RNS Number:5337K
Metalrax Group PLC
25 September 2001
Sharper than expected downturn hits Metalrax interim results
First profit decrease for twenty years - dividend unchanged
"Current anticipation...this year will prove to be a temporary setback"
"A combination of cyclical factors has adversely affected our trading
performance" also "the sharper than expected downturn of industrial output"
states Mr Eric Moore, chairman, in reporting an interim pre-tax profit
decrease to #5.305m (#6.535m) and turnover reduced to #50.208m (#52.038m) at
Metalrax Group PLC - specialist engineering services - for the half year to
June 30.
The interim dividend remains unchanged at 1.65p per share payable from
earnings per share of 3.04p (3.74p), and Mr Moore includes a pertinent
reminder that "we have navigated through pervious recessionary periods" while
"for nearly twenty years...producing record interim and final results" and
"current anticipation is that this year will prove to be a temporary setback".
Abilities of management teams to reduce costs and protect margins have been
fully tested, and the engineering and storage products division "suffered the
worst pain from the abrupt reduction in demand". Operating profit for this
division was #3.408m (#4.305m) on turnover of #28.246m (#31.293m). New
precision assemblies and additional innovative products received encouraging
response in the market and "future trading periods will benefit".
For the housewares division "retail spending has remained relatively buoyant"
as turnover increased to #21.962m (#20.745m), but with "customers looking to
expand volume at the expense of selling prices and profit margins," operating
profit reduced to #1.845m (#2.191m). The acquisition in June of Classic
Housewares consolidated the group's position as the leading European
manufacturer of kitchen bakeware, with other new products being developed for
leading DIY chains.
The chairman concludes that "the strength, diversity and flexibility of our
operations will continue to deliver satisfactory returns for shareholders".
Further information: Mr. Eric Moore, chairman - Telephone 0121 433 3444
Statement by the chairman
Results and dividend
For nearly twenty years we have successfully defied external economic
pressures in producing record interim and final results. However, in the first
half of this year a combination of cyclical factors has adversely affected our
trading performance. The signs of returning confidence reported at the
annual general meeting proved to be a false dawn, when product sales in June
fell below anticipated levels. This slowdown was inevitably reflected in the
figures for the six months to 30th June 2001 when turnover was reduced to
#50.208m from #52.038m and pre-tax profit decreased to #5.305m from #6.535m.
Based on the current level of group profitability, the directors have declared
an unchanged interim dividend of 1.65 pence per share payable on the 30th
October 2001 to shareholders on the register at the close of business on 5th
October 2001.
Review
One of the main objectives set by our management teams has been to counter the
worst effects of the sharper than expected downturn of industrial output, with
rather sluggish demand and tough competition on a global scale. Our abilities
to reduce costs and protect margins have been fully tested, especially in
relation to commodities, energy prices and levies over which we have little
control.
On a more positive note there are some encouraging signs from the accompanying
group newsletter that numerous ongoing business initiatives will create
opportunities for both operating divisions.
Engineering and storage products
This division suffered the worst pain from the abrupt reduction in demand when
life cycles of some projects were terminated, while replacements were deferred
by those customers looking to rationalise and also reduce cost bases. The
development of several new precision assemblies reached advanced stages and
future trading periods will benefit when associated sales volumes come on
stream.
Weakness in capital spending from a number of industrial sectors reduced the
contribution from storage and structural installations. Additional innovative
products were launched and received encouraging response in the market, where
direct and distributor customers welcomed the further options available to
them for bulk storage applications and composite schemes.
Housewares
Retail spending has remained relatively buoyant in a market dominated by the
demands of customers looking to expand volume at the expense of selling prices
and profit margins. In June, as part of our response to these pressures, we
acquired the trading assets and business of Classic Housewares Limited which
will help to consolidate our position as the leading European manufacturer of
kitchen bakeware. In the brief period since joining the group its contribution
to the results was obviously very limited.
Stylish designs in beds and headboards have opened the way to further growth,
with new bathroom products being developed for leading DIY chains and trade
distributors. Our profile in export markets has been maintained through
negotiation of major contracts with leading international retailers.
Prospects
In recent years we have spread our marketing base so that we are not dependent
on manufacturing alone, with other new services contributing an increasingly
major part of trading profits. This strategy is now proving particularly
beneficial at a time when according to official figures the manufacturing
sector as a whole is in recession.
We have navigated through previous recessionary periods and intend to use
those experiences and achievements in weathering the present storm. Current
anticipation is that this year will prove to be a temporary setback and that
the strength, diversity and flexibility of our operations will continue to
deliver satisfactory returns for shareholders.
Eric Moore
25th September 2001
Consolidated profit and loss account
six months ended 30th June 2001
2001 2000 2000
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Audited
Notes #'000 #'000 #'000
Turnover 1 50,208 52,038 104,698
====== ====== =======
Operating profit 5,384 6,626 14,559
Goodwill amortisation 131 130 262
------ ------ ------
5,253 6,496 14,297
Interest receivable 165 163 282
------ ------ ------
5,418 6,659 14,579
Interest payable 113 124 237
------ ------ ------
Profit before taxation 5,305 6,535 14,342
Taxation 3 1,631 1,999 4,289
------ ------ ------
Profit after taxation 3,674 4,536 10,053
Minority interests - equity
interests 12 20 47
------ ------ ------
Profit for the period 3,662 4,516 10,006
====== ====== =======
Appropriated as follows:
Interim dividend
1.65p per share payable
30th October 2001
(2000: 1.65p per share) 5 1,984 1,984 6,495
Retained profit for
the period 1,678 2,532 3,511
------ ------ ------
3,662 4,516 10,006
====== ====== =======
Earnings per share - basic
and diluted 6 3.04p 3.74p 8.30p
Consolidated balance sheet
30th June 2001
2001 2000 2000
30th June 30th June 31st December
Unaudited Unaudited Audited
#'000 #'000 #'000
Fixed assets
Intangible assets 4,734 4,963 4,865
Tangible assets 25,922 25,305 25,548
Investments 200 200 200
----- ------ ------
30,856 30,468 30,613
------ ------ ------
Current assets
Stocks 20,457 18,089 16,879
Debtors 22,910 22,647 21,157
Cash at bank 3,879 5,153 7,403
------ ------ ------
47,246 45,889 45,439
Creditors
Amounts falling due
within one year 24,925 25,919 24,682
------ ------ ------
Net current assets 22,321 19,970 20,757
------ ------ ------
Total assets less current
liabilities 53,177 50,438 51,370
Creditors
Amounts falling due after
more than one year 15 46 28
------ ------ ------
53,162 50,392 51,342
Provision for liabilities
and charges
Deferred taxation 1,366 1,451 1,366
------ ------ ------
Net assets 51,796 48,941 49,976
====== ====== =======
Financed by:
Capital and reserves
Called up share capital 6,014 6,014 6,014
Share premium account 2,355 2,355 2,355
Capital redemption reserve 224 224 224
Profit and loss account 42,659 39,850 40,851
------ ------ ------
Shareholders' funds - equity
interests 51,252 48,443 49,444
Minority interests - equity
interests 544 498 532
------ ------ ------
51,796 48,941 49,976
====== ====== =======
Cash flow statement
six months ended 30th June 2001
2001 2000 2000
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Audited
#'000 #'000 #'000
Cash inflow from operating
activities 5,325 5,806 16,183
Net cash inflow from returns
on investments and servicing
of finance 52 39 45
Taxation paid (1,553) (1,347) (4,629)
Net cash outflow for capital
expenditure and financial
investment (1,771) (2,035) (3,945)
Net cash outflow for
acquisitions (891) - (799)
Equity dividends paid (4,510) (4,209) (6,194)
------ ------ ------
Cash outflow before
management of liquid resources
and financing (3,348) (1,746) 661
Net cash inflow from management
of liquid resources 702 1,328 1,808
Financing
Purchase of own shares - (655) (655)
Borrowings repaid (177) (2) (159)
------ ------ ------
(177) (657) (814)
------ ------ ------
Decrease in cash in the period (2,823) (1,075) 1,655
====== ====== ======
Notes on the cash flow statement
six months ended 30th June 2001
2001 2000 2000
Six months Six months Twelve months
ended ended ended
30th June 30th June 31st December
Unaudited Unaudited Audited
#'000 #'000 #'000
1 Reconciliation of operating
profit to net cash flow from
operating activities
Operating profit 5,253 6,496 14,297
Depreciation, net of
disposal surpluses 1,648 1,627 3,172
Amortisation of goodwill 131 130 262
Increase in stocks (1,577) (1,950) (899)
Increase in debtors (1,643) (1,734) (215)
Increase in creditors 1,513 1,237 (434)
------ ------ ------
Net cash inflow from
operating activities 5,325 5,806 16,183
====== ====== ======
2 Reconciliation of net cash
flow to movement in net funds
Decrease in cash in the period (2,823) (1,075) 1,655
Cash outflow for decrease
in debt 177 2 159
Cash inflow from decrease in
liquid resources (702) (1,328) (1,808)
------ ------ ------
(3,348) (2,401) 6
Effect of foreign exchange
rate changes (132) (161) (197)
------ ------ ------
Movement in net funds in
the period (3,480) (2,562) (191)
Net funds at 31st December 2000 4,874 5,065 5,065
------ ------ ------
Net funds at 30th June 2001 1,394 2,503 4,874
====== ====== ======
3 Analysis of net funds Foreign
At Cash exchange At
31.12.00 flow movement 30.6.01
#'000 #'000 #'000 #'000
Bank balances 4,479 (2,823) 1 1,657
Short-term deposits 2,924 (702) - 2,222
------ ------
Cash at bank per
balance sheet 7,403 3,879
Debt (2,529) 177 (133) (2,485)
------ ------ ------ ------
4,874 (3,348) (132) 1,394
====== ====== ====== ======
Notes to the interim results
six months to 30th June 2001
1 Segmental analysis
Analysis by activity 2001 2000 2000
Six months Six months Twelve months
to 30th June to 30th June to 31st December
Unaudited Unaudited Audited
Operating Operating Operating
Turnover profit Turnover profit Turnover profit
#'000 #'000 #'000 #'000 #'000 #'000
Engineering and
storage products 28,246 3,408 31,293 4,305 59,411 8,890
Housewares 21,962 1,845 20,745 2,191 45,287 5,407
------ ------ ------ ------ ------ ------
50,208 5,253 52,038 6,496 104,698 14,297
====== ====== ======= ====== ====== =======
Geographical analysis
by origin Operating Operating Operating
Turnover profit Turnover profit Turnover profit
#'000 #'000 #'000 #'000 #'000 #'000
United Kingdom 46,356 5,053 48,292 6,234 96,632 13,817
North America 3,852 200 3,746 262 8,066 480
------ ------ ------ ------ ------ ------
50,208 5,253 52,038 6,496 104,698 14,297
====== ====== ====== ====== ====== ======
Geographical turnover
analysis by destination #'000 #'000 #'000
North America 4,283 4,293 9,686
Germany 750 553 1,222
Spain 341 540 856
France 410 505 1,031
Sweden 229 322 594
Belgium 312 320 655
Holland 267 351 690
Austria 790 302 898
Eire 429 264 592
Finland 94 140 255
Rest of Europe 549 358 786
Africa 26 33 75
Far East, Australia
and other 649 678 1,311
United Kingdom 41,079 43,379 86,047
------ ------ ------
50,208 52,038 104,698
====== ====== =======
2 Accounting policies
The unaudited interim results for the half year ended 30th June 2001 have been
prepared on the basis of the accounting policies set out in the report and
accounts for the year ended 31st December 2000. 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 2000, which have been
delivered to the registrar of companies, carry an unqualified report by the
auditors, and do not contain a statement under section 237(2) or (3) of the
Companies Act 1985.
3 Taxation
The charge for taxation is based on the estimated effective rate for the year
as a whole.
4 Recognised gains and losses
There were no material recognised gains or losses in the results other than
the consolidated profit for the period.
5 Dividend
The directors recommend the payment of an interim dividend of 1.65p per
ordinary share to shareholders registered on 5th October 2001 to be paid on
30th October 2001.
6 Earnings per share
The earnings per ordinary share are calculated on the profit for the period.
The number of shares used in the calculation of basic earnings per share is
120,270,740 being the shares in issue during the period (2000: 120,732,000).
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.
7 Announcement of results
These results were announced to the London Stock Exchange on 25th September
2001 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.
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