TIDMMLIN
RNS Number : 6923M
Molins PLC
29 August 2013
29 August 2013 FOR IMMEDIATE RELEASE
Molins PLC
Half-year report for the six months ended 30 June 2013
Molins PLC, the international engineering and services company,
announces its results for the six months ended 30 June 2013.
Group Highlights
-- Order intake maintained at same levels as last year
-- Increase in Group sales of 20% to GBP47.8m (2012: GBP39.9m)
-- Increase in Group underlying profit before tax to GBP1.5m (2012: GBP0.8m)
-- Underlying earnings per share increased to 6.5p (2012: 3.6p)
-- Net funds of GBP5.6m
-- Interim dividend per share maintained at 2.5p (2012: 2.5p)
Dick Hunter, Chief Executive, commented:
"The Group has had a strong first half, with increases in both
sales and underlying profit. We have continued our investment
across the business, most notably in product development, as well
as through the expansion of our Packaging Machinery presence in
Asia.
The order book supports the Group's full year trading
performance being second half weighted as in previous years. The
Board's expectation of performance for the full year remains
unchanged."
Divisional Highlights
Scientific Services
-- Strong orders and sales growth at Cerulean, leading to improved trading performance
-- Order intake at Arista Laboratories lower than the prior
year, as the regulatory regime for the testing of tobacco products
in the USA has yet to be confirmed
-- Following investment in personnel, equipment and systems at
Arista in anticipation of increased demand, trading performance was
lower in the first half of the year
Packaging Machinery
-- Order intake maintained, with sales increase of 16% supported by strong opening order book
-- Trading performance at similar levels to previous year, reflecting slightly lower margins
-- Sales and service operations established in Asia
Tobacco Machinery
-- Sales growth of 22% reflecting strong opening order book for new machinery
-- Trading performance improved with increase in margins
For further information, please contact:
Molins PLC Tel: +44(0)1908
Dick Hunter, Chief Executive 246870
David Cowen, Group Finance Director
Canaccord Genuity Limited
Bruce Garrow Tel: +44(0)20 7523
8350
MHP Communications Tel: +44(0)20 3128
Andrew Jaques, Simon Hockridge, Naomi 8100
Lane
MOLINS is an international business providing high performance
machinery and instrumentation, as well as services and support for
the production, packaging and analysis of consumer products. The
Group serves its customers through its wide geographic spread of
sales, service and manufacturing locations. The Group is focused on
the organic development of its businesses, through targeted product
development, excellence in customer service and ongoing operational
efficiency improvements, supported by acquisitive growth where
appropriate.
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
(restated)(4) (restated)(4)
Sales GBP47.8m GBP39.9m GBP93.0m
Underlying operating profit(1) GBP1.5m GBP0.8m GBP4.9m
Underlying profit before tax(2) GBP1.5m GBP0.8m GBP4.9m
Underlying earnings per share(3) 6.5p 3.6p 21.8p
Dividends per share 2.5p 2.5p 5.5p
Net funds GBP5.6m GBP5.7m GBP7.4m
Statutory profit before tax GBP0.7m GBP0.2m GBP4.5m
Statutory profit for the period GBP0.7m GBP0.2m GBP3.8m
Basic earnings per share 3.5p 1.0p 20.6p
(1) Before non-underlying net charge of GBP0.4m (30 June 2012:
GBP0.5m; 31 December 2012: GBP0.3m)
(2) Before non-underlying net charge of GBP0.8m (30 June 2012:
GBP0.6m; 31 December 2012: GBP0.4m), comprising net charges
included in operating profit of GBP0.4m (30 June 2012: GBP0.5m; 31
December 2012: GBP0.3m) and interest expense on pension scheme
balances of GBP0.4m (30 June 2012: GBP0.1m; 31 December 2012:
GBP0.1m)
(3) Before non-underlying net charge of GBP0.6m (30 June 2012:
GBP0.5m; 31 December 2012: GBP0.3m), comprising net charges
included in operating profit of GBP0.3m (30 June 2012: GBP0.4m; 31
December 2012: GBP0.2m) and interest expense on pension scheme
balances of GBP0.3m (30 June 2012: GBP0.1m; 31 December 2012:
GBP0.1m), all figures after tax
(4) Restated to reflect amendments to IAS 19 Employee benefits
and consequent changes to the Group's accounting policies
INTERIM MANAGEMENT REPORT
Operating results
Group sales in the six months to 30 June 2013 increased by 20%
to GBP47.8m (2012: GBP39.9m) and underlying operating profit
(before non-underlying net charges) increased to GBP1.5m (2012:
GBP0.8m). Additionally the Group incurred charges of GBP0.4m (2012:
GBP0.4m) in respect of administering the Group's defined benefit
pension schemes and GBP0.4m (2012: GBP0.1m) financing expense
arising as a result of the accounting for the Group's pension
schemes. Reported profit before tax was GBP0.7m (2012: GBP0.2m).
The net tax charge on underlying profit (before non-underlying net
charges) was GBP0.2m (2012: GBP0.1m), with a net tax credit of
GBP0.2m (2012: GBP0.1m) in respect of non-underlying net charges,
resulting in profit for the period of GBP0.7m (2012: GBP0.2m), of
which underlying profit was GBP1.3m (2012: GBP0.7m). Basic earnings
per share amounted to 3.5p (2012: 1.0p) and underlying earnings per
share (before non-underlying net charges) amounted to 6.5p (2012:
3.6p). The Group's net funds position at 30 June 2013 was GBP5.6m
(31 December 2012: GBP7.4m).
Scientific Services
Sales in the period increased by 23% to GBP11.4m (2012: GBP9.3m)
leading to an operating profit of GBP0.1m (2012: GBP0.1m loss). The
division, with its main facilities in the UK and USA, comprises
Arista Laboratories, an independent tobacco and smoke constituent
analytical laboratory, and Cerulean, which supplies process and
quality control instruments to the tobacco industry, as well as
other instruments and machinery to other industrial sectors. Order
intake at Cerulean was strong in most areas, with the key Chinese
market remaining buoyant and the order book being supported by a
large, one-off project for a customer in North Africa. Sales grew
in the period for both instruments and aftermarket products, which
represented one-third of revenues. The growth in revenues led to a
commensurate increase in profitability. The business continues to
develop its product range both in the tobacco sector and to address
other non-tobacco end markets.
Order intake at Arista Laboratories was lower than in the same
period last year. Although it was expected that regulatory
requirements for the testing and reporting of tobacco product
constituents in the USA would have been confirmed by the Food and
Drug Administration (FDA) in the first half of the year, the
regulatory framework was not forthcoming and the latest indication
from the FDA is that guidance will be published in December 2013.
This has meant that activity levels at Arista have been
considerably lower than the business is capable of delivering and
these relatively low levels are expected to continue during the
rest of the year. The business is fully operational from its new
laboratory facility in Richmond, Virginia where it services all the
tobacco industry's tobacco and smoke testing requirements, and from
where non-tobacco testing will be carried out as the business
extends its activities into other end markets.
Packaging Machinery
Sales in the period increased by 16% to GBP18.4m (2012:
GBP15.9m) and operating profit was GBP0.1m (2012: GBP0.1m, before
reorganisation costs). The division supplies engineering services
and capital equipment through ITCM, based in the UK, and Langen
Packaging Group, based in the Netherlands and Canada. In addition,
during the first part of this year, Langen has established sales
and service offices in Asia to support customers' growth plans in
that region. Order intake overall has remained at similar levels to
last year, with momentum in the European part of the division being
offset by weaker demand in North America. Good levels of order
prospects remain for the second half of the year across all
regions. The increase in sales in the first half was supported by a
strong opening order book, although margins were reduced as a
result of an increase in high-engineering content projects, with a
lower proportion of sales of standardised machines. Sales and
marketing costs have increased in the period in support of the
investment in infrastructure in Asia.
Tobacco Machinery
Sales in the period increased by 22% to GBP18.0m (2012:
GBP14.7m) and operating profit increased to GBP1.3m (2012:
GBP0.8m). The division designs, manufactures, markets and services
specialist machinery for the tobacco industry from its facilities
in the UK, USA, Brazil, Singapore and Czech Republic. Sales of new
and rebuild machines were supported by a strong opening order book
and also by the receipt of orders which required quick response
times, which the division was able to deliver, reflecting the
efficiency of its operations and the support it provides its
customer base. Although order intake overall was slightly weaker
than in the same period last year, current order prospects are
relatively strong. Activity levels in the period were good which,
together with the margins earned on increased sales, resulted in a
strong financial performance. The division continues its focus on
new product development and continuing improvements in service
performance.
Non-underlying items
Non-underlying items in the period comprise charges in respect
of the administration costs of the Group's defined benefit pension
schemes and financing expense on pension scheme balances, which are
detailed in the Pension schemes section below. Additionally, in the
six months to 30 June 2012 and twelve months to 31 December 2012,
charges in respect of reorganisations of GBP0.1m and GBP1.0m
respectively were incurred. Cash payments of GBP0.6m were made in
the period to 30 June 2013 in respect of reorganisations in earlier
periods.
Cash
Net funds at 30 June 2013 were GBP5.6m (30 June 2012: GBP5.7m;
31 December 2012: GBP7.4m). Net cash inflow from operating
activities in the first half of the year was GBP1.3m, which is net
of reorganisation costs paid of GBP0.6m, deficit recovery payments
to the UK defined benefit pension scheme of GBP0.6m and tax paid of
GBP0.7m. Net capital and product development cash outflow was
GBP2.5m. Ordinary dividends of GBP0.6m were paid in the period.
Pension schemes
The Group is responsible for defined benefit schemes in the UK
and the USA, in which there are no active members, which it
accounts for in accordance with IAS 19 Employee benefits. Changes
to IAS 19 have taken effect for 2013 reporting, with the prior year
comparative figures being restated. Financing income/expense is now
calculated by applying the discount rate used for valuing the
schemes' liabilities to the value of the net pension
asset/liability at the beginning of the year, rather than
calculating financing income by applying the expected return on
assets to the value of the schemes' assets at the beginning of the
year and financing expense by applying the discount rate to the
value of the schemes' liabilities at the beginning of the year. As
the discount rate is lower than the expected return on assets,
financing income/expense is lower than would have been reported
under IAS 19 before its requirements changed. Additionally for 2013
reporting, the expense of administering the pension schemes can no
longer be accounted for as a reduction in the expected return on
schemes' assets and is instead charged separately to operating
profit within the income statement.
The IAS 19 valuation of the UK scheme at 30 June 2013 shows a
surplus of GBP0.8m (GBP0.5m net of deferred tax), compared with a
deficit of GBP13.9m (GBP10.7m net of deferred tax) at the beginning
of the period. The value of the scheme's assets at 30 June 2013 was
GBP333.8m (31 December 2012: GBP322.5m), and the value of the
scheme's liabilities was GBP333.0m (31 December 2012: GBP336.4m).
The net valuation of the USA pension schemes at 30 June 2013, with
total assets of GBP15.2m, showed a deficit of GBP4.4m (GBP2.7m net
of deferred tax), compared with a deficit of GBP5.3m (GBP3.2m net
of deferred tax) at the beginning of the period. The aggregate
expense of administering the pension schemes was GBP0.4m (2012:
GBP0.4m). The net financing expense on pension scheme balances was
GBP0.4m (2012: GBP0.1m).
The UK scheme was subject to a formal actuarial valuation as at
30 June 2012. This valuation is close to completion and is expected
to show a deficit as at that date of approximately GBP53m. The
level of deficit funding required is expected to increase from
GBP1.2m per annum to GBP1.7m per annum (increasing by inflation)
from July 2013, which is expected to equate to a deficit recovery
period of 17 years.
Related party transactions
There has been no material change in the nature of related party
transactions from those described in note 29 of the 2012 Annual
Report and Accounts and these are also referred to in note 13 of
this Half-year report.
Risks
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 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 13
and 14 of the Group's 2012 Annual Report and Accounts.
Cautionary statement
This Interim management report (IMR) has been prepared solely to
provide additional information to shareholders to assess the
Group's strategies and the potential for those strategies to
succeed. The IMR should not be relied on by any other party or for
any other reason. The IMR contains certain forward-looking
statements. These statements are made by the directors in good
faith based on the information available to them up to the time of
their approval of this report and such information should be
treated with caution due to the inherent uncertainties, including
both economic and business risk factors, underlying any such
forward-looking information. This IMR has been prepared for the
Group as a whole and therefore emphasises those matters which are
significant to Molins PLC and its subsidiary undertakings when
viewed as a whole.
Dividend
The Board has declared an interim dividend of 2.5p per ordinary
share (2012: 2.5p), which will be paid on 10 October 2013 to
ordinary shareholders registered at the close of business on 20
September 2013. Dividends paid to shareholders in the six months to
30 June 2013 were 3.0p per ordinary share (2012: 2.75p).
Outlook
The order book supports the Group's full year trading
performance being second half weighted as in previous years. The
Board's expectation of performance for the full year remains
unchanged.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
HALF-YEAR REPORT
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been
prepared in accordance with IAS 34 Interim financial
reporting as adopted by the EU; and
* the Interim management report includes a fair review
of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during
the first six months of the financial year and their impact
on the condensed set of financial statements; and a description
of the principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the
first six months of the current financial year and that
have materially affected the financial position or performance
of the Group during that period; and any changes in the
related party transactions described in the last annual
report that could do so.
By order of the Board
Dick Hunter
Chief Executive
David Cowen
Group Finance Director
29 August 2013
CONDENSED CONSOLIDATED INCOME STATEMENT
6 months to 30 June 6 months to 30 June 2012
2013 (restated)
----------------------------------------- -----------------------------------------
Non-underlying Non-underlying
(note 5) (note 5)
Underlying GBPm Total Underlying GBPm Total
Notes GBPm GBPm GBPm GBPm
Revenue 4 47.8 - 47.8 39.9 - 39.9
Cost of sales (35.2) - (35.2) (28.8) - (28.8)
------------ ---------------- --------- ------------ ---------------- ---------
Gross profit 12.6 - 12.6 11.1 - 11.1
Other operating
income - - - - - -
Distribution expenses (4.2) - (4.2) (4.0) - (4.0)
Administrative
expenses (6.4) (0.4) (6.8) (6.3) (0.5) (6.8)
Other operating
expenses (0.5) - (0.5) - - -
------------ ---------------- --------- ------------ ---------------- ---------
4,
Operating profit 7 1.5 (0.4) 1.1 0.8 (0.5) 0.3
Financial income 6 0.1 - 0.1 0.1 - 0.1
Financial expenses 6 (0.1) (0.4) (0.5) (0.1) (0.1) (0.2)
------------ ---------------- --------- ------------ ---------------- ---------
Net financing 4,
expense 6 - (0.4) (0.4) - (0.1) (0.1)
------------ ---------------- --------- ------------ ---------------- ---------
Profit before
tax 4 1.5 (0.8) 0.7 0.8 (0.6) 0.2
Taxation 8 (0.2) 0.2 - (0.1) 0.1 -
------------ ---------------- --------- ------------ ---------------- ---------
Profit for the
period 1.3 (0.6) 0.7 0.7 (0.5) 0.2
============ ================ ========= ============ ================ =========
Basic earnings
per ordinary share 9 3.5p 1.0p
Diluted earnings
per ordinary share 9 3.4p 0.9p
------------ ---------------- --------- ------------ ---------------- ---------
CONDENSED CONSOLIDATED INCOME STATEMENT
12 months to 31 December 2012
(restated)
-------------------------------------------
Non-underlying
(note 5)
Underlying GBPm Total
Notes GBPm GBPm
Revenue 4 93.0 - 93.0
Cost of sales (65.7) - (65.7)
------------- ----------------- ---------
Gross profit 27.3 - 27.3
Other operating income - 1.5 1.5
Distribution expenses (8.0) - (8.0)
Administrative expenses (13.7) (1.8) (15.5)
Other operating expenses (0.7) - (0.7)
------------- ----------------- ---------
4,
Operating profit 7 4.9 (0.3) 4.6
Financial income 6 0.2 - 0.2
Financial expenses 6 (0.2) (0.1) (0.3)
------------- ----------------- ---------
4,
Net financing expense 6 - (0.1) (0.1)
------------- ----------------- ---------
Profit before tax 4 4.9 (0.4) 4.5
Taxation 8 (0.8) 0.1 (0.7)
------------- ----------------- ---------
Profit for the period 4.1 (0.3) 3.8
============= ================= =========
Basic earnings per
ordinary share 9 20.6p
Diluted earnings
per 9 19.9p
ordinary share
------------- ----------------- ---------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
(restated) (restated)
GBPm GBPm GBPm
Profit for the period 0.7 0.2 3.8
------------- ------------- -------------
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss 15.9 (12.5) (17.6)
Actuarial gains/(losses)
(4.0) 3.3 4.4
Tax on items that will not be reclassified
to profit or loss
------------- ------------- -------------
11.9 (9.2) (13.2)
------------- ------------- -------------
Items that may be reclassified subsequently
to profit or loss
Currency translation movements arising 0.3 (0.7) (0.7)
on foreign currency net investments
(0.1) (0.2) 0.3
Effective portion of changes in fair
value of cash flow hedges
- (0.1) -
Net changes in fair value of cash flow
hedges transferred to profit or loss
------------- ------------- -------------
0.2 (1.0) (0.4)
------------- ------------- -------------
Other comprehensive income/(expense)
for the period 12.1 (10.2) (13.6)
------------- ------------- -------------
Total comprehensive income/(expense)
for the period 12.8 (10.0) (9.8)
============= ============= =============
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
2013
Balance at 1 January
2013 5.0 26.0 3.5 3.9 0.2 (8.1) 30.5
---------- ---------- -------------- ------------ ---------- ----------- ---------
Profit for the period
Other comprehensive - - - - - 0.7 0.7
income/(expense) for
the period - - 0.3 - (0.1) 11.9 12.1
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
income/(expense) for
the period - - 0.3 - (0.1) 12.6 12.8
---------- ---------- -------------- ------------ ---------- ----------- ---------
Dividends to shareholders - - - - - (0.6) (0.6)
Equity-settled share-based
transactions - - - - - 0.1 0.1
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners, recorded
directly in equity - - - - - (0.5) (0.5)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 30 June
2013 5.0 26.0 3.8 3.9 0.1 4.0 42.8
========== ========== ============== ============ ========== =========== =========
6 months to 30 June
2012
Balance at 1 January
2012 5.0 26.0 4.2 3.9 (0.1) 2.0 41.0
---------- ---------- -------------- ------------ ---------- ----------- ---------
Profit for the period,
as restated
Other comprehensive
income/(expense) for - - - - - 0.2 0.2
the period,
as restated - - (0.7) - (0.3) (9.2) (10.2)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
income/(expense) for
the period - - (0.7) - (0.3) (9.0) (10.0)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Dividends to shareholders - - - - - (0.5) (0.5)
Equity-settled share-based
transactions - - - - - 0.1 0.1
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners, recorded
directly in equity - - - - - (0.4) (0.4)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 30 June
2012 5.0 26.0 3.5 3.9 (0.4) (7.4) 30.6
========== ========== ============== ============ ========== =========== =========
12 months to 31 December
2012
Balance at 1 January
2012 5.0 26.0 4.2 3.9 (0.1) 2.0 41.0
---------- ---------- -------------- ------------ ---------- ----------- ---------
Profit for the period,
as restated
Other comprehensive
income/(expense) for - - - - - 3.8 3.8
the period,
as restated - - (0.7) - 0.3 (13.2) (13.6)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
income/(expense) for
the period - - (0.7) - 0.3 (9.4) (9.8)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Dividends to shareholders - - - - - (1.0) (1.0)
Equity-settled share-based
transactions - - - - - 0.2 0.2
Tax on items recorded
directly in equity - - - - - 0.1 0.1
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners, recorded
directly in equity - - - - - (0.7) (0.7)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 31 December
2012 5.0 26.0 3.5 3.9 0.2 (8.1) 30.5
========== ========== ============== ============ ========== =========== =========
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 Dec
2013 2012 2012
Notes GBPm GBPm GBPm
Non-current assets
Intangible assets 14.9 14.6 14.5
Property, plant and equipment 11.8 10.7 11.7
Investment property 0.8 - -
Employee benefits 7 0.8 - -
Deferred tax assets 3.7 5.2 7.8
---------- ---------- ---------
32.0 30.5 34.0
---------- ---------- ---------
Current assets
Inventories 19.5 18.1 18.1
Trade and other receivables 21.6 19.0 21.5
Current tax assets 0.1 0.1 -
Cash and cash equivalents 14.0 12.2 13.3
---------- ---------- ---------
55.2 49.4 52.9
---------- ---------- ---------
Current liabilities
Trade and other payables (28.2) (24.8) (26.9)
Current tax liabilities (1.1) (0.8) (1.0)
Provisions (1.5) (1.3) (1.7)
---------- ---------- ---------
(30.8) (26.9) (29.6)
---------- ---------- ---------
Net current assets 24.4 22.5 23.3
---------- ---------- ---------
Total assets less current liabilities 56.4 53.0 57.3
---------- ---------- ---------
Non-current liabilities
Interest-bearing loans and borrowings (8.4) (6.5) (5.9)
Employee benefits 7 (4.4) (15.9) (19.2)
Deferred tax liabilities (0.8) - (1.7)
---------- ---------- ---------
(13.6) (22.4) (26.8)
---------- ---------- ---------
Net assets 4 42.8 30.6 30.5
========== ========== =========
Equity
Issued capital 5.0 5.0 5.0
Share premium 26.0 26.0 26.0
Reserves 7.8 7.0 7.6
Retained earnings 4.0 (7.4) (8.1)
---------- ---------- ---------
Total equity 42.8 30.6 30.5
========== ========== =========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
(restated) (restated)
Notes GBPm GBPm GBPm
Operating activities Operating profit
Non-underlying items included in operating
profit
Amortisation Depreciation 1.1 0.3 4.6
Defined benefit scheme pension service 0.4 0.5 0.3
costs
Other non-cash items Defined benefit 0.7 0.6 1.4
scheme pension payments Working capital
movements: - increase in inventories
- decrease/(increase) in trade and
other receivables - increase in trade
and other payables - increase/(decrease)
in provisions
0.9 1.0 2.1
- 0.5 0.9
0.1 0.1 (0.3)
(0.6) (0.8) (1.6)
(1.2) (2.6) (2.6)
0.6 1.3 (0.7)
0.4 1.2 3.5
0.2 (0.1) 0.3
------------- ------------- -------------
Cash generated from operations before 2.6 2.0 7.9
reorganisation Reorganisation costs
paid 5 (0.6) (0.3) (0.5)
------------- ------------- -------------
Cash generated from operations Taxation 2.0 1.7 7.4
paid
(0.7) (0.4) (0.8)
------------- ------------- -------------
Net cash from operating activities 1.3 1.3 6.6
------------- ------------- -------------
Investing activities
Interest received 0.1 0.1 0.2
Proceeds from sale of property, plant 0.1 - 0.1
and equipment Acquisition of property,
plant and equipment Acquisition of
investment property Capitalised development
expenditure
(1.0) (1.5) (3.9)
(0.7) - -
(0.8) (0.4) (1.2)
------------- ------------- -------------
Net cash from investing activities (2.3) (1.8) (4.8)
------------- ------------- -------------
Financing activities Interest paid
Net increase against revolving facilities
Dividends paid
(0.1) (0.1) (0.2)
2.3 1.3 0.7
10 (0.6) (0.5) (1.0)
------------- ------------- -------------
Net cash from financing activities 1.6 0.7 (0.5)
------------- ------------- -------------
Net increase in cash and cash equivalents 0.6 0.2 1.3
Cash and cash equivalents at 1 January 11 13.3 12.3 12.3
Effect of exchange rate fluctuations 0.1 (0.3) (0.3)
on cash held
------------- ------------- -------------
Cash and cash equivalents at period
end 14.0 12.2 13.3
============= ============= =============
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 auditor, KPMG Audit Plc,
and its report is set out on page 18. The information for the year
ended 31 December 2012 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 2012
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 29 August 2013.
2. Basis of preparation
(a) Statement of compliance
The condensed set of financial statements for the six months
ended 30 June 2013 has been prepared in accordance with IAS 34
Interim financial reporting as adopted by the EU and the Disclosure
and Transparency Rules of the UK's Financial Conduct Authority. 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
2012.
(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 2012.
3. Significant accounting policies
Except as described below, the accounting policies in these
interim financial statements are the same as those applied in the
Group's consolidated financial statements as at and for the year
ended 31 December 2012. The following changes in accounting
policies are also expected to be reflected in the Group's
consolidated financial statements as at and for the year ending 31
December 2013.
Changes in accounting policies
As required, the Group has adopted amendments to IAS 19 Employee
benefits, including consequential amendments to other standards,
with a date of initial application of 1 January 2013, and restated
the prior year's results accordingly. The Group has changed its
accounting policies with respect to the basis for accounting for
financing income/expense on the value of the defined benefit
pension schemes' assets/liabilities and with respect to the costs
of administering the defined benefit pension schemes.
The Group determines financing income/expense for the period by
applying the discount rate used for valuing the schemes'
liabilities to the value of the net pension asset/liability at the
beginning of the year. Previously, the Group calculated financing
income by applying the expected return on assets to the value of
the schemes' assets at the beginning of the year and financing
expense by applying the discount rate to the value of the schemes'
liabilities at the beginning of the year (taking into account any
changes during the period as a result of contributions and benefit
payments). Additionally, the expense of administering the pension
schemes is now charged separately to operating profit within the
income statement. Previously it was accounted for as a reduction in
the expected return on schemes' assets.
For the period to 30 June 2012, the restatement has reduced
profit for the period as previously reported by GBP1.8m and
increased other comprehensive income by GBP1.8m. For the year to 31
December 2012, the restatement has reduced profit for the period as
previously reported by GBP3.8m and increased other comprehensive
income by GBP3.8m.
4. Operating segments
The Group has three operating segments which are the Group's
three 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 three
divisions are set out in the Interim management report.
Revenue Profit
6 months 6 months 12 months 6 months 6 months 12 months
to 30 June to 30 to 31 to 30 June to 30 June to 31 Dec
June Dec
2013 2012 2012 2013 2012 2012
(restated) (restated)
GBPm GBPm GBPm GBPm GBPm GBPm
Scientific
Services 11.4 9.3 23.1 0.1 (0.1) 1.2
Packaging
Machinery 18.4 15.9 38.8 0.1 0.1 1.5
Tobacco Machinery 18.0 14.7 31.1 1.3 0.8 2.2
------------ ---------- ----------- ---------------- ------------- -------------
47.8 39.9 93.0
============ ========== ===========
Underlying
operating
profit 1.5 0.8 4.9
Non-underlying items included in operating
profit (0.4) (0.5) (0.3)
---------------- ------------- -------------
Operating profit 1.1 0.3 4.6
Net financing
expense (0.4) (0.1) (0.1)
---------------- ------------- -------------
Profit before tax 0.7 0.2 4.5
================ ============= =============
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 2012.
30 June 30 June 31 Dec
2013 2012 2012
Segment assets GBPm GBPm GBPm
Scientific Services 12.9 12.5 13.6
Packaging Machinery 20.9 19.6 19.1
Tobacco Machinery 23.7 24.3 26.5
---------- ---------- ---------
Total segment assets 57.5 56.4 59.2
Total segment liabilities (27.4) (29.0) (29.9)
Segment net assets - continuing operations 30.1 27.4 29.3
Net liabilities - discontinued operations (0.2) (0.1) (0.1)
Unallocated net assets 12.9 3.3 1.3
---------- ---------- ---------
Total net assets 42.8 30.6 30.5
========== ========== =========
There have been no changes to the basis of segmentation or the
measurement basis for the segment profit or loss since 31 December
2012.
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 for out of the assets of the
Group's pension schemes, and financing expense on pension scheme
balances, and which are detailed in note 7 below. Additionally, in
the 6 months to 30 June 2012 and 12 months to 31 December 2012,
charges in respect of reorganisations of GBP0.1m and GBP1.0m were
incurred. Cash payments of GBP0.6m were made in the period to 30
June 2013 in respect of reorganisations in earlier periods, of
which GBP0.2m was paid to the UK defined benefit pension
scheme.
6. Net financing expense
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
(restated) (restated)
GBPm GBPm GBPm
Financial income
Amounts receivable on cash and cash
equivalents 0.1 0.1 0.2
---------- ---------- ----------
0.1 0.1 0.2
---------- ---------- ----------
Financial expenses
Defined benefit pension scheme finance (0.4) (0.1) (0.1)
expense
Amounts payable on bank loans and (0.1) (0.1) (0.1)
overdrafts
Preference dividends paid - - (0.1)
---------- ---------- ----------
(0.5) (0.2) (0.3)
---------- ---------- ----------
Net financing expense (0.4) (0.1) (0.1)
========== ========== ==========
7. Employee benefits
The Group accounts for pensions under IAS 19 Employee benefits.
A formal valuation of the UK defined benefit pension scheme is
being carried out as at 30 June 2012, and formal valuations of the
USA defined benefit schemes were carried out as at 1 January 2013,
and their assumptions, modified as appropriate, have been applied
in the condensed set of financial statements, updated to reflect
actual experience and conditions at 30 June 2013. Profit before tax
for the 6 months to 30 June 2013 includes charges in respect of IAS
19 pension schemes administration costs of GBP0.4m (6 months to 30
June 2012: GBP0.4m; 12 months to 31 December 2012: GBP0.8m) and
financing expense on pension scheme balances of GBP0.4m (6 months
to 30 June 2012: GBP0.1m; 12 months to 31 December 2012: GBP0.1m).
Also included within profit before tax in the 12 months to 31
December 2012 were credits totalling GBP1.5m in respect of actions
taken within the Group's pension scheme in the UK. Payments to the
Group's UK defined benefit scheme in the period included GBP0.6m 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
2013 2012 2012
GBPm GBPm GBPm
UK scheme
Fair value of assets 333.8 315.7 322.5
Present value of defined benefit obligations (333.0) (326.0) (336.4)
--------- --------- ---------
Defined benefit asset/(liability) 0.8 (10.3) (13.9)
========= ========= =========
USA schemes
Fair value of assets 15.2 15.0 14.7
Present value of defined benefit obligations (19.6) (20.6) (20.0)
--------- --------- ---------
Defined benefit liability (4.4) (5.6) (5.3)
========= ========= =========
8. Taxation
The Group tax charge for the 6 months to 30 June 2013 amounted
to GBPnil (6 months to 30 June 2012: GBPnil; 12 months to 31
December 2012: GBP0.7m) and is calculated as follows:
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
(restated) (restated)
GBPm GBPm GBPm
Tax charge on underlying profit 0.2 0.1 0.8
Tax credit on non-underlying items (0.2) (0.1) (0.1)
---------- ---------- ----------
Taxation - - 0.7
========== ========== ==========
The Group's consolidated effective tax rate in respect of
underlying profit for the 6 months to 30 June 2013 is 11% (6 months
to 30 June 2012: 11%; 12 months to 31 December 2012: 16%).
The UK Finance Bill 2013, which contains legislation for some of
the proposals announced by the Chancellor in the 20 March 2013
Budget, was substantively enacted on 2 July 2013. The Bill
introduced a further reduction in the rate of UK corporation tax to
21% from 1 April 2014 and to 20% from 1 April 2015. Deferred tax
assets and liabilities are measured at tax rates that are enacted
or substantively enacted at the end of the reporting period and
therefore the reduction in the corporate tax rate from 23% to 20%
has not been taken into account in the calculation of the effective
tax rate applied in this condensed set of financial statements.
9. Earnings per share
Basic earnings per ordinary share is based upon the profit for
the period and on a weighted average of 19,326,857 shares in issue
during the period (6 months to 30 June 2012: 19,048,071; 12 months
to 31 December 2012: 19,067,302). The weighted average number of
shares excludes shares held by the employee trust in respect of the
Company's long-term incentive arrangements.
Diluted earnings per ordinary share is based upon the profit for
the period and on a diluted weighted average of 19,856,326 shares
in issue during the period (6 months to 30 June 2012: 19,687,662;
12 months to 31 December 2012: 19,795,541). The diluted weighted
average number of shares includes the diluting effect, if any, of
own shares held by the employee trust.
Underlying earnings per ordinary share and diluted underlying
earnings per ordinary share amounted to 6.5p for the 6 months to 30
June 2013 (6 months to 30 June 2012: 3.6p; 12 months to 31 December
2012: 21.8p) in respect of underlying earnings per share and 6.4p
(6 months to 30 June 2012: 3.5p; 12 months to 31 December 2012:
21.0p) in respect of diluted underlying earnings per ordinary
share. The calculations of underlying earnings per ordinary share
and diluted underlying earnings per ordinary share are based on
underlying profit for the 6 months to 30 June 2013 of GBP1.3m (6
months to 30 June 2012: GBP0.7m; 12 months to 31 December 2012:
GBP4.1m) which is calculated as follows:
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
(restated) (restated)
GBPm GBPm GBPm
Profit for the period 0.7 0.2 3.8
Financing expense on pension scheme balances 0.3 0.1 0.1
(net of tax)
Non-underlying items included in operating 0.3 0.4 0.2
profit (net of tax)
------------ ------------ ------------
Underlying profit for the period 1.3 0.7 4.1
============ ============ ============
10. Dividends
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
GBPm GBPm GBPm
Dividends to shareholders paid in the period
Final dividend for the year ended 31 December
2011
of 2.75p per share
Interim dividend for the year ended 31
December 2012 - 0.5 0.5
of 2.5p per share
Final dividend for the year ended 31 December - - 0.5
2012
of 3.0p per share 0.6 - -
----------- ----------- ----------
0.6 0.5 1.0
=========== =========== ==========
An interim dividend for the year ending 31 December 2013 of 2.5p
per ordinary share will be paid on 10 October 2013 to ordinary
shareholders registered at the close of business on 20 September
2013.
11. Reconciliation of net cash flow to movement in net funds
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2013 2012 2012
GBPm GBPm GBPm
Net increase in cash and cash equivalents 0.6 0.2 1.3
Cash outflow from movement in borrowings (2.3) (1.3) (0.7)
----------- ----------- ----------
Change in net funds resulting from cash
flows (1.7) (1.1) 0.6
Translation movements (0.1) (0.3) (0.3)
----------- ----------- ----------
Movement in net funds in the period (1.8) (1.4) 0.3
Opening net funds 7.4 7.1 7.1
----------- ----------- ----------
Closing net funds 5.6 5.7 7.4
=========== =========== ==========
Analysis of net funds
Cash and cash equivalents - current assets 14.0 12.2 13.3
Interest-bearing loans and borrowings -
non-current liabilities (8.4) (6.5) (5.9)
----------- ----------- ----------
Closing net funds 5.6 5.7 7.4
=========== =========== ==========
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 2012.
At 1 January 2013 and 30 June 2013 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.
Categories of financial instruments
30 June 30 June 31 Dec
2013 2012 2012
GBPm GBPm GBPm
Financial assets
Derivative instruments in designated - 0.1 1.0
hedge accounting relationship
Loans and receivables (including cash 28.1 26.0 29.3
and cash equivalents)
------- ------- ------
28.1 26.1 30.3
======= ======= ======
Financial liabilities
Derivative instruments in designated 0.4 0.5 0.5
hedge accounting relationship
Amortised cost 36.2 30.8 32.3
------- ------- ------
36.6 31.3 32.8
======= ======= ======
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 pension schemes. There has been no material
change in the nature of the related party transactions described in
note 29 of the 2012 Annual Report and Accounts.
14. Half-year report
The Half-year report will be sent to all shareholders in
September 2013 and additional copies will be 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.
INDEPENDENT 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 2013 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 to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). 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 financial report in accordance with the DTR
of the UK FCA.
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this Half-year financial 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 2013 is
not prepared, in all material respects, in accordance with IAS 34
as adopted by the EU and the DTR of the UK FCA.
Peter Selvey
for and on behalf of KPMG Audit Plc
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
29 August 2013
This information is provided by RNS
The company news service from the London Stock Exchange
END
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