax, goodwill amortisation and exceptional items Profit before tax Earnings per ordinary share based on adjusted earnings 2.2p 2.1p based on reported earnings 1.4p 5.3p Interim dividend per ordinary share 1.5p 1.5p 1

3 Chairman s Statement The results for the period to 30 September 2004 were in line with expectations with pre exceptional profit before tax the same level as the first half of last year. This is despite significant adverse effects of currency and raw material price increases. There was a strong improvement in the North American market and China but trading conditions for power transmission products in Europe remained weak. The Automotive business continues to evolve with the new German facility operational and supplying product. Construction is underway to develop a similar facility in the USA. Production efficiency improvements at Calais were offset by steel price increases, exchange and lower sales demand. The Machine Tool and Rotor business remains ahead. Group results Sales for the half year to 30 September 2004 were 95.3 million (2003/04: 94.9 million). At constant exchange rates, sales were 6% ahead of last year. Operating profit before goodwill amortisation and exceptional items was 3.5 million (2003/04: 3.6 million). Profit before tax (and before goodwill amortisation and exceptional items) was 2.3 million (2003/04: 2.3 million) with interest costs reduced by 0.1 million compared with 2003/04. Reported profit before tax was 1.4 million (2003/04: 4.2 million after a 2.8 million exceptional gain). The tax charge in the period was 0.4 million (2003/04: 0.5 million). Adjusted earnings per share, before goodwill amortisation and exceptional items, were 2.2 pence (2003/04: 2.1 pence) and basic earnings per share were 1.4 pence (2003/04: 5.3 pence). Cash flow and borrowings Operating cash flow net of capital spending was an outflow of 3.8 million (2003/04: 0.6 million outflow) reflecting some increase in working capital in the first half and higher capital expenditure. There was a net cash outflow of 7.5 million compared with an inflow of 0.2 million a year ago (last year benefiting from disposal of the Leicester property for 5.1 million). Net borrowings including finance leases at 30 September 2004 were 26.9 million compared with 19.8 million at September 2003 and 19.2 million at year end, as a result of the net cash outflow in the period and an increase of 0.2 million due to exchange translation. Gearing was 33% of shareholders funds compared with 24% both at the year end and a year ago. 2

4 Chairman s Statement continued Dividend The Board has declared an unchanged interim dividend of 1.5 pence. The dividend will be paid on 28 January 2005 to shareholders on the register on 7 January In the USA, Jeffrey Chain experienced a strong first half with sales up 23% (at constant exchange rates) and profits well ahead. Elsewhere in North America the other chain businesses maintained profit levels. Comment Power Transmission Industrial Chain Demand for industrial chain products during the first half reflected good growth in North America but weaker market conditions in Europe. Sales were 5% higher at constant exchange rates. The UK Chain business had a difficult first half with domestic demand flat and increased supplies to the growing North American market hit by adverse exchange rate effects and significant escalation in steel prices. In Germany, sales to the USA were strong but the domestic market was flat and profits were lower reflecting the adverse US Dollar/Euro exchange rate. Other European markets, including France, achieved sales which were broadly in line with the first half of last year at constant exchange rates. The Asia Pacific region improved both sales and profits and order intake for the new operation in China was encouraging. Gears and Couplings The Gears and Couplings businesses increased sales and profits in the period and the benefits of integrating the three Couplings units into a consolidated business are starting to show. The Gears business was successful in mitigating raw material price increases by outsourcing initiatives. During the first half a further large order for gearboxes in China was received and the level of project activity remains strong for both Gears and Couplings. Automotive Systems Sales of Automotive Systems were 5% lower than the first half of last year (but level at constant exchange rates). Production efficiency improvements at Calais were offset by the US 3

5 Chairman s Statement continued Dollar/Euro rate, steel prices and lower sales demand. This situation was further exacerbated by recent supplier quality issues. addressed and sales demand remains at a reduced level. Operational efficiency improvements are being pursued aggressively to mitigate the impact. The German facility is operational and satisfying customers requirements. Work is in progress on the establishment of a US facility to supply US automotive customers locally and it is intended to complete the facility during the second half of the year and start shipping product at the end of the first half of 2005/06. Overall, there are good growth prospects in North America for all the Group s products but European markets remain soft and the twin pressures of exchange rates and raw material price increases continue to hinder progress of the Group s performance. Machine Tool and Rotor Sales were 6% ahead of the previous year as the machine tool sector improved. Profitability was substantially better than last year with a 0.4 million profit compared with a breakeven performance in 2003/04. Roger Leverton Chairman 15 November 2004 Outlook Good progress is being made in North America, and the Machine Tool, Gears and Couplings businesses have performed well. This is expected to continue in the second half. The Automotive business will continue to be adversely affected as supplier quality issues are 4

6 Group Profit and Loss Account for the half year ended 30 September 2004 (unaudited) Turnover Operating costs normal operating costs (91.8) (91.3) (184.4) goodwill amortisation (0.6) (0.7) (1.3) exceptional redundancy and restructuring costs (0.3) (0.2) (0.5) exceptional gain on disposal of property held for sale (92.7) (89.4) (183.4) Operating profit Interest payable (1.2) (1.3) (2.3) Profit on ordinary activities before tax Tax: UK (0.2) (0.4) (0.3) Overseas (0.2) (0.1) (0.7) (0.4) (0.5) (1.0) Profit for the period Dividends (including non-equity) (1.1) (1.1) (3.2) (Loss)/retained profit for the period (0.1) Adjusted earnings per ordinary share based on reported earnings adjusted for goodwill amortisation and exceptional items after tax relief 2.2p 2.1p 5.4p Basic and diluted earnings per ordinary share based on reported earnings 1.4p 5.3p 7.7p Dividends per ordinary share 1.5p 1.5p 4.5p 5

7 Group Balance Sheet as at 30 September 2004 (unaudited) At At At 30 September 27 September 3 April Fixed assets Intangible asset goodwill Tangible assets Current assets Stocks Debtors Cash and short-term deposits Creditors due within one year Loans and overdrafts (14.7) (17.0) (12.1) Other creditors (38.3) (40.2) (44.4) (53.0) (57.2) (56.5) Net current assets Total assets less current liabilities Creditors due after one year Loans Other creditors (16.8) (12.2) (15.5) (1.4) (0.8) (1.4) Provisions for liabilities and charges (15.0) (14.3) (14.3) Net assets Capital and reserves (including non-equity interests) Called up share capital Share premium Profit and loss account Shareholders funds

8 Summarised Group Cash Flow Statement for the half year ended 30 September 2004 (unaudited) Cash flow from operating activities Operating profit Depreciation Goodwill amortisation (Increase) in working capital (7.6) (5.7) (7.0) Exceptional gain on property held for sale (2.8) (2.8) Other Net cash inflow from operating activities Servicing of finance (1.1) (1.4) (3.3) Taxation (0.5) (0.8) (1.6) Capital expenditure and financial investment purchase of tangible fixed assets (3.9) (2.9) (6.0) proceeds from disposal of property held for sale Equity dividends paid (2.1) (2.1) (3.2) Cash (outflow)/inflow before use of liquid resources and financing (7.5) Management of liquid resources transfers from/(to) short-term deposits 0.3 (5.3) (1.0) Financing Increase/(decrease) in debt and lease financing 4.6 (6.2) (6.4) (Decrease) in cash in the period (2.6) (11.3) (7.2) Reconciliation of net cash flow to movement in net debt (Decrease) in cash in the period (2.6) (11.3) (7.2) Cash flow from (increase)/decrease in debt and lease financing (4.6) Cash flow from (decrease)/increase in liquid resources (0.3) Change in net debt resulting from cash flows (7.5) New finance leases (0.5) Other non-cash changes (0.1) Exchange translation difference (0.2) Movement in net debt in the period (7.7) Net debt at beginning of period (19.2) (20.9) (20.9) Net debt at end of period (26.9) (19.8) (19.2) 7

9 Other Group Statements Statement of total recognised gains and losses Profit for the period Exchange translation differences on foreign currency net investments 0.8 (0.7) (3.1) Total recognised gains and losses Reconciliation of movements in shareholders funds Profit for the period Dividends (1.1) (1.1) (3.2) (Loss)/retained profit for the period (0.1) Exchange translation differences on foreign currency net investments 0.8 (0.7) (3.1) Net increase/(reduction) in shareholders funds (0.9) Opening shareholders funds (including non-equity of 0 6m) Closing shareholders funds (including non-equity of 0 6m)

10 Notes to the Interim Statement 1. Analysis of activities Activities classified by business segment: Turnover Operating Operating Turnover Operating Operating Turnover Operating Operating Profit Assets Profit Assets Profit Assets Power transmission Machine tool and rotor Less: Inter activity sales (1.0) (1.1) (2.8) Goodwill amortisation (0.6) (0.7) (1.3) Exceptional redundancy and restructuring costs (0.3) (0.2) (0.5) Add: Exceptional gain on disposal of property held for sale The exceptional redundancy and restructuring cost of 0.3 million is attributed to the power transmission segment (2003/2004: 0.1 million to the power transmission segment and 0.1million to the machine tool and rotor segment). Of the total goodwill charge of 0.6 million, 0.5 million (2003/2004: 0.6 million) relates to the power transmission business and 0.1 million (2003/2004: 0.1 million) to the machine tool and rotor business. The 2003/2004 exceptional gain of 2.8 million relates to the disposal of a non-trading property held for sale. This property was part of the machine tool and rotor segment. Activities classified by geographical region of operation: Turnover Operating Operating Turnover Operating Operating Turnover Operating Operating Profit Assets Profit Assets Profit Assets United Kingdom Germany France 22.6 (0.1) (0.4) (0.6) 14.8 Rest of Europe North America Other countries Less: Intra Group sales (21.3) (21.3) (43.3) Goodwill amortisation (0.6) (0.7) (1.3) Exceptional redundancy and restructuring costs (0.3) (0.2) (0.5) Add: Exceptional gain on disposal of property held for sale

11 Notes to the Interim Statement continued 1. Analysis of actvities (continued) Turnover by geographical region includes intra group sales as follows: United Kingdom Germany France The exceptional redundancy and restructuring cost of 0.3 million arose 0.2 million in France and 0.1 million in North America (2003/2004: 0.1 million in the UK and 0.1 million in France). The goodwill amortisation is attributed to business acquisitions in North America. The exceptional gain on the asset held for sale arose in the UK. Operating assets comprise fixed assets, current assets less creditors but exclude goodwill, cash, borrowings, dividends, current and deferred corporate tax, finance lease obligations, pension prepayments and other provisions for liabilities and charges. Geographical analysis of external turnover by market area: United Kingdom Germany France Rest of Europe North and South America Other countries Accounting policies and basis of preparation The interim accounts are unaudited and do not constitute statutory accounts. They have been prepared under the historical cost convention (but include some past revaluations of properties and equipment) and in accordance with applicable accounting standards, using the accounting policies set out in the Annual Report for the year ended 3 April There is no material difference between the result in the profit and loss account and the result on an unmodified historical cost basis. The Board approved the Interim Statement on 15 November

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