RNS Number:4727R
Metalrax Group PLC
20 September 2005
Issued on behalf of Metalrax Group PLC
Date: Tuesday, 20th September 2005
Embargoed: 7.00am
Metalrax Group PLC
Interim Results
for the six months ended 30th June 2005
2005 2004*
-------------------------------------------------------------------------------
Revenue #48.83m #44.87m
Trading Profit #4.04m #4.58m
Profit before Tax #3.97m #4.70m
Maintained Interim Dividend 1.65p 1.65p
Engineering & Storage Products
Consolidation of diecasting foundries completed - provides new market opportunities
Support services experienced higher levels of demand
Housewares
Re-organisation of businesses underway
"...at the annual general meeting in May we announced that the group was
experiencing the impact of the well-publicised downturn in consumer spending in
the retail sector. This has continued and has coincided with reduced levels of
demand in the automotive sector.
"The strategic review of our businesses conducted at the end of last year has
enabled the group to respond swiftly to the rapid deterioration in market
conditions.
"The implementation of our strategic review of group operations will lead to
further consolidation of businesses in both divisions as we act to restore
margins and pursue profitable growth in what is proving to be an extremely
difficult trading climate."
John Crabtree, Chairman
* Restated under IFRS
Enquiries:
Richard Arbuthnot, Chief Executive Fiona Tooley
Metalrax Group PLC Citigate Dewe Rogerson Ltd
Tel: 0121 433 3444 Tel: 0121 455 8370
E-mail: info@metalraxgroup.co.uk Mobile: 07785 703523
www.metalraxgroup.co.uk
-2-
Metalrax Group PLC
Interim Results
For the six months ended 30th June 2005
STATEMENT BY THE CHAIRMAN
Results
We indicated in our Annual Report that these results would be prepared using the
presentation, recognition and measurement requirements of International
Financial Reporting Standards (IFRS) and, in order to give a greater level of
clarity, we have restated group results for 2004 under the same rules with
explanatory notes on pages 11 and 12.
Turnover for the first half year increased to #48.83m from #44.87m. However, at
the annual general meeting in May we announced that the group was experiencing
the impact of the well-publicised downturn in consumer spending in the retail
sector. This has continued and has coincided with reduced levels of demand in
the automotive sector, resulting in a trading profit from continuing activities
for the six months to 30th June 2005 of #4.04m compared with #4.58m in the prior
year.
Dividend
Based on the current level of group profitability, the board has declared an
unchanged interim dividend of 1.65 pence per share, payable on 28th October
2005, to shareholders on the register at the close of business on 7th October
2005.
Board Changes
Eric Moore retired from the board as a non-executive director following the
annual general meeting in May, and in preparation for operational changes to be
made next year, Hedley Brook-Carter was appointed to the board as an executive
director on 6th September 2005.
Review
The strategic review of our businesses conducted at the end of last year has
enabled the group to respond swiftly to the rapid deterioration in market
conditions.
Engineering and storage products
We have now seen some stability return to steel prices but inevitably the
combination of a lag effect this year in recovering both these steep cost
increases and the sharp increase in utility costs from our customers has
impacted on group results.
The consequences of the demise of MG Rover and Powertrain in April are now
clear. We have provided for the bad debts in these accounts but it has not been
immediately possible to compensate for the resulting loss of sales. At the same
time the automotive sector saw a fall in global demand that was almost
unprecedented with resulting reductions in build volumes. The group companies
affected, responded quickly and all are now trading profitably with programmes
in place to restore their performance to acceptable levels.
The successful consolidation of our two pressure diecasting foundries onto one
site was completed in the summer, on time and to budget, producing a business
with a significant critical mass and reduced cost base to exploit new market
opportunities.
The engineering support services operations have experienced higher levels of
demand and have produced results that have helped offset some of the falls in
their sister companies' performance as markets called on them to deliver fast
response times to satisfy new and replacement builds for storage equipment,
structures, balustrading and stairways.
continued...
-3-
Housewares
The continuing decline in footfall in the retail sector has resulted in reduced
demand for our products. All major retail customers are showing significant
reductions in their orders and consequently we have advanced the reorganisation
of the division's operations. We have discontinued the manufacture of bathroom
products and will be closing the facility by the end of this year.
Mounting uncertainty in raw plastic material prices as they track the rising oil
price levels has confirmed our decision to exit injection moulding, and this has
resulted in the manufacturing operation being prepared for sale or closure.
Prospects
The implementation of our strategic review of group operations will lead to
further consolidation of businesses in both divisions as we act to restore
margins and pursue profitable growth in what is proving to be an extremely
difficult trading climate.
-4-
Metalrax Group PLC
Interim Results
For the six months ended 30th June 2005
Consolidated income statement
six months ended 30th June 2005
Notes 2005 2004 2004
Six Six Twelve
months months months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Revenue 48,828 44,866 95,167
====================================
Trading profit 4,042 4,582 11,535
Exceptional items (net) 7 (135) - (363)
------------------------------------
Operating profit before
financial 7 3,907 4,582 11,172
income
Net interest receivable 65 127 234
------------------------------------
Profit before taxation 3,972 4,709 11,406
Taxation 3 (1,040) (1,429) (3,442)
------------------------------------
Profit from continuing 2,932 3,280 7,964
operations
Loss from discontinued 9 (1,100) 369 1,226
operations ------------------------------------
Profit for the period 1,832 3,649 9,190
====================================
Attributable to:
Equity holders of the parent 1,832 3,592 9,129
Minority interests - 57 61
------------------------------------
Profit for the period 1,832 3,649 9,190
====================================
Earnings per share 4
Basic and diluted earnings per
share 1.53p 3.00p 7.61p
Earnings per share from
continuing 2.45p 2.74p 6.64p
operations
-5-
Metalrax Group PLC
Interim Results
For the six months ended 30th June 2005
Consolidated statement of recognised income and expense
six months ended 30th June 2005
2005 2004 2004
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Profit attributable to equity
shareholders 1,832 3,592 9,129
Currency variations - (28) (70)
Adjustment to goodwill - - 20
Actuarial losses arising on retirement
benefit obligations (net of tax) - - (2)
-------------------------------------
Total recognised income 1,832 3,564 9,077
Dividends paid (4,496) (4,496) (6,474)
Opening shareholders' equity 57,547 54,944 54,944
-------------------------------------
Closing shareholders' equity 54,883 54,012 57,547
=====================================
-6-
Metalrax Group PLC
Interim Results
For the six months ended 30th June 2005
Consolidated balance sheet
30th June 2005
2005 2004 2004
30th June 30th June 31st December
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Assets
Goodwill 7,332 5,779 6,555
Intangible assets 170 47 210
Property, plant and equipment 25,276 24,979 26,884
Deferred tax asset 1,203 1,145 1,180
-------------------------------------------
Total non-current assets 33,981 31,950 34,829
-------------------------------------------
Inventories 18,694 18,566 17,416
Trade and other receivables 24,157 21,217 21,227
Cash and cash equivalents 2,186 7,955 10,356
Assets classified as held for sale 1,485 - -
-------------------------------------------
Total current assets 46,522 47,738 48,999
-------------------------------------------
Total assets 80,503 79,688 83,828
===========================================
Liabilities
Trade and other payables 18,302 17,632 18,231
Loan notes 200 - 200
Current tax liabilities 880 1,685 1,614
-------------------------------------------
Total current liabilities 19,382 19,317 20,045
-------------------------------------------
Other payables - 344 75
Loan notes 300 - 300
Employee benefits 4,009 3,817 3,932
Deferred tax liabilities 1,929 1,787 1,929
-------------------------------------------
Total non-current liabilities 6,238 5,948 6,236
-------------------------------------------
Total liabilities 25,620 25,265 26,281
===========================================
Net assets 54,883 54,423 57,547
===========================================
Equity
Share capital 5,995 5,995 5,995
Share premium account 2,732 2,732 2,732
Capital redemption revenue 274 274 274
Retained earnings 45,882 45,011 48,546
-------------------------------------------
Total shareholders' equity 54,883 54,012 57,547
Minority interests - 411 -
-------------------------------------------
Total equity 54,883 54,423 57,547
===========================================
-7-
Metalrax Group PLC
Interim Results
For the six months ended 30th June 2005
Consolidated cash flow statement
six months ended 30th June 2005
Notes 2005 2004 2004
Six Six Twelve
months months months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Operating activities
Cash generated by operations 10 3,090 4,447 12,377
Net interest received 65 127 234
Income taxes paid (1,327) (1,825) (3,820)
-----------------------------------
Net cash flow from operating
activities 1,828 2,749 8,791
-----------------------------------
Investing activities
Purchase of property, plant and
equipment (2,079) (1,312) (3,498)
Proceeds from sale of property,
plant and equipment 735 54 124
Acquisition of subsidiary
undertakings (331) (63) (2,022)
Acquisition of business (3,827) - -
Proceeds from sale of subsidiary,
less its bank balance - - 2,411
-----------------------------------
Net cash flow from investing
activities (5,502) (1,321) (2,985)
-----------------------------------
Financing activities
Equity dividends paid (4,496) (4,496) (6,474)
-----------------------------------
Net cash flow from financing
activities (4,496) (4,496) (6,474)
-----------------------------------
Effects of exchange rate changes - (1) -
--------- -------- ----------
Net decrease in cash and cash
equivalents (8,170) (3,069) (668)
Cash and cash equivalents at
beginning of period 10,356 11,024 11,024
-----------------------------------
Cash and cash equivalents at end
of 11 2,186 7,955 10,356
period ===================================
-8-
Metalrax Group PLC
Interim Results
For the six months ended 30th June 2005
Notes to the interim results
six months to 30th June 2005
1. Basis of preparation
The unaudited interim results for the half year ended 30th June 2005 have been
prepared in accordance with International Financial Reporting Standards (IFRS).
The financial information contained herein does not constitute statutory
accounts within the meaning of section 240(5) of the Companies Act 1985.
The statutory accounts for the year ended 31st December 2004, which have been
delivered to the registrar of companies, carry an unqualified Auditors' Report.
Information for the comparative periods, having previously been published using
UK Generally Accepted Accounting Principles (UK GAAP), is now reported in
accordance with IFRS. Reconciliations of profit and equity between these two
bases are shown on pages 11 and 12.
2. Accounting policies
The introduction of IFRS has not had a material impact on the existing
accounting policies and practices of the group except for the effect on business
combinations, post-employment obligations and the recognition of dividends as a
post-balance sheet event. In general terms, with these exceptions, the
accounting policies disclosed in the financial statements for the year ended
31st December 2004 have continued to be applicable with the major differences
detailed below. A full statement of the accounting policies will be included in
the financial statements for the year ending 31st December 2005.
a) Goodwill - business combinations
Goodwill arising on consolidation represents the excess of fair value of
consideration over the fair value of all identifiable assets and liabilities
acquired at the date of acquisition. It is recognised as an intangible asset and
carried at cost, less any recognised impairment charges arising from the annual
assessment of its carrying value. Any impairment write-down identified is
charged in the income statement.
b) Pensions
The principal pension schemes operated by the group provide benefits based on
final pensionable pay. The assets of the schemes are held separately from those
of the group and contributions are determined in accordance with the
recommendations of actuaries. The group also operates a number of defined
contribution arrangements.
The group accounts for the cost of defined benefit schemes through full
recognition of the schemes' surpluses or deficits on the balance sheet at each
period end. The current and past service costs, returns on scheme assets and
interest on obligations are recognised within the operating profit. Actuarial
gains and losses are included in the statement of recognised income and expense.
The group's contributions to defined contribution arrangements are charged to
the income statement as they fall due.
3. Taxation
The charge for taxation is based on the estimated effective rate for the year as
a whole.
continued...
-9-
4. Earnings per share
The basic earnings per ordinary share are calculated on the profit for the
period attributable to equity holders of the parent. The number of shares used
in the calculation of basic earnings per share is 119,897,298 being the average
shares in issue during the period.
Diluted earnings per share, taking into account the number of shares capable of
being exercised under the various option schemes, are the same as the disclosed
basic earnings.
Earnings per share from continuing operations is calculated using the profit
from continuing operations and the average number of shares in issue during the
period.
5. Dividends
The dividend paid in the six months ended 30th June 2005 was the final dividend
for 2004 of 3.75 pence per ordinary share paid on 27th May 2005.
The directors recommend the payment of an interim dividend of 1.65 pence per
ordinary share to shareholders registered on 7th October 2005 to be paid on 28th
October 2005.
6. Announcement of results
These results were announced to the London Stock Exchange on 20th September 2005
and sent to shareholders on the same day. Further copies are available from the
Company Secretary, Metalrax Group PLC, Ardath Road, Kings Norton, Birmingham,
B38 9PN.
7. Segmental analysis - Analysis by activity
2005 2004 2004
Six months Six months Twelve months
ended 30th June ended 30th June ended 31st December
Unaudited Unaudited Unaudited
Operating Operating Operating
Revenue Profit Revenue Profit Revenue Profit
#'000 #'000 #'000 #'000 #'000 #'000
Continuing
operations
Engineering
and 35,345 3,588 31,429 3,557 62,906 7,542
storage
products
Housewares 13,483 454 13,437 1,025 32,261 3,993
Exceptional (135) - (363)
items --------------------------------------------------------------
48,828 3,907 44,866 4,582 95,167 11,172
==============================================================
The exceptional items comprise profit on sale of property #505,000, bad debts
from MG Rover Group Limited and Powertrain Limited #225,000 and reorganisation
costs #415,000 (2004: #363,000).
8. Geographical revenue analysis by destination
2005 2004 2004
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Unaudited
#'000 #'000 #'000
United Kingdom 36,468 38,468 81,629
Rest of Europe 8,894 4,246 8,579
North America 1,456 1,304 3,060
Rest of World 2,010 848 1,899
---------------------------------------------------------
48,828 44,866 95,167
=========================================================
continued...
-10-
9. Discontinued operations
2005 2004 2004
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Revenue 3,479 5,714 9,291
=======================================
Operating loss (471) 450 91
Adjustments to assets held for resale (1,099) - -
Profit on disposal of subsidiary - - 1,164
Taxation 470 (81) (29)
---------------------------------------
Loss from discontinued operations (1,100) 369 1,226
=======================================
10. Cash flow from operating activities
Reconciliation of operating profit to net
cash flow from operating activities
Continuing operations
Operating profit 3,907 4,582 11,172
Depreciation, net of disposal surpluses 1,477 1,310 2,614
Profit on sale of property (505) - -
Amortisation of intangibles 40 47 134
Decrease in inventories 35 (1,462) (1,374)
Increase in trade and other receivables (391) (324) (642)
Decrease in payables (1,480) (138) (398)
Increase in pensions 78 196 343
-----------------------------------
Cash generated from continuing operations 3,161 4,211 11,849
-----------------------------------
Discontinued operations
Operating loss (471) 450 91
Depreciation 194 247 464
Decrease in inventories 248 (120) (27)
Increase in trade and other receivables (52) (521) 318
Increase in payables 10 180 (318)
-----------------------------------
Cash flow for discontinued operations (71) 236 528
-----------------------------------
Cash generated from operations 3,090 4,447 12,377
===================================
11. Analysis of cash and cash equivalents
Bank balances 2,186 6,965 10,356
Short term deposits - 990 -
-----------------------------------
Cash at bank per balance sheet 2,186 7,955 10,356
===================================
-11-
Metalrax Group PLC
Explanation of changes from introducing IFRS for the first time
As a European listed entity, the group is required to prepare consolidated
financial statements using IFRS from 1st January 2005. The following explains
the differences resulting from the introduction of IFRS for the first time. As
this report includes restated figures for 2004, reconciliations are shown in the
tables below.
The IFRSs used are those valid and appropriate at the balance sheet date. On the
introduction of IFRS, the group has adopted certain exceptions allowed under the
transitional rules with regard to the restatement of financial information.
These apply principally to business combinations which took place before 1st
January 2004. As a result, the amortised value of goodwill using UK GAAP, at
that date, then became the deemed cost for IFRS purposes.
The principal impact of the introduction of IFRS has been the application of IAS
19: Employee Benefits. IAS 19 permits an approach very similar to the FRS 17
disclosures provided on pages 29 and 30 in the 2004 Annual Report and Accounts
and the group has adopted that approach.
Under UK GAAP, goodwill on acquisitions made after 1st January 1998 was
capitalised and amortised over its estimated useful life, subject to a maximum
of 20 years. Where an acquired business was sold and goodwill had previously
been written off to reserves, the goodwill was reinstated and included in the
calculation of profit or loss on disposal.
Under IFRS 3: Business Combinations, after the identification of separable
intangible assets, any goodwill arising is carried at cost and is subject to an
annual impairment review. Consequently, from 1st January 2004, there is no
goodwill amortisation charge in the income statement and certain intangible
assets have been reclassified and amortised. In addition, the goodwill
previously written off to reserves on the acquisition of The Texas Group, Inc.
is now not reinstated on disposal and has therefore been excluded from the
calculation of profit on disposal in the 2004 results.
IFRS does not permit dividends to be accrued where they have been approved after
the balance sheet date. Therefore, interim dividends are reflected in the period
in which they are approved by the Board and the final dividends, approved at the
Annual General Meeting in May, are recorded in the half year to 30th June.
The introduction of IFRS also leads to a number of changes to the presentation
of the financial statements. These mainly relate to wording and positional
changes of existing information. However, under IFRS, all of the financial
results arising in the period from discontinued operations are shown as a single
component of the income statement. Thus, for 2004, both the operating profit
after tax and profit on disposal relating to The Texas Group, Inc. are included
within discontinued operations. For the bathroom products and injection moulding
businesses, which were discontinued in the first half of 2005, the income and
cashflow statements relating to 2004 have also been restated to include the
results under discontinued operations. The non-current assets relating to these
businesses are reported within assets held for resale on the balance sheet.
-12-
Metalrax Group PLC
Explanation of changes from introducing IFRS for the first time
Reconciliation of profits attributable to equity holders of the parent
Six months Twelve months
ended ended
30th June 2004 31st December 2004
Unaudited Unaudited
#'000 #'000
Profit previously reported using UK GAAP 3,605 8,475
Inclusion of defined benefit pension
scheme deficits (162) (275)
Elimination of defined benefit pension
scheme prepayment (34) (68)
Change in policy on treatment of
goodwill 172 392
Reclassification of goodwill as
intangible assets (47) (134)
Taxation effects on the above 58 103
Goodwill written back on disposal of
subsidiary - 636
--------------------------------
Profit reported using IFRS 3,592 9,129
================================
Reconciliation of shareholders' equity
1st January 2004 30th June 2004 31st December 2004
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Equity previously
reported using UK
GAAP 53,609 55,208 56,196
Inclusion of defined
benefit pension
scheme (3,655) (3,817) (3,932)
deficits
Elimination of
defined benefit
pension scheme (740) (774) (808)
prepayment
Change in policy on
treatment of goodwill - 172 392
Reclassification of
goodwill as
intangible assets (85) (132) (219)
Taxation effects on
the above 1,319 1,377 1,422
Timing differences in
respect of dividends 4,496 1,978 4,496
-------------------------------------------------
Equity reported using
IFRS 54,944 54,012 57,547
=================================================
-13-
Metalrax Group PLC
Directors Bankers
John R. A. Crabtree, LL.B.* Barclays Bank PLC
Chairman 15 Colmore Row
Richard E. Arbuthnot, B.Sc., M.Sc. Birmingham B3 2BY
Chief executive
Reginald Fort, F.C.A.* National Westminster Bank PLC
Jeffrey G. L. Edwards 21 Digbeth
Garry H. Gresham, B.A. (Hons) Birmingham B5 6BL
John K. Adcock, F.C.I.B.*
Darren J. Farrimond, B.Sc., A.C.A. HSBC Bank plc
R. Hedley Brook-Carter 130 New Street
Birmingham B2 4JU
*non-executive
Secretary Auditors
Darren J. Farrimond, B.Sc., A.C.A. Bentley Jennison
Charterhouse
Legge Street
Birmingham B4 7EU
Registered Office Solicitors
Ardath Road Gateley Wareing LLP
Kings Norton One Eleven
Birmingham B38 9PN Edmund Street
Birmingham B3 2HJ
Telephone: 0121 433 3444 Registrars
Facsimile: 0121 433 3325 Computershare Investor Services Plc
E-mail: info@metalraxgroup.co.uk P.O. Box 82
www.metalraxgroup.co.uk The Pavilions
Bridgwater Road
Registered in England 793639 Bristol BS99 7NH
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLMLTMMBBBRA
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