TIDMMLIN
RNS Number : 9536H
Molins PLC
24 August 2016
24 August 2016
AIM: MLIN
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No. 596/2014
Molins PLC
("Molins" or "Company" or "Group")
International specialist technology and services group
Half-year report for the six months to 30 June 2016
Key points
-- Results in line with management expectations
-- Sales from continuing operations of GBP35.0m (2015: GBP39.5m)
-- Underlying profit before tax from continuing operations of GBP0.1m (2015: GBP1.3m)
Statutory loss before tax on continuing operations of GBP0.3m
(2015: GBP0.4m profit)
-- Underlying earnings per share from continuing operations of 0.2p (2015: 5.1p)
Basic loss per share of 1.5p (2015: 26.9p)
-- Interim dividend of 1.25p per share (2015: 2.5p)
-- Tony Steels appointed as Chief Executive in June
- comprehensive review of strategic direction initiated
-- The Board is taking a more cautious view of the short-term
trading outlook and has revised downwards its trading expectations
for the current year
Tony Steels, Chief Executive, commented:
"I am pleased to have joined Molins, a business with a long
established track record of delivering innovative, engineered
solutions to meet customers' packaging, instrumentation and
processing needs. In the coming months our primary focus will be to
review the strategic direction of the business to ensure we are in
the best position to serve our customers. We expect this review to
be largely completed by the end of the year.
The Group's results for the first half of the year are lower
than in the same period last year but are in line with management
expectations, with tough trading conditions impacting both
divisions. Low demand for new cigarette-making capacity affected
the Instrumentation & Tobacco Machinery division, and the
Packaging Machinery division continues to experience delays in
customers' investment decisions, although encouragingly sales of
aftermarket products across the Group increased.
As in previous years, the Group's full year trading performance
will be significantly weighted towards the second half. However we
are experiencing continuing delays in receiving orders and are
therefore taking a more cautious view of the short-term trading
outlook, such that the Board has revised downwards its trading
expectations for the current year."
For further information, please contact:
Molins PLC Tel: +44 (0)1908
Tony Steels, Chief Executive 246870
David Cowen, Group Finance Director
Panmure Gordon (UK) Limited (NOMAD)
Andrew Potts / Peter Steel - Tel: +44 (0)20
Corporate Finance 7886 2500
Tom Salvesen - Corporate Broking
KTZ Communications Tel: +44(0)20
Katie Tzouliadis/ Viktoria Langley/ 3178 6378
Emma Pearson
HALF-YEAR MANAGEMENT REPORT
Introduction
As expected, tough market conditions have continued to impact
the trading performances of both divisions. Low demand for new
cigarette-making capacity affected the Instrumentation &
Tobacco Machinery Division, and the Packaging Machinery division
experienced delays in customers' investment decisions. Accordingly,
results for the first half of the year are lower than the same
period last year but are in line with management expectations.
Encouragingly, sales of aftermarket products increased in the
period.
In June, we were pleased to welcome Tony Steels to the Group as
Chief Executive. Tony has extensive experience in engineering both
in the UK and internationally and a proven track record in business
development. With the support of the senior management team, he is
now leading a comprehensive review of the Group's strategic
direction to ensure we are in the best position to serve our
customers, with a focus on market opportunities and operational
efficiency, and which we expect to be completed during the next six
months. We are also pleased to welcome Andrew Kitchingman as a
non-executive director who joined the Group in May. The Board would
like to place on record its appreciation of the many years of
service that Dick Hunter gave to the Group as Chief Executive, and
wishes him well in his future endeavours.
It is too early to predict with any certainty what the impact of
the UK leaving the EU will be on the Group. The recent reduction in
the value of sterling compared with most other major trading
currencies is likely to be somewhat positive for our trading
activities, as the Group is a net exporter of goods from the UK.
The fall in interest rates, which followed the vote to leave, has
resulted in the valuation of the Group's UK defined benefit pension
obligations increasing; this increase has been partly mitigated by
the consequent rise in the value of the scheme's gilts and
bonds.
Financial results
Sales from continuing operations in the six months to 30 June
2016 were GBP35.0m (2015: GBP39.5m) and the underlying profit
before tax was GBP0.1m (2015: GBP1.3m). After a net tax charge of
GBPnil (2015: GBP0.3m), the underlying profit after tax for the
period was GBP0.1m (2015: GBP1.0m). Underlying earnings per share
on continuing operations were 0.2p (2015: 5.1p).
These underlying results are stated before reorganisation costs
of GBPnil (2015: GBP0.1m) and pension related charges of GBP0.4m
(2015: GBP0.8m). Pension related costs comprised charges in respect
of administering the Group's defined benefit pension schemes of
GBP0.4m (2015: GBP0.4m) and financing expense on pension scheme
balances of GBPnil (2015: GBP0.4m).
On a statutory basis, the loss before tax from continuing
operations was GBP0.3m (2015: GBP0.4m profit). The net tax charge
was GBPnil (2015: GBPnil - after a tax credit of GBP0.3m and a tax
charge on underlying profit of GBP0.3m), resulting in a loss for
the period of GBP0.3m (2015: GBP0.4m profit). Discontinued
operations (sold on 31 May 2015) incurred losses of GBP5.8m in
2015, details of which are shown in note 16. The basic loss per
share, which includes losses on discontinued operations, amounted
to 1.5p (2015: 26.9p).
Finances
Net debt at 30 June 2016 was GBP4.6m (30 June 2015: GBP3.9m and
31 December 2015: GBP3.2m). Net cash inflow from operating
activities (continuing operations) in the first half of the year
was GBP0.2m. This is after an increase in working capital levels of
GBP0.2m, deficit recovery payments to the Group's defined benefit
pension scheme of GBP0.9m and tax paid of GBP0.3m. Capital and
product development expenditure was GBP1.4m (net). Net cash outflow
in relation to the discontinued operations in the period was
GBP0.1m. Ordinary dividends totalling GBP0.3m were paid in the
period.
Dividend
In line with the Group's reduction in the 2015 final dividend,
the Board has declared an interim dividend of 1.25p per ordinary
share (2015: 2.5p) which will be paid on 13 October 2016 to
ordinary shareholders registered at the close of business on 16
September 2016. Dividends paid to shareholders in the six months to
30 June 2016 were 1.5p per ordinary share (2015: 3.0p).
Operating performance
Packaging Machinery
The division supplies highly automated product processing,
handling, cartoning and robotic end-of-line packaging machinery and
systems from its operations in the UK, the Netherlands, Canada and
Singapore.
The division experienced a challenging first half of the year,
with order intake reduced in most regions, reflecting the
continuing deferral of customer investment decisions. As a result,
sales decreased to GBP18.2m (2015: GBP21.8m). The operational
gearing effect of this reduction resulted in breakeven operating
profit (2015: GBP1.1m profit).
Currently, order books are lower than this time last year and,
although the division has a robust level of prospects, the
conversion of prospects to orders is more difficult to predict in
the current environment. We continue to emphasise the importance of
customer support and service, and this has helped to achieve growth
in the aftermarket business, which we expect to continue in the
second half.
Looking further ahead, the division's strategy to solve customer
specific needs through the combination of modular designs and
innovative engineering and applications skills, continues to place
the division in a good position to support the investment plans of
its many multinational and regional customers.
Instrumentation & Tobacco Machinery
The division comprises both the Group's tobacco machinery
activities and its quality control, testing and analytics
instrumentation business, which has customers in both the tobacco
and other FMCG sectors.
Sales in the period were GBP16.8m (2015: GBP17.7m) and operating
profit, before reorganisation costs, was GBP0.2m (2015:
GBP0.3m).
As anticipated, conditions in the tobacco sector continued to be
challenging and market opportunities for sales of cigarette-making
machines remain relatively low. As a consequence, competitive
pressures to secure machine orders have resulted in reduced margins
for those orders that are secured. More encouragingly, orders for
the aftermarket activities remained quite strong and demand for our
instrumentation activities held up in the period following better
order intake in the last few months of 2015. However, we believe
that there may be some softening in the key Asia region for
instrumentation in the second half.
Despite these conditions, we are encouraged by the market
response to the introduction of new tobacco machinery. Field trials
of the Alto cigarette making machine were completed in 2015 and
orders for production machines were secured in the first half of
2016. Optima, the new cigarette packing machine, began field trials
this year which are on-going and encouraging. These two major
machine introductions, alongside other ancillary equipment, means
that the division has completed a significant programme of
development, enabling it to supply a complete make-pack cigarette
production line of equipment in a range of speeds, thereby
expanding the addressable market. We also continued to enhance the
product range of the instrumentation business to support both its
market-leading position in the tobacco sector and its expansion
into new sectors.
Pension schemes
The Group is responsible for defined benefit pension schemes in
the UK and the USA. There are no active members and the schemes are
accounted for in accordance with IAS 19 Employee benefits. The
Company is responsible for the payment of a statutory levy to the
Pension Protection Fund. The quantum of this levy is dependent on a
number of factors, including a specific method of calculating a
pension deficit for this purpose and a credit assessment of the
Company, the methodology for which is also specific for this
purpose. The levy that will be paid in 2016 will be considerably in
excess of the 2015 levy.
The IAS 19 valuation of the UK scheme at 30 June 2016 shows a
deficit of GBP1.9m (GBP1.6m net of deferred tax), compared with a
surplus of GBP10.6m (GBP6.9m net of deferred tax) at the beginning
of the period. Following the results of the UK referendum in June
2016, the bond rates used to calculate the value of the scheme's
liabilities reduced considerably, resulting in the value of the
scheme's liabilities increasing to GBP372.8m (31 December 2015:
GBP336.3m). The impact of this was mitigated to a degree by strong
returns of the assets held by the scheme, with the value increasing
to GBP370.9m (31 December 2015: GBP346.9m). The UK scheme is
subject to a formal triennial actuarial valuation as at 30 June
2015 and the deficit recovery plan is expected to be formally
reassessed in the next few months. The results of the last
completed funding valuation, as at 30 June 2012, showed a funding
level of 86% of liabilities, which represented a deficit of
GBP53.0m. The level of deficit funding is currently GBP1.8m per
annum (increasing by 2.1% per annum).
The net valuation of the USA pension schemes at 30 June 2016,
with total assets of GBP16.8m, showed a deficit of GBP8.1m (GBP4.9m
net of deferred tax), compared with a deficit of GBP6.6m (GBP4.0m
net of deferred tax) at the beginning of the period.
The aggregate expense of administering the pension schemes was
GBP0.4m (2015: GBP0.4m). The net financing expense on pension
scheme balances was GBPnil (2015: GBP0.4m).
Outlook
As in previous years, the Group's full year trading performance
will be significantly weighted towards the second half. However we
are experiencing continuing delays in receiving orders and are
therefore taking a more cautious view of the short-term trading
outlook, such that the Board has revised downwards its trading
expectations for the current year.
The Board's comprehensive review of the Group's strategic
direction is underway and we look forward to updating shareholders
on its results in due course. At the same time we continue to focus
on our existing growth initiatives within our core market sectors
of nutrition, beverages, healthcare, pharmaceutical and
tobacco.
Tony Steels David Cowen
Chief Executive Group Finance Director
24 August 2016
CONDENSED CONSOLIDATED INCOME STATEMENT
6 months to 30 June 6 months to 30 June
2016 2015
---------------------------------------- -----------------------------------------
Non-underlying Non-underlying
(note (note
Underlying 5) Total Underlying 5) Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 4 35.0 - 35.0 39.5 - 39.5
Cost of sales (25.4) - (25.4) (28.4) - (28.4)
------------ ---------------- -------- ------------ ---------------- ---------
Gross profit 9.6 - 9.6 11.1 - 11.1
Distribution
expenses (3.9) - (3.9) (4.3) - (4.3)
Administrative
expenses (5.3) (0.4) (5.7) (5.1) (0.5) (5.6)
Other operating
expenses (0.2) - (0.2) (0.3) - (0.3)
------------ ---------------- -------- ------------ ---------------- ---------
Operating 4,
(loss)/profit 7 0.2 (0.4) (0.2) 1.4 (0.5) 0.9
Financial income 6 0.1 - 0.1 - - -
Financial expenses 6 (0.2) - (0.2) (0.1) (0.4) (0.5)
------------ ---------------- -------- ------------ ---------------- ---------
Net financing 4,
expense 6 (0.1) - (0.1) (0.1) (0.4) (0.5)
------------ ---------------- -------- ------------ ---------------- ---------
(Loss)/profit
before tax 4 0.1 (0.4) (0.3) 1.3 (0.9) 0.4
Taxation 8 - - - (0.3) 0.3 -
------------ ---------------- -------- ------------ ---------------- ---------
(Loss)/profit
for the period
from continuing
operations
0.1 (0.4) (0.3) 1.0 (0.6) 0.4
Loss for the
period from
discontinued
operations 16 - - - - (5.7) (5.7)
------------ ---------------- -------- ------------ ---------------- ---------
Loss for the
period 0.1 (0.4) (0.3) 1.0 (6.3) (5.3)
============ ================ ======== ============ ================ =========
Basic loss per 9 (1.5)p (26.9)p
ordinary share
9 (1.5)p (26.9)p
Diluted loss
per ordinary
share
------------ ---------------- -------- ------------ ---------------- ---------
CONDENSED CONSOLIDATED INCOME STATEMENT (CONTINUED)
12 months to 31 December
2015
--------------------------------------------
Non-underlying
(note
Underlying 5) Total
Notes GBPm GBPm GBPm
Revenue 4 87.0 - 87.0
Cost of sales (63.8) - (63.8)
------------- ----------------- ----------
Gross profit 23.2 - 23.2
Other operating - 0.2 0.2
income
Distribution (7.9) - (7.9)
expenses
Administrative (10.6) (1.3) (11.9)
expenses
Other operating (0.7) - (0.7)
expenses
------------- ----------------- ----------
4,
Operating profit 7 4.0 (1.1) 2.9
Financial income 6 0.1 - 0.1
Financial expenses 6 (0.3) (0.7) (1.0)
------------- ----------------- ----------
Net financing 4,
expense 6 (0.2) (0.7) (0.9)
------------- ----------------- ----------
Profit before 4 3.8 (1.8) 2.0
tax
8 (0.9) 0.6 (0.3)
Taxation
------------- ----------------- ----------
Profit for the
period from
continuing operations 2.9 (1.2) 1.7
Loss for the
period from
discontinued
operations 16 - (5.8) (5.8)
------------- ----------------- ----------
Loss for the
period 2.9 (7.0) (4.1)
============= ================= ==========
Basic loss per 9 (20.9)p
ordinary share
9 (20.9)p
Diluted loss
per ordinary
share
------------- ----------------- ----------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 12 months
to 30 to 30 to 31
June June Dec
2016 2015 2015
GBPm GBPm GBPm
Loss for the period (0.3) (5.3) (4.1)
----------- ----------- ------------
Other comprehensive (expense)/income
Items that will not be reclassified
to profit or loss (13.9) 6.9 24.6
Actuarial (losses)/gains
4.5 (1.5) (6.6)
Tax on items that will not
be reclassified to profit or
loss
----------- ----------- ------------
(9.4) 5.4 18.0
----------- ----------- ------------
Items that may be reclassified
subsequently to profit or loss
Currency translation movements 2.9 (1.7) (2.2)
arising on foreign currency
net investments 0.9 (0.2) (0.1)
Effective portion of changes
in fair value of cash flow
hedges
----------- ----------- ------------
3.8 (1.9) (2.3)
----------- ----------- ------------
Other comprehensive (expense)/income
for the period (5.6) 3.5 15.7
----------- ----------- ------------
Total comprehensive (expense)/income
for the period (5.9) (1.8) 11.6
=========== =========== ============
Total comprehensive (expense)/income
for the period arises from:
Continuing operations (5.9) 3.9 17.4
Discontinued operations - (5.7) (5.8)
------- -------- --------
(5.9) (1.8) 11.6
======= ======== ========
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Share Share Translation redemption Hedging Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
6 months to 30
June 2016
Balance at 1
January 2016 5.0 26.0 (1.5) 3.9 (0.7) 3.9 36.6
---------- ---------- -------------- ------------ ---------- ----------- ---------
Loss for the
period
Other comprehensive - - - - - (0.3) (0.3)
expense for the
period - - 2.9 - 0.7 (9.2) (5.6)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
expense
for the period - - 2.9 - 0.7 (9.5) (5.9)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Dividends to
shareholders
Equity-settled - - - - - (0.3) (0.3)
share-based transactions - - - - - - -
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners,
recorded directly
in equity - - - - - (0.3) (0.3)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 30
June 2016 5.0 26.0 1.4 3.9 - (5.9) 30.4
========== ========== ============== ============ ========== =========== =========
6 months to 30
June 2015
Balance at 1
January 2015 5.0 26.0 0.7 3.9 (0.6) (9.1) 25.9
---------- ---------- -------------- ------------ ---------- ----------- ---------
Loss for the
period
Other comprehensive - - - - - (5.3) (5.3)
income for the
period - - (1.7) - (0.2) 5.4 3.5
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
expense for the
period - - (1.7) - (0.2) 0.1 (1.8)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Dividends to - - - - - (0.6) (0.6)
shareholders
Equity-settled - - - - - 0.1 0.1
share-based transactions
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners,
recorded directly
in equity - - - - - (0.5) (0.5)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 30
June 2015 5.0 26.0 (1.0) 3.9 (0.8) (9.5) 23.6
========== ========== ============== ============ ========== =========== =========
12 months to
31 December 2015
Balance at 1
January 2015 5.0 26.0 0.7 3.9 (0.6) (9.1) 25.9
---------- ---------- -------------- ------------ ---------- ----------- ---------
Loss for the
period
Other comprehensive - - - - - (4.1) (4.1)
income for the
period - - (2.2) - (0.1) 18.0 15.7
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
income for the
period - - (2.2) - (0.1) 13.9 11.6
---------- ---------- -------------- ------------ ---------- ----------- ---------
Dividends to - - - - - (1.1) (1.1)
shareholders
Equity-settled - - - - - 0.3 0.3
share-based transactions
Purchase of own - - - - - (0.1) (0.1)
shares
Tax on items - - - - - - -
recorded directly
in equity
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners,
recorded directly
in equity - - - - - (0.9) (0.9)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 31
December 2015 5.0 26.0 (1.5) 3.9 (0.7) 3.9 36.6
========== ========== ============== ============ ========== =========== =========
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 Dec
2016 2015 2015
Notes GBPm GBPm GBPm
Non-current assets
Intangible assets 15.3 15.0 14.9
Property, plant and equipment 8.7 8.1 8.0
Investment property 0.8 0.8 0.8
Employee benefits - - 10.6
Deferred tax assets 5.0 4.9 4.2
---------- ---------- ---------
29.8 28.8 38.5
---------- ---------- ---------
Current assets
Inventories 16.9 19.7 15.1
Trade and other receivables 17.2 21.7 17.9
Current tax assets 0.2 0.1 -
Cash and cash equivalents 4.5 4.3 10.4
---------- ---------- ---------
38.8 45.8 43.4
---------- ---------- ---------
Current liabilities
Bank overdraft (0.2) - (0.6)
Trade and other payables (17.5) (27.2) (18.9)
Current tax liabilities (0.3) (0.4) (0.5)
Provisions (1.0) (1.2) (1.2)
Provisions held within discontinued (0.2) (0.3) (0.2)
operations
---------- ---------- ---------
(19.2) (29.1) (21.4)
---------- ---------- ---------
Net current assets 19.6 16.7 22.0
---------- ---------- ---------
Total assets less current
liabilities 49.4 45.5 60.5
---------- ---------- ---------
Non-current liabilities
Interest-bearing loans and (8.9) (8.2) (13.0)
borrowings
Employee benefits 7 (10.0) (13.6) (6.6)
Deferred tax liabilities (0.1) - (4.3)
Provisions held within discontinued - (0.1) -
operations
---------- ---------- ---------
(19.0) (21.9) (23.9)
---------- ---------- ---------
Net assets 4 30.4 23.6 36.6
========== ========== =========
Equity
Issued capital 5.0 5.0 5.0
Share premium 26.0 26.0 26.0
Reserves 5.3 2.1 1.7
Retained earnings (5.9) (9.5) 3.9
---------- ---------- ---------
Total equity 30.4 23.6 36.6
========== ========== =========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months 6 months 12 months
to 30 to 30 to 31
June June Dec
Notes 2016 2015 2015
GBPm GBPm GBPm
Operating activities Operating
(loss)/profit from continuing
operations
Non-underlying items included
in operating profit
Amortisation Depreciation (0.2) 0.9 2.9
Other non-cash items Defined
benefit pension payments
Working capital movements:
- (increase)/decrease in
inventories - decrease in
trade and other receivables
- (decrease)/increase in
trade and other payables
- decrease in provisions
0.4 0.5 1.1
0.7 0.6 1.4
0.7 0.5 1.2
- (0.1) 0.2
(0.9) (0.9) (1.9)
(0.5) (2.5) 2.2
2.1 2.6 6.4
(1.7) 0.2 (8.1)
(0.1) (0.1) (0.1)
----------- ----------- ------------
Cash generated from operations 0.5 1.7 5.3
before reorganisation and
discontinued operations Cash
used in discontinued operations
Reorganisation costs paid
16 (0.1) (0.9) (1.2)
5 - (0.2) (0.4)
----------- ----------- ------------
Cash flows from operations 0.4 0.6 3.7
Taxation paid
(0.3) (0.1) (0.1)
----------- ----------- ------------
Cash flows from operating
activities 0.1 0.5 3.6
----------- ----------- ------------
Investing activities
Interest received 0.1 - 0.1
Proceeds from sale of property, 0.2 0.3 0.4
plant and equipment Acquisition
of property, plant and equipment
Acquisition of intellectual
property Capitalised development
expenditure Net proceeds
on disposal of discontinued
operations
(0.8) (0.7) (1.3)
- (0.2) (0.2)
(0.8) (1.2) (1.9)
- 0.2 0.2
----------- ----------- ------------
Cash flows from investing
activities (1.3) (1.6) (2.7)
----------- ----------- ------------
Financing activities Interest
paid Purchase of own shares
Net (decrease)/increase against
revolving facilities Dividends
paid
(0.2) (0.1) (0.3)
- - (0.1)
(4.3) (3.6) 1.1
10 (0.3) (0.6) (1.1)
----------- ----------- ------------
Cash flows from financing
activities (4.8) (4.3) (0.4)
----------- ----------- ------------
Net decrease in cash and 11 (6.0) (5.4) 0.5
cash equivalents
Cash and cash equivalents 9.8 9.8 9.8
at 1 January
Effect of exchange rate fluctuations 0.5 (0.1) (0.5)
on cash held
----------- ----------- ------------
Cash and cash equivalents
at period end 4.3 4.3 9.8
=========== =========== ============
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
1. General information
The Half-year results for the current and comparative period are
unaudited but have been reviewed by the auditors, KPMG LLP, and
their report is set out after the notes. The comparative
information for the year ended 31 December 2015 does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. The Group's statutory accounts have been reported on by the
Group's auditor and delivered to the Registrar of Companies. The
report of the auditor was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying its report, and (iii) did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006. The Group's statutory accounts for the year ended 31
December 2015 are available from the Company's registered office at
Rockingham Drive, Linford Wood East, Milton Keynes MK14 6LY or from
the Group's website at www.molins.com.
Having made due enquiries the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
condensed set of financial statements.
The condensed set of financial statements was approved by the
Board of directors on 24 August 2016.
2. Basis of preparation
(a) Statement of compliance
The condensed set of financial statements for the 6 months ended
30 June 2016 has been prepared in accordance with IAS 34 Interim
financial reporting as adopted by the EU. It does not include all
of the information required for full annual financial statements
and should be read in conjunction with the financial statements of
the Group for the year ended 31 December 2015.
(b) Judgements and estimates
The preparation of the condensed set of financial statements
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing the condensed set of financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were of the same type as those that applied to the financial
statements for the year ended 31 December 2015.
3. Significant accounting policies
The accounting policies, presentation and methods of computation
applied by the Group in this condensed set of financial statements
are the same as those applied in the Group's latest audited
financial statements.
4. Operating segments
The Group has two operating segments which are the Group's two
divisions. These divisions form the basis of the Group's management
and internal reporting structure. Further details in respect of the
Group structure and performance of the two divisions are set out in
the Half-year management report.
Revenue Profit
-----------
6 months 6 months 12 months 6 months 6 months 12 months
to 30 to 30 to 31 to 30 to 30 to 31 Dec
June June Dec June June 2015
2016 2015 2015 2016 2015 GBPm
Continuing operations GBPm GBPm GBPm GBPm GBPm
Packaging Machinery 18.2 21.8 51.0 - 1.1 3.9
Instrumentation
& Tobacco Machinery 16.8 17.7 36.0 0.2 0.3 0.1
---------- ---------- ----------- ---------- ---------- -----------
35.0 39.5 87.0
========== ========== ===========
Underlying operating
profit 0.2 1.4 4.0
Non-underlying items included
in operating profit (0.4) (0.5) (1.1)
---------- ---------- -----------
Operating (loss)/profit (0.2) 0.9 2.9
Net financing expense (0.1) (0.5) (0.9)
---------- ---------- -----------
(Loss)/profit before
tax from continuing operations (0.3) 0.4 2.0
Loss for the period from
discontinued operations - (5.7) (5.8)
---------- ---------- -----------
Loss before tax for the
period (0.3) (5.3) (3.8)
========== ========== ===========
Net financing expense includes dividends paid on preference
shares. The Company has in issue 900,000 6% fixed cumulative
preference shares. The preference dividend is payable on 30 June
and 31 December and amounted to GBP0.1m in the 12 months ended 31
December 2015.
30 June 30 June 31 Dec
2016 2015 2015
Segment assets GBPm GBPm GBPm
Packaging Machinery 19.0 29.0 18.7
Instrumentation & Tobacco 33.5 35.0 31.9
Machinery
---------- ---------- ---------
Total segment assets 52.5 64.0 50.6
Total segment liabilities (19.9) (33.2) (20.5)
Segment net assets - continuing
operations 32.6 30.8 30.1
Net liabilities - discontinued
operations (0.1) (0.3) (0.2)
Unallocated net (liabilities)/assets (2.1) (6.9) 6.7
---------- ---------- ---------
Total net assets 30.4 23.6 36.6
========== ========== =========
5. Non-underlying items
Charges classified as non-underlying items were incurred in
respect of the administration costs of the Group's defined benefit
pension schemes, which are paid from the assets of the pension
schemes, and financing expense on pension scheme balances, which
are detailed in note 7. In the 6 months to 30 June 2016, charges in
respect of reorganisations of GBPnil (6 months to 30 June 2015:
GBP0.1m; 12 months to 31 December 2015: GBP0.2m) were incurred. In
the period to 30 June 2016 cash payments of GBPnil (6 months to 30
June 2015: GBP0.1m; 12 months to 31 December 2015: GBP0.1m) were
made in respect of reorganisations.
6. Net financing expense
6 months 6 months 12 months
to 30 June to 30 to 31
2016 June Dec
GBPm 2015 2015
GBPm GBPm
Financial income
Amounts receivable on cash
and cash equivalents 0.1 - 0.1
----------- -------- ----------
0.1 - 0.1
----------- -------- ----------
Financial expenses
Defined benefit pension scheme - (0.4) (0.7)
finance expense
Amounts payable on bank loans (0.2) (0.1) (0.2)
and overdrafts
Preference dividends paid - - (0.1)
----------- -------- ----------
(0.2) (0.5) (1.0)
----------- -------- ----------
Net financing expense (0.1) (0.5) (0.9)
=========== ======== ==========
7. Employee benefits
The Group accounts for pensions under IAS 19 Employee benefits.
A formal valuation of the UK defined benefit pension scheme was
carried out as at 30 June 2012, and formal valuations of the USA
defined benefit schemes were carried out as at 1 January 2015, and
their assumptions, updated to reflect actual experience and
conditions at 30 June 2016 and modified as appropriate for the
purposes of IAS 19, have been applied in the condensed set of
financial statements. Profit before tax for the 6 months to 30 June
2016 includes charges in respect of pension scheme administration
costs of GBP0.4m (6 months to 30 June 2015: GBP0.4m; 12 months to
31 December 2015: GBP0.9m) and financing expense on pension scheme
balances of GBPnil (6 months to 30 June 2015: GBP0.4m; 12 months to
31 December 2015: GBP0.7m). Payments to the Group's UK defined
benefit pension scheme in the period of GBP0.9m (6 months to 30
June 2015: GBP0.9m; 12 months to 31 December 2015: GBP1.8m) were in
respect of the agreed deficit recovery plan.
Employee benefits as shown in the Condensed Consolidated
Statement of Financial Position were:
30 June 30 June 31 Dec
2016 2015 2015
GBPm GBPm GBPm
UK scheme
Fair value of assets 370.9 349.3 346.9
Present value of defined benefit (372.8) (356.9) (336.3)
obligations
--------- --------- ---------
Defined benefit (liability)/asset (1.9) (7.6) 10.6
--------- --------- ---------
USA schemes
Fair value of assets 16.8 14.6 14.9
Present value of defined benefit (24.9) (20.6) (21.5)
obligations
--------- --------- ---------
Defined benefit liability (8.1) (6.0) (6.6)
--------- --------- ---------
Total defined benefit (liability)/asset (10.0) (13.6) 4.0
========= ========= =========
8. Taxation
The tax charge for the 6 months to 30 June 2016 amounted to
GBPnil (6 months to 30 June 2015: GBPnil; 12 months to 31 December
2015: GBP0.3m) and is calculated as follows:
6 months 6 months 12 months
to 30 to 30 June to 31
June 2015 Dec
2016 GBPm 2015
GBPm GBPm
Tax charge on underlying profit - 0.3 0.9
Tax credit on non-underlying - (0.3) (0.6)
items
-------- ----------- ---------
- - 0.3
======== =========== =========
The Group's consolidated effective tax rate in respect of
underlying profit for the 6 months to 30 June 2016 is 12% (6 months
to 30 June 2015: 24%; 12 months to 31 December 2015: 24%).
Reductions in the UK corporation tax rate from 23% to 21%
(effective from 1 April 2014) and 20% (effective from 1 April 2015)
were substantively enacted on 2 July 2013. Further reductions to
19% (effective from 1 April 2017) and to 18% (effective 1 April
2020) were substantively enacted on 26 October 2015, and an
additional reduction to 17% (effective from 1 April 2020) was
announced in the budget on 16 March 2016. This will reduce the
company's future current tax charge accordingly. The deferred tax
asset at 31 December 2015 arising in the UK has been calculated
based on the rates enacted.
9. Earnings per share
Basic earnings per ordinary share is calculated by dividing the
profit or loss attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the
period excluding shares held by the employee trust in respect of
the Company's long-term incentive arrangements. For diluted
earnings per ordinary share, the weighted average number of shares
includes the diluting effect, if any, of own shares held by the
employee trust. The effect of dilution for each of the periods
reported would be to decrease the loss per ordinary share and is
therefore excluded from the dilution calculation.
The weighted average number of ordinary shares for both the
basic EPS, diluted EPS and underlying EPS calculations in the 6
months to 30 June 2016 is 19,708,637 (6 months to 30 June 2015:
19,522,213; 12 months to 31 December 2015: 19,574,724).
The adjusted weighted average number of ordinary shares for the
diluted underlying EPS calculation in the 6 months to 30 June 2016
is 19,832,504 (6 months to 30 June 2015: 19,808,933; 12 months to
31 December 2015: 19,831,957).
Underlying EPS and diluted underlying EPS, which are calculated
on profit before non-underlying items, for the 6 months to 30 June
2016 amounted to 0.2p (6 months to 30 June 2015: 5.1p; 12 months to
31 December 2015: 15.1p) and 0.2p (6 months to 30 June 2015: 5.0p;
12 months to 31 December 2015: 14.9p) respectively.
The calculations of underlying EPS and diluted underlying EPS
are based on underlying profit for the 6 months to 30 June 2016 of
GBP0.1m (6 months to 30 June 2015: GBP1.0m; 12 months to 31
December 2015: GBP2.9m) which is calculated as follows:
6 months 6 months 12 months
to 30 to 30 June to 31 Dec
June 2015 2015
2016 GBPm GBPm
GBPm
Loss for the period (0.3) (5.3) (4.1)
Non-underlying items (net of 0.4 0.6 1.2
tax)
Loss from discontinued operations - 5.7 5.8
-------- ----------- ----------
Underlying profit for the period 0.1 1.0 2.9
======== =========== ==========
10. Dividends
6 months 6 months 12 months
to 30 to 30 to 31 Dec
June June 2015
2016 2015 GBPm
GBPm GBPm
Dividends to shareholders paid
in the period
Final dividend for the year ended
31 December 2014
of 3.0p per share
Interim dividend for the year
ended 31 December 2015 - 0.6 0.6
of 2.5p per share
Final dividend for the year ended - - 0.5
31 December 2015
of 1.5p per share 0.3 - -
-------- -------- ----------
0.3 0.6 1.1
======== ======== ==========
An interim dividend for the year ending 31 December 2016 of
1.25p per ordinary share will be paid on 13 October 2016 to
ordinary shareholders registered at the close of business on 16
September 2016.
11. Reconciliation of net cash flow to movement in net
(debt)/funds
6 months 6 months 12 months
to 30 to 30 to 31 Dec
June June 2015
2016 2015 GBPm
GBPm GBPm
Net (decrease)/increase in cash (6.0) (5.4) 0.5
and cash equivalents
Cash inflow/(outflow) from movement 4.3 3.6 (1.1)
in borrowings
-------- -------- ----------
Change in net (debt)/funds resulting
from cash flows (1.7) (1.8) (0.6)
Translation movements 0.3 - (0.5)
-------- -------- ----------
Movement in net debt in the period (1.4) (1.8) (1.1)
Opening net debt (3.2) (2.1) (2.1)
-------- -------- ----------
Closing net debt (4.6) (3.9) (3.2)
======== ======== ==========
Analysis of net debt
Cash and cash equivalents - current
assets 4.5 4.3 10.4
Bank overdrafts (0.2) - (0.6)
Interest-bearing loans and borrowings
- non-current liabilities (8.9) (8.2) (13.0)
-------- -------- ----------
Closing net debt (4.6) (3.9) (3.2)
======== ======== ==========
12. Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the financial statements for
the year ended 31 December 2015.
At 1 January 2016 and 30 June 2016 the Group held all financial
instruments at Level 2 (as defined in IFRS 7 Financial instruments:
disclosures) and there have been no transfers of assets or
liabilities between levels of the fair value hierarchy.
30 June 30 June 31 Dec
2016 2015 2015
Categories of financial instruments GBPm GBPm GBPm
Financial assets
Derivative instruments in designated
hedge accounting relationship 0.3 0.2 -
Loans and receivables (including
cash and cash equivalents) 16.9 17.6 22.7
------- ------- ------
17.2 17.8 22.7
======= ======= ======
Financial liabilities
Derivative instruments in designated 0.1 0.6 0.5
hedge accounting relationship
Amortised cost 26.6 34.7 32.0
------- ------- ------
26.7 35.3 32.5
======= ======= ======
Amortised cost comprises interest-bearing loans and borrowings
and trade and other payables, excluding foreign currency
derivatives.
The Group enters into forward foreign exchange contracts solely
for the purpose of minimising currency exposures on sale and
purchase transactions. The Group classified its forward foreign
exchange contracts used for hedging as cash flow hedges and states
them at fair value.
The fair value is the gain/loss on all open forward foreign
exchange contracts at the period end. These amounts are based on
the market values of equivalent instruments at the period end date
and all relate to those forward foreign exchange contracts that
have been designated as effective cash flow hedges under IAS 39
Financial instruments - recognition and measurement.
13. Related parties
The Group has related party relationships with its directors and
with the UK and USA defined benefit pension schemes. There has been
no material change in the nature of the related party transactions
described in note 31 of the 2015 Annual Report and Accounts.
14. Principal risks and uncertainties
Molins is subject to a number of risks which could have a
serious impact on the performance of the business. The Board
regularly considers the principal risks that the Group faces and
how to mitigate their potential impact. The key risks to which the
business is exposed have not changed significantly over the past
six months (other than the elimination of exposure to the testing
regime for tobacco related products in the USA following the sale
of the analytical services laboratories business) and are not
expected to do so over the remaining six months of the financial
year. Further information on the principal risks and uncertainties
faced by the Group is included on pages 12 and 13 of the Group's
2015 Annual Report and Accounts.
15. Half-year report
The Half-year report will be made available to shareholders on
or before 9 September 2016 on the Group's website at
www.molins.com. The Half-year report will not be available in
printed form.
16. Discontinued operations
On 31 May 2015 the Group sold the trade and assets of Arista
Laboratories, Inc. The table below shows the results of the
discontinued operations which are included in the Group's Condensed
Consolidated Income Statement and Condensed Consolidated Statement
of Cash Flow.
6 months 6 months 12 months
to 30 to 30 to 31
Income June June Dec
2016 2015 2015
GBPm GBPm GBPm
Revenue from trading activities - 0.7 0.7
Costs from trading activities - (1.6) (1.6)
------------ ----------- ------------
Operating loss from trading - (0.9) (0.9)
activities
Proceeds from disposal - 0.3 0.3
Costs incurred on disposal - (0.4) (0.4)
Loss on disposal of net assets - (3.4) (3.5)
Impairment of goodwill - (1.3) (1.3)
------------ ----------- ------------
Loss before and after tax - (5.7) (5.8)
================== =========== ============
6 months 6 months 12 months
to 30 to 30 to 31
Cash flow June June Dec
2016 2015 2015
GBPm GBPm GBPm
Operating activities Operating
loss Depreciation Net movements
in working capital
- (0.9) (0.9)
- 0.2 0.2
- 0.1 0.2
----------- ----------- ------------
Cash used in operations before - (0.6) (0.5)
reorganisation Reorganisation
costs paid (0.1) (0.3) (0.7)
----------- ----------- ------------
Cash flows from operating
activities (0.1) (0.9) (1.2)
----------- ----------- ------------
Investing activities Cash
flows from investing activities
- net proceeds on disposal - 0.2 0.2
----------- ----------- ------------
Net decrease in cash and
cash equivalents (0.1) (0.7) (1.0)
=========== =========== ============
INDEPENT REVIEW REPORT TO MOLINS PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the Half-year report for the six months
ended 30 June 2016 which comprises the condensed consolidated
income statement, condensed consolidated statement of comprehensive
income, condensed consolidated statement of changes in equity,
condensed consolidated statement of financial position, condensed
consolidated statement of cash flows and the related explanatory
notes. We have read the other information contained in the
Half-year report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this 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 for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The Half-year report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Half-year report in accordance with the AIM
Rules.
The annual financial statements of the Group are prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the EU. The condensed set of financial statements
included in this Half-year report has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half-year report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half-year report for the six months ended 30 June 2016 is
not prepared, in all material respects, in accordance with IAS 34
as adopted by the EU and the AIM Rules.
Peter Selvey
for and on behalf of KPMG LLP
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
24 August 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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