Interim Results
September 12 2002 - 3:02AM
UK Regulatory
12th September 2002
Coats plc Announces Interim Results
For Six Months To 30 June 2002
Financial Highlights
* Turnover from continuing operations down 7% to �577m
* Operating profit �8.4m (H1 2001 �18.8m)
* Profit before tax �4.7m (H1 2001 �5.0m)
* Loss per share 0.6p (H1 2001 loss per share 0.3p)
* Net debt at end of H1 �164m (H1 2001 �177m)
* Interim dividend maintained at 1.5p per share
* 2001 comparatives restated following adoption of FRS 17 and FRS 19
Strategic Highlights
* Operating profit from core Thread business in line with expectations despite
weak economic conditions
* Decision to accelerate focus on Thread
- Sale process underway to sell Fashion Retail
- Discussions opening with potential buyers of Bedwear
- Ongoing withdrawal from India Textiles business
* Sustained investment in low cost Thread manufacturing in Asia, Romania and
Mexico
* Further reduction in capacity in Thread in Western Europe and USA.
Martin Flower, Chief Executive, Coats plc, said:
"As expected, trading conditions in Western markets remained challenging during
the period. Even so, in our core Thread business we achieved a result in line
with our plan for the year.
"In addition, the Board has resolved to accelerate the strategy of an exclusive
focus on Thread and has initiated the process for the sale of Fashion Retail
and Bedwear."
Contacts:
Martin Flower Group Chief Executive 020 7404 5959 (on the day)
Jonathan Lea Group Finance Director 020 8210 5000 (thereafter)
Patrick Handley/ Brunswick Group 020 7404 5959
Katya Reynier
Fiona Laffan
An interview with Group Chief Executive, Martin Flower, in video, audio and
text will be available from 7:00am on www.cantos.com and www.coats.com. A copy
of the analyst presentation will be available on www.coats.com after 11:00am
today.
Chairman's statement
The first six months of 2002 have as indicated proved difficult as the weaker
economic conditions experienced towards the end of last year in North America
became more widespread. Nevertheless I am pleased to report that first half
operating profit from the core Thread business was in line with our plan for
the full year. At the same time further strategic progress has been made in
exiting high cost locations and investing in new growth markets. The major
disappointment in the results to June - already referred to in earlier
statements - was the �8 million loss incurred by the Fashion Retail business.
Most of the loss can be traced to problems with Jaeger's spring range and
corrective action has been taken.
We are now entering the final phase of the strategy set out two years ago to
focus on our global Thread business and the next steps are to disengage from
Fashion Retail and Bedwear. An information memorandum for the sale of Fashion
Retail has been prepared by HSBC Investment Bank and has already generated
interest. We also intend to open discussions with potential buyers of the
Bedwear business.
Thread is currently on track to deliver significant improvement on last year's
second half. The outcome is heavily dependent on economic conditions in North
America, Western Europe and Brazil, but in the absence of further deterioration
we continue to expect a modest improvement in underlying Thread performance for
the year as a whole. In the non-thread businesses we expect trading losses to
be reduced in the second half compared to the first.
Over the last two years the group has undergone considerable restructuring
including the sale of the contract clothing division, progressive withdrawal
from textiles manufacturing in India, and relocation of thread production.
Management has a clear view on how to meet the challenges which remain and I am
confident that we are now well placed to take advantage of the long term growth
opportunities in our core markets.
Chief Executive's review
Thread Operating profit before reorganisation costs �28.8 million (2001:�41.5
million)
Although trading conditions in Western markets remained challenging and
significantly weaker than last year's first half, Thread results are in line
with expectations.
In North America growth in retail sales of apparel remained slow, but inventory
levels - which had been cut significantly during the second half of 2001 -
began to be rebuilt. Industrial Thread sales correspondingly showed some
recovery over the levels experienced in the second half of last year while
still remaining below the first half. Profits were also affected by
increasingly competitive pricing. Crafts sales and profits continued to be
robust particularly in handknittings.
In Asia, sales benefited from recovery in apparel exports to the US and
continued growth in exports to Europe.
Weaker demand especially in Germany depressed sales and profits in Europe,
partly offset by improved economic conditions in Turkey. South America was
impacted by renewed economic and exchange weakness in Brazil following the
problems in Argentina.
Reorganisation costs at �8.0 million were �5.2 million below previous year and
included closure of spinning in Portugal and a speciality thread plant in the
USA.
Other Businesses Operating loss before reorganisation costs �10.2 million
(2001:loss �1.4 million)
In Fashion Retail reaction to Jaeger's Womenswear spring range was extremely
disappointing. Higher discounting and provisions on stock resulted in an
Operating loss before reorganisation costs of �8.3 million (2001:�nil million).
Reorganisation costs at �1.7 million were �2 million lower than previous year
and related to the closure of Jaeger tailoring.
While branded Bedwear sales were steady, own label business primarily to Marks
& Spencer was down resulting in an Operating loss before reorganisation costs
of �1.1 million (2001:loss �0.2 million). Further downsizing at the remaining
UK production facilities has been undertaken incurring reorganisation costs of
�1.2 million (2001:�1.9 million).
Ongoing withdrawal from the India Textiles business is reflected in lower sales
and a somewhat reduced operating loss of �0.8 million (2001:loss �1.2 million).
Exit costs amounted to �5.3 million (2001:�10.1 million) and as last year are
included in termination losses.
Strategic progress
The decision to initiate the process for the eventual sale of the Fashion
Retail and Bedwear divisions will enable management to focus completely on the
core Thread business.
Within Thread, investment in low cost facilities in Asia continues and exciting
new projects to build large-scale plants in Romania and Mexico have commenced.
These plants are designed to serve as long term sources of competitive product
for the European and North American regions and are a key part of our overall
strategy to improve margins and to increase sales in growth markets.
The first half of 2002 has seen further progress in the reduction of capacity
in Western Europe and the USA. Thread reorganisation costs are expected to
continue at a similar level in the second half, in line with the program
outlined in the Annual Report and will generate further benefits in 2003.
Current trading
Our Thread business plan for 2002 always assumed that demand in key markets
such as the USA would remain weak during the first six months but begin to
recover in the second half as Western economies regained momentum and
inventories were rebuilt. At the same time we anticipated that cost savings
programs begun in 2001 would impact more strongly as the year progressed and
that the net result of both factors would be a relatively weak first half more
than offset by a strong second half.
It is clear that economic conditions in Western Europe, North and South America
are weaker than had generally been expected. Nevertheless at this stage we
continue to expect a significant improvement in Thread performance in the
second half compared to last year and modest progress at constant exchange
rates for the full year.
Financial review
Operating Profit
Operating profit before reorganisation and exceptional costs was down by 51% at
�18.6 million. Lower profits in Thread and the loss in Fashion Retail accounted
for the bulk of the reduction. Discontinued operations comprising the Branded
Clothing and Home Furnishings businesses which were sold during 2001
contributed operating losses of �2.5 million in the first half of 2001.
Reorganisation costs including related provisions for portfolio restructuring
and impairment of fixed assets were �10.9 million compared with �18.9 million
in the first half of last year. The major part of the reorganisation costs
arose in Thread (�8.0 million) with Fashion Retail �1.7 million and Bedwear �
1.2 million. Exceptional items (�0.7 million) comprise small amounts of
goodwill arising during the period, mainly in connection with the acquisition
of minority interests, which have not been capitalised but have been treated as
impairments during the period. Operating Profit at �8.4 million compared to �
18.8 million in 2001.
Following the adoption of FRS 17 - Retirement Benefits in the accounts for the
2001 full year, the comparative figures for the 2001 first half have been
restated to incorporate that standard. The principal effect was to reduce 2001
reported operating profit by �9.8 million.
The principal average exchange rates used for sterling/dollar and sterling/Euro
translations were 1.44 (2001:1.44) and 1.61 (2001:1.60) respectively. In total,
Group operating profit was adversely impacted by �0.2 million on the
translation of the results of overseas units.
The principal non-operating exceptional items arising in the period were the
losses realised on the continuing withdrawal from the Indian Textiles business
amounting to �5.3 million less net gains of �0.7 million arising in respect of
prior year disposals. Property disposal gains amounted to �3.1 million (2001:�
3.4 million).
Net interest costs were �5.7 million (2001:�5.9 million). Other finance income,
being the notional interest income on surplus pension assets introduced under
FRS 17 was �3.2 million (2001:�4.9 million).
Reported profit before tax was �4.7 million compared to �5.0 million in 2001
which was heavily impacted by the effects of gains and losses on sale or
termination of operations. Pre-tax profit on the Institute of Investment
Management and Research (IIMR) basis fell from �19.7 million to �6.7 million.
Unrelieved pre-tax losses in the UK arising in Fashion Retail and Bedwear
result in a distortion of the overall tax charge which exceeds the pre-tax
profit. The tax charge of �6.2 million relates to the estimated taxation
attributable to first half year profits overseas, principally Europe and Asia,
based on the estimated effective tax rate for the full year. The underlying tax
rate on overseas profits is similar to last year.
FRS 19 - Deferred Tax becomes applicable this year and has been adopted in
these accounts. Comparative figures for the half year and full year 2001 have
been restated accordingly. Additional deferred tax provisions of �27.8 million
were required at 31 December 2001 but the effect on the tax charge for 2001 and
the 2002 half year has been insignificant.
There was a reported basic loss per share of 0.6p (2001:loss 0.3p) and a
headline loss (IIMR basis) per share of 0.6p (2001:earnings of 1.1p).
The interim dividend of 1.5p per share (2000:1.5p) will be paid as a
conventional dividend. Payment of the interim dividend will be made on 6th
January 2003 to shareholders on the register on 6th December 2002.
Net cash inflow from normal operating activities was �13.0 million compared
with an inflow of �44.1 million in 2001. This was principally the result of the
reduced operating profit before exceptional items (�19.1 million) and an
increase in working capital employed of �28.8 million compared with �21.4
million in 2001. Cash Flow was a positive � 27.0 million in Thread and �14
million negative in the Other Businesses.
Capital expenditure, including assets purchased under finance leases, was �16.3
million (2001:�21.1 million). Acquisitions during the period comprised certain
minority interests in Indonesia and Venezuela, giving rise to a cash outflow of
�2.0 million. Sale or termination of operations, mainly India Textiles, gave
rise to a further cash outflow of �3.3 million (2001:inflow �22.5 million).
Net debt at the end of the period was �164.4 million (2001:�176.5 million) and
net gearing was 30% (2001:29%).
Pension Surplus. An interim valuation of the assets of the UK defined benefit
pension scheme revealed a fall in value from �1,438.5 million at 31 December
2001 to �1,369.6 million at 30 June 2002. Liabilities as of 31 December 2001
were �1219.5 million. Management take the view that the surplus is still
comfortably in excess of the recoverable surplus of �34.9 million included in
the balance sheet pension asset of �49.8 million.
INTERIM RESULTS (UNAUDITED)
For the six months ended 30 June 2002
Financial Highlights
2002 2001
Half year Half year
Restated
�m �m %
_____________ ____________ _________
Turnover
Continuing operations 576.8 621.1 -7%
Total 576.8 645.1 -11%
============ =========== =========
Operating profit 8.4 18.8 -55%
_____________ ____________ _________
Pre-tax profit 4.7 5.0 -6%
_____________ ____________ _________
(Loss) per share (0.6)p (0.3)p
_____________ ____________ _________
Headline (loss) / earnings per (0.6)p 1.1p
share
_____________ ____________ _________
Interim dividend 1.50p 1.50p
_____________ ____________ _________
Net debt 164.4 176.5
_____________ ____________ _________
Net gearing 30% 29%
_____________ ____________ _________
Net cash inflow from operating 2.4 29.6
activities
_____________ ____________ _________
Note:
2001 comparatives have been restated following the adoption of FRS 17 -
Retirement benefits and FRS 19 - Deferred tax.
Consolidated Profit and Loss Account (unaudited)
2002 2001 2001
Half year Half year Full year
Restated Restated
For the six months ended 30 June �m �m �m
2002
_____________ ____________ _________
Turnover
continuing operations 576.8 621.1 1,212.6
discontinued operations - 24.0 34.4
_____________ ____________ _________
Total 576.8 645.1 1,247.0
_____________ ____________ _________
Operating profit
continuing operations 8.4 21.3 36.4
discontinued operations - (2.5) (0.5)
_____________ ____________ _________
Total 8.4 18.8 35.9
Share of operating profits of 0.3 0.3 0.6
associated companies
Profit on sale of fixed assets 1.8 2.0 9.2
of continuing operations
Profit on sale of fixed assets 1.3 1.4 4.4
of discontinued operations
(Losses) on sale or termination (5.3) (19.8) (24.1)
of continuing operations
Gains/(losses) on sale or 0.7 3.3 (2.7)
termination of discontinued
operations
_____________ ____________ _________
Profit on ordinary activities 7.2 6.0 23.3
before interest
Net interest payable (5.7) (5.9) (10.5)
Other finance income 3.2 4.9 10.2
_____________ ____________ _________
Profit on ordinary activities 4.7 5.0 23.0
before taxation
Tax on profit on ordinary (6.2) (6.5) (11.0)
activities
_____________ ____________ _________
(Loss)/profit on ordinary (1.5) (1.5) 12.0
activities after taxation
Equity minority interests (2.3) (0.2) (1.1)
_____________ ____________ _________
(Loss)/profit for the financial (3.8) (1.7) 10.9
period
Preference dividends on (0.4) (0.4) (0.7)
non-equity shares
_____________ ____________ _________
(Loss)/profit available for (4.2) (2.1) 10.2
ordinary shareholders
Ordinary dividends on equity (10.7) (10.6) (21.1)
shares
_____________ ____________ _________
Transferred (from) reserves (14.9) (12.7) (10.9)
============ =========== =========
Basic (loss)/earnings per (0.6)p (0.3)p 1.4p
ordinary share of 20p
Headline (loss)/earnings per (0.6)p 1.1p 2.8p
ordinary share of 20p
Dividends per ordinary share 1.50p 1.50p 3.00p
Principal exchange rates used - 1.44 1.44 1.44
US Dollar
- Euro 1.61 1.60 1.61
Interim results are neither audited nor reviewed, but the 2001 full year's
figures are extracted from audited accounts which have been filed with the
Registrar of Companies and contain an unqualified audit report.
Consolidated Balance Sheet (unaudited)
2002 2001 2001
30 June 30 June 31 Dec
Restated Restated
At 30 June 2002 �m �m �m
_____________ ____________ _________
Fixed assets
Tangible assets 383.0 419.3 402.5
Investments 6.3 4.1 6.3
Goodwill 45.6 53.4 47.1
_____________ ____________ _________
434.9 476.8 455.9
_____________ ____________ _________
Current assets
Stocks 286.1 320.2 291.9
Debtors 259.1 294.2 255.2
Investments 23.3 24.0 24.5
_____________ ____________ _________
568.5 638.4 571.6
Less: Creditors (218.8) (261.1) (250.9)
_____________ ____________ _________
Net current assets 349.7 377.3 320.7
_____________ ____________ _________
Total assets less current 784.6 854.1 776.6
liabilities
Provision for liabilities and (67.0) (78.2) (68.7)
charges
_____________ ____________ _________
717.6 775.9 707.9
Less: Net debt
Convertible debt (60.3) (60.1) (60.2)
Other (104.1) (116.4) (67.9)
_____________ ____________ _________
Total (164.4) (176.5) (128.1)
_____________ ____________ _________
Net assets excluding pension 553.2 599.4 579.8
assets and liabilities
Pension assets 49.8 54.3 50.7
Pension liabilities (49.8) (49.0) (49.8)
_____________ ____________ _________
Net assets including pensions 553.2 604.7 580.7
assets and liabilities
============ =========== =========
Shareholders' funds 493.9 524.4 515.4
Equity minority interests 59.3 80.3 65.3
============ =========== =========
Total capital employed 553.2 604.7 580.7
============ =========== =========
Net gearing 30% 29% 22%
Principal exchange rates used:
US Dollars 1.52 1.41 1.46
Euro 1.54 1.66 1.63
Cash Flow Statement (unaudited)
2002 2001 2001
Half Half Full year
year year
Six months ended 30 June 2002 �m �m �m
________ ________ _________
________ ________ _________
Net cash inflow from operating activities 2.4 29.6 86.9
________ ________ _________
Returns on investments and servicing of finance
Net interest paid (6.8) (8.9) (6.4)
Income from investments 0.1 0.2 -
Preference dividends paid (0.4) (0.4) (0.7)
Dividends paid to minority shareholders (2.7) (1.9) (3.7)
________ ________ _________
Net cash outflow for returns on investment and (9.8) (11.0) (10.8)
servicing of finance
________ ________ _________
Taxation paid (6.6) (1.3) (11.1)
________ ________ _________
Capital expenditure and financial investment
Purchase of tangible fixed assets (16.3) (21.1) (54.7)
Sale of tangible fixed assets 4.8 5.4 24.0
Sale of fixed asset investments - 1.7 1.7
Purchase of fixed asset investments - - (0.5)
________ ________ _________
Net cash outflow for capital expenditure and (11.5) (14.0) (29.5)
financial investment
________ ________ _________
Acquisitions and disposals
Purchase of subsidiary undertakings (2.0) (13.5) (18.9)
Sale or termination of subsidiary undertakings (3.3) 22.5 33.1
________ ________ _________
Net cash (outflow)/inflow for acquisitions and (5.3) 9.0 14.2
disposals
________ ________ _________
Equity dividends paid (10.5) (10.5) (21.1)
________ ________ _________
Management of liquid resources
Decrease in short-term deposits 4.3 5.0 1.8
Purchase of current asset investments - (0.7) (1.7)
Sale of current asset investments 0.9 - -
________ ________ _________
Net cash inflow from management of liquid 5.2 4.3 0.1
resources
________ ________ _________
Financing
Issue of ordinary share capital 0.9 0.1 0.6
Net funds from minorities 0.2 0.1 0.1
Increase/(decrease) in borrowings 11.6 0.7 (35.2)
________ ________ _________
Net cash inflow/(outflow) from financing 12.7 0.9 (34.5)
________ ________ _________
(Decrease)/increase in cash (23.4) 7.0 (5.8)
======= ======= =========
Reconciliation of net cash flow to movement in
net debt
(Decrease)/increase in cash (23.4) 7.0 (5.8)
Cash (inflow)/outflow from change in debt and (11.6) (0.7) 35.2
lease financing
Cash (inflow) from change in short-term deposits (4.3) (5.0) (1.8)
________ ________ _________
Change in net debt resulting from cash flows (39.3) 1.3 27.6
New finance leases - - (0.3)
Loans and finance leases acquired with - (0.4) (0.4)
subsidiaries
Loan notes issued in respect of acquisitions - (2.5) (2.5)
Other (0.1) (0.1) (0.1)
Exchange 3.1 (26.6) (4.2)
________ ________ _________
(Increase)/decrease in net debt (36.3) (28.3) 20.1
Net debt at 1 January (128.1) (148.2) (148.2)
Net debt at 30 June (164.4) (176.5) (128.1)
________ ________ _________
Statement of Total Recognised Gains and Losses (unaudited)
2002 2001 2001
Half year Half year Full year
Restated Restated
For the six months ended 30 June 2002 �m �m �m
________ ________ _________
(Loss)/profit for the financial period (3.8) (1.7) 10.9
Currency translation differences on foreign currency (7.5) (4.9) (12.2)
net investments
Actuarial (losses) - - (4.4)
________ ________ _________
Total recognised gains and losses relating to the (11.3) (6.6) (5.7)
period
Prior period adjustments (27.3) (80.0) (80.0)
______________________________________________________________________________________
Total gains and losses recognised since the last (38.6) (86.6) (85.7)
Annual Report
======= ======= =========
Reconciliation of Movements in Shareholders' Funds (unaudited)
2002 2001 2001
Half Half Full year
year year
Half Restated Restated
year
For the six months ended 30 June 2002 �m �m �m
________ ________ _________
(Loss)/profit for the financial period (3.8) (1.7) 10.9
Dividends (11.1) (11.0) (21.8)
________ ________ _________
(14.9) (12.7) (10.9)
Other recognised gains and losses relating to the (7.5) (4.9) (16.6)
period
New share capital subscribed 0.9 0.1 0.6
Goodwill attributable to businesses sold or - 12.1 12.5
terminated
________ ________ _________
Net (reduction of) shareholders' funds (21.5) (5.4) (14.4)
Opening shareholders' funds as restated (see 515.4 529.8 529.8
below)
________ ________ _________
Closing shareholders' funds 493.9 524.4 515.4
======= ======= ========
Equity shareholders' funds 479.3 509.8 500.8
Non-equity shareholders' funds 14.6 14.6 14.6
________ ________ _________
493.9 524.4 515.4
======= ======= ========
Opening shareholders' funds as reported 542.7 633.6 633.6
Prior period adjustments - FRS 17 Retirement - (76.7) (76.7)
Benefits
- FRS 19 Deferred Tax (27.3) (27.1) (27.1)
________ ________ _________
Opening shareholders' funds as restated 515.4 529.8 529.8
======= ======= ========
Segmental Information
Turnover Operating profit/(loss)
2002 2001 2001 2002 2001 2001
Half year Half Full Half Half Full
year year year year year
Restated Restated
Six months ended 30 June �m �m �m �m �m �m
2002
_________ ________ ________ ________ ________ ______
Product category:
Thread
UK and Europe 160.1 171.8 325.9 7.6 13.0 18.1
North America 148.4 159.2 304.5 3.8 8.9 11.7
South America 47.5 54.2 103.7 4.7 6.9 12.6
Asia 107.2 102.7 203.8 15.1 15.2 29.5
Central costs - - - (2.4) (2.5) 0.8
_________ ________ ________ ________ ________ ______
Total Thread 463.2 487.9 937.9 28.8 41.5 72.7
India Textiles 12.2 17.3 32.4 (0.8) (1.2) (2.3)
Fashion Retail 63.2 74.1 155.7 (8.3) - (2.3)
Bedwear 38.2 41.8 86.6 (1.1) (0.2) 0.7
_________ ________ ________ ________ ________ ______
Continuing operations 576.8 621.1 1,212.6 18.6 40.1 68.8
Discontinued operations - 24.0 34.4 - (2.4) (0.4)
_________ ________ ________ ________ ________ ______
576.8 645.1 1,247.0 18.6 37.7 68.4
________ ________ ________
Reorganisation costs and (10.9) (18.9) (31.5)
impairment of fixed
assets
Exceptional items 0.7 - (1.0)
_________ ________ ________ ________ ________ ______
Operating profit 8.4 18.8 35.9
Associated companies 0.3 0.3 0.6
FRS 3 exceptional items (1.5) (13.1) (13.2)
_________ ________ ________ ________ ________ ______
Profit before interest 7.2 6.0 23.3
======== ======= ======= ======= ======= ======
Geographical analysis by location:
United Kingdom 119.2 134.4 277.2 (12.9) (1.6) (4.9)
Rest of Europe 128.7 136.7 260.1 9.2 11.5 20.2
North America 154.6 166.9 319.1 2.6 8.6 10.2
South America 47.5 54.2 103.7 4.7 6.9 12.6
Africa, Asia, Australasia 126.8 128.9 252.5 15.0 14.7 30.7
_________ ________ ________ ________ ________ ______
Continuing operations 576.8 621.1 1,212.6 18.6 40.1 68.8
Discontinued operations - 24.0 34.4 - (2.4) (0.4)
_________ ________ ________ ________ ________ ______
576.8 645.1 1,247.0 18.6 37.7 68.4
_________ ________ ________
Reorganisation costs and (10.9) (18.9) (31.5)
impairment of fixed
assets
Exceptional items 0.7 - (1.0)
_________ ________ ________ ________ ________ ______
Operating profit 8.4 18.8 35.9
Associated companies 0.3 0.3 0.6
FRS 3 exceptional items (1.5) (13.1) (13.2)
_________ ________ ________ ________ ________ ______
Profit before interest 7.2 6.0 23.3
======== ======= ======= ======= ======= ======
Following the incorporation of all central administrative functions within the
Thread head office, the Corporate segment was reallocated into Thread central
costs along with existing Thread costs in the accounts for the year ended 31
December 2001. The analysis of Thread operations was also changed to align more
closely with the way in which they are managed and controlled. The segmental
analysis for the six months to 30 June 2001 has accordingly been restated onto
the basis adopted in the 2001 full year accounts.
Notes to the Interim Accounts
For the six months ended 30 June 2002
1. Reorganisation costs and impairment of fixed assets
2002 2001 2001
Half year Half year Full
year
�m �m �m
Thread
UK and Europe 4.9 9.2 11.1
North America 1.7 2.3 10.5
South America 0.5 0.6 1.8
Asia 0.9 0.6 1.7
Central costs - 0.5 0.6
______________ _________ ________
Total Thread 8.0 13.2 25.7
Fashion Retail 1.7 3.7 4.1
Bedwear 1.2 1.9 1.6
______________ _________ ________
Continuing operations 10.9 18.8 31.4
Discontinued operations - 0.1 0.1
______________ _________ ________
Total 10.9 18.9 31.5
============= ======== =======
2. (Loss)/earnings per share
2002 2001 2001 2002 2001 2001
Half Half Full year Half Half Full
year year year year year
Restated Restated Restated Restated
________ ________ _________ ________ ________ _______
�m �m �m
(Loss)/earnings per share (4.2) (2.1) 10.2
are based on (loss)/profit
available for ordinary
shareholders of:
and an average number of 705.5m 702.6m 703.6m
shares of:
resulting in (loss)/ (0.6)p (0.3)p 1.4p
earnings per share of:
Less:
amortisation of goodwill 0.2p 0.2p 0.1p 1.2 1.6 0.7
Impairment of goodwill (0.1)p - 0.2p (0.7) - 1.1
(profit) on sale of fixed (0.4)p (0.5)p (1.9)p (3.1) (3.4) (13.6)
assets
losses on sale or 0.6p 2.4p 3.8p 4.6 16.5 26.8
termination of operations
taxation relating to these - - (0.1)p - (0.2) (0.4)
items
minority interests (0.3)p (0.7)p (0.7)p (1.9) (4.7) (5.1)
relating to these items
________ ________ _________ ________ ________ _______
Headline (loss)/earnings (0.6)p 1.1p 2.8p (4.1) 7.7 19.7
per share
======= ======== ======== ======= ======= =======
Headline (loss)/earnings per share has been calculated in accordance with
Statement of Investment Practice Number 1 issued by The Institute of Investment
Management and Research and is provided in order to assist users of accounts to
identify earnings derived from trading activities.
Exercise of outstanding share options and conversion of all the �60.460m 6.25%
Senior Convertible Bonds of Coats plc would not result in any dilution of
earnings per share.
3. Taxation
The taxation charge for the six months ended 30 June 2002 is based on the
estimated effective tax rate for the full year, including the effect of prior
period tax adjustments.
4. Dividend
The interim dividend of 1.50p net per share (2001 - 1.50p net per share) will
be paid on 6 January 2003 to shareholders on the register on 6 December 2002.
5. Net debt
2002 2001 2001
Half year Half year Full year
Restated
�m �m �m
_________ __________ _________
Net cash (13.9) (29.4) (38.1)
Short-term deposits (21.5) (22.8) (25.9)
Debentures, loans and finance 139.5 168.6 131.9
leases
Convertible debt 60.3 60.1 60.2
_________ __________ _________
Net debt 164.4 176.5 128.1
======== ========== =========
Currency analysis of net debt:
Sterling (37.3) (350.8) (56.7)
US Dollars 219.3 488.0 210.3
Other (17.6) 39.3 (25.5)
_________ __________ _________
164.4 176.5 128.1
======== ========== =========
Analysis of changes in net cash:
Balance at 1 January 38.1 47.6 47.6
(Decrease)/increase in cash (23.4) 7.0 (5.8)
Exchange (0.8) (25.2) (3.7)
_________ __________ _________
Balance at end of period 13.9 29.4 38.1
======== ========= =========
6. Reconciliation of operating profit to net cash inflow from operating
activities
2002 2001 2001
Half Half Full
year year year
Restated
�m �m �m
________ _______ ________
Operating profit 8.4 18.8 35.9
Dividends from associated companies - - 0.1
Depreciation 22.6 23.2 45.5
Amortisation of goodwill 1.2 1.6 0.7
Reorganisation costs and impairment of 10.9 18.9 31.5
fixed assets
Exceptional items (0.7) - 1.0
Decrease/(increase) in stocks 2.4 (19.0) (7.4)
(Increase)/decrease in debtors (14.5) 22.3 30.4
(Decrease) in creditors (16.7) (24.7) (33.1)
Other non-cash movements (0.6) 3.0 9.8
________ _______ ________
Net cash inflow from normal operating 13.0 44.1 114.4
activities
Net cash outflow in respect of (10.6) (14.5) (27.5)
reorganisation costs
________ _______ ________
Net cash inflow from operating 2.4 29.6 86.9
activities
======== ======= ========
7. Change of accounting policy
The interim accounts have been prepared in accordance with the accounting
policies set out in the Annual Report and Accounts for the year ended 31
December 2001, as amended by the adoption of FRS 19 - Deferred Tax.
The effect of the adoption of FRS 19, which requires a full provision for
deferred taxation in respect of almost all timing differences, has been to
reduce shareholders' funds at 31 December 2000 by �27.1m and at 31 December
2001 by �27.3m.
The tax charge for the year ended 31 December 2001 was reduced by �0.1m.
Shareholders' funds at 30 June 2001 were reduced by �27.1m and the tax charge
for the six months to 30 June 2001 was unchanged.
Prior year comparative figures have been restated accordingly. The effect of
FRS 19 on the tax charge for the six months to 30 June 2002 is insignificant.
In the full year accounts for the year ended 31 December 2001, the Group
adopted FRS 17 - Retirement Benefits and the effects of that standard were
explained in detail in note 29 to those accounts. The comparative figures for
the six months to 30 June 2001 above have been restated to incorporate FRS 17
which reduced operating profit for the period by �9.8m, increased other finance
income by �4.9m and reduced the taxation charge by �1.9m. Shareholders' funds
were reduced by �79.3m.
END
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