RNS Number:7368Z
Metalrax Group PLC
14 March 2006
Issued on behalf of Metalrax Group PLC
Date: Tuesday, 14 March 2006
Embargoed: 7.00am
Metalrax Group PLC
CHAIRMAN'S STATEMENT
Preliminary Results
for the year ended 31 December 2005
Introduction
In December 2005, the group issued a trading update which indicated that, as
with other businesses operating in similar sectors, we had been experiencing a
tough and competitive trading and economic environment particularly from within
our housewares activities where we witnessed an adverse impact on volume and
margin.
Subsequently, our preliminary results for the year ended 31 December 2005
disclose that performance reflected analysts' revised forecasts, with revenue
increasing to #100.25 million, producing a profit before taxation of #7.41
million.
During 2005, the engineering and storage products division performed in line
with expectations, but as reported a downturn in consumer spending and the
consequent decline in retail footfall, impacted directly on the housewares
division. As a result, the business did not see the level of sales upturn
normally experienced in the last quarter of the financial year and, as
shareholders will be aware, the operational gearing of the housewares division
is such that lost sales rapidly diminish profit margins and bottom line results.
Across the group as a whole the downturn in United Kingdom revenue was more than
compensated by substantial increases achieved in Europe, North America and other
international markets.
The Year in Review
The implementation of the strategic review conducted at the end of 2004,
coincided with what proved to be an extremely disappointing year for a number of
reasons including having to contend with the demise of MG Rover and, whilst the
debt write off had been successfully mitigated in time, the subsequent loss of
turnover was not quickly replaced within the engineering and storage products
division. Despite these events, the group's planned reorganisation continued
throughout the year as we strengthened the foundations on which to build the new
group structure.
As part of the housewares division reorganisation, the second quarter of the
year saw the termination of manufacture of occasional furniture and accessories
and the business transformed into a design and sourcing operation, distributing
and selling different ranges of products to both the retail sector and direct
via the internet. In the third quarter of the year, we completed our planned
exit from manufacture in the volatile plastic injection moulded products market
with the sale of the business. In the final quarter of the year the bathroom
furniture business was closed.
Our two pressure die-casting foundry operations were successfully consolidated
onto one site during the third quarter with expected benefits flowing through
into 2006. The coil coating business acquired at the beginning of the year has
performed ahead of expectations and the anti-vandal cabin manufacturing
operation that we purchased at the end of the year has made a promising start
with the group.
We have recently announced the amalgamation of two of our larger automotive
component manufacturing facilities that will bring significant economies of
scale in the second half of 2006. Similarly, we have commenced the consolidation
of our bearings company onto our site at Bordesley Green where we shall
significantly improve the use of group assets. The coil coating operations have
also now been brought together under a common management team and we expect to
realise further benefits in due course.
continued...
-2-
Strategic Planning
The group strategic plan is regularly updated and was reviewed by the board in
January. The next phase, implemented at the beginning of 2006, includes dividing
the group into three reporting segments:
* the Engineering Support Services Division,
* the Automotive and Engineering Division, and
* the Housewares Division.
This initiative will enable the group to continue its planned programme of
consolidation of its core activities and selective acquisitions, under a more
effective management structure.
Dividend
As indicated in our December trading statement, the board is recommending the
payment of an unchanged final dividend of 3.75 pence per share to be made on 26
May 2006 to shareholders on the register of members at the close of business on
28 April 2006, subject to formal approval at the annual general meeting on
Tuesday 23 May 2006. This, together with the interim dividend of 1.65 pence,
makes a total dividend for the year of 5.4 pence per share.
IFRS Conversion
Further to the interim report announced on the 20 September 2005, no further
amendments have been identified in the transition to IFRS. Full details will be
included in the annual report.
Our People
We are announcing today the appointment of Bill Kelly as group finance director
and company secretary. Bill brings with him a wealth of financial and commercial
acumen, as well as extensive experience of devising and implementing successful
change strategies. He represents an excellent addition to the board.
In January 2006, we announced the appointment of Andy Pearson as a non-executive
director of the group. Reg Fort will retire from the board at the end of the
2007 annual general meeting. During the course of this financial year, it is
proposed that Mr Pearson will be appointed chairman of the audit committee.
We are also announcing today that, Jeff Edwards, Garry Gresham Hedley
Brook-Carter and Darren Farrimond are relinquishing their responsibilities as
main board directors to enable them to concentrate their efforts on ensuring the
more effective performance of our new operational board which we established
during the course of last year. This change is no reflection on their continuing
substantial contribution, but follows a careful review of the structure required
to drive the strategic plan referred to above, with the divisional directors
being freed to focus on its implementation.
Prospects
The increased critical mass of our businesses operating under this revised
divisional structure will enable them to provide an even greater level of
service to customers around the world.
Current trading continues to meet our expectations across all divisions and is
developing in line with our plans.
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
-3-
Metalrax Group PLC
Consolidated Income Statement
Year ended 31 December 2005
2005 2004
#'000 #'000
Revenue 100,255 95,167
Cost of sales (76,843) (69,834)
-------------------------
Gross profit 23,412 25,333
Distribution costs (6,696) (5,984)
Administrative expenses (9,136) (7,814)
Exceptional items (217) (363)
-------------------------
Operating profit 7,363 11,172
Finance income 77 245
Finance costs (32) (11)
-------------------------
Profit before taxation 7,408 11,406
Income tax expense (2,177) (3,442)
-------------------------
Profit from continuing operations 5,231 7,964
Loss from discontinued operations (817) 1,226
-------------------------
Profit for the year 4,414 9,190
-------------------------
Attributable to:
Equity holders of the parent 4,414 9,129
Minority interest - 61
-------------------------
Profit for the year 4,414 9,190
--------- ---------
Earnings per share:
Basic and diluted 3.68p 7.61p
From continuing operations 4.36p 6.64p
The basic and diluted earnings per share are calculated on the profit for the
year, the earnings per share from continuing operations are calculated on the
profit from continuing operations. The number of shares used in the calculations
is 119,897,298.
Dividends (Equity) 2005 2004
#'000 #'000
Final dividend for 2004 paid on 27 May 2005 of 3.75p 4,496 4,496
(2003: final 3.75p)
Interim dividend for 2005 paid on 7 October 2005 of 1.65p 1,978 1,978
(2004: interim 1.65p)
---------------------
Total equity dividends paid 6,474 6,474
---------------------
Proposed dividends
The Directors recommend that a final dividend of 3.75p per share is paid and is
to be proposed as a resolution at the Annual General Meeting in May 2006. The
final dividend amounts to #4,496,000 (2004: #4,496,000).
-4-
Metalrax Group PLC
Consolidated Statement of Recognised Income and Expenses
Year ended 31 December 2005
2005 2004
#'000 #'000
Profit attributable to equity shareholders 4,414 9,129
Currency variations - (70)
Adjustment to goodwill - 20
Actuarial losses arising on retirement benefit obligations (1,455) (2)
Deferred tax credit on retirement benefit obligations 436 -
--------------------
Total recognised income 3,395 9,077
Dividends paid (6,474) (6,474)
Opening shareholders' equity 57,547 54,944
--------------------
Closing shareholders' equity 54,468 57,547
--------------------
-5-
Metalrax Group PLC
Consolidated Balance Sheet
As at 31 December 2005
2005 2004
#'000 #'000
Assets
Goodwill 11,058 6,555
Intangible assets 130 210
Property, plant and equipment 26,623 26,884
Deferred tax asset 1,744 1,180
--------------------------
Total non-current assets 39,555 34,829
--------------------------
Inventories 16,776 17,416
Trade and other receivables 23,618 21,227
Cash and cash equivalents 2,713 10,356
Assets held for sale 764 -
--------------------------
Total current assets 43,871 48,999
--------------------------
Total assets 83,426 83,828
--------------------------
Liabilities
Loan notes 300 200
Trade and other payables 19,113 18,231
Current tax payable 1,018 1,614
--------------------------
Total current liabilities 20,431 20,045
--------------------------
Loan notes 750 300
Other payables - 75
Employee benefits 5,814 3,932
Deferred tax liabilities 1,963 1,929
--------------------------
Total non-current liabilities 8,527 6,236
--------------------------
Total liabilities 28,958 26,281
--------------------------
Net assets 54,468 57,547
--------------------------
Equity
Share capital 5,995 5,995
Share premium account 2,732 2,732
Capital redemption reserve 274 274
Retained earnings 45,467 48,546
--------------------------
Total shareholders' equity 54,468 57,547
--------------------------
-6-
Metalrax Group PLC
Consolidated Cash Flow Statement
Year ended 31 December 2005
2005 2004
#'000 #'000
Operating activities
Cash generated from operations 11,224 12,377
Net interest received 45 234
Income taxes paid (2,733) (3,820)
--------------------
Net cash flow from operating activities 8,536 8,791
--------------------
Investing activities
Purchase of property, plant and equipment (3,796) (3,498)
Proceeds from sale of property, plant and equipment 2,314 124
Acquisition of businesses (8,875) (2,022)
Proceeds from sale of business, plant and equipment 652 -
Proceeds from sales of subsidiary less its bank balance - 2,411
---------------------
Net cash flow from investing activities (9,705) (2,985)
---------------------
Financing activities
Equity dividends paid (6,474) (6,474)
---------------------
Net cash flow from financing activities (6,474) (6,474)
---------------------
Net decrease in cash and cash equivalents (7,643) (668)
Cash and cash equivalents at beginning of period 10,356 11,024
---------------------
Cash and cash equivalents at end of period 2,713 10,536
---------------------
-7-
Metalrax Group PLC
Notes to the Cash Flow Statement
2005 2004
#'000 #'000
a) Reconciliation of operating profit to net cash flow from operating activities
Continuing operations
Operating profit 7,363 11,172
Depreciation, net of disposal surpluses 3,093 2,614
Profit on sale of property (505) -
Amortisation of intangibles 80 134
Decrease in inventories 2,129 (1,374)
Decrease in trade and other receivables 1,572 (642)
Decrease in payables (2,578) (398)
Increase in non-current liabilities 427 343
-------------------
Cash generated from continuing operations 11,581 11,849
-------------------
Discontinued operations
Operating loss (939) 91
Depreciation, net of disposal surpluses 206 464
Profit on sale of property (552) -
Decrease in inventories 801 (27)
Decrease in trade and other receivables 330 318
Decrease in payables (203) (318)
-------------------
Cash absorbed by discontinued operations (357) 528
-------------------
Cash generated from operations 11,224 12,377
-------------------
b) Reconciliation of net cash flow to movement in net funds
Decrease in cash in the period (7,643) (668)
New loan notes issued (750) (500)
Loan notes redeemed 200 -
-------------------
Movement in net funds in the year (8,193) (1,168)
Net funds at 31 December 2004 9,856 11,024
-------------------
Net funds at 31 December 2005 1,663 9,856
-------------------
c) Net funds reconciled to the balance sheet
Cash and cash equivalents 2,713 10,356
Current liabilities - loan notes (300) (200)
Non-current liabilities - loan notes (750) (300)
-------------------
1,663 9,856
-------------------
d) Acquisitions
Cash consideration 8,125 1,575
Bank overdraft acquired 152 340
Payment of deferred consideration 598 107
-------------------
8,875 2,022
-------------------
-8-
Metalrax Group PLC
Notes to the Accounts
Year ended 31 December 2005
1. Segmental analysis
Analysis by activity
2005 2004
Engineering Housewares Total Engineering Housewares Total
and Storage and Storage
Products Products
#'000 #'000 #'000 #'000 #'000 #'000
Revenue
External 72,050 28,205 100,255 62,906 32,261 95,167
sales
Inter-segment
sales 4,300 - 4,300 3,950 - 3,950
---------------------------------------------------------------------
Total 76,350 28,205 104,555 66,856 32,261 99,117
revenue ---------------------------------------------------------------------
Operating profit
Trading 6,734 846 7,580 7,542 3,993 11,535
profit
Exceptional
items (265) 48 (217) (35) (328) (363)
---------------------------------------------------------------------
Segment 6,469 894 7,363 7,507 3,665 11,172
result ---------------------------------------------------------------------
The exceptional items comprise profit on sale of property #505,000 (2004: #nil),
bad debts from MG Rover Group Limited and Powertrain Limited #225,000 (2004:
#nil) and reorganisation costs of #497,000 (2004: #363,000).
Balance sheet
Segment assets 55,334 23,961 79,295 39,910 27,915 67,825
Unallocated assets 4,131 16,003
-------- --------
Total assets 83,426 83,828
-------- --------
Segment
liabilities 14,747 3,327 18,074 11,600 5,433 17,033
Unallocated liabilities 10,884 9,248
-------- --------
Total liabilities 28,958 26,281
-------- --------
Unallocated assets and liabilities principally comprise assets held for sale,
cash, tax and pension scheme obligations.
Other information
Capital expenditure 1,826 1,008 2,834 3,381 602 3,983
Depreciation 2,227 866 3,093 1,891 857 2,748
2. Geographical revenue analysis by destination
2005 2004
#'000 #'000
United Kingdom 73,169 81,629
Rest of Europe 19,592 8,579
North America 3,489 3,060
Rest of World 4,005 1,899
---------------------------------
100,255 95,167
---------------------------------
continued...
-9-
3. Discontinued operations
During the year, Anotrim Limited ceased to trade and the Group disposed of the
trade and assets of MRX Plastic Moulders Limited on 16 September 2005.
The results of the discontinued businesses for the period which have been
included in the consolidated accounts were as follows:
2005 2004
#'000 #'000
Revenue 3,754 9,291
Operating costs (4,586) (9,200)
---------------------
Trading loss (832) 91
Closure costs (659) -
Profit on sale of fixed assets 552 -
---------------------
Operating loss (939) 91
Loss on disposal of business (402) -
Profit on disposal of subsidiary - 1,164
---------------------
Loss before tax (1,341) 1,255
Income tax credit 524 (29)
---------------------
Loss from discontinued activities after tax (817) 1,226
---------------------
Earnings per share (0.68)p 0.97p
---------------------
4. Post balance sheet events
In 2006, the Group has made further business acquisitions for a total
consideration of #2.5m.
5. Section 240 statement
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2005 or 2004. Statutory
accounts for 2004, which were prepared under UK GAAP, have been delivered to the
Registrar of Companies, and those for 2005 prepared under accounting standards
adopted by the EU, will be delivered in due course. The auditors have reported
on the 2004 accounts; their report was unqualified, did not include references
to any matters by way of emphasis without qualifying their report and did not
contain statements under Section 237(2) or (3) of the Companies Act 1985.
6. The Annual General Meeting will be convened for Tuesday, 23 May 2006.
7. Copies of the Report and Accounts will be posted to Shareholders on 19 April
2006 and will be available from the same date to the public from:
The Secretary
Metalrax Group PLC
Ardath Road
Kings Norton
Birmingham
B38 9PN
Tel: +44 (0)121 433 3444
This information is provided by RNS
The company news service from the London Stock Exchange
END
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