TIDMMRX
RNS Number : 6884M
Metalrax Group PLC
20 September 2012
Metalrax Group PLC
Interim Report - 2012
Financial Summary - 26 week period ended 1 July 2012
Results in brief
2012 2011
GBP'm GBP'm
----------------------------------------- ------- ---------
Revenues 27.7 31.0
Gross margins 25.0% 26.8%
Adjusted operating profit (1) 0.3 0.9
Total Group (loss)/profit after
taxation (1.2) 0.1
Basic (loss)/earnings per 5p ordinary
share (1.26)p 0.02p
Adjusted (loss)/earnings per 5p
ordinary share* (0.11)p 0.54p
Cash (used in)/generated from continuing
operations before pension contributions (0.8) 0.8
Net debt 8.5 6.1
Gearing (net debt/net assets) 53.7% 33.3%
Dividends paid per 5p ordinary nil nil
share
----------------------------------------- ------- ---------
1. Adjusted operating profit represents operating profit from
continuing operations before exceptional items and share option
costs.
Total Group represents results from continuing and discontinued
businesses.
* Adjusted (loss)/earnings excludes discontinued operations,
exceptional items, share option costs and debt issue cost
amortisation, and the tax effect thereon (see note 8).
Key Points: Financial and Operational
-- Revenues in the period were GBP27.7m, a decrease of 10.8%
compared with the same period last year (2011 H1: GBP31.0m). Both
the Specialist Engineering and Consumer Durables divisions
experienced very challenging conditions resulting in lower
revenues.
-- Group gross margin was 1.8 points lower at 25.0% (2011 H1:
26.8%) which was driven by cost increases and pricing pressure
within the Consumer Durables division.
-- Overheads were reduced by 18.4% to GBP4.0m from GBP4.9m in
the first half of 2011, as a result of cost saving initiatives
across the Group.
-- Adjusted operating profit was GBP0.3m (2011 H1: GBP0.9m) reflecting the reduced turnover.
-- The restructuring of George Wilkinson and the winding down of
Premier Architectural Metalwork, resulted in exceptional costs of
GBP0.8m in the first half (2011 H1: GBP0.2m) in continuing
operations.
-- The Group successfully refinanced its bank borrowings in February 2012 for a 4 year term.
-- The pension deficit has decreased by GBP0.1m to GBP3.3m at 1
July 2012 (31 December 2011: GBP3.4m).
Commenting on these results, Andrew Walker, Chairman, said:
"The current prolonged economic uncertainty, particularly in the
UK consumer durables markets, continues to affect the Group both at
a revenue and a profitability level. Whilst the Specialist
Engineering Division continues to see strong overseas demand for
its products particularly from the automotive and yellow goods
sectors, the Group's performance in the first half of 2012 as a
whole has been below management expectations and there is still
some work to do to achieve full year expectations."
Contacts: +44 (0) 845 030
Metalrax Group PLC 3300
Andrew Richardson, Chief Executive Officer
Caroline Green, Group Finance Director
Arden Partners plc
+44 (0) 121 423
Steve Douglas 8943
+44 (0) 207 614
Jamie Cameron 5925
Overview
The first half of 2012 has been a challenging period. The
Group's reliance on UK markets, in particular within the consumer
sector, has had a marked impact on its overall performance during
this period. Order books were weaker than during the comparable
period in 2011, particularly in quarter two, although we have seen
some strengthening in recent months.
The Group's long term strategic goals remain the same; high
return on investment and sustainable growth. However, in
anticipation of difficult trading conditions for 2012, the Group's
focus has been on overhead reduction.
In the face of the continuing challenging economic conditions,
the Board decided early in the year to take two specific actions;
to restructure the Group's the largest Consumer Durables business,
George Wilkinson, and to wind down the Specialist Engineering
business trading as Premier Architectural Metalwork. The combined
impact of these decisions has resulted in exceptional costs of
GBP0.9m in the first half in continuing operations.
Net debt at the half year of GBP8.5m compares to GBP6.1m at the
start of the year, reflecting the weaker trading, pension deficit
payments and the exceptional restructuring costs mentioned above.
Also included are costs relating to the Group's successful
refinancing of its bank facilities with the Royal Bank of Scotland
in February 2012 for a 4 year term.
Results
Group revenues were GBP27.7m, a decrease of 10.8% compared with
2011 (2011 H1: GBP31.0m). The decrease was mainly driven by George
Wilkinson and Premier Architectural Metalwork as well as a fall in
UK demand in some areas of the Specialist Engineering Division.
Group gross margin was reduced by 1.8 points to 25.0% (2011 H1:
26.8) driven by cost increases and pricing pressure within the
Consumer Durables division.
Overheads before exceptional items and share option costs
decreased by 18% from GBP4.9m in the first half of 2011 to GBP4.0m,
as a result of cost saving initiatives across the Group.
Adjusted operating profit was GBP0.3m (2011 H1: GBP0.9m)
reflecting the reduced turnover.
After tax, share option costs and exceptional items, the Group
is reporting a loss for the period of GBP1.2m (2011 H1: profit
GBP0.1m). This results in a loss per 5p ordinary share of 1.00p
compared to a profit per 5p ordinary share of 0.02p for the first
half of 2011.
Dividend
The Group's policy is to make dividend payments that are covered
2.0 to 2.5 times by earnings and in line with the Group's policy
there will be no interim dividend payment in respect of the period
ended 1 July 2012.
Operational Review
Overview
Both the Specialist Engineering and Consumer Durables divisions
experienced challenging trading conditions resulting in lower
revenues. Sales to UK customers decreased by 16.3% with the impact
felt most in the businesses exposed to UK consumer markets.
However, Group export sales grew as a proportion of the business
and represented 36% of total sales compared to 31.6% in 2011,
increasing by 2% in absolute terms.
Specialist Engineering
This division accounted for 72% of the first half Group
revenues. The decision to wind down Premier Architectural Metalwork
resulted in reduced sales of GBP0.8m year-on-year. Total external
sales for this division were GBP19.9m (2011 H1: GBP22.0m), a
decrease of GBP2.1m.
Gross margin remained level at 25.6% (2011 H1: 25.7%) as
increases in factory costs were offset by improved labour
efficiency and reduced material costs.
The stable margin helped to reduce the impact of the revenue
short fall on adjusted operating profit which was GBP1.7m (2011 H1:
GBP2.0m).
The two businesses with a high degree of exposure to the power
generation, off-highway and specialist vehicle sectors (Toolspec
and Weston Body Hardware) continued to perform well with Toolspec
delivering double digit revenue growth year-on-year.
Following a successful 2011, Post Glover LifeLink, the USA-based
medical electrical safety equipment manufacturer experienced lower
export sales to South America and the Middle East although the
North American market performed well.
The largest company in the Group, the specialist coatings
business Cooper Coated Coil, grew export sales by 2% but had a
difficult first half with sales to its UK customer base down
significantly. The business's customers are predominantly bakeware
manufacturers and this sector, non-food retail sales, is
experiencing lower demand, particularly in the UK.
Consumer Durables
This division accounted for 28% of the first half Group
revenues. There are two trading businesses in this division; George
Wilkinson whose main revenues are derived from sales of bakeware to
the large UK grocers and Samuel Groves which provides bakeware and
cookware into the professional catering and retail markets. Trading
conditions within the UK retail sector continued to be very
difficult resulting in a 13.7% decline in revenues for the division
to GBP7.7m (2011 H1: GBP8.9m).
Gross margin declined by 4.3 points as a result of increased
pricing pressures from customers as well as labour inefficiencies
associated with lower volume. This, combined with the lower
revenues resulted in an adjusted operating loss for the half year
of GBP0.6m (2011 H1: loss GBP0.2m).
This division traditionally exhibits marked seasonality with
profits and cash generation being stronger in the second half of
the year. This is due to its large customers taking promotional
stock in the run up to Christmas, although UK consumer spending
needs to recover for the full benefit of this seasonality to be
experienced.
As previously announced, during the period George Wilkinson was
informed that it had lost a supply contract with the supermarket
chain Morrison's which accounted for approximately 3% of Group
turnover. As described earlier, at the start of 2012 the Board
decided to restructure George Wilkinson with the objective of
making the business more responsive to difficult market conditions.
To this end, GBP0.3m of exceptional costs were incurred in the
first half associated with the restructuring of this business.
Financial Review
Revenues from continuing operations declined by 10.8% to
GBP27.7m (2011 H1: GBP31.0m). Gross margin reduced by 1.8 points
and whilst distribution costs increased by GBP0.1m as a result of
increased energy costs and the increased proportion of export
business, administrative overheads before exceptional items and
share option costs reduced by GBP0.9m. The first half resulted in
adjusted operating profit of GBP0.3m compared to GBP0.9m in
2011.
Exceptional Costs
Continuing operations incurred exceptional items of GBP0.8
million in the first half (2011 H1: GBP0.2m) in continuing
operations. This comprised:-
-- The winding down of the Premier Architectural Metalwork
business incurred exceptional costs of GBP0.6m although over
GBP0.3m of cash was generated from the realisation of assets.
-- The restructuring of George Wilkinson incurred exceptional costs of GBP0.3m.
-- In the period, the property occupied by Post Glover LifeLink
in the USA was sold and leased back which resulted in a profit
against that property's carrying value of GBP0.1m.
Balance Sheet
Net debt increased by GBP2.4m in the period to GBP8.5m from the
2012 opening position of GBP6.1m. The first half's trading resulted
in the generation of GBP0.9m of EBITDA before exceptional items and
share option costs. However this was insufficient to result in debt
reduction after the payment of other cash commitments which
included exceptional costs, capital expenditure, pension deficit
contributions, and bank interest as well as costs (GBP0.3m)
associated with the successful bank refinancing earlier in the
year.
The pension deficit decreased by GBP0.1m to GBP3.3m as at 1 July
2012 (31 December 2011: GBP3.4m). Deficit contributions of GBP0.5m
were made to the scheme in the period. .
Cash Generation
The Group is reporting a cash outflow from continuing operations
before pension contributions of GBP0.8m compared to a GBP0.8m
inflow in the first half of 2011. Of this GBP1.6m change, GBP1.3m
is attributable to the weaker sales performance in the first half
and includes GBP0.6m of exceptional cash costs associated with the
restructuring of George Wilkinson and the wind down of the Premier
Architectural business.
Working capital has increased by GBP0.8m from the start of the
year, with GBP0.7m of this movement being the build up of inventory
in anticipation of the seasonal sales in the second half. Inventory
levels are however GBP1.1m lower than the previous year (2011 H1:
GBP8.9m).
Outlook
The current prolonged economic uncertainty, particularly in the
UK consumer durables markets, continues to affect the Group both at
a revenue and a profitability level. The Specialist Engineering
Division continues to see strong overseas demand for its products
particularly from the automotive and yellow goods sectors. However
the Group's performance in the first half of 2012 as a whole has
been below management expectations and there is still some work to
do to achieve full year expectations.
The loss of the Morrisons supply agreement is likely to affect
the Consumer Durables division during the remainder of the year and
the Board will continue to review the operational balance of the
Group in light of this.
By order of the Board
Andrew J Walker Andrew J Richardson
Chairman Group Chief Executive Officer
20 September 2012
Consolidated income statement
For the 26 week period ended 1 July 2012
26 weeks Year
ended ended
26 weeks 3 31
ended 1 July December
July 2012 2011 2011
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
Revenues 4 27.7 31.0 63.0
Cost of sales (20.8) (22.7) (46.7)
-------------------------------------------- ------ ---------- ------------ -------------
Gross profit 6.9 8.3 16.3
Distribution expenses (2.6) (2.5) (5.3)
Administrative expenses (4.9) (5.1) (9.0)
Operating profit before exceptional
items* and share option costs 0.3 0.9 2.4
Exceptional items* 5 (0.8) (0.2) (0.4)
Share option costs (0.1) - -
Operating (loss)/profit 4 (0.6) 0.7 2.0
-------------------------------------------- ------ ---------- ------------ -------------
Finance expense before amortisation
of debt issue costs 6 (0.4) (0.4) (1.0)
Amortisation of debt issue
costs 6 (0.4) (0.4) (1.4)
-------------------------------------------- ------ ---------- ------------ -------------
Net finance expense 6 (0.8) (0.8) (2.4)
-------------------------------------------- ------ ---------- ------------ -------------
(Loss)/profit before taxation (1.4) (0.1) (0.4)
Taxation (charge)/credit 7 (0.1) 0.2 0.4
-------------------------------------------- ------ ---------- ------------ -------------
(Loss)/profit after taxation (1.5) 0.1 -
Profit from discontinued
activities 4 0.3 - 0.1
-------------------------------------------- ------ ---------- ------------ -------------
(Loss)/profit for the period (1.2) 0.1 0.1
-------------------------------------------- ------ ---------- ------------ -------------
(Loss)/profit for the period
attributable to equity shareholders
of the parent (1.2) 0.1 0.1
-------------------------------------------- ------ ---------- ------------ -------------
Basic (loss)/earnings per
share 8 (1.00)p 0.02p 0.11p
Continuing 8 (1.26)p 0.02p -
Discontinued 0.26p - 0.11p
Diluted (loss)/earnings per
share 8 (1.00)p 0.02p 0.11p
Continuing 8 (1.26)p 0.02p -
Discontinued 0.26p - 0.11p
-------------------------------------------- ------ ---------- ------------ -------------
*Exceptional items (note 5) are items of income and expenditure
that, in the judgement of management, should be disclosed
separately on the basis that they are material, either by their
nature or their size, to the understanding of the interim financial
information and where not to do so would distort the comparability
of financial performance between periods. Profits and losses on
property sales are considered to be exceptional in nature.
Consolidated statement of comprehensive income
For the 26 week period ended 1 July 2012
26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 2011 2011
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
----------------------------------------- ---------- ---------- ---------
(Loss)/profit for the period/year
Other comprehensive income: (1.2) 0.1 0.1
Loss on property devaluation - - (0.2)
Actuarial (loss)/gain on defined benefit
pension scheme (0.3) 1.6 0.6
Tax relating to components of other
comprehensive income - (0.4) (0.1)
Other comprehensive income for the
period/year (0.3) 1.2 0.3
Total comprehensive income for the
period/year (1.5) 1.3 0.4
----------------------------------------- ---------- ---------- ---------
Attributable to equity shareholders
of the parent (1.5) 1.3 0.4
----------------------------------------- ---------- ---------- ---------
Total comprehensive income attributable
to equity shareholders of the parent
arising from:
----------------------------------------- ---------- ---------- ---------
* Continuing operations (1.8) 1.3 0.3
----------------------------------------- ---------- ---------- ---------
* Discontinued operations 0.3 - 0.1
----------------------------------------- ---------- ---------- ---------
Consolidated balance sheet
As at 1 July 2012
31
1 July 3 July December
2012 2011 2011
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
------------------------------ ---- ---------- ---------- ---------
Non-current assets
Goodwill 7.0 7.0 7.0
Other intangible assets 0.6 0.6 0.6
Property, plant and equipment 11.7 13.2 12.2
Deferred tax asset 1.3 0.7 1.3
20.6 21.5 21.1
------------------------------ ---- ---------- ---------- ---------
Current assets
Inventories 7.8 8.9 7.1
Trade and other receivables 10.5 13.0 11.8
Cash 1.1 2.0 3.0
19.4 23.9 21.9
Total assets 40.0 45.4 43.0
------------------------------ ---- ---------- ---------- ---------
Current liabilities
Bank borrowings 9 (5.9) (4.1) (9.1)
Trade and other payables (10.8) (15.0) (12.3)
Provisions (0.1) (0.2) (0.2)
------------------------------ ---- ---------- ---------- ---------
(16.8) (19.3) (21.6)
------------------------------ ---- ---------- ---------- ---------
Non-current liabilities
Bank borrowings 9 (3.7) (4.0) -
Employee benefits 11 (3.3) (2.7) (3.4)
Provisions (0.3) (1.1) (0.7)
(7.3) (7.8) (4.1)
------------------------------ ---- ---------- ---------- ---------
Total liabilities (24.1) (27.1) (25.7)
------------------------------ ---- ---------- ---------- ---------
Net assets 15.9 18.3 17.3
------------------------------ ---- ---------- ---------- ---------
Shareholders' equity
Share capital 10 6.0 6.0 6.0
Share premium 2.7 2.7 2.7
Capital redemption reserve 0.3 0.3 0.3
Revaluation reserve 1.6 1.9 1.6
Other reserve 0.7 0.7 0.6
Retained earnings 4.6 6.7 6.1
------------------------------ ---- ---------- ---------- ---------
Total Equity 15.9 18.3 17.3
------------------------------ ---- ---------- ---------- ---------
Consolidated statement of changes in equity
For the 26 week period ended 1 July 2012
Capital
Share Share Re-valuation Other Re-demption Retained
capital premium reserve reserve reserve earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Loss for the
period
Other comprehensive
income - - - - - (1.2) (1.2)
Actuarial loss
on defined
benefit pension
schemes - - - - - (0.3) (0.3)
Tax relating
to components
of other comprehensive
income - - - - - - -
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Total comprehensive
income for
the period
Transactions
with owners - - - - - (1.5) (1.5)
Credit to equity
for equity-settled
share option
costs - - - 0.1 - - 0.1
Balance at
1 January 2012 6.0 2.7 1.6 0.6 0.3 6.1 17.3
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Balance at
1 July 2012
(Unaudited) 6.0 2.7 1.6 0.7 0.3 4.6 15.9
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Consolidated statement of changes in equity
For the 26 week period ended 3 July 2011 (continued)
Capital
Share Share Re-valuation Other Re-demption Retained
capital premium reserve reserve reserve earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Profit for
the period
Other comprehensive
income - - - - - 0.1 0.1
Realised on
property disposals - - (1.2) - - 1.2 -
Actuarial loss
on defined
benefit pension
schemes - - - - - 1.6 1.6
Tax relating
to components
of other comprehensive
income - - 0.1 - - (0.5) (0.4)
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Total comprehensive
income for
the period
Transactions
with owners - - (1.1) - - 2.4 1.3
Credit to equity
for equity-settled
share option
costs - - - 0.1 - - 0.1
Balance at
1 January 2011 6.0 2.7 3.0 0.6 0.3 4.3 16.9
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Balance at
3 July 2011
(Unaudited) 6.0 2.7 1.9 0.7 0.3 6.7 18.3
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Consolidated statement of changes in equity
For the year ended 31 December 2011 (continued)
Capital
Share Share Re-valuation Other Re-demption Retained
capital Premium reserve reserve reserve earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Profit for
the year - - - - - 0.1 0.1
Other comprehensive
income
Impairment
on property
revaluation - - (0.2) - - - (0.2)
Realised on
property disposals - - (1.5) - - 1.5 -
Actuarial gain
on defined
benefit pension
schemes - - - - - 0.6 0.6
Tax relating
to components
of other comprehensive
income - - 0.3 - - (0.4) (0.1)
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Total comprehensive
income for
the year - - (1.4) - - 1.8 0.4
Transactions
with owners
Credit to equity
for equity-settled
share option
costs - - - - - - -
Balance at
1 January 2011 6.0 2.7 3.0 0.6 0.3 4.3 16.9
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Balance at
31 December
2011 (Audited) 6.0 2.7 1.6 0.6 0.3 6.1 17.3
-------------------------- --------- -------- -------------- --------- ------------ ---------- -------
Consolidated cash flow statement
For the 26 week period ended 1 July 2012
26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 2011 2011
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
---------------------------------------------- ---------- ---------- ---------
Loss before tax (1.4) (0.1) (0.4)
Finance costs 0.8 0.8 2.4
Depreciation and amortisation 0.6 0.6 1.3
Impairment losses - - 0.2
(Profit)/loss on disposal of fixed
assets (0.1) 0.2 0.2
Share-based payment expense 0.1 - -
Increase in inventories (0.7) (2.2) (0.4)
Decrease in trade and other receivables 1.1 0.7 1.3
(Decrease)/increase in payables (1.5) 0.6 (1.6)
Other non-cash movements 0.3 0.2 (0.6)
---------------------------------------------- ---------- ---------- ---------
Cash (used in)/generated from continuing
operations before pension payment
contributions (0.8) 0.8 2.4
Defined benefit pension deficit contributions (0.5) (0.5) (1.0)
Cash flows related to discontinued
operations (0.3) (0.5) (0.3)
Interest paid (0.3) (0.3) (0.8)
Tax paid (0.1) (0.1) (0.1)
---------------------------------------------- ---------- ---------- ---------
Net cash (used in)/generated from
operating activities (2.0) (0.6) 0.2
---------------------------------------------- ---------- ---------- ---------
Investing activities
Purchase of property, plant and equipment (0.5) (0.9) (1.2)
Proceeds from sale of property, plant
and equipment 0.5 4.1 4.2
Proceeds from sale of businesses - - 0.2
---------------------------------------------- ---------- ---------- ---------
Net cash generated from investing
activities - 3.2 3.4
---------------------------------------------- ---------- ---------- ---------
Financing activities
Increase in bank borrowings 0.5 2.0 2.4
Repayment of bank borrowings (10.3) (4.1) (4.5)
New bank borrowings 10.2 - -
Debt issue costs (0.3) - -
Net cash generated from/(used in)
financing activities 0.1 (2.1) (2.1)
---------------------------------------------- ---------- ---------- ---------
Net (decrease)/increase in cash and
cash equivalents (1.9) 0.5 1.5
Opening cash and cash equivalents 3.0 1.5 1.5
---------------------------------------------- ---------- ---------- ---------
Closing cash and cash equivalents 1.1 2.0 3.0
---------------------------------------------- ---------- ---------- ---------
Reconciliation of net cash flow to movement in net debt for the
26 week period ended 1 July 2012
26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 2011 2011
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
---------------------------------------- ---------- ---------- ---------
Net (decrease)/increase in cash in
the period/year (1.9) 0.5 1.5
Non-cash changes - amortisation of
debt issue costs (0.4) (0.4) (1.4)
Increase in borrowings (0.5) (2.0) (2.4)
Repayment of bank borrowings 10.3 4.1 4.5
New bank borrowings (10.2) - -
Debt issue costs paid in the period 0.3 - -
Movement in net debt in the period/year (2.4) 2.2 2.2
Net debt at start of period/year (6.1) (8.3) (8.3)
Net debt at end of period/year (8.5) (6.1) (6.1)
---------------------------------------- ---------- ---------- ---------
Notes to the interim report for the 26 week period ended 1 July
2012
1 General information
The company is a public limited company incorporated and
domiciled in the UK. The address of its registered office is
Rectory Court, Old Rectory Lane, Alvechurch, Birmingham, B48
7SX.
The company has its primary listing on the Alternative
Investment Markets ("AIM").
This interim report was approved for issue on 20 September
2012.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. The full accounts of Metalrax Group PLC
for the year ended 31 December 2011, which received an unqualified
report from the auditors on 19 March 2012, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498(2) or (3) of the Companies Act 2006, have been
filed with the Registrar of Companies.
The condensed consolidated interim financial information has
been reviewed by the auditor, not audited, and their independent
review report is included within this financial information.
2 Basis of preparation
The condensed consolidated interim financial information for the
26 week period ended 1 July 2012 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority and with International Accounting Standard 34
'Interim Financial Reporting' (IAS 34) as adopted by the European
Union.
The condensed consolidated interim financial information should
be read in conjunction with the annual financial statements for the
year ended 31 December 2011, which have been prepared in accordance
with IFRS as adopted by the European Union.
The condensed consolidated interim financial information has
been prepared on the going concern basis, which assumes that the
Group will continue to be able to meet its liabilities as they fall
due for the foreseeable future. The directors have considered the
Group's trading forecasts, forecast cash requirements and the
forecast headroom against the agreed covenants on the Group's
banking facility. On this basis, the directors consider it
appropriate to prepare the interim financial information on a going
concern basis. The set of condensed financial information do not
include the adjustments that would result if the Group was unable
to continue as a going concern.
3 Accounting policies
The accounting policies applied are consistent with those in the
annual financial statements for the year ended 31 December 2011, as
described in those financial statements except for taxes, which are
accrued using the tax rate that would be applicable to the expected
total annual profit or loss. The following relevant accounting
standards are applicable for the first time in the year ended 31
December 2012;
-- IFRS 7 Financial Instruments: Disclosures
-- IAS 12 Income Tax - Deferred Taxes: Recovery of Underlying Assets
There has been no significant impact from the adoption of these
accounting standards.
Certain new standards, interpretations and amendments to
existing standards have been published that are mandatory for the
Group's future accounting periods which the Group has not early
adopted. The relevant ones effective for the year ended 31st
December 2013 are set out below:
-- IFRS 10 Consolidated Financial Statements; IAS 27 Separate Financial Statements
-- IFRS 11 Joint Arrangements; IAS 28 Investments in Associates and Joint Ventures
-- IFRS 12 Disclosure of Interests in Other Entities
-- IFRS 13 Fair Value Measurement
-- IAS 1 Presentation of Items of Other Comprehensive Income
-- IAS 19 Employee Benefits (revised)
The directors are currently assessing the impact on the Group of
these standards.
The interim financial information have been prepared under the
historical cost convention as modified by the revaluation of
properties.
The preparation of interim financial information in conformity
with generally accepted accounting principles requires the use of
certain critical accounting estimates. It also requires management
to exercise judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the condensed consolidated interim financial
statements are disclosed within the Group's accounting policies as
disclosed in the IFRS financial statements for the year ended 31
December 2011.
4 Segmental information
The Group has two divisions - Specialist Engineering and
Consumer Durables along with a Central Cost function. These
segments are consistent with information reported to the Group's
Chief Executive, being the Chief Operating Decision Maker, for the
purpose of resource allocation and performance assessment. The
principal activities of the two divisions are as follows:
Specialist Engineering - a variety of precision manufacturing
activities that incorporate value adding technology for unique
applications in the medical, specialist metal coating and premium
automotive sectors.
Consumer Durables - manufactures and markets bakeware and
associated ranges of kitchen accessories to both the retail and
commercial markets in the UK and abroad.
The accounting policies of the reporting segments are the same
as the Group's accounting policies which are described in the
Group's latest annual financial statements and those in note 3.
Segment result represents the profit or loss achieved by each
segment without allocation of share option costs, central
administration costs including directors' salaries, finance costs,
and income tax expense.
The normal seasonal nature of consumer durables business is to
see higher revenues and operating profits in the second half of the
year than in the first six months.
4 Segmental information (continued)
a) Segment revenues and results:
26 week period ended 1 July 2012 - Unaudited
Continuing businesses
Specialist Consumer Central Total Discontinued Total Group
Engineering Durables Services Continuing businesses
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Total revenues 21.3 7.7 0.1 29.1 - 29.1
Inter-segment
revenues (1.4) - - (1.4) - (1.4)
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Revenue from
external
customers 19.9 7.7 0.1 27.7 - 27.7
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Gross profit 5.4 1.4 0.1 6.9 (0.1) 6.8
Gross margins 25.6% 18.4% 52.1% 25.0% - 24.7%
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Operating
profit/(loss)
before
exceptional
items and
share option
costs 1.7 (0.6) (0.8) 0.3 (0.1) 0.2
Exceptional
items (0.5) (0.3) - (0.8) 0.4 (0.4)
Share option
costs - - (0.1) (0.1) - (0.1)
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Operating
profit/(loss) 1.2 (0.9) (0.9) (0.6) 0.3 (0.3)
Finance
expense (0.8) - (0.8)
--------------- -------------- --------------
Loss before
taxation (1.4) 0.3 (1.1)
Taxation (0.1) - (0.1)
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Loss after
taxation (1.5) 0.3 (1.2)
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
4 Segmental information (continued)
a) Segment revenues and results (continued):
26 week period ended 3 July 2011 - Unaudited
Continuing businesses
Specialist Consumer Central Total Discontinued Total Group
Engineering Durables Services Continuing businesses
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Total revenues 24.1 9.0 0.1 33.2 - 33.2
Inter-segment
revenues (2.1) (0.1) - (2.2) - (2.2)
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Revenue from
external
customers 22.0 8.9 0.1 31.0 - 31.0
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Gross profit 6.2 2.0 0.1 8.3 - 8.3
Gross margins 25.7% 22.7% 50.0% 26.8% - 26.8%
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Operating
profit/(loss)
before
exceptional
items and
share option
costs 2.0 (0.2) (0.9) 0.9 (0.1) 0.8
Exceptional
items - (0.2) - (0.2) 0.2 -
Share option - - - - - -
costs
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Operating
profit/(loss) 2.0 (0.4) (0.9) 0.7 0.1 0.8
Finance
expense (0.8) (0.1) (0.9)
--------------- -------------- --------------
Loss before
taxation (0.1) - (0.1)
Taxation 0.2 - 0.2
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
Profit after
taxation 0.1 - 0.1
--------------- ------------------- -------------- --------------- --------------- -------------- --------------
4 Segmental information (continued)
Segment revenues and results (continued):
Year ended 31 December 2011 - Audited
Continuing businesses
---------------------------------------------------
Specialist Consumer Central Total Discontinued Total
Engineering Durables Services Continuing businesses Group
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Total revenues 47.5 20.3 0.3 68.1 - 68.1
Inter-segment
revenues (5.0) (0.1) - (5.1) - (5.1)
------------------------- ------------- ---------- ---------- ------------ ------------- -------
Revenue from
external customers 42.5 20.2 0.3 63.0 - 63.0
------------------------- ------------- ---------- ---------- ------------ ------------- -------
Gross profit 11.5 4.5 0.3 16.3 - 16.3
Gross margins 27.2% 22.3% 100.0% 26.0% - 26.0%
------------------------- ------------- ---------- ---------- ------------ ------------- -------
Operating profit/(loss)
before exceptional
items and share
option costs 3.9 0.2 (1.7) 2.4 - 2.4
Exceptional
items (0.2) (0.2) - (0.4) 0.1 (0.3)
Share option - - - - - -
costs
------------------------- ------------- ---------- ---------- ------------ ------------- -------
Operating profit/(loss) 3.7 - (1.7) 2.0 0.1 1.9
Finance expense (2.4) - (2.4)
------------ ------------- -------
(Loss)/profit
before taxation (0.4) 0.1 (0.3)
Taxation 0.4 - 0.4
------------------------- ------------- ---------- ---------- ------------ ------------- -------
Profit after
taxation - 0.1 0.1
------------------------- ------------- ---------- ---------- ------------ ------------- -------
4 Segmental information (continued)
b) Segment assets/(liabilities)
Unaudited Unaudited
1 July 3 July Audited
2012 2011 31 December 2011
GBP'm GBP'm GBP'm
--------------------------- --------------- ----------- ---------- ------------ ------------------
Specialist Engineering 18.0 21.9 18.1
Consumer Durables 8.9 10.6 10.9
Central Services 8.8 10.9 9.8
Discontinued Businesses 1.9 2.0 1.4
Total segment assets 37.6 45.4 40.2
Unallocated assets and liabilities (21.7) (27.1) (22.9)
---------------------------------------- -------------- ---------- ------------ ------------------
Consolidated total assets 15.9 18.3 17.3
---------------------------------------- -------------- ---------- ------------ ------------------
The unallocated assets and liabilities include debt, taxation,
pensions and deferred taxation.
5 Exceptional items
26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 Unaudited 2011 Unaudited 2011 Audited
GBP'm GBP'm GBP'm
---------------------------------------- --------------- --------------- -------------
(Profit)/loss on disposal of properties (0.1) 0.2 0.4
Restructuring and redundancy costs 0.9 - -
---------------------------------------- --------------- --------------- -------------
Total continuing exceptional items 0.8 0.2 0.4
Discontinued - Release of onerous
lease provisions (0.4) - -
---------------------------------------- --------------- --------------- -------------
Total exceptional items 0.4 0.2 0.4
---------------------------------------- --------------- --------------- -------------
During the period, George Wilkinson and Premier Architectural
Metalwork incurred restructuring and redundancy costs of GBP0.3m
and GBP0.6m, respectively.
The onerous lease provision created in 2008 has been adjusted to
reflect the fact that the once vacant property in Walsall has been
sublet to a third party tenant who cover a proportion of the
onerous lease costs.
There is no tax impact of exceptional items as there are
sufficient taxation losses available in the jurisdictions they
arise.
6 Finance expense (net)
26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 Unaudited 2011 Unaudited 2011 Audited
GBP'm GBP'm GBP'm
------------------------------------ --------------- --------------- -------------
Interest payable on bank loans and 0.3 0.3 0.7
overdrafts
Amortisation of debt issue costs 0.4 0.4 1.4
Net finance cost of defined benefit
pension schemes 0.1 0.1 0.3
------------------------------------ --------------- --------------- -------------
Finance expense - continuing 0.8 0.8 2.4
Finance expense - discontinued - 0.1 -
------------------------------------ --------------- --------------- -------------
Total finance expense 0.8 0.9 2.4
------------------------------------ --------------- --------------- -------------
Of the GBP0.4m amortisation of debt issue costs, GBP0.3m relates
to costs incurred in relation to the refinancing on 23 February
2012, which have been expensed immediately.
7 Income tax (charge)/credit
26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 Unaudited 2011 Unaudited 2011 Audited
GBP'm GBP'm GBP'm
--------------------------- --------------- --------------- -------------
Current tax charge (0.1) (0.1) (0.2)
Deferred tax credit - 0.3 0.6
Income tax (charge)/credit (0.1) 0.2 0.4
--------------------------- --------------- --------------- -------------
Income tax credit/(charge) is recognised based on management's
best estimate of the weighted average annual income tax rate
expected for the full financial year applied to the weighted
earnings in the period. The estimated average annual tax rate used
for the year to 31 December 2012 is 40.6%.
Reductions to the UK corporation tax rate were announced in the
June 2011 Budget. These changes, which are expected to be enacted
separately each year, proposed reducing the rate by 1% per annum to
24% by 1 April 2014. These reductions have been amended by Budget
2012 on 23 March 2012. An additional reduction of 1% is proposed to
the Financial Year beginning 1 April 2012 and rates will be reduced
by three further one per cent cuts to 22% by the Financial Year
beginning 1 April 2014. At the balance sheet date the rate that had
been substantively enacted was a reduction in the current tax rate
to 26% and therefore the deferred tax balance has been calculated
at 26%. Management have assessed the impact of these changes and
they do not have a material effect on deferred taxation.
8 (Loss)/earnings per ordinary share
The basic and diluted loss per share is calculated based on the
(loss)/profit after tax for the period and the adjusted
(loss)/profit per share is calculated based on an adjusted
(loss)/profit after tax as calculated below. The weighted average
number of shares used in the basic earnings per share calculation
is 119,897,298 (30 June and 31 December 2011: 119,897,298). The
weighted average number of shares used in the diluted earnings per
share calculation is 131,845,699 (31 December 2011:
131,845,699).
Total Group 26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 Unaudited 2011 Unaudited 2011 Audited
GBP'm GBP'm GBP'm
---------------------------------------- --------------- --------------- -------------
(Loss)/profit for the period/year
after tax (1.2) 0.1 0.1
Add back exceptional items 0.4 0.2 0.3
Add back share option costs 0.1 - -
Add back debt issue cost amortisation 0.4 0.4 1.4
---------------------------------------- --------------- --------------- -------------
Adjusted (loss)/profit after tax (0.3) 0.7 1.8
---------------------------------------- --------------- --------------- -------------
Basic (loss)/earnings per 5p ordinary
share (pence per share) (1.00) 0.02 0.11
---------------------------------------- --------------- --------------- -------------
Diluted (loss)/earnings per 5p ordinary
share (pence per share) (1.00) 0.02 0.11
---------------------------------------- --------------- --------------- -------------
Adjusted basic (loss)/earnings per
5p ordinary share (pence per share) (0.18) 0.54 1.48
---------------------------------------- --------------- --------------- -------------
Continuing operations 26 weeks 26 weeks Year
ended ended ended 31
1 July 3 July December
2012 Unaudited 2011 Unaudited 2011 Audited
GBP'm GBP'm GBP'm
---------------------------------------- --------------- --------------- -------------
(Loss)/profit for the period/year
after tax (1.5) 0.1 -
Add back exceptional items 0.8 0.2 0.4
Add back share option costs 0.1 - -
Add back debt issue cost amortisation 0.4 0.4 1.4
---------------------------------------- --------------- --------------- -------------
Adjusted (loss)/profit after tax (0.2) 0.7 1.8
---------------------------------------- --------------- --------------- -------------
Basic (loss)/earnings per 5p ordinary
share (pence per share) (1.26) 0.02 -
---------------------------------------- --------------- --------------- -------------
Diluted (loss)/earnings per 5p ordinary
share (pence per share) (1.26) 0.02 -
---------------------------------------- --------------- --------------- -------------
Adjusted basic (loss)/earnings per
5p ordinary share (pence per share) (0.11) 0.54 1.50
---------------------------------------- --------------- --------------- -------------
Diluted earnings per share needs to be disclosed when a Company
could be called upon to issue shares that would decrease net profit
or increase net loss per share. There is no dilution in the loss
per share calculation at 1 July 2012.
9 Borrowings
31
1 July 3 July December
2012 2011 2011
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
Current loans and borrowings
Bank overdraft - - -
Bank loans 5.9 5.3 9.2
Debt issue costs - (1.2) (0.1)
Total current loans and borrowings 5.9 4.1 9.1
Non-current loans and borrowings
Bank loans 3.7 4.0 -
Debt issue costs - - -
Total non-current loans and borrowings 3.7 4.0 -
Total loans and borrowings 9.6 8.1 9.1
Cash at bank and in hand (1.1) (2.0) (3.0)
Net debt at period end 8.5 6.1 6.1
On 23 February 2012, the Group agreed new banking facilities up
to GBP14.0m for 4 years with The Royal Bank of Scotland. The new
facilities will result in an average interest rate of bank base
rate plus 2.5%. The facilities, being mainly provided by the Bank's
asset based lending team, are secured against the properties (up to
GBP2.9m), plant and machinery (up to GBP0.9m), the debtor ledger
(up to GBP8.5m) and inventory (up to GBP3.0m) with a maximum
facility of GBP14.0m. The financial covenant is consolidated EBITDA
to bank interest cover, and other operational covenants include
debtor day targets and inventory turnover targets.
10 Sharecapital
31
1 July 3 July December
2012 2011 2011
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
----------------------------------------- ----------- ----------- ----------
Called up, issued and fully paid
119,897,298 (2011:119,897,298) ordinary
shares of 5p each 6.0 6.0 6.0
----------------------------------------- ----------- ----------- ----------
11 Pensions
The valuation of the Group's pension scheme obligation has been
updated using an IAS19 valuation as at 1 July 2012, to reflect
current market discount rates, current market values of investment
and actual investment returns. The amounts included in the balance
sheet arising from the Group's pension obligations in respect of
defined benefit schemes are as follows:
31
1 July 3 July December
2012 2011 2011
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
------------------------------------ ---------- ----------- ---------
Total market value of plan assets 8.3 7.8 8.2
Present value of scheme liabilities (11.6) (10.5) (11.6)
------------------------------------ ---------- ----------- ---------
Pension scheme liability (3.3) (2.7) (3.4)
------------------------------------ ---------- ----------- ---------
A deferred tax asset of GBP0.9m (2011: GBP0.7m) has been
recognised in relation to the pension scheme liability.
The major assumptions used by the Actuary were:
1 July 3 July 31 December
2012 2011 2011
Unaudited Unaudited Audited
% % %
---------------------------------- ---------- ----------- -----------
Inflation 2.8 3.4 3.0
Rate of increase in salaries - - -
Pension increases, subject to RPI 2.8 3.4 3.0
Revaluation, subject to CPI 1.9 2.5 2.0
Discount rate 4.5 5.5 4.8
Return on plan assets 4.4 5.2 4.4
---------------------------------- ---------- ----------- -----------
No adjustments have been made in the period to the mortality
assumptions used as at 31 December 2011.
12 Related party transactions
All intra-group transactions have been eliminated on
consolidation at 1 July 2012. There have been no other related
party transactions in the period from 1 January 2012 to 20
September 2012.
13 Principal risks and uncertainties
The principal risks and uncertainties which could affect the
Group for the remainder of the financial year are consistent with
those detailed on pages 14 and 15 of the Annual Report and Accounts
for the year ended 31 December 2011, a copy of which is available
at www.metalraxgroup.co.uk, and are:
-- Economic risk
-- People risk
-- Pensions risk
-- Property valuations risk
-- Financial risk
-- Operational risk
The Company regularly assesses these risks together with the
associated mitigating factors listed in the 2011 Annual Report. The
levels of activity in the Group's markets and the level of
financial liquidity and flexibility continue to be the areas
designated as appropriate for added management focus.
The Outlook section of this half yearly report provides a
commentary concerning the remainder of the financial year.
Forward-looking statements
Certain statements in this interim results announcement are
forward-looking statements. By their nature, forward-looking
statements involve a number of risks, uncertainties or assumptions
that could cause actual results or events to differ materially from
those expressed or implied by the forward-looking statements. These
risks, uncertainties or assumptions could adversely affect the
outcome and financial effects of the plans and events described
herein. Forward-looking statements contained in this interim
results announcement regarding past trends or activities should not
be taken as a representation that such trends or activities will
continue in the future. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
interim results announcement. Except as required by law, the
Company is under no obligation to update or keep current the
forward-looking statements contained in this interim results
announcement or to correct any inaccuracies which may become
apparent in such forward-looking statements.
Independent review report to Metalrax Group PLC
Introduction
We have been engaged by the Company to review the condensed
consolidated interim financial information in the Interim Report
for the 26 week period ended 1 July 2012, which comprises the
consolidated income statement, the consolidated statement of
comprehensive income, the consolidated balance sheet, the
consolidated statement of changes in equity, the consolidated cash
flow statement and related notes. We have read the other
information contained in the Interim Report and considered whether
it contains any apparent misstatements or material inconsistencies
with the information in the condensed consolidated interim
financial information.
Directors' responsibilities
The Interim Report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Interim Report in accordance with the AIM Rules for
Companies which require that the financial information must be
presented and prepared in a form consistent with that which will be
adopted in the company's annual financial statements.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed consolidated interim financial
information included in this Interim Report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated interim financial information in the
Interim Report based on our review. This report, including the
conclusion, has been prepared for and only for the Company for the
purpose of the AIM Rules for Companies and for no other purpose. We
do not, in producing this report, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
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 United Kingdom. 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 consolidated interim
financial information in the Interim Report for the 26 week period
ended 1 July 2012 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union, and the AIM
Rules for Companies.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
20 September 2012
Notes
(a) The maintenance and integrity of the Metalrax Group PLC
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLMFTMBIBBJT
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