ESR Ensor Hldgs

 
TIDMESR 
 
ENSOR HOLDINGS PLC 
 
CHAIRMAN'S STATEMENT 
 
  * Dividend up 25% 
 
  * Group gearing reduced to 2% 
 
  * Confident start to current year 
 
I am pleased with our full year results, which are as expected at the half 
year. 
 
I reported at the half year that our results had been influenced by a slow 
start to capital expenditure by the UK Water Utilities. This is a significant 
market for one of our subsidiaries, Technocover. I anticipated that the 
benefits of a strong order book at Technocover would come through progressively 
in the second half, but principally in the results for next year. This has been 
the case and a confident start to the new financial year is beginning to bear 
this out. 
 
Our other subsidiaries have made satisfactory progress during the year, 
increasing sales and profitability across the group. We are cautiously 
predicting a more active market this year and feel well placed to take 
advantage of the additional opportunities this will bring. The construction 
industry, in which our subsidiaries Ellard, Ensor Building Products, OSA and 
Technocover operate, is showing encouraging signs of growth. The retail sector, 
supplied by Woods Packaging, is also buoyant and we are encouraged by our 
forecasts. 
 
Our China office continues to support all our UK companies, facilitating access 
to supplies and development of new products. 
 
Our results demonstrate an improved second half which produced an operating 
profit of GBP1.1 million (2013: GBP1.1 million) compared with our first half result 
of GBP0.7million (2013: GBP1.2 million) . 
 
During the year we disposed of two of our businesses, CMS Tools and SRC. 
 
We reported eighteen months ago that the management team at CMS had proposed an 
MBO for the company, however at the time, this could not be finalised. A 
revised offer from the management team has now been accepted including a write 
off of goodwill which is reflected in these results. We are happy with this 
disposal, which fits in with our view of the future shape of the group. 
 
Our disposal of SRC has allowed us to release the land that the business 
occupied. As previously reported, we have exchanged contracts for the sale of 
this site which is on track to complete within the next twelve months. 
 
Around the group we have continued to work hard to control our working capital. 
After having met all of our capital expenditure commitments, cash surpluses 
have been generated throughout the group which have all but eliminated our 
borrowings (2013: gearing 23%). 
 
We are proposing to pay a net final dividend of 1.0p (2013: 0.8p) per share. 
This is an increase of 25% on last year's final dividend. The dividend will be 
paid in cash only, on 8 August 2014, to shareholders registered on 27 June 
2014. The ex-dividend date will be 25 June 2014. 
 
Once again I would like to thank all the men and women who work around the 
group for their continued hard work and contribution which are appreciated. 
 
K A Harrison TD 
 
Chairman 
 
12 June 2014 
 
STRATEGIC REPORT EXTRACTS 
 
______________________________________________________________________________________ 
 
Operating results and future developments 
 
Strong performances around the group were tempered by a slow pick-up in orders 
at Technocover, this year, which resulted in a small reduction in sales revenue 
of 1.4%, to GBP30.6m, and a reduction in operating profit to GBP1.8m. 
 
Technocover's results last year, whilst hampered by the need for changes which 
were then implemented, were strengthened by a pre-acquisition order bank. 
During the current financial year, our expectation was for a more consistent 
run through the two years to the end of Ofwat's AMP5, asset management 
programme, in March 2015. However, our customers have tended to focus on 
fulfilling their capital spends by the end of next year, the final year of the 
AMP. As a result, invoiced sales reduced by around GBP2m, however, margins were 
improved by the process developments made since acquisition and overheads were 
further reduced by re-organisation during the current year. 
 
There is good visibility of orders for the coming year, which will be bolstered 
by the delays experienced throughout the current year, but their timing will 
remain critical to enable their fulfilment. 
 
Elsewhere in Building & Security Products, Ellard, OSA Door Parts and Ensor 
Building Products each performed well, with combined sales advancing by 10% and 
operating profits increased by GBP180,000. Each of these businesses produced 
year-on-year growth in every quarter, particularly in the second half of the 
year. 
 
Our Packaging business, Wood's Packaging, had an excellent year, with sales 
growth of 24% enhancing operating profit by GBP159,000. 
 
Growth has been achieved at the expense of some margin, principally due to 
product mix, with the result that overall group gross margin has moderated from 
25.5% to 24.5%. 
 
We ceased our rubber crumb manufacturing activity during the period, with the 
sale of the business and assets of SRC, in January 2014, clearing the way for 
the completion of the sale of the Stockport site in the first half of 2015. 
 
Finance costs 
 
Finance costs comprise borrowing costs and an actuarial calculation reflecting 
the net cost of financing the deficit in the group's defined-benefit pension 
scheme. 
 
The reduction in the bank interest cost, from GBP192,000 to GBP157,000, is 
principally the result of cash generation. The element of that cost which 
relates to Technocover's legacy enhanced collar arrangement persisted as our 
claim for mis-selling remains unresolved. 
 
The revised accounting standard for Employee Benefits, IAS19, increased the 
pension deficit funding cost by GBP48,000 from that which it would otherwise have 
been. The prior year charge has been re-presented for consistency. 
 
Income tax 
 
The income tax charge has reduced to effective tax rate of 15.9%, from last 
year's 24.2%, as a result of the utilisation of prior year losses and 
overprovisions, as well as a reduction in the headline rate of corporation tax 
to 23%. 
 
Discontinued activity 
 
Following the aborted sale of our subsidiary company, CMS Tools Limited, in 
2012, agreement was again reached for the sale of the company to its 
management. The sale was completed on 14 February 2014. The company's results 
for the period, together with the loss on disposal, are shown on the Income 
Statement as a discontinued operation. Further details of the transaction are 
shown in note 2. 
 
Cash flow and financial position 
 
A net increase in cash and cash equivalents of GBP1,536,000 left the group in a 
positive cash position at the year end, with net borrowings reduced by GBP 
1,803,000. The resultant net borrowings of GBP223,000 equate to gearing of just 
2% (2013: 23%). 
 
Operating activities generated cash of GBP2,784,000, supported by a reduction in 
working capital. 
 
The disposal of CMS Tools contributed GBP613,000 to the overall cash flow and, 
over the course of the year, Technocover returned GBP1.1m of the group's initial 
investment of GBP1.5m. 
 
A significant investment of GBP721,000 was made in tangible fixed assets, 
predominantly in relation to the development of production capability and IT 
systems. 
 
GBP295,000 was expended on the purchase of treasury shares at prices of between 
47p and 51p per share. 
 
The Stockport property, formerly occupied by SRC, has been re-classified as an 
asset held for sale at a carrying value of GBP496,000. 
 
The group's net assets have increased to GBP9.6m (2013: GBP8.9m). 
 
Dividend 
 
The directors propose to pay a final dividend of 1.0p per share in respect of 
the financial year ended 31 March 2014 (2013: 0.8p). Dividends of GBP389,000 were 
paid on ordinary shares during the year ended 31 March 2014 (2013: GBP280,000). 
 
Dividends paid and proposed (note 9) 
 
In respect of the year ended 31 March:                      2014       2013 
 
Interim dividend paid                                      0.50p      0.40p 
 
Final dividend proposed                                    1.00p      0.80p 
 
                                                          ______     ______ 
 
                                                           1.50p      1.20p 
 
                                                          ______     ______ 
 
Consolidated Income Statement 
 
for the year ended 31 March 2014 
 
_____________________________________________________________________________ 
 
                                                          2014     Re-presented 
 
                                                                           2013 
 
                                                         GBP'000            GBP'000 
 
Continuing operations 
 
Revenue                                                 30,558           31,001 
 
Cost of sales                                         (23,081)         (23,090) 
 
                                                        ______           ______ 
 
Gross profit                                             7,477            7,911 
 
Administrative expenses                                (5,650)          (5,634) 
 
                                                        ______           ______ 
 
Operating profit                                         1,827            2,277 
 
Finance costs                                            (301)            (373) 
 
                                                        ______           ______ 
 
Profit before tax                                        1,526            1,904 
 
Income tax expense                                       (242)            (440) 
 
                                                        ______           ______ 
 
Profit for the year on continuing operations             1,284            1,464 
 
Discontinued operation                                   (182)              134 
 
                                                        ______           ______ 
 
Profit for the year attributable to equity               1,102            1,598 
shareholders of the parent company 

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