TIDMMRX
RNS Number : 1526N
Metalrax Group PLC
30 August 2011
Metalrax Group PLC
Interim Report - 2011
Financial Highlights - 26 week period ended 3 July 2011
Results in brief
2011 2010
GBP'm GBP'm
----------------------------------------- ----- -------
On-going revenues(1) 31.0 26.6
On-going gross margins(1) 24.6% 25.9%
Operating profit before exceptional
items*
and share option costs 0.9 0.6
Profit/(loss)after taxation 0.1 (0.4)
Basic earnings/(loss) per 5p ordinary
share 0.02p (0.32)p
Adjusted earnings/(loss) per 5p
ordinary share+ 0.54p 0.08p
Cash (used in)/generated from operations (0.2) 0.8
Net debt 6.1 12.7
Gearing (net debt/net assets) 33.3% 81.9%
Dividends paid per 5p ordinary nil nil
share
----------------------------------------- ----- -------
1. The prior period on-going revenues and gross margins excludes
the revenue and the cost of sales of businesses sold at the end of
2010, and provides prior period information that is comparable to
the on-going revenues and gross margins of the Group.
*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. Profits and losses on
property sales are considered to be exceptional in nature.
+ Adjusted earnings is after the add back of exceptional items,
share option costs and debt issue cost amortisation, and the tax
effect thereon (see note 8).
Financial and Operational Highlights
-- On-going revenues increased by 16% compared with the first
half of 2010, mainly due to the growth in export sales in the
Specialist Engineering division.
-- On-going gross margins have decreased year on year by 1.3% to
24.6% (2010: 25.9%).
-- Operating profit before exceptional items and share option
costs was GBP0.9m (2010: GBP0.6m). The profit after tax was GBP0.1m
(2010: GBP0.4m loss).
-- Cash used in operating activities of GBP0.2m (2010: GBP0.8m
inflow) reflects the increase in working capital levels required to
fund the growth in revenues.
-- Net debt has been reduced to GBP6.1m from GBP8.3m as at 31
December 2010 (2010 H1: GBP12.7m) following the disposal of vacant
properties and the completion of two further sale and leaseback
transactions. Asset disposals generated GBP4.1m in the 26 weeks to
3 July 2011.
-- The pension deficit has decreased by GBP2.0m to GBP2.7m at 3
July 2011 (31 December 2010: GBP4.7m).
Commenting on these results, Andrew Walker, Chairman, said:
"The strong revenue growth from the Specialist Engineering
division is encouraging and the price rises implemented throughout
the first half should be reflected in an improved margin being
reported in the second half. Taking the Group as a whole, the Board
expects to meet market expectations for the full year."
Contacts: +44 (0) 845 030
Metalrax Group PLC 3300
Andrew Richardson, Chief Executive Officer
Arden Partners plc
Steve Douglas +44 (0) 121 423
8943
Jamie Cameron +44 (0) 207 614
5925
Introduction
The first half of 2011 saw the continuation of the Group's
return to operating profitability and is the fourth consecutive
half-year period to show period-on-period sustainable revenue
growth and higher return on capital employed. First half revenues
on an on-going basis grew 16% compared to the first half of 2010
albeit with marked variations between the two divisions.
The Group's main strategic goals are high return on investment
and sustainable growth. In 2011, the Group is focused on cash
generation to reduce Group borrowings and to this end completed a
further GBP4.1m of property sales in the first half helping to
reduce net debt to GBP6.1m compared with GBP8.3m at the year-end
(2010 H1: GBP12.7m). The property disposals included the sale and
leaseback of two properties at Luton (Toolspec) and Burnley (George
Wilkinson). The Board believe that the Group can generate better
long term returns with the headroom generated by these sale and
leasebacks.
Results
Operating profits before exceptional items and share option
costs at the Group level improved to GBP0.9m (2010 H1: GBP0.6m).
Building on the sales growth reported in the second half of 2010,
when revenues grew over 16% compared to the second half of 2009, it
is pleasing to see the momentum maintained with a 16% growth in
revenues on an on-going basis to GBP31.0m (2010 H1: GBP26.6m).
On-going gross margin was impacted by input price rises and
declined by 1.3 points to 24.6%. Group operating profit before
interest and tax grew to GBP0.7m (2010 H1: GBP0.5m) increasing
return on on-going sales to 2.2% (2010 H1: 1.7%).
After tax, the Group is reporting a profit of GBP0.1m compared
to a loss of (GBP0.4m) in the first half of 2010.
This results in earnings per 5p ordinary share of 0.02p compared
to a loss per 5p ordinary share of (0.32p) for the first half of
2010.
Dividend
The Group's policy is to make dividend payments that are covered
2.0 to 2.5 times by earnings and in line with the Group's policy
there will be no interim dividend payment in respect of the period
ended 3 July 2011.
Operational Review
Overview
The first half of 2011 showed a polarisation between the
divisions, where Specialist Engineering delivered on-going revenue
growth of 30%, compared to an 8% decline in Consumer Durables. This
reflects the economic conditions of the markets in which the
divisions operate; the Group's Specialist Engineering businesses
have a higher proportion of export sales, selling to a wide range
of sectors including power generation, off highway, specialist
vehicle and construction where the first half of 2011 has seen a
continuing recovery from the low point in early 2009. The Consumer
Durables division sales are mainly in the UK to large grocery
multiples, independent retailers, catering equipment distributors
as well as the DIY sheds - markets which have experienced difficult
trading conditions in 2011, particularly in the second quarter. The
increased price of steel impacted both divisions in the Group and
the challenge was to pass these input price increases on to the end
customers. The Group had good success at achieving this although,
due to the time lag between receiving and passing on the price
rises, the margin percentage in the first half has been adversely
impacted.
Specialist Engineering
This division accounted for 71% of the first half Group
revenues. All six trading businesses showed strong sales growth,
delivering 30% external sales growth overall on an on-going basis
resulting in revenues for the division of GBP22.0m (2010 H1:
GBP16.8m). As a result of the steel price rises mentioned above,
on-going gross margin declined to 26.0% (2010 H1: 27.9% on an
on-going basis). Customer price increases have now been agreed and
should be reflected in the second half margin. Despite the 2%
margin decline, the top line growth meant that at the operating
level, this division delivered GBP2.0m of profit, an increase of
39% over the prior year. The division contributed GBP0.9m of cash
in the first half compared to GBP2.3m in the prior year. This
reduced cash generation was largely as a result of a GBP1.3m
increase in trade receivable driven by the revenue growth; trade
debtor days have reduced over the prior year.
Two of the division's businesses, Toolspec and Weston Body
Hardware have a high degree of exposure to the off-highway and
specialist vehicle sectors. Both businesses have continued to see
strong signs of recovery in the first half of 2011 following the
difficult trading conditions in 2009 resulting in year-on-year
revenue growth across the combined businesses in excess of 35%.
Post Glover LifeLink, the supplier of medical electrical and
safety equipment had a difficult 2010 as market conditions
toughened for this late cycle business and so it was pleasing to
see the business increase its US Dollar sales by over 6% in the
first half of 2011. The weakening of the US Dollar in the period
has impacted the GBP equivalent, resulting in a flat GBP sales
performance year on year.
Cooper Coated Coil, the specialist coatings business continued
to deliver strong revenue growth driven from increased export sales
as its UK consumer durables customer base experienced tougher
trading. The business's significant sales growth was predominantly
volume driven. Following the installation of the waste heat
recovery plant earlier this year, Cooper Coated Coil is expecting
significant gas usage reductions that will flow through to the
bottom line and improve environmental performance.
Consumer Durables
There are two trading businesses in this division; George
Wilkinson whose main revenues are derived from sales of bakeware to
the large UK grocers and Samuel Groves who provide bakeware and
cookware into the professional catering markets as well as some
retail. The UK retail market conditions have been difficult in the
first half of 2011, particularly the second quarter resulting in a
(7.6%) decline in revenues for the division to GBP8.9m. A slight
margin decline of 0.2 points combined with the lower revenues
resulted in an operating loss before exceptional items and share
option costs for the half year of GBP0.2m (2010 H1: breakeven).
This division traditionally exhibits marked seasonality with
profits and cash generation being stronger in the second half of
the year as its large customers take promotional stock in the run
up to Christmas. UK market share has been increased with new
customer and contract wins as well as sizeable second half
promotions being confirmed although, ultimately, consumer spending
needs to recover for this division to feel the benefit of
these.
Financial Review
The revenue growth in the first half, combined with a reduction
in overheads, resulted in a GBP0.3m operating profit growth (before
exceptional items and share option costs) to GBP0.9m (2010 H1:
GBP0.6m). Exceptional costs for the first half of 2010 were GBP0.2m
(2010 H1: GBPnil) which arose as a result of the sale and leaseback
of the Burnley property.
Balance Sheet
Bank borrowings have been reduced at the half year end to
GBP7.3m compared to a 2010 half year position of GBP14.6m (2010
year end: GBP9.8m). This represents gearing of 33.3% compared to
the half-year in 2010 of 81.9% and translates to net debt after the
unamortised financing costs of GBP6.1m (2010 year end net debt:
GBP8.3m). The GBP2.5m of borrowings reduction since December 2010
was achieved through the sale of a number of non-core/vacant
properties as well as the sale and leaseback of two occupied sites
(Burnley and Luton). With borrowings at this level, the Group is
well positioned to refinance ahead of August 2012 when the current
facilities expire.
The pension deficit has decreased by GBP2.0m to GBP2.7m at 3
July 2011 (31 December 2010: GBP4.7m). The decrease in deficit
principally relates to the move from RPI to CPI for the revaluation
of certain pension liabilities.
Cash Generation
The Group is reporting a cash outflow from operations of GBP0.2m
in the first half compared to an inflow of GBP0.8m in the same
period in 2010. This GBP1.0m swing is driven by an increase in
working capital required to support the 16% sales growth.
Financial Risks
The principal risks and uncertainties for the remainder of the
financial year are unchanged from those described in the Annual
Report at 31 December 2010, being economic, people, pensions,
property valuation, financial and operation risks. Further detail
is set out on pages 12 and 13 of the Annual Report for the year
ended 31 December 2010.
Outlook
The strong revenue growth from the Specialist Engineering
division is encouraging and the price rises implemented throughout
the first half should be reflected in an improved margin being
reported in the second half. Whilst the Consumer Durables division
have secured new customers and large promotional opportunities with
UK retailers for the second half, the division's full year
performance is exposed to fluctuations in UK consumer demand and
the wider economic conditions. Taking the Group as a whole, the
Board expects to meet market expectations for the full year.
By order of the Board
Andrew J Walker Andrew J Richardson
Chairman Group Chief Executive Officer
30 August 2011
Consolidated income statement
For the 26 week period ended 3 July 2011
Year
26 weeks 26 weeks ended 31
ended 3 ended 4 December
July 2011 July 2010 2010
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
--------------------------------- ------ ---------- ---------- ---------------
On-going revenues 4 31.0 26.6 60.0
Revenues of sold businesses 4 - 2.7 5.5
--------------------------------- ------ ---------- ---------- ---------------
Total external revenues 4 31.0 29.3 65.5
Cost of sales (23.4) (21.6) (48.5)
--------------------------------- ------ ---------- ---------- ---------------
Gross profit 7.6 7.7 17.0
Distribution expenses (2.5) (2.9) (5.8)
Administrative expenses (4.2) (4.3) (9.1)
Operating profit before
exceptional items* and share
option costs 0.9 0.6 2.3
Exceptional items* 4,5 (0.2) - -
Share option costs 4 - (0.1) (0.2)
Operating profit 4 0.7 0.5 2.1
--------------------------------- ------ ---------- ---------- ---------------
Finance expense before
amortisation of debt issue
costs (0.4) (0.6) (1.2)
Amortisation of debt issue
costs (0.4) (0.4) (0.7)
--------------------------------- ------ ---------- ---------- ---------------
Net finance expense 6 (0.8) (1.0) (1.9)
--------------------------------- ------ ---------- ---------- ---------------
(Loss)/ profit before taxation (0.1) (0.5) 0.2
Taxation credit 7 0.2 0.1 0.4
--------------------------------- ------ ---------- ---------- ---------------
Profit / (loss)after taxation 0.1 (0.4) 0.6
Loss from discontinued
activities 4 - - (0.3)
--------------------------------- ------ ---------- ---------- ---------------
Profit / (loss)for the period 0.1 (0.4) 0.3
--------------------------------- ------ ---------- ---------- ---------------
Profit / (loss)for the period
attributable to equity
shareholders of the parent 0.1 (0.4) 0.3
--------------------------------- ------ ---------- ---------- ---------------
Basic earnings per share 8 0.02p (0.32)p 0.29p
Continuing 8 0.02p (0.32)p 0.47p
Discontinued 8 - - (0.18)p
Diluted earnings per share 8 0.02p (0.32)p 0.24p
Continuing 8 0.02p (0.32)p 0.42p
Discontinued 8 - - (0.18)p
--------------------------------- ------ ---------- ---------- ---------------
*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.Profits and losses on
property sales are considered to be exceptional in nature.
Consolidated statement of comprehensive income
For the 26 week period ended 3 July 2011
26 weeks 26 weeks Year
ended ended ended 31
3 July 4 July December
2011 2010 2010
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
----------------------------------------- ---------- ---------- ---------
Profit/(loss) for the period/year
Other comprehensive income: 0.1 (0.4) 0.3
Loss on property devaluation - - (0.8)
Actuarial gain/(loss) on defined benefit
pension scheme 1.6 (1.1) 0.7
Exchange differences - 0.1 -
Tax relating to components of other
comprehensive income (0.5) 0.3 0.2
Other comprehensive income for the
period/year 1.1 (0.7) 0.1
Total comprehensive income for the
period/year 1.2 (1.1) 0.4
----------------------------------------- ---------- ---------- ---------
Attributable to equity shareholders
of the parent 1.2 (1.1) 0.4
----------------------------------------- ---------- ---------- ---------
Consolidated balance sheet
As at 3 July 2011
31
3 July 4 July December
2011 2010 2010
Unaudited Unaudited Audited
Note GBP'm GBP'm GBP'm
------------------------------ ---- ---------- ---------- ---------
Non-current assets
Goodwill 7.0 7.0 7.0
Other intangible assets 0.6 0.6 0.6
Property, plant and equipment 13.2 20.0 14.5
Deferred tax asset 0.7 0.3 0.8
21.5 27.9 22.9
------------------------------ ---- ---------- ---------- ---------
Current assets
Inventories 8.9 8.7 6.7
Trade and other receivables 13.0 11.2 13.7
Current tax asset - 0.1 -
Cash 2.0 0.9 1.5
------------------------------ ---- ---------- ---------- ---------
23.9 20.9 21.9
Assets held for sale 10 - 0.6 2.5
Total assets 45.4 49.4 47.3
------------------------------ ---- ---------- ---------- ---------
Current liabilities
Bank borrowings (4.1) (3.2) (2.1)
Trade and other payables (15.0) (13.0) (14.6)
Provisions (0.2) (0.4) (0.2)
------------------------------ ---- ---------- ---------- ---------
(19.3) (16.6) (16.9)
------------------------------ ---- ---------- ---------- ---------
Non-current liabilities
Bank borrowings (4.0) (10.4) (7.7)
Employee benefits (2.7) (5.9) (4.7)
Provisions (1.1) (1.0) (1.1)
(7.8) (17.3) (13.5)
------------------------------ ---- ---------- ---------- ---------
Total liabilities (27.1) (33.9) (30.4)
------------------------------ ---- ---------- ---------- ---------
Net assets 18.3 15.5 16.9
------------------------------ ---- ---------- ---------- ---------
Shareholders' equity
Share capital 9 6.0 6.0 6.0
Share premium 2.7 2.7 2.7
Capital redemption reserve 0.3 0.3 0.3
Revaluation reserve 1.9 4.2 3.0
Other reserve 0.7 0.7 0.6
Retained earnings 6.7 1.6 4.3
------------------------------ ---- ---------- ---------- ---------
Total Equity 18.3 15.5 16.9
------------------------------ ---- ---------- ---------- ---------
Consolidated statement of changes in equity
For the 26 week period ended 3 July 2011
Capital
Share Share Re-valuation Other Re-demption Retained
capital premium reserve reserve reserve earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
--------------- ------- ------- ------------ ------- ----------- -------- -----
Profit for the
period Other
comprehensive
income - - - - - 0.1 0.1
Realised on
property
disposals - - (1.2) - - 1.2 -
Exchange
differences - - - - - - -
Actuarial loss
on defined
benefit
pension
schemes - - - - - 1.6 1.6
Tax relating to
components of
other
comprehensive
income - - 0.1 - - (0.5) (0.4)
--------------- ------- ------- ------------ ------- ----------- -------- -----
Total
comprehensive
income for the
period
Transactions
with owners - - (1.1) - - 2.4 1.3
Credit to
equity for
equity-settled
share option
costs - - - 0.1 - - 0.1
Balance at
1 January 2011 6.0 2.7 3.0 0.6 0.3 4.3 16.9
--------------- ------- ------- ------------ ------- ----------- -------- -----
Balance at
3 July 2011
(Unaudited) 6.0 2.7 1.9 0.7 0.3 6.7 18.3
--------------- ------- ------- ------------ ------- ----------- -------- -----
Consolidated statement of changes in equity
For the 26 week period ended 4 July 2010 (continued)
Capital
Share Share Re-valuation Other Re-demption Retained
capital premium reserve reserve reserve earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
--------------- ------- ------- ------------ ------- ----------- -------- -----
Loss for the
period - - - - - (0.4) (0.4)
Other
comprehensive
income
Losses on
property
revaluation - - - - - - -
Exchange
differences - - - - - 0.1 0.1
Actuarial loss
on defined
benefit
pension
schemes - - - - - (1.1) (1.1)
Tax relating to
components of
other
comprehensive
income - - - - - 0.3 0.3
--------------- ------- ------- ------------ ------- ----------- -------- -----
Total
comprehensive
income for the
period - - - - - (1.1) (1.1)
Transactions
with owners
Credit to
equity for
equity-settled
share option
costs - - - 0.1 - - 0.1
Balance at 1
January 2010 6.0 2.7 4.2 0.6 0.3 2.7 16.5
--------------- ------- ------- ------------ ------- ----------- -------- -----
Balance at 4
July 2010
(Unaudited) 6.0 2.7 4.2 0.7 0.3 1.6 15.5
--------------- ------- ------- ------------ ------- ----------- -------- -----
Consolidated statement of changes in equity
For the year ended 31 December 2010 (continued)
Capital
Share Share Re-valuation Other Re-demption Retained
capital Premium reserve reserve reserve earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
--------------- ------- ------- ------------ ------- ----------- -------- -----
Profit for
the year - - - - - 0.3 0.3
Other
comprehensive
income
Impairment
on property
revaluation - - (0.8) - - - (0.8)
Realised on
property
disposals - - (0.6) - - 0.6 -
Exchange
differences - - - - - - -
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
Transactions
with owners
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 (Audited) 6.0 2.7 3.0 0.6 0.3 4.3 16.9
--------------- ------- ------- ------------ ------- ----------- -------- -----
Consolidated cash flow statement
For the 26 week period ended 3 July 2011
26 weeks 26 weeks Year
ended ended ended 31
3 July 4 July December
2011 2010 2010
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
------------------------------------------ ---------- ---------- ---------
Loss before tax (including discontinued) (0.1) (0.5) (0.1)
Finance costs 0.8 1.0 1.9
Depreciation and amortisation 0.6 0.8 1.6
Exceptional items 0.2 - (0.1)
Share-based payment expense - 0.1 0.2
Exchange gain - 0.1 -
(Increase)/decrease in inventories (2.2) (1.5) 0.1
Decrease/(increase) in trade and
other receivables 0.7 1.6 (1.2)
(Decrease)/increase in payables (0.3) (0.9) 1.0
Increase in provisions (0.1) 0.1 -
Other non-cash movements 0.2 - 0.6
------------------------------------------ ---------- ---------- ---------
Cash (used in)/generated from operations (0.2) 0.8 4.0
Interest paid (0.3) (0.4) (0.9)
Tax (paid)/recovered (0.1) 0.2 -
------------------------------------------ ---------- ---------- ---------
Net cash (used in)/generated from
operating activities (0.6) 0.6 3.1
------------------------------------------ ---------- ---------- ---------
Investing activities
Purchase of property, plant and equipment (0.9) (0.7) (1.3)
Proceeds from sale of property, plant
and equipment 4.1 - 2.4
Proceeds from sale of businesses - - 0.4
------------------------------------------ ---------- ---------- ---------
Net cash from/(used in) investing
activities 3.2 (0.7) 1.5
------------------------------------------ ---------- ---------- ---------
Financing activities
Increase/(decrease) in bank borrowings 2.0 (1.5) (2.6)
Repayment of bank borrowings (4.1) - (3.0)
Net cash used in financing activities (2.1) (1.5) (5.6)
------------------------------------------ ---------- ---------- ---------
Net increase/(decrease) in cash and
cash equivalents 0.5 (1.6) (1.0)
Opening cash and cash equivalents 1.5 2.5 2.5
------------------------------------------ ---------- ---------- ---------
Closing cash and cash equivalents 2.0 0.9 1.5
------------------------------------------ ---------- ---------- ---------
Reconciliation of net cash flow to movement in net debt for the
26 week period ended 3 July 2011
26 weeks 26 weeks Year
ended ended ended 31
3 July 4 July December
2011 2010 2010
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
---------------------------------------- ---------- ---------- ---------
Net increase/(decrease) in cash in
the period/year 0.5 (1.6) (1.0)
Non-cash changes - amortisation of
debt issue costs (0.4) (0.4) (0.7)
(Increase)/decrease in borrowings (2.0) 1.5 2.6
Repayment of bank borrowings 4.1 - 3.0
Movement in net debt in the period/year 2.2 (0.5) 3.9
Net debt at start of period/year (8.3) (12.2) (12.2)
Net debt at end of period/year (6.1) (12.7) (8.3)
---------------------------------------- ---------- ---------- ---------
Notes to the interim report for the 26 week period ended 3 July
2011
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 interim report was approved for issue on 30 August
2011.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. The full accounts of Metalrax Group PLC
for the year ended 31 December 2010, which received an unqualified
report from the auditors, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498(2) or
(3) of the Companies Act 2006, have been filed with the Registrar
of Companies.
The condensed consolidated interim financial information has
been reviewed, not audited. The interim financial information for 3
July 2011 has been reviewed by the auditors and their independent
review report is included within this financial information.
2 Basis of preparation
The condensed consolidated interim financial information for the
26 week period ended 3 July 2011 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 consolidated interim financial information should
be read in conjunction with the annual financial statements for the
year ended 31 December 2010, which have been prepared in accordance
with IFRS as adopted by the European Union.
The condensed consolidated financial information has 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's current banking facilities
expire on 31 August 2012. Refinancing discussions are in progress
and 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 information. The
set of condensed financial information do not include the
adjustments that would result if the Group was unable to continue
as a going concern.
3 Accounting policies
The accounting policies applied are consistent with those in the
annual financial statements for the year ended 31 December 2010, as
described in those financial statements. The following relevant
accounting standards are applicable for the first time in the year
ended 31 December 2011;
-- IFRIC 19 - 'Extinguishing financial liabilities with equity
instruments'
-- Improvements to IFRSs (April 2010)
-- IAS 24 (Revised) - 'Related party disclosures'
-- Amendment to IFRIC 14 - 'Prepayment of a minimum funding
requirement'
-- Amendment to IAS32 - 'Financial Instruments Presentation'
There has been no significant impact from the adoption of these
accounting standards.
The following new standards and interpretations have been issued
but are not effective for the year ended 31 December 2011 and have
not been adopted early;
-- Amendment to IAS1 'Financial Statement Presentation'
-- Amendments to IFRS7 on derecognition
-- Amendments to IFRS1 'First time adoption'
-- Amendments to IAS12 'Income taxes'
-- IAS 19 (revised) - 'Employee Benefits'
-- IFRS 10 - 'Consolidated financial statements'
-- IFRS 11 - 'Joint arrangements'
-- IFRS 12 - 'Disclosure of interests in other entities'
-- IFRS 13 - 'Fair value measurement'
-- IAS 27 -'Separate Financial Statements'
-- IAS 28 - 'Investments in associates and joint ventures'
The directors are currently assessing the impact on the Group of
these standards.
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 2010.
4 Segmental information
The Group has two divisions - Specialist Engineering and
Consumer Durables. These segments are consistent with information
reported to the Group's Chief Executive, being the Chief Operating
Decision Maker, for the purpose of resource allocation and
performance assessment. 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.
The accounting policies of the reporting segments are the same
as the Group's accounting policies which are described in the
Group's latest annual financial statements and those in note 3.
Segment result represents the profit or loss achieved by each
segment without allocation of share option costs, central
administration costs including directors' salaries, investment
revenue and finance costs, and income tax expense.
a) Segment revenues and results:
26 week period ended 3 July 2011 - Unaudited
Continuing businesses
Specialist Consumer Central Total Discontinued Total
Engineering Durables Services Continuing businesses Group
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
On-going
revenues 24.1 9.0 0.1 33.2 - 33.2
Revenues of
sold
businesses - - - - - -
--------------- ------------- ----------- --------- ----------- ------------- --------
Total revenues 24.1 9.0 0.1 33.2 - 33.2
Inter-segment
revenues (2.1) (0.1) - (2.2) - (2.2)
--------------- ------------- ----------- --------- ----------- ------------- --------
Revenue from
external
customers 22.0 8.9 0.1 31.0 - 31.0
--------------- ------------- ----------- --------- ----------- ------------- --------
Gross profit 5.7 1.9 - 7.6 - 7.6
Gross margin-
total and
ongoing 26.0% 21.5% 100.0% 24.6% - 24.6%
--------------- ------------- ----------- --------- ----------- ------------- --------
Operating
profit/(loss)
before
exceptional
items and
share option
costs 2.0 (0.2) (0.9) 0.9 (0.1) 0.8
Exceptional
items - (0.2) - (0.2) 0.2 -
Share option
costs - - - - - -
Operating
profit/(loss) 2.0 (0.4) (0.9) 0.7 0.1 0.8
--------------- ------------- ----------- --------- ----------- ------------- --------
Finance
expense
(net) (0.8) (0.1) (0.9)
--------------- ------------- ----------- --------- ----------- ------------- --------
Loss before
taxation (0.1) - (0.1)
Taxation 0.2 - 0.2
--------------- ------------- ----------- --------- ----------- ------------- --------
Profit after
taxation 0.1 - 0.1
--------------- ------------- ----------- --------- ----------- ------------- --------
26 week period ended 4 July 2010 - Unaudited
Total Discontinued Total
Continuing businesses Continuing businesses Group
-----------------------------------
Specialist Consumer Central
Engineering Durables Services
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
--------------- ------------ --------- ---------- ----------- ------------- ------
On-going
revenues 19.0 9.7 0.1 28.8 - 28.8
Revenues of
sold
businesses 2.7 - - 2.7 - 2.7
--------------- ------------ --------- ---------- ----------- ------------- ------
Total revenues 21.7 9.7 0.1 31.5 - 31.5
Inter-segment
revenues (2.2) - - (2.2) - (2.2)
--------------- ------------ --------- ---------- ----------- ------------- ------
Revenue from
external
customers 19.5 9.7 0.1 29.3 - 29.3
--------------- ------------ --------- ---------- ----------- ------------- ------
Gross profit 5.5 2.1 0.1 7.7 - 7.7
Gross margin
- total 28.1% 21.7% 100.0% 26.3% - 26.3%
Gross margin
- ongoing 27.9% 21.7% 100.0% 25.9% - 25.9%
--------------- ------------ --------- ---------- ----------- ------------- ------
Operating
profit/(loss)
before
exceptional
items and
share option
costs 1.4 - (0.8) 0.6 - 0.6
Exceptional
items Share - - - - - -
option costs - - (0.1) (0.1) - (0.1)
Operating
profit/(loss) 1.4 - (0.9) 0.5 - 0.5
--------------- ------------ --------- ---------- ----------- ------------- ------
Finance
expense
(net) (1.0) (1.0)
--------------- ------------ --------- ---------- ----------- ------------- ------
Loss before
taxation (0.5) - (0.5)
Taxation 0.1 - 0.1
--------------- ------------ --------- ---------- ----------- ------------- ------
Loss after
taxation (0.4) - (0.4)
--------------- ------------ --------- ---------- ----------- ------------- ------
Year ended 31 December 2010 - Audited
Continuing businesses
Specialist Consumer Central Total Discontinued Total
Engineering Durables Services Continuing businesses Group
GBP'm GBP'm GBP'm GBP'm GBP'm
--------------- ------------ --------- --------- ----------- -------------
On-going
revenues 40.6 23.9 0.2 64.7 - 64.7
Revenues of
sold
businesses 5.8 - - 5.8 - 5.8
--------------- ------------ --------- --------- ----------- ------------- ------
Total revenues 46.4 23.9 0.2 70.5 - 70.5
Inter-segment
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
- total 28.0% 21.9% 58.7% 25.8% - 25.8%
Gross margin
- ongoing 32.5% 21.9% 58.7% 28.3% - 28.3%
--------------- ------------ --------- --------- ----------- ------------- ------
Operating
profit/(loss)
before share
option 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)
--------------- ------------ --------- --------- ----------- ------------- ------
Finance
expense
(net) (1.9) (0.1) (2.0)
--------------- ------------ --------- --------- ----------- ------------- ------
Profit/(loss)
before
taxation 0.2 (0.3) (0.1)
Taxation 0.4 - 0.4
--------------- ------------ --------- --------- ----------- ------------- ------
Profit/(loss)
after
taxation 0.6 (0.3) 0.3
--------------- ------------ --------- --------- ----------- ------------- ------
b) Segment assets/(liabilities)
Audited
Unaudited Unaudited 31
3 July 4 July December
2011 2010 2010
GBP'm GBP'm GBP'm
--------------- ----------- ------------------------------------------------------ ---------
Specialist
Engineering 21.9 22.4 18.8
Consumer 10.6 14.0 14.1
Durables
Central 10.9 13.6 11.3
Services
Discontinued 2.0 1.9 1.8
Businesses
Total segment 45.4 51.9 46.0
assets
Unallocated (27.1) (36.4) (29.1)
assets and
liabilities
--------------- ----------- ------------------------------------------------------ ---------
Consolidated 18.3 15.5 16.9
total
assets
--------------- ----------- ------------------------------------------------------ ---------
The unallocated assets and liabilities include debt, taxation,
pensions and deferred taxation.
5 Exceptional items
26 weeks 26 weeks Year
ended ended ended 31
3 July 4 July December
2011 Unaudited 2010 Unaudited 2010 Audited
GBP'm GBP'm GBP'm
----------------------------- --------------- --------------- -------------
Loss on disposal of
properties 0.2 - -
----------------------------- --------------- --------------- -------------
During the period, the Group disposed of two properties at Luton
(Toolspec) and Burnley (George Wilkinson) under sale and leaseback
arrangements which realised a loss on disposal of GBP0.2m.
Included within the loss from discontinued activities in 2011,
there is an exceptional credit of GBP0.2m relating to the release
of part of the Group's onerous lease provision at Walsall following
a reassessment of the on-going rental costs by the directors.
6 Finance expense (net)
26 weeks 26 weeks Year
ended ended ended 31
3 July 4 July December
2011 Unaudited 2010 Unaudited 2010 Audited
GBP'm GBP'm GBP'm
----------------------------- --------------- --------------- -------------
Interest payable on bank
loans and overdrafts
Amortisation of debt issue 0.3 0.4 0.9
costs 0.4 0.4 0.7
Net finance cost of defined
benefit pension schemes 0.1 0.2 0.3
----------------------------- --------------- --------------- -------------
Net finance expense -
continuing 0.8 1.0 1.9
Net finance expense -
discontinued 0.1 - 0.1
----------------------------- --------------- --------------- -------------
Total net finance expense 0.9 1.0 2.0
----------------------------- --------------- --------------- -------------
7 Income tax credit/(charge)
26 weeks 26 weeks Year
ended ended ended 31
3 July 4 July December
2011 Unaudited 2010 Unaudited 2010 Audited
GBP'm GBP'm GBP'm
----------------------------- --------------- --------------- -------------
Current tax charge (0.1) - (0.2)
Prior period adjustments to
tax - 0.1 -
Deferred tax credit 0.3 - 0.6
Income tax credit 0.2 0.1 0.4
----------------------------- --------------- --------------- -------------
Income tax credit/(charge) is recognised based on management's
best estimate of the weighted average annual income tax rate
expected for the full financial year. The estimated average annual
tax rate used for the year to 31 December 2011 is 20.3%.
There is a net GBP0.3m (2010: GBPnil) deferred tax credit to the
income statement in the period relating to the recognition of
previously unrecognised tax losses amounting to GBP1.4m.
The Finance Act (No 2) 2010 was substantively enacted on 20 July
2010 and included legislation to reduce the main rate of
corporation tax from 28% to 27% from 1 April 2011.
Further reductions to the UK corporation tax rate were announced
in the June 2010 Budget. These changes, which are expected to be
enacted separately each year, proposed reducing the rate by 1% per
annum to 24% by 1 April 2014. These reductions have been amended by
Budget 2011 on 23 March 2011. An additional reduction of 1% is
proposed to the Financial Year beginning 1 April 2011 and rates
will be reduced by three further one per cent cuts to 23% by the
Financial Year beginning 1 April 2014. At the balance sheet date
the rate that had been substantively enacted was a reduction in the
current tax rate to 26% and therefore the deferred tax balance has
been calculated at 26%. Management is currently assessing the
impact of these changes.
8 Earnings/(loss) per ordinary share
The basic and diluted loss per share is calculated based on the
profit/(loss) after tax for the period and the adjusted
profit/(loss) per share is calculated based on an adjusted
profit/(loss) after tax as calculated below. The weighted average
number of shares used in the basic earnings per share calculation
is 119,897,298 (30 June and 31 December 2010: 119,897,298).The
weighted average number of shares used in the diluted earnings per
share calculation is 131,845,699 (31 December 2010:
131,845,699).
Year
26 weeks 26 weeks ended 31
ended ended December
3 July 4 July 2010
2010 Unaudited 2010 Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------- --------------- --------------- ---------
Profit/(loss) for the period/year
after tax 0.1 (0.4) 0.6
Add back exceptional items 0.2 - -
Add back share option costs - 0.1 0.2
Add back debt issue cost
amortisation 0.4 0.4 0.7
--------------------------------- --------------- --------------- ---------
Adjusted profit after tax 0.7 0.1 1.5
--------------------------------- --------------- --------------- ---------
Basic earnings/(loss) per 5p
ordinary share (pence per
share) 0.02 (0.32) 0.29
--------------------------------- --------------- --------------- ---------
Diluted earnings/(loss) per 5p
ordinary share (pence per
share) 0.02 (0.32) 0.24
--------------------------------- --------------- --------------- ---------
Adjusted basic earnings per 5p
ordinary share (pence per
share) 0.54 0.08 1.09
--------------------------------- --------------- --------------- ---------
Earnings/(loss) per ordinary share for Continuing operations
Year
26 weeks 26 weeks ended 31
ended ended December
3 July 4 July 2010
2011 Unaudited 2010 Unaudited Audited
GBP'm GBP'm GBP'm
--------------------------------- --------------- --------------- ---------
Profit/(loss) for the period/year
after tax 0.1 (0.4) 0.6
Add back exceptional items 0.2 -
Add back share option costs - 0.1 0.2
Add back debt issue cost
amortisation 0.4 0.4 0.7
--------------------------------- --------------- --------------- ---------
Adjusted profit after tax 0.7 0.1 1.5
--------------------------------- --------------- --------------- ---------
Basic earnings/(loss) per 5p
ordinary share (pence per
share) 0.02 (0.32) 0.47
--------------------------------- --------------- --------------- ---------
Diluted earnings/(loss) per 5p
ordinary share (pence per
share) 0.02 (0.32) 0.42
--------------------------------- --------------- --------------- ---------
Adjusted basic earnings per 5p
ordinary share (pence per
share) 0.54 0.08 1.27
--------------------------------- --------------- --------------- ---------
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. There is no dilution in the loss
per share calculation at 4 July 2010.
9 Share capital
31
3 July 4 July December
2011 2010 2010
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
---------------------------------------- ----------- ----------- ----------
Called up, issued and fully paid
119,897,298 (2008:119,897,298) ordinary
shares of 5p each 6.0 6.0 6.0
---------------------------------------- ----------- ----------- ----------
10 Assets held for resale
The value of assets held for sale at 31 December 2010 was
GBP2.5m. These relate to properties that were being actively
marketed and GBP1.7m was sold before the approval of the 2010
accounts and the remaining properties were disposed of in the
period. Sale proceeds of GBP2.5m were used to repay GBP2.5m of the
senior debt facility.
At 4 July 2010, assets held for resale totalled GBP0.6m and the
net disposal proceeds were used to repay GBP0.6m of the senior debt
facility.
11 Pensions
The valuation of the Group's pension scheme obligation has been
updated using an IAS19 valuation as at 3 July 2011, 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:
31
3 July 4 July December
2011 2010 2010
Unaudited Unaudited Audited
GBP'm GBP'm GBP'm
------------------------------------ ---------- ---------- ---------
Total market value of plan assets 7.8 8.1 8.6
Present value of scheme liabilities (10.5) (14.0) (13.3)
------------------------------------ ---------- ---------- ---------
Pension scheme liability (2.7) (5.9) (4.7)
------------------------------------ ---------- ---------- ---------
The major assumptions used by the Actuary were:
3 July 4 July 31 December
2011 2010 2010
Unaudited Unaudited Audited
% % %
---------------------------------- ---------- ---------- -----------
Inflation 3.40 3.25 3.30
Rate of increase in salaries - 3.25 -
Pension increases, subject to RPI 3.40 3.25 3.30
Revaluation, subject to CPI 2.50 - -
Discount rate 5.50 5.30 5.40
Return on plan assets 5.20 5.20 5.10
---------------------------------- ---------- ---------- -----------
No adjustments have been made in the period to the mortality
assumptions used as at 31 December 2010.
12 Related party transactions
All intra-group transactions have been eliminated on
consolidation at 3 July 2011. There have been no other related
party transactions in the period from 1 January 2011 to 30 August
2011.
13 Principal risks and uncertainties
The principal risks and uncertainties which could affect the
Group for the remainder of the financial year are consistent with
those detailed on pages 12 and 13 of the Annual Report and Accounts
for the year ended 31 December 2010, a copy of which is available
at www.metalraxgroup.co.uk, and are:
-- Economic risk
-- People risk
-- Pensions risk
-- Property valuations risk
-- Financial risk
-- Operational risk
The Company regularly assesses these risks together with the
associated mitigating factors listed in the 2010 Annual Report. The
levels of activity in the Group's markets and the level of
financial liquidity and flexibility continue to be the areas
designated as appropriate for added management focus.
The Outlook section of this half yearly report provides a
commentary concerning the remainder of the financial year.
Forward-looking statements
Certain statements in this interim results announcement are
forward-looking statements. By their nature, forward-looking
statements involve a number of risks, uncertainties or assumptions
that could cause actual results or events to differ materially from
those expressed or implied by the forward-looking statements. These
risks, uncertainties or assumptions could adversely affect the
outcome and financial effects of the plans and events described
herein. Forward-looking statements contained in this interim
results announcement regarding past trends or activities should not
be taken as a representation that such trends or activities will
continue in the future. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
interim results announcement. Except as required by law, the
Company is under no obligation to update or keep current the
forward-looking statements contained in this interim results
announcement or to correct any inaccuracies which may become
apparent in such forward-looking statements.
Independent review report to Metalrax Group PLC
Introduction We have been engaged by the Company to review the
condensed consolidated interim financial information in the interim
report for the 26 week period ended 3 July 2011, which comprises
the consolidated income statement, the consolidated statement of
other comprehensive income, the consolidated statement of changes
in equity, the consolidated balance sheet, the consolidated cash
flow statement, the reconciliation of net cash flow to movement in
net debt and related notes. We have read the other information
contained in the Interim Report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The interim report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the interim report in accordance with the AIM Rules for
Companies which require that the financial information must be
presented and prepared in a form consistent with that which will be
adopted in the company's annual financial statements.
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 consolidated interim financial
information included in this InterimReport 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 consolidated interim financial information in the
interim report based on our review. This report, including the
conclusion, has been prepared for and only for the Company for the
purpose of the AIM Rules for Companies and for no other purpose. We
do not, in producing this report, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
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 enquiries, 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 consolidated interim financial information in the
interim report for the 26 week period ended 3 July 2011 is not
prepared, in all material respects, in accordance with
International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union, and the AIM Rules for
Companies.
PricewaterhouseCoopers LLP Chartered Accountants Birmingham 30
August 2011
Notes
(a) The maintenance and integrity of the Metalrax Group PLC
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PFMATMBITBTB
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