RNS Number:2755I
Metalrax Group PLC
31 August 2006
Metalrax Group PLC
("Metalrax", "the Company" or "the Group")
Interim Results for the six months ended 30 June 2006
Metalrax Group PLC, the UK-based engineering specialist group, today announces
its interim results for the six months ended 30 June 2006:
Highlights
* Revenues increased to #57.9m (2005: #52.3m (restated)), reflecting the
contribution from acquisitions
* Including exceptional items, profit before tax was #3.7m (2005: #2.4m
(restated))
* Profit before taxation* was #1.8m (2005: #3.6m (restated)), reflecting
the impact of challenging trading conditions and corporate activity
* Basic earnings per share were 2.53p (2005: 1.53p)
* Interim dividend per share maintained at 1.65p (2005: 1.65p)
* Eight businesses successfully amalgamated into four as planned; recent
acquisitions being successfully integrated
* Realisation of cash from property disposals arising from the strategic
re-organisation
* Board reconfigured and strengthened as part of reorganisation of the
Group
*before exceptional items, comprising of reorganisation costs, property profits
and a discount on acquisition (see Income Statement and note 4).
Commenting on the interim results, Richard Arbuthnot, Chief Executive, said:
"The plans made as a consequence of the Strategic Review continue to be
implemented and we are making good progress with executing them.
"As the benefits of the Strategic Review accrue, together with the normal
seasonality of the business, we expect a much improved underlying performance in
the second half. However, this will not make up for the shortfall in first half
profitability and the Company therefore expects the underlying performance for
the year (before exceptional items) to be broadly in line with 2005.
"The Board believes that the Group has potential for future organic growth in
its current portfolio. In addition, it can be further strengthened in the longer
term by continuing to identify acquisitions, particularly in the Engineering
Support Services and Automotive divisions, where Metalrax's niche skills can
bring further added value as a means of achieving profitable growth on the back
of its robust financial position."
For further information, please contact:
Metalrax Group plc www.metalraxgroup.co.uk
Richard Arbuthnot, Chief Executive 0121 433 3444
Bill Kelly, Group Finance Director
Smithfield
Reg Hoare/Katie Hunt/Will Swan 020 7360 4900
INTERIM REPORT
CHAIRMAN'S STATEMENT
Introduction
Metalrax is a UK-based engineering specialist group of 22 businesses exporting
to over 50 countries worldwide.
Following a Strategic Review, the Group now operates as three distinct divisions
focusing on niche activities where it can secure strong market positions based
on its technical expertise. A number of business amalgamations and
reorganisations are underway to improve efficiencies, and release surplus
property for sale. In addition, acquisitions have been made to strengthen the
Group, which are also being integrated.
The three divisions are:
* Automotive, which concentrates on precision manufacturing activities
providing supplies to automotive, telecommunications, off-road vehicles,
enclosure hardware and brewery bar display markets.
* Engineering Support Services, which provides surface coated metals,
architectural, primary and secondary steelwork, mezzanine flooring and
storage equipment and also distribute tools, fasteners and janitorial
products.
* Housewares, which produces and markets bakeware, together with
associated ranges of kitchen tools to both retail and commercial markets in
the UK and internationally.
Results
Revenues for the six months ended 30th June 2006 increased to #57.9 million from
#52.3 million (restated) in the same period last year reflecting the
contribution from acquisitions. Profit before taxation (stated before
exceptional items*) was #1.8 million compared with #3.6 million (restated) last
year, reflecting the impact of challenging trading conditions and corporate
activity. Including exceptional items, profit before tax was #3.7 million
compared to #2.4 million (restated) last year.
As reported at the Annual General Meeting, the Group is in a transitional phase
with existing businesses being reorganised and amalgamated together with
acquisitions being bedded down. Trading conditions have continued to be
challenging for several of our businesses although others have performed well.
The combined effect of all of this exceptional activity means that underlying
profits for the current year as a whole will now be lower than previously
anticipated. However, we are confident that the benefits of all the hard work
currently being undertaken will begin to emerge during 2007.
Dividend
The Board has considered the levels of dividend in the context of its continued
confidence in the longer term outlook for the group and the significant level of
cash that is being realised from property disposals arising from the
re-organisation process. As a consequence, the Company is declaring a maintained
dividend of 1.65 pence per share. The dividend will be payable on 27 October
2006 to shareholders on the register at the close of business on 6 October 2006.
*exceptional items comprise of reorganisation costs, property profits and a
discount on acquisition (see Income Statement and note 4).
Board Changes
Following the Strategic Review, the group's Board has been reconfigured and
strengthened. On 14 March 2006, Bill Kelly was appointed Group Finance Director
with Darren Farrimond reverting to the position of Group Financial Controller.
Also as part of the reorganisation of the group, on 14 March 2006 Jeff Edwards,
Hedley Brook-Carter and Garry Gresham relinquished their positions on the board
in order to concentrate their efforts on the operations of their respective
divisions.
On 1 January 2006 Andy Pearson was appointed a non Executive Director and with
effect from the end of the Annual General Meeting on 23 May 2006, took over the
chairmanship of the Audit Committee.
Acquisitions
The results include contributions from the following acquisitions:
*Stackright Building Systems acquired in November 2005
*Makespace Mezzanine Floors in January 2006
*The Belsize Engineering Company in February 2006
*Advanced Handling and Hidrosib, its Romanian subsidiary, in March 2006.
The acquisitions are all fitting in well into the Group. The integration of
Belsize, however, took longer and was more complex and costly than expected due
to the business finally being acquired out of administration, and requiring some
remedial actions to be undertaken, impacting these results. Nevertheless this
acquisition will, as set out below, be highly beneficial to the Group.
As I reported at the Annual General Meeting, the full potential of the Romanian
site is beginning to emerge. Plant and equipment released as a result of the UK
business amalgamations have been identified and have begun to be transferred
there. Further capital investment is also being made. Customer response in the
Automotive sector has been very positive and new orders have already been
received specifically for the Romanian operation. The Board believes that the
benefits will begin to appear during 2007.
Review by division
* Automotive
In line with the Strategic Review, the acquisition of Belsize and its
amalgamation onto a single site at Bacol Fine Blanking will create the country's
premier fine blanking operation, one of the largest in Europe and improve
margins. In addition, the transfer of Kenham Tools into Bacol Industries will
create a business with greater critical mass, reduced costs and improved
efficiency.
The other businesses in the division have experienced a difficult first half due
to uncertainty in the automotive sector, although order books indicate a much
better performance for the rest of the year.
The exception to this positive outlook for the division is B.S.C. (Diecasting)
where, despite the amalgamation with A&D Diecasting in 2005, performance remains
unsatisfactory.
* Engineering Support Services
The Engineering Support Services division saw excellent contributions from the
newly acquired businesses, Stackright Building Systems and Makespace Mezzanine
Floors.
However, the division's results were lower for two reasons. Firstly due to
reduced demand from three large retail based customers undergoing corporate
activity and, secondly, cost and time overruns on certain long term contracts.
In respect of the latter new management has been appointed and is taking action
to rectify the position.
The reversal of fortunes at these two businesses offers an opportunity for the
division to improve its performance in the future, in addition to further
contributions from the acquisitions.
* Housewares
The Housewares division is now trading at lower levels of activity following the
fall in demand that affected the last quarter in 2005 so significantly. Further
costs have been eliminated and, in addition, the Microwise operation has been
absorbed into George Wilkinson.
The prospects remain difficult to predict in this sector although we anticipate
that profitability will improve in the second half of 2006 producing a
stabilised result for the year as a whole.
Exceptional items
The reorganisations are inevitably producing one-off costs, particularly from
the protracted transfer of Belsize to Bacol Fine Blanking and the commencement
of transfers out to Romania. On the other hand profits (and cash flow) are being
generated from the disposal of surplus properties with further transactions
expected in the second half of the year.
The discount on acquisition, under IFRS, reflects principally the purchase of
the Romanian site, an appreciating asset, at an advantageous price.
Cash flow
Bank borrowings as at 30 June 2006 stood at #8.8 million. In the period, #5.7
million was spent on acquisitions (including the repayment of bank loans and
overdrafts), #1.4 million on routine capital expenditure and #4.5 million to pay
the dividend for 2005. Receipts from property disposals totalled #1.1 million.
In the second half, there will be #1.0 million of deferred consideration on
acquisitions to pay in addition to approximately #2.0 million of routine capital
expenditure and the 2006 interim dividend of #2.0 million.
Based on improved second half profitability and normal seasonal operating cash
generation, together with further proceeds from property disposals, bank
borrowings are expected to fall substantially by the year end.
Pensions
We have carried out an informal IAS 19 review of the group pension scheme as at
30 June 2006. As a full valuation has not been carried out the results cannot be
definitive. However the review does indicate a material improvement in the
scheme's position and we anticipate, subject to changes in stock market
conditions, being able to record a reduced deficit as at 31 December 2006.
Advisers
We are continuing to look at all aspects of our business including reviewing the
services from our advisers. Accordingly, Deloitte & Touche have been appointed
auditors to the group and Smithfield Consultants appointed to advise on
Financial Public Relations.
Outlook
The plans made as a consequence of the Strategic Review continue to be
implemented and we are making good progress in executing them. We will continue
implementing these changes during the second half of 2006.
The Board believes that the major reorganisation of the Group with four business
amalgamations, together with the recent acquisitions, will combine to put
Metalrax on a positive path to recover from the disappointments of 2005 and the
weak profitability of the first half of 2006. In the future the Group is
unlikely to be able to match past operating margins given the more challenging
economic environment. However, this will be mitigated in part by the business
amalgamations, lower cost production in Romania and higher overall volumes.
As the benefits of the Strategic Review accrue, together with the normal
seasonality of the business, we expect a much improved performance at the
operating level in the second half of 2006. However, this will not make up for
the shortfall in underlying first half profitability and the Company therefore
expects the underlying performance for the year (before exceptional items) to be
broadly in line with 2005.
Overall, the significant work needed to complete our reorganisation will delay
the full benefits being realised for the Group until into 2007.
The Board believes that the Group has potential for future organic growth in its
current portfolio. In addition, it can be further strengthened in the longer
term by continuing to identify acquisitions, particularly in the Engineering
Support Services and Automotive divisions where Metalrax's niche skills can
bring further added value as a means of achieving profitable growth on the back
of its robust financial position.
J R A Crabtree
Chairman
Consolidated income statement
Six months ended 30th June 2006
Six months ended Restated (note 5) Restated (note 5)
30 June 2006 unaudited Six months ended Year ended
30 June 2005 unaudited 31 December 2005 audited
Notes Before Exceptional Total Before Exceptional Total Before Exceptional Total
exceptional items* exceptional items* exceptional items*
items items items
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Revenue 2 57,914 - 57,914 52,307 - 52,307 104,009 - 104,009
======== ======== ====== ======= ======== ====== ======== ======= ======
Trading
profit 1,965 (439) 1,526 3,571 (1,739) 1,832 6,748 (1,783) 4,965
-------- -------- ------ ------- -------- ------ -------- ------- ------
Other
operating
income - 2,318 2,318 - 505 505 - 1,057 1,057
Operating
profit 3 1,965 1,879 3,844 3,571 (1,234) 2,337 6,748 (726) 6,022
Finance
income - - - 97 - 97 77 - 77
Finance
costs (141) - (141) (32) - (32) (32) - (32)
-------- -------- ------ ------- -------- ------ -------- ------- ------
Profit before
taxation 1,824 1,879 3,703 3,636 (1,234) 2,402 6,793 (726) 6,067
-------- -------- ------ ------- -------- ------ -------- ------- ------
Taxation 6 (670) (570) (1,653)
------ ------ ------
Profit for
the period 3,033 1,832 4,414
====== ====== ======
Earnings per 7
share
Basic and
diluted
earnings
per share 2.53p 1.53p 3.68p
Dividend
paid per 8 3.75p 3.75p 5.40p
ordinary
share
* Exceptional items comprise of reorganisation costs, property profits and a
discount on acquisition (see note 4).
Consolidated statement of recognised income and expense
Six months ended 30th June 2006
Notes 2006 2005 2005
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st Dec
Unaudited Unaudited Audited
#'000 #'000 #'000
Actuarial loss on defined benefit
pension scheme - - (1,455)
Tax on items taken directly to
equity - - 436
-------- -------- ---------
Net (expense)/income recognised
directly in equity - - (1,019)
Profit for the period 3,033 1,832 4,414
-------- -------- ---------
Total recognised income for the
period 3,033 1,832 3,395
======== ======== =========
Attributable to:
Equity holders of the parent 3,033 1,832 3,395
======== ======== =========
Consolidated balance sheet
30th June 2006
2006 2005 2005
30th June 30th June 31st December
Unaudited Unaudited Audited
#'000 #'000 #'000
Assets
Goodwill 11,215 7,332 11,058
Intangible assets 90 170 130
Property, plant and equipment 33,136 25,276 26,623
Deferred tax asset 1,744 1,203 1,744
-------- -------- ---------
Total non-current assets 46,185 33,981 39,555
-------- -------- ---------
Inventories 19,879 18,694 16,776
Trade and other receivables 27,751 24,157 23,618
Cash and cash equivalents - 2,186 2,713
Assets classified as held for sale 1,728 1,485 764
-------- -------- ---------
Total current assets 49,358 46,522 43,871
-------- -------- ---------
Total assets 95,543 80,503 83,426
======== ======== =========
Liabilities
Bank overdrafts and loans 8,829 - -
Trade and other payables 23,661 18,302 19,113
Loan notes 550 200 300
Current tax liabilities 992 880 1,018
-------- -------- ---------
Total current liabilities 34,032 19,382 20,431
-------- -------- ---------
Loan notes 500 300 750
Employee benefits 5,814 4,009 5,814
Deferred tax liabilities 2,192 1,929 1,963
-------- -------- ---------
Total non-current liabilities 8,506 6,238 8,527
-------- -------- ---------
Total liabilities 42,538 25,620 28,958
-------- -------- ---------
Net assets 53,005 54,883 54,468
======== ======== =========
Equity
Share capital 5,995 5,995 5,995
Share premium account 2,732 2,732 2,732
Capital redemption reserve 274 274 274
Retained earnings 44,004 45,882 45,467
-------- -------- ---------
Total shareholders' equity 53,005 54,883 54,468
======== ======== =========
Net equity and liabilities 95,543 80,503 83,426
======== ======== =========
Consolidated cash flow statement
Six months to 30th June 2006
Notes 2006 2005 2005
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Audited
#'000 #'000 #'000
Operating activities
Cash generated by operations 9 (390) 3,090 11,224
Interest - received - 97 77
- paid (141) (32) (32)
Income taxes paid (605) (1,327) (2,733)
-------- -------- ----------
Net cash flow from operating
activities (1,136) 1,828 8,536
-------- -------- ----------
Investing activities
Purchase of property, plant and
equipment (1,361) (2,079) (3,796)
Proceeds from sale of property,
plant and equipment 1,143 735 2,314
Acquisition of subsidiary
undertakings including bank
balances (3,568) (331) (8,875)
Proceeds from sale of business - - 652
Acquisition of business (2,124) (3,827) -
-------- -------- ----------
Net cash flow from investing
activities (5,910) (5,502) (9,705)
-------- -------- ----------
Financing activities
Equity dividends paid (4,496) (4,496) (6,474)
Increase in bank overdraft 3 8,829 - -
-------- -------- ----------
Net cash flow from financing
activities 4,333 (4,496) (6,474)
-------- -------- ----------
Net decrease in cash and cash
equivalents (2,713) (8,170) (7,643)
Cash and cash equivalents at
beginning of period 2,713 10,356 10,356
-------- -------- ----------
Cash and cash equivalents at end
of period 10 - 2,186 2,713
======== ======== ==========
Notes to the interim results
Six months to 30th June 2006
1 Basis of preparation
The accounting policies used in the interim financial statements are consistent
with those that the Directors intend to use in the annual financial statements.
The interim financial statements are unaudited and do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
statutory accounts for the year ended 31st December 2005 have been delivered to
the Registrar of Companies. The auditors' opinion in those accounts was
unqualified and did not contain a statement made under Section 237(2) or S237(3)
of the Companies Act 1985. The interim report for 2006 is unaudited but has been
reviewed by the auditors and their report to the company is set out below. The
interim report in respect of 2005 is unaudited and has not been reviewed by the
auditors.
These interim financial statements were approved by the Board of Directors on 31
August 2006.
From 1 January 2006 the company is reporting its activities under three
divisions compared to two previously. Comparative figures have been amended
accordingly.
2 Revenue analysis by geographical destination and activity
Restated Restated Restated
2006 2005 2005
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Audited
#'000 #'000 #'000
United Kingdom 43,307 39,947 76,923
Rest of Europe 11,102 8,894 19,592
North America 1,459 1,456 3,489
Rest of World 2,046 2,010 4,005
--------- --------- ---------
57,914 52,307 104,009
========= ========= =========
Automotive 21,884 19,622 36,835
Engineering Support Services 26,163 18,832 39,514
Housewares 12,415 15,923 31,959
Intra-group (2,548) (2,070) (4,299)
--------- --------- ---------
57,914 52,307 104,009
========= ========= =========
3 Segmental analysis by activity
Six months ended Restated (note 5) Restated (note 5)
30 June 2006 unaudited Six months ended Year ended
Before Exceptional items 30 June 2005 unaudited 31 December 2005 audited
Before exceptional items Before exceptional items
Exceptional Exceptional Total exceptional exceptional Total Exceptional Exceptional Total
items items items (note 4) (note 4) items items
(note 4)
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Automotive 850 926 1,776 1,590 (265) 1,325 2,649 (265) 2,384
Engineering
Support
Services 1,378 (10) 1,368 1,961 - 1,961 3,808 - 3,808
Housewares (263) 963 700 20 (969) (949) 291 (461) (170)
--------- --------- ------ --------- --------- ------ --------- --------- ------
1,965 1,879 3,844 3,571 (1,234) 2,337 6,748 (726) 6,022
========= ========= ====== ========= ========= ====== ========= ========= ======
Notes to the interim results
Six months to 30th June 2006
4 Exceptional items
2006 Restated Restated
Six months 2005 2005
ended Six months Twelve months
30th June ended ended
Unaudited 30th June 31st December
#'000 Unaudited Audited
#'000 #'000
Profit on sale of property 1,043 505 1,057
Discount on acquisition (see note 12
(iii)) 1,275 - -
Reorganisation costs (including
redundancies) (439) (415) (497)
Bad debts - (225) (225)
Closure provisions - (1,099) (1,061)
--------- ---------- ----------
1,879 (1,234) (726)
========= ========== ==========
5 Restatement
The income statement for the year ended 31 December 2005 has been restated.
Having reconsidered the amounts included within (loss)/profit from discontinued
operations it was concluded that these were not in accordance with IFRS 5:
"Non-current assets held for resale and discontinued operations" as they are not
considered to be "separate major lines of business or geographical areas" and
were not "subsidiaries acquired and held for sale". The effect of the
restatement, which does not impact on net profit is outlined below:
Six months ended Year ended
30 June 2005 unaudited 31 December 2005 audited
As Restatement As As Restatement As
previously previously restated
reported restated reported
#'000 #'000 #'000 #'000 #'000 #'000
Revenues 48,828 3,479 52,307 100,255 3,754 104,009
-------- --------- -------- -------- --------- --------
Trading
profit 4,042 (471) 3,571 7,580 (832) 6,748
Exceptional
items (135) (1,099) (1,234) (217) (509) (726)
-------- --------- -------- -------- --------- --------
3,907 (1,570) 2,337 7,363 (1,341) 6,022
Interest 65 - 65 45 - 45
-------- --------- -------- -------- --------- --------
Profit before
tax 3,972 (1,570) 2,402 7,408 (1,341) 6,067
Taxation (1,040) 470 (570) (2,177) 524 (1,653)
-------- --------- -------- -------- --------- --------
2,932 (1,100) 1,832 5,231 (817) 4,414
(Loss) from
discontinued
operations (1,100) 1,100 - (817) 817 -
-------- --------- -------- -------- --------- --------
Profit for
the period 1,832 - 1,832 4,414 - 4,414
======== ========= ======== ======== ========= ========
6 Taxation
The tax charge of 18.1% is based on the estimated rate for the year ending 31
December 2006 and is less than the standard rate of tax due to the distorting
effect of the taxation of exceptional items in the period. The tax charge for
the six months ended 30 June 2005 of 23.7% was based on a estimated effective
rate for 2005. The actual tax rate for the year ended 31 December 2005 was
27.2%.
7 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.
Notes to the interim results
Six months to 30th June 2006
8 Dividends
The dividend paid in the six months ended 30th June 2006 was the final dividend
for 2005 of 3.75 pence per ordinary share (total #4,496,000) paid on 25th May
2006.
The directors recommend the payment of an interim dividend of 1.65 pence per
ordinary share (total #1,978,000) to shareholders registered on 6th October 2006
to be paid on 27th October 2006.
9 Cash flow from operating activities
2006 2005 2005
Six months Six Twelve
months months
ended ended ended
30th June 30th June 31st
December
Unaudited Unaudited Audited
#'000 #'000 #'000
Reconciliation of operating profit to net cash
flow from operating activities
Continuing operations
Operating profit 1,965 3,571 6,748
Exceptional items (see note 4) 604 (135) (324)
Depreciation (net) 1,685 1,671 3,299
(Profit) on sale of property (1,043) (505) (1,057)
Amortisation of intangibles 40 40 80
Increase in inventories (1,758) 283 2,930
Increase in trade and other
receivables (1,716) (443) 1,902
Decrease in payables (167) (1,470) (2,781)
Movement in pensions - 78 427
--------- -------- ---------
Cash generated from continuing
operations (390) 3,090 11,224
========= ======== =========
10 Analysis of cash and cash equivalents
2006 2005 2005
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Audited
#'000 #'000 #'000
Bank balances - 2,186 2,713
Bank overdrafts - - -
--------- --------- ---------
Cash at bank per balance sheet - 2,186 2,713
========= ========= =========
11 Movement in equity
Share Share Capital Retained Total
capital premium redemption earnings equity
#'000 #'000 reserve #'000 #'000
#'000
At 1st January 2006 5,995 2,732 274 45,467 54,468
Total recognised income
for the period - - - 3,033 3,033
Dividends paid (note 8) - - - (4,496) (4,496)
-------- -------- -------- -------- --------
5,995 2,732 274 44,004 53,005
======== ======== ======== ======== ========
Notes to the interim results
Six months to 30th June 2006
12 Acquisitions
(i) On 13th January 2006 the company acquired the entire issued share capital of
Makespace Mezzanine Floors Limited, a company manufacturing lightweight
mezzanine floors. The underlying assets acquired at what the Directors
considered to be provisional fair values were as follows:
Net assets acquired 395
Fair value adjustment -
---------
395
Goodwill 157
---------
552
=========
Consideration and costs:
Cash 552
=========
The provisional goodwill created by the acquisition above has been capitalised
in the balance sheet.
(ii) On 10th February 2006 the group acquired out of Administration the trade
and assets of The Belsize Engineering Company Limited, a fine blanking business.
The underlying assets acquired at what the Directors considered to be
provisional fair values were as follows:
#'000
Net assets acquired 2,157
Fair value adjustments (25)
---------
2,132
Discount on acquisition (8)
---------
2,124
=========
Consideration and costs:
Cash 2,124
=========
(iii) On 16th March 2006 the group acquired the entire issued share capital of
Advanced Quality Solutions Limited together with its principal subsidiaries
Advanced Handling Limited, a manufacturer of materials handling equipment, and
Hidrosib SA, based in Romania. The underlying assets acquired at what the
Directors consider to be provisional fair values were as follows:
#'000
Net assets acquired 248
Fair value adjustments and revaluation 3,424
---------
3,672
Discount on acquisition (1,267)
---------
2,405
=========
Consideration and costs:
Cash 1,280
Deferred consideration 1,125
---------
2,405
=========
The provisional fair value adjustments include principally the revaluation of
two freehold sites and the reassessment of stock values.
The provisional discount on acquisition created by the acquisitions in (ii) and
(iii) above has been taken directly to the income statement as an exceptional
item (see note 4).
All of these transactions have been accounted for by the purchase method of
accounting.
13 Announcement of results
These results were announced to the London Stock Exchange on 31st August 2006.
Further copies are available from the Company Secretary, Metalrax Group PLC,
Ardath Road, Kings Norton, Birmingham, B38 9PN.
Independent review report to Metalrax Group PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30th June 2006 which comprises the income statement, the
balance sheet, the statement of recognised income and expense, the cash flow
statement and related notes 1 to 13. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company for our review work, for this report, or for the conclusions we have
formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30th June 2006.
DELOITTE & TOUCHE LLP
Chartered Accountants
Four Brindleyplace
Birmingham
31 August 2006
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