TIDMMRX
RNS Number : 8637T
Metalrax Group PLC
15 June 2009
15 June 2009
Metalrax Group PLC
Preliminary results for the year ended 31 December 2008
Metalrax Group PLC ("Metalrax", the "Group"), the niche supplier of specialist
engineering and consumer durables products, today announces its preliminary
results for the year ending 31 December 2008.
Highlights:
* Revenues up 6.6% to GBP74.8m (2007: GBP70.2m) from continuing activities
* Gross margin improvement of 1.4% to 24.2% (2007: 22.8%) from continuing
activities
* GBP2.0m operating profit before exceptional items, goodwill impairment and share
based payments (2007: GBP2.6m) from continuing operations. The Group has made a
loss for the year of GBP16.2m (2007: 7.0m).
* Cash generation from operations remains strong at GBP5.2m (2007: GBP6.5m)
* Re-focusing of the Group into two divisions: Consumer Durables and Specialist
Engineering
* Acquisition of Post Glover LifeLink (PGL), performance above Management
expectations
* Successful disposal or closure of six businesses in line with strategic review
goals
* Consolidation of three businesses to maximise efficiencies
* Moved to the AIM market in June 2008
Results
+----------------------------------+------------+--------------------+--------------+---------------+
| | 2008 | 2008 | 2007 | 2007 |
+----------------------------------+------------+--------------------+--------------+---------------+
| | Continuing | Total | Continuing | Total |
| | activities | Group+ | activities | Group+ |
| | GBP'm | GBP'm | GBP'm | GBPm |
+----------------------------------+------------+--------------------+--------------+---------------+
| External revenues | 74.8 | 104.8 | 70.2 | 118.6 |
+----------------------------------+------------+--------------------+--------------+---------------+
| Gross margins | 24.2% | 21.6% | 22.8% | 19.3% |
+----------------------------------+------------+--------------------+--------------+---------------+
| Operating profit before | 2.0 | 3.1 | 2.6 | 3.2 |
| exceptional items*, goodwill | | | | |
| impairment and share based | | | | |
| payments | | | | |
+----------------------------------+------------+--------------------+--------------+---------------+
| Loss before interest and | (1.4) | (14.5) | (4.2) | (9.0) |
| taxation | | | | |
+----------------------------------+------------+--------------------+--------------+---------------+
| (Loss)/earnings per 5p Ordinary | (2.60p) | (13.55p) | (1.84p) | (5.83p) |
| share | | | | |
+----------------------------------+------------+--------------------+--------------+---------------+
| Adjusted earnings per 5p | 0.21p | 1.10p | 3.85p | 4.36p |
| Ordinary share | | | | |
+----------------------------------+------------+--------------------+--------------+---------------+
| Cash generated from operating | 1.8 | 5.2 | 3.6 | 6.5 |
| activities | | | | |
+----------------------------------+------------+--------------------+--------------+---------------+
| Net debt | | 12.5 | | 12.6 |
+----------------------------------+------------+--------------------+--------------+---------------+
| Gearing | | 40.1% | | 24.8% |
+----------------------------------+------------+--------------------+--------------+---------------+
| Dividends paid per 5p Ordinary | | nil | | 5.40p |
| share | | | | |
+----------------------------------+------------+--------------------+--------------+---------------+
* Exceptional items (note 3) are items of income and expenditure that, in the
judgement 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.
+ The results of the total Group have been reported above to aid the comparison
of the results presented in 2007 Annual Report and Accounts.
Andrew Richardson, Group Chief Executive, said:
"Current economic conditions reaffirm the need for the Group's repositioning
into growing, defensible niche sectors in line with the January 2008 strategic
review and we anticipate 2009 being a challenging year.
Although trading has improved slightly during the course of 2009, if this
trend does not improve further over coming months, the Directors would expect
the Group's performance in the current year to fall below current market
expectations."
For further information:
+--------------------------------------+-------------------------------+
| Metalrax Group PLC | |
+--------------------------------------+-------------------------------+
| Andrew Richardson, Chief Executive | 0121 433 3444 |
+--------------------------------------+-------------------------------+
| | |
+--------------------------------------+-------------------------------+
| Arden Partners plc | |
+--------------------------------------+-------------------------------+
| Chris Fielding | 020 7398 1600 |
+--------------------------------------+-------------------------------+
| Steve Douglas | 0121 423 8900 |
+--------------------------------------+-------------------------------+
| | |
+--------------------------------------+-------------------------------+
| Hogarth Partnership | 020 7357 9477 |
+--------------------------------------+-------------------------------+
| Rachel Hirst | |
+--------------------------------------+-------------------------------+
| Andrew Jaques | |
+--------------------------------------+-------------------------------+
| Anthony Arthur | |
+--------------------------------------+-------------------------------+
Chairman's Statement
The strategy set out in our Strategic Review is to build a business focused on
specialist engineering products occupying niche positions in growth markets,
supported by significant barriers to entry. In pursuit of this strategy the
Group completed one acquisition, three disposals and three closures during the
course of 2008. Additionally, three businesses were consolidated into other
existing operations. As a consequence, the Group started 2008 with twenty-one
operating businesses and finished the year with thirteen. Since the year end the
Group has disposed of a further business. Exiting from underperforming sectors
and the consequent avoidance of further potential losses and cash outflows
significantly reduces the Group's risk profile.
The GBP3.2m acquisition of Post Glover LifeLink (PGL) takes us into the growing
market for the supply of specialist medical equipment, perfectly fitting the
strategic criteria outlined above. Acquired in January 2008, PGL has exceeded
management's expectations and significantly enhanced its operating profit in the
year ended 31 December 2008.
The Group's strategic momentum has continued since the year end. In April 2009,
we announced the disposal of BSC Diecasting. MRX China's operations have also
been consolidated into other operating businesses in 2009.
Results
The resilience of our continuing businesses is demonstrated by their success in
increasing revenues to GBP74.8m (2007: GBP70.2m) during an increasingly
difficult year. Adjusted operating profit before exceptional items, goodwill
impairment and share based payments was GBP2.0m (2007: GBP2.6m). After
exceptional items, the Group incurred a loss before tax and discontinued
operations of GBP2.2m (2007: GBP5.2m. Exceptional items including goodwill
impairment and share based payments amounted to GBP17.6m (2007: GBP12.2m) and
were predominantly associated with the restructuring programme, with GBP14.2m
relating to discontinued operations. Of this, GBP11.6m related to goodwill and
asset impairment. The Group therefore incurred a loss after tax of GBP16.2m
(2007: GBP7.0m). Adjusted Group earnings per share before exceptional items,
goodwill impairment and share based payments were 1.10p (2007: 4.36p) and basic
loss per share was (13.55p) (2007: (5.83p) note 6).
Dividend
The Group's policy is to make dividend payments that are covered between 2.0 and
2.5 times by its earnings. In light of the current economic conditions and the
Group's performance in 2008, there will be no dividend payable in respect of the
year ended 31 December 2008.
People
The year also saw considerable change to the Group's Board as we positioned
ourselves for growth under a talented and energetic new management team. As
announced in last year's annual report Michael Stock was appointed as Group
Finance Director on 2 April 2008, succeeding William Kelly who resigned by
mutual consent on 15 January 2008. In addition, Ian Paling joined the Group as
non-executive Director on the 4 April 2008.
More recently, Andrew Pearson resigned as non-executive Director at the end of
2008 and John Adcock informed the Group that he will stand down as non-executive
Director following the 2009 Annual General Meeting. The Board would like to
record its thanks to Andrew Pearson and John Adcock for their significant
contribution to Metalrax.
The Group's restructuring alone has created substantial challenges for our
people, but the exceptional conditions presently affecting the economy impose
additional burdens and discomfort. Many of our employees and other stakeholders
have been personally and financially compromised by actions to assure the
Group's long term future. Our employees have been very supportive and I would
like to record my thanks and those of the entire Board to all involved.
Outlook
As announced in March 2009, trading in the first two months of 2009 was
significantly below the levels experienced in 2008, although subsequent trading
has shown a slight improvement. Against the current economic backdrop,
visibility of future trading levels continues to be very limited and, in the
Directors' opinion, there is a wide range of potential outcomes for the Group in
the current financial year. Although trading has improved slightly during the
course of 2009, if this trend does not improve further over coming months, the
Directors would expect the Group's performance in the current year to fall below
current market expectations.
In the meantime, we will vigorously pursue organic growth opportunities within
our continuing operations, continue to reduce costs and focus our business on
markets that will deliver long-term shareholder value.
Going concern
The Group has commenced re-financing discussions with its bankers to secure
fully committed facilities. Whilst these discussions are significantly
progressed, at the time of signing the accounts they had not yet been finalised,
but I look forward to updating shareholders appropriately in due course. Further
details of the Group's liquidity position and going concern are given in the
Financial Review and note 1 to the accounts.
Chief Executive's Review
Strategy, objectives and actions
The key strategic objectives for the year announced by the Group were: to stop
losses and exit non-core businesses; to turnaround and strengthen the strategic
focus of existing core businesses and to further progress the acquisition
strategy on businesses in target growth sectors.
Though the current economic situation has not fundamentally altered the
underlying strategy, it has impacted the Group's tactics and approach in a
number of ways. Most apparent has been the acceleration of the closure and
disposal programme for non-core businesses, which has moved apace. However, the
inability to maximise asset sales, caused by weak market conditions, has brought
challenges of its own. The overall result has been a significantly increased
focus on cash conservation and cost reduction in lieu of business acquisitions.
Despite the factors described above, the overall strategic goals of the Group
remain to:
* Be a specialist engineering Group;
* 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; and
* Pursue organic growth and increased margins by focussing on innovation in
products, services and distribution.
Strategic achievements to date include the acquisition of US based PGL, a world
leading manufacturer of isolated electrical power systems and electric raceways
for the medical, laboratory and educational sectors. Acquired in January 2008
for GBP3.2m, PGL has exceeded management's expectations and significantly
enhanced its operating profit in the year ended December 2008.
The Group has also successfully refocused its Consumer Durables division through
the consolidation of its RTA Wineracks business into GW International, and by
relocating its Samuel Groves operation to reduce costs and altering the focus of
its business model.
Specific accomplishments of the Specialist Engineering division include the
streamlining of the Group's coating operation through the consolidation of its
Fabricote businesses into Cooper Coated Coil; the closure of three construction
sector dependent businesses, Makespace Mezzanine Floors, Down and Francis, and
Stackright Building Systems; and the stabilisation of the remaining construction
sector reliant Premier Stairways business.
All high volume automotive operations were exited during 2008, including the
sale of Bacol Fine Blanking, MRX Automotive, and the Welland distribution
businesses. As well as this, the Group ceased automotive manufacturing in
Romania.
Alongside all these activities the Group's net borrowings at the end of the year
were GBP12.5m (2007: GBP12.6m) despite having acquired PGL for GBP3.2m. Cash
generated in 2009 from business and property sales amounted to GBP1.2m.
The Group also transferred its listing from the Main Market to AIM on the 25
June 2008, thereby lowering compliance costs and enabling the more efficient and
cost-effective execution of restructuring activities.
Review of 2008 performance
2008 was a year of substantial change and also saw the onset of the current
financial crisis. Despite this, for the year ended 31 December 2008 the Group
reports revenues of GBP74.8m (2007: GBP70.2m) from continuing activities.
Adjusted operating profit before exceptional items, goodwill impairment and
share based payments was GBP2.0m (2007: GBP2.6m). After exceptional items, the
Group incurred a loss before tax and discontinued operations of GBP2.2m (2007:
Loss of GBP5.2m). Losses from discontinued operations amounted to GBP13.1m
(2007: GBP4.8m), reflecting losses in the year and write-down in asset values as
explained in the Financial Review, resulting in a Group loss for the year of
GBP16.2m (2007: Loss of GBP7.0m).
Adjusted earnings per share before exceptional items were 1.10p (2007: 4.36p)
and basic losses per share were 13.55p (2007: Losses of 5.83p (note 6).
Net debt at 31 December 2008 stood at GBP12.5m (31 December 2007: GBP12.6m)
representing gearing of 40.1% (2007: 24.8%).
The 2008 results are reported in line with the simplified divisional structure
implemented during the year which comprises of two divisions - Consumer Durables
and Specialist Engineering.
During 2008 significant operational progress was made across both divisions
through the strengthening of management competencies and through the
restructuring of the Executive Board and the divisional organisation. We have
also focused on developing and strengthening subsidiary managing directors,
which will facilitate the Group's ongoing progress and further development of
other senior staff has commenced. Focused investment is now being undertaken in
Sales and Marketing to drive local growth initiatives. The repositioning of the
Group, as outlined in my strategic review in January last year has made great
strides with the acquisition of Post Glover LifeLink and the disposal, by
closure or sale, of six trading entities during the year and one since the year
end.
Consumer Durables
Revenues from continuing activities were down 0.8% to GBP25.5m (2007: GBP25.7m).
Operating profit before exceptional items was down 25.0% to GBP1.5m (2007:
GBP2.0m). Operating profit after exceptional items has increased to GBP0.5m
(2007: Loss of GBP0.2m) as a result of lower exceptional items in the period.
Businesses in this division are market leaders in bakeware and microwave
cookware sold in the UK. The division's major brands are Mermaid, Long Life,
Progress, RTA and Microwise. In November 2008, RTA won a trade award -
"Innovative Product of the Year" for RTA Eco Chef Chopping Boards, made from
recycled cardboard.
Financial performance of this division was adversely affected by the weakening
of Sterling against the US Dollar in the second half of the year. Increased
steel prices in the latter part of 2008 and the start of 2009 also affected
short term margins. This division also has potential exposure to retail business
failures evidenced by the rapid demise of Woolworths, which was a major
customer. However, management has minimised the risks of bad debts through
careful credit control. In addition, the professional catering market has been
affected by the downturn in investment by hotels, pubs and restaurants across
the UK.
However, the largest part of the division's sales and margin comes from
bakeware. This market has remained strong as European consumers choose to eat at
home rather than eat out. As well as being motivated by the economic conditions,
an increased awareness of healthy eating is encouraging consumers to return to
home cooking instead of convenience foods. These products are 'need to have'
rather than 'nice to have'. The main adverse impact of the recession on bakeware
products is in the UK where retailers have focused on lower margin promotions.
Our response to this includes operational efficiency improvements enabled by the
higher volume nature of such promotions.
A number of structural changes and investments were made to our Consumer
Durables businesses during the year.
Samuel Groves, our catering equipment business was relocated at the end of the
year to new premises and remodelled, reducing operating and logistics costs. The
relocation was completed in January 2009, enabling its management now to
concentrate on sales growth, based around a more clearly focused product range,
with high levels of service already being delivered to the customer.
Our wine rack business, RTA has transferred its administration, warehousing and
distribution functions to the GW International site, reducing costs and
improving economies of scale in terms of customer support.
The sales team across the division now has a wider range of products to sell to
the existing customer base, to create more opportunities. We introduced
exclusive Teflon bakeware made in China, in a worldwide exclusive arrangement
negotiated with Du Pont, with the first shipments made to Lakeland Limited in
September 2008. Further new product developments included the introduction of
the Annabel Karmel licensed children's bakeware range. Annabel Karmel is a world
renowned specialist in advice and re-assurance to parents with children under
10. Moving into 2009 we plan to continue with further investment on automated
processes in our bakeware manufacture to improve our competitive position.
Tooling developments are underway in China to meet international
customer-specific demands for bakeware development.
2009 has begun with margins in this division still under pressure from the
effects of the weakened Sterling and the impact of rising steel prices, although
actions are ongoing to pass on these price increases wherever possible, whilst
retaining the goodwill of our customers who are increasingly focused on
promotions to create market share.
The medium term outlook is favourable, as our investments and actions are aimed
at producing progressive improvements to take advantage of the current trading
climate and establish future profit improvements.
Specialist Engineering
Revenues from continuing activities were up 10.8% to GBP49.3m (2007: GBP44.5m).
Operating profit before exceptional items and goodwill impairment was up 81.0%
to GBP3.8m (2007: GBP2.1m). Operating profit after exceptional items and
goodwill impairment has increased to GBP2.2m (2007: loss of GBP2.5m) as a result
of lower exceptional items in the period.
Investment in the key businesses, the acquisition of Post Glover LifeLink,
divestment and consolidation of non-core businesses provide the focal point for
the progress made in Specialist Engineering during 2008.
Investment in new capital equipment at Cooper Coated Coil (CCC) allowed the
consolidation of CCC with its sister company Fabricote to be completed. This
investment programme has given us the most efficient coil coating bakeware line
in the world. CCC now has the largest market share of pre-coated metal for the
bakeware market within the European Community. Aggressive financial targets were
met, allowing the business to double its profitability compared with the
previous year. The business commenced the supply of coil coated products to
China for resale back to Europe during 2008. The market for this business has
remained reasonably strong during 2008 and early 2009, as European consumers
move towards home cooking, motivated by the economic conditions and increased
awareness of healthy eating benefits.
Post Glover Lifelink, which was acquired by the Group for GBP3.2m in January
2008 performed ahead of management expectations. PGL, which is based in Northern
Kentucky, supplies medical electrical and safety equipment and is an
increasingly strong force within its domestic and export markets. The business
was successfully integrated into the Group and showed strong sales and profit
growth under Metalrax's first year of ownership. Investments have been made in
new product development, restructuring of manufacturing operations and export
growth. Whilst some of the benefits of these investments were seen in 2008,
further benefits will come through in 2009. These benefits will help counteract
the effects of the US recession, from which PGL and its market are sheltered but
not unaffected.
Weston Body Hardware is a specialist full service light assembly business
focused on access control systems. It was impacted by the recession from Q4 2008
and this has continued into early 2009. However, management are forecasting
recovery in the second half of 2009 following new trading agreements in Europe,
and will focus on developing opportunities in 'green energy generating systems'
and medical assembly.
Toolspec is recognised as a specialist fabricator to the global vehicle market.
Although the customer base is dominated by off-highway and specialist vehicle
manufacturers, management dealt swiftly and effectively with the sudden downturn
within this sector in late 2008. The business also secured orders to provide
chassis components for the new Jaguar XJ vehicle to be launched in Q4 2009. The
business is now well placed for a recovery in vehicle volumes.
Metalrax Storage launched a major drive in 2008 to increase market share through
more focused marketing and sales activity. This culminated in securing two
prestigious projects as well as a major UK government framework agreement. The
market for its products declined sharply in Q4 2008 and underlying market demand
in early 2009 remains poor. However, the business has retained its major retail
customers, some of which are continuing to increase the number of store refits
during 2009.
Sections & Tubes manufactures rolled steel sections for UK manufacturers
including Metalrax Storage. Such manufacturers were impacted by the recessionary
climate during 2008 and early 2009. Management has concentrated on reducing
costs, whilst developing the skills of the workforce to increase flexibility and
make the changes demanded by the marketplace.
Advanced Handling offers bespoke materials handling solutions, mainly to the UK
market. It launched a significant new product during 2008 - a specialist
elevator for mezzanine floors. The business enjoyed growth in its niche products
and new market sectors, offsetting the decline in the sales of standard products
due to price pressures, which have continued into 2009. As a result of this
change in product mix, sales remained static in 2008, with increased margins.
The business is increasing its marketing emphasis to generate further sales into
the healthcare, nuclear, military and food processing applications.
Premier Stairways, which was loss making in 2008, is now half way through a
recovery programme. Its market for specialist architectural metalwork declined
in the second half of 2008, specifically in the private housing, public housing,
office and industrial sectors. Premier appointed a new Managing Director in late
2008 and now has a growing order bank and consistent factory throughput. It is
focussing on building a solid and sustainable key customer base and improving
factory productivity and customer service.
A decline in demand at our Commercial Bearings business led to restructuring
activity to reduce costs. This has proved insufficient to offset the drop in
sales. The business is being run for cash while attempts are made to secure a
sale of the business as a going concern.
Discontinued businesses
The strategy of the Group since January 2008 has been to stop losses and exit
all non-strategic businesses. This strategy has proven even more appropriate as
the economic environment has continued to deteriorate. A number of closures and
disposals have been accelerated where markets have turned down very sharply or
where there has been risk of significant cash costs (such as bad debts or future
closure costs) arising from continuing operations.
Revenues for discontinued businesses for year ended 31 December 2008 were
GBP30.0m, 38.0% behind the prior year (2007: GBP48.4m). Losses after exceptional
items and goodwill impairment relating to these businesses amounted to GBP13.1m
(2007: GBP4.8m).
Bacol Fine Blanking traded in Metalrax ownership until February 2008, when it
was sold to Rical Limited. The business generated an operating profit of GBP1.0m
from the beginning of the year until the point of sale, as a result of
innovative management actions taken prior to transferring ownership.
Down & Francis traded until June 2008 when it was closed. The operating loss in
2008 prior to closure was GBP0.2m.
MRX Automotive (formerly Bacol Industries, Kenham Tools and Pressings and
Prescott Powell) traded under Metalrax ownership until December 2008, when it
was sold to Sertec Birmingham Limited. It generated an operating profit of
GBP1.9m until the point of sale. We do not believe that it would have traded
profitably in 2009. The significant costs of future closure were avoided by the
disposal of this business.
Stackright Building Systems suffered dramatically as a result of the downturn in
the construction sector. It started the year strongly but was heavily exposed to
price sensitive rental markets. The business traded until December 2008, when it
was closed. The operating loss in 2008 was GBP0.9m, which rose to GBP5.0m,
primarily goodwill impairment of GBP3.6m and closure costs of GBP0.5m.
Welland traded under Metalrax ownership until December 2008, when it was sold to
a local businessman. The business generated a small operating profit until the
point of sale, but exceptional costs on disposal reduced this to a loss of
GBP0.2m.
Makespace Mezzanine Floors was hit by cost pressures and bad debts within the
construction downturn. It traded until December 2008, when it was closed. The
operating loss in 2008 was GBP0.3m, which rose to GBP0.6m with closure costs.
BSC Diecasting was hit by the downturn in volumes within automotive and brewery
trades. It traded until April 2009, when it was sold. The operating profit was
GBPnil in 2008 with exceptional asset impairment charges of GBP0.6m. Potential
closure costs of GBP0.5m were avoided by the disposal.
The Group retained the freehold properties from the business operations of Bacol
Fine Blanking, MRX Automotive, Welland and BSC Diecasting. These properties are
expected to generate rental incomes and will be available for disposal as and
when appropriate. We have subsequently sold the freehold property relating to
Makespace Mezzanine Floors and Stackright Building Systems. The freehold
property formerly occupied by Samuel Groves has been retained and is currently
being marketed for sale along with other vacant properties.
Exceptional items
Exceptional items in 2008 totalled GBP17.6m (2007: GBP12.2m), and were
predominantly associated with the restructuring programme described above, with
GBP14.2m (2007: GBP5.4m) relating to discontinued operations. Of the GBP17.6m
charge, GBP11.6m is non-cash relating to goodwill and asset impairment. Further
details about exceptional items are given in the Financial Review and in note 3
to the accounts.
People
Since the Company embarked on implementing its new strategy, substantial
management changes have taken place and we have invested significantly in people
development amongst our continuing and new employees. This programme includes
in-depth reviews of personal strengths, development opportunities, goals and
objectives. Future development in 2009 will focus on commercial skills and
strategies designed to support growth of profitable sales during the recession.
All efforts are focused on building a strong and decentralised Group of
companies.
During 2008 the number of Divisional Chief Executives was reduced from four to
two, reflecting the restructuring of our businesses and the reduced number of
operating subsidiaries.
The Executive Committee now comprises four executives: Group Chief Executive,
Andrew Richardson; Group Finance Director, Michael Stock; Chief Operating
Officer, Mike Smith, who is now responsible for both our Specialist Engineering
and Consumer Durables Divisions; and Director of Corporate Development, Caroline
Green, who is responsible for implementing business and asset disposals,
acquisitions and corporate finance.
Working capital
Working capital remains a key area of focus for management. Throughout 2008,
inventory reduced by GBP2.1m and trade and other receivables reduced by GBP5.8m,
primarily as a result of the business closure and sale programme. Working
capital in the continuing businesses declined slightly, notwithstanding the
growth achieved by those businesses. Further detail is provided in the Financial
Review.
Current trading and prospects
Current economic conditions reaffirm the need for the Group's repositioning into
growing, defensible niche sectors in line with the January 2008 strategic review
and we anticipate 2009 being a challenging year.
The Directors announced in March 2009 that trading in the first two months of
2009 was significantly below the levels experienced in 2008 although subsequent
trading has shown a slight improvement. However, against the current economic
backdrop, visibility of future trading levels remains very limited and, in the
Directors' opinion, there remains a wide range of potential outcomes for the
Group in the current financial year. Although trading has improved slightly
during the course of 2009, if this trend does not improve further over coming
months, the Directors would expect the Group's performance in the current year
to fall below current market expectations.
The Group has the benefit of having significantly reduced its exposure to the
automotive and construction markets since the beginning of 2008. However, parts
of the Group remain exposed to these sectors. The Group has also moved into some
market sectors related to British government spending. These market sectors now
pose new risk due to the state of public finances in the UK. The lower
technology businesses face continuing pressures on top line and margins. Our
commercial catering business remains under pressure due to the lack of
investment in hotels, restaurants and pubs.
However, there are a number of bright spots within our portfolio of businesses.
The technology-led businesses within the Specialist Engineering division, such
as Cooper Coated Coil and Post Glover LifeLink, possess proprietary technology
and supply into defensible market sectors. The market for Post Glover LifeLink's
medical products in North America is defensible, as are its export markets,
mainly in the Middle East. The European domestic bakeware market also remains
strong, as consumers have switched from dining out to lower cost and healthier
home cooking options. This is the largest market for our Consumer Durables
business and it is also a significant sales driver for Cooper Coated Coil's
specialist steel coating products.
Central and legacy costs have been a financial burden to the Group. However, as
the Group reduces in complexity and reaches the final stages of its
restructuring processes, it will be possible to reduce many of these costs. The
benefits of these savings will start to appear in 2009 and will take on greater
significance in 2010.
Bank borrowings and overdrafts at the end of 2008 were at GBP12.5m (2007:
GBP12.0m). During the first quarter of 2009 borrowings increased, as announced
in March 2009. However, the Directors have instituted measures to preserve cash,
which have resulted in borrowings reducing to a seasonal norm.
The Group has enjoyed the benefit of an unencumbered balance sheet and
well-priced borrowing facilities for many years. However, the current financing
climate means that it is necessary for the Group to negotiate new, secured and
committed refinancing. The Directors look forward to announcing progress with
these negotiations in due course. Further details are provided in the Financial
Review.
In the short-term, the priority of the Board is to focus assiduously on cash
conservation and cost reduction, creating the financial stability that will
enable us to press ahead with our strategic plans.
Financial Review
Results summary
The results have been prepared under International Financial Reporting Standards
("IFRS").
The Consolidated Income Statement reports the Revenue and Operating income and
expenditure of the Group's continuing businesses. The ongoing turnaround of the
Group has resulted in a number of businesses being closed or disposed of in the
year under review. The trading results of businesses that have been closed or
sold are reported separately as discontinued operations at the base of the
Income Statement.
Revenues
Revenue from continuing activities for the year ended 31 December 2008 at
GBP74.8m were 6.6% ahead of the prior year (2007: GBP70.2m). Total external
revenues for the Group were GBP104.8m (2007: GBP118.6m). Further details of the
divisional performances are set out in the Chief Executive's Review and note 2
to the accounts.
Operating profit/loss
Operating profits from continuing businesses before exceptional items, goodwill
impairment and share based payments at GBP2.0m (2007: GBP2.6m) were in line with
the revised market expectations. Operating losses for continuing businesses
before interest and taxation were GBP1.4m (2007: Loss of GBP4.2m).
Cash generation
The Group has continued to focus on working capital management and cost control
during the period. The cash out flow on discontinued activities represents the
cash cost of reorganisation and the experienced downturn in trade prior to
closure or disposal of these businesses. Total cash generated from operations
was GBP5.2m (2007: GBP6.5m). Of this, GBP1.8m was generated from continuing
operations (2007: GBP3.6m).
Exceptional items
The Group has incurred significant one-off exceptional costs including goodwill
impairment and share based payments in 2008 totalling GBP17.6m (2007: GBP12.2m).
The vast majority of this total was incurred in respect of discontinued
businesses (GBP14.2m) as the group continued to implement its strategy to
reposition its focus on businesses that operate in niche markets, have
significant growth potential and barriers to entry and that can be expected to
contribute meaningful cash and profits. Of the GBP17.6m of exceptional items
incurred in 2008, GBP11.3m related to non-cash items resulting from the
impairment of assets prior to business closure or disposal, the impairment of
goodwill and the charge for the IFRS2 share option expense.
The exceptional items incurred can be broadly categorised into the following
types:
* Re-organisation costs incurred in restructuring various elements of the Group
has resulted in a GBP4.4m charge to exceptional items (2007: GBP8.9m);
* A further GBP0.5m provision was charged in respect of the onerous contract in
MRX Romania (2007: GBP0.7m);
* The closure and disposal of businesses has resulted in impairment provisions
totalling GBP5.0m reflecting the realisation of fixed asset and working capital
at less than book value (2007: GBP2.2m). An additional GBP0.3m asset impairment
results from the relocation of Samuel Groves to Oldbury in December 2008 (2007:
GBPnil);
* Onerous lease costs of GBP1.4m (2007: GBPnil) relate to future vacant property
rentals payable following the closure of Stackright Building Systems; and
* The deterioration in the commercial property market in 2008 resulted in the
devaluation of our property portfolio. Of the GBP4.6m reduction in market value,
GBP4.3m has been taken directly to the revaluation reserve and GBP0.3m charged
to exceptional, being the impairment below the original historic cost of two of
our properties.
Each year, the Group reviews the carrying value of its goodwill and in 2008 this
has resulted in an impairment of GBP5.5m (2007: GBPnil), GBP4.7m of which
relates to discontinued businesses.
The IFRS 2 share option charge of GBP0.2m (2007: GBPnil) has been disclosed
separately on the face of the income statement as this is considered to be a
non-trading item.
Net finance costs
Finance costs incurred in the year comprise bank interest of GBP0.7m (2007:
GBP1.0m) and the pension finance cost of GBP0.2m (2007: GBP0.1m). Interest of
GBP0.1m (2007: GBPnil) was received in respect of tax refunds collected from
HMRC in relation to prior periods.
Taxation
The Group is not expecting to pay any UK cash tax in respect of its 2008 trading
results. Tax of GBP1.2m was refunded in respect of 2007 losses carried back to
prior tax periods.
The effective tax rate of the Group is 23.5% (2007: 29.8%) which is
significantly lower than the standard rate of 28.5% (2007: 30.0%). The major
reconciling items are due to the high level of expenses not deductible (mainly
goodwill and asset impairments) and the additional deferred tax liability
recognised for the first time in 2008 following the change in the UK tax
legislation in respect of Industrial Buildings Allowances (further details are
provided in note 5).
Loss /earnings per share
The basic and diluted loss per share was 13.55p compared with 5.83p in the
previous year. There are no dilutive effects associated with share options
granted under either the executive share option plans or the employee Sharesave
scheme during the year since these options are currently out-of-the-money.
Dividend and dividend policy
The group is committed to its dividend policy announced in its 2007 Report and
Accounts. This progressive and sustainable policy aims to pay, where
appropriate, 40% to 50% of net profit.
In line with this policy, the Board does not propose to pay a final dividend for
the year, and therefore there has been no dividend in 2008 (2007: 5.40p). The
Board believes that this is appropriate given the status of the turnaround plan
and is fully consistent with its current focus on cash management.
Property, plant & equipment
A formal valuation exercise was commissioned at the end of 2008 to update the
market value of the commercial properties owned by the Group. This resulted in a
devaluation of our properties of GBP4.6m which has been reflected in the
financial statements. Of this GBP4.6m, GBP4.3m relates mainly to properties that
were previously revalued upwards in 2007 and this has been taken against the
revaluation reserve. The balance of GBP0.3m which is shown as an exceptional
impairment relates to property values falling below historic cost.
The Group has invested GBP3.4m (2007: GBP6.0m) in new capital, mainly the new
paint line at Cooper Coated Coil (GBP1.6m) and the relocation of Samuel Groves
to leased premises in Oldbury (GBP0.5m).
Goodwill & intangibles
In January 2008, the Group acquired Post Glover Lifelink Inc. ("PGL") for a
total cash consideration of GBP3.2m. PGL is based in Erlanger, Kentucky, USA and
is involved in the manufacture of isolated electrical power systems and
electric raceways for the medical, laboratory and education sectors. The PGL
acquisition resulted in goodwill of GBP1.7m and intangible assets of GBP0.6m.
The annual review of goodwill resulted in a GBP5.5m impairment during the year
(2007: GBPnil), relating primarily to businesses which were discontinued in the
year (GBP4.7m). Of the remaining goodwill at the end of the year of GBP7.6m,
GBP1.7m relates to PGL and GBP5.9m relates to the Consumer Durables division.
Pensions
The pension deficit over the year has decreased by GBP0.4m. Given the declines
we have seen in investment markets over the last year, the reduction in the fair
value of assets of GBP4.9m (30.0%) was tempered by the position taken in 2007 to
reduce the plan's exposure to equities. The plan's liabilities have also
decreased by GBP5.3m (26.8%), principally due to the increased discount rate and
lower inflation assumptions. The IAS 19 deficit at 31 December 2008 is GBP3.0m.
The pension fund also concluded its triennial scheme specific valuation as at 1
January 2008 and the Group has agreed a deficit recovery plan and future
contributions with the Pension Trustees based on this valuation.
Treasury
The Group operates a centralised treasury function, whose primary responsibility
is to manage cash-flow and currency risk. The Group has transactional and
translational exposure to overseas currencies, primarily the US Dollar in PGL
and purchases made by the Consumer Durables division.
The Group has established a natural hedge for translational risk by denominating
$6.0m of its net debt to cover its 2008 investment in PGL.
The rapid devaluation of GBP Sterling against the US Dollar in the second half
of the year has resulted in a transactional exchange loss as our US Dollar
denominated purchases increased in GBP terms. Where markets allowed these
increases were passed on to customers. As part of the Group's hedging strategy
forward cover is put in place to cover for currency volatility and is based on
the Group's forecast future currency cashflows.
Cash flow and borrowings
Bank overdrafts and loans at 31 December 2008 stood at GBP12.5m compared with
GBP12.0m for the previous year. The acquisition of PGL and the capital
expenditure in the year was funded through cash generated from operations in the
period.
The Group has committed bank facilities with HSBC, totalling GBP15.0m at 31
December 2008, of which approximately GBP9.0m has been drawn down. The Group
also has uncommitted overdraft facilities with HSBC of GBP2.0m and with RBS of
GBP14.0m, although the RBS facility was reduced to GBP7.0m following the renewal
date in December 2008. Since that date, the overdraft facilities have continued
to be provided by both banks on an informal basis whilst refinancing discussions
involving secured facilities continue to progress.
The Group's bank facilities contain certain covenant tests relating to
Consolidated EBITDA to Consolidated Net Borrowing costs; and Consolidated Net
Borrowings to Consolidated EBITDA. The failure of a covenant test would render
the facilities in default. The Group reports on these covenants to the providers
bi-annually as part of the facility agreements. As at the year end, the terms of
the facilities, including covenants, were met. The covenants are due to be
tested next at 30 June 2009. Due to the deterioration in market conditions since
the year-end, it is likely that a covenant breach will exist at 30 June 2009 and
the Group is therefore negotiating to refinance its existing banking facilities.
Going concern
The Group has commenced re-financing discussions with its bankers to secure
fully committed facilities. The move to secured facilities will require the
agreement of both the banks and the Pension Scheme Trustees. The company is also
seeking clearance from the Pension Regulator. Whilst these negotiations are
significantly progressed, they are not yet complete and at the date of signing
the accounts these facilities are not finalised. Without these facilities in
place, the Group and the Company will be unable to continue as a going concern,
and therefore, that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The Directors have concluded that these circumstances represent a material
uncertainty that casts significant doubt upon the Group's and the Company's
ability to continue as a going concern. Nevertheless, based on the discussions
to date with our current bankers, and considering the uncertainties described
above, the Directors have a reasonable expectation that the Group and the
Company have adequate resources to continue in operational existence for the
foreseeable future. The Directors have assumed that appropriate facilities with
the current bankers will be available to the Company going forward. For these
reasons, they continue to adopt the going concern basis in preparing the Annual
Report and Accounts.
Cautionary note
This document has been prepared solely to provide additional information to
shareholders to allow them to assess the Company's strategies and the potential
for those strategies to succeed. It should not be relied on by any other party
or for any other purpose.
It contains certain forward-looking statements, made by the Directors in good
faith based on the information available to them up to the time of their
approval of this report. Such statements should be treated with caution due to
the inherent uncertainties, including both economic and business risk factors,
underlying any such forward-looking information.
Financial Statements
Consolidated income statement
+-------------------------------------------------+-------------+-------------+------------+
| Year ended 31 December 2008 | | | |
+-------------------------------------------------+-------------+-------------+------------+
| | | 2008 | 2007 |
+-------------------------------------------------+-------------+-------------+------------+
| | | Total | Total |
+-------------------------------------------------+-------------+-------------+------------+
| | Notes | GBP'm | GBP'm |
+-------------------------------------------------+-------------+-------------+------------+
| Continuing operations | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Revenue | 2 | 74.8 | 70.2 |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Cost of sales | | (56.7) | (54.2) |
+-------------------------------------------------+-------------+-------------+------------+
| Gross profit | | 18.1 | 16.0 |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Distribution expense | | (6.2) | (5.6) |
+-------------------------------------------------+-------------+-------------+------------+
| Administrative expense | | (13.3) | (14.7) |
+-------------------------------------------------+-------------+-------------+------------+
| Other operating income | | - | 0.1 |
+-------------------------------------------------+-------------+-------------+------------+
| Operating profit before exceptional items, | | 2.0 | 2.6 |
| share based | | | |
| payments and Goodwill impairment | | | |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Exceptional items | 3 | (2.4) | (6.9) |
+-------------------------------------------------+-------------+-------------+------------+
| Share based payments | | (0.2) | - |
+-------------------------------------------------+-------------+-------------+------------+
| Goodwill impairment | 3 | (0.8) | - |
+-------------------------------------------------+-------------+-------------+------------+
| Exceptional operating income | 3 | - | 0.1 |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Operating loss | | (1.4) | (4.2) |
+-------------------------------------------------+-------------+-------------+------------+
| Finance income | | 0.1 | - |
+-------------------------------------------------+-------------+-------------+------------+
| Finance expense | | (0.9) | (1.0) |
+-------------------------------------------------+-------------+-------------+------------+
| Profit/(loss) before income tax | | (2.2) | (5.2) |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Income tax expense | 5 | (0.9) | 3.0 |
+-------------------------------------------------+-------------+-------------+------------+
| Loss for the year from continuing operations | | (3.1) | (2.2) |
+-------------------------------------------------+-------------+-------------+------------+
| Discontinued operations | 4 | (13.1) | (4.8) |
+-------------------------------------------------+-------------+-------------+------------+
| Loss for the year | | (16.2) | (7.0) |
+-------------------------------------------------+-------------+-------------+------------+
| Loss for the year attributable | | | |
+-------------------------------------------------+-------------+-------------+------------+
| to equity holders of the parent | | (16.2) | (7.0) |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| (Loss)/earnings per ordinary share - Continuing | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Basic and diluted (loss)/earnings per share | 6 | (2.60p) | (1.84p) |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Loss)/earnings per ordinary share - | | | |
| Discontinued | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Basic and diluted (loss)/earnings per share | | (10.95p) | (3.99p) |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| (Loss)/earnings per ordinary share - Continuing | 6 | | |
| & Discontinued | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Basic and diluted (loss)/earnings per share | | (13.55p) | (5.83p) |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Dividends in respect of the year | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Paid (GBP'm) | 7 | - | 6.5 |
+-------------------------------------------------+-------------+-------------+------------+
| | | | |
+-------------------------------------------------+-------------+-------------+------------+
| Paid per share | 7 | - | 5.40p |
+-------------------------------------------------+-------------+-------------+------------+
* Exceptional items (note 3) are items of income and expenditure that, in the
judgement 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. In 2007 the GBP6.9 million charge comprised reorganisation
costs, losses on long-term contracts, stock write-downs and property profits. In
2008, the GBP2.4 million charge comprises further such costs as the strategy set
out previously has continued to be implemented. For further details see note 3
and the Finance review.
Consolidated statement of recognised income and expense
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Year ended 31 December 2008 | | | |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| | | 2008 | 2007 |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| | | GBP'm | GBP'm |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| (Devaluation)/revaluation of properties | | (4.0) | 11.7 |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Actuarial gain/(loss) on defined benefit | | | (0.6) |
| pension scheme | | 0.3 | |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Tax on items taken directly to equity | | (0.1) | (1.4) |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Exchange gain | | | - |
| | | 0.4 | |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Net (loss)/income recognised directly in | | (3.4) | 9.7 |
| equity | | | |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Loss for the year | | (16.2) | (7.0) |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Total recognised (loss)/income for the year | | (19.6) | 2.7 |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| | | | |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| | | | |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Attributable to: | | | |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
| Equity holders of the parent | | (19.6) | 2.7 |
+------------------------------------------------+-------------+-------------------------------------------+------------------------------------------+
Consolidated balance sheet
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| As at 31 December 2008 | | | |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| | | 2008 | 2007 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| | Notes | GBP'm | GBP'm |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Assets | | | |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Goodwill | | 7.6 | 11.4 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Other intangible assets | | 0.6 | - |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Property, plant and equipment | | 33.8 | 36.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Deferred tax asset | | | 1.6 |
| | | 1.4 | |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Total non-current assets | | 43.4 | 49.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Inventories | | 11.1 | 13.2 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Trade and other receivables | | 18.5 | 24.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Current tax asset | | - | 0.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Assets held for sale | | 0.8 | 3.6 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Total current assets | | 30.4 | 41.4 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Total assets | | 73.8 | 90.7 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| | | | |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| | | | |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Liabilities | | | |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Loan notes | | - | 0.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Trade and other payables | | 22.6 | 22.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Provisions | | 0.7 | 0.4 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Current tax payable | | 0.3 | - |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Bank overdrafts and loans | | 12.5 | 12.0 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Total current liabilities | | 36.1 | 35.0 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Loan notes | | - | 0.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Provisions | | 1.2 | 0.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Employee benefits | | 3.0 | 3.4 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Deferred tax liabilities | | 2.3 | 1.1 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Total non-current liabilities | | 6.5 | 5.1 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Total liabilities | | 42.6 | 40.1 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Net assets | | 31.2 | 50.6 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Equity | | | |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Share capital (ordinary shares) | | 6.0 | 6.0 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Share premium | | 2.7 | 2.7 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Capital redemption reserve | | 0.3 | 0.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Revaluation reserve | | 6.3 | 10.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Other reserve | | 0.2 | - |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Retained earnings | | 15.7 | 31.3 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
| Total equity | | 31.2 | 50.6 |
+----------------------------------------------+------------------------------------------+------------------------------------------+-----------+
Consolidated Cash flow Statements
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Year ended 31 December 2008 | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| | 2008 | 2007 |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| | Group | Group |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| | GBP'm | GBP'm |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Operating loss | (14.5) | (9.0) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Depreciation (net of disposals) | 2.5 | 4.9 |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Profit on sale of property | - | (1.5) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Impairment losses | 10.7 | 3.0 |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Share-based payment expense | 0.2 | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Exchange losses | (0.7) | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Amortisation of intangibles | - | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Decrease in inventories | 1.9 | 4.9 |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Decrease/(increase) in trade and other | 4.6 | 4.1 |
| receivables | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| (Decrease)/increase in payables | (0.4) | (0.3) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Increase in provisions | 1.3 | 0.7 |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Decrease in non-current liabilities | - | |
| | | (0.3) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Other non-cash movements | (0.4) | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Cash generated from/(used in) operations | 5.2 | 6.5 |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Interest received | 0.1 | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Interest paid | (1.0) | (1.0) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Tax income received/(paid) | 1.2 | (0.8) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Net cash generated from/(used in) operating | 5.5 | 4.7 |
| activities | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Investing activities | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Purchase of property, plant and equipment | (3.4) | (6.0) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Proceeds from sale of property, plant and | 0.4 | 6.3 |
| equipment | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Acquisition of businesses, net of cash | (3.6) | (0.6) |
| acquired | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Sale of businesses | 0.6 | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Net cash (used in)/from investing | (6.0) | (0.3) |
| activities | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Financing activities | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Equity dividends paid | - | |
| | | (6.5) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Repayment of borrowings | (5.0) | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| New bank loans raised | 3.0 | 5.0 |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| (Decrease)/increase in bank overdraft | 2.5 | (2.9) |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Net cash (used in)/from financing | 0.5 | (4.4) |
| activities | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Net decrease in cash and cash equivalents | - | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Cash and cash equivalents at beginning of | - | - |
| year | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| Cash and cash equivalents at end of year | - | - |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
| | | |
+---------------------------------------------+-------------------------------------------+------------------------------------------+
Notes
1 Going concern statement
The Group consolidated financial statements have been prepared on the going
concern basis, which assumes that the Group will continue to be able to meet its
liabilities as they fall due for the foreseeable future.
The deterioration in market conditions since the year-end results in a
likely covenant breach at 30 June 2009 and the need for the Group to refinance
its existing banking facilities. The Group has commenced re-financing
discussions with its bankers to secure fully committed facilities. The move to
secured facilities will require the agreement of both the banks and the Pension
Scheme Trustees. The company is also seeking clearance from the Pension
Regulator. Whilst these negotiations are significantly progressed they are not
yet complete and at the date of signing the accounts these facilities are not
finalised. Without these facilities in place, there is a risk that the Group and
the Company will be unable to continue as a going concern and therefore may be
unable to realise its assets and discharge its liabilities in the normal course
of business.
The Board has concluded that the ongoing negotiations with its bankers
represents a material uncertainty that casts significant doubt upon the Group's
ability to continue as a going concern. However, after considering the
uncertainties described above the Board has a reasonable expectation that the
Group will be successful in obtaining the necessary funding and for this reason
believes it is appropriate to continue to adopt the going concern basis in
preparing the annual report and accounts. The financial statements do not
include the adjustments that would result if the Group was unable to continue as
a going concern.
Further details on the above refinancing are included in the Financial Review.
2 Segmental reporting
a)Revenue analysis by geographical destination and activity
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| | Continuing | Discontinuing | 2008 | Continuing | Discontinuing | 2007 |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| | GBP'm | GBP'm | GBPm | GBP'm | GBP'm | GBPm |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| United Kingdom | 48.2 | 27.3 | 75.5 | 48.0 | 40.6 | 88.6 |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| Rest of Europe | 18.7 | 2.0 | 20.7 | 18.6 | 4.0 | 22.6 |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| North America | 4.6 | 0.6 | 5.2 | 2.0 | 0.7 | 2.7 |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| Rest of World | 3.3 | 0.1 | 3.4 | 1.6 | 3.1 | 4.7 |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| Revenue from | 74.8 | 30.0 | 104.8 | 70.2 | 48.4 | 118.6 |
| external | | | | | | |
| customers | | | | | | |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| Consumer Durables | 25.5 | - | 25.5 | 25.9 | - | 25.9 |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| Specialist | 54.4 | 31.3 | 85.7 | 49.2 | 50.4 | 99.6 |
| Engineering | | | | | | |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| Intra-Group | (5.1) | (1.3) | (6.4) | (4.9) | (2.0) | (6.9) |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
| Revenue from | 74.8 | 30.0 | 104.8 | 70.2 | 48.4 | 118.6 |
| external | | | | | | |
| customers | | | | | | |
+-------------------+-----------------------------------------------+------------------------+------------------------------------------+-----------------------------------------------+-----------------+-----------+
Intra-Group sales are charged at prevailing market prices and mostly originate
from the Specialist Engineering segment.
b) Segmental analysis by activity
Year to 31 December 2008
+-------------+---------------+------------+----------------+-----------------------------------+------+------------------------------------------+------+-------------------------------------------+
| | Continuing | | |
| | businesses | | |
+-------------+---------------------------------------------------------------------------------+-------------------------------------------------+--------------------------------------------------+
| | Specialist | Consumer | Central | Total | Discontinued | Total |
| | | | | | Businesses | |
| | Engineering | Durables | Services | Group | | Group |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Total | 54.0 | 25.9 | 0.4 | 80.3 | 31.3 | 111.6 |
| revenues | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Inter-group | (4.7) | (0.4) | (0.4) | (5.5) | (1.3) | (6.8) |
| revenues | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Revenue | 49.3 | 25.5 | - | 74.8 | 30.0 | 104.8 |
| from | | | | | | |
| external | | | | | | |
| customers | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Operating | 3.8 | 1.5 | (3.3) | 2.0 | 1.1 | 3.1 |
| profit | | | | | | |
| before | | | | | | |
| exceptional | | | | | | |
| items, | | | | | | |
| share | | | | | | |
| options | | | | | | |
| costs and | | | | | | |
| goodwill | | | | | | |
| impairment | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Exceptional | (0.8) | (1.0) | (0.6) | (2.4) | (9.5) | (11.9) |
| items | - | - | (0.2) | (0.2) | - | (0.2) |
| Share | | | | | | |
| options | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Goodwill | (0.8) | - | - | (0.8) | (4.7) | (5.5) |
| impairment | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Operating | 2.2 | 0.5 | (4.1) | (1.4) | (13.1) | (14.5) |
| (loss) / | | | | | | |
| profit | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Finance | | | | (0.8) | - | (0.8) |
| expense | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Loss | | | | (2.2) | (13.1) | (15.3) |
| before | | | | | | |
| taxation | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Taxation | | | | (0.9) | - | (0.9) |
| expense | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| Loss after | | | | (3.1) | (13.1) | (16.2) |
| taxation | | | | | | |
+-------------+---------------+------------+----------------+------------------------------------------+-------------------------------------------------+-------------------------------------------+
| | | | | | | |
+-------------+---------------+------------+----------------+-----------------------------------+------+------------------------------------------+------+-------------------------------------------+
2b Segmental analysis by activity (continued)
Year to 31 December 2007
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| | Continuing | | |
| | businesses | | |
+--------------------------+---------------------------------------------------------------+-----------------------+-------------------------------------------+
| | Specialist | Consumer | Central | Total | Discontinued | Total |
| | | | Services | Group | Businesses | Group |
| | Engineering | Durables | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Total revenues | 49.1 | 25.9 | 0.7 | 75.7 | 50.4 | 126.1 |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Inter-group revenues | (4.6) | (0.2) | (0.7) | (5.5) | (2.0) | (7.5) |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Revenue from external | 44.5 | 25.7 | - | 70.2 | 48.4 | 118.6 |
| customers | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Operating profit | 2.1 | 2.0 | (1.5) | 2.6 | 0.6 | 3.2 |
| before | | | | | | |
| exceptional | | | | | | |
| items, share options | | | | | | |
| costs and | | | | | | |
| goodwill impairment | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Exceptional items | (4.6) | (2.2) | - | (6.8) | (5.4) | (12.2) |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Goodwill impairment | - | - | - | - | - | - |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Operating (loss) / | (2.5) | (0.2) | (1.5) | (4.2) | (4.8) | (9.0) |
| profit | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Finance expense | | | | (1.0) | - | (1.0) |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Loss before taxation | | | | (5.2) | (4.8) | (10.0) |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Taxation credit | | | | 3.0 | - | 3.0 |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| Loss after taxation | | | | (2.2) | (4.8) | (7.0) |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
| | | | | | | |
+--------------------------+----------------------+----------------+-----------+-----------+-----------------------+-------------------------------------------+
3Exceptional items
Exceptional items are items of income and expenditure that, in the judgement 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 profits or
losses on the disposal of businesses; and significant impairments of other
current assets.
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| | | | 2008 | | | 2007 |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| | Continuing | Discontinued | GBP'm | Continuing | Discontinued | GBP'm |
| | GBP'm | GBP'm | | GBP'm | GBP'm | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| (Profit)/loss on | - | - | - | (0.1) | (1.4) | (1.5) |
| sale of property | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Reorganisation | 1.3 | 3.1 | 4.4 | 4.2 | 4.7 | 8.9 |
| and restructuring | | | | | | |
| costs | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Provision for | 0.5 | - | 0.5 | 0.7 | - | 0.7 |
| Romanian Losses | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Losses on | - | - | - | - | 1.9 | 1.9 |
| long-term | | | | | | |
| contracts | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Impairment of | 0.3 | 5.0 | 5.3 | 2.0 | 0.2 | 2.2 |
| assets | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Onerous lease | - | 1.4 | 1.4 | - | - | - |
| costs | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Property | 0.3 | - | 0.3 | - | - | - |
| devaluation | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Total exceptional | 2.4 | | 11.9 | 6.8 | 5.4 | 12.2 |
| items before | | 9.5 | | | | |
| taxation | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Impairment of | 0.8 | | 5.5 | - | | - |
| goodwill | | 4.7 | | | - | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| IFRS2 Share | 0.2 | - | 0.2 | - | - | - |
| option expense | | | | | | |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
| Total | 3.4 | 14.2 | 17.6 | 6.8 | 5.4 | 12.2 |
+----------------------+-------------+--------------------+------------------------------------------+----------------+----------------------+------------------------------------------+
4 Discontinued operations
The Group has undertaken a review of its underperforming businesses and has
taken actions to close or sell those businesses. The businesses that are no
longer part of the Group are:
+---------------------------+------------------------+-------------------+
| Bacol Fine Blanking | Sold | February 2008 |
+---------------------------+------------------------+-------------------+
| Down and Francis | Closed | June 2008 |
+---------------------------+------------------------+-------------------+
| MRX Automotive | Sold | December 2008 |
+---------------------------+------------------------+-------------------+
| Welland Engineering | Sold | December 2008 |
+---------------------------+------------------------+-------------------+
| Stackright Building | Closed | December 2008 |
| Systems | | |
+---------------------------+------------------------+-------------------+
| Makespace Mezzanine | Closed | December 2008 |
| Floors | | |
+---------------------------+------------------------+-------------------+
| BSC (Diecasting) | Sold | April 2009 |
| | | |
+---------------------------+------------------------+-------------------+
All of these businesses have been presented as discontinued operations in the
Profit and Loss account on the basis that irreversible management decisions were
taken in 2008, and the communications to interested parties, including the
employees and creditors of the businesses involved, were completed in 2008. The
trade, assets and liabilities of BSC (Diecasting) were sold in April 2009 and
has therefore been classified as discontinued. Management is of the view that
this presentation of information enables the users of the financial statements
to understand the financial effects of these operations no longer being part of
the Group.
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| | 2008 | 2007 |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| | GBP'm | GBP'm |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| | | |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Revenue | 30.0 | 48.4 |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Cost of sales | (25.5) | (41.8) |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Gross Profit | 4.5 | 6.6 |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Administrative expenses | (3.4) | (6.0) |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Exceptional costs (note 3) | (9.5) | (5.4) |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Goodwill impairment | (4.7) | - |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Profit before tax of discontinued operations | (13.1) | (4.8) |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Attributable tax expense | - | - |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| | | |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Profit after tax of discontinued items | (13.1) | (4.8) |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Pre tax gain / (loss) of disposal group | - | - |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Tax | - | - |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| After tax gain / (loss of disposal group | - | - |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| | | |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
| Profit for the year from discontinued operations | (13.1) | (4.8) |
+------------------------------------------------------+--------------------------------------------+-------------------------------------------+
5 Taxation
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | 2008 | 2007 |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | GBP'm | GBP'm |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Current tax: | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| UK corporation tax | - | - |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Adjustment in respect of prior years | (0.8) | - |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | (0.8) | - |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Overseas taxation | 0.2 | - |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Current tax credit | | - |
| | (0.6) | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Deferred tax | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Current year | (0.5) | (2.8) |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Effect of change in legislation | 1.2 | |
| | | - |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Adjustment in respect of prior years | 0.8 | (0.2) |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | 0.9 | (3.0) |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Factors affecting the tax charge for the year | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| (Loss)/profit on ordinary activities before tax | (15.3) | (10.0) |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Tax on ordinary activities at 28.5% (2007: 30%) | (4.4) | (3.0) |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Effects of: | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Expenses not deductible for tax purposes | 4.0 | 0.2 |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Capital profits not taxable | - | (0.4) |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Deferred tax not recognised | 0.1 | 0.4 |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Effect of change in tax legislation | 1.2 | - |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Adjustment to tax charge in respect of previous | - | (0.2) |
| periods | | |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
| Total taxation expense/(credit) | 0.9 | (3.0) |
+------------------------------------------------------+-------------------------------------------+-------------------------------------------+
Taxation for other jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
The Finance Act 2008 included legislation which prevents the Group from claiming
industrial buildings allowances on affected assets after 2011. This change is
introduced by reducing the rate of allowances that may be claimed from 1 April
2008 to 31 March 2011, at which point allowances will be removed. The Directors
estimate that the enactment of this legislation has increased the corporation
tax charge by GBP1.2m in the current year.
6 (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.
There is no dilution in the loss per share calculation at the 31 December
2008. 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
(loss)/earning per share equals basic (loss)/earning per share for the current
year. In the previous year there were no potential diluting future shares.
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 (200: 119,897,298).
7 Dividends paid
+------------------------------------------------------+-----------------------------------------+-----------------------------------------+
| | 2008 | 2007 |
+------------------------------------------------------+-----------------------------------------+-----------------------------------------+
| | GBPm | GBPm |
+------------------------------------------------------+-----------------------------------------+-----------------------------------------+
| Final dividend | - | 4.5 |
| for 2007 nil | | |
| pence (2006: | | |
| 3.75p) | | |
+------------------------------------------------------+-----------------------------------------+-----------------------------------------+
| | | |
+------------------------------------------------------+-----------------------------------------+-----------------------------------------+
| Interim dividend | - | 2.0 |
| for 2008 nil | | |
| pence (2007: | | |
| 1.65p) | | |
+------------------------------------------------------+-----------------------------------------+-----------------------------------------+
| Total equity | - | 6.5 |
| dividends paid | | |
+------------------------------------------------------+-----------------------------------------+-----------------------------------------+
8Proposed dividends
The Directors recommend that no final dividend be paid and a resolution to this
effect will be proposed at the Annual General Meeting to be held on 13 July
2009. Therefore the total dividends paid for the year amounts to GBPnil (2007:
GBP6.5 million).
9 Post Balance sheet events
On 30 April 2009, the Group disposed of the trade and certain assets of BSC
(Diecasting), a trading business in the Specialist Engineering Division, for
GBP0.5m. The assets held at 31 December 2008 have been included at net
realisable value.
10 Section 240 Statement
The financial information in the preliminary results announcement does not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985 but has been extracted from statutory accounts. The statutory accounts
for the year ended 31 December 2007 have been filed with the Registrar of
Companies and those for the year ended 31 December 2008 will be filed before 30
June 2009. The auditors' reports on the statutory accounts for the year ended 31
December 2007 and for the year ended 31 December 2008 were unqualified and do
not contain a statement under Sections 237 (2) or (3) of the Companies Act 1985,
however for the year ended 31 December 2008 the auditors' report included
reference to matters to which the auditors drew attention by way of emphasis of
matter without qualifying the report. The matters referred to in the auditors'
report relating to going concern are described in the Financial Review and these
matters indicate the existence of a material uncertainty.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRSs), this announcement does not
itself contain sufficient information to comply with IFRSs. The Company will
publish its full financial statements for the year ended 31 December 2008 on 19
June 2009, which will be available on the Company's website at
www.metalraxgroup.co.uk and at the Company's registered office at Ardath Road,
Kings Norton, Birmingham, B38 9PN.
The Group's principal accounting policies as set out in the 2007 Annual
Report have been applied consistently.
11 Annual General Meeting
The Annual General Meeting will be held at the
Burlington Hotel, 126 New Street, Birmingham, B2 4DH on Monday 13 July 2009 at
12:15pm.
12 Annual Report
Copies of the Annual Report will be posted
to Shareholders on Friday 19 June 2009 and will be available from the same date
to the public on the Company's website (www.metalraxgroup.co.uk) or from
Metalrax Group PLC, Ardath Road, Kings Norton, B39 9PN.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GUUQWQUPBPGC
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