Molins PLC - Interim Results
September 03 1997 - 3:32AM
UK Regulatory
RNS No 3924t
MOLINS PLC
3rd September 1997
1997 INTERIM RESULTS
Molins PLC, the international specialist engineering company, announces its
results for the six months ended 30 June 1997.
1997 1996
Half Year Half Year
Turnover #125.4m #147.2m
______________ ______________
Operating profit (before exceptional items) #8.2m #16.0m
Exceptional items
- Langston #(13.4)m -
- Rationalisation costs #(1.5)m #(2.0)m
Interest #(1.0)m #(0.4)m
____________ ____________
(Loss)/profit before taxation #(7.7)m #13.6m
____________ ____________
Earnings per share (before exceptional items) 14.2p 33.7p
(Loss)/earnings per share (18.2)p 29.9p
Dividend per share 6.5p 6.5p
Chief Executive, Peter Harrisson, commented:
"Clearly this is a very disappointing set of results reflecting difficult
trading conditions in our major markets coupled with the exceptional charges
at Langston. Although the outlook is for substantially lower second half
profits this year compared with last, the balance sheet remains strong and we
are taking action to improve profitability in a changing market environment".
Enquiries: Peter Harrisson, Chief Executive
Peter Grant, Group Finance Director
Tel: 0171 638 9571
Chairman's statement
Results
The Group's results for the six months ended 30 June 1997 are very
disappointing and reflect in particular the outcome of the investigation into
the accounting irregularities at Langston. When the findings from the
investigation were announced early in July, shareholders were made aware that
the exceptional charge in respect of Langston would take the Group into loss
for the first half. The full results are now available and confirm that the
Group incurred a loss before tax of #7.7m after charging exceptional costs of
#14.9m (including #13.4m in respect of Langston).
The gradual decline in order intake for tobacco and corrugated board
machinery from the record levels of more than a year ago began to affect the
Group's trading performance in the first half of the current year. Sales of
tobacco machinery in the first half were lower than a year ago and sales of
corrugated board machinery remained depressed. Packaging machinery sales were
substantially higher, reflecting the acquisition of Langen. It became
increasingly apparent that the strength of sterling had eroded the Group=s
competitive position at a time when demand in some of its main markets was
slowing. Group profit before tax before exceptional items was only #7.2m,
against #15.6m for the first half of last year. Earnings per share before
exceptional items of 14.2p compared with 33.7p a year ago. After an
exceptional charge equivalent to 32.4p per share the loss per share was
18.2p.
Shareholders' funds were #98.2m at 30 June 1997 (1996: #119.6m) following the
acquisition of Langen in November 1996 and net debt amounted to #16.6m (1996:
net cash of #1.4m). Net cash inflow from operating activities in the first
half was #6.4m (1996: #9.3m).
Dividend
The Directors have declared an interim dividend of 6.5p per share (1996:
6.5p) which is more than twice covered by earnings before exceptional items.
This is payable on 30 October 1997 to shareholders on the register on 19
September 1997.
Langston Investigation
The results of the investigation into the accounting irregularities at
Langston were announced early in July. In summary, the investigation
concluded that profits had been overstated over a number of years to the
aggregate sum of US$20.8m (#12.2m) before tax and US$14.8m (#8.7m) after tax.
The impact on the reported results for 1996 was less than #3.0m (#1.9m after
tax) against reported profits of #33.4m (#24.9m after tax). The total
adjustment, together with the related investigation costs of #1.2m (#1.0m
after tax), has been accounted for as an exceptional charge.
Tobacco Machinery
Tobacco Machinery reported sales of #78.9m for the six months to 30 June 1997
(1996: #88.0m) and an operating profit before exceptional items of #7.7m
(1996: #11.6m). The order backlog for original equipment at the beginning of
the current year, whilst substantially lower than the record of a year
earlier, was sufficient to maintain satisfactory levels of production
throughout the first half. However, invoiced sales were some #5m lower than
expected because shipments to the Far East were affected by delays in
receiving letters of credit. Operating results for the first half suffered
accordingly.
As previously announced, weak demand caused losses at the Brazilian
operation, prompting a restructuring to reduce costs, for which an
exceptional charge of #1.5m is included in the half year's results. Steady
progress has been made in most of the other areas of Tobacco Machinery, with
the spares activities performing particularly well.
Corrugated Board Machinery
Corrugated Board Machinery=s sales of #31.3m in the first half (1996: #51.7m)
were much lower than those of a year earlier, when Langston benefited from a
substantial order backlog built up at the top of the cycle. In the downturn,
weaker demand throughout the whole of the industry put margins under pressure
and resulted in an operating loss before exceptional items of #0.9m for the
six months to 30 June 1997, against last year=s reported profit before
exceptional items of #3.6m.
The investigation of the accounting irregularities at Langston inevitably
caused a significant distraction, affecting both operational management and
marketing activities. Decisive action was taken to replace the management
and the new team is now established.
Packaging Machinery
Packaging Machinery reported sales of #15.2m in the first half (1996: #7.5m)
and an operating profit of #1.4m (1996: #0.8m), and continues to grow in
importance as an integral part of the Group.
Sandiacre achieved satisfactorily higher volumes in the first half, although
margins were affected by the strength of sterling. Langen had a slow start
to the year but by June the order book had returned to more normal levels.
Further development work continued on tea bagging machines and other projects
in collaboration with major multi-nationals.
Outlook
When the trading update accompanying the announcement of the results of the
Langston investigation was released early in July, the Group was looking for
the second half results to be broadly comparable with those achieved in the
second half of 1996. However, further discussions with major customers
regarding the delays in shipment referred to above have cast a different
light upon the pattern of demand for tobacco machinery in Far Eastern
markets. In summary, a slowing of the flow of orders for original equipment
seems bound to reduce levels of activity in the second half. Spares volumes
have not been affected, but production schedules for original equipment will
need to be adjusted and further action is being taken to reduce costs. In
the changed circumstances, even though the problems at Langston are largely
behind us and the packaging machinery operations continue to make steady
progress, the outlook must now be for substantially lower operating profits
in the second half of the year when compared with the second half of 1996.
Looking further forward, with a strong balance sheet and an internationally
recognised portfolio of products, the Group is in a sound position to weather
its current difficulties and resume growth in future years.
J C Orr
Chairman
3 September 1997
Group profit and loss account
6 months to
30 June 6 months 6 months 6 months 12
1997 to months
before 30 June to 30 to 30 to 31
1997 June June Dec
excep- excep- 1997 1996 1996
tional tional
items items total
#m #m #m #m #m
Note 2
Turnover 125.4 - 125.4 147.2 306.2
_____ _____ _____ _____ _____
Operating (loss)/profit 8.2 (14.9) (6.7) 14.0 34.4
Net interest payable (1.0) - (1.0) (0.4) (1.0)
_____ _____ _____ _____ _____
(Loss)/profit on ordinary 7.2 (14.9) (7.7) 13.6 33.4
activities before taxation
Taxation (2.3) 3.7 1.4 (3.4) (8.5)
_____ _____ _____ _____ _____
(Loss)/profit for the period 4.9 (11.2) (6.3) 10.2 24.9
Dividends (including non- (2.3) - (2.3) (2.2) (7.6)
equity)
_____ _____ _____ _____ _____
Retained (loss)/profit 2.6 (11.2) (8.6) 8.0 17.3
for the period _____ _____ _____ _____ _____
Earnings per ordinary share 14.2p - 14.2p 33.7p 81.0p
(before exceptional items)
(Loss)/earnings per ordinary 14.2p (32.4)p (18.2)p 29.9p 72.8p
share
Dividend per ordinary share 6.5p - 6.5p 6.5p 22.0p
_____ ______ _____ _____ _____
Reconciliation of movements in shareholders' funds
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
1997 1996 1996
#m #m #m
Opening shareholders' funds 105.9 111.4 111.4
_____ _____ _____
(Loss)/profit for the period (6.3) 10.2 24.9
Dividends (2.3) (2.2) (7.6)
Goodwill adjustment - - (19.8)
Other recognised gains and losses for the 0.9 0.1 (6.5)
period
New share capital - 0.1 3.5
_____ _____ _____
Net (reductions)/additions to (7.7) 8.2 (5.5)
shareholders' funds
_____ _____ _____
Closing shareholders' funds 98.2 119.6 105.9
_____ _____ _____
Group balance sheet
1997 1996 1996
#m #m #m
Fixed assets
Tangible assets 54.1 56.1 54.7
Investments 1.3 0.4 1.2
_____ _____ _____
55.4 56.5 55.9
_____ _____ _____
Current assets
Stocks 79.7 84.0 78.1
Debtors - due within one year 59.7 58.5 66.0
Debtors - due after more than one year 14.3 13.8 13.9
Cash at bank and in hand 8.5 17.1 9.8
_____ _____ _____
162.2 173.4 167.8
Creditors - amounts falling due within
one year
Borrowings (14.0) (2.9) (16.3)
Other creditors (85.2) (85.4) (84.1)
Proposed dividend (2.3) (2.2) (5.4)
_____ _____ _____
(101.5) (90.5) (105.8)
Net current assets 60.7 82.9 62.0
Total assets less current liabilities 116.1 139.4 117.9
Creditors - amounts falling due after
more than one year
Borrowings (11.1) (12.8) (5.2)
Other creditors (0.8) (0.3) (0.9)
_____ _____ _____
(11.9) (13.1) (6.1)
Provisions for liabilities and charges (5.8) (6.7) (5.7)
_____ _____ _____
Net assets 98.4 119.6 106.1
_____ _____ _____
Capital and reserves
Called up share capital 9.5 9.4 9.5
Share premium account 21.0 19.8 21.0
Revaluation reserve 18.3 21.6 17.8
Profit and loss account 49.4 68.8 57.6
_____ _____ _____
Shareholders' funds (including 98.2 119.6 105.9
non-equity interests)
Minority interests 0.2 - 0.2
____ ____ ____
98.4 119.6 106.1
_____ _____ _____
Group cash flow statement
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
1997 1996 1996
#m #m #m
Operating (loss)/profit (6.7) 14.0 34.4
Exceptional items 14.9 2.0 3.9
Depreciation 3.6 3.2 6.6
Working capital (5.4) (9.6) (17.0)
Other - (0.3) (0.3)
____ ____ ____
Net cash inflow from operating activities 6.4 9.3 27.6
Interest paid (net) (0.9) (0.4) (1.1)
Dividends paid (5.4) (4.8) (7.1)
Tax paid (1.7) (3.7) (8.2)
Investment in joint venture (0.1) - (1.0)
Purchase of subsidiary/acquisition costs (0.2) - (19.5)
Capital expenditure (net) (2.9) (5.9) (9.6)
____ ____ ____
Net cash outflow before use of liquid
resources and financing (4.8) (5.5) (18.9)
____ ____ ____
Management of liquid resources - 2.7 6.5
Financing
Issue of ordinary share capital - 0.1 1.4
Increase/(decrease) in loans and
finance lease obligations 3.0 (0.1) (1.5)
____ ____ ____
Net cash inflow/(outflow) from financing 3.0 - (0.1)
____ ____ ____
Decrease in cash in the period (1.8) (2.8) (12.5)
____ ____ ____
Closing net (borrowings)/cash (16.6) 1.4 (11.7)
____ ____ ____
Notes
1 Segmental information
Turnover Operating (loss)/profit
------------------- ---------------------------
6 months 6 months 12 months 6 months 6 months 12 months
to 30 to 30 to 31 Dec to 30 to 30 to 31 Dec
June June June June
1997 1996 1996 1997 1996 1996
#m #m #m #m #m #m
By activity
Tobacco 78.9 88.0 183.2 7.7 11.6 28.4
Corrugated 31.3 51.7 101.6 (0.9) 3.6 6.6
Board
Packaging 15.2 7.5 21.4 1.4 0.8 3.3
____ ____ ____ ____ ____ ____
125.4 147.2 306.2 8.2 16.0 38.3
Exceptional - - - (14.9) (2.0) (3.9)
items
____ ____ ____ ____ ____ ____
125.4 147.2 306.2 (6.7) 14.0 34.4
____ ____ ____ ____ ____ ____
The exceptional items for 1997 comprise #1.5m cost of restructuring in
Brazil (Tobacco Machinery division) and #13.4m in respect of accounting
irregularities at The Langston Corporation. These irregularities had the
effect of overstating profits of the Corrugated Board Machinery division
over a number of years to 31 December 1996. This adjustment comprises US
$20.8m (#12.2m) before tax and US $14.8m (#8.7m) after tax together with
related investigation costs of #1.2m (#1.0m after tax). The exceptional
items in 1996 comprised rationalisation costs in the Corrugated Board
Machinery division (full year: #2.9m, half year: #2.0m) and in the
Tobacco Machinery division (full year: #1.0m, half year: nil). The
exceptional items for 1996 are now shown separately in the segmental
analysis.
3 The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's 1996 statutory accounts.
4 The financial information for the half year has not been audited,
although the auditors have carried out a review.
5 The results for the full year 1996 are not the Group's statutory accounts
but have been extracted from the Group's full accounts for that year
which have been filed with the Registrar of Companies. The 1996 accounts
received an auditors' report which was not qualified and did not contain
a statement under section 237 (2) or (3) of the Companies Act 1985.
6 The preference dividend paid on 30 June 1997 amounted to #18,900 (1996:
#18,900).
The cost of the interim dividend of 6.5p per ordinary share for the six
months to 30 June 1997 will amount to #2,328,000.
8 Overseas tax included in taxation in the profit and loss account
comprises a #0.8m charge against the result before exceptional items, and
a #3.7m credit in respect of exceptional items (6 months to 30 June 1996
- #1.4m charge, year to 31 December 1996 - #3.1m charge).
9 Earnings per ordinary share are based upon the profit after taxation less
the preference dividend and on a weighted average of 34,603,489 shares in
issue during the period (1996: 34,104,180).
10 In 1996 the Group changed its accounting policy regarding the
translation of overseas earnings and now uses an average rate
rather than the closing rate. The directors believe that the
new treatment more fairly reflects the results and cash flows
as they arise throughout the year. The effects are not
material in either the current or prior periods and therefore
comparative figures have not been restated.
Copies of the report are being sent to all shareholders. Further copies, and
copies of the 1996 Annual Report and Accounts, are available from the
Company's registered office: 11 Tanners Drive, Blakelands, Milton Keynes
MK14 5LU.
END
Mpac (LSE:MPAC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Mpac (LSE:MPAC)
Historical Stock Chart
From Jul 2023 to Jul 2024
