RNS Number:3660T
Metalrax Group PLC
21 March 2007
21 March 2007
Metalrax Group PLC
("Metalrax", "the Company" or "the Group")
Preliminary Results (unaudited) for the year ended 31 December 2006
Metalrax, the niche worldwide supplier of specialist steel products to the
automotive, engineering support services and housewares sectors, today announced
its preliminary results for the year ended 31 December 2006:
Financial Highlights
*Revenues increased by 15.6% to #120.2m (2005: #104.0m)
*Profit before tax, excluding exceptional items*, was #6.5m (2005: #6.8m),
ahead of expectations and reflecting materially improved second half
performance
*Profit before tax, including exceptional items*, was #6.1m (2005: #6.1m)
*Basic earnings per share were 3.83p (2005: 3.68p)
*Dividend per share was maintained at 5.4p (2005: 5.4p)
*Strong financial position - significant reduction in pension deficit
Operating Highlights
*Reorganisation of Housewares underway to improve profitability from a
smaller but more sustainable operational base
*First phase of Group reorganisation completed - more changes planned for
2007
*Newly branded and structured divisions, having introduced the MRX prefix
and logo, firmly established and recognised in their markets
*Following all of the reorganisations, the Group will have five freehold
properties for sale
*Romanian facility refurbishment nearing completion with production on the
back of new orders to commence in the second quarter
*Exceptional items in 2006 of #0.4m comprise reorganisation costs, property
profits and a discount on acquisition. Exceptional items in 2005 of #0.7m
comprise reorganisation costs, property profits and bad debt charges (see note
5).
Commenting on the results, John Crabtree, Chairman, said:
"The Group remains on a robust financial footing. The signs are that the
reorganisation work is beginning to bear fruit and we are optimistic about the
future.
"The cash being generated from property disposals now and in the future
strengthens the Group financially during a time of change and also allows us to
retain our growth aspirations by continuing to consider selective acquisitions
"We have had a satisfactory start to the current financial year in line with our
expectations for the year as a whole."
For further information, please contact:
Metalrax Group plc www.metalraxgroup.co.uk
---------------------------
Richard Arbuthnot, Chief Executive 0121 433 3444
Bill Kelly, Group Finance Director
Arbuthnot Securities 020 7012 2000
Graham Swindells
Smithfield
Reg Hoare/Will Swan 020 7360 4900
CHAIRMAN'S STATEMENT
Results
For the year ended 31st December 2006 Metalrax Group PLC achieved a 16% increase
in revenue at #120.2m (2005: #104.0m).
Profit before tax, excluding exceptional items, was #6.5m (2005: #6.8m), ahead
of expectations and reflecting materially improved second half performance.
Profit before tax (including exceptional items) was #6.1 million, the same as in
the previous year.
Bank overdraft and loans as at 31 December 2006 stood at # 9.9 million (31
December 2005: #2.7 million cash in hand). This debt is expected to fall this
year subject to the timing of property disposals and from the expected
improvement in profitability.
A year of transformation
The three operating divisions have been firmly established and are reported as
follows for the first time: Automotive, Engineering Support Services and
Housewares. We have relocated and integrated Kenham Tools and Pressings to Bacol
Industries and Commercial Bearings to Metalrax (Bordesley Green). We have added
to the Group through the acquisitions of Makespace Mezzanine Floors, The Belsize
Engineering Company and Advanced Handling (including the Romanian facility).
Welland Engineering Supplies also moved to new premises at the end of the year.
Whilst the profit for the year (excluding exceptional items) as a whole is not
that dissimilar to 2005, after a very poor first half in 2006 when profits fell,
we have seen a much improved second half of the year with reported profits of
#4.7 million, well in excess of last year's #3.2 million.
This illustrates the start of the planned recovery of the Group and supports our
optimism for the future.
Further transformation in 2007
The major reorganisation of the Group, which commenced with the 2004 strategic
review, will be complete by the end of 2007, but there is still much work to be
done.
The development of our Romanian facility is a key opportunity. Surplus equipment
from the UK has now arrived in Romania and a #1 million refurbishment is nearing
completion.
Production on the back of new orders is about to commence and we expect further
orders to flow. I hope to report at the Annual General Meeting a highly
successful opening that is due to take place in early May.
Romania will also undertake about half of the business from the Prescott Powell
operation, the balance being reallocated within the Automotive Division. This
will release a further freehold property in the UK for disposal.
As reported in the Trading Update issued in January 2007, we carried out a
review of the George Wilkinson bakeware business in conjunction with KPMG, as it
continued to under perform relative to its peak a few years ago. The business
will be downsized onto one half of its existing site and turned into a smaller
more profitable business through both cost reduction and the elimination of
unprofitable contracts.
Having merged the management of Cooper Coated Coil and Fabricote, it is now time
to reduce down from two coating lines to one. This will require capital
investment of some #1.6 million and will deliver a reduction in costs, operating
from a single site with one of the most efficient lines in the world and with no
reduction in capacity. The environmental impact will be significantly improved.
Again a freehold property will be released for sale.
Dividend
As indicated in our January Trading Update, the Board is recommending the
payment of an unchanged final dividend of 3.75 pence per ordinary share to be
made on 25th May 2007 to shareholders on the register on 27th April 2007,
subject to formal approval at the Annual General Meeting on Wednesday, 23rd May
2007. This, together with the interim dividend of 1.65 pence per share, makes an
unchanged total dividend for the year of 5.4 pence per ordinary share.
The dividend policy reflects the Board's continued confidence in the longer term
outlook for the Group and the level of cash that is being realised from property
disposals arising from the re-organisation process.
Board changes
As previously reported, the Board structure has undergone a number of changes in
the year. On 14th March 2006 four board members relinquished their positions in
order to form the nucleus of the newly created operational board. Andy Pearson
joined the Board as a non executive director on 1st January 2006 and Bill Kelly
was appointed Group Finance Director on 14th March 2006.
After 12 years on the board, Reg Fort will be retiring after the 2007 Annual
General Meeting in May. On behalf of board colleagues past and present we thank
him for his wise counsel and wish him well in his retirement from the Group.
Our People
2006 has been a significant year of change for the Group, to which I welcome our
new joiners. On behalf of the Board I wish to thank all of our people for their
valued hard work and commitment to the Group. They have again proved themselves
to be our greatest asset.
Pensions
I am pleased to report that as a result of initiatives instigated by the Board,
there has been a substantial reduction in the net deficit in the main Metalrax
Scheme, from #5.8 million to #3.2 million.
Outlook and current trading
Metalrax remains on a robust financial footing. The Group has been faced by many
challenges in recent years both internally and externally generated, and as our
peers will attest, common to all involved in the global metal manufacturing
market.
The signs are that the reorganisation work is beginning to bear fruit and there
are reasons to be optimistic about the future. The cash being generated from
property disposals now and in the future strengthens the Group financially
during a time of change and also allows us to realise our growth aspirations by
continuing to consider selective acquisitions
We have had a satisfactory start to the current financial year in line with our
expectations for the year as a whole.
J R A Crabtree
Chairman
21 March 2007
CHIEF EXECUTIVE'S REVIEW
The many changes that the Group has embarked on are outlined in the Chairman's
Statement.
Details of divisional operational performances for 2006 are as follows:
Divisional structure
The three divisions - Automotive, Engineering Support Services and Housewares -
have been firmly established and recognised in their markets. As part of the
process each division has adopted a new identity - the "MRX" prefix and logo -
which is building brand strength as it is rolled out further to our market
place.
An Operational Board has been established with the Chief Executives from each
division, the Group Financial Controller together with the two group executive
directors. The operational focus of this forum is another positive and
significant change for the Group.
MRX Automotive
Divisional revenue (including intra Group) increased by 15% to #42.5 million.
However, operating profits (before exceptional items) fell to #2.2 million from
#2.6 million as an initial consequence of the acquisitions of the Romanian
operation and the Belsize Engineering business.
MRX Automotive is fortunate to participate in several niche market sectors and,
as a consequence, is not immediately vulnerable to the pressures from major cus
tomers to manufacture from a low cost economy in order to drive costs down.
However, in March 2006 the Group made a significant strategic step by acquiring
a major facility in Romania. The twenty acre site offers enormous potential for
the future. A #1 million refurbishment of part of the site is coming to
completion, and following the transfer of surplus presses from the UK,
production is about to commence. Orders, never destined for the UK, have already
been won and customer reactions to date have fuelled our optimism.
The Romanian acquisition included an existing business which in the period
produced a small loss. However this was outweighed by the fact that the
acquisition was not greenfield, came with an established English speaking
management team and an experienced work force.
Belsize Engineering was bought out of Administration in February 2006 to be
merged into the division's existing fine blanking operation. However, purchasing
the business out of Administration has been more problematic than was envisaged
at the time.
The phased Belsize move was completed at the end of January 2007, and the
freehold site that it occupied has been disposed of in 2007. Full integration of
the business is not expected to be complete until the end of the second quarter.
We now have one of the largest fine blanking operations in Europe, one that is
potentially highly profitable for the future, in contrast to the losses and
significant exceptional costs incurred in 2006.
The relocation and merger of our two presswork businesses was successfully
completed in the second half of the year. The savings resulting from moving to
one site are already beginning to show through and the vacated freehold property
is on the market. The combined enlarged business will also take up the new logo
and is now trading as "MRX Automotive". Prospects for 2007 are good.
Of the remaining businesses in the division both Toolspec and Weston Body
Hardware produced another year of consistent profit generation.
At the interim stage we highlighted an unsatisfactory performance from our
diecasting operation. Whilst the rest of the year fared much the same the
prospects for 2007 do appear, at present, a little brighter. However, in the
longer term it remains vulnerable to an inconsistent level of demand and
movements in the price of its prime raw material, zinc.
MRX Engineering Support Services
Divisional revenue (including intra Group) increased by 37% to #54.2 million,
however operating profits (before exceptional items) fell to #3.5 from #3.8
million.
Metalrax (Bordesley Green), one of the founding businesses of the Group and a
major profit contributor in recent years, suffered a significant shortfall in
profit in 2006. An overall reduction in demand in the sector as a whole was
exacerbated by three major retail customers reducing their activity levels for
varying corporate reasons. The sector has been cyclical historically but there
are signs that 2007 should see a level of improvement.
The Commercial Bearings operation, which occupied part of the Kenham site, was
relocated into available space at Metalrax Bordesley Green and had a
satisfactory year.
Our coil coating businesses merged management teams during the year in
preparation for the consolidation of the businesses onto just one coating line
during 2007 as set out in the Chairman's Statement. Difficult market conditions
resulted in a drop in profits.
The acquisitions of Stackright Building Systems at the end of 2005 and Makespace
Mezzanine Floors in February 2006, have bedded in well. The relatively small
Makespace had a record year, exceeding expectations. Stackright is a business
with great potential. Profits were ahead of expectations and Stackright's
presence in its market together with the strength of its management team bode
very well for the future.
The acquisition of Advanced Handling, a manufacturer of materials handling
equipment, was most notable for it bringing the Romanian facility into the
Group. It endured a difficult year due to over dependence on a small number of
customers. However, work on product development has aroused interest from
potential new customers making the outlook for 2007 encouraging.
Both of our businesses involved in the construction/contracting area endured
difficult years. Premier Stairways, which had enjoyed an excellent first full
year in 2005, suffered from a combination of factors. Despite an order book at
record levels, problems getting on to major sites were made worse by a series of
troublesome small contracts at the same time as the factory had reached
capacity. There has been a better start to the new year with significant order
levels and access to sites for major contracts now being given.
Down & Francis, the steel fabricator, is involved in contracts of a longer term
nature. During 2006 a number of contracts which commenced in 2005 incurred cost
and time over runs absorbing additional working capital. Management changes have
been made and whilst small, the profit contribution represents a significant
turnaround from the previous year's losses.
Six of the businesses in the division have adopted the new MRX brand and are
sharing a new customer relationship management (CRM) system to maximise the
potential for cross selling each others products.
The "MRX Support Services" brand and CRM will offer architects or project
managers on particular construction projects a "one stop shop" for cabins,
structural steelwork, mezzanine floors, staircases, atriums as well as storage.
The initiative shows all the signs of contributing to growth in 2007.
MRX Housewares
Divisional revenue (including intra Group) was 15% down at #27.6 million with
operating profits (before exceptional items) of #1.3 million compared to #0.3
million the previous year. 2005 included the discontinued businesses of MRX
Plastic Moulders and Anotrim.
The division is dominated by the bakeware business of George Wilkinson (Burnley)
now known as GW International ("GW"). A number of years ago GW contributed as
much as 25% to significantly higher Group profits overall. However, by 2005 the
business felt the full effect of cheap imports, particularly from China and the
combined effect of supermarkets driving prices down whilst at the same time raw
material (steel) prices were increasing. Although 2006's performance was no
worse than 2005, the Board, in conjunction with KPMG, instigated a profit
enhancement review to determine whether previous levels of profitability were
capable of being achieved again.
The Board has now initiated a plan to downsize GW into a smaller more profitable
business. It will vacate one half of the site it currently occupies,
significantly reduce costs including a reduction of one third of the work force
and eliminate low margin contracts. Initial signs are encouraging.
Our catering supply business enjoyed a better year but operates in a market
again under attack from cheap imports. We have determined to exit the small home
accessories business and GS Smart will be gradually run down during 2007
following the loss of a major customer. This will release warehouse/factory
space for better use within the Group.
Summary
2006 has been a year of transformation that has presented challenges to our
management teams throughout the Group and that they have dealt with admirably.
The Group now has a secure foundation on which to build for the future with a
clear direction for its growth.
The re-organisation will continue this year. We aim to transform GW
International into a stronger global player in the housewares market place;
further consolidation of our automotive operations will contribute to expansion
in Romania; and selected businesses in our Engineering Support Services
operation will become the forerunners of the new public face of the Group.
There will be significant developments ahead to accompany this new image as we
look forward to a future with many opportunities for organic growth and
selective, strategic acquisitions.
R E Arbuthnot
Chief Executive
21 March 2007
FINANCIAL REVIEW
Results summary
The results have been prepared under International Financial Reporting Standards
("IFRS").
Revenues for the year ended 31 December 2006 at #120.2 million were 16% higher
than in the previous year, reflecting contributions from the acquisitions in the
year. At the time of the interim report it was envisaged that the results for
the year would only be broadly in line with 2005. This has been confirmed with
profit before taxation at #6.1 million compared to #6.1 million in the previous
year. The profits before exceptional items at #6.5m are slightly ahead of
expectations. Further details of divisional operational performances are set out
in the Chief Executive's review.
Exceptional items
During the year the Group incurred three major types of exceptional items.
Reorganisation costs, including redundancies of #2.3 million were incurred
principally from the protracted integration of the Belsize acquisition into
Bacol Fine Blanking, and to a lesser extent the transfer of Kenham into Bacol
Industries and Microwise into GW International. Other redundancies not related
to major reorganisations have been charged in arriving at operating profits.
The acquisition of Advanced Handling in the UK brought with it the Romanian
operation. The revaluation of the Romanian freehold site resulted in an overall
excess of assets over the amount paid of #0.9 million. Under IFRS this discount
on acquisition is taken directly to the income statement.
The sale of surplus properties produced a profit on sale of #1.0 million.
As the Group completes its transformation in 2007 exceptional items will
continue to be a feature of the reported results.
Further reorganisation costs will be incurred on completing the Belsize
integration, the downsizing of the GW International bakeware business, the
transfer of Prescott Powell to MRX Automotive and Romania and finally the
consolidation of the two coil coating businesses, Cooper Coated Coil and
Fabricote, onto one coating site.
Following all of the reorganisations the Group will now have five freehold
properties to dispose of including one held in current assets. Two property
disposals have been completed to date in 2007 raising #1 million in cash. The
remaining properties will be disposed of over the course of the next two
financial years depending on exactly when they are vacated.
Tax
The effective tax rate of 24.6% is lower than the standard rate of 30% due to
property profits being relieved by capital losses and indexation and the
discount on acquisition being taxed at the Romanian rate of 16%.
Earnings per share ("EPS") and dividends
Basic EPS were 3.83p per share compared to 3.68p in the previous year,
benefiting from a lower tax charge. The Directors have decided to maintain the
payment of the final dividend at 3.75p per share making an unchanged dividend
for the year of 5.4p per share. The required resolution to approve it will be
put to the forthcoming Annual General Meeting.
Cash flow/capital investment
Bank overdrafts and loans at 31 December 2006 stood at #9.9 million compared to
net funds of #2.7 million for the previous year. The principal reasons for the
movement into borrowing was the continued investment in routine capital
expenditure of some #3.2 million together with #6.7 million spent on acquiring
new businesses and a temporary working capital outflow of approximately #3.0
million.
The Group now has total unsecured banking facilities of #31 million.
Debt is expected to fall this year, subject to the timing of the disposal of
surplus properties and improved profitability.
Acquisitions
During the year the Group made three acquisitions:
* 13th January 2006 Makespace Mezzanine Floors Ltd.
* 10th February 2006 the trade and assets of The Belsize Engineering
Company from the Administrator.
* 16th March 2006 Advanced Handling Ltd (including its Romanian
subsidiary).
With deferred consideration and debt acquired, overall spending on acquisitions
was #6.7 million in the year.
Foreign exchange
The Group currently transacts in both dollars and euros at a modest level, and
being principally based in the UK is less exposed to currency fluctuations than
many of its UK peers in the engineering sector. Exposure to currency movements
is managed through limited amounts of forward buying.
During the year there were no material currency gains or losses.
Pensions
The Group's gross IAS19 pension deficit has shown a significant reduction at
#3.2 million (2005: #5.8 million).
The defined benefit scheme was closed to new members over seven years ago.
Following an increase in member contribution rates from 8% to 12% on 1st July
2006 the Group introduced a new defined contribution scheme as an alterative
option for members, resulting in a reduction in active membership. The Group is
continuing to monitor the implications for future contribution rates and has
agreed to increase the company contribution from 1st January 2007 from 25.9% to
30.0%, albeit on a much reduced pensionable payroll.
During the year the Group paid #929,000 in contributions compared to a current
service cost of #555,000.
Net assets
The Group's net assets at 31 December 2006 stood at #54 million.
A review of the value of the Group's freehold properties has indicated that
their market value is in excess of their book value by approximately #11
million, increasing net assets to approximately #65 million, representing net
assets per share of 54 pence.
Restatement
As set out in the Interim statement, 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".
Auditors
During the year Deloitte & Touche LLP were appointed as auditors in place of
Bentley Jennison. On behalf of the Board I would like to thank Bentley Jennison
and its predecessor firms, for their many years as auditors and for their
assistance during that period.
Going concern
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the accounts.
W.D. Kelly, F.C.A.
Group Finance Director
21 March 2007
Consolidated Income Statement
Year ended 31 December 2006
2006 2005
Before Before
exceptional Exceptional exceptional Exceptional
Continuing items items * Total items items Total
operations #'000 #'000 #'000 #'000 #'000 #'000
--------- --------- --------- --------- --------- ---------
Revenue 120,233 - 120,233 104,009 - 104,009
Cost of sales (95,028) - (95,028) (80,602) - (80,602)
--------- --------- --------- --------- --------- ---------
Gross profit 25,205 - 25,205 23,407 - 23,407
Distribution
costs (7,713) - (7,713) (7,054) - (7,054)
Administrative
expenses (10,485) (2,286) (12,771) (9,605) (1,783) (11,388)
Other
operating
income - 1,878 1,878 - 1,057 1,057
--------- --------- --------- --------- --------- ---------
Operating
profit 7,007 (408) 6,599 6,748 (726) 6,022
Finance income 6 - 6 77 - 77
Finance costs (511) - (511) (32) - (32)
--------- --------- --------- --------- --------- ---------
Profit before
taxation 6,502 (408) 6,094 6,793 (726) 6,067
Income tax
expense (1,497) (1,653)
--------- ---------
Profit for the
year 4,597 4,414
--------- ---------
Attributable
to:
Equity holders
of the parent 4,597 4,414
--------- ---------
Earnings per
share:
Basic and
diluted
earnings per
share 3.83p 3.68p
Dividend paid
per ordinary
share 5.40p 5.40p
The basic and diluted earnings per share are calculated on the profit for the
year. The number of shares used in the calculations is 119,897,298.
* Exceptional items comprise reorganisation costs, property profits and a
discount on acquisition (see note 5).
Consolidated Statement of Recognised Income and Expense
Year Ended 31 December 2006
2006 2005
#'000 #'000
-------- --------
Actuarial gain/(loss) on defined benefit scheme 2,441 (1,455)
Tax on items taken directly to equity (733) 436
-------- --------
Net income/(expense) recognised directly in equity 1,708 (1,019)
Profit for the year 4,597 4,414
-------- --------
Total recognised income for the year 6,305 3,395
-------- --------
-------- --------
Attributable to equity holders of the parent 6,305 3,395
-------- --------
Consolidated Balance Sheet
As at 31 December 2006
2006 2005
#'000 #'000
-------- --------
Assets
Goodwill 11,356 11,058
Other intangible assets 50 130
Property, plant and equipment 33,158 26,623
Deferred tax asset 948 1,744
-------- --------
Total non-current assets 45,512 39,555
-------- --------
Inventories 18,068 16,776
Trade and other receivables 29,099 23,618
Cash and cash equivalents - 2,713
Assets held for sale 1,063 764
-------- --------
Total current assets 48,230 43,871
-------- --------
-------- --------
Total assets 93,742 83,426
-------- --------
Liabilities
Loan Notes 250 300
Trade and other payables 22,930 19,113
Current tax liabilities 540 1,018
Bank overdrafts and loans 9,936 -
-------- --------
Total current liabilities 33,656 20,431
-------- --------
Loan notes 500 750
Employee benefits 3,159 5,814
Deferred tax liabilities 2,128 1,963
-------- --------
Total non-current liabilities 5,787 8,527
-------- --------
-------- --------
Total liabilities 39,443 28,958
-------- --------
-------- --------
Net assets 54,299 54,468
Equity
Share capital 5,995 5,995
Share premium account 2,732 2,732
Capital redemption reserve 274 274
Retained earnings 45,298 45,467
-------- --------
Total equity 54,299 54,468
-------- --------
Consolidated Cash Flow Statement
Year ended 31 December 2006
2006 2005
#'000 #'000
-------- --------
Operating activities
Cash generated from operations 5,089 11,224
Interest received 6 77
Interest paid (511) (32)
Income taxes paid (1,882) (2,733)
-------- --------
Net cash from operating activities 2,702 8,536
-------- --------
Investing activities
Purchase of property, plant and equipment (3,241) (3,796)
Proceeds from sale of property, plant and equipment 1,746 2,314
Acquisition of businesses (6,692) (8,875)
Proceeds from sale of business, plant and equipment - 652
-------- --------
Net cash used in investing activities (8,187) (9,705)
-------- --------
Financing activities
Equity dividends paid (6,474) (6,474)
Repayment of borrowings (690) -
New bank loans raised 5,000 -
Increase in bank overdraft 4,936 -
-------- --------
Net cash from financing activities 2,772 (6,474)
-------- --------
Net decrease in cash and cash equivalents (2,713) (7,643)
Cash and cash equivalents at beginning of year 2,713 10,356
-------- --------
Cash and cash equivalents at end of year - 2,713
-------- --------
Notes to the Cash Flow Statement
2006 2005
#'000 #'000
------- -------
a) Reconciliation of operating profit to net cash from
operating activities
Continuing operations
Operating profit 6,599 6,022
Depreciation, net of disposals 3,428 3,299
Profit on sale of property (1,026) (1,057)
Loss on disposal of business - 402
Discount on acquisition (852) -
Amortisation of intangibles 80 80
Decrease in inventories 53 2,930
Increase in trade and other receivables (3,054) 1,902
Increase in payables 78 (2,781)
Decrease in non-current liabilities (217) 427
------- -------
Cash generated from continuing operations 5,089 11,224
------- -------
b) Reconciliation of net cash flow to movement in net (debt) / funds
Decrease in cash in the period (2,713) (7,643)
New bank loan (5,000) -
Increase in bank overdraft (4,936) -
New loan notes issued - (750)
Loan notes redeemed 300 200
------- -------
Movement in net funds in the year (12,349) (8,193)
Net funds at 1 January 2006 1,663 9,856
------- -------
Net (debt) / funds at 31 December 2006 (10,686) 1,663
------- -------
c) Net (debt) / funds reconciled to the balance sheet
Cash and cash equivalents - 2,713
Current liabilities - loan notes, bank overdrafts and loan (10,186) (300)
Non - current liabilities - loan notes (500) (750)
------- -------
(10,686) 1,663
------- -------
d) Acquisitions
Cash consideration 4,539 8,125
Cash acquired (105) -
Bank overdraft acquired - 152
Loans acquired 1,713 -
Payment of deferred consideration 545 598
------- -------
6,692 8,875
------- -------
Notes to the Accounts
Year ended 31 December 2006
1. Geographical revenue analysis by destination and activity
Geographical 2006 2005
#'000 #'000
-------- --------
United Kingdom 92,201 76,923
Rest of Europe 21,153 19,592
North America 2,252 3,489
Rest of World 4,627 4,005
-------- --------
120,233 104,009
-------- --------
Activity 2006 2005
#'000 #'000
-------- --------
Automotive 42,471 36,835
Engineering Support Services 54,175 39,514
Housewares 27,640 31,960
Intra-group (4,053) (4,300)
-------- --------
120,233 104,009
-------- --------
2. Segmental analysis by activity
Before Before
exceptional Exceptional 2006 exceptional Exceptional 2005
Operating items items Total items items Total
profit #'000 #'000 #'000 #'000 #'000 #'000
------- ------- ------- ------- ------- -------
Automotive 2,226 (1,184) 1,042 2,649 (265) 2,384
Engineering
Support
Services 3,465 (90) 3,375 3,808 - 3,808
Housewares 1,316 866 2,182 291 (461) (170)
------- ------- ------- ------- ------- -------
7,007 (408) 6,599 6,748 (726) 6,022
Engineering Engineering
Support 2006 Support 2005
Other Automotive Services Housewares Total Automotive Services Housewares Total
information #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
-------- -------- -------- ------ ------- -------- -------- ------
Capital
Expenditure 1,618 1,202 368 3,188 1,428 508 1,481 3,417
Depreciation 1,495 989 840 3,324 1,260 841 1,023 3,124
Amortisation - 80 - 80 - 80 - 80
-------- -------- -------- ------ ------- -------- -------- ------
Balance sheet
Segment 33,002 36,330 23,247 92,579 30,614 24,022 24,147 78,783
Assets
Unallocated
Assets 1,163 4,643
-------- -------- -------- ------ ------- -------- -------- ------
Total Assets 93,742 83,426
-------- -------- -------- ------ ------- -------- -------- ------
Segment
liabilities 7,365 10,617 3,207 21,189 9,906 4,657 3,451 18,014
Unallocated
liabilities 18,254 10,944
-------- -------- -------- ------ ------- -------- -------- ------
Total
liabilities 39,443 28,958
-------- -------- -------- ------ ------- -------- -------- ------
The unallocated assets and liabilities represent corporate assets and
liabilities, cash, tax (including deferred tax) and pension scheme obligations.
3. Tax
The tax charge for the year was #1,497,000 (2005:#1,653,000) and the effective
tax rate was 24.6% (2005:27.2%)
4. 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 in net profit is outlined below:
2005
As previously
reported Restatement As Restated
#'000 #'000 #'000
-------- -------- --------
Revenue 100,255 3,754 104,009
-------- -------- --------
Trading Profit 7,580 (832) 6,748
Exceptional Items (217) (509) (726)
-------- -------- --------
7,363 (1,341) 6,022
Interest 45 - 45
-------- -------- --------
Profit before tax 7,408 (1,341) 6,067
Taxation (2,177) 524 (1,653)
-------- -------- --------
5,231 (817) 4,414
(Loss) from discontinued operations (817) 817 -
-------- -------- --------
Profit for the Period 4,414 - 4,414
-------- -------- --------
5. Exceptional Items
2006 2005
#'000 #'000
------ -------
Profit on sale of property 1,026 1,057
Discount on acquisition 852 -
Reorganisation costs (including redundancies) (2,286) (1,558)
Bad debts - (225)
------ -------
(408) (726)
------ -------
As a consequence of the reorganisation of a number of businesses within the
Group costs have been incurred through redundancies and relocation. The release
of properties arising from the reorganisations has resulted in profits on
disposal.
A discount on acquisition arose principally due to the revaluation of the
freehold property within the Romania operation.
In 2005 bad debts were incurred from MG Rover Group Ltd and Powertrain Limited.
6. Dividends
2006 2005
Dividends (Equity) #'000 #'000
------- --------
Final dividend for 2005 paid on 27 May 2006 of 3.75p 4,496 4,496
(2004: final 3.75p)
Interim dividend for 2006 paid on 7 October 2006 of 1.65p 1,978 1,978
(2005: 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 2007. The
final dividend amounts to #4,496,000 (2005: #4,496,000), and has not been
included as a liability in these financial statements.
7. Section 240 statement
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2006 or 2005. The
financial information for the year ended 31 December 2005 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under s. 237 (2) or (3) Companies Act 1985. The
statutory accounts for the year ended 31 December 2006 will be finalised on the
basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the company's annual general meeting.
Whilst the information included in this preliminary announcement has been
computed in accordance with International Financial Reporting Standards (IFRS),
this announcement does not itself contain sufficient information to comply with
IFRS. The Company expects to publish full financial statements that comply with
IFRS on 12 April 2007.
The Group's principal accounting policies as set out in the 2005 Annual Report
have been applied consistently.
8. The Annual General Meeting will be convened for Wednesday 23 May 2007.
9. Copies of the Report and Accounts will be posted to Shareholders on 12 April
2007 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
FR PUUQWWUPMGRU
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