TIDMMRX
RNS Number : 9277C
Metalrax Group PLC
15 March 2011
15 March 2011
Metalrax Group PLC
Preliminary results for the year ended 31 December 2010
Metalrax Group PLC ("Metalrax", the "Group"), the niche supplier
of specialist engineering and consumer durables products, today
announces its preliminary results for the year ended 31 December
2010.
Results
2010 2010 2009 2009
Continuing Total Continuing Total
activities Group activities Group
GBP'm GBP'm GBP'm GBPm
External revenues 65.5 65.5 61.2 62.9
Gross margins 25.8% 25.8% 23.8% 22.3%
Operating
profit/(loss)
before exceptional
items*, goodwill
impairment and
share option costs 2.3 2.1 (0.2) (0.6)
Profit/(loss) before
interest and
taxation 2.1 1.9 (2.7) (10.6)
Profit/(loss) for
the year 0.3 (11.5)
Basic
earnings/(loss) per
5p Ordinary share 0.47p 0.29p ( 2.96p) (9.62p)
Adjusted earnings
per 5p Ordinary
share 1.27p 1.09p (0.90p) (1.29p)
Cash generated from
operations 4.2 4.0 2.0 0.5
Net debt 8.3 12.2
Gearing (net
debt/net assets) 49.1% 73.9%
Dividends paid per nil nil
5p Ordinary 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.
Highlights:
-- The full year profit before tax and interest of GBP2.1m
(2009: loss GBP2.7m) was ahead of market expectations and reflects
a return to profit in the second half of GBP1.6m (compared to an
operating profit of GBP0.5m in the first half). The Group has made
a profit after taxation for the year of GBP0.3m (2009: loss
GBP11.5m).
-- Revenues are up 7.1% to GBP65.5m (2009: GBP61.2m) from
continuing activities, reflecting a strong second half performance
with revenues up 16% year on year.
-- Gross margins have improved year on year by 2.0% to 25.8%
(2009: 23.8%) from continuing activities, mainly arising from
manufacturing efficiencies and reduced costs.
-- Cash generation from continuing operations remains strong at
GBP4.2m (2009: GBP2.0m).
-- Net debt has been reduced to GBP8.3m (2009: GBP12.2m) at the
year- end, as a result of strong cash generation and debt
repayments from asset disposals in the year of GBP3.0m. This
results in available banking facilities of up to GBP20.2m at 31
December 2010. Deferred consideration on asset disposals of GBP1.0m
will also be used to repay bank borrowings.
-- Assets held for resale of GBP2.5m at the year-end represent
those properties held for sale in early 2011. The consideration
received has also been used to further reduce bank borrowings.
Commenting on the Group's performance Chairman Andrew Walker
concluded:
"The board is encouraged by last year's performance and believes
that the Group is in a good position to further grow profitability
in 2011. The Groups order books have continued to strengthen and
should support this year's growth."
For further information, please contact:
Metalrax Group PLC :
----------------------------------- -------------
Andrew Richardson, Chief Executive 0845 030 3300
----------------------------------- -------------
Arden Partners :
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Steve Douglas 0121 423 8900
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Jamie Cameron 0207 614 5925
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Chairman's Statement
Return to profitability
Metalrax Group is announcing a profit for the first time since
2006.
The Group has been through a turbulent period since 2006,
undertaking significant changes at the same time as battling the
adverse economic conditions. It is a testament to the commitment
and tenacity of all the employees that the Group delivered
profitable revenue growth in 2010. The on-going commitment and
support of all our employees is greatly appreciated.
The strategy of being a specialist engineering group within
niche markets remains unchanged. The Group now comprises two
divisions and has been restructured to focus on markets where their
individual specialisms can be best exploited.
Cash generation with the objective of minimising borrowings and
reducing gearing is a priority for the Group. In addition to
operational cash generation, the sale of non-core assets is a key
focus- assisting in borrowings reduction as well as resulting in a
'cleaner' and more focused business. During the year, the Group
completed the disposal of Hidrosib, the Romanian subsidiary, sold
its Storage business, disposed of a number of vacant properties as
well as completing the sale and leaseback of two properties. Post
year end a further property has been the subject of a sale and
leaseback arrangement. The board believe that reducing the Group's
debt is imperative and with that objective embarked on a property
sale and leaseback plan despite the longer term lease liabilities
The Board believe that the Group can generate better long term
returns with the headroom generated by the debt repayment.
Results
The Group's shift in focus from survival to growth in 2010 was
rewarded with a positive set of results, increased order books and
significant debt reduction from cash generated from operations as
well as asset disposals. Revenues from continuing operations were
GBP65.5m, 7.1% above 2009. It is worth noting that momentum on
sales growth really gathered pace over the year which saw very
strong growth of 16% in the second half. Keeping this sales
momentum is a key priority for the Group.
For Continuing Operations, the full year operating profit of
GBP2.1m exceeded market expectations and reflects a positive swing
of GBP4.8m compared to the GBP2.7m loss in 2009. After several
years of significant exceptional items, the Board is pleased to
announce no exceptional items for 2010. Looking at the Group
results (including discontinued operations), operating profit after
share option costs for 2010 was GBP1.9m compared to a loss of
GBP10.6m in 2009 (which included exceptional costs and goodwill
impairment of GBP9.7m).
The Group is reporting a post-tax profit of GBP0.3m (2009:
GBP11.5m) resulting in basic earnings per share of 0.29p compared
to a basic loss of 9.62p per share in 2009. The Group's strong
focus on cash continued with GBP4.0m (2009:GBP0.5m) of cash being
generated from operations. Proceeds from the sale of assets
generated an additional GBP2.8m in the year. The cash generated
from operations as well as non-core asset disposal resulted in a
year end net debt position of GBP8.3m compared to the half year of
GBP12.7m (December 2009: GBP12.2m).
Dividend
The Group's policy is to make dividend payments that are covered
2.0 to 2.5 times by earnings. There will be no dividend payment in
respect of the period ended 31 December 2010.
Board Changes
I joined the board during the year following Stephen Boyd's
decision to step down. The board also strengthened its
international engineering expertise with the appointment of Gerard
Wainwright.
Outlook
Last year's performance was encouraging and the board believes
that the Group is in a good position to further grow revenues
profitably in 2011. Our order books have shown continued
strengthening over 2010 and these should drive this year's growth.
Taking this into account the Board expects to meet market
expectations in the current year.
Andrew Walker
Chairman
15 March 2011
Chief Executive's Operating and Financial Review
Overview
The return to profitability has been a longer journey than
anticipated, but this annual report shows that the Group's
Continuing Operations are now in the black. When the new management
team took over in 2007,the Metalrax Group was already in severe
decline with a number of damagingly loss making businesses. The
Group had been paying an uncovered dividend that had weakened its
cash position leading to borrowings of GBP19.4m; and that was
before the credit crunch, the ensuing financial market uncertainty
and economic recession. Over 2008 and 2009, six loss making or
non-core businesses were sold and three were closed. The Group has
been restructured and refocused. The Group started 2010 in a much
leaner shape and this structure is reflected in these financial
statements. It has demonstrated profitable growth across the Group;
it has continued management's focus on working capital and cash
generation; and management have continued to restructure the Group
and dispose of non-core assets. Taken together, these actions have
resulted in strong cash generation enabling a significant reduction
in Group borrowings.
The Board and Executive team are committed to growing Metalrax
into a group focused on specialist engineering and consumer
durables that delivers superior return on investment and
sustainable long-term growth. In 2008 and 2009, survival was the
paramount priority. These results show that we have moved on and
are now looking forwards, leaving the crisis management phase
behind us and now focusing on growing the Group into the success
both the Board and the Executive know it can be.
The Group started 2010 highly geared at 74% with net bank
borrowings ofGBP14.4m. Strong operational cash generation of
GBP4.0m combined with cash generated by asset sales of GBP2.8m
enabled us to reduce the bank borrowings by year end to GBP9.8m
with a gearing ratio of below 50%. Our banking facilities, agreed
in October 2009, are in place for 3 years - a level of commitment
that gives us the security to drive our growth strategy. However,
the current high levels of debt were a legacy from the Group's
difficult 2004 - 2007 period and the Group's future growth would
benefit from lower bank debt. As in 2010, our focus on cash
generation with the aim of reducing borrowings remains one of the
Group's two key priorities for 2011.
Our other key priority also remains unchanged from 2010;
profitable sales growth. In our Interim Results for the period
ending 4 July 2010,it was disappointing to report a small decline
in turnover but at that time we stated that we were encouraged by
the double digit growth in our order books. That encouragement was
well placed as sales grew in the second half by 16% compared to
2009, giving a total of7.1% growth for the full year. Gross margins
across the group were up 2.0% to 25.8% (2009:23.8%) which is a
reflection of our drive for higher margin business. We closed our
order books at 31 December 2010 52% higher than at the end of 2009
which gives further encouragement that the momentum behind the
second half's turnover growth is sustainable. We are working with
both divisions to ensure that the key drivers for profitable growth
are understood, measured and managed. Strategic customers have been
identified where further investment would be beneficial and the
divisions are working to ensure that their sharp focus on these
customers is maintained and developed.
The Group has undertaken continual change over the past three
years and our employees have remained positive and optimistic
throughout the difficult times. Our 2010 results are a reflection
of the hard work of all those employees. We believe that our
employees and all other stakeholders are entitled to excellent
leadership. During 2010 we invested in comprehensive leadership
development programme which has delivered quantifiable results.
This will be continued into 2011.
The return to profit enables us to look to 2011 and beyond with
renewed optimism.
2010 Performance
The 2010 results are reported in line with the structure
implemented in 2008, which comprises of two divisions: Consumer
Durables and Specialist Engineering. There have been no major
business disposals in 2010 and therefore all operations are
reported as continuing operations.
Specialist Engineering
This division accounted for 64% (2009: 62%) of Group sales at
GBP41.5m, an increase of 5.9% over prior year (2009: GBP39.2m).
Gross margin at 28.0% increased by 3.8 percentage points compared
to 2009. Operating profit before share option costs was GBP3.5m
compared to GBP1.6m in 2009.
The division's largest contributor of profit in 2010, Cooper
Coated Coil, which coats steel for consumer, automotive, and
printing markets, had a strong year with total sales up by 7.8%.
This sales growth combined with margin improvement meant that the
business grew well. The business's consolidation onto one site was
finally completed in January 2010 and the benefit of this combined
with earlier investments flowed through into the margin by way of
improved efficiencies. Cooper Coated Coil will significantly reduce
energy usage in 2011 following the Group's investment in a
regenerative thermal oxidiser which will also reduce the business'
carbon footprint. The business has been awarded a three year grant
by the Carbon Trust to invest in this regenerative thermal oxidiser
which uses recycled heat to incinerate particular emissions,
thereby keeping the air clean using minimal gas. The implementation
of this will be completed in the first quarter of 2011.
Both of the businesses in this division which have exposure to
the specialist automotive and off-highway markets, Toolspec and
Weston Body Hardware, showed excellent recoveries in 2010 with
their core markets strengthening. Both of these businesses
capitalised on the recovery in their core markets whilst gaining
traction with new customers and / or new markets. They continue to
drive for growth in this way.
In this division, PG Lifelink and Premier Architectural, failed
to grow sales revenues in the full year and it is interesting to
note that they are both late economic cycle businesses that supply
products used towards the end of construction projects.
Encouragingly both of these businesses are reporting strong and
growing order books for 2011. PG LifeLink, our USA-based
manufacturer of medical electrical safety equipment, recorded
operating profit growth in spite of a downturn in their markets,
reflecting their very close management of margin and costs.
Advanced Handling, which manufactures and supplies a range of
bespoke handling solutions, has invested in its sales, marketing
and technical teams to drive its strategy of growing higher margin
bespoke product and service revenues. This included an encouraging
order for access platforms for the assembly of Airbus aircraft.
Metalrax Storage, the supplier of storage solutions was heavily
impacted by delayed new retail store build / refurbishment
programmes by its key customers. The decision was taken to dispose
of this business as it was seen as strategically non-core and
accordingly it was sold at the end of December 2010.
Consumer Durables
This accounted for 36% of external revenues in 2010 (2009: 35%).
Divisional turnover grew by 8.7% to GBP23.8m (2009: GBP21.9m)
although gross margin declined 0.7% to 21.9%. However the top line
growth with careful overhead management delivered strong divisional
operating profit at GBP1.0m (2009: GBP0.3m).
George Wilkinson, manufactures and supplies bakeware, kitchen
tools and gadgets, wine racks and bathroom furniture into the
retail markets. The business had a strong year with sales growth
helped by some important key account gains and good performance on
winning promotional business. Increased margin pressure was felt
from the large national retailers, with margins also being
adversely impacted by factory inefficiencies (which are being
addressed) and increased freight costs. The promotional business
wins also impact the ratio of margin to sales. The new management
team performed well to exceed their budget.
Samuel Groves which supplies both the catering and retail
markets grew its top line and returned to profitability after a
number of loss making years. The new management team, in place
since the beginning of quarter two are making good progress in new
account wins, product innovation and development and improving
supply chain efficiency.
Current trading and prospects
The current year budgets have been built on the basis that the
economies in which the Group operates will broadly be the same as
in 2010 and that the divisions will continue to make gains both in
existing and new customers. Any economic downturn or high rates of
escalation in input prices would be a risk. For both divisions,
Sterling's current relative weakness represents firstly improved
export opportunities and we continue to seek opportunities in key
overseas markets and secondly the opportunity to displace imports
which we are exploiting. The board is confident that the Group is
in a strong position to grow further this year.
Financial results
The Consolidated Income Statement reports the Revenue and
Operating income and expenditure of the Group's continuing
businesses under IFRS.
Revenues
Revenues for continuing activities for the year ended 31
December 2010 at GBP65.5m were 7.1 % higher than the prior year
(2009: GBP61.2m). Total external revenues for the Group were
GBP65.5m (2009: GBP62.9m). Further details of the divisional
performances are set out in note 2 of the financial statements.
Operating Profit/loss
The operating profit for continuing businesses before
exceptional items, goodwill impairment and share option costs at
GBP2.3m (2009 loss: GBP0.2m) was ahead of the market expectations.
Operating profit for continuing businesses before net finance costs
and taxation were GBP2.1m (2009 loss: GBP2.7m).
Cash generation
The Group has focused on reducing it bank borrowings in 2010,
through the disposal of assets and cash generation from the
operating businesses, through working capital management and cost
control. GBP2.8m of cash was generated on asset and business
disposals in the year with a further GBP1.0m of deferred
consideration due in 2011 and 2012. Total cash generated from
operations was GBP4.0m (2009: GBP0.5m). Of this, GBP4.2m was
generated from continuing operations (2009: GBP2.0m). The cash
outflow in discontinued activities in 2009 represents the cash cost
of reorganisation and the experienced downturn in trade prior to
closure or disposal of these businesses.
Exceptional items, goodwill impairment and share option
costs
There have been no exceptional items incurred in 2010. In 2009,
the Group incurred significant one-off exceptional costs totalling
GBP9.1m.
Each year, the Group reviews the carrying value of its goodwill
and in 2009 this resulted in an impairment of GBP0.6m, which
related to Samuel Groves. There is no impairment in the current
year of the remaining GBP7.0m of goodwill.
The IFRS 2 share option charge of GBP0.2m (2009: GBP0.3m) 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
GBP0.9m (2009: GBP0.5m), amortisation of debt issue costs GBP0.7m
(2009: GBP0.2m) and the pension finance cost of GBP0.3m (2009:
GBP0.3m).
Taxation
The Group is not expecting to pay any UK cash tax in respect of
its 2010 trading results. The tax losses arising in prior year have
been recognised as a deferred tax asset in 2010, to the extent that
these losses are recoverable in future periods.
The effective tax rate of the Group is 81.1% (2009: 18.4%) which
is significantly higher than the standard rate of 28.0% (2009:
28.0%). The major reconciling items are due to expenses not
deductible and the higher overseas taxation rates.
Earnings/(loss) per share
The basic earnings per share is 0.29p compared with a loss of
9.62p in the previous year.
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.
The Board does not propose to pay a final dividend for the year,
and therefore there has been no dividend in 2010 (2009: nil). The
Board believes that this is appropriate given the status of the
turnaround plan and is consistent with its stated policy and with
its current focus on cash management.
Property, plant & Equipment
The directors have updated the valuation of its commercial
properties in 2010, following the formal valuation exercise that
was commissioned at the end of 2008. The review has resulted in a
further devaluation of our properties of GBP0.8m (2009: GBP2.8m)
which has been reflected in the financial statements. All of the
GBP0.8m relates to properties that were previously revalued upwards
in 2007 and this has been taken against the revaluation
reserve.
The Group has invested GBP1.4m (2009: GBP1.0m) in new capital,
mainly relating to the finishing line at Cooper Coated Coil
(GBP0.5m), the automation of plant at GW International (GBP0.6m)
and new tooling at Weston Body hardware (GBP0.1m).
Goodwill & Intangibles
The annual review of goodwill supported the carrying value of
goodwill (2009 impairment: GBP0.6m). Of the remaining goodwill at
the end of the year of GBP7.0m, GBP2.8m relates to Specialist
Engineering and GBP4.2m relates to the Consumer Durables
Division.
Gross margins
Gross margins have increased year on year in Specialist
Engineering by 3.6% as a result of the focus on product
differentiation, improved production efficiencies and further cost
reduction programmes.
Gross margins in the Consumer Durables Division have fallen to
21.9% in 2010, as a result of the benefits from the completion of
phase 1 and 2 of the automation of the pressing-lines at one
operation being offset by higher energy bills and transportation
costs.
Overhead reduction
Despite higher carriage and energy costs experienced during
2010, the Group has been committed to reduce overhead spend in the
year to 22.7% of sales (2009: 28.3%). As well as improved cost
control across the businesses, this includes a reduction in head
office operating costs by GBP0.3m year on year, to GBP1.8m in 2010
(2009: GBP2.1m and 2008: GBP3.3m).
Operating margins
Operating margins are stated before exceptional items and
therefore year on year improvements have benefitted from overall
improvements gross margins. The Group continues to focus on cost
management and where appropriate headcount and discretionary spend
has been reduced to maintain operating margins.
Operating margins in both Divisions are ahead year on year as a
result of the full year impact of cost reduction programmes
initiated in 2009.
Working capital
Working capital management has been a sustained focus for the
Group during 2010. Good improvements were seen in the Consumer
Durables Division where average stock days reduced year on year by
a further 5 days to 51 days. Stock days in this Specialist
Engineering Division remained flat at 44 days.
Debtor days within the Specialist Engineering Division improved
by 12 days to 49 days with improved cash collections processes
implemented across the Group. The Consumer Durables Division
improved by 6 days to 56 days. There have been no bad debts of note
during 2010.
Return of Capital Employed "ROCE"
Year on year improvement in ROCE within both Divisions results
from the increased operating margins noted above, and the reduction
in assets and working capital. The Group continues to drive towards
its target of 15% ROCE.
Pensions
The pension deficit over the year has increased by GBP0.1m. The
deficit at 31 December 2010 is GBP4.7m (2009: GBP4.6m). The pension
fund 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 Trustees based on this valuation. The
next Triennial valuation will be at 1 January 2011.
Cash flow and Borrowings
Bank borrowings at 31 December 2010 were GBP9.8m (2009
GBP14.4m). Net debt at 31 December 2010 stood at GBP8.3m, compared
with GBP12.2m for the previous year. Net debt is after taking into
account the GBP1.5m of unamortised debt issues costs (2009:
GBP2.2m).
The Group's bank facilities contain certain financial covenant
tests relating to Consolidated EBITDA and Consolidated Net
Borrowings. The Group reports on these covenants to the providers
quarterly as part of the facility agreements. As at the year end,
the terms of the facilities, including covenants, were all met.
There is a risk that a further downturn in economic conditions
may result in a breach of the banking covenants and therefore the
Group's ability to raise additional funding. In setting the
financial covenants, the directors have negotiated appropriate
levels of EBITDA and cashflow headroom to allow a degree of
flexibility during the economic downturn. The Directors have
reviewed the Group's borrowing requirements for the next twelve
months and the financial covenant tests as set out in the banking
facilities, and can confirm that the preparation of the Group
Accounts on a going concern basis remains appropriate.
Cautionary note
This review of business operations 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.
A J Richardson
Chief Executive
15 March 2011
Consolidated income statement
Year ended 31 December 2010
2010 2009
Note GBPm GBPm
Revenue 2 65.5 61.2
Cost of sales (48.5) (46.6)
Gross profit 17.0 14.6
Distribution costs (5.8) (5.8)
Administrative expenses (9.1) (11.5)
Operating profit/(loss) before
exceptional items, share
based payments and goodwill
impairment 2.3 (0.2)
Exceptional items* 3 - (1.6)
Share based payments (0.2) (0.3)
Goodwill impairment - (0.6)
Operating profit/(loss) 2.1 (2.7)
-------------------------------- ---- ------- ------- -------- --------
Finance expense before debt
issue cost amortisation 4 (1.2) (0.8)
Debt issue cost amortisation 4 (0.7) (0.2)
-------------------------------- ---- ------- ------- -------- --------
Total finance expense 4 (1.9) (1.0)
Profit/(loss) before income
tax 0.2 (3.7)
Income tax credit 5 0.4 0.1
Profit/(loss) for the year from
continuing operations 0.6 (3.6)
Loss from discontinued
activities (0.3) (7.9)
Profit/(loss) for the year 0.3 (11.5)
Profit/(loss) for the year
attributable to equity
holders of the parent 0.3 (11.5)
Basic earnings/(loss) per
share 6 0.29p (9.62)p
Continuing 6 0.47p (2.96)p
Discontinued 6 (0.18)p (6.66)p
Diluted earnings/(loss) per share 6 0.24p (9.62)p
Continuing 6 0.42p (2.96)p
Discontinued 6 (0.18)p (6.66)p
* 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 years.
Consolidated Statement of comprehensive income
Year ended 31 December 2010
2010 2010 2009 2009
GBP'm GBP'm GBP'm GBP'm
---------------------------------------- ------- ------- -------- --------
Profit/(loss) for the year 0.3 (11.5)
Loss on property valuation (0.8) (2.6)
Actuarial gain/(loss) on defined
benefit pension scheme Exchange 0.7 (1.4)
differences - (0.4)
Tax relating to components of other
comprehensive income 0.2 0.8
Other comprehensive income for the
year 0.1 (3.6)
Total comprehensive income for the
year, attributed to equity
shareholder of the parent 0.4 (15.1)
---------------------------------------- ------- ------- -------- --------
Consolidated balance sheet
31 December 2010
2010 2009
Note GBPm GBPm
Assets
Goodwill 7.0 7.0
Other intangible assets 0.6 0.6
Property, plant and equipment 14.5 20.7
Deferred tax asset 0.8 -
Total non-current assets 22.9 28.3
Inventories 6.7 7.2
Trade and other receivables 13.7 12.8
Current tax asset - 0.2
Cash and cash equivalents 1.5 2.5
Total current assets 21.9 22.7
Assets held for sale 8 2.5 -
Total assets 47.3 51.0
Liabilities
Trade and other payables 14.6 13.9
Provisions 0.2 0.2
Bank borrowings 2.1 4.7
Total current liabilities 16.9 18.8
Bank borrowings 7.7 10.0
Provisions 1.1 1.1
Retirement benefit obligations 9 4.7 4.6
Total non-current liabilities 13.5 15.7
Total liabilities 30.4 34.5
Net assets 16.9 16.5
Equity
Share capital (ordinary shares) 6.0 6.0
Share premium 2.7 2.7
Capital redemption reserve 0.3 0.3
Revaluation reserve 3.0 4.2
Other reserve 0.6 0.6
Retained earnings 4.3 2.7
Total equity attributable
to owners of the parent 16.9 16.5
The consolidated financial statements of Metalrax Group PLC,
registered number 793639, were approved by the Board of Directors
on 15 March 2011 and were signed on its behalf by:
AJ Richardson
15 March 2011
Cash flow statement
31 December 2010
Group
2010 2009
GBPm GBPm
Loss before tax (including discontinued) (0.1) (11.6)
Finance cost 1.9 1.0
Depreciation 1.6 1.8
Impairment losses - 8.9
(Profit)/loss on disposal of assets (0.1) -
Share-based payment expense 0.2 0.3
Exchange losses - 0.6
Decrease in inventories 0.1 3.6
Decrease/(increase) in trade and other receivables (1.2) 5.2
(Decrease)/increase in trade and other payables 1.0 (8.7)
Decrease in provisions - (0.5)
Other non-cash movements 0.6 (0.1)
Cash generated from operations 4.0 0.5
Interest paid (0.9) (0.5)
Income Tax paid - (0.5)
Net cash generated from/(used in) operating activities 3.1 (0.5)
Investing activities
Purchase of property, plant and equipment (1.3) (1.0)
Proceeds from sales of property, plant and equipment 2.4 1.6
Sales of businesses 0.4 0.2
Net cash generated from investing activities 1.5 0.8
Financing activities
Repayment of bank loans (3.0) (11.4)
New bank loans raised - 19.1
Debt issue costs - (2.2)
(Decrease)/increase in bank borrowings (2.6) (3.3)
Net cash (used in)/from financing activities (5.6) 2.2
Net (decrease)/increase in cash and cash equivalents (1.0) 2.5
Non-cash changes - amortisation of debt issue costs (0.7) (0.2)
New bank loans - (19.1)
Reduction/(increase) in borrowings 2.6 3.3
Debt issue costs - 2.4
Repayment of bank borrowings 3.0 11.4
Movement in net debt in the year 3.9 0.3
Net debt at start of year (12.2) (12.5)
Net debt at end of year (8.3) (12.2)
Consolidated statement of changes in equity
Share Capital
Share Premium Revaluation Other Redemption Retained
Capital Account Reserve Reserve Reserve Earnings Total
2010 GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
----------------- ------- ------- ----------- ------- ---------- -------- -----
Profit for the
year - - - - - 0.3 0.3
Impairment on
property
revaluations - - (0.8) - - - (0.8)
Realised on
property
disposals - - (0.6) - - 0.6 -
Actuarial gain on
defined benefit
pension schemes - - - - - 0.7 0.7
Tax relating to
components of
other
comprehensive
income - - 0.2 - - - 0.2
----------------- ------- ------- ----------- ------- ---------- -------- -----
Total
comprehensive
income for the
year - - (1.2) - - 1.6 0.4
Credit to
equity for
equity-settled
share option
costs - - - - - - -
Balance at 1
January 2010 6.0 2.7 4.2 0.6 0.3 2.7 16.5
----------------- ------- ------- ----------- ------- ---------- -------- -----
Balance at 31
December 2010 6.0 2.7 3.0 0.6 0.3 4.3 16.9
----------------- ------- ------- ----------- ------- ---------- -------- -----
Share Capital
Share Premium Revaluation Other Redemption Retained
Capital Account Reserve Reserve Reserve Earnings Total
2009 GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
----------------- ------- ------- ----------- ------- ---------- -------- ------
Loss for the
year - - - - - (11.5) (11.5)
Losses on
property
revaluation - - (2.6) - - - (2.6)
Exchange
differences - - - - - (0.4) (0.4)
Actuarial loss
on defined
benefit
pension
schemes - - - - - (1.4) (1.4)
Tax relating to
components of
other
comprehensive
income - - 0.3 - - 0.5 0.8
----------------- ------- ------- ----------- ------- ---------- -------- ------
Total
comprehensive
income for the
year - - (2.3) - - (12.8) (15.1)
Transfer
between
reserves - - 0.2 - - (0.2) -
Credit to
equity for
equity-settled
share option
costs - - - 0.4 - - 0.4
Balance at 1
January 2009 6.0 2.7 6.3 0.2 0.3 15.7 31.2
----------------- ------- ------- ----------- ------- ---------- -------- ------
Balance at 31
December 2009 6.0 2.7 4.2 0.6 0.3 2.7 16.5
----------------- ------- ------- ----------- ------- ---------- -------- ------
Notes
1 Basis of preparation
Metalrax Group PLC (the "Company") is a public limited company
incorporated in the United Kingdom under the Companies Act 2006.
This preliminary announcement is an extract from the consolidated
financial statements of the Company for the year ended 31 December
2010 and comprise the Company and its subsidiaries (together
referred to as the "Group"). The consolidated financial statements
were authorised for issuance on 15 March 2011. The Group financial
statements have been prepared and approved by the Directors in
accordance with International Financial Reporting Standards and
interpretations adopted for use by the EU ("IFRS"), and these parts
of the Companies Act 2006 applicable to companies reporting under
IFRS.
The financial statements have been prepared on the historical
cost basis except that freehold and long leasehold properties and
assets classified as held for sale are held at fair value. The
preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources.
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 31 December 2009
or 2010 within the meaning of Section 434 of the Companies Act2006,
but is derived from those accounts. Statutory accounts for 2009
have been delivered to the Registrar of Companies and those for
2010 will be delivered following the company's Annual General
Meeting. The auditors' reports on the statutory accounts for the
years ended 31 December 2009and 31 December 2010 were unqualified
and do not contain statements under s498(2) or (3) Companies Act
2006.
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 2010 by 28 April 2011, 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 Annual General Meeting will be held on Tuesday 24 May
2011.
The Group's principal accounting policies as set out in the
Annual Report have been applied consistently.
2 Segmental reporting
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.
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 1. Segment
profit represents the profit earned by each segment without
allocation of central administration costs including directors'
salaries, investment revenue and finance costs, and income tax
expense. This is the measure reported to the Group's Chief
Executive for the purpose of resource allocation and assessment of
segment performance.
The Group has two divisions - Consumer Durables and Specialist
Engineering. 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.
Revenue represents amounts derived from the sale of specialist
products which fall within the Group's ordinary activities after
deduction of trade discounts and value added tax. Intra-Group sales
are charged at prevailing market prices and mostly originate from
the Specialist Engineering segment.
The primary segment is based on the activities and markets to
which the individual operating business units serve and an analysis
of external revenue and operating profit/(loss) are shown
below:
Year ended 31 December 2010
Continuing businesses
----------------------------------------------
Unallocated
Specialist Consumer Central Total Discontinued Total
Engineering Durables Costs Group businesses Group
2010 2010 2010 2010 2010 2010
GBPm GBPm GBPm GBPm GBPm GBPm
Total revenues 46.4 23.9 0.2 70.5 - 70.5
Inter-group
revenues (4.9) (0.1) - (5.0) - (5.0)
Revenue from
external
customers 41.5 23.8 0.2 65.5 - 65.5
Gross profit 11.7 5.2 0.1 17.0 (0.1) 16.9
Gross margin
(%) 28.0% 21.9% 58.7% 25.9% - 25.8%
--------------- ------------ --------- ------------ ------- ------------- ------
Operating
profit/(loss)
before share
options
costs 3.4 1.0 (2.1) 2.3 (0.2) 2.1
Share option
costs - - (0.2) (0.2) - (0.2)
Operating
profit/(loss) 3.4 1.0 (2.3) 2.1 (0.2) 1.9
Net finance
expense (1.9) (0.1) (2.0)
Profit/(loss)
before
taxation 0.2 (0.3) (0.1)
Taxation
credit 0.4 - 0.4
Profit after
taxation 0.6 (0.3) 0.3
Other segmental information
Continuing businesses
----------------------------------------------
Unallocated
Specialist Consumer Central Total Discontinued Total
Engineering Durables Costs Group Businesses Group
2010 2010 2010 2010 2010 2010
GBPm GBPm GBPm GBPm GBPm GBPm
Capital
expenditure 0.8 0.6 - 1.4 - 1.4
Depreciation 0.9 0.5 0.2 1.6 - 1.6
Amortisation - - - - - -
Impairment
losses 0.4 - 0.4 0.8 - 0.8
Balance sheet
Segment
assets 17.8 14.1 11.3 43.2 1.8 45.0
Unallocated
assets 2.3
Segment
liabilities (8.8) (4.7) (1.6) (15.1) (1.8) (15.9)
Unallocated
liabilities (14.5)
Net assets 9.0 9.4 9.7 29.1 (0.2) 16.9
Year ended 31 December 2009
Continuing businesses
----------------------------------------------
Unallocated
Specialist Consumer Central Total Discontinued Total
Engineering Durables Costs Group businesses Group
2009 2009 2009 2009 2009 2009
GBPm GBPm GBPm GBPm GBPm GBPm
Total revenues 43.3 22.0 0.2 65.5 2.1 67.6
Inter-group
revenues (4.1) (0.1) (0.1) (4.3) (0.4) (4.7)
Revenue from
external
customers 39.2 21.9 0.1 61.2 1.7 62.9
Gross profit 9.5 5.0 0.1 14.6 (0.5) 14.1
Gross margin
(%) 24.2% 22.6% 100.0% 23.8% (29.4)% 22.3%
--------------- ------------ --------- ------------ ------- ------------- -------
Operating
profit/(loss)
before
exceptional
items, share
options costs
and goodwill
impairment 1.6 0.3 (2.1) (0.2) (0.4) (0.6)
Exceptional
items (note
3) Share
options (0.4) (0.4) (0.8) (1.6) (7.5) (9.1)
Share option
costs - - (0.3) (0.3) - (0.3)
Goodwill
impairment - (0.6) - (0.6) - (0.6)
Operating
profit/(loss) 1.2 (0.7) (3.2) (2.7) (7.9) (10.6)
Net finance
expense (1.0) - (1.0)
Loss before
taxation (3.7) (7.9) (11.6)
Taxation
credit 0.1 - 0.1
Loss after
taxation (3.6) (7.9) (11.5)
Other segmental information
Continuing businesses
----------------------------------------------
Unallocated
Specialist Consumer Central Total Discontinued Total
Engineering Durables Costs Group businesses Group
2009 2009 2009 2009 2009 2009
GBPm GBPm GBPm GBPm GBPm GBPm
Capital
expenditure 0.6 0.4 - 1.0 - 1.0
Depreciation 1.0 0.5 0.3 1.8 - 1.8
Amortisation - - - - - -
Impairment
losses - 0.8 0.3 1.1 7.8 8.9
Balance sheet
Segment
assets 25.1 17.1 4.3 46.5 1.8 48.3
Unallocated
assets 2.7
Segment
liabilities (7.8) (3.0) (2.3) (13.1) (2.1) (15.2)
Unallocated
liabilities (19.3)
Net assets 17.3 14.1 2.0 33.4 (0.3) 16.5
Segmental analysis by geographical activity
An analysis of the Group's revenue is as follows:
Continuing Discontinued 2010 Continuing Discontinued 2009
GBP'm GBP'm GBPm GBP'm GBP'm GBPm
United
Kingdom 38.0 - 38.0 37.4 1.0 38.4
Rest of
Europe 16.5 - 16.5 16.0 0.5 16.5
North
America 7.8 - 7.8 4.5 0.2 4.7
Rest of
World 3.2 - 3.2 3.3 - 3.3
------------ ---------------- ------------- --------------- ---------------- ------------- ---------------
Revenue
from
external
customers 65.5 - 65.5 61.2 1.7 62.9
------------ ---------------- ------------- --------------- ---------------- ------------- ---------------
3. Exceptional 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 years. 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; onerous
leases; and significant impairments of other current assets.
There were no exceptional items in 2010 (2009: GBP9.1m).
Continuing Discontinued 2010 Continuing Discontinued 2009
GBP'm GBP'm GBPm GBP'm GBP'm GBPm
Reorganisation and
restructuring costs - - - 1.0 - 1.0
Provision for
Romanian losses and
asset impairment - - - - 6.4 6.4
Impairment of assets - - - 0.1 0.9 1.0
Onerous lease costs - - - - 0.2 0.2
Property devaluation - - - 0.5 - 0.5
Total exceptional
items before
taxation - - - 1.6 7.5 9.1
Total cash
exceptional items - - - 1.0 0.6 1.6
The tax effect of exceptional items in the year is a tax credit
of GBPnil (2009: GBP0.2m).
4. Finance income and expense
2010 2009
GBPm GBPm
Interest income received on overpaid
taxation - -
Net finance cost of defined benefit
pension scheme (0.3) (0.4)
Interest on bank loans and overdrafts (0.9) (0.4)
Amortisation of debt issue costs (0.7) (0.2)
Total finance expenses (1.9) (1.0)
Net finance expenses (1.9) (1.0)
5. Income Tax credit
2010 2009
GBPm GBPm
Current tax:
UK corporation tax - -
Adjustments in respect of prior years - (0.2)
- (0.2)
Overseas taxation 0.2 0.2
Current tax charge 0.2 -
Deferred tax:
Current year (0.6) (0.3)
Adjustments in respect of prior years - 0.2
Income tax credit (0.4) (0.1)
Factors affecting the tax credit for the
year
Loss before tax (0.1) (11.7)
Tax on ordinary activities at 28.0% (2009:
28.0%) - (3.3)
Effects of:
Expenses not deductible for tax purposes 0.2 0.8
Losses (recognised)/ not recognised (0.7) 2.3
Overseas taxation 0.1 0.1
Tax credit (0.4) (0.1)
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
A number of changes to the UK Corporation Tax system were
announced in the 2010 Budget Report which have been enacted in the
2010 Finance Act. The impact of these is not considered to be
material to the future tax charge in the UK. Further changes were
announced in the UK Government's Emergency Budget on 22 June 2010.
This included a reduction in the main corporation tax rate from the
current 28% to 24% comprising a 1% per annum reduction over the
course of a four year period commencing from 1 April 2011. In
addition, the rates of capital allowances on assets in the main and
special pools are expected to fall from 20% to 18% and from 10% to
8% respectively from 1 April 2012.
6. Earnings per share
The basic and diluted earnings per share are calculated using
the profit attributable to equity holders of the parent. The
adjusted earnings per share uses this figure adjusted by the
post-tax exceptional and other charges.
2010 2010 2009 2009
Continuing Total Continuing Total
GBPm GBPm GBPm GBPm
Profit/(loss) for the year 0.6 0.3 (3.6) (11.5)
Add back exceptional items - - 1.6 9.1
Add back share option
charge 0.2 0.2 0.3 0.3
Add back goodwill
impairment - - 0.6 0.6
Add back debt cost
amortisation 0.7 0.7 0.2 0.2
Adjusted earnings/(loss)
after tax 1.5 1.2 (0.9) (1.3)
Basic
earnings/(loss)
per ordinary
share (pence per
share) 0.47 0.29 (2.96) (9.62)
--------------- --------------- --------------- ---------------
Diluted
earnings/(loss)
per ordinary
share (pence per
share) 0.42 0.24 (2.96) (9.62)
Adjusted basic
earnings/(loss)
per ordinary
share (pence per
share) 1.27 1.09 (0.90) (1.29)
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.
The weighted average number of shares used in the calculation of
the basic earnings/(loss) per share and the adjusted earnings per
share is 119,897,298 (2009: 119,897,298).
7. Dividends
2010 2009
GBPm GBPm
Final dividend for 2009 of nil pence (2008: - -
final nil pence)
Interim dividend for 2010 of nil pence - -
(2009: interim nil pence)
Total equity dividends paid - -
Proposed 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 24 May 2011. Therefore the total dividend for
the year amounts to GBPnil (2009: GBPnil).
8. Assets held for sale
The value of assets held for sale at 31 December 2010 is GBP2.5m
(2009: GBPnil). These relate to properties that were being actively
marketed and GBP1.7m was sold in early 2011.
9. Pensions
Defined benefit plans
The major assumptions used by the actuary are below:
2010 2009
%p.a. %p.a.
Inflation 3.3 3.4
Rate of increase in salaries n/a 3.9
Pension increases, subject to LPI 3.3 3.4
Discount rate 5.4 5.7
Return on plan assets
Equities 7.7 8.0
Property 7.7 8.0
Bonds 4.6 4.9
Other 4.2 4.5
Group pension contract 5.1 5.2
.
The amounts included in the balance sheet arising from the
Group's and company's obligations in respect of defined benefit
schemes are as follows:
Group
2010 2009
GBPm GBPm
Total market value of assets 8.6 10.5
Present value of scheme liabilities (13.3) (15.1)
Gross pension liability (4.7) (4.6)
Deferred tax asset 1.3 1.3
Net pension liability (3.4) (3.3)
10. Post Balance sheet events
The Group disposed of three properties for GBP1.7m after the
balance sheet date. There was GBPnil profit on disposal. The
consideration received has been used to repay GBP1.7m of the bank
senior loan.
11. Annual report
Copies of the Annual Report will be posted to Shareholders by
Thursday28 April 2011 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 LLFFTVSISLIL
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