TIDMMLIN
RNS Number : 1605Q
Molins PLC
28 August 2014
AIM: MLIN
Molins PLC
International specialist technology and services group
Half-year report for the six months ended 30 June 2014
Key points
-- H1 performance broadly in line with management expectations
although market conditions in the Middle East and eastern Europe
adversely impacted the Tobacco Machinery division
-- Sales of GBP40.0m (2013: GBP47.8m)
-- Underlying profit before tax of GBP0.6m (2013: GBP1.5m)
Statutory loss before tax of GBP0.1m (2013: profit of
GBP0.7m)
-- Underlying earnings per share of 2.1p (2013: 6.5p)
Basic loss per share of 0.9p (2013: earnings of 3.5p)
-- Interim dividend per share maintained at 2.5p (2013: 2.5p)
-- Good progress in the Scientific Services and Packaging
Machinery divisions; Tobacco Machinery division affected by order
deferrals
-- Continuing focus on product development across all divisions
-- Ongoing penetration of target market sectors (including healthcare and pharmaceutical)
-- Ordinary shares admitted to trading on AIM in June
-- Despite some near term challenges, the Board continues to view prospects positively
Dick Hunter, Chief Executive, commented,
"Molins' performance in the first half of the year was broadly
in line with management expectations with sales of GBP40.0m and
underlying pre-tax profit of GBP0.6m. The Scientific Services and
Packaging Machinery divisions showed good progress, with sales in
local currencies up by 4% and 9% respectively on the prior period,
however the Tobacco Machinery division felt the impact of adverse
market conditions.
As in previous years, the Group's full year trading performance
will be significantly weighted towards the second half. The Board
is mindful of the strength of sterling and current market
conditions for the Tobacco Machinery division. The prospects for
the Scientific Services and Packaging Machinery divisions continue
to be encouraging. We continue to pursue our growth initiatives in
all divisions."
For further information, please contact:
Molins PLC Tel: +44(0)20 3178
Dick Hunter, Chief Executive 6378 (today)
David Cowen, Group Finance Director +44(0)1908 246870
Panmure Gordon (UK) Limited (NOMAD)
Hugh Morgan / Peter Steel - Corporate Tel: +44(0)20 7886
Finance 2500
Tom Salvesen - Corporate Broking
KTZ Communications Tel: +44(0)20 3178
Katie Tzouliadis / Deborah Walter 6378
HALF-YEAR MANAGEMENT REPORT
Introduction
Results for the first half of the financial year are broadly in
line with management expectations. The Scientific Services and
Packaging Machinery divisions showed encouraging progress, with
sales in local currencies up by 4% and 9% respectively on the prior
period, however the Tobacco Machinery division saw market
conditions toughen, with order deferrals.
We continue to make good progress with product development
across all three divisions and our ongoing strategy to build our
presence in our chosen markets, which include nutrition, beverages,
healthcare and pharmaceutical as well as tobacco, continues.
In June, we were pleased to see the Company's ordinary shares
admitted to trading on AIM. The move delivers a number of benefits
to the Company and also supports our long-term strategy of
combining organic growth with complementary acquisitions.
Financial results
Sales in the six months to 30 June 2014 totalled GBP40.0m (2013:
GBP47.8m) and underlying operating profit before tax was GBP0.6m
(2013: GBP1.5m). After nil net finance expenses, the underlying
profit before tax was GBP0.6m (2013: GBP1.5m). The net tax charge
on underlying profit was GBP0.2m (2013: GBP0.2m) resulting in an
underlying profit for the period of GBP0.4m (2013: GBP1.3m).
Underlying earnings per share were 2.1p (2013: 6.5p). These
underlying results are stated before reorganisation costs of
GBP0.2m (2013: GBPnil) and pension-related charges of GBP0.5m
(2013: GBP0.8m). Reorganisation costs in the period related to the
Scientific Services and Tobacco Machinery divisions.
Pension-related costs comprised charges in respect of administering
the Group's defined benefit pension schemes of GBP0.4m (2013:
GBP0.4m) and financing expense on pension scheme balances of
GBP0.1m (2013: GBP0.4m).
On a statutory basis, the loss before tax was GBP0.1m (2013:
GBP0.7m profit) which includes the benefit of a net tax credit of
GBP0.1m (2013: GBP0.2m) in respect of non-underlying net charges.
The basic loss per share amounted to 0.9p (2013: earnings per share
of 3.5p).
Finances
Net debt at 30 June 2014 was GBP0.9m (30 June 2013: GBP5.6m net
cash and 31 December 2013: GBP5.2m net cash). Net cash outflow from
operating activities in the first half of the year was GBP3.5m,
which is net of an increase in working capital levels of GBP3.9m,
deficit recovery payments to the UK defined benefit pension scheme
of GBP0.9m and tax paid of GBP0.9m. Net capital and product
development expenditure was GBP2.2m. Ordinary dividends of GBP0.6m
were paid in the period.
Dividend
The Board is pleased to declare an interim dividend of 2.5p per
ordinary share (2013: 2.5p), which will be paid on 9 October 2014
to ordinary shareholders registered at the close of business on 19
September 2014. Dividends paid to shareholders in the six months to
30 June 2014 were 3.0p per ordinary share (2013: 3.0p).
Operating performance
Scientific Services
Sales in first half increased to GBP11.7m (2013: GBP11.4m) and
operating profit, before reorganisation costs, improved to GBP0.7m
(2013: GBP0.1m). The division, with its main facilities in the UK
and USA, develops, supplies and supports process and quality
control instruments and machinery for the tobacco industry (where
it is the market leader) and other industrial sectors. In addition,
it provides analytical services, which test for the constituents of
tobacco and smoke. These services are used for regulatory, research
and product development purposes.
Sales of process and quality control instruments and machinery
grew, with demand remaining strong for quality control instruments
in our major markets and demand for cigarette smoke capture
machines ahead of the prior period. We launched a new instrument
for the testing of e-cigarettes in the period and this has received
strong market interest, resulting in initial sales. Good progress
is being made in extending the division's product range for a
variety of industrial applications. Sales of the division's newer
products, for carton testing and air sampling, increased in the
period. As well as supplying standardised instruments, the
division's strength in technical innovation enables it to engineer
specialised equipment to meet specific customer requirements and
the business continued to benefit from this type of product.
Order intake for laboratory-based analytical services was
slightly higher than the prior period, with work secured from a
number of new customers, and increased activity with e-cigarette
manufacturers. However, as expected, overall sales were lower
against the prior period which benefited from a large one-off sale
in the early part of last year. We have reduced costs in this area
of the division's operations, which has helped to improve its
performance compared with the prior period, and cost levels
continue to be monitored given the continuing uncertainty over the
timing for the introduction of new tobacco product testing
regulations in the USA. Nonetheless, the business is making
progress in establishing new customer relationships.
Packaging Machinery
While sales grew by 9% in local currencies, they were impacted
by the strength of sterling resulting in a marginal reduction to
GBP18.3m (2013: GBP18.4m). Operating profit was maintained at
GBP0.1m (2013: GBP0.1m). The division supplies engineering services
and capital equipment through its operations in the UK, the
Netherlands, Canada and Singapore.
The division's UK based specialist engineering and machinery
business continued to make good progress in its strategy to
increase its customer base, especially in the pharmaceutical sector
and in healthcare, and is well positioned to progress in a number
of other FMCG markets. This was reflected in first half sales which
grew, benefiting from a strong opening order book. The division's
non-UK operations showed growth on a local currency basis but were
impacted by the strength of sterling. The strategy of introducing a
more standardised range of products continues, with new "hygienic"
variants of standard machines being well received by the market,
resulting in initial orders. The sales and service office in
Singapore, which we opened last year, is performing well and will
help to support the division's growth in the region.
Tobacco Machinery
Sales in the period were GBP10.0m (2013: GBP18.0m) and operating
loss, before reorganisation costs, was GBP0.2m (2013: GBP1.3m
profit). 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. The division
delivers a significant portion of its machinery to countries in
North Africa, the Middle East and South East Asia. The division
also provides spares and servicing to customers in more than 120
countries globally.
Results reflect adverse market conditions in some of our main
markets, with the division experiencing reduced order demand and
aftermarket activity. In particular two large orders to the Middle
East and eastern Europe, which were expected to have been delivered
in the period, were deferred. Appropriate cost control measures
reflecting current market conditions have been implemented. Looking
ahead, the division continues with its product development
initiatives, with the commercialisation of the Alto
cigarette-making machine, and the launch of a new cigarette-packing
machine expected to have a positive impact on activity over the
medium-term.
Pension schemes
The Group is responsible for defined benefit pension schemes in
the UK and the USA. There are no active members and the schemes are
accounted for in accordance with IAS 19 Employee benefits.
The IAS 19 valuation of the UK scheme at 30 June 2014 shows a
deficit of GBP6.3m (GBP5.0m net of deferred tax), compared with a
deficit of GBP2.5m (GBP2.0m net of deferred tax) at the beginning
of the period. The value of the scheme's assets at 30 June 2014 was
GBP339.2m (31 December 2013: GBP337.9m), and the value of the
scheme's liabilities increased to GBP345.5m (31 December 2013:
GBP340.4m), reflecting lower interest rates. The net valuation of
the USA pension schemes at 30 June 2014, with total assets of
GBP14.4m, showed a deficit of GBP3.6m (GBP2.2m net of deferred
tax), compared with a deficit of GBP3.1m (GBP1.9m net of deferred
tax) at the beginning of the period. The aggregate expense of
administering the pension schemes was GBP0.4m (2013: GBP0.4m). The
net financing expense on pension scheme balances was GBP0.1m (2013:
GBP0.4m).
The UK scheme was subject to a formal actuarial valuation as at
30 June 2012, which showed a funding deficit as at that date of
GBP53.0m. The agreed level of deficit funding is GBP1.7m per annum
(increasing by 2.1% per annum, except in respect of the payments
for the year to 30 June 2016 which will increase by the percentage
increase in ordinary dividends in respect of the Company's 2014
financial year if higher than 2.1%). The deficit recovery plan will
be formally reassessed following the next scheme specific funding
valuation, which will be carried out as at 30 June 2015.
Outlook
As in previous years, the Group's full year trading performance
will be significantly weighted towards the second half. The Board
is mindful of the strength of sterling and current market
conditions for the Tobacco Machinery division. The prospects for
the Scientific Services and Packaging Machinery divisions continue
to be encouraging.
The Group continues to focus on its growth initiatives,
including further development, both organically and acquisitively,
within our core sectors.
Dick Hunter
Chief Executive
David Cowen
Group Finance Director
28 August 2014
CONDENSED CONSOLIDATED INCOME STATEMENT
6 months to 30 June 6 months to 30 June 2013
2014
----------------------------------------- -----------------------------------------
Non-underlying Non-underlying
(note 5) (note 5)
Underlying GBPm Total Underlying GBPm Total
Notes GBPm GBPm GBPm GBPm
Revenue 4 40.0 - 40.0 47.8 - 47.8
Cost of sales (28.5) - (28.5) (35.2) - (35.2)
------------ ---------------- --------- ------------ ---------------- ---------
Gross profit 11.5 - 11.5 12.6 - 12.6
Distribution expenses (4.6) - (4.6) (4.2) - (4.2)
Administrative
expenses (6.1) (0.6) (6.7) (6.4) (0.4) (6.8)
Other operating
expenses (0.2) - (0.2) (0.5) - (0.5)
------------ ---------------- --------- ------------ ---------------- ---------
4,
Operating profit 7 0.6 (0.6) - 1.5 (0.4) 1.1
Financial income 6 0.1 - 0.1 0.1 - 0.1
Financial expenses 6 (0.1) (0.1) (0.2) (0.1) (0.4) (0.5)
------------ ---------------- --------- ------------ ---------------- ---------
4,
Net financing expense 6 - (0.1) (0.1) - (0.4) (0.4)
------------ ---------------- --------- ------------ ---------------- ---------
(Loss)/profit before
tax 4 0.6 (0.7) (0.1) 1.5 (0.8) 0.7
Taxation 8 (0.2) 0.1 (0.1) (0.2) 0.2 -
------------ ---------------- --------- ------------ ---------------- ---------
(Loss)/profit for
the period 0.4 (0.6) (0.2) 1.3 (0.6) 0.7
============ ================ ========= ============ ================ =========
Basic (loss)/earnings
per ordinary share 9 (0.9)p 3.5p
Diluted
(loss)/earnings 9 (0.9)p 3.4p
per ordinary share
------------ ---------------- --------- ------------ ---------------- ---------
CONDENSED CONSOLIDATED INCOME STATEMENT (CONTINUED)
12 months to 31 December 2013
-------------------------------------------
Non-underlying
(note 5)
Underlying GBPm Total
Notes GBPm GBPm
Revenue 4 105.2 - 105.2
Cost of sales (76.6) - (76.6)
------------- ----------------- ---------
Gross profit 28.6 - 28.6
Distribution expenses (8.5) - (8.5)
Administrative expenses (13.8) (0.9) (14.7)
Other operating expenses (0.8) - (0.8)
------------- ----------------- ---------
4,
Operating profit 7 5.5 (0.9) 4.6
Financial income 6 0.2 - 0.2
Financial expenses 6 (0.3) (0.7) (1.0)
------------- ----------------- ---------
4,
Net financing expense 6 (0.1) (0.7) (0.8)
------------- ----------------- ---------
(Loss)/profit before 4 5.4 (1.6) 3.8
tax
8 (0.8) 0.5 (0.3)
Taxation
------------- ----------------- ---------
(Loss)/profit for
the period 4.6 (1.1) 3.5
============= ================= =========
Basic (loss)/earnings
per 9 18.0p
ordinary share
Diluted (loss)/earnings 9 17.6p
per
ordinary share
------------- ----------------- ---------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2014 2013 2013
GBPm GBPm GBPm
(Loss)/profit for the period (0.2) 0.7 3.5
------------- ------------- ------------
Other comprehensive (expense)/income
Items that will not be reclassified
to profit or loss (4.7) 15.9 13.5
Actuarial (losses)/gains
1.0 (4.0) (3.6)
Tax on items that will not be reclassified
to profit or loss
------------- ------------- ------------
(3.7) 11.9 9.9
------------- ------------- ------------
Items that may be reclassified subsequently
to profit or loss
Currency translation movements arising (0.5) 0.3 (1.5)
on foreign currency net investments
(0.3) (0.1) (0.8)
Effective portion of changes in fair
value of cash flow hedges
0.1 - 0.1
Tax on items that may be reclassified
to profit or loss
------------- ------------- ------------
(0.7) 0.2 (2.2)
------------- ------------- ------------
Other comprehensive (expense)/income
for the period (4.4) 12.1 7.7
------------- ------------- ------------
Total comprehensive (expense)/income
for the period (4.6) 12.8 11.2
============= ============= ============
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
2014
Balance at 1 January
2014 5.0 26.0 2.0 3.9 (0.5) 4.1 40.5
---------- ---------- ------------- ----------- ---------- ----------- ---------
Loss for the period - - - - - (0.2) (0.2)
Other comprehensive
expense for the period - - (0.5) - (0.2) (3.7) (4.4)
---------- ---------- ------------- ----------- ---------- ----------- ---------
Total comprehensive
expense for the period - - (0.5) - (0.2) (3.9) (4.6)
---------- ---------- ------------- ----------- ---------- ----------- ---------
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
2014 5.0 26.0 1.5 3.9 (0.7) (0.3) 35.4
========== ========== ============= =========== ========== =========== =========
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
========== ========== ============= =========== ========== =========== =========
12 months to 31 December
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 - - - - - 3.5 3.5
income/(expense) for
the period - - (1.5) - (0.7) 9.9 7.7
---------- ---------- ------------- ----------- ---------- ----------- ---------
Total comprehensive
income/(expense) for
the period - - (1.5) - (0.7) 13.4 11.2
---------- ---------- ------------- ----------- ---------- ----------- ---------
Dividends to shareholders - - - - - (1.1) (1.1)
Equity-settled share-based
transactions
Purchase of own shares - - - - - 0.2 0.2
Tax on items recorded - - - - - (0.2) (0.2)
directly in equity
- - - - - (0.1) (0.1)
---------- ---------- ------------- ----------- ---------- ----------- ---------
Total transactions
with owners, recorded
directly in equity - - - - - (1.2) (1.2)
---------- ---------- ------------- ----------- ---------- ----------- ---------
Balance at 31 December
2013 5.0 26.0 2.0 3.9 (0.5) 4.1 40.5
========== ========== ============= =========== ========== =========== =========
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 Dec
2014 2013 2013
Notes GBPm GBPm GBPm
Non-current assets
Intangible assets 15.7 14.9 15.2
Property, plant and equipment 10.9 11.8 11.2
Investment property 0.8 0.8 0.8
Employee benefits 7 - 0.8 -
Deferred tax assets 4.3 3.7 3.2
---------- ---------- ---------
31.7 32.0 30.4
---------- ---------- ---------
Current assets
Inventories 22.9 19.5 18.5
Trade and other receivables 21.4 21.6 24.3
Current tax assets 0.1 0.1 -
Cash and cash equivalents 8.5 14.0 15.0
---------- ---------- ---------
52.9 55.2 57.8
---------- ---------- ---------
Current liabilities
Trade and other payables (28.0) (28.2) (29.5)
Current tax liabilities (0.5) (1.1) (1.2)
Provisions (1.4) (1.5) (1.6)
---------- ---------- ---------
(29.9) (30.8) (32.3)
---------- ---------- ---------
Net current assets 23.0 24.4 25.5
---------- ---------- ---------
Total assets less current liabilities 54.7 56.4 55.9
---------- ---------- ---------
Non-current liabilities
Interest-bearing loans and borrowings (9.4) (8.4) (9.8)
Employee benefits 7 (9.9) (4.4) (5.6)
Deferred tax liabilities - (0.8) -
---------- ---------- ---------
(19.3) (13.6) (15.4)
---------- ---------- ---------
Net assets 4 35.4 42.8 40.5
========== ========== =========
Equity
Issued capital 5.0 5.0 5.0
Share premium 26.0 26.0 26.0
Reserves 4.7 7.8 5.4
Retained earnings (0.3) 4.0 4.1
---------- ---------- ---------
Total equity 35.4 42.8 40.5
========== ========== =========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2014 2013 2013
Notes GBPm GBPm GBPm
Operating activities Operating profit
Non-underlying items included in operating
profit
Amortisation Depreciation Other non-cash - 1.1 4.6
items Defined benefit pension payments
Working capital movements: - increase
in inventories - decrease/(increase)
in trade and other receivables - (decrease)/increase
in trade and other payables - (decrease)/increase
in provisions
0.6 0.4 0.9
0.6 0.7 1.4
1.0 0.9 1.8
0.2 0.1 0.2
(0.9) (0.6) (1.5)
(4.7) (1.2) (1.0)
1.9 0.6 (3.4)
(0.9) 0.4 2.4
(0.2) 0.2 0.4
------------- ------------- ------------
Cash (used in)/generated from operations (2.4) 2.6 5.8
before reorganisation Reorganisation
costs paid
5 (0.2) (0.6) (0.7)
------------- ------------- ------------
Cash flows from operations Taxation (2.6) 2.0 5.1
paid
(0.9) (0.7) (1.0)
------------- ------------- ------------
Cash flows from operating activities (3.5) 1.3 4.1
------------- ------------- ------------
Investing activities
Interest received 0.1 0.1 0.2
Proceeds from sale of property, plant 0.1 0.1 0.2
and equipment Acquisition of property,
plant and equipment Acquisition of
investment property Capitalised development
expenditure
(1.0) (1.0) (1.9)
- (0.7) (0.7)
(1.3) (0.8) (2.2)
------------- ------------- ------------
Cash flows from investing activities (2.1) (2.3) (4.4)
------------- ------------- ------------
Financing activities Interest paid
Purchase of own shares Net (decrease)/increase
against revolving facilities Dividends
paid
(0.1) (0.1) (0.3)
- - (0.2)
(0.2) 2.3 4.2
(0.6) (0.6) (1.1)
10
------------- ------------- ------------
Cash flows from financing activities (0.9) 1.6 2.6
------------- ------------- ------------
Net (decrease)/increase in cash and (6.5) 0.6 2.3
cash equivalents
Cash and cash equivalents at 1 January 11 15.0 13.3 13.3
Effect of exchange rate fluctuations - 0.1 (0.6)
on cash held
------------- ------------- ------------
Cash and cash equivalents at period
end 8.5 14.0 15.0
============= ============= ============
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
1. General information
The Half-year results for the current and comparative period are
unaudited but have been reviewed by the auditors, KPMG LLP, and
their report is set out after the Notes. The comparative
information for the year ended 31 December 2013 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 (which for that period was KPMG Audit Plc, a
subsidiary of KPMG LLP) 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 2013 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 28 August 2014.
2. Basis of preparation
(a) Statement of compliance
The condensed set of financial statements for the six months
ended 30 June 2014 has been prepared in accordance with IAS 34
Interim financial reporting as adopted by the EU. It does not
include all of the information required for full annual financial
statements and should be read in conjunction with the financial
statements of the Group for the year ended 31 December 2013.
(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 2013.
3. Significant accounting policies
The accounting policies, presentation and methods of computation
applied by the Group in this condensed set of financial statements
are the same as those applied in the Group's latest audited
financial statements.
4. Operating segments
The Group has 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 Half-year management report.
Revenue Profit/(loss)
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
2014 June Dec 2014 2013 2013
GBPm 2013 2013 GBPm GBPm GBPm
GBPm GBPm
Scientific Services 11.7 11.4 26.5 0.7 0.1 1.1
Packaging Machinery 18.3 18.4 44.3 0.1 0.1 1.5
Tobacco Machinery 10.0 18.0 34.4 (0.2) 1.3 2.9
------------ ---------- ----------- ------------ ------------ -----------
40.0 47.8 105.2
============ ========== ===========
Underlying operating
profit 0.6 1.5 5.5
Non-underlying items included in operating
profit (0.6) (0.4) (0.9)
------------ ------------ -----------
Operating profit - 1.1 4.6
Net financing expense (0.1) (0.4) (0.8)
------------ ------------ -----------
(Loss)/profit before
tax (0.1) 0.7 3.8
============ ============ ===========
Net financing expense includes dividends paid on preference
shares. The Company has in issue 900,000 6% fixed cumulative
preference shares. The preference dividend is payable on 30 June
and 31 December and amounted to GBP0.1m in the 12 months ended 31
December 2013.
30 June 30 June 31 Dec
2014 2013 2013
Segment assets GBPm GBPm GBPm
Scientific Services 14.9 12.9 14.0
Packaging Machinery 21.6 20.9 22.5
Tobacco Machinery 26.6 23.7 23.8
---------- ---------- ---------
Total segment assets 63.1 57.5 60.3
Total segment liabilities (27.7) (27.4) (28.9)
Segment net assets - continuing operations 35.4 30.1 31.4
Net liabilities - discontinued operations (0.1) (0.2) (0.1)
Unallocated net assets 0.1 12.9 9.2
---------- ---------- ---------
Total net assets 35.4 42.8 40.5
========== ========== =========
There have been no changes to the basis of segmentation or the
measurement basis for the segment profit or loss since 31 December
2013.
5. Non-underlying items
Charges classified as non-underlying items were incurred in
respect of the administration costs of the Group's defined benefit
pension schemes, which are paid from the assets of the pension
schemes, and financing expense on pension scheme balances, and
which are detailed in note 7 below. Additionally, in the 6 months
to 30 June 2014, charges in respect of reorganisations of GBP0.2m
(6 months to 30 June 2013: GBPnil; 12 months to 31 December 2013:
GBP0.1m) were incurred. In the period to 30 June 2014 cash payments
of GBP0.2m (6 months to 30 June 2013: GBP0.6m; 12 months to 31
December 2013: GBP0.7m) were made in respect of
reorganisations.
6. Net financing expense
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2014 2013 2013
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 (0.1) (0.4) (0.7)
expense
Amounts payable on bank loans and overdrafts (0.1) (0.1) (0.2)
Preference dividends paid - - (0.1)
----------- ----------- ----------
(0.2) (0.5) (1.0)
----------- ----------- ----------
Net financing expense (0.1) (0.4) (0.8)
=========== =========== ==========
7. Employee benefits
The Group accounts for pensions under IAS 19 Employee benefits.
A formal valuation of the UK defined benefit pension scheme was
carried out as at 30 June 2012, and formal valuations of the USA
defined benefit schemes were carried out as at 1 January 2014, 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 2014. Profit before tax
for the 6 months to 30 June 2014 includes charges in respect of IAS
19 pension schemes administration costs of GBP0.4m (6 months to 30
June 2013: GBP0.4m; 12 months to 31 December 2013: GBP0.8m) and
financing expense on pension scheme balances of GBP0.1m (6 months
to 30 June 2013: GBP0.4m; 12 months to 31 December 2013: GBP0.7m).
Payments to the Group's UK defined benefit scheme in the period of
GBP0.9m were in respect of the agreed deficit recovery plan.
Employee benefits as shown in the condensed consolidated
statement of financial position were:
30 June 30 June 31 Dec
2014 2013 2013
GBPm GBPm GBPm
UK scheme
Fair value of assets 339.2 333.8 337.9
Present value of defined benefit obligations (345.5) (333.0) (340.4)
--------- --------- ---------
Defined benefit (liability)/asset (6.3) 0.8 (2.5)
========= ========= =========
USA schemes
Fair value of assets 14.4 15.2 14.3
Present value of defined benefit obligations (18.0) (19.6) (17.4)
--------- --------- ---------
Defined benefit liability (3.6) (4.4) (3.1)
========= ========= =========
8. Taxation
The tax charge for the 6 months to 30 June 2014 amounted to
GBP0.1m (6 months to 30 June 2013: GBPnil; 12 months to 31 December
2013: GBP0.3m) and is calculated as follows:
6 months 6 months 12 months
to 30 June to 30 June to 31
2014 2013 Dec
GBPm GBPm 2013
GBPm
Tax charge on underlying profit 0.2 0.2 0.8
Tax credit on non-underlying items (0.1) (0.2) (0.5)
----------- ----------- ---------
Taxation 0.1 - 0.3
=========== =========== =========
The Group's consolidated effective tax rate in respect of
underlying profit for the 6 months to 30 June 2014 is 34% (6 months
to 30 June 2013: 11%; 12 months to 31 December 2013: 14%).
The UK Finance Bill 2013 was substantively enacted on 2 July
2013. The Bill introduced a 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. The deferred tax asset at 30 June 2014 has been calculated
based on the rate of 20% substantively enacted at the balance sheet
date.
9. Earnings per share
Basic earnings per ordinary share is calculated by dividing the
profit or loss attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the
period excluding shares held by the employee trust in respect of
the Company's long-term incentive arrangements. For diluted
earnings per ordinary share, the weighted average number of shares
includes the diluting effect, if any, of own shares held by that
employee trust.
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2014 2013 2013
Basic EPS - weighted average number of ordinary
shares 19,489,824 19,326,857 19,399,424
Diluting effect of shares held by the employee
trust - 529,469 448,065
----------- ----------- -----------
Diluted EPS - adjusted weighted average
number of ordinary shares(1) 19,489,824 19,856,326 19,847,489
=========== =========== ===========
(1) In the 6 months to 30 June 2014 the effect of dilution would
be to decrease the loss per ordinary share and is therefore
excluded from the dilution calculation. The adjusted weighted
average number of ordinary shares for the diluted underlying EPS
calculation (see below) in the 6 months to 30 June 2014 is
20,015,507.
Underlying earnings per ordinary share and diluted underlying
earnings per ordinary share, which are calculated on profit before
non-underlying items, for the 6 months to 30 June 2014 amounted to
2.1p (6 months to 30 June 2013: 6.5p; 12 months to 31 December
2013: 23.9p) and 2.0p (6 months to 30 June 2013: 6.4p; 12 months to
31 December 2013: 23.4p) respectively.
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 2014 of GBP0.4m (6
months to 30 June 2013: GBP1.3m; 12 months to 31 December 2013:
GBP4.6m) which is calculated as follows:
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2014 2013 2013
GBPm GBPm GBPm
(Loss)/profit for the period (0.2) 0.7 3.5
Non-underlying items (net of tax) 0.6 0.6 1.1
------------ ------------ -----------
Underlying profit for the period 0.4 1.3 4.6
============ ============ ===========
10. Dividends
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2014 2013 2013
GBPm GBPm GBPm
Dividends to shareholders paid in the period
Final dividend for the year ended 31 December
2012
of 3.0p per share
Interim dividend for the year ended 31
December 2013 - 0.6 0.6
of 2.5p per share
Final dividend for the year ended 31 December - - 0.5
2013
of 3.0p per share 0.6 - -
----------- ----------- ----------
0.6 0.6 1.1
=========== =========== ==========
An interim dividend for the year ending 31 December 2014 of 2.5p
per ordinary share will be paid on 9 October 2014 to ordinary
shareholders registered at the close of business on 19 September
2014.
11. Reconciliation of net cash flow to movement in net
(debt)/funds
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2014 2013 2013
GBPm GBPm GBPm
Net (decrease)/increase in cash and cash (6.5) 0.6 2.3
equivalents
Cash inflow/(outflow) from movement in 0.2 (2.3) (4.2)
borrowings
----------- ----------- ----------
Change in net funds resulting from cash
flows (6.3) (1.7) (1.9)
Translation movements 0.2 (0.1) (0.3)
----------- ----------- ----------
Movement in net funds in the period (6.1) (1.8) (2.2)
Opening net funds 5.2 7.4 7.4
----------- ----------- ----------
Closing net (debt)/funds (0.9) 5.6 5.2
=========== =========== ==========
Analysis of net (debt)/funds
Cash and cash equivalents - current assets 8.5 14.0 15.0
Interest-bearing loans and borrowings -
non-current liabilities (9.4) (8.4) (9.8)
----------- ----------- ----------
Closing net (debt)/funds (0.9) 5.6 5.2
=========== =========== ==========
12. Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the financial statements for
the year ended 31 December 2013.
At 1 January 2014 and 30 June 2014 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
2014 2013 2013
GBPm GBPm GBPm
Financial assets
Derivative instruments in designated 0.1 - 0.1
hedge accounting relationship
Loans and receivables (including cash 23.4 28.1 32.8
and cash equivalents)
------- ------- ------
23.5 28.1 32.9
======= ======= ======
Financial liabilities
Derivative instruments in designated 0.4 0.4 0.8
hedge accounting relationship
Amortised cost 37.0 36.2 38.5
------- ------- ------
37.4 36.6 39.3
======= ======= ======
Amortised cost comprises interest-bearing loans and borrowings
and trade and other payables, excluding foreign currency
derivatives.
The Group enters into forward foreign exchange contracts solely
for the purpose of minimising currency exposures on sale and
purchase transactions. The Group classified its forward foreign
exchange contracts used for hedging as cash flow hedges and states
them at fair value.
The fair value is the gain/loss on all open forward foreign
exchange contracts at the period end. These amounts are based on
the market values of equivalent instruments at the period end date
and all relate to those forward foreign exchange contracts that
have been designated as effective cash flow hedges under IAS 39
Financial instruments - recognition and measurement.
13. Related parties
The Group has related party relationships with its directors and
with the UK and USA defined benefit pension schemes. There has been
no material change in the nature of the related party transactions
described in note 30 of the 2013 Annual Report and Accounts.
14. Principal risks and uncertainties
Molins is subject to a number of risks which could have a
serious impact on the performance of the business. The Board
regularly considers the principal risks that the Group faces and
how to mitigate their potential impact. The key risks to which the
business is exposed have not changed significantly over the past
six months 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 16
and 17 of the Group's 2013 Annual Report and Accounts.
15. Half-year report
The Half-year report will be sent to all shareholders on 5
September 2014 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 2014 which comprises the condensed consolidated
income statement, condensed consolidated statement of changes in
equity, condensed consolidated statement of financial position,
condensed consolidated statement of cash flows and the related
explanatory notes. We have read the other information contained in
the Half-year report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The Half-year report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Half-year report in accordance with the AIM
Rules.
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this Half-year report has been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half-year report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half-year report for the six months ended 30 June 2014 is
not prepared, in all material respects, in accordance with IAS 34
as adopted by the EU and the AIM Rules.
Peter Selvey
for and on behalf of KPMG LLP
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
28 August 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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