RNS Number:4565R
Chloride Group PLC
30 October 2003
CHLORIDE GROUP PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
30 October 2003
Through rigorous focus on innovation, flexibility and reliability, Chloride is
the supplier of choice for power protection solutions. Its strengths derive
from applying innovative technologies and industry-leading customer service to
the protection of critical applications worldwide.
Highlights
Interim results for the six months ended 30 September 2003
* Sales up 11% to #75.1 million (2002: #67.6 million), representing a
return to organic growth of 3%
* Operating profit before goodwill amortisation up 12% to #3.4 million
(2002: #3.0 million) - a 25% increase excluding start-up costs in China
* Contribution margin improved by 2 points
* Adjusted EPS before goodwill amortisation up 17% at 0.95p (2002: 0.81p)
* Strong cash flow from operating activities of #4.5 million (2002: #4.0
million), before a special contribution of #1.5 million (2002: #Nil) to the
UK pension fund
* Interim dividend maintained at 0.80p per share (2002: 0.80p), reflecting the
Board's confidence in future performance
Commenting on the interim results, Chairman Norman Broadhurst said: "Chloride
has made good progress in continuing difficult market conditions, achieving a
return to organic sales growth. Recent extensively reported power cuts
highlight the key driver of our solutions business - the essential need to
protect a wide range of applications and processes from degrading power quality
and reliability."
Enquiries:
Chloride Group PLC All day on 30 October 2003
Keith Hodgkinson (Chief Executive) Tel: 020 7796 4133 (Hudson Sandler)
Neil Warner (Finance Director) Thereafter, tel: 020 7834 5500
Hudson Sandler Tel: 020 7796 4133
Andrew Hayes
Further information on Chloride Group can be found on www.chloridegroup.com.
CHAIRMAN'S STATEMENT
Chloride made good progress in the first half of the year, despite challenging
trading conditions particularly in our main European markets. In the period to
30 September 2003, we achieved organic sales growth of 3%, excluding the
positive effects of additional sales from our Chinese acquisition and the
strengthened euro. The impact of the SARS epidemic held back performance in
China and South East Asia, and the conflict in Iraq adversely affected our
market in the Middle East.
Our UPS, Industrial Systems and Power Conditioning businesses all achieved
improvements in sales and operating profit compared to the prior year, while our
Telecom Systems business maintained last year's improved performance in a
continuing difficult market sector.
Results
Total sales were increased by 11% to #75.1 million (2002: #67.6 million) - a 3%
rise after excluding additional sales of #1.5 million in China and the exchange
benefit of the euro.
Operating profit before goodwill amortisation increased by 12% to #3.4 million
(2002: #3.0 million), after absorbing the start-up costs of #0.4 million in
China and increased insurance costs. Excluding China, the underlying operating
profit before goodwill amortisation was increased by an encouraging 25%.
The profit improvement was driven by a contribution margin increase of two
percentage points. Product margins were improved in a price-competitive market,
as we continued to focus on reducing production, procurement and logistics costs
and the 10% increase in higher-margin service sales also contributed to the
overall margin improvement.
Profit before tax and goodwill amortisation was up 15% to #3.0 million (2002:
#2.6 million), delivering an increase in adjusted EPS of 17% at 0.95p (2002:
0.81p).
Cash flow from operating activities, before a special contribution to the UK
pension fund of #1.5 million, remained strong at 133% of operating profit before
goodwill amortisation. Net debt increased to #10.7 million, from #8.8 million
at 31 March 2003, due to the special contribution to the UK pension fund and
additional capital expenditure of #0.9 million on upgraded IT systems, which
will further improve operational performance. The balance sheet also remained
strong with shareholders' funds of #64 million.
Dividend
The Board remains confident in the long-term growth prospects of the market and
the competitive advantage of our total solutions offering. The Board is
therefore pleased to announce an unchanged interim dividend of 0.80p (2002:
0.80p).
Payment will be made on 9 December 2003 to shareholders on the register at the
close of business on 7 November 2003.
Trading
Over the first half of the year, the Company achieved sales growth against a
background of continuing tough market conditions. Product sales showed an
encouraging improvement especially in the transportation, medical, energy and
petrochemical market sectors.
The continued development of our service offering has resulted in a 10% increase
in service revenues for the period, and service now accounts for 27% of total
revenues.
In geographic terms, sales improved in the USA, Middle East and Far East. In
Europe we maintained sales in line with last year's improved performance, in a
difficult trading environment. Our progress in the USA was driven by a strong
performance in Power Conditioning, including a good take-up of our patented
communication line protectors by major telecom operators.
During the period we invested for the long term in our recently acquired
business in China, Chloride Masterguard Power Systems. This included the
development of new telecom power systems products and the strengthening of sales
and technical support for our UPS business. Trading in the first half was
adversely affected by the SARS epidemic, but we expect to increase sales in the
second half from a growing list of identified prospects.
Product Development
We continued to invest in our strategic product development programme to support
sales growth and improve our total solutions offering.
At the close of the half year, Chloride Industrial Systems launched the APODYS
product range. This innovative development expands our proprietary Vector
digital control technology into industrial systems, to provide modular,
cost-efficient products, with flexible configuration, smaller footprint and
enhanced performance.
In North America, Oneac continues to develop and expand its range of patented
communication line protectors for high-speed fixed and mobile telecom networks,
while in Europe our UPS business is preparing to launch a range of new products
in the fourth quarter.
Market Drivers
The long-term growth in demand for power protection solutions is driven by the
wide range of applications and processes in business and public sector
organisations, which rely on uninterrupted, high-quality power. The
deteriorating quality and reliability of the power supply have been highlighted
by the recent extensively reported power cuts in North America, the UK, Italy
and Scandinavia. These factors will continue to underpin the long-term market
for power protection, in which our comprehensive solutions offering has real
competitive advantage.
Outlook
As we continue to build long-term partnerships with blue-chip customers and roll
out new and innovative products and services, we believe that Chloride is well
positioned to deliver consistent increases in sales and profit.
The immediate trading environment though remains challenging and we do not
expect any significant market recovery in the short term. Nevertheless, the
order book at the end of the first half was ahead of that on 1 April 2003 and we
are confident that we can continue to achieve organic growth and deliver value
to our shareholders.
Norman Broadhurst
30 October 2003
Summarised consolidated profit and loss account
(unaudited)
Year to Six months to Six months to
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
142,967 Turnover 75,115 67,602
7,062 Operating profit before goodwill amortisation 3,369 3,005
(2,587) Goodwill amortisation (1,342) (1,182)
4,475 Operating profit 2,027 1,823
(725) Net interest payable (360) (388)
3,750 Profit on ordinary activities before taxation 1,667 1,435
(1,712) Tax on profit on ordinary activities (933) (706)
2,038 Profit on ordinary activities after taxation 734 729
48 Minority interests 174 -
2,086 Profit for the period 908 729
(3,777) Dividends (1,897) (1,883)
(1,691) Loss retained (989) (1,154)
Earnings per share
1.98p Adjusted 0.95p 0.81p
0.88p Basic 0.38p 0.31p
0.88p Diluted 0.38p 0.31p
Summarised consolidated balance sheet
(unaudited)
At At At
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
Fixed assets
41,069 Goodwill 39.572 39,507
14,158 Tangible assets 13,871 13,226
10,519 Investments 10,500 10,583
65,746 63,943 63,316
Current assets
29,040 Stocks 27,432 27,253
49,948 Debtors 48,840 43,190
16,662 Cash at bank and in hand 10,407 22,242
95,650 86,679 92,685
79,426 Creditors: amounts falling due within one year 68,464 62,250
16,224 Net current assets 18,215 30,435
81,970 Total assets less current liabilities 82,158 93,751
Creditors: amounts falling due after more than
2,596 one year 5,081 16,040
13,625 Provisions for liabilities and charges 13,077 13,145
65,749 Net assets 64,000 64,566
65,962 Equity shareholders' funds 64,387 64,518
(213) Minority interests (387) 48
65,749 Total capital employed 64,000 64,566
Summarised consolidated cash flow statement
(unaudited)
Year to Six months to Six months to
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
11,852 Cash inflow from operating activities 2,970 4,027
(725) Returns on investments and servicing of finance (360) (388)
(2,298) Taxation (263) (780)
(1,886) Capital expenditure (1,839) (919)
(558) Acquisitions and disposals (90) -
(3,786) Equity dividends paid (1,895) (1,892)
Cash (outflow)/inflow before use of liquid resources
2,599 and financing (1,477) 48
Management of liquid resources
3,413 Net decrease/(increase) in short-term deposits 9,883 (1,665)
Financing
(6,162) Net cash (outflow)/inflow from financing (9,244) 120
(150) Decrease in cash (838) (1,497)
Statement of total recognised gains and losses
(unaudited)
Year to Six months to Six months to
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
2,086 Profit for the period 908 729
Currency translation differences on foreign currency
890 net investments (586) (1,021)
2,976 Total recognised gains/(losses) for the period 322 (292)
Reconciliation of movements in equity shareholders' funds
(unaudited)
Year to Six months to Six months to
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
2,086 Profit for the period 908 729
(3,777) Dividends (1,897) (1,883)
890 Exchange adjustments (586) (1,021)
112 New share capital issued - 42
(689) Net decrease in equity shareholders' funds (1,575) (2,133)
66,651 Opening equity shareholders' funds 65,962 66,651
65,962 Closing equity shareholders' funds 64,387 64,518
Notes to the interim financial statements
(unaudited)
1 Segmental information
Year to Six months to Six months to
31 March 2003 30 September 2003 30 September 2003
Profit/(loss) Profit/(loss) Profit/(loss)
before before before
Turnover interest Turnover interest Turnover interest
#000 #000 #000 #000 #000 #000
115,142 6,966 Europe 58,448 3,409 54,386 2,875
21,085 41 Americas 11,018 290 10,485 125
6,740 55 Asia and Australasia 5,649 (330) 2,731 5
142,967 7,062 Total 75,115 3,369 67,602 3,005
- (2,587) Goodwill amortisation - (1,342) - (1,182)
142,967 4,475 75,115 2,027 67,602 1,823
2 Preparation of the interim financial statements
The interim financial statements, which are unaudited, have been prepared on the
basis of the accounting policies set out in the 2003 annual report.
The comparative figures for the year ended 31 March 2003 do not comprise full
financial statements and have been extracted from the 2003 statutory accounts,
which have been filed with the Registrar of Companies. The auditors' opinion on
those accounts was unqualified and did not include any statement under section
237 of the Companies Act 1985.
3 Taxation
The tax charge provided at the half year is based on the estimated effective tax
rate for each undertaking in the Group applicable to the year to 31 March 2004
as applied to the taxable profits for the period.
Earnings per share
4
Year to Six months to Six months to
31 March 30 September 30 September
2003 2003 2002
Million Million Million
Weighted average number of 25p ordinary shares
236.6 - basic and adjusted 236.2 236.7
- Adjustment for shares under option 0.2 -
Weighted average number of 25p ordinary shares
236.6 - diluted 236.4 236.7
#000 #000 #000
Profit for basic and diluted earnings per share
2,086 calculations 908 729
2,587 Goodwill amortisation 1,342 1,182
4,673 Profit for adjusted earnings per share calculation 2,250 1,911
1.98p Earnings per - adjusted 0.95p 0.81p
share
0.88p - basic 0.38p 0.31p
0.88p - diluted 0.38p 0.31p
The weighted average number of shares excludes shares held by the Chloride Group
Employee Benefit Trust and the Chloride Quest.
The directors consider that the adjusted earnings per share figures more
accurately reflect the underlying performance of the business.
5 Cash flow statement supporting information
a) Reconciliation of net cash flow to movement in net debt
Year to Six months to Six months to
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
(150) Decrease in cash (838) (1,497)
Net cash outflow/(inflow) from movement in debt
6,274 and lease financing 9,244 (120)
Cash (inflow)/outflow from (decrease)/increase in
(3,413) liquid resources (9,883) 1,665
(451) Debt and finance leases acquired with subsidiary - -
(2,981) Exchange rate translation differences (356) (1,123)
(721) Increase in net debt (1,833) (1,075)
(8,124) Net debt at 1 April (8,845) (8,124)
(8,845) Net debt at 30 September (10,678) (9,199)
b) Reconciliation of operating profit to net cash flow
Year to Six months to Six months to
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
4,475 Operating profit 2,027 1,823
5,666 Depreciation and goodwill amortisation 3,003 2,712
12 Loss on sale of tangible assets 8 -
3,100 Decrease in stocks 1,626 2,791
3,555 Decrease in debtors 157 5,557
(4,956) Decrease in creditors and provisions (3,851) (8,856)
11,852 Cash inflow from operating activities 2,970 4,027
c) Analysis of net debt
At At At
31 March 30 September 30 September
2003 2003 2002
#000 #000 #000
6,174 Cash 9,859 6,678
(2,520) Overdrafts (6,996) (4,635)
(19,878) Debt due within one year (8,850) (10,344)
(1,888) Debt due after more than one year (4,694) (15,572)
(633) Discounted trade bills (3) (269)
(588) Finance lease obligations (542) (621)
10,488 Liquid resources 548 15,564
(8,845) Net debt (10,678) (9,199)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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