TIDMMRX
RNS Number : 8019Z
Metalrax Group PLC
29 September 2009
? 29 September 2009
Metalrax Group PLC
Interim Report - 2009
Financial Highlights - 26 weeks ended 5 July 2009
Results in brief
+-----------------------------------+--+------------+------------+------------+---------+
| | | 2009 | 2009 | 2008 | 2008 |
+-----------------------------------+--+------------+------------+------------+---------+
| | | Continuing | Total | Continuing | Total |
| | | activities | Group | activities | Group |
| | | GBP'm | GBPm | GBP'm | GBPm |
| | | | | | |
+-----------------------------------+--+------------+------------+------------+---------+
| External revenues | | 30.0 | 31.4 | 34.9 | 54.7 |
+-----------------------------------+--+------------+------------+------------+---------+
| Gross margins | | 22.3% | 30.8% | 23.8% | 30.5% |
+-----------------------------------+--+------------+------------+------------+---------+
| Operating (loss)/profit before | | (0.6) | (1.4) | 1.0 | 2.1 |
| exceptional items*, share option | | | | | |
| costs and goodwill impairment | | | | | |
+-----------------------------------+--+------------+------------+------------+---------+
| (Loss)/profit before taxation | | (2.6) | (12.0) | 0.4 | (4.9) |
+-----------------------------------+--+------------+------------+------------+---------+
| (Loss)/earnings per 5p Ordinary | | (2.08p) | (9.92p) | 0.04p | (4.38p) |
| share | | | | | |
+-----------------------------------+--+------------+------------+------------+---------+
| Adjusted earnings per 5p Ordinary | | (0.63p) | (1.39p) | 0.05p | 0.95p |
| share+ | | | | | |
+-----------------------------------+--+------------+------------+------------+---------+
| Cash (used in)/generated from | | | (3.0) | | 4.5 |
| operating activities | | | | | |
+-----------------------------------+--+------------+------------+------------+---------+
| Net debt | | | 15.0 | | 12.1 |
+-----------------------------------+--+------------+------------+------------+---------+
| Gearing | | | 95.5% | | 28.3% |
+-----------------------------------+--+------------+------------+------------+---------+
| Dividends paid per 5p Ordinary | | | nil | | nil |
| share | | | | | |
+-----------------------------------+--+------------+------------+------------+---------+
* Exceptional items (note 5) 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.
+ see note 9.
Highlights
* Continuing business sales reduced by 14% compared with the first half of 2008,
mainly due to the economic downturn and difficult trading conditions
* Continuing businesses recorded an operating loss before exceptional items, share
option costs and goodwill impairment of GBP0.6m (2008: profit GBP1.0m)
* Three businesses were discontinued in the 26 week period, including MRX Romania
which was placed into Administration
* Exceptional items, excluding share option costs and goodwill impairment, during
the period amounted to GBP9.5m (2008: GBP1.8m) of which GBP0.4m were cash items
* Refinancing is at an advanced stage of legal documentation, which when completed
would result in facilities of up to GBP24.0m until September 2012
Chairman's Statement
The first half of 2009 proved to be challenging due to the depressed global
economy impacting the markets in which Metalrax operates. The Group has focused
on its strategic objectives of stopping losses and exiting non-core businesses
and turning around and strengthening the strategic focus of existing core
businesses. Significant progress has been made since the beginning of 2009 with
three trading companies having been exited in the first half and three having
been restructured to drive growth and operational efficiencies. The Group has
focused on cash management and cost reduction to support the ongoing business
through this difficult trading period.
Results
Including discontinued businesses, the Group delivered a 2009 first half
operating loss before exceptional items, share option costs and goodwill
impairment of GBP1.4m (2008: profit GBP2.1m) which includes a loss of GBP0.8m
(2008: profit GBP1.1m) from discontinued businesses. The continuing businesses
recorded an operating loss before exceptional items, share option costs and
goodwill impairment of GBP0.6m (2008: profit GBP1.0m) reflecting difficult
market conditions. However, the seasonality in some of the key businesses
combined with the benefits of turnaround and cost cutting actions create a more
positive outlook for the second half.
Reduced total group sales (including discontinued businesses) at GBP31.4m (2008:
GBP54.7m) reflects the number of business disposals in the period. Continuing
business sales show a reduction of GBP4.9m compared with the first half of 2008,
amounting to GBP30.0m in the first half of the current year. Whilst the Group
has exited from high volume/low margin automotive manufacturing, we still have
exposure to the severely impacted automotive markets through our Weston Body
Hardware and Toolspec businesses which has had a material impact on their sales
performance.
Exceptional items, excluding share option costs and goodwill impairment, during
the period amounted to GBP9.5m (2008: GBP1.8m) of which GBP0.4m were cash items.
Major exceptional items include the provision for impaired asset values of
GBP7.2m relating to our Romanian subsidiary which commenced insolvency
proceedings in July, GBP0.9m relating to asset impairments associated with the
closure and disposal of businesses and GBP0.7m relating to the devaluation of
commercial property. In total for the period, commercial property was devalued
by GBP3.5m, GBP2.8m of which was taken to the revaluation reserve and GBP0.7m
charged to exceptional items. The Group delivered a loss after tax and
exceptional items of GBP11.9m (2008: GBP5.3m). Despite this loss, strong working
capital management resulted in an increase in net debt of just GBP2.5m from
GBP12.5m to GBP15.0m at the half year.
We anticipate that the current year result will be broadly in line with market
expectations.
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 the first half, there will be no dividend payment in
respect of the period ended 5 July 2009.
Board appointments
As announced earlier in the year, John Adcock stood down as Non-Executive
Director following the 2009 Annual General Meeting. The Board would like to
record its thanks to John for his contribution.
Refinancing
As previously announced, the Group is continuing with its refinancing
discussions with its bankers. These discussions are at an advanced stage of
legal documentation, but have yet to be finalised. When completed this would
provide the Group with facilities of up to GBP24.0m until September 2012. I
look forward to updating shareholders appropriately in due course. Further
details on the Group's liquidity position and going concern are given in the
Financial Review section below and note 2 to the condensed set of financial
statements.
Chief Executive's Review
Strategic Progress
Last year I announced that the Group's strategic objectives were:
* To stop the 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.
As I explained in my full year report, the current economic difficulties have
not changed our strategy but have impacted our timing and tactics. In addition
to focusing heavily on the first two objectives, we have carefully managed cash
and focused on cost reductions. Whilst we have been constrained by economic
circumstances in our ability to make acquisitions into strategic, niche,
defensible sectors, progress has been made in re-focusing our existing
businesses into attractive markets with these attributes.
We started 2009 with 17 businesses and we have vigorously focused on eliminating
non-core and/or loss making businesses. As a result, the Group comprised 11
continuing businesses as at 5 July 2009. We have subsequently sold Commercial
Bearings bringing our total number of trading entities to 10, creating a more
manageable, higher quality Group to take forward.
We are at the advanced stages of legal documentation to finalise our
refinancing. When completed, with up to GBP24.0m of facilities in place, the
Directors have a reasonable expectation that the Group would continue as a going
concern for the foreseeable future, placing us in a stronger position to
continue our strategic refocusing and the strengthening of the group. This is a
crucial step in re-establishing Metalrax as a major force in the UK engineering
sector.
Principal achievements
In 2009, we have achieved strong strategic momentum. Among our key achievements,
we have:
* Sold 2 non-core and loss making businesses (including Commercial Bearings which
was sold after the half year). These businesses had made a combined operating
loss of GBP0.2m in the last financial year.
* Stemmed the cash losses of approximately GBP0.1m per month associated with our
Romanian subsidiary by commencing insolvency proceedings
* Restructured 3 businesses to facilitate growth and operational improvements
* Reduced central costs to GBP0.8m for the half year (2008: GBP1.4m)
* Implemented group-wide management appraisal and objective setting processes
Review of Business Operations
Consumer Durables
Revenues declined 13.0% from continuing businesses to GBP10.0m (2008: 11.5m),
operating loss before exceptional items, share option costs and goodwill
impairment of GBP0.3m (2008: profit GBP0.5m).
Consumer Durables' businesses are market leaders in bakeware and kitchenware to
the retail and commercial catering markets and account for c.33% of continuing
Group turnover. 2009 has seen continued margin pressure resulting from the
weakened Sterling and the impact of rising steel prices. We have restructured
these trading units and the management of this group and expect the second half
to benefit from these actions as well as the strong seasonality that has
historically been seen.
Specialist Engineering
Revenues declined 15.0% from continuing businesses to GBP19.9m (2008: 23.4m),
operating profit before exceptional items, share option costs and goodwill
impairment of GBP0.5m (2008: GBP1.9m).
The continuing Specialist Engineering division comprises eight businesses in a
variety of sectors which together account for c.67% of continuing Group revenue.
In the medical sector, Post Glover Lifelink which supplies medical electrical
and safety equipment continues to perform well and has strengthened its position
by diversifying into overseas markets such as Asia Pacific and South America.
Whilst we have exited the high volume/low margin automotive sector, we are still
exposed to the higher value-add, niche automotive sector by Weston Body Hardware
and Toolspec. Both of these businesses have seen a substantial reduction in
sales but the impact of this is being minimized by strong, proactive management
and cost reduction. We believe that these businesses are well placed to benefit
from the anticipated recovery in automotive markets and from the potential to
grow market share as the competitive landscape within the wider automotive
supplier base turns in our favour.
Despite a difficult market, Cooper Coated Coil, our specialist coatings
business, has grown turnover in the first half although high steel prices and
reduced yield on the paint line have impacted margins during the period.
Management actions have been taken to improve yields.
Our People - a motivated and committed team
I would like to acknowledge the passion, motivation and professionalism
demonstrated by the Group's people during what has been a challenging period. We
have excellent people across the Group who have enabled us to achieve
significant strategic change and progress. There is still much to do and I know
we can achieve it together.
Financial Review
Results
The operating loss on continuing businesses before exceptional items, share
option costs and goodwill impairment was GBP0.6m (2008: profit GBP1.0m). The
decline in relative profitability is attributable to:
* Sales decline of GBP4.9m reflecting the depressed global economy generally and
specifically our residual exposure to the severely impacted automotive markets
through Weston Body Hardware and Toolspec and the softening in our retail
markets served by our Consumer Durables business;
* Margin pressure from a weaker Sterling/US Dollar exchange rate on our purchases
sourced from Far Eastern suppliers and from increases in steel prices. Gross
margins decreased by 1.5 percentage points to 22.3% (2008: 23.8%).
Exceptional items of GBP9.5m (2008: 1.8m) relate primarily to the provision for
impaired asset values at Hidrosib SA (GBP7.2m) following the application to put
the company into administration in July 2009, the impairment of assets at BSC
(Diecasting) and Commercial Bearings on disposal and the devaluation of
commercial property. Of this GBP9.5m only c. GBP0.4m are cash items. These
exceptional charges represent the continuation of our strategy to eliminate loss
making businesses from our portfolio.
Given the operating losses at the half year in our Consumer Durables businesses
and our view of trading prospects going forward, we have tested the carrying
value of goodwill in this division. We have concluded that the value of goodwill
in Samuel Groves business of GBP0.6m is impaired and we have provided for this
in full. This provision is a non-cash item.
Balance Sheet
Given the continued downward movement in the UK commercial property market in
recent months, the Board has revisited the property valuations at December 2008
and reduced their value by GBP3.5m at 5 July 2009. This amount (which is
non-cash) has been offset against the revaluation reserve to the extent a
revaluation reserve exists, with the remaining balance of GBP0.7m being included
in the income statement as exceptional items.
Subsequent to the period end, the Group disposed of the remaining property at
Great Bridge Street for GBP0.4m. This has been classified as assets held for
resale on the balance sheet.
The pension deficit has increased by GBP1.1m over the period to GBP4.1m, due to
a reduction in the valuation of the plan's assets, reflecting the decline in the
investment markets over this period.
Inventories and receivables have reduced by GBP7.2m since the beginning of the
year. Part of this is attributable to businesses that were sold or closed in the
period, but part is also due a continued focus on cash management through robust
working capital programmes. Receivables across all continuing businesses having
reduced by GBP3.9m (27.1%) since the beginning of the year.
Financing
The Group's borrowings increased from GBP12.5m at 31 December 2008 to GBP15.0m
at the half year as a result of widespread weakness in the credit insurance
market, the reduced asset values arising from the sale of discontinued
operations and the trading losses referred to above. Borrowings are closely
controlled and managed well within existing facilities.
The Group has committed bank facilities with HSBC, totaling GBP15.0m at 5 July
2009, 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.
We reported at the full year that negotiations with our bankers were
significantly progressed. We can now report that detailed Heads of Agreement for
facilities of up to GBP24.0m have been agreed by all parties (Company, Banks and
Pension Scheme) and these have received full credit approval from the respective
banks' credit teams. The process is now at an advanced stage of legal
documentation.
Dividend
We are not proposing to make a dividend payment for the reasons stated in the
Chairman's statement.
Financial Risks
The principal risks and uncertainties are unchanged from the Annual Report at 31
December 2008, being macro-economic climate and competition, raw material input
prices, treasury risk and pension risk. Further detail is set out on page 18 of
the Annual report for the year ended 31 December 2008.
Current Trading and Prospects
The current economic conditions reaffirm the need for the Group's strategy of
repositioning into growing, defensible niche sectors. Visibility of
future trading levels still remains very limited in the current economic
environment and, in the Directors' opinion there remains a wide range of
potential outcomes for the Group in the current financial year. Trading began to
show signs of improvement in March of this year and this trend has continued
over the period. As a consequence, the Board would expect the Group's
performance in the current year to be in line with current market expectations.
In the short-term, the priorities of the Board are to focus assiduously on cash
conservation and cost reduction, creating the financial stability that will
enable us to press ahead with our strategic plans.
Condensed consolidated income statement
26 weeks ended 5 July 2009
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| | | 26 weeks | Six | Year ended |
| | | ended 5 | months | |
| | | July 2009 | ended 30 | 31 |
| | | Reviewed | June 2008 | December |
| | | | Reviewed | 2008 |
| | | | | Audited |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| | Note | GBP'm | GBP'm | GBP'm |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Continuing operations | | | | |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Revenue | 4 | 30.0 | 34.9 | 72.3 |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Cost of sales | | (23.3) | (26.6) | (54.3) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Gross profit | | 6.7 | 8.3 | 18.0 |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Distribution expenses | | (2.9) | (2.9) | (6.1) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Administrative expenses | | (6.0) | (4.5) | (12.9) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Operating (loss)/profit before | 4 | (0.6) | 1.0 | 2.0 |
| exceptional items, share option | | | | |
| costs and goodwill impairment | | | | |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Exceptional items* | 4, 5 | (0.9) | - | (2.0) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Goodwill impairment | 4 | (0.6) | - | (0.8) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Share based payments | 4 | (0.1) | (0.1) | (0.2) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Operating (loss)/profit | 4 | (2.2) | 0.9 | (1.0) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Finance income | 7 | - | - | 0.1 |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Finance expense | 7 | (0.4) | (0.5) | (0.9) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| (Loss)/profit before taxation | | (2.6) | 0.4 | (1.8) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Taxation | 8 | 0.1 | (0.4) | (0.9) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Loss after taxation | | (2.5) | - | (2.7) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Discontinued activities | 6 | (9.4) | (5.3) | (13.5) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Loss for the period | | (11.9) | (5.3) | (16.2) |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Loss for the period | | (11.9) | (5.3) | (16.2) |
| attributable to equity | | | | |
| shareholders of the parent | | | | |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
| Basic and diluted loss per | 9 | (9.92) | (4.38) | (13.55) |
| share | 9 | (2.08) | 0.04 | (2.19) |
| - Continuing | 9 | (7.84) | (4.42) | (11.36) |
| - Discontinued | | | | |
+---------------------------------+-----------+-----------+-----------+----------------------------------+
*Exceptional items (note 5) 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
the financial performance between periods.
Condensed consolidated balance sheet
As at 5 July 2009
+---------------------------------+----------+----------+----------+-----------+
| | | 5 July | 30 June | 31 |
| | | 2009 | 2008 | December |
| | | Reviewed | Reviewed | 2008 |
| | | | | Audited |
+---------------------------------+----------+----------+----------+-----------+
| | Note | GBP'm | GBP'm | GBP'm |
+---------------------------------+----------+----------+----------+-----------+
| Non-current assets | | | | |
+---------------------------------+----------+----------+----------+-----------+
| Goodwill | | 7.0 | 7.6 | 7.6 |
+---------------------------------+----------+----------+----------+-----------+
| Other intangible assets | | 0.6 | 0.6 | 0.6 |
+---------------------------------+----------+----------+----------+-----------+
| Property, plant and equipment | | 21.1 | 34.7 | 33.8 |
+---------------------------------+----------+----------+----------+-----------+
| Deferred tax asset | | 1.8 | 1.3 | 1.4 |
+---------------------------------+----------+----------+----------+-----------+
| | | 30.5 | 44.2 | 43.4 |
+---------------------------------+----------+----------+----------+-----------+
| Current assets | | | | |
+---------------------------------+----------+----------+----------+-----------+
| Inventories | | 9.6 | 13.9 | 11.1 |
+---------------------------------+----------+----------+----------+-----------+
| Trade and other receivables | | 12.8 | 22.3 | 18.5 |
+---------------------------------+----------+----------+----------+-----------+
| Current tax asset | | - | 0.6 | - |
+---------------------------------+----------+----------+----------+-----------+
| Assets held for sale - properties and | 0.4 | 3.8 | 0.8 |
| equipment | | | |
+--------------------------------------------+----------+----------+-----------+
| | | 22.8 | 40.6 | 30.4 |
+---------------------------------+----------+----------+----------+-----------+
| Total assets | | 53.3 | 84.8 | 73.8 |
+---------------------------------+----------+----------+----------+-----------+
| Current liabilities | | | | |
+---------------------------------+----------+----------+----------+-----------+
| Bank borrowings | | (15.0) | (12.1) | (12.5) |
+---------------------------------+----------+----------+----------+-----------+
| Trade and other payables | | (15.0) | (23.4) | (22.6) |
+---------------------------------+----------+----------+----------+-----------+
| Current tax payable | | (0.1) | (0.4) | (0.3) |
+---------------------------------+----------+----------+----------+-----------+
| Provisions | | (0.5) | (0.6) | (0.7) |
+---------------------------------+----------+----------+----------+-----------+
| | | (30.6) | (36.5) | (36.1) |
+---------------------------------+----------+----------+----------+-----------+
| Non-current liabilities | | | | |
+---------------------------------+----------+----------+----------+-----------+
| Employee benefits | 11 | (4.1) | (4.8) | (3.0) |
+---------------------------------+----------+----------+----------+-----------+
| Deferred tax liabilities | | (1.8) | (0.6) | (2.3) |
+---------------------------------+----------+----------+----------+-----------+
| Provisions | | (1.2) | (0.2) | (1.2) |
+---------------------------------+----------+----------+----------+-----------+
| | | (7.1) | (5.6) | (6.5) |
+---------------------------------+----------+----------+----------+-----------+
| Total liabilities | | (37.7) | (42.1) | (42.6) |
+---------------------------------+----------+----------+----------+-----------+
| Net assets | | 15.6 | 42.7 | 31.2 |
+---------------------------------+----------+----------+----------+-----------+
| Equity | | | | |
+---------------------------------+----------+----------+----------+-----------+
| Share capital | 10 | 6.0 | 6.0 | 6.0 |
+---------------------------------+----------+----------+----------+-----------+
| Share premium account | | 2.7 | 2.7 | 2.7 |
+---------------------------------+----------+----------+----------+-----------+
| Capital redemption reserves | | 0.3 | 0.3 | 0.3 |
+---------------------------------+----------+----------+----------+-----------+
| Revaluation reserve | | 3.9 | 8.5 | 6.3 |
+---------------------------------+----------+----------+----------+-----------+
| Other reserve | | 0.3 | 0.1 | 0.2 |
+---------------------------------+----------+----------+----------+-----------+
| Retained earnings | | 2.4 | 25.1 | 15.7 |
+---------------------------------+----------+----------+----------+-----------+
| Total equity | | 15.6 | 42.7 | 31.2 |
+---------------------------------+----------+----------+----------+-----------+
Condensed consolidated statement of comprehensive income
26 weeks ended 5 July 2009
+--------------------------------------------+----------+-----+-------+-----+-----------+
| | 26 weeks | Six | Year |
| | ended | months | ended 31 |
| | 5 July | | December |
| | 2009 | ended | 2008 |
| | Reviewed | 30 | Audited |
| | | June | |
| | | 2008 | |
| | | Reviewed | |
+--------------------------------------------+----------------+-------------+-----------+
| | GBP'm | GBP'm | GBP'm |
+--------------------------------------------+----------+-------------+-----------------+
| Loss for the period | (11.9) | (5.3) | (16.2) |
+--------------------------------------------+----------+-------------+-----------------+
| Loss on property valuation | (2.8) | (2.5) | (4.0) |
| Actuarial (loss)/gain on defined benefit | (1.1) | (1.4) | 0.3 |
| pension scheme | (0.6) | 0.1 | 0.4 |
| Exchange differences | | | |
+--------------------------------------------+----------+-------------+-----------------+
| Tax relating to components of other | 0.7 | 1.1 | (0.1) |
| comprehensive income | | | |
+--------------------------------------------+----------+-------------+-----------------+
| Other comprehensive income for the period | (15.7) | (8.0) | (19.6) |
+--------------------------------------------+----------+-------------+-----------------+
| Total comprehensive income for the period | (15.7) | (8.0) | (19.6) |
+--------------------------------------------+----------+-------------+-----------------+
| Attributable to equity shareholders of the | (15.7) | (8.0) | (19.6) |
| parent | | | |
+--------------------------------------------+----------+-----+-------+-----+-----------+
Condensed consolidated statement of changes in equity
26 weeks ended 5 July 2009
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| | Share | Share | Revaluation | Other | Capital | Retained | Total |
| | Capital | Premium | Reserve | Reserve | Redemption | Earnings | GBP'm |
| | GBP'm | Account | GBP'm | GBP'm | reserve | GBP'm | |
| | | GBP'm | | | GBP'm | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Loss | - | - | - | - | - | (11.9) | (11.9) |
| for the | | | | | | | |
| period | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Losses | - | - | (2.8) | - | - | - | (2.8) |
| on | | | | | | | |
| property | | | | | | | |
| revaluation | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Exchange | - | - | - | - | - | (0.6) | (0.6) |
| differences | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Actuarial | - | - | - | - | - | (1.1) | (1.1) |
| loss on | | | | | | | |
| defined | | | | | | | |
| benefit | | | | | | | |
| pension | | | | | | | |
| schemes | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Tax | - | - | 0.4 | - | - | 0.3 | 0.7 |
| relating | | | | | | | |
| to | | | | | | | |
| components | | | | | | | |
| of other | | | | | | | |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Total | - | - | (2.4) | - | - | (13.3) | (15.7) |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Credit | - | - | - | 0.1 | - | - | 0.1 |
| to | | | | | | | |
| equity | | | | | | | |
| for | | | | | | | |
| equity-settled | | | | | | | |
| share option | | | | | | | |
| costs | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Balance | 6.0 | 2.7 | 6.3 | 0.2 | 0.3 | 15.7 | 31.2 |
| at 1 | | | | | | | |
| January | | | | | | | |
| 2009 | | | | | | | |
| | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| Balance | 6.0 | 2.7 | 3.9 | 0.3 | 0.3 | 2.4 | 15.6 |
| at 5 | | | | | | | |
| July | | | | | | | |
| 2009 | | | | | | | |
| (Unaudited) | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
| | | | | | | | |
+-----------------------+---------+----------+-------------+---------+------------+----------+--------+
Condensed consolidated statement of changes in equity (continued)
Six month ended 30 June 2008
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| | Share | Share | Revaluation | Other | Capital | Retained | Total |
| | Capital | Premium | Reserve | Reserve | Redemption | Earnings | GBP'm |
| | GBP'm | Account | GBP'm | GBP'm | reserve | GBP'm | |
| | | GBP'm | | | GBP'm | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Loss | - | - | - | - | - | (5.3) | (5.3) |
| for the | | | | | | | |
| period | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Losses | - | - | (2.5) | - | - | - | (2.5) |
| on | | | | | | | |
| property | | | | | | | |
| revaluation | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Exchange | - | - | - | - | - | 0.1 | 0.1 |
| differences | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Actuarial | - | - | - | - | - | (1.4) | (1.4) |
| loss on | | | | | | | |
| defined | | | | | | | |
| benefit | | | | | | | |
| pension | | | | | | | |
| schemes | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Tax | - | - | 0.7 | - | - | 0.4 | 1.1 |
| relating | | | | | | | |
| to | | | | | | | |
| components | | | | | | | |
| of other | | | | | | | |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Total | - | - | (1.8) | - | - | (6.2) | (8.0) |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Credit | - | - | - | 0.1 | - | - | 0.1 |
| to | | | | | | | |
| equity | | | | | | | |
| for | | | | | | | |
| equity-settled | | | | | | | |
| share option | | | | | | | |
| costs | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Balance | 6.0 | 2.7 | 10.3 | - | 0.3 | 31.3 | 50.6 |
| at 1 | | | | | | | |
| January | | | | | | | |
| 2008 | | | | | | | |
| | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
| Balance | 6.0 | 2.7 | 8.5 | 0.1 | 0.3 | 25.1 | 42.7 |
| at 30 | | | | | | | |
| June | | | | | | | |
| 2008 | | | | | | | |
| (Unaudited) | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+-------+
Condensed consolidated statement of changes in equity (continued)
Year ended 31 December 2008
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| | Share | Share | Revaluation | Other | Capital | Retained | Total |
| | Capital | Premium | Reserve | Reserve | Redemption | Earnings | GBP'm |
| | GBP'm | Account | GBP'm | GBP'm | reserve | GBP'm | |
| | | GBP'm | | | GBP'm | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Loss | - | - | - | - | - | (16.2) | (16.2) |
| for the | | | | | | | |
| period | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Losses on | - | - | (4.6) | - | - | - | (4.6) |
| property | | | | | | | |
| revaluation | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Exchange | - | - | - | - | - | 0.4 | 0.4 |
| differences | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Actuarial | - | - | - | - | - | 0.3 | 0.3 |
| loss on | | | | | | | |
| defined | | | | | | | |
| benefit | | | | | | | |
| pension | | | | | | | |
| schemes | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Tax | - | - | 0.6 | - | - | (0.1) | 0.5 |
| relating | | | | | | | |
| to | | | | | | | |
| components | | | | | | | |
| of other | | | | | | | |
| comprehensive | | | | | | | |
| income | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Total | - | - | (4.0) | - | - | (15.6) | (19.6) |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Credit | - | - | - | 0.2 | - | - | 0.2 |
| to | | | | | | | |
| equity | | | | | | | |
| for | | | | | | | |
| equity-settled | | | | | | | |
| share option | | | | | | | |
| costs | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Balance | 6.0 | 2.7 | 10.3 | - | 0.3 | 31.3 | 50.6 |
| at 1 | | | | | | | |
| January | | | | | | | |
| 2008 | | | | | | | |
| | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
| Balance | 6.0 | 2.7 | 6.3 | 0.2 | 0.3 | 15.7 | 31.2 |
| at 31 | | | | | | | |
| December | | | | | | | |
| 2008 | | | | | | | |
| (Audited) | | | | | | | |
+-----------------------+---------+---------+-------------+---------+------------+----------+--------+
Condensed consolidated cash flow statement
26 weeks ended 5 July 2009
+----------------------------------------+-----------+-----------+------------+
| | 26 weeks | Six | Year |
| | ended | months | ended 31 |
| | 5 July | ended | December |
| | 2009 | 30 June | 2008 |
| | Reviewed | 2008 | Audited |
| | | Reviewed | |
+----------------------------------------+-----------+-----------+------------+
| | GBP'm | GBP'm | GBP'm |
+----------------------------------------+-----------+-----------+------------+
| Operating loss from activities | (11.6) | (4.4) | (14.5) |
+----------------------------------------+-----------+-----------+------------+
| Depreciation | 0.9 | 1.4 | 2.5 |
+----------------------------------------+-----------+-----------+------------+
| Impairment of property | 0.7 | - | 0.3 |
+----------------------------------------+-----------+-----------+------------+
| Impairment losses | 8.4 | 4.6 | 10.4 |
+----------------------------------------+-----------+-----------+------------+
| Share option costs | 0.1 | 0.1 | 0.2 |
+----------------------------------------+-----------+-----------+------------+
| Exchange gain/(loss) | 0.5 | 0.1 | (0.7) |
+----------------------------------------+-----------+-----------+------------+
| Decrease/(increase) in inventories | 1.1 | (0.8) | 1.9 |
+----------------------------------------+-----------+-----------+------------+
| Decrease in trade and other | 5.2 | 2.5 | 4.6 |
| receivables | | | |
+----------------------------------------+-----------+-----------+------------+
| (Decrease)/increase in payables | (7.5) | 0.8 | (0.4) |
+----------------------------------------+-----------+-----------+------------+
| (Decrease)/increase in provisions | (0.2) | 0.1 | 1.3 |
+----------------------------------------+-----------+-----------+------------+
| Other non-cash movements | - | - | (0.4) |
+----------------------------------------+-----------+-----------+------------+
| Cash generated (used in)/from | (2.4) | 4.4 | 5.2 |
| operations | | | |
+----------------------------------------+-----------+-----------+------------+
| Interest paid | (0.4) | (0.4) | (0.9) |
+----------------------------------------+-----------+-----------+------------+
| Tax (paid)/recovered | (0.2) | 0.4 | 1.2 |
+----------------------------------------+-----------+-----------+------------+
| Net cash (used in)/from operating | (3.0) | 4.4 | 5.5 |
| activities | | | |
+----------------------------------------+-----------+-----------+------------+
| Investing activities | | | |
+----------------------------------------+-----------+-----------+------------+
| Purchase of property, plant and | (0.5) | (1.6) | (3.4) |
| equipment | | | |
+----------------------------------------+-----------+-----------+------------+
| Proceeds from sale of property, plant | 0.8 | 0.3 | 0.4 |
| and equipment | | | |
+----------------------------------------+-----------+-----------+------------+
| Acquisition of subsidiary undertakings | - | (3.6) | (3.6) |
| | | | |
+----------------------------------------+-----------+-----------+------------+
| Proceeds from sale of businesses | 0.2 | 0.4 | 0.6 |
+----------------------------------------+-----------+-----------+------------+
| Net cash from/(used in) investing | 0.5 | (4.5) | (6.0) |
| activities | | | |
+----------------------------------------+-----------+-----------+------------+
| Financing activities | | | |
+----------------------------------------+-----------+-----------+------------+
| Equity dividends paid | - | - | - |
+----------------------------------------+-----------+-----------+------------+
| New bank borrowings | - | 3.0 | 3.0 |
+----------------------------------------+-----------+-----------+------------+
| Repayment of bank borrowings | - | (5.0) | (5.0) |
+----------------------------------------+-----------+-----------+------------+
| Increase in bank overdraft | 2.5 | 2.1 | 2.5 |
+----------------------------------------+-----------+-----------+------------+
| Net cash from financing activities | 2.5 | 0.1 | 0.5 |
+----------------------------------------+-----------+-----------+------------+
| Net increase in cash and cash | - | - | - |
| equivalents | | | |
+----------------------------------------+-----------+-----------+------------+
| Cash and cash equivalents at beginning | - | - | - |
| of period | | | |
+----------------------------------------+-----------+-----------+------------+
| Cash and cash equivalents at end of | - | - | - |
| period | | | |
+----------------------------------------+-----------+-----------+------------+
Notes to the condensed set of financial statements
26 weeks ended 5 July 2009
1 General information
The company is a public limited company incorporated and domiciled in the UK.
The address of its registered office is Ardath Road, Kings Norton, Birmingham,
B38 9PN.
The company has its primary listing on the Alternative Investment Markets
("AIM") following its delisting from the London Stock Exchange on 25 June 2008.
This condensed consolidated interim financial information was approved for issue
on 29 September 2009.
This condensed consolidated interim financial information does not comprise
statutory accounts within the meaning of section 435 of the Companies Act 2006
(Prior period: section 240 of the Companies Act 1985). The full accounts of
Metalrax Group plc for the year ended 31 December 2008, which received an
unqualified report from the auditors but did contain an emphasis of matter
paragraph regarding going concern, and did not contain a statement under
S.237(2) or (3) of the Companies Act 1985, have been filed with the Registrar of
Companies.
The condensed consolidated interim financial information has been reviewed, not
audited.
2 Basis of preparation
The condensed consolidated interim financial information for the 26 weeks ended
5 July 2009 has been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Services Authority and with International Accounting
Standard 34 'Interim Financial Reporting' (IAS 34) as adopted by the European
Union.
The condensed set of consolidated interim financial information should be read
in conjunction with the annual financial statements for the year ended 31
December 2008, which have been prepared in accordance with IFRS as adopted by
the European Union.
The condensed 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 Group is continuing
with its re-financing discussions with its bankers.Whilst the refinancing is at
an advanced stage of legal documentation, the process has yet to be finalised.
Whilst the refinancing discussions are in progress, the current overdraft
facilities have continued to be provided by the Company's bankers on an informal
basis.
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
uncertainty 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 condensed set of financial statements. The set of condensed
financial statements do not include the adjustments that would result if the
Group was unable to continue as a going concern.
3 Accounting policies
The condensed consolidated interim financial information has been prepared on
the basis of the accounting policies expected to apply for the financial year to
31 December 2009 applicable to the Group under IFRS. The IFRS and IFRIC
interpretations as adopted by the European Union that will be applicable at 31
December 2009, including those that will be applicable on an optional basis, are
not known with certainty at the time of preparing these interim financial
statements. Thus the accounting policies adopted in these interim financial
statements may be subject to revision to reflect further IFRS, IFRIC
interpretations and pronouncements issued between 29 September 2009 and
publication of the annual IFRS financial statements for the year ending 31
December 2009.
The financial statements have been prepared under the historical cost convention
as modified by the revaluation of properties.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of certain critical accounting estimates.
It also requires management to exercise judgement in the process of applying the
Group's accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
condensed consolidated interim financial statements are disclosed within the
Group's accounting policies as disclosed in the IFRS financial statements for
the year ended 31 December 2008.
The same accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in the Group's
latest annual audited financial statements, except for as described below.
Changes in accounting policy
In the current financial year, the Group has adopted International Financial
Reporting Standard 8 "Operating Segments" and International Accounting Standard
1 "Presentation of Financial Statements" (revised 2007).
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief
Executive to allocate resources to the segments and to assess their performance.
In contrast, the predecessor Standard (IAS 14 "Segment Reporting") required the
Group to identify two sets of segments (business and geographical), using a
risks and rewards approach, with the Group's system of internal financial
reporting to key management personnel serving only as the starting point for the
identification of such segments. As a result, the segmental information required
by IAS 34 which is included in note 4 below is presented in accordance with IFRS
8.
IAS 1(revised) requires the presentation of a statement of changes in equity as
a primary statement, separate from the income statement and statement of
comprehensive income. As a result, a condensed consolidated statement of changes
in equity has been included in the primary statements, showing changes in each
component of equity for each period presented.
The Group's method of internal reporting has changed from being based on
calendar months, to a 13 week quarter basis (termed 4-4-5 accounting). This
interim reporting period is therefore 26 weeks ended 5 July 2009.
4 Segmental information
The Group has two divisions - Specialist Engineering and Consumer Durables,
under IAS14 in the annual report for the year ended 31 December 2008.These
segments are consistent with information reported to the Group's Chief Executive
for the purpose of resource allocation and performance assessment. As a result,
the Group's reportable segments under IFRS8 are the same as those under IAS14.
The principal activities of the two divisions are as follows:
Specialist Engineering - a variety of precision manufacturing activities that
incorporate value adding technology for unique applications in the medical,
specialist metal coating and premium automotive sectors.
Consumer Durables - manufactures and markets bakeware and associated ranges of
kitchen accessories to both the retail and commercial markets in the UK and
abroad.
a) Segment revenues and results:
26 weeks to 5 July 2009
+---------------+-------------+----------+----------+--------+--------------+--------+
| | Continuing businesses | | |
+---------------+--------------------------------------------+--------------+--------+
| | Specialist | Consumer | Central | Total | Discontinued | Total |
| | Engineering | Durables | Services | Group | Businesses | Group |
+---------------+-------------+----------+----------+--------+--------------+--------+
| | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm | GBP'm |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Total | 21.6 | 10.0 | 0.1 | 31.7 | 1.6 | 33.3 |
| revenues | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Inter-segment | (1.7) | - | - | (1.7) | (0.2) | (1.9) |
| revenues | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Revenue | 19.9 | 10.0 | 0.1 | 30.0 | 1.4 | 31.4 |
| from | | | | | | |
| external | | | | | | |
| customers | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Operating | 0.5 | (0.3) | (0.8) | (0.6) | (0.8) | (1.4) |
| profit/(loss) | | | | | | |
| before | | | | | | |
| exceptional | | | | | | |
| items, share | | | | | | |
| option costs | | | | | | |
| and goodwill | | | | | | |
| impairment | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Exceptional | (0.8) | (0.1) | - | (0.9) | (8.6) | (9.5) |
| items | - | - | (0.1) | (0.1) | - | (0.1) |
| Share | | | | | | |
| option | | | | | | |
| costs | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Goodwill | - | (0.6) | - | (0.6) | - | (0.6) |
| impairment | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Operating | (0.3) | (1.0) | (0.9) | (2.2) | (9.4) | (11.6) |
| loss | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Finance | | | | (0.4) | - | (0.4) |
| expense | | | | | | |
| (net) | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Loss | | | | (2.6) | (9.4) | (12.0) |
| before | | | | | | |
| taxation | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Taxation | | | | 0.1 | - | 0.1 |
+---------------+-------------+----------+----------+--------+--------------+--------+
| Loss | | | | (2.5) | (9.4) | (11.9) |
| after | | | | | | |
| taxation | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
| | | | | | | |
+---------------+-------------+----------+----------+--------+--------------+--------+
4 Segmental information (continued)
a) Segment revenues and results (continued):
6 months to 30 June 2008
+------------------------------------------------------------------------------------+
| Continuing businesses |
| Specialist Consumer Central Total Discontinued Total |
| Engineering Durables Services Group Businesses Group |
| GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm |
| Total 25.3 11.5 0.2 37.0 20.7 57.7 |
| revenues |
| Inter-segment (1.9) - (0.2) (2.1) (0.9) (3.0) |
| revenues |
| Revenue 23.4 11.5 - 34.9 19.8 54.7 |
| from |
| external |
| customers |
| Operating 1.9 0.5 (1.4) 1.0 1.1 2.1 |
| profit/(loss) |
| before |
| exceptional |
| items, share |
| option costs |
| and goodwill |
| impairment |
| Exceptional - - - - (1.8) (1.8) |
| items - - (0.1) (0.1) - (0.1) |
| Share |
| option |
| costs |
| Goodwill - - - - (4.6) (4.6) |
| impairment |
| Operating 1.9 0.5 (1.5) 0.9 (5.3) (4.4) |
| profit/(loss) |
| Finance (0.5) - (0.5) |
| expense |
| (net) |
| Profit/(loss) 0.4 (5.3) (4.9) |
| before |
| taxation |
| Taxation (0.4) - (0.4) |
| Loss - (5.3) (5.3) |
| after |
| taxation |
| Year Continuing businesses |
| ended |
| 31 |
| December 2008 |
| Specialist Consumer Central Total Discontinued Total |
| Engineering Durables Services Group Businesses Group |
| GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm |
| Total 51.5 25.9 0.4 77.8 33.8 111.6 |
| revenues |
| Inter-segment (4.7) (0.4) (0.4) (5.5) (1.3) (6.8) |
| revenues |
| Revenue 46.8 25.5 - 72.3 32.5 104.8 |
| from |
| external |
| customers |
| Operating 3.8 1.5 (3.3) 2.0 1.1 3.1 |
| profit/(loss) |
| before |
| exceptional |
| items, share |
| option costs |
| and goodwill |
| impairment |
| Exceptional (0.4) (1.0) (0.6) (2.0) (9.9) (11.9) |
| items - - (0.2) (0.2) - (0.2) |
| Share |
| option |
| costs |
| Goodwill (0.8) - - (0.8) (4.7) (5.5) |
| impairment |
| Operating 2.6 0.5 (4.1) (1.0) (13.5) (14.5) |
| profit/(loss) |
| Finance (0.8) - (0.8) |
| expense |
| (net) |
| Loss (1.8) (13.5) (15.3) |
| before |
| taxation |
| Taxation (0.9) - (0.9) |
| Loss (2.7) (13.5) (16.2) |
| after |
| taxation |
| |
+------------------------------------------------------------------------------------+
b) Segment assets/(liabilities)
+----------------------------------+--------+--------+--------+----------+
| |
+------------------------------------------------------------------------+
| | | 5 July | 30 | 31 |
| | | 2009 | June | December |
| | | GBP'm | 2008 | 2008 |
| | | | GBP'm | GBP'm |
+----------------------------------+--------+--------+--------+----------+
| Specialist | | 19.8 | 27.2 | 27.2 |
| Engineering | | | | |
+----------------------------------+--------+--------+--------+----------+
| Consumer | | 15.8 | 16.8 | 16.2 |
| Durables | | | | |
+----------------------------------+--------+--------+--------+----------+
| Central | | (0.6) | (0.7) | (2.5) |
| Services | | | | |
+----------------------------------+--------+--------+--------+----------+
| Discontinued | | (0.2) | 15.4 | 7.0 |
| Businesses | | | | |
+----------------------------------+--------+--------+--------+----------+
| | | | | |
+----------------------------------+--------+--------+--------+----------+
| Total | | 34.8 | 58.7 | 47.9 |
| segment | | | | |
| net | | | | |
| assets | | | | |
+----------------------------------+--------+--------+--------+----------+
| Unallocated | | (19.2) | (16.0) | (16.7) |
| liabilities | | | | |
+----------------------------------+--------+--------+--------+----------+
| Consolidated | | 15.6 | 42.7 | 31.2 |
| total assets | | | | |
+----------------------------------+--------+--------+--------+----------+
| |
+----------------------------------+--------+--------+--------+----------+
For the purposes of monitoring segment performance and allocating resources
between segments, the Group's Chief Executive monitors the tangible, intangible
and financial assets attributable to each segment. All assets are allocated to
reportable segments with the exception other financial assets (except for trade
and other receivables) and tax assets. Assets used jointly by reportable
segments are allocated on the basis of the revenues earned by individual
reportable segments.
5Exceptional items
+--------------------------------------------+-----------+-----------+-----------+
| | 26 weeks | Six | Year |
| | ended | months | ended 31 |
| | 5 July | ended | December |
| | 2009 | 30 June | 2008 |
| | Reviewed | 2008 | Audited |
| | | Reviewed | |
+--------------------------------------------+-----------+-----------+-----------+
| | GBP'm | GBP'm | GBP'm |
+--------------------------------------------+-----------+-----------+-----------+
| | | | |
+--------------------------------------------+-----------+-----------+-----------+
| Reorganisation/restructuring costs | 0.4 | 1.3 | 4.4 |
+--------------------------------------------+-----------+-----------+-----------+
| Provision for Hidrosib SA losses | 0.3 | 0.5 | 0.5 |
+--------------------------------------------+-----------+-----------+-----------+
| Impairment of assets | 8.1 | - | 5.3 |
+--------------------------------------------+-----------+-----------+-----------+
| Onerous lease costs | - | - | 1.4 |
+--------------------------------------------+-----------+-----------+-----------+
| Property devaluations | 0.7 | - | 0.3 |
+--------------------------------------------+-----------+-----------+-----------+
| Total exceptional items | 9.5 | 1.8 | 11.9 |
+--------------------------------------------+-----------+-----------+-----------+
| Goodwill impairment | 0.6 | 4.6 | 5.5 |
+--------------------------------------------+-----------+-----------+-----------+
| IFRS2 share option costs | 0.1 | 0.1 | 0.2 |
+--------------------------------------------+-----------+-----------+-----------+
| Total | 10.2 | 6.5 | 17.6 |
+--------------------------------------------+-----------+-----------+-----------+
Impairment of assets incurred in the period relate to Hidrosib SA, which was put
into administration in July 2009 (GBP7.2m), and asset impairments at Commercial
Bearings (GBP0.5m) and BSC Diecasting (GBP0.4m) prior to disposal.
GBP0.9m of the total exceptional items of GBP9.5m relate to continuing
activities (six months to June 2008: GBPnil).
6Discontinued operations
The Group has undertaken a review of its underperforming businesses and has
taken actions to close or sell those businesses in the period and beyond. The
businesses that are no longer part of the Group are:
+----------------------------+----------------------+------------------+
| BSC (Diecasting) | Sold | 30 April 2009 |
| Hidrosib SA | Administration | 2 July 2009 |
| Commercial Bearings | Sold | 24 July 2009 |
| | | |
+----------------------------+----------------------+------------------+
These businesses have been presented as discontinued operations in the income
statement on the basis that irreversible management decisions were taken in the
period, and the communications to interested parties, including the employees
and creditors of the businesses involved, were completed in the period.
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.
6 Discontinued activities (continued)
+----------------------------------------+-----------------------+-------------+--------------+
| | 26 weeks | Six months | Year |
| | ended 5 | ended 30 | ended 31 |
| | July 2009 | June 2008 | December |
| | GBP'm | GBP'm | 2008 GBP'm |
+----------------------------------------+-----------------------+-------------+--------------+
| | | | |
+----------------------------------------+-----------------------+-------------+--------------+
| Revenue | 1.4 | 19.8 | 32.5 |
+----------------------------------------+-----------------------+-------------+--------------+
| Cost of sales | (1.7) | (16.3) | (27.9) |
+----------------------------------------+-----------------------+-------------+--------------+
| Gross (loss)/profit | (0.3) | 3.5 | 4.6 |
+----------------------------------------+-----------------------+-------------+--------------+
| Administrative expenses | (0.5) | (2.4) | (3.5) |
+----------------------------------------+-----------------------+-------------+--------------+
| Exceptional costs | (8.6) | (1.8) | (9.9) |
+----------------------------------------+-----------------------+-------------+--------------+
| Goodwill impairment | - | (4.6) | (4.7) |
+----------------------------------------+-----------------------+-------------+--------------+
| Loss before tax of discontinued | (9.4) | (5.3) | (13.5) |
| operations | | | |
+----------------------------------------+-----------------------+-------------+--------------+
| Attributable tax expense | - | - | - |
+----------------------------------------+-----------------------+-------------+--------------+
| Loss after tax of discontinued items | (9.4) | (5.3) | (13.5) |
+----------------------------------------+-----------------------+-------------+--------------+
| Pre tax loss of disposal group | - | - | - |
+----------------------------------------+-----------------------+-------------+--------------+
| Taxation | - | - | - |
+----------------------------------------+-----------------------+-------------+--------------+
| After tax loss of disposal group | (9.4) | (5.3) | (13.5) |
+----------------------------------------+-----------------------+-------------+--------------+
| Loss for the period from discontinued | (9.4) | (5.3) | (13.5) |
| operations | | | |
+----------------------------------------+-----------------------+-------------+--------------+
During the period management undertook a review of each of the business to
identify underperforming businesses. The assets of these businesses were written
down to net recoverable value during the period and therefore none of the
businesses that were sold generated a profit or loss on disposal. At the period
end the assets remaining in the balance sheet relating to the closed businesses
have been written down to the recoverable value.
The effect of discontinued operations on segment results is disclosed in note 4.
Central costs that would previously have been allocated to these closed or
disposed businesses have not been allocated in the results presented on the
basis that these costs remain part of the Central Services.
7Finance expense (net)
+--------------------------------------------+------------+-----------+----------+
| | 26 weeks | Six | Year |
| | ended | months | ended 31 |
| | 5 July | ended | December |
| | 2009 | 30 June | 2008 |
| | Reviewed | 2008 | Audited |
| | | Reviewed | |
+--------------------------------------------+------------+-----------+----------+
| | GBP'm | GBP'm | GBP'm |
+--------------------------------------------+------------+-----------+----------+
| Interest received on overpaid taxation | - | - | (0.1) |
+--------------------------------------------+------------+-----------+----------+
| Interest payable on bank loans and | 0.2 | 0.4 | 0.7 |
| overdrafts | | | |
+--------------------------------------------+------------+-----------+----------+
| Net finance cost of defined benefit | 0.2 | 0.1 | 0.2 |
| pension schemes | | | |
+--------------------------------------------+------------+-----------+----------+
| Net finance expense | 0.4 | 0.5 | 0.8 |
+--------------------------------------------+------------+-----------+----------+
8 Income tax (credit)/charge
+--------------------------------------------+------------+--+----------+----------+--+
| | 26 weeks | Six | Year |
| | ended | Months | Ended |
| | 5 July | Ended | 31 |
| | 2009 | 30 June | December |
| | Reviewed | 2008 | 2008 |
| | | Reviewed | Audited |
+--------------------------------------------+---------------+----------+-------------+
| | GBP'm | GBP'm | GBP'm |
+--------------------------------------------+------------+-------------+----------+
| Current tax (credit)/charge | 0.1 | 0.3 | 0.2 |
+--------------------------------------------+------------+-------------+----------+
| Prior period adjustments to tax | - | (0.6) | (0.8) |
+--------------------------------------------+------------+-------------+----------+
| Deferred tax (credit)/charge | (0.2) | 0.7 | 1.5 |
+--------------------------------------------+------------+-------------+----------+
| Income tax (credit)/charge | (0.1) | 0.4 | 0.9 |
+--------------------------------------------+------------+--+----------+----------+--+
9 (Loss)/earnings per ordinary share
The basic and diluted (loss)/earnings per share are calculated based on the
(loss)/profit for the period and the adjusted (loss)/earnings per share is
calculated based on an adjusted (loss)/profit after tax as calculated below. The
weighted average number of shares used in the basic and diluted loss per share
calculation is 119,897,298 (30 June and 31 December 2008: 119,897,298).
+--------------------------------------------+----------+-----------+-----------+
| | 26 weeks | Six | Year |
| | ended | months | ended 31 |
| | 5 July | ended | December |
| | 2009 | 30 June | 2008 |
| | Reviewed | 2008 | Audited |
| | | Reviewed | |
+--------------------------------------------+----------+-----------+-----------+
| | GBP'm | GBP'm | GBP'm |
+--------------------------------------------+----------+-----------+-----------+
| Loss for the period | (11.9) | (5.3) | (16.2) |
+--------------------------------------------+----------+-----------+-----------+
| Add back exceptional items | 9.5 | 1.8 | 11.9 |
+--------------------------------------------+----------+-----------+-----------+
| Add back share option costs | 0.1 | 0.1 | 0.2 |
+--------------------------------------------+----------+-----------+-----------+
| Add back goodwill impairment | 0.6 | 4.6 | 5.5 |
+--------------------------------------------+----------+-----------+-----------+
| Adjusted (loss)/profit after tax | (1.7) | 1.2 | 1.4 |
+--------------------------------------------+----------+-----------+-----------+
| Basic and diluted loss per 5p ordinary | (9.92) | (4.38) | (13.55) |
| share (pence per share) | | | |
+--------------------------------------------+----------+-----------+-----------+
| Adjusted basic (loss)/profit per 5p | (1.39) | 0.95 | 1.10 |
| ordinary share (pence per share) | | | |
+--------------------------------------------+----------+-----------+-----------+
(Loss)/earnings per ordinary share for Continuing operations
+--------------------------------------------+----------+--+-----------+-----------+--+
| | 26 weeks | Six | Year |
| | ended | months | ended 31 |
| | 5 July | ended | December |
| | 2009 | 30 June | 2008 Audited |
| | Reviewed | 2008 | |
| | | Reviewed | |
+--------------------------------------------+-------------+-----------+--------------+
| | GBP'm | GBP'm | GBP'm |
+--------------------------------------------+----------+--------------+-----------+
| (Loss)/profit for the period | (2.5) | - | (2.7) |
+--------------------------------------------+----------+--------------+-----------+
| Add back exceptional items | 0.9 | - | 2.0 |
+--------------------------------------------+----------+--------------+-----------+
| Add back share option costs | 0.1 | 0.1 | 0.2 |
+--------------------------------------------+----------+--------------+-----------+
| Add back goodwill impairment | 0.6 | - | 0.8 |
+--------------------------------------------+----------+--------------+-----------+
| Adjusted (loss)/profit after tax | (0.9) | 0.1 | 0.3 |
+--------------------------------------------+----------+--------------+-----------+
| Basic and diluted (loss)/earnings per 5p | (2.08) | 0.04 | (2.19) |
| ordinary share (pence per share) | | | |
+--------------------------------------------+----------+--------------+-----------+
| Adjusted basic (loss)/profit per 5p | (0.63) | 0.05 | 0.53 |
| ordinary share (pence per share) | | | |
+--------------------------------------------+----------+--+-----------+-----------+--+
9 Loss per ordinary share (continued)
There is no dilution in the loss per share calculation at 5 July 2009. 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 period.
Since there are no other diluting future share issues, diluted (loss)/earning
per share equals basic (loss)/earning per share for the current period. There
were no potential diluting future shares in the previous year or period.
10 Share capital
+----------------------------------------+------------+------------+-------------+
| | 5 July | 30 June | 31 |
| | 2009 | 2008 | December |
| | Reviewed | Reviewed | 2008 |
| | | | Audited |
| | | | |
+----------------------------------------+------------+------------+-------------+
| | GBP'm | GBP'm | GBP'm |
+----------------------------------------+------------+------------+-------------+
| Authorised | | | |
+----------------------------------------+------------+------------+-------------+
| 140,000,000 (2008: 140,000,000) | 7.0 | 7.0 | 7.0 |
| ordinary shares of 5p each | | | |
+----------------------------------------+------------+------------+-------------+
| Called up, issued and fully paid | | | |
+----------------------------------------+------------+------------+-------------+
| 119,897,298 (2008: 119,897,298) | 6.0 | 6.0 | 6.0 |
| ordinary shares of 5p each | | | |
+----------------------------------------+------------+------------+-------------+
11 Pensions
The valuation of the Group's pension scheme obligation has been updated using an
IAS19 valuation as at 5 July 2009, to reflect current market discount rates,
current market values of investment and actual investment returns. The amounts
included in the balance sheet arising from the Group's pension obligations in
respect of defined benefit schemes are as follows:
+-----------------------------------------+------------+------------+------------+
| | 5 July | 30 June | 31December |
| | 2009 | 2008 | 2008 |
| | Reviewed | Reviewed | Audited |
+-----------------------------------------+------------+------------+------------+
| | GBP'm | GBP'm | GBP'm |
+-----------------------------------------+------------+------------+------------+
| Total market value of plan assets | 10.3 | 14.0 | 11.5 |
+-----------------------------------------+------------+------------+------------+
| Present value of scheme liabilities | (14.4) | (18.8) | (14.5) |
+-----------------------------------------+------------+------------+------------+
| Pension scheme liability | (4.1) | (4.8) | (3.0) |
+-----------------------------------------+------------+------------+------------+
The major assumptions used by the Actuary were:
+----------------------------------------+-------------+------------+------------+
| | 5 July | 30 June | 31December |
| | 2009 | 2008 | 2008 |
| | Reviewed | Reviewed | Audited |
+----------------------------------------+-------------+------------+------------+
| | % | % | % |
+----------------------------------------+-------------+------------+------------+
| Inflation | 3.4 | 4.0 | 3.1 |
+----------------------------------------+-------------+------------+------------+
| Rate of increase in salaries | 3.4 | 4.0 | 3.6 |
+----------------------------------------+-------------+------------+------------+
| Pension increases, subject to LPI | 3.4 | 4.0 | 3.1 |
+----------------------------------------+-------------+------------+------------+
| Discount rate | 6.2 | 6.4 | 6.5 |
+----------------------------------------+-------------+------------+------------+
| Return on plan assets | 4.7 | 5.9 | 4.7 |
+----------------------------------------+-------------+------------+------------+
12 Related party transactions
All intra-group transactions have been eliminated on consolidation at 5 July
2009. There have been no other related party transactions in the period from 1
January 2009 to 29 September 2009.
13Post balance sheet events
Subsequent to the period end, the Group disposed of the trade and assets of
Commercial Bearings for GBP0.1m and the remaining property at Great Bridge
Street, West Bromwich for GBP0.4m. The Property has been classified as assets
held for resale on the balance sheet.
INDEPENDENT REVIEW REPORT TO METALRAX GROUP PLC
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the 26 weeks ended 5 July
2009 which comprises the condensed consolidated income statement, the condensed
consolidated balance sheet, the condensed consolidated statement of
comprehensive income, the condensed consolidated cash flow statement and related
notes 1 to 13. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued
by the Auditing Practices Board. Our work has been undertaken so that we might
state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the 26 weeks ended 5 July 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the AIM Rules of the London Stock Exchange.
Emphasis of matter - Going Concern
In forming our review opinion on the condensed set of financial statements,
which is not qualified, we have considered the adequacy of the disclosure made
in note 2 (see above) to the condensed set of financial statements concerning
the Group's ability to continue as a going concern.
The group is in the process of re-negotiating its banking facilities with its
current providers. These conditions, along with the matters explained in note 2
to the condensed set of financial statements, indicate the existence of a
material uncertainty that may cast doubt about the Group's ability to continue
as a going concern. The condensed set of financial statements do not include the
adjustments that would result if the Group were unable to continue as a going
concern.
Deloitte LLP
Chartered Accountants and Statutory Auditors
Birmingham, UK
29 September 2009
Statement of directors' responsibilities
26 weeks ended 5 July 2009
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance
with IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining 26
weeks of the year); and
(c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and changes
therein).
The directors of Metalrax Group plc are listed in the Metalrax Group plc Annual
Report for 31 December 2008.
By order of the Board
+--------------------------------------+--------------------------------------+
| A J Richardson | M J Stock |
+--------------------------------------+--------------------------------------+
| Chief Executive Officer | Group Finance Director |
+--------------------------------------+--------------------------------------+
| | |
+--------------------------------------+--------------------------------------+
| 29 September 2009 | 29 September 2009 |
+--------------------------------------+--------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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