TIDMLCT
RNS Number : 4430D
Lincat Group PLC
23 March 2011
Lincat Group plc ("the Group"), the AIM listed manufacturer of
commercial catering appliances and bar equipment, announces its
preliminary results for the year to 31 December 2010.
Financial highlights:
-- Revenues on continuing operations up 6% to GBP32.7m (2009:
GBP30.8m)
-- 15% growth in underlying operating profit to GBP5.6m
(GBP4.9m)
-- Underlying fully diluted earnings per share up 20% to a
record 77.7p
-- Year-end cash and short-term deposits of GBP7.1m (2009:
GBP5.1m)
Commenting on the year's results, Alan Schroeder, Chairman,
said:
"The Group has delivered another strong result on the back of
double-digit sales growth at Lincat Limited and is well positioned
to grow further during 2011 as the UK catering equipment market
continues its recovery."
Contacts:
Lincat Group plc
Alan Schroeder, Chairman }
Paul Bouscarle, Chief
Executive } 01522 875555
Terry Storey, Finance
Director }
Cenkos Securities plc
Ivonne Cantu (Nomad) }
Jeremy Warner Allen (Sales) } 0207 397 8980
23 March 2011
CHAIRMAN'S STATEMENT
I am delighted to be reporting on a year that has seen the Group
grow revenue and operating profits before exceptional items
strongly. Against a background of generally weak market conditions,
our trading companies are to be congratulated on delivering such a
positive result.
Financial result
The Group's domestic appliance business, Mercury, was sold in
2009. The most relevant year-on-year comparisons, therefore, are of
continuing operations excluding Mercury and it is those comparisons
that will be used throughout these statements unless otherwise
stated.
Group sales from continuing operations in 2010 grew 6% to
GBP32.7m, driven by 12% sales growth at Lincat Limited, our largest
operation. Group sales in the UK grew by 8% to GBP27.7m, whilst
export sales fell fractionally to GBP5.0m.
Operating profit from continuing operations of GBP5.6m compares
with the prior year underlying figure of GBP4.9m, a rise of 15%.
Profit before tax of GBP5.7m compares with GBP9.9m in 2009 but this
latter figure includes an exceptional profit of GBP5.1m on the
disposal of IMC's vacated Hertfordshire site.
Underlying, diluted earnings per share from continuing
operations - excluding both Mercury and the exceptional item in
2009 - rose 20% from 64.9p to a record 77.7p.
Cash flow
The Group has held substantial cash reserves since December
2009, following the sale of IMC's redundant Hertfordshire site.
Total cash and short-term deposits rose during the year from
GBP5.1m to GBP7.1m, despite a period of high capital expenditure
that included the purchase for GBP0.6m of a laser profiling cell at
Lincat Limited.
Trading outlook
Industry statistics indicate an accelerating recovery in the UK
catering equipment market during the latter part of 2010, although
the levels of demand remain some way below the peak of late 2007.
This trend suggests that trading conditions will continue to
improve during 2011, albeit the rate of improvement may be slow and
uneven.
Against the anticipated background of a strengthening market,
the Group's operations continue to improve their competitive
positions through innovation and investment. 2011 is set to be a
milestone year for new product introductions around the Group, as a
number of major long-term projects reach completion. We remain
confident of our ability to offer the market an ever more
attractive product offering and to deliver strong returns to our
shareholders.
Alan Schroeder
Chairman
FINANCIAL AND OPERATIONS REVIEW
Our operations have collectively delivered another impressive
result, driven by an exceptionally strong performance at Lincat
Limited, at a time when market conditions have not been easy.
Financial
Group operating profit of GBP5.6m, an increase of 15% against
the comparable figure of GBP4.9m for 2009, represents a 17% return
on sales of GBP32.7m. Gross profit remained at 50% of sales,
despite generally higher levels of input cost inflation.
During the year, the Group's operations generated GBP4.8m of
cash after payments for tax and interest. GBP1.2m was invested in
plant and equipment and a further GBP1.6m was paid out in dividends
to shareholders. At the year end, holdings of cash and short-term
investments had risen by GBP2.0m to GBP7.1m.
Pension scheme
The sole final salary scheme within the Group, which had been
closed to new members since 2003, was closed to future accrual in
April 2010. Following a triennial valuation at 30 June 2010, which
showed a deficit of GBP1.9m, the sponsoring employer, IMC, agreed a
recovery plan with the scheme trustees that will see two payments
totalling GBP0.5m made to the scheme by 30 June 2011 and further
payments covering the balance of the June 2010 deficit being made
over the subsequent six years. The scheme's IAS 19 pre-tax deficit
at 31 December 2010 was GBP1.4m.
Operations
Following a fall in revenues in 2009, it is pleasing to report
sales growth of 6% for 2010, despite continuing weaknesses in
certain sectors of the market, for example pubcos, bars and certain
segments of the public sector.
Lincat Limited's revenues grew by 12% between 2009 and 2010,
with both UK and export sales increasing at a similar rate.
Previous reports made reference to enhanced dealer incentives
introduced in early 2009 and these, combined with a systematic and
targeted approach to sales activities, have underpinned the
company's strong performance. Some significant new products were
launched during the year, including a range of pizza ovens that has
already been taken up by a national retail chain. Manufacturing
efficiencies and material cost savings have been delivered by the
investment in a laser profiler in March 2010.
Continuing weakness in the demand for bar equipment was the
major factor that led to a 9% fall in sales at IMC, where both UK
and export revenues experienced a similar decline. IMC's stainless
steel underbar systems are largely supplied to new builds, as there
is no significant replacement market for these non-mechanical
products, which leads to a volatile demand pattern. New product
development has concentrated on broadening the company's offering
of bottle coolers and further investment in innovative food waste
recycling equipment.
After a first half year of high order intake but a low level of
shipments, Britannia delivered a much stronger second half
performance, with sales at a similar level to 2009. Substantial
progress was made on training the company's Australian licensee and
royalty payments will start to accrue from April 2011.
In summary, the Group's operations have once again produced a
result that bears testament to the professionalism and commitment
of the management and staff at each of the businesses. We have
continued to encourage investment and enterprise throughout the
economic downturn and remain convinced that this strategy has been
to the benefit of the Group, its customers and its employees. With
major product launches scheduled for this year - and against an
anticipated background of gradually strengthening demand - we look
forward to 2011 with some confidence.
Paul Bouscarle
Chief Executive
CONDENSED CONSOLIDATED INCOME STATEMENT
Total Total
Year to Year to
31 December 1 January
2010 2010
Note GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 1 32,747 30,763
Cost of sales (16,356) (15,419)
---------- ----------
Gross profit 16,391 15,344
Distribution costs (5,039) (4,676)
Administrative expenses (2,627) (2,665)
Other operating expenses (3,122) (3,129)
---------- ----------
Operating profit before exceptional
item 5,603 4,874
Exceptional item 2 - 5,092
---------- ----------
Operating profit 5,603 9,966
Net finance income/(costs) 3 53 (114)
---------- ----------
Profit before taxation 5,656 9,852
Taxation (1,505) (1,337)
---------- ----------
Profit after tax from continuing
operations 4,151 8,515
Profit after tax from discontinued
operations 4 - 58
---------- ----------
Profit for the year attributable
to shareholders 4,151 8,573
====== ======
Earnings per share 5
From continuing operations:
Basic 78.2p 161.4p
Diluted 77.7p 161.4p
From continuing and discontinued
operations:
Basic 78.2p 162.5p
Diluted 77.7p 162.5p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year to Year to
31 December 1 January
2010 2010
GBP'000 GBP'000
Profit for the period 4,151 8,573
Other comprehensive income:
Actuarial gains/(losses) on defined benefit
pension scheme 528 (1,476)
Tax on the above (143) 413
---------- ----------
Other comprehensive income for the year, net
of tax 385 (1,063)
Total comprehensive income for the year 4,536 7,510
---------- ----------
Total comprehensive income for the year
attributable to equity shareholders 4,536 7,510
CONDENSED CONSOLIDATED BALANCE SHEET
31 December 1 January
2010 2010
Note GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 693 693
Other intangible assets 551 234
Property, plant and equipment 8,840 8,584
Deferred tax asset 2 85
---------- ----------
10,086 9,596
Current assets
Inventories 3,463 3,459
Trade and other receivables 5,901 5,227
Short-term investments 1,000 -
Cash and cash equivalents 6,148 5,141
---------- ----------
16,512 13,827
---------- ----------
Total assets 26,598 23,423
LIABILITIES
Non-current liabilities
Retirement benefit obligation 6 (1,368) (1,889)
Deferred tax liabilities (708) (523)
---------- ----------
(2,076) (2,412)
Current liabilities
Trade and other payables (4,391) (4,192)
Current tax liabilities (686) (726)
Provisions (415) (371)
---------- ----------
(5,492) (5,289)
---------- ----------
Total liabilities (7,568) (7,701)
---------- ----------
Net assets 19,030 15,722
Shareholders' equity
Issued share capital 549 543
Share premium account 286 2
Investment in own shares (16) (16)
Other reserves 874 874
Retained earnings 17,337 14,319
---------- ----------
Total equity 19,030 15,722
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS
EQUITY
Investment
Share Share in own Other Retained
capital premium shares reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 2 January
2009 543 2 (16) 874 8,253 9,656
Total
comprehensive
income for
the year - - - - 7,510 7,510
Credit to
equity for
share-based
payments - - - - 86 86
Dividends paid - - - - (1,530) (1,530)
---------- ---------- ---------- ---------- ---------- ----------
At 1 January
2010 543 2 (16) 874 14,319 15,722
Total
comprehensive
income for
the year - - - - 4,536 4,536
Credit to
equity for
share-based
payments - - - - 112 112
Issue of share
capital 6 284 - - - 290
Dividends paid - - - - (1,630) (1,630)
---------- ---------- ---------- ---------- ---------- ----------
At 31 December
2010 549 286 (16) 874 17,337 19,030
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Year to Year to
31 December 1 January
2010 2010
Note GBP'000 GBP'000
Net cash inflow from operating activities 7 4,795 4,473
Investing activities
Interest received 46 2
Short-term investment (1,000) -
Proceeds of sale of business - 323
Disposal proceeds of property - 5,500
Disposal proceeds of plant and equipment 124 62
Purchase of intangible assets (54) (27)
Purchases of property, plant and equipment (1,213) (576)
Expenditure on product development (351) (136)
---------- ----------
Net cash used in investing activities (2,448) 5,148
Financing activities
Dividends paid (1,630) (1,530)
Proceeds on issue of shares 290 -
Repayment of borrowings - (3,682)
---------- ----------
Net cash from financing activities (1,340) (5,212)
Increase in cash and cash equivalents 1,007 4,409
Cash and cash equivalents at beginning
of the year 5,141 732
---------- ----------
Cash and cash equivalents at the end
of the year 6,148 5,141
Notes to the consolidated financial statements
1. Segmental information
The Group is organised into three operating units in line with its
statutory entities and these are the business segments for which
information is supplied to the Chief Executive.
Business Year to 31 December
segment 2010 Year to 1 January 2010
Revenue Profit Margin Revenue Profit Margin
GBP'000 GBP'000 % GBP'000 GBP'000 %
Lincat 21,800 4,112 18.9 19,440 3,167 16.3
IMC -
underlying 8,228 1,820 22.1 9,035 1,928 21.3
IMC - profit on
sale of
property - - - 5,092
Britannia 2,719 247 9.1 2,692 361 13.4
Inter-segment
sales - - (404) -
---------- ---------- ---------- ----------
Continuing
operations 32,747 6,179 30,763 10,548
Central costs - (576) - (582)
Net finance
income/(costs) - 53 - (114)
Taxation - (1,505) - (1,337)
Discontinued
operations - - 901 58
---------- ---------- ---------- ----------
Total for the
year 32,747 4,151 31,664 8,573
Geographical segments
The Group's operations are all located in the United Kingdom.
Revenue by destination
Year to
31 December Year to
2010 1 January 2010
GBP'000 GBP'000
United Kingdom 27,701 25,691
Rest of World 5,046 5,072
---------- ----------
Total 32,747 30,763
2. Exceptional item
Year to Year to
31 December 1 January
2010 2010
GBP'000 GBP'000
Profit on sale of IMC's Hertfordshire
freehold property - 5,092
The sale of IMC's former manufacturing site in Hertfordshire was
completed on 21 December 2009; the total proceeds of sale were
GBP7.5m.
3. Finance income and finance costs
Year to Year to
31 December 1 January
2010 2010
GBP'000 GBP'000
Finance income:
Interest receivable on short-term
deposits 58 2
Expected return on pension scheme
assets 480 393
Finance costs:
Interest payable on bank loans and
overdrafts (7) (116)
Interest on pension scheme
liabilities (478) (393)
---------- ----------
Net finance income/(costs) 53 (114)
4. Discontinued operations
The disposal of the Group's domestic appliance business, Mercury
Appliances, was completed on 25 August 2009. The results of Mercury
Appliances were shown as discontinued operations in the 2009
condensed consolidated income statement, as follows:
Year to Year to
31 December 1 January
2010 2010
GBP'000 GBP'000
Revenue - 901
Expenses - (1,095)
---------- ----------
Loss before tax - (194)
Tax - 54
---------- ----------
Loss after tax - (140)
Profit on disposal - 258
Tax on disposal - (60)
---------- ----------
Total profit attributable to discontinued
operations - 58
5. Earnings per share
Year to Year to
31 December 1 January
2010 2010
GBP'000 GBP'000
Earnings
From continuing operations 4,151 8,515
Exceptional item - (5,092)
---------- ----------
Adjusted earnings from continuing
operations 4,151 3,423
Average number of shares during
year ('000)
For basic earnings per share 5,305 5,275
Dilutive effect of share options 39 -
---------- ----------
For diluted earnings per share 5,344 5,275
Earnings per share
From continuing operations, adjusted:
Basic 78.2p 64.9p
Diluted 77.7p 64.9p
From continuing operations, total:
Basic 78.2p 161.4p
Diluted 77.7p 161.4p
From discontinued operations:
Basic - 1.1p
Diluted - 1.1p
From continuing and discontinued
operations:
Basic 78.2p 162.5p
Diluted 77.7p 162.5p
6. Retirement benefit obligation
With effect from 30 April 2010, the IMC defined benefit pension
scheme closed to the future accrual of benefits and all remaining
active members became deferred pensioner members. An estimate of
the assets and liabilities of the defined benefit scheme was
updated to 31 December 2010 by an independent actuary in accordance
with IAS 19. The principal assumptions were:
Year to Year to
31 December 2010 1 January 2010
Rate of increase in salaries n/a 3.8%
Rate of increase of pensions in
payment 3.6% 3.6%
Discount rate 5.4% 5.7%
Inflation assumption 3.6% 3.8%
Expected return on plan assets 6.9% 7.4%
Year to 31 December 2010 Year to 1 January 2010
Scheme Scheme Scheme Scheme
assets obligations Net assets obligations Net
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At beginning of
the year 6,602 (8,491) (1,889) 5,704 (6,139) (435)
Current service
cost - (31) (31) - (43) (43)
Employer
contributions 22 - 22 65 - 65
Employee
contributions 13 (13) - 39 (39) -
Actuarial
gains/(losses) 491 37 528 674 (2,150) (1,476)
Finance
income/(expense) 480 (478) 2 393 (393) -
Benefits paid (268) 268 - (273) 273 -
---------- ---------- ---------- ---------- ---------- ----------
At end of the
year 7,340 (8,708) (1,368) 6,602 (8,491) (1,889)
Consolidated cash flow statement: reconciliation of operating
7. profit to net cash inflow from operating activities
Year to Year to
31 December 2010 1 January 2010
GBP'000 GBP'000
Operating profit from continuing
activities 5,603 4,874
Operating loss from discontinued
activities - (187)
Amortisation of intangible assets 64 75
Depreciation 932 950
Profit on disposal of tangible
fixed assets (50) -
Share based payments 112 86
Increase/(decrease) in provisions 44 (8)
(Increase)/decrease in inventories (4) 454
Increase in trade and other receivables (657) (419)
Increase in trade and other payables 178 142
---------- ----------
Cash generated by operations 6,222 5,967
Interest paid (7) (103)
Corporation tax paid (1,420) (1,391)
---------- ----------
Net cash inflow from operating
activities 4,795 4,473
8. Basis of preparation
This preliminary report, which has been agreed with the
auditors, was approved by the Board on 22 March 2011. The financial
information set out above does not constitute statutory accounts
within the meaning of section 435 of the Companies Act 2006.
The statutory accounts for the period ended 1 January 2010,
which have been delivered to the Registrar of Companies, carry an
unqualified report by the auditors and do not contain a statement
under Section 498 (2) or section 498 (3) of the Companies Act
2006.
The statutory accounts for the year ended 31 December 2010 will
be finalised on the basis of the financial information presented by
the directors in this preliminary announcement and will be
delivered to the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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