RNS Number:6019R
Metalrax Group PLC
04 April 2008
4 April 2008
Metalrax Group PLC
("Metalrax", "the Company" or "the Group")
Preliminary Results (unaudited) for the year ended 31 December 2007
Metalrax, the niche supplier of specialist engineering and consumer durable
products, today announced its preliminary results for the year ended 31 December
2007.
Financial Highlights
* Revenue of �118.6m (2006: �120.2m)
* Adjusted profit before tax* �2.3m (2006: �6.5m)
* Adjusted earnings per share* 1.26p (2006: 3.72p)
* Exceptional costs before tax of �12.2m (2006: �0.4m)
* Loss for the year after tax of �7.0m (2006: profit after tax �4.6m)
* Revaluation of property increases book value by �11.7m
* Net cash generated from operating activity �4.7m (2006: �2.7m)
* Year end debt of �12.5m (2006: �10.7m) representing gearing of 24.8% -
significant headroom
*Before exceptional items (see note 3 and commentary in Financial Review)
Operational Highlights
* Turnaround in Housewares
* Commenced withdrawal from low margin automotive business
* Implementation of strategic review conclusions underway
* Significant management changes made and planned
* Current year has started satisfactorily
* Confident of improved performance
Commenting on the results, Andrew Richardson, Chief Executive, said:
"The conclusions of my initial strategic review were announced in January. We
are energetically implementing the resultant actions which are intended to take
Metalrax through a period of necessary strategic and structural change.
"The Board believes that the Group is in a very sound financial position and has
significant scope for improving its financial performance. I am pleased to
report that we have had a satisfactory start to the current financial year and
am confident of an improvement in performance."
For further information, please contact:
Metalrax Group PLC
Andrew Richardson, Chief Executive 0121 433 3444
Michael Stock, Group Finance Director
Arden Partners
Chris Fielding 020 7398 1600
Steve Douglas 0121 423 8900
Smithfield
Reg Hoare/Will Swan 020 7360 4900
A presentation for analysts will be held at 09:15 for 09:30 at Smithfield's
offices, 10 Aldersgate Street, London, EC1A 4HJ
Print resolution images are available for the media to download from
www.vismedia.co.uk
CHAIRMAN'S STATEMENT
Introduction
It has been a year of considerable change, culminating in the appointment of our
new Chief Executive, Andrew Richardson, in October. The Board has empowered
Andrew, who has successfully managed turnarounds and growth during his 20 years
in manufacturing industry, to lead Metalrax through a time of necessary
strategic and structural change.
Following the year end the conclusions of his initial strategic review were
announced and we have started to implement the resultant actions. Further
details are set out in his Review of Strategy which follows this statement.
Results
For the year ended 31 December 2007 Metalrax Group PLC achieved revenue of
�118.6 million (2006: �120.2 million). Adjusted profit before exceptional items
and tax was �2.3 million (2006: �6.5 million). After exceptional items, the
Group incurred a loss before tax of �9.9 million. Adjusted earnings per share
before exceptional items were 1.26p (2006: 3.72p) and basic (loss)/earnings per
share were (5.83p) (2006: 3.83p). Net debt at 31 December 2007 stood at �12.5
million (31 December 2006: �10.7 million) representing gearing of 24.8%.
Dividend
As indicated in our trading update of 16 January 2008, the Board 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, following the interim dividend of 1.65 pence per share which was
paid in October 2007, there will be no final dividend payable in respect of the
year ended 31 December 2007.
Acquisitions & Disposals
Following the year end, we acquired Post Glover LifeLink, Inc (PGL), from Halma
p.l.c. for a cash consideration of �3.0 million. PGL, which is based in
Erlanger, Kentucky, USA, is a world leading manufacturer of isolated electrical
power systems and electrical raceways for the medical, laboratory and
educational sectors. The acquisition is in line with Metalrax's new stated
strategy to supplement organic growth through selective acquisitions of
complementary technologies and companies. It is immediately earnings enhancing
and has been funded from Metalrax's existing cash and debt facilities.
In addition, we subsequently disposed of the net assets of the Fine Blanking
business, excluding its property, debtors and creditors, for a cash
consideration of approximately �0.5 million, to Rical Limited. This sale
represented an important step in the reorganisation of our existing operations
and the elimination of loss makers.
We expect to make further acquisitions and disposals in the future. In terms of
the latter we are reviewing our remaining high volume, low margin automotive
businesses and our loss making Romanian business.
Alternative Investment Market (AIM)
In light of our plans to make acquisitions and disposals and of the Company's
market capitalisation, the Board is proposing to move the Company's shares from
the Main Market to AIM. A circular to shareholders setting out the background to
this proposal will accompany the Annual Report. Subject to shareholder approval
at a General Meeting on Friday 23 May 2008, the transfer to AIM is to take
effect at 08:00am on Wednesday 25 June 2008.
The Board and Management
We have made further changes to the Board structure during 2007, consistent with
our Board succession planning referred to at the time of the interim results.
Richard Arbuthnot resigned as Group Chief Executive on 12 October 2007, having
announced his retirement plans in May 2007. He was succeeded by Andrew
Richardson.
Following the year end William Kelly resigned as Group Finance Director and
Company Secretary by mutual consent. The Board implemented robust interim
arrangements to manage the Company's financial reporting and controls while
seeking a replacement and are pleased that, with effect from 2 April 2008,
Michael Stock joins as the new Group Finance Director.
Reg Fort, a non-executive Director, retired after the 2007 Annual General
Meeting in May. The Board is delighted that Ian Paling joins as a new
non-executive Director from today. An announcement providing full details of his
appointment has been made separately.
In addition, to these changes, since the appointment of Andrew Richardson as
Chief Executive, fourteen senior managers have left, and nine new senior
managers have been appointed to the Group.
People
2007 has seen continued significant change throughout the Group and this has
been well supported by our people. On behalf of the Board I would like to
express our gratitude for their continued endeavours.
Executive Benefits
The Board believes that it is appropriate to bring the various executive
incentive plans up to date and in line with current best practice. Mercer
Limited was appointed during 2007 to review the existing provision. A circular
to shareholders setting out the changes arising from that review will accompany
the Annual Report.
Pensions
The deficit in the Metalrax defined benefit pension scheme has increased from
�3.2 million last year to �3.4 million. This scheme has been closed to new
members since 1999. The Board remains comfortable with its current funding
arrangements for the scheme.
Advisers
Following the year end, we appointed Arden Partners plc as the Company's
stockbroker and, in conjunction with NM Rothschild and Sons Limited who were
appointed in 2007, financial adviser. A fresh team brings new energy and
expertise that is enormously helpful in a turnaround situation and both firms
are specialists in advising companies of Metalrax's size and nature.
Outlook
The Board believes that the Group is in a very sound financial position and has
significant scope for improving its financial performance. The Group's balance
sheet remains strong with significant property assets and headroom within its
current banking facilities to underpin recovery and growth. Cash being generated
from operations will support the financial position, allowing appropriate
investments in organic and, where appropriate, acquisitive growth.
Within the Group's existing varied portfolio there are a number of good quality
businesses from which to build. Management changes, together with a strategy
focused on products that can offer improved returns and profitable growth, will
allow Metalrax to take advantage of the potential that exists within the Group.
I am pleased to report that we have had a satisfactory start to the current
financial year and view our prospects in 2008 with confidence. A further update
on current trading will be provided at the Company's Annual General Meeting on
23 May 2008.
JRA Crabtree
Chairman
4 April 2008
REVIEW OF BUSINESS OPERATIONS
Chief Executive's Review of Strategy
Introduction
In this, my first review as Chief Executive, I will present the Company's
results for the year ended 31 December 2007. However, I think it important that
I first set out the strategic changes I am implementing at Metalrax Group PLC.
Strategy, objectives and actions
My strategic review was initiated in October 2007 and the conclusions were
announced in January 2008. Strategy is meaningless without action. Therefore,
arising from this review, the Board and I resolved to:
*re-organise Metalrax from three into two divisions, Consumer Durables and
Specialist Engineering:
Consumer Durables will comprise the former Housewares division as well as the
Company's new offices in Hong Kong and China. It is likely to account for
approximately 22% of Group revenue and will supply a wide range of bakeware and
kitchenware to the retail and commercial catering markets; and
Specialist Engineering will consist of the former Engineering Support Services
division together with the specialist businesses from the former Automotive
division. It is likely to account for approximately 78% of Group revenue and
will supply niche products and services to the construction, retail and
specialist automotive markets, mainly in the UK and France. Its products and
services will be geared to solving customers' problems, using high calibre
engineering design, development and manufacturing, locally and internationally.
*focus on businesses that operate in niche markets, have significant
growth potential and barriers to entry, and that can each be expected to
contribute meaningful profits;
*exit businesses that currently do not meet these criteria;
*pursue organic growth through focussing on innovation in products,
services and distribution;
*establish operations overseas where appropriate; and
*supplement organic growth through selective acquisitions of complementary
technologies and companies which are consistent with the Company's new
strategy.
As part of the strategic review, the Board examined Metalrax's balance sheet and
financial position. This identified:
* the potential for significant upward revaluation of the Company's
property portfolio;
* the likelihood of write-downs of various fixed and current assets;
* that the various intended business exits are likely to generate cash and
will also serve to enhance operating cash flow through removing loss-making
businesses; and
* that Metalrax will generate further cash from ongoing property disposals
and through a management initiative to reduce working capital.
Actions implementing these conclusions are well underway.
Market sectors that can deliver profitable growth and good margins tend to be
niche areas where the customer requires specialist products, services or after
sales support. They have high barriers to entry often based on intellectual
property, technology or regulation. Sectors capable of delivering growth will
themselves have strong, independent growth drivers. The best businesses within
these sectors will have high-calibre people and demonstrate flexibility, close
attention to the market and the ability to solve customers' problems.
Niche areas in which Metalrax companies will operate are likely to be small and
specialised, falling beneath the radar of bigger engineering companies. The
Group will dispose of companies that do not operate in, or cannot migrate to,
such areas in suitable market sectors. It will focus on a limited number of
sectors displaying the characteristics described above. This focus will be
achieved by a combination of investment in existing businesses and selective
acquisition of new businesses.
The first example of such focus is in healthcare, demonstrated by the
acquisition since the year end of Post Glover Lifelink, Inc (PGL) which was
announced on 28 January 2008. PGL, which is based in Erlanger, Kentucky, USA, is
a world-leading manufacturer of isolated electrical power systems and electrical
raceways for the medical, laboratory and educational sectors. It is the number
two supplier in each of its primary product markets. PGL will be part of the
Specialist Engineering division and will complement other businesses within that
division that provide products to the healthcare market. PGL also provides a
foothold in the North American healthcare market and increases our technological
capability in this sector.
The Group's role is to add value to its subsidiary businesses. Value can be
added by simplifying administration across the Group, leveraging scale,
providing lower-cost capital for investment, or facilitating synergies between
businesses. Higher standards of financial reporting and analysis will drive
improved margins. Senior management and head office staff are already engaged in
a programme to ensure that all of their activities provide added value to
subsidiary businesses.
Developing people at all levels will support the growth of our businesses and
our ability to differentiate in our chosen sectors.
Finally the Board and I have concluded that, given the current market
capitalisation and the strategic objectives outlined above, the Main Market no
longer provides the most appropriate market for the trading of shares in
Metalrax and that the Group's future would be better served by moving to AIM.
REVIEW OF BUSINESS OPERATIONS
Chief Executive's Review of Operations
The 2007 results are reported in line with the divisional structure that was in
place during 2007. This comprised three divisions - Housewares, Engineering
Support Services and Automotive. Following the year end, this divisional
structure has been simplified into two divisions, namely Consumer Durables and
Specialist Engineering. Hence, future reporting will follow this new structure.
HOUSEWARES
Background
Our Housewares operations produce and market the majority of bakeware sold in
the UK, together with associated ranges of kitchen tools, to both retail and
commercial markets. We are the market leader in microwave cookware and our wine
racks are sold extensively in the UK and overseas markets. Businesses in this
division have the benefit of a good reputation and own some very strong and well
established brands. For example, the Mermaid brand is extremely popular with
professional chefs and caterers. Its popularity is also growing in the retail
market, helped by the endorsement of celebrity chefs, including Delia Smith on
her web-site. Other brands widely recognised by our trade customers and
consumers include LongLife, Progress, RTA, Microwise and Popware, for which we
won a prestigious industry award. We will continue to promote these brands
vigorously alongside our private label developments for premium brands including
AGA. Our retail customers include such premier names as John Lewis Partnership,
Lakeland, Argos, IKEA, B&Q, Morrisons, Wilkinsons Hardware Stores, Sainsbury's,
Waitrose, and House of Fraser, plus many other high street and specialist
retailers in the UK and overseas.
Management had the foresight in 2007 to open a sourcing office in mainland
China, to strengthen its existing Far East operations, and a Sales & Marketing
centre in Hong Kong. These have contributed strongly to the Division's ability
to develop and secure reliable, high quality, lower cost sources for ranges of
products for distribution via its wide customer base. Further investment is
planned for these facilities, including exclusive new product introductions.
Market
The Division's products are sold into diverse, niche markets for use either in
the home or in the professional kitchen. The markets for this Division's
products during 2007 were steady. Consumer spending is tightening, but our
products are more 'need to have' rather than 'nice to have' and are therefore
likely to be more resilient to downturns than some other product sectors.
Performance
Overall the Division performed well during 2007. On reduced revenues of �25.7
million (2006: �27.6 million) operating profit before exceptional items improved
from �1.3 million to �1.8 million although the operating loss after exceptional
items of �0.7 million was worse than the previous year's operating profit after
exceptional items of �2.2 million. This improvement was driven primarily by the
increased focus on more profitable contracts with lower margin/higher volume
work being exited where necessary. A more competitive base for future growth has
been established as a result of the achievement of appropriate and planned cost
reductions.
Projects
The largest business in this Division implemented its plan to focus on more
profitable products and customers, and also completed the restructuring of its
manufacturing and product ranges to improve its efficiency. It now occupies an
enviable niche providing high-quality bakeware products, with high levels of
availability and service, to discerning retailers and distributors in the UK.
This is achieved at competitive prices using a combination of UK based
manufacturing complemented by high quality sourcing from lower-cost economies.
Outlook
This Division has made a satisfactory start to 2008 in line with our
expectations. Pressures on raw material prices represent a potential risk for
2008 in terms of our ability to pass these increases on to customers on a timely
basis. Uncertainty surrounding the performance of the UK economy could also
affect our customers' retail sales during the year. However, new management has
been appointed before and after the year-end and I am confident that they will
pursue opportunities to achieve growth from operational and marketing
initiatives.
ENGINEERING SUPPORT SERVICES
Background
The Engineering Support Services Division comprises 11 small businesses, each
focused on different products and/or routes to market. Products ranged from
structural steel and architectural steel through metal shelving and mezzanine
floors, consumable tools, to vandal proof containers and painted steel coil. A
number of high profile projects were completed in 2007, including mobile
shelving and picture racking installations for the National Museum and Gallery
of Wales and the Herbert Museum in Coventry. Storage and handling equipment was
also installed in numerous blue chip high street stockrooms. A variety of
bespoke trailers were designed and manufactured for servicing Eurostar at St.
Pancras. Staircases and support steelwork were provided on the Sir Robert
McAlpine site at Highbury comprising 150 prestigious apartments. Various other
balconies and staircases were commissioned at premier retail developments
including Westfield in Derby.
Market
The end market for most of the products in this Division is driven by
construction of new buildings, the refurbishment and refitting of existing
buildings, and the retail sector. Products from this Division are sold almost
exclusively in the UK, a market which performed reasonably well during 2007.
However, Metalrax companies in this segment have not performed as well as their
underlying markets.
Performance
Divisional revenue (including intra-Group) was flat at �54.3 million (2006:
�54.2 million). Operating profit (before exceptional items) reduced
significantly to �1.3 million (2006: �3.6 million). The operating loss after
exceptional items was �2.0 million (2006: �3.5 million operating profit after
exceptional items). The decline in profit despite the unchanged revenue was due
to margins being squeezed by product pricing and cost. A large part of this
profit decline is attributed to the consumable tools, metal shelving and
structural steel businesses, while the materials handling and commercial
bearings businesses showed improved performance during the year.
Projects
The previously reported installation of a new paint line at Fabricote progressed
more slowly than anticipated. However consolidation of Fabricote with Cooper
Coated Coil will still take place during the first half of 2008.
The initiative to re-brand the Division as MRX Support Services has been
cancelled as a result of the revised divisional structure described above.
Outlook
Following the year-end there have been a number of changes to the management
structure governing the businesses in this Division. These have been designed to
focus on opportunities for growth across the markets in which these companies
operate. In the medium term many of the businesses are expected to demonstrate
improvements in performance. However, in the short term these businesses are
being managed very closely, and further changes are being made, to deliver their
potential. Anticipated increases in steel prices combined with additional
competitive pressures and a potential slowdown in retail could add further
challenges. Meanwhile the start to the current financial year is broadly in line
with the performance in 2007.
AUTOMOTIVE
Background
The Automotive Division focuses on press work, metal manipulation, fabrication
and assemblies for a broad spread of customers. These range from high-volume car
manufacturers through commercial, agricultural and construction vehicles, to
low-volume specialist car manufacturers. Customers in 2007 included Jaguar, Land
Rover, General Motors, JCB, TRW and Arvin.
Market
During the last few years, vehicle manufacturers and many first-tier component
suppliers have moved production out of the UK. This trend undoubtedly affected
the Group's automotive companies in terms of both volume and margin performance.
The focus during 2007 therefore remained on consolidation of operations rather
than investment for growth. In addition, overstocking by some vehicle
manufacturers had a disproportionate impact on the Automotive Division as
schedules were reduced during the year.
Performance
Divisional revenue over the year as a whole was steady at �42.4 million (2006:
�42.5 million). Operating profit before exceptional items was down at �0.3
million (2006: �2.3 million), while after exceptional items the Division
suffered an operating loss of �6.2 million (2006: �1.1 million operating profit
after exceptional items).
In addition to the impact of difficult market conditions described above, the
acquisition of Belsize and its integration into the Fine Blanking operations had
a significant, adverse impact on the management and performance of the
Automotive Division overall. Furthermore, integration of Kenham Tools &
Pressings and Prescott Powell into MRX Automotive in Smethwick was delayed
significantly as another consequence of the Fine Blanking problems.
The Division's specialist businesses that supply lower volume customers improved
during the year.
Outlook
Following the year end and as part of my review, the Group announced its
intention to exit the high-volume, low margin automotive businesses that are
unlikely to make a meaningful contribution to future Group profits. The Fine
Blanking business was subsequently sold for �0.5 million, as announced on 14
February 2008, with the Company retaining ownership of the associated property
and certain working capital components. The elimination of the losses incurred
by this business will have a significant positive impact on the Division and
Group's future performance. Our remaining high-volume, low margin automotive
businesses in the UK, together with our loss-making Romanian business, remain
under close scrutiny in order to maximise performance as quickly as possible.
I expect the more focused low-volume, niche automotive businesses to be capable
of growth as they reduce costs whilst introducing innovation in customer service
and new products. They have had a satisfactory start to the current financial
year in line with our expectations.
Working capital
We are making progress in reducing the Group's working capital having reduced
gross inventory levels since 31 December 2006 by �2.8 million to �16.7 million
and trade and other receivables (before provision) by �3.2 million. Bank loans
and overdrafts at the year end amounted to �12.0 million, which provides the
Group with significant headroom on its existing banking facilities.
People
People at all levels of the Group have become accustomed to change. They have
greeted my arrival and the consequent turbulent environment with grace and
support. I would like to record my appreciation for this.
An essential part of the Group's future success will be the fundamental change
in culture and focus away from defence toward growth. Management changes
throughout the Group have been made and will continue as necessary. I am
confident that people will support necessary changes to facilitate progressive
and profitable growth.
Current trading and prospects
Against the backdrop of an uncertain economy, our strengthened management team
is implementing our new strategy and driving performance improvements primarily
through controlling costs and improving efficiencies. We have already disposed
of the loss making Fine Blanking business and are making progress in reducing
the losses in other loss-making subsidiaries. We are also achieving organic
profit growth in our other businesses which should cushion the impact on the
Group of the expected increase in steel prices.
The current year has started satisfactorily and I am confident that the
strategic and the operational changes we are making will result in an improved
performance overall during 2008 and thereafter.
Andrew Richardson
Chief Executive
4 April 2008
REVIEW OF BUSINESS OPERATIONS
Financial Review
Results summary
The results have been prepared under International Financial Reporting Standards
("IFRS"). Revenues for the year ended 31 December 2007 at �118.6 million were
1.3% lower than in the previous year. The losses for the year before taxation
were �9.9 million against a profit for 2006 of �6.1 million. Profits before
exceptional items at �2.3 million (2006: �6.5 million) were in line with market
expectations. Further details of divisional performances are set out in the
Chief Executive's Review of Operations.
Exceptional items
During the year the Group incurred four main types of exceptional items.
The sales of surplus properties produced a profit on sale of �1.5 million.
Reorganisation costs totalling �9.6 million have been incurred in the
restructuring of various elements of the Group. The largest element relates to
the volume automotive businesses, including the cost of completing the move of
Belsize to Bacol Fine Blanking and the cost of production inefficiency during
that move; the subsequent exiting of fine blanking manufacturing in the Group;
and restructuring costs in the Romanian operations. Some reorganisation costs
were also incurred in other Group businesses including Central Management.
The Group has incurred losses totalling �1.9 million on negotiation of a
settlement on old long term contracts.
As part of its business review the Group has introduced a more systematic
approach to identifying excess stock. This, together with some amounts arising
from commercial and strategic changes, has resulted in an increase in stock
provisions totalling �2.2 million across all Group operations.
Taxation
The effective tax rate of 29.8% is very close to the standard rate of 30%.
Losses not deductible for tax purposes (mainly Romanian losses) were offset by
capital profits relieved by indexation and a small prior period adjustment.
(Loss)/earnings per share
Basic and diluted (loss)/earnings per share was (5.83p) compared to 3.83p in the
previous year. There are no dilutive effects associated with share options
granted under the 2007 Sharesave scheme during the year since these options are
out-of-the money.
Dividend and dividend policy
As has been highlighted in the Chairman's statement, the Group is to implement a
progressive and sustainable policy whereby dividends should represent between
40% and 50% of net profit before one-off items including goodwill impairment.
In line with this policy the Board does not propose to pay a final dividend,
leaving the total dividend per share in respect of 2007 at 1.65p (2006: 5.40p).
The dividend per share paid in 2007 (comprising the 2006 final dividend and 2007
interim dividend) was 5.40p (2006: 5.40p).
Cash flow and capital investment
Bank overdrafts and loans at 31 December 2007 stood at �12.0 million compared to
�9.9 million for the previous year. The debt increased in the year because
trading income did not cover the dividend payments of �6.5 million. The Group
has total unsecured banking facilities of �31 million.
Property revaluation
In 2006 the Group reported that a review had indicated that the market value of
the Group's freehold and long-leasehold properties was approximately �11.0
million in excess of their book value. A formal valuation exercise was carried
out as at 31 December 2007 on all UK property by AtisReal Limited which led to
an increase in the carrying value of �11.7 million.
FINANCIAL STATEMENTS
Consolidated income statement
Year ended 31 December 2007
2007 2006
Note Before Exceptional Total Before Exceptional Total
exceptional items* exceptional items*
items (Note 3) items (Note 3)
�000 �000 �000 �000 �000 �000
------------------- ----- ------- ------- ------- ------- ------- -------
Continuing
operations
Revenue 1 118,647 - 118,647 120,233 - 120,233
Cost of sales (95,804) - (95,804) (95,028) - (95,028)
------------------- ----- ------- ------- ------- ------- ------- -------
Gross profit 22,843 - 22,843 25,205 - 25,205
Distribution
expense (7,092) (7,092) (7,713) (7,713)
Administrative
expense (12,370) (13,689) (26,059) (10,485) (2,286) (12,771)
Other
operating
income - 1,472 1,472 - 1,878 1,878
------------------- ----- ------- ------- ------- ------- ------- -------
Operating
profit/(loss) 2 3,381 (12,217) (8,836) 7,007 (408) 6,599
Finance income - - - 6 6
Finance expense (1,120) - (1,120) (511) (511)
------------------- ----- ------- ------- ------- ------- ------- -------
Profit/(loss)
before
taxation 2,261 (12,217) (9,956) 6,502 (408) 6,094
------- ------- ------- -------
Taxation 2,970 (1,497)
------------------- ----- ------- ------- ------- ------- ------- -------
(Loss)/profit
for the year (6,986) 4,597
------------------- ----- ------- ------- ------- ------- ------- -------
(Loss)/profit for
the year
attributable
to equity
shareholders
of the parent (6,986) 4,597
------------------- ----- ------- ------- ------- ------- ------- -------
(Loss)/earnings per
ordinary share
Basic and
diluted
(loss)/earnings
per share 4 (5.83p) 3.83p
Dividends in
respect of the year
Paid (�000) 5 6,474 6,474
Paid per share 5.40p 5.40p
* Exceptional items comprised reorganisation costs, losses on long-term
contracts, stock write-downs and property profits. In 2006 the �0.4 million
charge consisted of reorganisation costs, property profits and a discount on
acquisition.
Statement of recognised income and expense
Year ended 31 December 2007
Note 2007 2006
�000 �000
------------------------------ ------ ------- -------
Revaluation of properties 11,667 -
Actuarial (loss)/gain on defined benefit
pension scheme (572) 2,441
Tax on items taken directly to equity (1,320) (733)
Exchange losses (41) -
------------------------------ ------ ------- -------
Net income recognised directly in equity 9,734 1,708
(Loss)/profit for the year (6,986) 4,597
------------------------------ ------ ------- -------
Total recognised income for the year 2,748 6,305
------------------------------ ------ ------- -------
Attributable to equity holders of the parent 2,748 6,305
------------------------------ ------ ------- -------
Consolidated Balance Sheet
As at 31 December 2007
2007 2006
�000 �000
------------------------------ ------- -------
Assets
Goodwill 11,381 11,356
Other intangible assets - 50
Property, plant and equipment 36,356 33,158
Deferred tax asset 1,609 948
------------------------------ ------- -------
Total non-current assets 49,346 45,512
------------------------------ ------- -------
Inventories 13,176 18,068
Trade and other receivables 24,338 29,099
Current tax asset 274 -
Assets held for sale 3,557 1,063
------------------------------ ------- -------
Total current assets 41,345 48,230
------------------------------ ------- -------
Total assets 90,691 93,742
------------------------------ ------- -------
Liabilities
Loan notes 250 250
Trade and other payables 22,344 22,930
Provisions 384 -
Current tax payable - 540
Bank overdrafts and loans 12,031 9,936
------------------------------ ------- -------
Total current liabilities 35,009 33,656
------------------------------ ------- -------
Loan notes 250 500
Provisions 289 -
Employee benefits 3,412 3,159
Deferred tax liability 1,143 2,128
------------------------------ ------- -------
Total non-current liabilities 5,094 5,787
------------------------------ ------- -------
Total liabilities 40,103 39,443
------------------------------ ------- -------
Net assets 50,588 54,299
------------------------------ ------- -------
Equity
Share capital 5,995 5,995
Share premium account 2,732 2,732
Capital redemption reserve 274 274
Revaluation reserve 10,262 -
Other reserve 15 -
Retained earnings 31,310 45,298
------------------------------ ------- -------
Total equity 50,588 54,299
------------------------------ ------- -------
Consolidated Cash Flow Statement
Year ended 31 December 2007
2007 2006
�000 �000
------------------------------ ------- -------
Operating activities
Cash generated from/(used in) operations 6,490 5,089
Interest received - 6
Interest paid (996) (511)
Income taxes paid (810) (1,882)
------------------------------ ------- -------
Net cash generated from/(used in) operating
activities 4,684 2,702
------------------------------ ------- -------
Investing activities
Purchase of property, plant and equipment (6,019) (3,241)
Proceeds from sale o f property, plant and
equipment 6,263 1,746
Acquisition of businesses (549) (6,692)
------------------------------ ------- -------
Net cash (used in) investing activities (305) (8,187)
------------------------------ ------- -------
Financing activities
Equity dividends paid (6,474) (6,474)
Repayment of borrowings - (690)
New bank loans raised 5,000 5,000
(Decrease)/increase in bank overdraft (2,905) 4,936
------------------------------ ------- -------
Net cash (used in)/from financing activities (4,379) 2,772
------------------------------ ------- -------
Net decrease in cash and cash equivalents - (2,713)
Cash and cash equivalents at beginning of year - 2,713
------------------------------ ------- -------
Cash and cash equivalents at end of year - -
------------------------------ ------- -------
Notes to the Consolidated Cash Flow Statement
Year ended 31 December 2007
Reconciliation of operating profit to net 2007 2006
cash flow from operating activities �000 �000
------------------------------ ------- -------
Operating (loss)/profit (8,836) 6,599
Depreciation (net of disposals) 4,872 3,428
Profit on sale of property (1,472) (1,026)
Impairment losses 2,990 -
Share-based payment expense 15 -
Exchange losses (41) -
Discount on acquisition - (852)
Amortisation of intangibles 50 80
Decrease in inventories 4,891 53
Decrease/(increase) in trade and other
receivables 4,099 (3,054)
Increase/(decrease) in payables 241 78
Decrease in non-current liabilities (319) (217)
------------------------------ ------- -------
Cash generated from/(used in) continuing
operations 6,490 5,089
------------------------------ ------- -------
Reconciliation of net cash flow to movement
in net (debt)/funds
------------------------------ ------- -------
Decrease in cash in year - (2,713)
New bank loan (5,000) (5,000)
Decrease/(increase in bank overdrafts 2,905 (4,936)
Loan notes redeemed 250 300
------------------------------ ------- -------
Movement in net debt (1,845) (12,349)
Net (debt)/funds at 1 January 2007 (10,686) 1,663
------------------------------ ------- -------
Net (debt)/funds at 31 December 2007 (12,531) (10,686)
------------------------------ ------- -------
Net (debt)/funds reconciled to the balance
sheet
------------------------------ ------- -------
Cash and cash equivalents - -
Current liabilities - loan notes, bank
overdrafts and loans (12,281) (10,186)
Non-current liabilities - loan notes (250) (500)
------------------------------ ------- -------
(12,531) (10,686)
------------------------------ ------- -------
Acquisitions
------------------------------ ------- -------
Cash consideration - 4,539
Cash acquired - (105)
Loans acquired - 1,713
Payment of deferred consideration 549 545
------------------------------ ------- -------
549 6,692
------------------------------ ------- -------
Notes
1. Revenue analysis by geographical destination and activity
2007 2006
�000 �000
------------------------------ ------- -------
United Kingdom 88,622 92,201
Rest of Europe 22,617 21,153
North America 2,712 2,252
Rest of World 4,696 4,627
------------------------------ ------- -------
118,647 120,233
------------------------------ ------- -------
Housewares 25,661 27,640
Engineering Support Services 54,348 54,175
Automotive 42,453 42,471
Intra-Group (3,815) (4,053)
------------------------------ ------- -------
118,647 120,233
------------------------------ ------- -------
2. Segmental analysis by activity
2007 2006
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 3) Total items (note 3) Total
Operating
profit �000 �000 �000 �000 �000 �000
----------- ------- ------- ------- ------- ------- ------- -------
Housewares 1,825 (2,490) (665) 1,316 866 2,182
Engineering
Support
Services 1,263 (3,217) (1,954) 3,465 (90) 3,375
Automotive 293 (6,510) (6,217) 2,226 (1,184) 1,042
----------- ------- ------- ------- ------- ------- ------- -------
3,381 (12,217) (8,836) 7,007 (408) 6,599
------- ------- ------- -------
Finance
income - 6
Finance
costs (1,120) (511)
----------- ------- ------- ------- ------- ------- ------- -------
(Loss)/profit
before
taxation (9,956) 6,094
Taxation 2,970 (1,497)
---------------- ------- ------- ------- ------- ------- -------
(Loss)/profit
for the year (6,986) 4,597
---------------- ------- ------- ------- ------- ------- -------
3. Exceptional items
Exceptional items are items of income and expenditure that, in the judgment of
management, should be disclosed separately on the basis that they are material,
either by their nature or their size, to the understanding of the financial
statements and where not to do so would distort the comparability of financial
performance between periods. Items which have been considered appropriate to
disclose as exceptional include: profits and losses on the disposal of
non-current assets; restructuring and reorganisation costs including associated
production inefficiency costs together with profits or losses on the disposal of
businesses; and significant impairments of other current assets.
2007 2006
�000 �000
------------------------------ ------- -------
Profit on sale of property 1,472 1,026
Discount on acquisition - 852
Reorganisation and restructuring costs (9,571) (2,286)
Losses on long-term contracts (1,941) -
Provision for stock write-downs (2,177) -
------------------------------ ------- -------
(12,217) (408)
------------------------------ ------- -------
4. (Loss)/earnings per share
The basic and diluted (loss)/earnings per share are calculated using the (loss)/
profit attributable to equity holders of the parent. The adjusted earnings per
share uses this figure adjusted by the post-tax exceptional charges.
Diluted earnings per share needs to be disclosed when a company could be called
upon to issue shares that would decrease net profit or increase net loss per
share. It would be inappropriate to assume that option holders would act
irrationally in exercising out-of-the money options when the company has made a
loss and therefore the existing options have no dilutive effect in the current
year. Since there are no other diluting future share issues, diluted EPS equals
basic EPS for the current year
The weighted average number of shares used in the calculation of the basic
(loss)/earnings per share, the adjusted earnings per share, and the diluted
(loss)/earnings per share is therefore 119,897,298 (2006: 119,897,298).
5. Dividends (equity)
2007 2006
�000 �000
------------------------------ ------- -------
Final dividend for 2006 paid on 25 May 2007 of 4,496 4,496
3.75p (2005 final: 3.75p)
Interim dividend for 2007 paid on 26 October 1,978 1,978
2007 of 1.65p (2006 interim: 1.65p)
------------------------------ ------- -------
Total equity dividends paid 6,474 6,474
------------------------------ ------- -------
6. Events after the balance sheet date
On 25 January 2008 the Group acquired the entire share capital of Post Glover
Lifelink, Inc. for consideration of �3.0 million settled in cash.
On 14 February 2008 the business and certain assets of Bacol Fine Blanking were
disposed of for consideration of �0.5 million
7. Section 240 statement
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2007 or 2006. The
financial information for the year ended 31 December 2006 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
audit of the statutory accounts for the year ended 31 December 2007 is not yet
complete. These statutory accounts 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 21 April 2008.
The Group's principal accounting policies as set out in the 2006 Annual Report
have been applied consistently.
8. Annual General Meeting
The Annual General Meeting will be held at the Burlington Hotel, 126 New Street,
Birmingham, B2 4DH on Friday 23 May 2007 at 12:15pm.
9. Annual Report
Copies of the Annual Report will be posted to Shareholders on Monday 21 April
2008 and will be available from the same date to the public on the Company's
website (www.metalraxgroup.co.uk) or 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 UUUCGCUPRPWW
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