RNS Number:3387H
Lincat Group PLC
12 February 2003
Lincat Group plc, the publicly quoted manufacturer of commercial catering
appliances, bar equipment and domestic range cookers, announces its interim
results to 31 December 2002.
Highlights
* Sales of #14.5m (2001: #14.9m)
* Operating profits of #2.1m (2001: #2.3m)
* Gross margin held at 51%
* Interim dividend raised 4% to 5.6p (2001: 5.4p) on underlying EPS of 18.6p
(2001: 19.1p)
* Acquisition in November 2002 of Britannia Kitchen Ventilation Ltd
* Further 546,960 shares repurchased in October 2002
* Gearing still low at 13%
Commenting on the half year's results, Martin Craddock, Chairman, said:
"Sales fell slightly due to continuing weak demand in the US but I am pleased to
note that gross margins are holding up well at this stage of the economic cycle.
Our cash generation remains strong and has enabled us to buy in further shares
and complete the acquisition of Britannia whilst holding gearing to a low
level."
Contacts Martin Craddock, Chairman
Paul Bouscarle, Chief Executive
Lincat Group plc
01522 875555
12 February 2003
Chairman's statement
The six months to 31 December 2002 saw gross margins holding up well at 51% but
a 3% decline in sales led to a fall in operating profits to #2.1m (2001: #2.3m).
Underlying earnings per share were down only marginally at 18.6p per share
(2001: 19.1p, excluding profit on sale of property), due to the favourable
impact of our share buy-back programme.
Our disappointment with this result is tempered by the knowledge that market
conditions in our two major markets of the UK and the US remain difficult.
Against that background, we have increased emphasis on controlling operating
expenses, with some success.
Acquisition of Britannia
In November 2002 we announced the acquisition of Britannia Kitchen Ventilation
Ltd, a specialist manufacturer of commercial kitchen ventilation canopies.
Although small in the context of the Group, we are pleased to have acquired one
of the leading manufacturers in a market sector that is set to benefit from new
European environmental and energy conservation directives.
Share buy-back
Our share repurchase programme continued with the acquisition for cancellation
of a further 546,960 ordinary shares in October 2002 at a cost of #1.5m (272p
per share plus expenses). This leaves 7,341,817 shares currently in issue. We
estimate the positive impact on earnings per share to be 4% in the current year.
This brings the total number of shares repurchased since we started the
programme in October 2000 to 2,296,960, representing 24% of the shares in issue
prior to the first buy-back.
Gearing
Following the acquisition of Britannia and the share repurchase, gearing at 31
December 2002 was 13% (2001: 9%). We expect this to fall to around 5% by our
year end on 30 June 2003.
Dividend
The Board has declared an interim dividend of 5.6p (December 2001: 5.4p),
representing an increase of 4%, which will be paid on 7 April 2003 to all
shareholders on the register at 14 March 2003.
Trading
This six month period has seen difficult trading conditions for all of our
operating companies. The UK market for catering equipment has been far from
buoyant, a reflection of the difficulties faced by many leisure and hospitality
groups. To this extent we are dependant on the broader economy and the
willingness of the consumer to eat and drink away from home. We retain our view
that this is a long term growth area but have to recognise a short term dip
against this trend.
Douglas Machines Corp, our US operation, continues to experience reluctance
amongst its customers to commit to large capital spend items. Sales were down
21% against the corresponding period in 2001 and whilst there is no sign yet of
a significant upturn in their business, the Company continues to trade
profitably.
Prospects
Lincat Group continues to generate profits and strong cash flow under adverse
market conditions. Our operations are working hard to balance sensible
investment in sales, marketing and engineering to achieve growth in market share
against the need to hold operating costs as low as possible to offset the
current general decline in end user demand. At this stage the second half of the
year is likely to be broadly similar in result to the first half.
Martin Craddock
Chairman
12 February 2003
Consolidated profit and loss account
Six months to Six months to Year to
31/12/02 31/12/01 30/06/02
#'000 #'000 #'000
Turnover 14,487 14,930 29,733
Cost of sales (7,159) (7,366) (14,641)
Gross profit 7,328 7,564 15,092
Other operating expenses (5,249) (5,219) (10,778)
Goodwill amortisation (3) - -
Operating profit 2,076 2,345 4,314
Profit on sale of long leasehold property - 430 430
Profit on ordinary activities before interest 2,076 2,775 4,744
Net interest payable (28) (4) (46)
Profit on ordinary activities before taxation 2,048 2,771 4,698
Taxation (625) (760) (1,375)
Profit for the period 1,423 2,011 3,323
Ordinary dividends (345) (328) (1,283)
Retained profit 1,078 1,683 2,040
Earnings per share - basic and diluted 18.6p 23.7p 40.6p
Earnings per share - excluding sale of property 18.6p 19.1p 35.8p
Ordinary dividend per share 5.6p 5.4p 17.5p
Consolidated balance sheet
As at As at As at
31/12/02 31/12/01 30/06/02
#'000 #'000 #'000
Fixed assets
Goodwill 500 - -
Tangible assets 8,420 8,353 8,432
8,920 8,353 8,432
Current assets
Stocks 3,799 3,327 3,381
Debtors 5,144 5,784 5,480
Cash at bank and in hand 303 510 380
9,246 9,621 9,241
Creditors: Amounts falling due within one year (7,044) (6,662) (6,086)
Net current assets 2,202 2,959 3,155
Total assets less current liabilities 11,122 11,312 11,587
Creditors: Amounts falling due after more than one year (19) - -
Provisions for liabilities and charges (357) (368) (362)
Net assets 10,746 10,944 11,225
Capital and reserves - equity
Called-up share capital 734 789 789
Share premium 1,067 1,067 1,067
Capital redemption reserve 230 175 175
Merger reserve 874 874 874
Profit and loss account 7,841 8,039 8,320
Shareholders' funds 10,746 10,944 11,225
Consolidated cash flow
Six months to Six months to Year to
31/12/02 31/12/01 30/06/02
#'000 #'000 #'000
Net cash inflow from operating activities 2,539 2,696 5,620
Return on investments and servicing of finance
Net interest paid (10) (7) (47)
Taxation (435) (484) (1,436)
Capital expenditure
Purchase of tangible fixed assets (361) (304) (865)
Proceeds from sale of tangible fixed assets 28 1,090 1,109
(333) 786 244
Acquisitions (736) - -
Equity dividends paid (888) (1,034) (1,460)
Cash inflow before financing and use of
liquid resources 137 1,957 2,921
Financing
Purchase of share capital (1,503) (2,246) (2,246)
(Decrease)/increase in cash in the period (1,366) (289) 675
Reconciliation of net cash flow to movement in net debt:
(Decrease)/increase in cash in the period (1,366) (289) 675
Exchange adjustments (23) (29) (72)
Movement in net debt in the period (1,389) (318) 603
Opening net debt (30) (633) (633)
Closing net debt (1,419) (951) (30)
Statement of total recognised gains and losses
Six months to Six months to Year to
31/12/02 31/12/01 30/06/02
#'000 #'000 #'000
Profit for the period 1,423 2,011 3,323
Foreign currency translation (54) (49) (125)
Total recognised gains and losses for the period 1,369 1,962 3,198
Notes
1. The figures for the six months ended 31 December are unaudited. These figures
have been prepared in accordance with the same accounting policies used in
the accounts for the financial year ended 30 June 2002.
2. Britannia Kitchen Ventilation Limited, acquired on 11 November 2002,
contributed turnover of #218,000 and incurred a pre-tax loss of #7,000 in
the period to 31 December 2002.
3. The results for the year ended 30 June 2002 are abridged. Full accounts for
that year, with an unqualified audit report, have been filed with the
Registrar of Companies.
4. Taxation is calculated at an estimated rate of 30.5% (2001: 31.0%).
5. The earnings per share calculation is based on earnings of #1,423,000 (2001:
#2,011,000) and a weighted average number of ordinary shares of 7,665,831
(2001: 8,471,385).
6. The earnings per share calculation excluding the property sale is based on
earnings of #1,423,000 (2001: #1,615,000) and a weighted average number of
ordinary shares of 7,665,831 (2001: 8,471,385).
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