Trading Statement
January 16 2008 - 2:01AM
UK Regulatory
RNS Number:8577L
Metalrax Group PLC
16 January 2008
16 January 2008
Metalrax Group PLC
("Metalrax", "the Group" or the "Company")
Chief Executive's Review
Year End Trading Statement
Directorate Change
Metalrax today announces:
* conclusions of a strategic review undertaken by its recently appointed
Chief Executive, Andrew Richardson, including a new dividend policy;
* a year end trading statement in respect of its financial year ended 31
December 2007, in line with expectations;
* the resignation of its finance director and other management changes;
and
* notice of its preliminary results to be issued by 4 April 2008.
Conclusions of strategic review
Metalrax has concluded its Chief Executive's review, the initiation of which was
announced on 29 October 2007.
Following this review, the Board has resolved to re-organise Metalrax into two
divisions, Consumer Durables and Specialist Engineering, from the current three
(Automotive, Engineering & Support Services and Housewares). Metalrax will focus
on businesses that operate in niche markets, have significant growth potential
and barriers to entry and can each be expected to contribute meaningful profits.
The Board therefore intends to exit businesses that currently do not meet these
criteria. It is already progressing the following:
* fine blanking, which is currently incurring losses of �200,000 per
month;
* high volume, low margin automotive businesses that are unlikely to make
a meaningful contribution to future group profits; and,
* as soon as commitments allow, its Romanian business, which
notwithstanding management actions is incurring losses of approximately
�60,000 per month.
The Board anticipates that these exits will, in aggregate, be cash generative
and earnings enhancing.
The future strategy of the Group will be to pursue organic growth in its
selected businesses, in part, through focussing on innovation in products,
services and distribution. It will also look to establish operations overseas
where appropriate.
The Board also intends to supplement organic growth through selective
acquisitions of complementary technologies and companies, consistent with the
Company's new strategy.
As part of the strategic review, the Board has also reviewed Metalrax's balance
sheet and financial position. This review has identified the potential for
significant upward revaluation of the Company's property portfolio, but also the
likelihood of write-downs of various fixed and current assets. The post-tax net
effect of these changes, which will be reflected in the audited results for the
year ended 31 December 2007, is not expected to be material to the Company's
total net assets.
With respect to cash, the Company has significant headroom within its current
banking facilities. Year end net debt stood at approximately �13 million (30
June 2007: net debt of �18.1 million). As stated above, the Board anticipates
that the various intended business exits described above will generate cash and
will also serve to enhance operating cash flow through removing loss-making
businesses. In addition, the Board anticipates that Metalrax will generate
further cash from ongoing property disposals and through a management initiative
to reduce working capital.
Overall the Board believes that the Group has a very sound financial position
with significant scope for improving its financial performance.
Dividend policy
In light of the implementation of the new strategy, the Board has reviewed the
Company's dividend policy. It has resolved to implement a new, progressive and
sustainable policy whereby dividends payable by the Company will be covered
between 2.0 and 2.5 times by its earnings. Accordingly, there will be no final
dividend payable in respect of the year ended 31 December 2007.
Resignation of Finance Director and other management changes
On 15 January 2008 William Kelly, the Group Finance Director, resigned from the
Board of Metalrax. His departure was by mutual consent.
The process to identify a replacement is underway. However, in the meantime, the
Board has already put in place robust interim arrangements to manage the
Company's financial reporting and controls.
On 15 January 2008 Darren Farrimond was appointed Company Secretary.
Since the appointment of Andrew Richardson as Chief Executive, with effect from
15 October 2007, five senior managers have left, and six new senior managers
have joined, the group.
Year end trading statement
The Directors anticipate that Metalrax's underlying financial performance (that
is stated before exceptional items) in respect of the year ended 31 December
2007 will be within the range of current market expectations. An update on 2008
trading prospects will be provided at the time of the preliminary results.
Notice of results
Metalrax intends to issue its preliminary results for its financial year ended
31 December 2007 by 4 April 2008.
Andrew Richardson, Chief Executive of Metalrax, commented,
"Following the conclusion of my review, we intend to pursue our new strategy
focussed around the many successful businesses within the Group.
"I believe that Metalrax has the potential to generate greatly improved returns
to shareholders from a combination of turnaround and growth and I look forward
to delivering on that potential".
Enquiries:
Metalrax Group PLC www.metalraxgroup.co.uk
Andrew Richardson, Chief Executive 0121 433 3444
Arden Partners
Chris Fielding 020 7398 1600
Steve Douglas 0121 423 8900
Smithfield 020 7360 4900
Reg Hoare/Will Swan/Will Henderson
This information is provided by RNS
The company news service from the London Stock Exchange
END
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