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 £1.1 million (2013: £1.1 million) compared with our first half result
of £0.7million (2013: £1.2 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 £30.6m, and a reduction in operating profit to £1.8m.
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 £2m, 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 £180,000. 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 £159,000.
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 £192,000 to £157,000, 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 £48,000 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 £1,536,000 left the group in a
positive cash position at the year end, with net borrowings reduced by £
1,803,000. The resultant net borrowings of £223,000 equate to gearing of just
2% (2013: 23%).
Operating activities generated cash of £2,784,000, supported by a reduction in
working capital.
The disposal of CMS Tools contributed £613,000 to the overall cash flow and,
over the course of the year, Technocover returned £1.1m of the group's initial
investment of £1.5m.
A significant investment of £721,000 was made in tangible fixed assets,
predominantly in relation to the development of production capability and IT
systems.
£295,000 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 £496,000.
The group's net assets have increased to £9.6m (2013: £8.9m).
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 £389,000 were
paid on ordinary shares during the year ended 31 March 2014 (2013: £280,000).
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
£'000 £'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
______ ______
Earnings per share - basic and diluted
Continuing operations 4.3p 4.8p
Discontinued operation (0.6p) 0.4p
______ ______
3.7p 5.2p
______ ______
Consolidated Statement of Comprehensive Income
2014 Re-presented
2013
£'000 £'000
Profit for the year 1,102 1,598
______ ______
Actuarial gain/(loss) 305 (358)
Income tax relating to components of other (115) 20
comprehensive income
______ ______
Total of other comprehensive income for the 190 (338)
year
______ ______
______ ______
Total comprehensive income attributable to 1,292 1,260
equity shareholders of the parent company
______ ______
Consolidated Statement of Financial Position
at 31 March 2014
______________________________________________________________________________________
2014 2013
£'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 6,413 6,901
Intangible assets 2,704 3,087
Deferred tax asset 475 632
______ ______
Total non-current assets 9,592 10,620
______ ______
Current assets
Assets held for sale 496 -
Inventories 2,646 3,109
Trade and other receivables 6,515 8,001
Cash and cash equivalents 585 298
______ ______
Total current assets 10,242 11,408
______ ______
Total assets 19,834 22,028
______ ______
LIABILITIES
Non-current liabilities
Retirement benefit obligations (2,264) (2,749)
Borrowings (533) (810)
Other creditors (986) (974)
Deferred tax (73) (100)
______ ______
Total non-current liabilities (3,856) (4,633)
______ ______
Current liabilities
Borrowings (275) (1,514)
Current income tax liabilities (378) (312)
Trade and other payables (5,729) (6,631)
______ ______
Total current liabilities (6,382) (8,457)
______ ______
Total liabilities (10,238) (13,090)
______ ______
NET ASSETS 9,596 8,938
______ ______
EQUITY
Share capital 3,082 3,062
Share premium 552 522
Revaluation reserve 140 140
Retained earnings 5,822 5,214
______ ______
Total equity attributable to equity 9,596 8,938
shareholders of the parent company
______ ______
The financial statements were approved by the board and were authorised for
issue on 12 June 2014. They were signed on its behalf by:
A R Harrison )
M A Chadwick )
Consolidated Statement of Changes in Equity
for the year ended 31 March 2014
____________________________________________________________________________
Attributable to equity shareholders of the parent company
Issued Share Treasury Revaluation Retained Total
Capital Premium Shares Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 3,062 557 (79) 140 4,278 7,958
April 2012
_____ _____ _____ _____ _____ _____
Profit for the year - - - - 1,598 1,598
Other comprehensive
income:
Actuarial loss - - - - (358) (358)
Related deferred - - - - 20 20
tax
_____ _____ _____ _____ _____ _____
Total comprehensive - - - - 1,260 1,260
income for the year
_____ _____ _____ _____ _____ _____
Reclassification - (35) 79 - (44) -
Dividends paid - - - - (280) (280)
_____ _____ _____ _____ _____ _____
Total transactions - (35) 79 - (324) (280)
recognised directly
in equity
_____ _____ _____ _____ _____ _____
Balance as at 31 3,062 522 - 140 5,214 8,938
March 2013
_____ _____ _____ _____ _____ _____
Balance as at 1 3,062 522 - 140 5,214 8,938
April 2013
_____ _____ _____ _____ _____ _____
Profit for the year - - - - 1,102 1,102
Other comprehensive
income:
Actuarial gain - - - - 305 305
Related deferred - - - - (115) (115)
tax
_____ _____ _____ _____ _____ _____
Total comprehensive - - - - 1,292 1,292
income for the year
_____ _____ _____ _____ _____ _____
Issue of shares 20 30 - - - 50
Purchase of - - - - (295) (295)
treasury shares
Dividends paid - - - - (389) (389)
_____ _____ _____ _____ _____ _____
Total transactions 20 30 - - (684) (634)
recognised directly
in equity
_____ _____ _____ _____ _____ _____
Balance at 31 March 3,082 552 - 140 5,822 9,596
2014
_____ _____ _____ _____ _____ _____
Share premium
The share premium account represents the consideration that has been received
in excess of the nominal value of shares on issue of new ordinary share
capital, less permitted expenses.
Treasury shares
The deduction from retained earnings in respect of treasury shares resulted
from the company's acquisition of its own shares, at cost.
Revaluation reserve
The revaluation reserve represents the unrealised surplus arising on the
revaluation of certain of the group's freehold properties.
Retained earnings
The retained earnings reserve represents profits and losses retained in the
current and previous periods.
Consolidated Cash Flow Statement
for the year ended 31 March 2014
______________________________________________________________________________________
2014 2013
£'000 £'000
Net cash generated from operations before 2,468 2,133
pension exercise
Pension fund enhanced transfer value exercise - (778)
_______ _______
Net cash generated from operations 2,468 1,355
_______ _______
Cash flows from investing activities
Proceeds from sale of property, plant and 97 53
equipment
Proceeds from sale of subsidiary 613 -
Proceeds from disposal of assets held for - 150
sale
Acquisition of property, plant and equipment (721) (569)
_______ _______
Net cash used in investing activities (11) (366)
_______ _______
Cash flows from financing activities
Equity dividends paid (389) (280)
Issue of shares 50 -
Purchase of treasury shares (295) -
Amounts repaid in respect of finance leases (20) (22)
Loan repayments (267) (583)
_______ _______
Net cash used in financing activities (921) (885)
_______ _______
Net increase in cash and cash equivalents 1,536 104
Opening cash and cash equivalents (951) (1,055)
_______ _______
Closing cash and cash equivalents 585 (951)
_______ _______
.
Accounting Policies and Notes to the Final Results
for the year ended 31 March 2014
______________________________________________________________________________________
1. Basis of preparation
The consolidated financial statements of Ensor Holdings PLC have been prepared
in accordance with the Companies Act 2006 and International Financial Reporting
Standards (IFRS) as adopted by the European Union in accordance with the rules
of the London Stock Exchange for companies trading securities on the
Alternative Investment Market. The group financial statements have been
prepared under the historical cost convention, as modified by the revaluation
of land and buildings, and derivative financial instruments at fair value
through profit or loss. The principal accounting policies adopted by the group
are set out below.
2. Prior period adjustment and representation of the financial statements
The group has adopted IAS 19 - Employee Benefits (Revised 2011) in the year,
the impact of which has been to increase the finance costs in the income
statement by £48,000, from £64,000 to £112,000, with a corresponding increase
in the gain recognised in other comprehensive income (2013: £72,000). The new
accounting policy has been adopted retrospectively and the comparative amounts
have been re-presented.
The prior year income statement has also been re-presented to reflect the
discontinued operation in the current year.
3. Basis of consolidation
Where the company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity so as to obtain benefits
from its activities, the entity is classified as a subsidiary. The consolidated
financial statements present the results of the company and its subsidiaries as
if they formed one single entity. Intercompany transactions and balances
between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the consolidated balance sheet,
the subsidiary's identifiable assets, liabilities and contingent liabilities
are initially recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated income
statement from the date on which control is obtained.
3. Segmental analysis
For management purposes, the group's business activities are organised into
business units based on their products and services and have three primary
operating segments as follows:
* Building and Security Products - manufacture, marketing, supply and
distribution of building materials, security access products and access
control equipment;
* Packaging - marketing and distribution of packaging materials;
* Other - manufacture of rubber crumb and waste recycling.
These segments are the basis on which information is reported to the group
board. The segment result is the measure used for the purposes of resource
allocation and assessment and represents the operating profit of each segment
before exceptional operating costs, amortisation and impairment charges, other
gains and losses, net finance costs and taxation.
Details of the types of products and services from which each segment derives
its revenues are given above.
The accounting policies applied in preparing the management information for
each of the reportable segments are the same as the group's accounting
policies.
The group's revenues and results by reportable segment for the year ended 31
March 2014 are shown in the following table.
Building Packaging Other Total Discont-inued Unalloca-ted Total
& continuing
Security
Products
£'000 £'000 £'000 £'000 £'000 £'000 £'000
External 27,215 2,758 585 30,558 1,431 - 31,989
revenue
____ ____ ___ _____ _____ ____ ____
Depreciation 490 23 28 541 26 - 567
____ ____ ___ _____ _____ ____ ____
Operating 1,385 437 5 1,827 106 - 1,933
profit
____ ____ ___
Finance costs - - (301) (301)
Income tax - (25) (242) (267)
expense
Loss on - (263) - (263)
disposal
_____ _____ ____ ____
Profit for the 1,827 (182) (543) 1,102
year
_____ _____ ____ ____
Total assets 13,764 1,394 301 15,459 - 4,375 19,834
____ ____ ___ _____ _____ ____ ____
Total (5,952) (728) (15) (6,695) - (3,543) (10,238)
liabilities
____ ____ ___ _____ _____ ____ ____
Capital 592 33 66 691 30 - 721
expenditure
____ ____ ___ _____ _____ ____ ____
The group's revenues and results by reportable segment for the year ended 31
March 2013 are shown in the following table.
Building Packaging Other Total Discont-inued Unalloca-ted Total
& continuing
Security
Products
£'000 £'000 £'000 £'000 £'000 £'000 £'000
External 28,066 2,216 719 31,001 1,769 - 32,770
revenue
____ ____ ___ _____ _____ ____ ____
Depreciation 454 23 32 509 26 - 535
____ ____ ___ _____ _____ ____ ____
Operating 1,964 278 35 2,277 150 - 2,427
profit
____ ____ ___
Finance costs (373) - - (373)
Income tax (440) (16) - (456)
expense
_____ _____ ____ ____
Profit for the 1,464 134 - 1,598
year
_____ _____ ____ ____
Total assets 15,853 950 742 17,545 1,404 3,079 22,028
____ ____ ___ _____ _____ ____ ____
Total (6,481) (178) (56) (6,715) (200) (6,175) (13,090)
liabilities
____ ____ ___ _____ _____ ____ ____
Capital 582 16 - 598 23 18 639
expenditure
____ ____ ___ _____ _____ ____ ____
Head office costs are apportioned to the segments on the basis of earnings.
The group operates almost exclusively in one geographical segment, being the
United Kingdom. Turnover to customers located outside the United Kingdom
accounted for less than 10% of total group turnover and has therefore not been
separately disclosed.
Revenue from a single customer did not exceed more than 10% of turnover during
the current or prior reporting periods.
4. Discontinued operation
CMS Tools Limited was sold on 14 February 2014 and the operation has been
classified as discontinued. The prior year income statement has been
re-presented to reflect the discontinued operation.
The results of the discontinued operation were as follows:
2014 2013
£'000 £'000
Revenue 1,431 1,769
Expenses (1,325) (1,619)
______ ______
Operating profit 106 150
Income tax expense (25) (16)
______ ______
Profit after tax 81 134
Loss on disposal (263) -
______ ______
(Loss)/profit after tax for the (182) 134
year
______ ______
Cash flows from discontinued operations
Operating 25 268
Investing (18) (4)
Proceeds of disposal 613 -
______ ______
Total cashflow 620 264
______ ______
The net assets of the subsidiary at the date of disposal and at 31 March 2013
were as follows:
14 February 31 March
2014 2013
£'000 £'000
Property, plant and equipment 47 52
Inventories 222 223
Trade and other receivables 323 429
Cash at bank 142 124
Trade and other payables (208) (325)
Attributable goodwill 350 350
______ ______
876 853
______
Loss on disposal (263)
______
Total consideration, satisfied in cash 613
______
On 2 January 2014, the business and assets of SRC Limited were sold as a going
concern. The business has not been classified as a discontinued operation
because it is not considered to have been a separate major line of business.
5. Earnings per share
The calculation of earnings per share for the period is based on the profit for
the period divided by the weighted average number of ordinary shares in issue,
being 29,963,373 (2013: 30,295,976). The diluted earnings per share is based
upon the weighted average of 29,963,373 shares (2013: 30,378,246). The dilution
in the prior period was due to subsisting share options and had no impact on
the amounts disclosed.
The weighted average number of shares for the basic and diluted earnings per
share calculation can be reconciled as follows:
2014 2013
No. No.
Weighted average number of shares in issue 29,963,373 30,295,976
Weighted average number of dilutive shares arising - 82,270
from subsisting share options
__________ __________
Weighted average number of shares for diluted 29,963,373 30,378,246
calculation
_ _____ _ _____
6. Cash flow generated from operations
2014 2013
£'000 £'000
Cash flows from operating
activities
Profit for the year 1,102 1,580
attributable to equity
shareholders
Depreciation charge 567 535
Finance costs 301 373
Income tax expense 242 474
Profit on disposal of (3) (14)
property, plant &
equipment
Profit on disposal of - (12)
asset held for sale
Amortisation of intangible 33 34
asset
Charge in respect of - 81
enhanced transfer exercise
Loss on disposal of 263 -
subsidiary
_______ _______
Operating cash flow before 2,505 3,051
changes in working capital
(Increase(/decrease in 241 112
inventories
(Increase)/decrease in 1,163 (1,112)
receivables
Increase/(decrease) in (1,125) 443
payables
_______ _______
Cash generated from/(used 2,784 2,494
in) operations
Interest paid (158) (191)
Income taxes paid (158) (170)
_______ _______
Net cash generated from/ 2,468 2,133
(used in) operations
_______ _______
7. Other information
The financial information set out in this preliminary announcement of results
does not constitute the Company's statutory accounts for the years ended 31
March 2014 or 31 March 2013 but is derived from those accounts. Statutory
accounts for 2013 have been delivered to the Registrar and those for 2014 will
be delivered following the Company's Annual General Meeting. The Independent
Auditors have reported on these accounts. Their reports were unqualified and
did not contain a statement under section 498 of the Companies Act 2006.
The Annual General Meeting of the Company will be held at the Company's
registered office, Ellard House, Floats Road, Manchester M23 9WB at 10.00 a.m.
on Monday 21 July 2014.
The Report and Accounts will be sent to shareholders and be available from the
Company's website at www.ensor.co.uk shortly. Additional copies of the Annual
Report and of this statement will be available at the Company's registered
office.
Enquiries:
Ensor Holdings PLC
Roger Harrison/Marcus Chadwick
0161 945 5953
Westhouse Securities Limited
Richard Baty/Hugo Rubenstein
020 7601 6100
Directors