RNS Number:9487S
Senior PLC
14 March 2002
Thursday 14 March 2002
Senior plc
Results for the year ended 31 December 2001
HIGHLIGHTS Year ended
31 December
2001 2000
TURNOVER FROM CONTINUING OPERATIONS £452.8m £466.5m
OPERATING PROFIT FROM CONTINUING OPERATIONS
- BEFORE EXCEPTIONAL ITEMS AND GOODWILL AMORTISATION £34.3m £46.4m
- AFTER EXCEPTIONAL ITEMS AND GOODWILL AMORTISATION £21.2m £26.8m
PROFIT BEFORE TAXATION £9.5m £0.8m
FREE CASH FLOW - PRE DIVIDENDS AND DISPOSAL OF BUSINESSES £28.6m £19.7m
NET BORROWINGS £122.7m £146.5m
EARNINGS PER SHARE BASED ON PROFIT BEFORE GOODWILL AMORTISATION
AND DISPOSAL OF BUSINESSES 5.51p 5.87p*
DIVIDEND PER SHARE 2.00p 4.88p
* 2000 restated for FRS19 "Deferred Tax"
Commenting on the results, James Kerr-Muir, Chairman of Senior plc said:
"The Group has demonstrated a resilient performance in what has been one of its
toughest years for trading. We have continued to make progress towards the
strategic goals set out in May 2000, by rationalising the business through
disposals and by improving efficiency and productivity levels to rebuild
profitability. Net debt has been reduced significantly and the measures taken to
control costs ahead of the downturn meant the impact on our operational
performance was mitigated.
We enter 2002 with many business development opportunities and this, together
with our strengthening financial position, means we are in much better shape to
take advantage of future recovery in our markets."
For further information please contact:
Senior plc
Graham Menzies, Group Chief Executive 01923 714702
Mark Rollins, Group Finance Director 01923 714738
Finsbury Group
James Murgatroyd / Charlotte Festing 020 7251 3801
Internet users will be able to view this announcement on the web site:
www.seniorplc.com .
Note to Editors:
Senior is an international manufacturing group with annual sales of around £450m
and with operations in 15 countries. Senior designs, manufactures and markets
high technology components and systems for the principal original equipment
producers in the worldwide aerospace, automotive and specialised industrial
markets. Senior's policy is to enhance shareholder value by improving operating
performance and customer service levels and by developing its market positions
in the aerospace and automotive industries.
CHAIRMAN'S STATEMENT
In a year of major challenges in its markets, Senior continued to make progress
towards the strategic goals set out in May 2000 by rationalising the business
through disposals and by improving efficiency and productivity levels to rebuild
profitability. Net debt has been reduced significantly and the measures taken to
control costs ahead of the downturn meant the impact on our operational
performance was mitigated.
During the year we disposed of our loss making UK air systems company, our
remaining German air systems company, the two industrial businesses in Australia
and New Zealand and our investment in the Japanese associate, Techno Flex. Our
small industrial operation in Singapore was closed.
Management teams have been restructured across the Group, and important
operating improvements have been achieved in virtually all areas of the
business. Given the market conditions in 2001, these improvements have not been
reflected in profits for the year, but the businesses are in much better shape
to weather the current market slowdown and to take advantage of the economic
recovery when it comes.
The Group's borrowings have been reduced substantially. With the proposed
reduction in the final dividend and continuing tight control on capital
expenditure, we expect a further reduction in borrowings this year.
Financial Highlights
Group turnover from continuing businesses fell 2.9% in the year to £452.8
million, and operating profit from continuing operations before goodwill
amortisation and exceptional items declined from £46.4 million in 2000 to £34.3
million. Group profit before taxation increased to £9.5m (2000 - £0.8m).
Underlying earnings per share of 5.51p were 6.1% below the comparable figure for
2000.
Free cash flow improving to £28.6m (2000 - £19.7m) together with disposal
proceeds resulted in Group net debt falling by £23.8m to end the year at
£122.7m.
Operations
Aerospace sales rose 9.0% to £196.8m (2000 - £180.5m) with the strengthening US$
providing a benefit and the majority of the operations, particularly Ketema and
BWT, seeing volume increases. Operating profits before exceptional costs and
goodwill amortisation increased by 2.9% to £18.0m (2000 - £17.5m) as the profit
generated from the increased sales volume was partly offset by start-up costs in
Mexico and the higher costs associated with the now disbanded market development
team.
Sales in the Automotive Division fell by 18.1% to £129.0m (2000 - £157.5m). This
was due to the performance in North America where sales were down by 26.3%
(£28.1m) as our customers reduced their finished vehicle inventories and the
full year effect of a major programme ending in late 2000 was seen. Sales
outside North America were broadly unchanged over 2000. Operating profits before
exceptional costs and goodwill amortisation declined by 52.7% to £11.3m (2000 -
£23.9m) because of the decline in volumes in North America and the start-up
costs associated with the new facility in the Czech Republic.
Specialised Industrial Divisional sales of £128.0m (2000 - £129.4m) and
operating profits of £5.0m (2000 - £5.0m) were largely unchanged over the prior
year.
Dividend
We announced in our trading statement on 8 October 2001 that the Board would be
recommending to shareholders a change in the final dividend to bring dividend
cover back to more appropriate levels for the business. The Board is,
therefore, recommending to shareholders a final dividend of 0.16p per share,
which will be paid on 30 May 2002 to shareholders on the register on 3 May 2002,
bringing the total dividend for the year to 2.00p per share, compared with 4.88p
the previous year.
The full impact of the dividend reduction will be felt in the final dividend for
2001 as we had previously announced an unchanged interim dividend just before
the events of 11 September. The Board intends to bring the balance between the
interim and final dividend payments back to a more normal basis in 2002, paying
an interim dividend of approximately one-third of the expected total dividend
for the year.
Employees and the Board
As well as reducing headcount this year to bring our costs in line with a level
of sales lower than that budgeted, we implemented many operating improvements
across the Group. We particularly appreciate the positive attitude and
co-operation of our employees and thank them for their contribution to the Group
during this very tough period.
Dr Alan Watkins and John Hudson retired from the Board following the 2001 Annual
General Meeting in May. Alan Watkins had been a non-executive Director for
eight years, and Chairman since 1996, and John Hudson had served on the Board
since 1991. Both made major contributions to the Company, over a period which
included some exceptionally difficult times, and I thank them on behalf of the
Board. I became Chairman on Dr Watkins' retirement.
The Board having regard to the valuable contribution made by Richard Turner
since his appointment in 1996 intends to offer him an appointment for a further
two years when his current term as a non-executive Director ends in July 2002.
Outlook
The rescheduling of aerospace orders seen towards the end of 2001 resulted in a
number of customers reviewing and reducing their inventory levels. Consequently
demand for our products on a number of programmes reduced significantly and this
is impacting the early months of 2002. However, we are already seeing demand
picking up as the destocking ends and the second quarter of 2002 is anticipated
to be better than the first. The slow start is likely to result in Aerospace
being less profitable in the first half of the year than the second.
Automotive volumes in the first two months of 2002 are at satisfactory levels in
both North America and Europe. It is hoped that the recent tentative signs of
the global economic recovery will mean this continuing for the remainder of the
year. In Specialised Industrial, Pathway and Hargreaves have had a solid start
to the year whilst the other businesses have generally encountered lower volumes
but increasing enquiry activity.
In economic and business terms, the impact of the events of 11 September may
have been to accelerate the downturn in the business cycle, especially in the
aerospace markets, rather than to create it. While we expect 2002 to be another
challenging year, the strategic, management and culture changes which have been
implemented over the last two years have put the Group in a far better position
to weather this period of uncertainty and to emerge from it stronger than
before.
James Kerr-Muir CHAIRMAN 13 March 2002
CHIEF EXECUTIVE'S REVIEW
2001 turned out to be a very difficult year for manufacturers in the markets in
which Senior operates and included the shock of 11 September which substantially
affected world markets, particularly aerospace. We continue, however, to seek
to enhance shareholder value in all circumstances and at all times.
Senior entered 2001 with a clear strategy that had been set out and first
implemented during 2000. The policy was, and is, to improve operational
performance, reduce operating costs, reduce head office expenses and look for
organic growth. The reduction in the level of debt continues to be a priority
and good progress to this end was made in 2001.
These policies, which remain in place, mitigated the impact to Senior of the
dramatic market changes witnessed in 2001. We were correct to have commenced
our cost reduction and cash containment programmes when we did.
During the course of the year, the general economic condition in the USA
continued to weaken and this was reflected in demand deteriorating at our
industrial businesses as the year progressed. Towards the end of 2001 demand in
this sector also began to weaken in Europe.
More specifically, the semi-conductor industry stopped almost completely in
March and the inevitable overstocking by our customers has meant that it is only
at the beginning of 2002 that we are seeing a modest recovery.
Senior Automotive suffered a significant shortfall in demand in the first half
as a direct result of destocking by its customers in the USA. The number of
light vehicles sold in the USA in 2000 was 17.4 million - an all time record,
but finished goods stock in January 2001 was also an all time record at 90 days.
By June 2001, this had been reduced to 57 days, which meant an 18% reduction
in build rate and, therefore, reduction in demand for component suppliers such
as ourselves. 2002 has started with 59 days of stock and we have planned for
15.5 million vehicles to be sold in the US market during the year (2001 - 17.1
million vehicles).
During 2001, the airline industry began to exhibit typical signs of overcapacity
with many of the carriers announcing losses and an expectation of at least a
pause in demand for new aircraft developing. After 11 September, the industry
reduced demand dramatically and very quickly. Senior acted by making the
protection of cash flow a priority and by implementing further managerial cost
reductions and curtailing some business development activity. As part of this
process decisions were taken to reposition the dividend and to reassess the
level of capital expenditure for 2002.
The ratio of Group capital expenditure to depreciation was reduced to 95% in
2000 and further reduced to 90% in 2001. It is planned to be around 70% in
2002. In current market conditions, these levels of capital expenditure are
appropriate for the business. 2001 has seen the opening of brand new facilities
for Senior Aerospace in Saltillo, Mexico and for Senior Automotive in Olomouc,
Czech Republic. 2002 will see both Senior Aerospace BWT and Senior Aerospace
Ermeto relocated into new factories.
At the end of 2001, the net debt for the Group dropped to £122.7 million. This
is a 24% reduction from its peak in June 2000 and it is planned to fall further
in 2002 as a result of the policies now in place.
We enter 2002 with many business development opportunities. Our low cost
factories are increasingly attractive to our customers. The aerospace industry
still has a highly fragmented supply base and the current downturn is driving
rationalisation plans amongst our customers, which is resulting in new
opportunities for Senior Aerospace.
In Senior Automotive, product development has potentially brought a new range of
engineered components and sub-systems closer to production.
We have continued to strive to improve all aspects of our business in 2001,
irrespective of market conditions. We plan to continue with our existing
policies and strategies in 2002, in what may turn out to be more settled, but
subdued, market conditions.
AEROSPACE
The events of 11 September which created the enforced downturn in the aerospace
market could not have been predicted. We are, however, continuing to improve
our own operational performance and new business opportunities are potentially
better than they were a year ago.
Demand reduced dramatically immediately following 11 September and is still in
the process of settling at new and lower levels. The need to address the new
circumstances resulted in a cost reduction programme across all operations
involving manpower reductions and a reversal of the strategy to find growth in
the aftermarket.
At Ketema, recovery continued and the Saltillo facility in Mexico was brought on
stream. This facility is now operational, receiving the necessary quality
accreditations from customers and attracting a lot of attention from the
industry because of its low cost base. Extension of the Mexican facility is
being studied as a result of the current opportunities for incremental business.
GE and Rolls-Royce, however, reduced their schedules significantly at the
beginning of 2002.
Under new leadership, Jet Products had an outstanding year up until September,
when its prime exposure to Boeing resulted in sales demand being reduced
significantly. The year saw the initial impact of lean principles in the
operation, with a reduction of stock and work in progress of 30%. Efforts to
broaden the customer base have resulted in new products coming on stream.
At SSP, the new management team continued to improve performance in all
respects. The operational improvement initiatives here are starting to produce
major improvements in factory efficiency and on time delivery. This business
benefits from a significant proportion of defence and military work and its
demand outlook is solid. The ductwork for the Rolls-Royce Trent 500 is now
coming on stream.
There are two composite businesses in Senior Aerospace which design and
manufacture low-temperature ducting products for heating and air conditioning
distribution in aircraft. Until September, performance was outstanding at BWT in
the UK, because of its prime exposure to the regional jet market, which
continued to expand. Its new factory will be occupied in the spring of 2002 to
accommodate increased future demand. Its sister business in Wichita achieved
much in 2001 under the energetic leadership of a new team, including the
introduction of a substantial lean programme and the recovery of its delivery
performance with its largest customer Cessna, who now has listed it as a "go
forward" supplier. Together, these two companies have won their first contract
for the Airbus A380 to design and supply the cockpit ducting - essentially for
avionics cooling.
Bosman in Rotterdam supplies original equipment parts for both jet engines and
land based gas turbines and provides an aftermarket service to airlines to
repair components for their fleets. In August 2001, a freak rainstorm caused the
main roof in the factory to collapse, but a magnificent effort by the workforce
recovered production as quickly as possible. All this resulted in a small loss.
Demand in 2002 will be helped by increased work on land based gas turbines.
In France, Calorstat traded at a loss - an unsatisfactory performance - not
helped by significant delays in new product introduction. A cost reduction
programme has been implemented and 2002 will benefit from the Airbus metallic
duct business now on stream. Its sister company Ermeto improved its performance
year on year and it has won additional aerospace and industrial business to
mitigate the volume downturn from its biggest customer Snecma. This business is
shortly due to move to a new facility close to the five separate buildings from
which it operates at the moment.
Metal Bellows, located in Sharon, Massachusetts, has some 25% of its business in
the semi-conductor industry. This stopped dead at the end of March whilst the
balance of its business, in aerospace, slowed after September. The performance
of the company, in these circumstances, was excellent. As a result of the
market changes, the proposed factory expansion was postponed but the upgrade of
the company computer infrastructure is in progress. New product development
efforts have resulted in many opportunities to win new business in 2002 as the
semi-conductor industry starts to show signs of recovery.
Senior Aerospace entered 2001 with many opportunities to secure new business and
enters 2002 with possibly more opportunities as the industry seeks cost
reductions and economies of scale and some other suppliers develop financial
difficulties. In addition, with the A380 and the Lockheed Martin Joint Striker
Fighter going ahead, there is plenty of scope for our operations to win new
business. Whilst current demand is lower, the unexecuted order book remains
ahead of the position a year ago. Throughout the operations, efficiency
improvement and cost cutting measures are being put into effect to reduce
inventory and improve on-time delivery. Operational improvements are expected to
continue, irrespective of the level of demand from our customers.
AUTOMOTIVE
In the USA, we expect 2002 to see overall demand for vehicles lower than 2001
but without the severe production adjustments witnessed in 2001. The European
market appears to continue to be stable. The focus on product development is
yielding many opportunities.
Contrary to what was believed at the beginning of 2001, there was no recovery
following the first quarter when customers put into effect a substantial
destocking programme that crippled component demand in the US operation of
Senior Automotive.
Thereafter, the year proceeded with weak demand until October and November, when
there was a recovery following the introduction of interest-free incentives by
the motor manufacturers to stimulate the market. It is likely that this will
have pulled orders forward from 2002. The facility in Bartlett, Chicago reduced
headcount in 2001 and late in the year had its sister industrial business, on
the same site, merged into it under one management team to reduce overhead cost.
During 2001, however, much product development work was maintained. In June
2002, deliveries of exhaust flexes for the new Ford Expedition and Lincoln
Navigator models will commence. This is a major development and it is
anticipated that they will also be fitted to other Ford and GM vehicles. A
flexible exhaust catalyst is on trial with one of our major customers. The
first order has been received for our patented exhaust gas recycling cooler.
Fuel products have been offered to North American diesel engine makers including
high pressure fuel lines, fuel filler pipes, fuel rail dampers and flexible fuel
rails. These programmes will yield new business in the future.
The operation in Sao Paulo, Brazil, performed well in very difficult
circumstances with the local economy slowing up progressively during the year,
forcing a reduction in manpower and cost-base of the business. The signs are
now of an improving economy once again.
Senior Automotive New Delhi produced a very strong performance. This operation
supplies aftermarket products - mainly flexible exhaust connectors - to the USA
and Europe, but has recently won new business direct with the Indian car
assembly market on Fiat and Mitsubishi models.
At Senior Automotive Blois, France, the demand for "common rail" diesel engine
tube sets continued to swamp the installed capacity and 2001 was spent
strengthening the management and rationalising the operations. This plant is
focussed on fuel pipework production, with many other products now transferred
out - turbo oil feed and drain tubes and exhaust gas recycling tubes to Crumlin
in the UK and aluminium air conditioning pipework to Olomouc in the Czech
Republic. Blois is expected to return to profit in 2002. During the year,
additional "common rail" diesel fuel pipework was won at Renault, Peugeot, Fiat
and Isuzu.
The new plant in Olomouc is planned to begin to contribute profits in 2002. The
building has been completed on cost and on time and the production equipment is
in the process of being transferred from France. Initially, this plant will
produce pipework for automotive air conditioning systems but we anticipate
developing production of other products in due course.
Senior Automotive has never successfully penetrated the German submarket.
During 2001, the decision was made to retain the Berghofer industrial business
located in Kassel, Germany, as a platform for automotive product engineering.
Work has already begun with fuel pump dampers and fuel injection bellows for
Bosch.
The Crumlin operation in the UK had another year of change with product being
transferred to Cape Town and being brought in from Blois. The company produced
a good financial performance and under new leadership, coped very well with all
the changes. New business was won at Volvo, Opel, Ford and Volkswagen.
Cape Town in South Africa doubled the number of product lines in production
during 2002. This caused a degree of disruption but the operation continued to
perform excellently in all respects.
Senior Automotive has dealt with some substantial challenges in 2001, both
external and internal. The outlook for 2002 and beyond is encouraging, helped
by the product development work that continues and the strong market positions
held in the exhaust and fuel sectors. As ever, cost control, on-time delivery
and quality standards are acknowledged as essential to maintain progress in the
automotive industry.
SPECIALISED INDUSTRIAL
Pathway performed very well in a solid power generation market but, with the
exception of UK construction for Hargreaves, almost all other industrial markets
proved to be disappointing. In line with Group strategy five industrial
businesses were disposed of during the year.
Market conditions in North America were very mixed and, with the exception of
the power generation sector, deteriorated during the course of the year.
Canada was mainly impacted by the very weak demand for steel, but maintained
profitability with good cost control.
In the USA, the Romeoville hose operation had a very difficult year with demand
reducing across the range of industries it services, perhaps with the exception
of oil and gas. At the Flexonics operation in Bartlett, Chicago, the
semi-conductor business stopped at the end of March and, in the summer, both its
micro-turbine customers stopped taking components as their markets failed to
develop as they had envisaged. Consequently, it was decided to merge this
industrial operation into the automotive business located on the same site to
achieve a substantial cost saving. A major piece of new business, however, was
successfully introduced when an existing customer awarded Bartlett the
production of an additional blood oxygenator bellows.
Pathway, with plants in Texas and Tennessee, had an excellent year with
substantially improved results. Cost reduction, a reliable market and a well
developed marketing strategy all contributed to the outcome and it is
anticipated that 2002 will see continued progress in this business. Pathway
designs and manufactures large expansion joints for industrial process plant and
enters 2002 with strong land based gas turbine OEM business and significant
orders in the nuclear and petrochemical industries.
Improvements in performance were seen at Habia, the Teflon business in Sweden
and Bredan, the European expansion joint business in Denmark with its sister
companies in the Czech Republic, Poland and the UK. Both are under new
leadership. Of particular note was the excellent performance of the UK
expansion joint business in its inaugural year.
In the European hose businesses in the UK, Holland and France, demand weakened
as the year progressed. Throughout Europe, all the industrial businesses saw
demand slacken as 2001 ended.
Senior Hargreaves in the UK had a solid year and enters 2002 with an enhanced
order book helped by contracts with the UK government and on the Canary Wharf
development. This business has consistently contributed profits and cash to the
Group over many years and it is anticipated that it will continue to do so.
Businesses disposed of during the year included Polenz (Germany), Senior Air
Systems (UK), Australia, New Zealand and the minority interest in Techno Flex
(Japan). Singapore was closed and Berghofer transferred to Senior Automotive.
Throughout the Specialised Industrial Division and throughout all the operations
within Senior, management has continued to maintain clear direction of
individual businesses to improve the quality, performance and value of each of
them.
2001 turned out to be one of the most difficult years ever and many thanks are
due to the unstinting efforts of all employees throughout Senior.
Graham Menzies CHIEF EXECUTIVE
FINANCE DIRECTOR'S REVIEW
Operating in difficult economic climates, the Group achieved a significant
reduction in net debt. Senior's strengthening financial position and increasing
organic growth opportunities provide a solid platform for the Group's long-term
success.
Financial Performance
Turnover of continuing operations fell by 2.9% to £452.8m (2000 - £466.5m) and
operating profits on continuing operations before goodwill amortisation and
exceptional items fell by 26.1% to £34.3m (2000 - £46.4m). Profits on ordinary
activities before tax increased significantly to £9.5m (2000 - £0.8m).
Turnover in the Aerospace Division increased as volumes rose at Ketema, which
benefited from its new Mexican facility, and BWT where the regional jet market
was strong prior to 11 September. Turnover in the Automotive Division fell
dramatically in the USA due to the combined effects of lower vehicle production,
as the manufacturers reduced inventory levels, and a number of programmes coming
to an end. Outside North America Automotive turnover was slightly ahead. In
difficult economic markets the Specialised Industrial Division recorded largely
unchanged turnover with Pathway, benefiting from the strong power generation
market, seeing an improved performance but operations exposed to the steel and
semi-conductor industries recording a decline. The continued strengthening of
the US$ benefited all three Divisions when the results were translated into
sterling.
The reduction in North American Automotive turnover was by far the most
significant reason for the decline in the Group's underlying profitability.
This, together with the start up costs of the new facility in Olomouc and
operational difficulties in the growing French operation, resulted in the
Automotive Division's underlying profits falling to around half the prior year's
level. Operating profits, at constant exchange rates, were broadly unchanged in
both the Aerospace and Specialised Industrial Divisions which, given the
difficult market conditions and the start-up costs associated with the Mexican
Aerospace facility, were creditable performances.
Exceptional Items
Exceptional charges of £6.9m (2000 - £14.7m) were incurred in the year. They
comprised £2.9m of reorganisation and redundancy costs associated with the cost
reduction measures largely taken following the events of 11 September and a
£4.0m impairment charge following a review of the carrying value of fixed assets
and goodwill across the Group, which resulted in a provision being made against
the carrying value of the goodwill arising on the acquisition of the Brazilian
operations.
Interest Charge
The net interest charge for the year of £9.8m (2000 - £9.3m) was up on the prior
year primarily as the result of interest receivable on the Thermal Loan Note
ceasing at the end of 2000 when the Note was settled. Interest payable actually
fell by £0.8m as a result of the reduced level of debt and lower variable
interest rates. Interest cover, calculated on profits before exceptional items,
interest, tax and goodwill amortisation was 3.5 times (2000 - 5.1 times).
Tax
The Group adopted Financial Reporting Standard 19 - "Deferred Tax" during 2001.
As required, the prior year results were restated with the 2000 tax charge
increasing by £0.4m to £0.9m and the deferred tax asset at 31 December 2000
increasing by £0.4m to £5.4m.
The Group's effective tax rate for 2001, measured on profit before amortisation
and impairment of goodwill and before losses on disposal was 23.2% (2000 - 21.6%
restated for FRS19).
Earnings and Dividends
Underlying earnings per share (after exceptional costs but before amortisation
and impairment of goodwill and loss on disposal of operations) was 5.51p (2000 -
5.87p restated for FRS19). The Board has recommended a final dividend of 0.16p
per share bringing the total dividend for the year to 2.00p (2000 - 4.88p). The
reduction in the year's dividend reflects the Board's desire, which was
communicated to shareholders on 8 October 2001, to return dividend cover to more
traditional levels.
Disposals
During 2001 the Group disposed of a number of its Specialised Industrial
Operations: Polenz GmbH (March); Senior Air Systems (June); Senior Flexonics
Australia Pty. Limited and Senior Flexonics New Zealand Limited (both October).
In addition, the Group's 20% shareholding in its only associated undertaking,
Techno Flex Company Limited, was sold (June) and the Group's small operation in
Singapore was closed (December). Total losses of £2.3m were incurred on these
disposals (including goodwill of £3.6m previously written off). Full details are
shown in Note 25 of the Accounts.
Cash Flow and Net Debt
2001 2000
£m £m
OPERATING PROFIT (AFTER GOODWILL AND EXCEPTIONAL ITEMS) 21.3 25.0
DEPRECIATION OF TANGIBLE FIXED ASSETS 18.4 18.3
IMPAIRMENT AND AMORTISATION OF GOODWILL 10.2 6.1
WORKING CAPITAL MOVEMENT (3.0) 0.7
CASH FLOW FROM OPERATING ACTIVITIES 46.9 50.1
CAPITAL EXPENDITURE (16.5) (17.4)
PROCEEDS FROM SALE OF FIXED ASSETS 0.9 0.6
NET INTEREST PAID (9.7) (8.7)
TAX RECOVERED/(PAID) 7.0 (4.9)
FREE CASH FLOW 28.6 19.7
A continuing tight control on capital expenditure, and significant tax
recoveries in the USA, resulted in Free Cash Flow (operating cash flow from
operations after net capital expenditure, interest and tax) improving to £28.6m
(2000 - £19.7m). This cash flow and net disposal and acquisition proceeds of
£11.5m were utilised to finance the dividend payments of £15.0m and to reduce
Group net debt which fell by £23.8m (2000 - £5.7m increase in net debt). At the
year end net debt was £122.7m (31 December 2000 - £146.5m), representing gearing
of 98.1% (2000 - 118.0%).
Retirement Benefits
The Group continued to account for retirement benefits in accordance with SSAP
24. The Group's main defined benefit pension scheme is in the UK whilst it also
has a number of smaller defined benefit schemes in the USA. The UK plan is
normally valued on a triennial basis but, because of the significant changes in
membership in 1999 and 2000, the plan valuation was brought forward one year to
6 April 2001. At this date the actuarial value of assets held was £115m which
represented 100% of the benefits that had accrued to members after allowing for
future increases in earnings. The US plans are valued annually and had assets of
£16.1m at 31 December 2001.
Financial Reporting Standard 17 - "Retirement Benefits" came into effect during
the year requiring companies to bring employer sponsored defined benefit pension
schemes into their accounts. Whilst full implementation is not required until
the end of 2003, disclosure of certain information, including the pension scheme
asset or liability, is required as at the end of 2001. The disclosures required
by FRS17, which are given in Note 24 of the Accounts, are based on the most
recent actuarial valuations which have been updated by the actuary to 31
December 2001 in accordance with the calculation methodology prescribed by
FRS17. This methodology requires assets to be valued at market rates at a single
point in time (the balance sheet date) and liabilities to be discounted back to
the balance sheet date at the long-term high quality (AA) corporate bond rate
effective at the balance sheet date. As equity and bond prices and the AA
corporate bond rate are all liable to substantial and short-term changes, the
pension asset/liability calculated under FR17 is likely to be volatile. The
particular conditions existing at 31 December 2001 resulted in FRS17 plan
deficits of £5.4m and £2.3m in the UK and USA respectively.
Financial Risk Management and Treasury Policies
The Group's principal financial risks relate to funding and liquidity, interest
rate fluctuations and currency exposures. The management of these risks is
performed by a centralised treasury department which reports to the Group
Finance Director and operates according to the objectives, policies and
authority levels approved by the Board.
Funding and Liquidity
The Group's operations are financed by a combination of retained profits, equity
and borrowings. Borrowings are normally raised at Group level and lent onto
operating subsidiaries on commercial terms. The Group's policy in respect of
external debt funding is to ensure that, as a minimum, all projected net
borrowing requirements are covered by committed facilities. As at the year end
the Group had total facilities of £213m (including £185m committed), of which a
total of £75m was unused.
Interest Rate Risk Management
The Group seeks to operate with the majority of debt at fixed rates. At the year
end, $105m (£72m) was drawn down at fixed interest rates (weighted average
interest rate of 7.53%) and a further £22m was the subject of fixed interest
rate "swaps" thus providing a total of 67% of fixed interest bearing net debt.
Currency Risk Management
The Group covers, through forward exchange contracts on a rolling 12 month
basis, exchange exposures which arise through normal trading and it hedges,
largely through currency denominated loans, the majority of exchange exposures
that arise on the translation into sterling of the Group's overseas assets
(including balance sheet goodwill). The Group does not hedge the effects of
currency variations on the translation of its overseas earnings into sterling.
Mark Rollins FINANCE DIRECTOR
Group Profit and Loss Account
For the year ended 31 December 2001 2000
restated
£m £m
Turnover
Continuing operations 452.8 466.5
Discontinued operations 10.9 38.9
463.7 505.4
Operating profit before exceptional items
Continuing operations 34.3 46.4
Amortisation of goodwill (6.2) (6.1)
Total continuing operations 28.1 40.3
Discontinued operations 0.1 (0.6)
28.2 39.7
Exceptional items
Reorganisation and rationalisation charges - continuing operations (2.9) (8.0)
- discontinued operations - (1.2)
Other exceptional items (4.0) (5.5)
(6.9) (14.7)
Total operating profit
Continuing operations 21.2 26.8
Discontinued operations 0.1 (1.8)
21.3 25.0
Share of operating profit in associated undertaking 0.3 1.3
Amortisation of goodwill on associated undertaking (0.1) (0.3)
Profit on sale of fixed assets - continuing operations 0.1 -
Loss on disposal of discontinued operations (0.8) (15.9)
(including goodwill of £3.6m previously written off to reserves)
Loss on disposal of associated undertaking - discontinued (1.5) -
Profit on ordinary activities before interest and taxation 19.3 10.1
Other interest receivable and similar income 0.7 2.0
Interest payable and similar charges (10.5) (11.3)
Profit on ordinary activities before taxation 9.5 0.8
Tax on profit on ordinary activities (5.1) (0.9)
Profit/(loss) for the financial year 4.4 (0.1)
Dividends (6.1) (15.0)
Loss for the year (1.7) (15.1)
Earnings/(loss) per share
Basic 1.46p (0.08)p
Diluted 1.45p (0.08)p
Underlying 5.51p 5.87p
Dividends per share 2.00p 4.88p
The restatement of 2000 relates only to the adoption of Financial Reporting
Standard No.19 "Deferred Tax".
Group Balance Sheet
At 31 December 2001 2000
restated
£m £m
Fixed assets
Intangible assets - goodwill 98.4 112.2
Tangible assets 102.7 106.9
Investments 0.2 8.0
201.3 227.1
Current assets
Stocks 52.2 60.7
Debtors: Amounts falling due after more than one year 3.6 3.4
Debtors: Amounts falling due within one year 75.1 107.6
Cash at bank and in hand 14.9 16.4
145.8 188.1
Creditors: Amounts falling due within one year (92.0) (125.5)
Net current assets 53.8 62.6
Total assets less current liabilities 255.1 289.7
Creditors: Amounts falling due after more than one year (127.5) (162.1)
Provisions for liabilities and charges (2.5) (3.5)
Net assets 125.1 124.1
Capital and reserves
Called-up share capital 30.7 30.7
Share premium 3.5 3.5
Other reserves 17.7 17.7
Profit and loss account 73.2 72.1
Equity shareholders' funds 125.1 124.0
Minority interests - equity - 0.1
Total capital employed 125.1 124.1
Group Statement of Total Recognised Gains and Losses
For the year ended 31 December 2001 2000
restated
£m £m
Profit/(loss) for the financial year 4.4 (0.1)
Currency translation differences on overseas assets and goodwill (1.3) 2.6
Tax benefits on foreign exchange losses 0.5 -
Total recognised gains and losses relating to the year 3.6 2.5
Prior year adjustment (FRS19 "Deferred Tax") 0.4
Total gains and losses recognised since last annual accounts 4.0
There is no material difference between the profits/(losses) as reported and
those profits/(losses) restated on an historical cost basis.
Group Cash Flow Statement
For the year ended 31 December 2001 2001 2000 2000
£m £m £m £m
Net cash inflow from operating activities 46.9 50.1
Dividend income from associated undertaking 0.2 0.2
Returns on investments and servicing of finance
Interest received 0.7 2.7
Interest paid (10.4) (11.4)
Net cash outflow from returns on investments
and servicing of finance (9.7) (8.7)
Taxation
UK corporation tax paid (0.4) -
Overseas tax recovered/(paid) 7.4 (4.9)
7.0 (4.9)
Capital expenditure and financial investments
Purchase of tangible fixed assets (16.5) (17.4)
Sale of property, plant and equipment 0.9 0.6
Net cash outflow from capital expenditure
and financial investments (15.6) (16.8)
Acquisitions and disposals
Purchase of subsidiary undertakings - deferred consideration (0.6) (1.0)
Sale of subsidiary undertakings 6.6 (2.2)
Sale of associated undertaking 5.9 -
Net cash disposed on sale of subsidiary undertakings (0.4) (0.6)
Net cash inflow/(outflow) from acquisitions and disposals 11.5 (3.8)
Dividends paid on ordinary shares (15.0) (15.0)
Financing
Share issues - 0.1
New loans initiated by Group 32.3 38.9
Repayment of existing loans (57.6) (34.7)
(25.3) 4.2
Increase in cash in the period - 5.4
Notes:
1 Segment Information
Group turnover, operating profit and net assets are analysed as follows:
a) By class of business
Turnover Turnover Operating Operating Net Net
profit profit assets assets
2001 2000 2001 2000 2001 2000
restated
£m £m £m £m £m £m
Aerospace 196.8 180.5 12.8 6.8 147.3 147.2
Automotive 129.0 157.5 5.5 19.6 43.5 49.0
Specialised 128.0 129.4 2.9 0.4 61.3 66.7
Industrial
Total 453.8 467.4 21.2 26.8 252.1 262.9
Inter-segment (1.0) (0.9) - - - -
sales
Total continuing 452.8 466.5 21.2 26.8 252.1 262.9
operations
Discontinued 10.9 38.9 0.1 (1.8) (3.1) 1.8
operations
463.7 505.4 21.3 25.0 249.0 264.7
Operating profits shown above are stated after charging £6.9 million (2000 -
£14.7 million) of exceptional items and £6.2 million (2000 - £6.1 million) of
goodwill amortisation. These are attributed to the segments as follows:
Exceptional items Goodwill amortisation
2001 2000 2001 2000
£m £m £m £m
Aerospace 1.6 7.2 3.6 3.5
Automotive 4.7 3.1 1.1 1.2
Specialised Industrial 0.6 3.2 1.5 1.4
Total continuing operations 6.9 13.5 6.2 6.1
Discontinued operations - 1.2 - -
6.9 14.7 6.2 6.1
b) By geographical market
Turnover Turnover Turnover Turnover Operating Operating Net Net
by by by by profit profit assets assets
destination destination origin origin by by
origin origin
2001 2000 2001 2000 2001 2000 2001 2000
restated
£m £m £m £m £m £m £m £m
North
America 279.1 291.0 295.0 313.1 19.9 24.7 143.0 148.8
United
Kingdom 56.1 55.9 76.7 79.0 5.5 3.3 65.2 69.0
Rest of
Europe 96.9 89.0 73.4 65.7 (2.1) (2.2) 36.3 31.6
Rest of
World 29.3 37.9 16.3 16.0 (2.1) 1.0 7.6 13.5
Total 461.4 473.8 461.4 473.8 21.2 26.8 252.1 262.9
Inter-
segment
sales (8.6) (7.3) (8.6) (7.3) - - - -
Total
continuing
operations 452.8 466.5 452.8 466.5 21.2 26.8 252.1 262.9
Discontinued
operations 10.9 38.9 10.9 38.9 0.1 (1.8) (3.1) 1.8
463.7 505.4 463.7 505.4 21.3 25.0 249.0 264.7
2001 discontinued operations reflect the turnover and operating results of
Polenz GmbH, Senior Air Systems, Senior Flexonics Australia Pty. Limited and
Senior Flexonics New Zealand Limited, all of which were sold during 2001, and
Senior Flexonics (Singapore) Pte. Limited which was closed in 2001.
Operating profits shown above are stated after charging £6.9 million (2000 -
£14.7 million) of exceptional items and £6.2 million (2000 - £6.1 million) of
goodwill amortisation. These are attributed to the segments as follows:
Exceptional items Goodwill amortisation
2001 2000 2001 2000
£m £m £m £m
North America 2.4 9.1 3.2 3.0
United Kingdom 0.2 2.4 2.4 2.4
Rest of Europe 0.3 1.7 0.2 0.2
Rest of World 4.0 0.3 0.4 0.5
Total continuing operations 6.9 13.5 6.2 6.1
Discontinued operations - 1.2 - -
6.9 14.7 6.2 6.1
c) Net assets reconciliation 2001 2000
restated
£m £m
Net assets, as above 249.0 264.7
Unallocated liabilities, net (1.2) (1.9)
Investment in associated undertaking - 7.8
Net borrowings (122.7) (146.5)
Net assets, per Balance Sheet 125.1 124.1
d) Total exceptional items 2001 2000
£m £m
Reorganisation and rationalisation charges - continuing operations 2.9 8.0
- discontinued operations - 1.2
Write-off of non contractually guaranteed development engineering cost - 4.0
Strategic review cost - 1.5
Impairment of goodwill, previously recognised on acquisition of Brazilian operations 4.0 -
(see below)
6.9 14.7
The impairment review was based on a comparison of the carrying value, including
goodwill, to a net present value calculation based on current cash flow
projections discounted at a rate appropriate to such an investment (20%).
2 Dividends
The proposed final dividend is at the rate of 0.16p per share (2000 - 3.04p)
making 2.00p for the year (2000 - 4.88p) and, if approved, will be payable on 30
May 2002 to shareholders on the register at the close of business on 3 May 2002.
3 Earnings per Share
The calculation of basic earnings per share and underlying earnings per share
are shown below and have been based on the weighted average number of ordinary
shares in issue and ranking for dividend during the year.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares. The Group has only one category of dilutive
potential ordinary shares in the current year, being those share options granted
where the exercise price is less than the average price of the Company's
ordinary shares during the year. The prior year diluted earnings per share has
been restated to a loss per share to take account of the earnings restatement
caused by the adoption of FRS19. However, it has not been adjusted for the
theoretically dilutive effect of those share options granted where the exercise
price is more than the average price of the Company's ordinary shares, as it is
not considered that this provides any meaningful information.
The provision of an underlying earnings per share has been included to identify
the performance of operations before amortisation and impairment of goodwill,
profit on sale of fixed assets and losses on disposal of discontinued operations
and associated undertakings.
Earnings Earnings Earnings Earnings
per share per share
2001 2000 2001 2000
restated restated
pence pence £m £m
Basic profit/(loss) on ordinary activities after taxation 1.46 (0.08) 4.4 (0.1)
Adjust:
Amortisation of goodwill 2.01 1.99 6.2 6.1
Amortisation of goodwill on associated undertaking 0.03 0.09 0.1 0.3
Impairment of goodwill 1.30 - 4.0 -
Profit arising on sale of fixed assets (0.03) - (0.1) -
Loss on disposal of discontinued operations 0.26 5.19 0.8 15.9
Loss on disposal on associated undertaking 0.48 - 1.5 -
Taxation attributable to above adjustments - (1.32) - (4.1)
Underlying earnings 5.51 5.87 16.9 18.1
Weighted average number of shares - basic 306.5m 306.4m
- diluted 307.1m 306.8m
- underlying 306.5m 306.4m
Earnings/(loss) per share - basic 1.46p (0.08)p
- diluted 1.45p (0.08)p
- underlying 5.51p 5.87p
4 Group Cash Flow Statement
a) Reconciliation of operating profit to net cash inflow from operating activities 2001 2000
£m £m
Group operating profit 21.3 25.0
Depreciation of tangible fixed assets 18.4 18.3
Amortisation of goodwill 6.2 6.1
Impairment of goodwill 4.0 -
Decrease in stocks 4.9 1.3
Decrease/(increase) in debtors 12.2 (8.6)
(Decrease)/increase in creditors (20.4) 4.0
Working capital currency variations 0.3 4.0
Net cash inflow from operating activities 46.9 50.1
The net cash inflow from operating activities includes an outflow of £0.4 million (2000 - £2.5 million) in
respect of discontinued
activities
b) Reconciliation of net cash flow to movement in net debt 2001 2000
£m £m
Increase in cash in the period - 5.4
Decrease/(increase) in loans 25.3 (4.2)
Change in net debt resulting from cash flows 25.3 1.2
Currency variations on net borrowings (1.5) (6.9)
Movement in net debt in the period 23.8 (5.7)
Net debt at 1 January (146.5) (140.8)
Net debt at 31 December (122.7) (146.5)
c) Analysis of net debt At 1 Cashflow Exchange At 31
January movement December
2001 2001
£m £m £m £m
Cash 16.4 (1.3) (0.2) 14.9
Overdrafts (2.8) 1.3 - (1.5)
Debt due within one year (3.5) (6.3) - (9.8)
Debt due after one year (156.2) 31.8 (1.3) (125.7)
Finance leases (0.4) (0.2) - (0.6)
Total (146.5) 25.3 (1.5) (122.7)
Debt due within one year shown above includes short-term bank borrowings of £0.1
million (2000 - £2.1 million).
5 Reconciliation of Movements in Shareholders' Funds
Group Share Share Other reserves Profit Total
capital premium Revaluation Special Total and loss
account account
£m £m £m £m £m £m £m
At 1 January 2001 as
previously reported 30.7 3.5 0.7 17.0 17.7 71.7 123.6
Prior year adjustment - - - - - 0.4 0.4
(FRS19 "Deferred Tax")
At 1 January 2001 as
restated 30.7 3.5 0.7 17.0 17.7 72.1 124.0
Profit for the
financial year - - - - - 4.4 4.4
Dividends - - - - - (6.1) (6.1)
Goodwill - - - - - 3.6 3.6
Currency
variations - - - - - (0.8) (0.8)
At 31
December 2001 30.7 3.5 0.7 17.0 17.7 73.2 125.1
6 Status of Financial Information
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2001 or 2000 but is derived
from those accounts. Statutory accounts for 2000 have been delivered to the
Registrar of Companies, and those for 2001 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on those accounts;
their reports were unqualified and did not contain statements under Sections 237
(2) or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
Senior (LSE:SNR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Senior (LSE:SNR)
Historical Stock Chart
From Jul 2023 to Jul 2024
