RNS Number:3099E
Norman Hay PLC
24 September 2007
NORMAN HAY PLC ("the Group")
Interim Results for the six months to 30 June 2007
Chairman's Statement
I am particularly pleased to report that the results for the half-year to 30
June 2007 were very encouraging and demonstrated a substantial and continuing
improvement in the Group's overall performance.
Profit before tax increased by 38% to #1,279,000 (2006: #924,000) with basic
earnings per share increasing by 30% to 6.0 pence per share.
Whilst the overall level of sales is not necessarily a good guide to the Group's
performance, given the varying levels of margin within our product mix, it was
still encouraging to see sales for the first six months of this year up 7% at
#11.6 million.
This improved profit performance, building on the record levels set last year
and combined with a continuing strong cash position, allows your Directors to
pay an increased interim dividend of 1.8p per share (2006: 1.3p) and this will
be paid on 2 November 2007 to shareholders on the register on 5 October 2007.
The change in the balance of the Group's trading activities has resulted in
Norman Hay being reclassified on AIM and we are now listed in the Chemicals
Sector.
Presentation of Accounts
Due to these interim accounts being prepared under International Financial
Reporting Standards, the format of the Profit and Loss Account has been changed
and indeed renamed as the Income Statement. There have also been changes to the
presentation of the Balance Sheet and Cash Flow, whilst the Statement of
Recognised Income and Expense takes the place of the Statement of Total
Recognised Gains and Losses. The comparative figures for the six months to 30
June 2006 and for the year to 31 December 2006 have also been re-stated in this
new format.
The impact of these changes has been marginal and further details, including the
Group's new accounting policies, are given in the notes to the accounts.
Operational Overview
There is strong demand for our specialised Surface Coatings activities and we
expect this to continue given the high levels of activity in the global oil and
gas exploration and extraction industries which we serve.
Ultraseal's automotive & engineering sealants business continues to perform well
and it was very gratifying to see our new Shanghai plant move into profit in the
first half of this year.
Norman Hay Engineering, our process plant manufacturing division, complements
our automotive sealants activities and is operating satisfactorily after last
year's rationalisation of facilities, albeit on fairly tight margins.
We are working to strengthen the global infrastructure of TAM International,
which we purchased at the end of 2006. This will ensure that the business is
well resourced for the significant growth that we foresee for its sealants
business in structural waterproofing for the construction industry.
As a result of our investing in an increasing level of overhead, there is, as
yet, little contribution from TAM International within these results.
Outlook and Current Trading
In May of this year we announced the conditional sale of our Coventry site. If
an acceptable planning permission is granted we will use some of the proceeds to
relocate within the Coventry area whilst leaving sufficient funds to help our
growth in surface coatings and sealant chemistry.
Trading continues to be strong, running at a similar level to the first half of
the year, as we prepare to expand our operations further into Malaysia and
Australia in the latter part of this year.
Peter L Hay
Chairman
24 September 2007
Consolidated Income Statement for the half year ended 30 June 2007
Unaudited Unaudited Unaudited
6 months 6 months 12 months
2007 2006 2006
Note #000 #000 #000
Revenue 11,634 10,887 20,250
Cost of sales (7,326) (7,206) (12,857)
Gross profit 4,308 3,681 7,393
Distribution expenses (237) (258) (370)
Administrative expenses (2,802) (2,564) (5,088)
Other operating income 12 - 133
Operating profit 1,281 859 2,068
Profit on sale of assets 2 - - 417
Profit/(loss) on disposal of business 3 - 91 (290)
Finance income 78 39 193
Finance costs (80) (65) (214)
Profit before tax 1,279 924 2,174
Tax (385) (238) (573)
Profit on ordinary activities after tax 894 686 1,601
Attributable to:
Equity holders of the parent 872 667 1,575
Minority interest 22 19 26
894 686 1,601
Basic earnings per share 4 6.0p 4.6p 10.8p
Diluted earnings per share 4 5.9p 4.6p 10.7p
Consolidated statement of recognised income and expense for the half year ended 30 June 2007
Unaudited Unaudited Unaudited
6 months 6 months 12 months
2007 2006 2006
#000 #000 #000
Profit for the year 894 686 1,601
Deferred tax on items taken directly to equity 1 3 6
Exchange differences on translation of foreign 11 (15) (38)
operations
Total recognised income and expense for the year 906 674 1,569
Attributable to:
Equity shareholders 884 655 1,543
Minority interests 22 19 26
906 674 1,569
Consolidated balance sheet at 30 June 2007
Unaudited at 30 June Unaudited at 30 June Unaudited at 31 December
2007 2006 2006
#000 #000 #000 #000 #000 #000
Assets
Non-current Assets
Goodwill 1,540 - 1,535
Intangible assets 500 760 500
Property, plant and equipment 2,422 4,990 4,094
Investments 26 26 26
Other receivables 178 218 198
Total non-current assets 4,666 5,994 6,353
Current Assets
Inventories 1,578 1,003 1,181
Trade and other receivables 5,813 5,642 5,718
Cash and cash equivalents 2,145 1,895 1,464
Assets held for sale 2,111 - 271
Total current assets 11,647 8,540 8,634
Total Assets 16,313 14,534 14,987
Liabilities
Current liabilities
Financial liabilities 734 243 822
Trade and other payables 3,847 4,027 3,352
Provisions 183 180 190
Current tax liabilities 577 388 405
Total current liabilities 5,341 4,694 4,769
Non-current liabilities
Financial liabilities 947 1,257 1,026
Deferred tax liabilities 147 165 146
Total non-current liabilities 1,094 1,422 1,172
Total liabilities 6,435 6,116 5,941
Net assets 9,878 8,418 9,046
Equity
Share capital 1,473 1,452 1,452
Share premium account 1,228 1,170 1,170
Capital redemption reserve 94 94 94
Other reserves 759 766 766
Reserve for own shares (146) - -
Share scheme reserve 9 - 9
Foreign exchange reserve (28) (19) (39)
Retained earnings 6,269 4,895 5,396
Equity attributable to equity
holders of the
parent company 9,658 8,358 8,848
Minority Interest 220 60 198
Total equity 9,878 8,418 9,046
Norman Hay plc Interim Report & Accounts 2007
Consolidated cash flow statement for the half year ended 30 June 2007
Unaudited 6 months Unaudited 6 months Unaudited 12 months
2007 2006 2006
#000 #000 #000 #000 #000 #000
Cash flows from operating
activities
Operating profit 1,281 859 2,068
Impairment of intangibles - - 8
Depreciation 189 466 476
Loss/(profit) on sale of assets 26 82 (78)
Share option charge - - 9
(Increase)/decrease in (397) 54 195
inventories
(Increase)/decrease in (75) (167) 543
receivables
Increase/(decrease) in payables 496 39 (739)
(Decrease)/increase in provisions (7) 11 21
Finance income 78 39 193
Finance costs (80) (65) (214)
Tax paid (212) (54) (333)
Net cash generated from operating 1,299 1,264 2,149
activities
Cash flows from investing
activities
Acquisition of subsidiaries net - - (1,757)
of cash acquired
Purchase of property plant and (383) (142) (269)
equipment
Expenditure on intangibles (15) - -
Proceeds from sale of business - - 17
Net borrowing disposed of with
subsidiary undertaking - - 134
Proceeds from disposal of 1 85 836
property plant and equipment
Net cash used in investing (397) (57) (1,039)
activities
Cash flows from financing
activities
Dividends paid to shareholders - - (407)
Dividends paid to minority - - (38)
shareholders
Net proceeds from issue of 80 - -
ordinary share capital
Purchase of long term incentive (146) - -
plan shares
Finance lease inception 23 - -
Finance lease repayment (20) (43) (62)
Increase in/(repayment of) (240) 20 150
borrowings
New loans raised 74 - -
Net cash used in financing (229) (23) (357)
activities
Net increase in cash and cash 673 1,184 753
equivalents
Cash and cash equivalents at the 1,464 711 711
beginning of the year
Effects of foreign exchange rate 8 - -
changes
Cash and cash equivalents at the 2,145 1,895 1,464
end of the period
Notes to the financial statements
1 Accounting policies
Accounting convention
The Group previously reported its financial statements under UK Generally
Accepted Accounting Practice (GAAP). From 1st January 2007 the Group is required
to prepare its financial statements in accordance with EU endorsed International
Financial Reporting Standards (IFRS), International Accounting Standards (IAS)
and Interpretations (IFRIC). The comparative data for the six months to 30 June
2006, and the year ended 31 December 2006, have been restated and
reconciliations are included in Note 5 to explain the changes. The financial
statements are unaudited. The comparatives for the full year ended 31 December
2006 were based on the latest published audited accounts, but are subject to
unaudited restatement to IFRS as endorsed for use in the European Union. They
are not the Company's full statutory accounts for that year. A copy of the
statutory accounts for that year, which were prepared in accordance with UK
GAAP, has been delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified, did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and did not contain a statement under section 237(2) - (3) of the
Companies Act 1985.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and the assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Although these are based on management's best knowledge of
the amount, event or actions, actual results may ultimately differ from those
estimates.
First time adoption of IFRS
The Group's transition date to IFRS was 1 January 2006, which is the beginning
of the comparative period for the year ended 31 December 2007. The Group has
applied IFRS 1 for the first time adoption of IFRS, and has elected to use the
following exemptions:
* IFRS 3 has not been applied retrospectively to business combinations that
occurred before 1 January 2006
* Cumulative translation differences for foreign operations have been
deemed to be nil at 1 January 2006. Consequently any gain or loss arising on a
subsequent disposal will exclude translation differences that arose before 1
January 2006.
2 Profit on sale of assets Unaudited Unaudited Unaudited
6 months 6 months 12 months
2007 2006 2006
#000 #000 #000
Plasticraft Ltd property - - 417
3 Profit/(loss) on disposal of business
Profit on sale of impregnation business and assets - 91 100
Loss on sale of BK Engineering Ltd - - (390)
- 91 (290)
4 Earnings per share
Profit after tax attributable to the equity shareholders 872 667 1,575
Number Number Number
Basic earnings per ordinary share 000's 000's 000's
Weighted average number of ordinary shares in issue 14,567 14,524 14,524
Earnings per share 6.0p 4.6p 10.8p
Fully diluted earnings per share
Weighted average number of ordinary shares in issue plus 14,776 14,524 14,733
all share options
Earnings per share 5.9p 4.6p 10.7p
5 Explanation of transition to IFRS
Set out below are certain reconciliations to show the effect on the reported
figures of the Group moving from UK Generally Accepted Accounting Practice (UK
GAAP) to International Financial Reporting Standards (IFRS). The reconciliations
of equity as at 1 January 2006 (the date of transition to IFRS) and as at 31
December 2006 (date of our last UK GAAP financial statements) and the
reconciliation of profit for 2006, as required by IFRS 1, are shown below. In
addition, a reconciliation of the effect of IFRS on the profit for the six
months to June 2006 and on the equity as at 30th June 2006 is shown in order to
allow a comparison of the effects for each period.
The individual standards giving rise to significant changes are shown below.
IFRS 5 Non-current assets held for sale
In accordance with IFRS 5 various property belonging to Group companies at 31
December 2006 has been reclassified as 'Assets held for sale', and following the
recent announcement to the Stock Exchange concerning the Group's Coventry site,
that property has been similarly reclassified as held for sale.
IAS 7 Cash flow statements
The cash flow statement has been reformulated under IAS 7 and incorporates the
relevant adjustments made to the Balance Sheet and Income Statement.
IAS 12 Income taxes
Under UK GAAP deferred tax was provided on timing differences between the
accounting and taxable profit. Under IFRS, deferred tax is provided on temporary
differences between the book carrying value and tax base of assets and
liabilities. As a result, the Group's IFRS balance sheet includes an additional
deferred tax liability in respect of fair value property revaluations on
acquisitions and property rollover gains. In addition, deferred tax has been
recognised on the adjustments between UK GAAP and IFRS, where necessary, with
the majority of the net deferred tax asset relating to the adjustments for share
options.
IAS 37 Provisions
In accordance with IAS 37 provisions for product warranty which were included
with accruals under UK GAAP are now shown separately under IFRS.
IFRS 3 Business combinations
In accordance with IFRS 3 the value of the 'TAM' brand acquired with the TAM
Group of companies in December 2006 has been separately identified and in the
opinion of the Directors had a value of #500,000 as at 31 December 2006.
Also in accordance with IFRS 3 Goodwill is no longer amortised but is subject to
annual impairment tests. This resulted in a reduction of #50,000 in the amount
charged to profit for amortisation in the year to 31 December 2006 and a
reduction of #25,000 in that charge for the six months to 30 June 2006.
Reconciliation of equity at 1 January 2006
Accounting Tax
effect of effect of
UK transition transition
Transition GAAP to IFRS to IFRS IFRS
notes #000 #000 #000 #000
Non-current assets
Goodwill 887 887
Intangible assets - -
Property, plant and equipment 5,272 5,272
Investments 26 26
Other receivables - -
Total non-current assets 6,185 - - 6,185
Current assets
Inventories 1,057 1,057
Trade and other receivables 5,693 5,693
Cash and cash equivalents 711 711
Assets held for sale - -
Total current assets 7,461 - - 7,461
Total assets 13,646 - - 13,646
Current liabilities
Financial liabilities 282 282
Trade and other payables 1 4,012 (169) 3,843
Provisions 1 - 169 169
Current tax liabilities 239 239
Total current liabilities 4,533 - - 4,533
Non-current liabilities
Financial liabilities 1,200 1,200
Deferred tax liabilities 6& 7 34 135 169
Total non-current liabilities 1,234 - 135 1,369
Total liabilities 5,767 - 135 5,902
Total assets less total liabilities 7,879 - (135) 7,744
Equity
Share capital 1,452 1,452
Share premium account 1,170 1,170
Revaluation reserve 4 545 (545) -
Capital redemption reserve 94 94
Other reserves 766 766
Foreign exchange reserve - -
Retained earnings 4 3,811 545 (135) 4,221
Equity attributable to the equity 7,838 - (135) 7,703
holders of the parent company
Minority interests 41 41
Total equity 7,879 - (135) 7,744
Reconciliation of equity as at 30 June 2006
Accounting Tax
effect of effect of
UK transition transition
Transition GAAP to IFRS to IFRS IFRS
notes #000 #000 #000 #000
Non-current assets
Goodwill 3 735 25 760
Intangible assets - -
Property, plant and equipment 4,990 4,990
Investments 26 26
Other receivables 8 - 218 218
5,751 243 - 5,994
Current assets
Inventories 1,003 1,003
Trade and other receivables 8 5,860 (218) 5,642
Cash and cash equivalents 1,895 1,895
Assets held for sale - -
8,758 (218) - 8,540
Total assets 14,509 25 - 14,534
Current liabilities
Financial liabilities 243 243
Trade and other payables 1 4,207 (180) 4,027
Provisions 1 - 180 180
Current tax liabilities 388 388
4,838 - - 4,838
Non-current liabilities
Financial liabilities 1,113 1,113
Deferred tax liabilities 6& 7 34 131 165
1,147 - 131 1,278
Total liabilities 5,985 - 131 6,116
Total assets less total 8,524 25 (131) 8,418
liabilities
Equity
Share capital 1,452 1,452
Share premium account 1,170 1,170
Revaluation reserve 4 541 (541) -
Capital redemption reserve 94 94
Other reserves 766 766
Foreign exchange reserve 9 - (19) (19)
Retained earnings 3, 4& 9 4,441 585 (131) 4,895
Equity attributable to the 8,464 25 (131) 8,358
equity holders of the parent
company
Minority interests 60 60
Total equity 8,524 25 (131) 8,418
Reconciliation of equity as at 31 December 2006
Accounting Tax
effect of effect of
UK transition transition
Transition GAAP to IFRS to IFRS IFRS
notes #000 #000 #000 #000
Non-current assets
Goodwill 2 & 3 1,985 (450) 1,535
Intangible assets 2 500 500
Property, plant and equipment 5 4,365 (271) 4,094
Investments 26 26
Other receivables 8 - 198 198
6,376 (23) - 6,353
Current assets
Inventories 1,181 1,181
Trade and other receivables 8 5,916 (198) 5,718
Cash and cash equivalents 1,464 1,464
Assets held for sale 5 - 271 271
8,561 73 - 8,634
Total assets 14,937 50 - 14,987
Current liabilities
Financial liabilities 822 822
Trade and other payables 1 3,542 (190) 3,352
Provisions 1 - 190 190
Current tax liabilities 405 405
4,769 - - 4,769
Non-current liabilities
Financial liabilities 1,026 1,026
Deferred tax liabilities 6& 7 19 127 146
1,045 - 127 1,172
Total liabilities 5,814 - 127 5,941
Total assets less total 9,123 50 (127) 9,046
liabilities
Equity
Share capital 1,452 1,452
Share premium account 1,170 1,170
Revaluation reserve 4 538 (538) -
Capital redemption reserve 94 94
Other reserves 766 766
Share scheme reserve 9 9
Foreign exchange reserve 9 - (39) (39)
Retained earnings 3, 4& 9 4,896 627 (127) 5,396
Equity attributable to the equity 8,925 50 (127) 8,848
holders of the parent company
Minority interests 198 198
Total equity 9,123 50 (127) 9,046
Reconciliation of the income statement to 30 June 2006
Accounting Tax
effect of effect of
UK transition transition
Transition GAAP to IFRS to IFRS IFRS
notes #000 #000 #000 #000
Revenue 10,887 10,887
Cost of sales (7,206) (7,206)
Gross profit 3,681 - - 3,681
Distribution expenses (258) (258)
Administrative expenses 3 (2,589) 25 (2,564)
Operating profit 834 25 - 859
Net profit on disposal of 91 91
business and assets
Finance income 39 39
Finance costs (65) (65)
Profit before tax 899 25 - 924
Tax 7 (239) 1 (238)
Profit on ordinary activities 660 25 1 686
after tax
Attributable to:
Equity holders of the parent 641 25 1 667
Minority interest 19 19
660 25 1 686
Basic earnings per share 4.4p 0.2p - 4.6p
Diluted earnings per share 4.4p 0.2p - 4.6p
Reconciliation of income statement to 31 December 2006
Accounting Tax
effect of effect of
UK transition transition
Transition GAAP to IFRS to IFRS IFRS
notes #000 #000 #000 #000
Revenue 20,250 20,250
Cost of sales (12,857) (12,857)
Gross profit 7,393 - - 7,393
Distribution expenses (370) (370)
Administrative expenses 3 (5,138) 50 (5,088)
Other operating income 133 133
Operating profit 2,018 50 - 2,068
Profit on sale of assets 417 417
Loss on disposal of business (290) (290)
Finance income 193 193
Finance costs (214) (214)
Profit before tax 2,124 50 - 2,174
Tax 7 (575) 2 (573)
Profit on ordinary activities 1,549 50 2 1,601
after tax
Attributable to:
Equity holders of the parent 1,523 50 2 1,575
Minority interest 26 26
1,549 50 2 1,601
Basic earnings per share 10.5p 0.3p - 10.8p
Diluted earnings per share 10.3p 0.4p - 10.7p
Transition notes
1 Provisions were included with 'Trade and other payables' under UK GAAP
2 Goodwill at 31 December 2006 included a sum of #500,000 relating to the
value of trademarks, which is shown separately under IFRS.
3 Amortisation of goodwill of #50,000 per annum is not required under IFRS as
this asset is subject to annual impairment reviews.
4 Under IFRS the revaluation reserve is now transferred to retained earnings.
5 Various property is considered to be 'Assets held for sale' under IFRS.
6 The revaluation of property gives rise to a liability for deferred tax of
#161,000 which is recognised under IFRS.
7 The expense relating to share based payments is not tax deductible at the
time of grant and this gives rise to deferred tax adjustments.
8 The long term element of the debt due in relation to the sale of certain
business and assets to Spaceseal Ltd is now shown as 'Other receivables'
in 'Non-current assets'.
9 Foreign exchange differences arising on translation of overseas subsidiaries
are now shown separately.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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