TIDMSNR
RNS Number : 7401F
Senior PLC
01 August 2016
Interim Results for the half-year ended 30 June 2016
FINANCIAL HIGHLIGHTS Half-year to
30 June
2016 2015 % change % change
(constant
currency)
---------------------------- ----------- ----------- --------- -----------
REVENUE GBP450.5m GBP434.5m +4% -1%
---------------------------- ----------- ----------- --------- -----------
OPERATING PROFIT GBP37.5m GBP49.1m -24% -28%
ADJUSTED OPERATING PROFIT
(1) GBP47.2m GBP56.2m -16% -20%
ADJUSTED OPERATING MARGIN
(1) 10.5% 12.9% -2.4ppts -2.4ppts
---------------------------- ----------- ----------- --------- -----------
PROFIT BEFORE TAX GBP32.6m GBP45.0m -28% -31%
ADJUSTED PROFIT BEFORE
TAX (1) GBP42.3m GBP52.1m -19% -23%
---------------------------- ----------- ----------- --------- -----------
BASIC EARNINGS PER SHARE 6.33p 8.45p -25%
ADJUSTED EARNINGS PER
SHARE (1) 8.07p 9.86p -18%
---------------------------- ----------- ----------- ---------
INTERIM DIVID PER SHARE 1.95p 1.84p +6%
---------------------------- ----------- ----------- ---------
FREE CASH FLOW (2) GBP17.3m GBP24.7m -30%
---------------------------- ----------- ----------- ---------
NET DEBT (2) - JUNE GBP207.3m GBP145.5m + GBP62m
NET DEBT - DECEMBER 2015 GBP194.6m + GBP13m
---------------------------- ----------- ----------- ---------
Headlines
-- Aerospace performance in line with expectations
with good organic growth in large commercial
-- Market conditions for the Flexonics Division
remain subdued, mitigating actions continue
-- Adjusted profit before tax of GBP42.3m, 19% below
prior year (23% decrease at constant currency)
-- Generated GBP17.3m free cash flow after investing
GBP22.8m in capital expenditure for organic growth
-- Interim dividend increased by 6% to 1.95 pence
per share
-- The Group is well positioned to increase market
share and deliver strong growth over the medium-term
Commenting on the results, David Squires, Group Chief Executive
of Senior plc, said:
"Senior's Aerospace Division has performed in line with
expectations in the first half of 2016. Revenue and adjusted
profits have increased and a book to bill ratio of 1.15 is
encouraging. Conversely, as previously announced, business
conditions deteriorated in the Flexonics Division and resulted in a
weak first half as end markets remained challenging with no clear
signs of recovery yet visible.
Overall the Group remains well positioned for the future with
Aerospace production programmes continuing to ramp-up and many new
business opportunities in discussion with key customers. In
Flexonics, despite the challenging conditions, we have continued to
secure positions on new programmes and platforms, and therefore are
well positioned to resume growth when markets recover. As
previously announced, the Board expects the Group's performance in
the second half of 2016 to be stronger than the first half and is
confident of progress in 2017 and beyond."
For further information please contact:
Derek Harding, Group Finance Director,
Senior plc 01923 714722
Bindi Foyle, Head of Investor Relations
& Leadership Development, Senior plc 01923 714725
Philip Walters, Finsbury Group 020 7251 3801
This Release, together with other information on Senior plc, may
be found at: www.seniorplc.com
(1) Adjusted figures are stated before a GBP9.8m
charge for amortisation of intangible assets
arising on acquisitions (H1 2015 - GBP5.4m),
acquisition costs of GBPnil (H1 2015 - GBP0.9m)
and a profit on sale and write-down of fixed
assets of GBP0.1m (H1 2015 - loss GBP0.8m). Adjusted
earnings per share takes account of the tax impact
of these items.
(2) See Notes 11(b) and 11(c) for derivation of free
cash flow and of net debt, respectively.
The Group's principal exchange rates for the US dollar and the
Euro, applied in the translation of first-half revenue, profit and
cash flow items at average rates were $1.42 (H1 2015 - $1.53) and
EUR1.28 (H1 2015 - EUR1.36), respectively. The US dollar and Euro
rates applied to the Balance Sheet at 30 June 2016 were $1.34 (June
2015 - $1.57) and EUR1.20 (June 2015 - EUR1.41), respectively.
Webcast
There will be a presentation on Monday 1 August 2016 at 11.00am
BST, with a live webcast that is accessible on Senior's website at
www.seniorplc.com/investors. The webcast will be made available on
the website for subsequent viewing.
Note to Editors
Senior is an international manufacturing Group with operations
in 14 countries. It is listed on the main market of the London
Stock Exchange (symbol SNR). Senior designs, manufactures and
markets high technology components and systems for the principal
original equipment producers in the worldwide aerospace, defence,
land-vehicle and energy markets.
Cautionary Statement
This Interim Management Report ("IMR") has been prepared solely
to provide additional information to enable shareholders to assess
the Group's strategy and business objectives and the potential for
the strategy and objectives to be fulfilled. It should not be
relied upon by any other party or for any other purpose.
This IMR contains certain forward-looking statements. Such
statements have been made by the Directors in good faith based on
information available to them at the time of their approval of this
Report. These statements should therefore be treated with caution
due to the inherent uncertainties, including both economic and
business risk factors, underlying such forward-looking
information.
INTERIM MANAGEMENT REPORT 2016
Overview
Group revenue increased by 3.7% to GBP450.5m (H1 2015 -
GBP434.5m). This included a favourable exchange rate impact of
GBP21.5m and a beneficial incremental impact from acquisitions of
GBP18.6m. Underlying Group revenue from organic operations was down
GBP24.1m (5.3%) on a constant currency basis as growth from the
Aerospace Division was offset by lower Flexonics revenue due to
weaker truck and off-highway, and oil and gas markets.
Adjusted operating profit decreased by GBP9.0m (16.0%) to
GBP47.2m (H1 2015 - GBP56.2m). This included a favourable exchange
rate impact of GBP2.7m and GBP2.0m of operating profit contributed
by acquisitions. Adjusted operating profit from organic operations
decreased by 23.3% on a constant currency basis. Whilst the Group
continues to focus on operational improvements, cost management and
efficiency initiatives, as previously disclosed, margins in the
first half of 2016 were impacted by the reduction in volumes and
change in mix in the Flexonics Division, as well as the ramp-up of
new aircraft production programmes in the Aerospace Division. These
resulted in the Group's adjusted operating margin reducing by 2.4
percentage points to 10.5%.
Adjusted profit before tax decreased to GBP42.3m (H1 2015 -
GBP52.1m), down 18.8%, or 22.5% on a constant currency basis.
Adjusted earnings per share decreased by 18.2% to 8.07 pence (H1
2015 - 9.86 pence).
The Group generated free cash inflow of GBP17.3m (H1 2015 -
GBP24.7m) after gross investment in capital expenditure of GBP22.8m
(H1 2015 - GBP23.3m). The level of net debt at the end of June 2016
was GBP207.3m (December 2015 - GBP194.6m). This increase was
principally due to unfavourable currency movements of GBP12.2m and
GBP18.3m of dividend payments partly offset by free cash inflow of
GBP17.3m and proceeds on disposal of business of GBP1.5m. The ratio
of net debt to EBITDA at the end of June 2016 was 1.6x, comfortably
below the Group's bank covenant level of 3.0x.
Recognising the underlying strength of the business and its
future prospects, the Board has approved an interim dividend of
1.95 pence per share, an increase of 6.0% over the prior year (H1
2015 - 1.84 pence). It will be paid on 30 November 2016 to
shareholders on the register at the close of business on 21 October
2016.
Market conditions
The production ramp-up of new engine option single-aisle and
wide-body aircraft means the outlook for the large commercial
aerospace sector is both strong and visible. Demand for large
commercial aircraft remains robust with Boeing and Airbus
predicting air traffic to grow in excess of 4% per annum over the
next 20 years. Boeing is forecasting market demand for over 39,000
large commercial aircraft and Airbus is forecasting market demand
for over 33,000 large commercial aircraft over the next 20
years.
Senior has healthy shipset content on all the key large
commercial aircraft platforms and has further increased its content
on the new engine versions in the first half of this year. With
significantly higher content on the new engine A320neo, 737 MAX and
A330neo than the current engine versions, the Group will outgrow
the market, as these new engine versions come into service and
production ramps up. Customer deliveries of the A320neo began in
January 2016, whilst the 737 MAX and A330neo are scheduled to enter
service in 2017.
In the regional jet market, the first CSeries was delivered to
Swiss International Air Lines in June, followed by its maiden
commercial flight on 15 July 2016. Senior has a healthy level of
content on the CSeries airframe and its Pratt & Whitney Geared
Turbo Fan engine and is also expected to benefit from the
Mitsubishi MRJ and Embraer E2-Jet, which are anticipated to enter
into service in 2018. In the defence sector, military spending has
stabilised and Senior is well positioned on the key growth
platforms, particularly the Joint Strike Fighter which is scheduled
to ramp-up significantly between now and the end of the decade.
In the Flexonics Division, market conditions in North American
truck and off-highway and oil and gas markets remain challenging.
Production of North American heavy-duty diesel trucks is forecast
to decline in 2016 and 2017, and the off-highway market is expected
to remain weak. Oil and gas related markets remain challenging in
the near term as investment in the sector is reduced or
postponed.
Despite this, Senior Flexonics continues to bid for and win new
opportunities with existing and new customers. In order to remain
competitive and reduce costs, more work is being directed to cost
competitive Flexonics facilities in Mexico, India, Czech Republic,
Malaysia and China. As a consequence, when the cyclical markets do
pick up, Senior will see strengthening performance from an
ever-more lean and competitive business.
Operational review
In response to the challenging market conditions faced by the
Flexonics Division, during the first half of 2016, there has been
continuing focus on both short-term cost management actions, as
well as an acceleration of longer-term structural cost improvement
initiatives.
Near-term cost management actions have included headcount
reductions, reduced overtime, discretionary spend management and
supply chain cost out activity. In Flexonics, total payroll costs
have reduced by 15% from end of June 2015 to end of June 2016. In
certain businesses most affected by the challenging market
conditions, headcount has reduced by up to 30%.
Longer-term structural cost improvements are centred around
Senior's cost competitive country strategy. Production continues to
be transferred to new facilities in Mexico, India and the Czech
Republic. For example, all production has now been transferred from
our Flexonics site in the UK, with the last programme and equipment
having moved to India. This will enable the Group to establish a
specialist technology, development and test centre in a smaller,
less expensive facility in the UK. During the second half of 2016
additional common rail and cooler products and associated equipment
are being transferred to Mexico from our facility in Chicago. In
India, EGR coolers are now being manufactured for an off-highway
customer and production of fuel rails will launch for a truck
customer at the end of 2016.
On the Aerospace side, Senior's global footprint continues to
provide opportunities for growth, as a result of the Group's
investment in our Aerospace facilities in Thailand, Malaysia,
Mexico, California and South Carolina. Plans are being developed to
add aerospace capability to our existing highly efficient Flexonics
plant in the Czech Republic. The new 200,000 sq.ft. facility in
Thailand was officially opened on 23 June 2016 with key customers
in attendance and we are encouraged by the opportunities for
organic growth that this facility brings.
Senior Aerospace has continued with its targeted capital
investment in its operating businesses. New state-of-the-art high
speed and high performance equipment has been installed at many of
our sites around the world in response to increasing customer
demand. This new equipment gives a step function improvement in
set-up times and machining speeds which in turn reduces costs and
helps our operating businesses to be highly competitive and
operationally efficient and effective.
Finally, the integration of Steico is going well and has
benefitted from the new post-acquisition integration process
introduced in the second half of 2015. We are pleased with its
contribution to the Group in the first half, which was fully in
line with the acquisition case.
Outlook
Overall the Group remains well positioned for the future with
Aerospace production programmes continuing to ramp-up and many new
business opportunities in discussion with key customers. In
Flexonics, despite the challenging conditions, we have continued to
secure positions on new programmes and platforms, and therefore are
well positioned to resume growth when markets recover. As
previously announced, the Board expects the Group's performance in
the second half of 2016 to be stronger than the first half and is
confident of progress in 2017 and beyond.
DIVISIONAL REVIEW
Aerospace Division
The Aerospace Division represents 72% (H1 2015 - 66%) of Group
revenue and consists of 19 operations. These are located in North
America (ten), the United Kingdom (four), continental Europe
(three), Thailand and Malaysia. The Division's operating results on
a constant currency basis are summarised below:
Half-year Half-year
ended ended
30 June 30 June
2016 2015 (1) Change
GBPm GBPm
Revenue 323.8 302.7 +7.0%
Adjusted operating profit 41.1 39.8 +3.3%
Adjusted operating margin 12.7% 13.1% -0.4ppts
(1) H1 2015 results translated using H1 2016 average
exchange rates - constant currency.
Divisional revenue increased by GBP21.1m (7.0%) to GBP323.8m (H1
2015 - GBP302.7m(1) ) whilst adjusted operating profit increased by
GBP1.3m (3.3%) to GBP41.1m (H1 2015 - GBP39.8m(1) ). Excluding the
incremental contribution from Steico, acquired in December 2015
(revenue of GBP14.3m; operating profit of GBP2.3m), organic revenue
for the Division increased by GBP6.8m (2.2%) whilst adjusted
operating profit decreased by GBP1.0m (2.5%) over the first half of
2015.
Revenue Reconciliation GBPm
H1 2015 revenue(1) 302.7
Large commercial 17.2
Regional & business jets (3.7)
Military (3.8)
Other (2.9)
------
H1 2016 organic 309.5
Acquisitions 14.3
------
H1 2016 revenue 323.8
======
The Division's most important market is large commercial
aircraft where Boeing and Airbus collectively delivered 673
aircraft in the first half of 2016, 1.8% less than the prior year.
Senior's sales in the large commercial aircraft sector increased by
12.3%(1) during the six-month period to 30 June 2016, with organic
growth, excluding acquisitions, being 9.6%. The Group benefited
from increased production of the A350 and A320neo, which began
customer deliveries in January 2016, and from higher deliveries of
the 787; however, these increases were partly offset by the
comparative impact of the decline in A330 build rates.
The Division's sales to the regional jet market, excluding
acquisitions, increased by 34.5% in the period(1) , mainly as a
result of increased production of Bombardier's CSeries, which
commenced customer deliveries in June 2016, and increased revenue
from the Mitsubishi Regional Jet programme which is expected to
commence deliveries to customers in 2018. Revenue derived from the
business jet sector declined by 31.8%, on an organic basis, in the
period(1) due to previously announced reductions in build rates of
Bombardier's Global 5000/6000 and Gulfstream's G550 programmes.
Total revenue from the military and defence sector increased by
4.5% during the period(1) , however excluding acquisitions, organic
revenue decreased by 6.6% primarily due to lower Joint Strike
Fighter content as a work package was dual sourced as previously
noted, and lower deliveries of the CH-47 Chinook.
Around 8% of the Aerospace Division's revenue was derived from
other markets such as space, non-military helicopters, power and
energy, medical and semi-conductor equipment, where the Group
manufactures products using very similar technology to that used
for certain aerospace products. Excluding acquisitions, revenue
derived from these markets decreased by 9.6%(1) , mainly due to
weaker power and energy markets.
The divisional adjusted operating margin declined by 0.4
percentage points to 12.7% (H1 2015 - 13.1%)(1) . Margins were
impacted by the year-on-year volume reductions on mature programmes
such as the A330, Global 5000/6000 and G550, and costs associated
with the ramp-up of new aircraft production programmes such as the
A320neo and CSeries. Improvement in performance is anticipated in
the second half of this year driven by increasing revenues and
operational improvements.
Senior has a healthy level of content on the A320neo, 737 MAX,
A330neo, A350, and Joint Strike Fighter, all of which are
forecasting significant increases in production over the coming
years. The Group will also benefit from greater content on the new
engine aircraft, with 66% more content on the A320neo, 52% more on
the 737 MAX, 24% more on the A330neo and 67% more on Embraer's
E2-Jets, than their respective current engine versions. Customer
deliveries of the A320neo began in January 2016, whilst the 737 MAX
and A330neo are scheduled to enter service in 2017 and the E2-Jet
in 2018.
Overall the future prospects for the Group's Aerospace Division
are visible and remain strong.
Flexonics Division
The Flexonics Division represents 28% (H1 2015 - 34%) of Group
revenue and consists of 14 operations which are located in North
America (four), continental Europe (three), the United Kingdom
(two), South Africa, India, Brazil, Malaysia and China where the
Group also has a 49% equity stake in a land vehicle joint venture.
The Division's operating results on a constant currency basis are
summarised below:
Half-year Half-year
ended ended
30 June 30 June
2016 2015 (1) Change
GBPm GBPm
Revenue 126.9 153.5 -17.3%
Adjusted operating profit 10.8 23.2 -53.4%
Adjusted operating margin 8.5% 15.1% -6.6ppts
(1) H1 2015 results translated using H1 2016 average
exchange rates - constant currency.
Divisional revenue decreased by GBP26.6m (17.3%) to GBP126.9m
(H1 2015 - GBP153.5m(1) ) and adjusted operating profit decreased
by GBP12.4m (53.4%) to GBP10.8m (H1 2015 - GBP23.2m(1) ). Excluding
the incremental contribution from the acquisition of LPE at the end
of March 2015 (revenue of GBP4.3m; operating loss of GBP0.3m),
organic revenue for the Division declined by GBP30.9m (20.1%) and
adjusted operating profit decreased by GBP12.1m (52.2%).
Revenue Reconciliation GBPm
H1 2015 revenue(1) 153.5
Truck and off-highway (13.2)
Passenger vehicles (0.4)
Industrial (17.2)
Other (0.1)
-------
H1 2016 organic 122.6
Acquisitions 4.3
-------
H1 2016 revenue 126.9
=======
Group sales to truck and off-highway markets decreased by
24.9%(1) . Senior's sales to the North American truck market
decreased by GBP11.0m (35.6%), primarily due to lower sales of EGR
coolers for new vehicles as market production declined and sales to
the North American off-highway market decreased by GBP4.3m (31.4%)
due to weaker demand for agricultural and mining vehicles. Sales to
European truck and off-highway markets grew by GBP1.4m (20.3%) due
to launch and ramp-up of new programmes, including EGR coolers to
new customers. The Group also benefited by GBP0.7m (43.8%)
increased sales from new truck and off-highway programmes in India
and China.
Group sales to passenger vehicle markets decreased slightly by
GBP0.4m (1.5%) in the period(1) , with growth of GBP1.2m (6.3%) in
the Division's main European market and growth of GBP0.3m (18.8%)
from new programme launches in India, offset by some North American
programmes ending and weaker market demand in Brazil.
In the Group's industrial markets, organic sales excluding the
incremental contribution from LPE were down 24.3%(1) . As
anticipated, organic sales to petrochemical markets were down
GBP14.1m (41.6%) due to lower demand and the non-repeat of the
large industrial expansion joint orders for North American and
South Korean petrochemical projects from 2015. Organic sales to
power and energy markets decreased by GBP4.1m (20.3%) due to
continued weakness in North American coal and gas fired power
generation markets and the year-on-year impact of lower revenue
from fuel cell dielectrics.
The adjusted operating margin decreased to 8.5% (H1 2015 -
15.1%). On an organic basis, excluding acquisitions, the margin
declined by 6.0 percentage points to 9.1%, principally due to
volume reductions in truck, off-highway and oil and gas markets and
change in mix. The Group continues to focus on cost management and
efficiency initiatives and these are anticipated to provide some
improvement in Flexonics performance in the second half of this
year.
Looking further ahead, global environmental legislation
continues to tighten and coupled with projected increases in global
energy usage, will drive increased demand for many of the Flexonics
Division's products. Senior is developing solutions for the next
generation of diesel engines, as well as alternative energy
applications. As a result of its global footprint, technical
innovation and customer relationships, the Group remains well
positioned for the future as new Flexonics programmes and products
enter production.
OTHER FINANCIAL INFORMATION
Finance costs
Total finance costs, net of investment income of GBP0.1m (H1
2015 - GBP0.1m), increased to GBP4.9m (H1 2015 - GBP4.1m). Net
interest costs on borrowings increased to GBP4.8m (H1 2015 -
GBP3.9m) due to the increased debt associated with the acquisitions
of Steico and LPE and the adverse foreign exchange impact on the
translation of US dollar denominated borrowings. The net IAS 19
pension finance cost decreased to GBP0.1m (H1 2015 - GBP0.2m)
principally due to a reduction in the retirement benefit
obligations at 31 December 2015 compared to 31 December 2014.
Tax charge
The total tax charge decreased to GBP6.1m (H1 2015 - GBP9.7m).
Excluding the net tax benefits of GBP2.4m (H1 2015 - GBP1.2m)
arising from amortisation of intangible assets from acquisitions,
acquisition costs and profit or loss on sale and write-down of
fixed assets, the adjusted tax charge is GBP8.5m (H1 2015 -
GBP10.9m) resulting in an adjusted tax rate of 20.0% (H1 2015 -
21.0%) on adjusted profit before tax.
Earnings per share
The weighted average number of shares, for the purposes of
calculating undiluted earnings per share, increased to 418.8
million (H1 2015 - 417.8 million). The increase arose principally
from the vesting of shares awarded under the Group's Long-Term
Incentive Plan. Adjusted earnings per share decreased by 18.2% to
8.07 pence (H1 2015 - 9.86 pence). Basic earnings per share
decreased by 25.1% to 6.33 pence (H1 2015 - 8.45 pence). See Note 7
of the Interim Financial Statements for details of the basis of
these calculations.
Working capital
Working capital increased from 15.1% of sales at 31 December
2015 to 17.3% of sales at 30 June 2016. 0.6% of this increase was
due to exchange differences resulting from the significant
fluctuation in spot exchange rates at the balance sheet date
compared to the average exchange rate over the past 12 months. The
remaining increase was primarily driven by holding additional
inventory to support new product introductions and product
re-location to cost competitive countries, while movements in
receivables and payables broadly offset.
Capital expenditure
Capital expenditure of GBP22.8m (H1 2015 - GBP23.3m) was 1.4
times depreciation (H1 2015 - 1.7 times), with the majority of the
spend related to investment in growth programmes in the Aerospace
Division. In particular, GBP5.1m was invested in our new Thailand
facility and GBP1.7m invested in Malaysia both supporting A350 and
787 programmes. In the USA, GBP2.4m was invested to support the
increasing build rate on 737. Capital expenditure is expected to
continue to be significantly higher than depreciation in the second
half of the year, as major investments continue, supporting future
growth programmes.
Retirement benefit obligations
Aggregate retirement benefit liabilities at 30 June 2016 were
GBP17.0m in excess of the value of pension assets, representing an
increase in the deficit of GBP4.4m from 31 December 2015. The
deficit in respect of the Group's UK defined benefit pension plan
increased by GBP2.1m to GBP2.7m (31 December 2015 - GBP0.6m). The
deficit in North America and other territories increased by
GBP2.3m. The GBP4.4m net increase over the first six months of 2016
is principally due to the decrease in the bond yields used to place
a value on the defined benefit obligation partially offset by
GBP4.4m contributions in excess of service costs made by the
Group.
Audit tender
As set out in the Annual Report & Accounts 2015 the Group
undertook a formal tender of its external audit during the first
half of 2016, led by the Audit Committee. The process began in
March 2016 with a selected number of audit firms receiving an
invitation to tender; Deloitte LLP, the Group's current external
auditor, was not invited to tender due to the longevity of its
appointment. The process involved access to a data room, detailed
meetings with management, selected site visits and a final
presentation to the Audit Committee by each shortlisted firm.
Following its conclusion, the Board proposes the appointment of
KPMG LLP as the Group external auditor for the financial year
commencing 1 January 2017, subject to approval by shareholders at
the Annual General Meeting to be held in April 2017. Deloitte will
complete the external audit for the year ending 31 December 2016
and a hand over process will take place during that time-frame. The
Board extends its appreciation to Deloitte for their contribution
over many years.
Related party transactions
The Group's related party transactions are between the Company
and its subsidiaries, and have been eliminated on
consolidation.
Going concern basis
The Directors have made appropriate enquiries and consider that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the Directors
continue to adopt the going concern basis in preparing the
financial statements.
Risks and uncertainties
The principal risks and uncertainties faced by the Group have
not changed from those set out in detail on pages 30 to 31 of the
Annual Report & Accounts 2015, which is available at
www.seniorplc.com. These can be summarised as:
-- New aircraft platform delays
-- Importance of emerging markets
-- Price-down pressures
-- Acquisitions
-- Strategy
-- Programme participation
-- Employee retention
-- Corporate governance breach
-- Financing and liquidity
-- Global cyclical downturn
Overall, the Board does not anticipate any significant change in
the likely impact of these risks. The Board is monitoring events
following the 23 June EU Referendum and will reflect any resulting
changes to its assessment of risks and uncertainties when the
consequences of the decision to leave the EU are more visible.
Directors' Responsibility Statement
We confirm to the best of our knowledge that:
1. the condensed set of Interim Financial Statements
has been prepared in accordance with IAS 34 "Interim
Financial Reporting" as adopted by the European
Union;
2. the Interim Management Report herein includes
a fair review of the important events during
the first six months and description of the principal
risks and uncertainties for the remaining six
months of the year, as required by Rule 4.2.7R
of the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority;
and
3. the Interim Management Report includes as applicable,
a fair review of disclosure of related party
transactions and changes therein, as required
by Rule 4.2.8R of the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct
Authority.
By Order of the Board
David Squires Derek Harding
Group Chief Executive Group Finance Director
29 July 2016 29 July 2016
INDEPENT REVIEW REPORT TO SENIOR PLC
We have been engaged by Senior plc ("the Company") to review the
condensed set of Financial Statements in the half-yearly financial
report for the six months ended 30 June 2016 which comprises the
Condensed Consolidated Income Statement, the Condensed Consolidated
Statement of Comprehensive Income, the Condensed Consolidated
Balance Sheet, Condensed Consolidated Statement of Changes in
Equity, the Condensed Consolidated Cash Flow Statement and related
Notes 1 to 15. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of Financial Statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in Note 2, the annual Financial Statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of Financial Statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of Financial Statements
in the half-yearly financial report for the six months ended 30
June 2016 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
29 July 2016
Condensed Consolidated Income Statement
For the half-year ended 30 June 2016
Half-year Half-year Year
ended ended ended
30 June 30 June 31 Dec
Notes 2016 2015 2015
GBPm GBPm GBPm
Revenue 3 450.5 434.5 849.5
---------- ---------- --------
Trading profit before one-off
items 37.2 49.7 94.0
Goodwill impairment - - (18.8)
Impairment of assets held
for sale - - (1.8)
------------------------------- ------ ---------- ---------- --------
Trading profit 37.2 49.7 73.4
Profit/(loss) on sale and
write-down of fixed assets 0.1 (0.8) (1.5)
Share of joint venture
profit 3 0.2 0.2 0.4
Operating profit (1) 37.5 49.1 72.3
Investment income 0.1 0.1 0.3
Finance costs (5.0) (4.2) (8.8)
---------- ---------- --------
Profit before tax (2) 32.6 45.0 63.8
Tax 5 (6.1) (9.7) (15.3)
---------- ---------- --------
Profit for the period 26.5 35.3 48.5
---------- ---------- --------
Attributable to:
Equity holders of the parent 26.5 35.3 48.5
---------- ---------- --------
Earnings per share
Basic (3) 7 6.33p 8.45p 11.59p
---------- ---------- --------
Diluted (4) 7 6.26p 8.35p 11.47p
---------- ---------- --------
(1) Adjusted operating
profit 4 47.2 56.2 107.8
(2) Adjusted profit before
tax 4 42.3 52.1 99.3
(3) Adjusted earnings per
share 7 8.07p 9.86p 18.98p
(4) Adjusted and diluted
earnings per share 7 7.98p 9.75p 18.78p
Condensed Consolidated Statement of Comprehensive Income
For the half-year ended 30 June 2016
Half-year Half-year Year
ended ended ended
30 June 30 June 31 Dec
2016 2015 2015
GBPm GBPm GBPm
Profit for the period 26.5 35.3 48.5
Other comprehensive income:
Items that may be reclassified
subsequently to profit
or loss:
Losses on cash flow hedges
during the period (3.7) (0.9) (5.6)
Reclassification adjustments
for losses included in
profit or loss 0.4 1.2 3.8
---------- ---------- --------
(Losses) / gains on cash
flow hedges (3.3) 0.3 (1.8)
Foreign exchange gain recycled (0.4) - -
to the Income Statement
on disposal of business
Exchange differences on
translation of foreign
operations 41.4 (12.8) (4.3)
Tax relating to items that
may be reclassified 1.1 - 0.4
---------- ---------- --------
38.8 (12.5) (5.7)
Items that will not be
reclassified subsequently
to profit or loss:
Actuarial losses on defined
benefit pension schemes (7.2) - (1.1)
Tax relating to items that
will not be reclassified 1.6 0.4 0.8
---------- ---------- --------
(5.6) 0.4 (0.3)
Other comprehensive income
for the period, net of
tax 33.2 (12.1) (6.0)
---------- ---------- --------
Total comprehensive income
for the period 59.7 23.2 42.5
---------- ---------- --------
Attributable to:
Equity holders of the parent 59.7 23.2 42.5
---------- ---------- --------
Condensed Consolidated Balance Sheet
As at 30 June 2016 30 June 30 June 31 Dec
Notes 2016 2015 2015
GBPm GBPm GBPm
Non-current assets
Goodwill 8 305.8 275.2 284.5
Other intangible assets 67.6 50.3 72.1
Investment in joint venture 1.2 0.9 1.1
Property, plant and equipment 9 233.5 175.7 206.6
Deferred tax assets 8.2 1.1 6.7
Loan to joint venture 0.3 0.7 1.1
Trade and other receivables 0.4 0.4 0.3
-------- -------- -------
Total non-current assets 617.0 504.3 572.4
-------- -------- -------
Current assets
Inventories 147.0 120.7 126.9
Loan to joint venture 1.0 0.4 0.1
Current tax receivables 2.2 0.3 5.1
Trade and other receivables 168.6 147.7 140.6
Cash and bank balances 11a) 13.5 22.0 14.4
Asset classified as held
for sale - - 1.8
-------- -------- -------
Total current assets 332.3 291.1 288.9
-------- -------- -------
Total assets 949.3 795.4 861.3
-------- -------- -------
Current liabilities
Trade and other payables 164.5 149.9 138.2
Current tax liabilities 20.3 15.8 20.5
Obligations under finance
leases 11c) 0.7 0.7 0.8
Bank overdrafts and loans 11c) 65.3 41.6 28.6
Provisions 1.8 1.7 1.4
Liabilities classified
as held for sale - - 1.1
-------- -------- -------
Total current liabilities 252.6 209.7 190.6
-------- -------- -------
Non-current liabilities
Bank and other loans 11c) 154.1 123.7 178.6
Retirement benefit obligations 12 17.0 15.1 12.6
Deferred tax liabilities 52.5 26.7 46.9
Obligations under finance
leases 11c) 0.7 1.5 1.0
Others 0.7 0.5 0.7
-------- -------- -------
Total non-current liabilities 225.0 167.5 239.8
-------- -------- -------
Total liabilities 477.6 377.2 430.4
-------- -------- -------
Net assets 471.7 418.2 430.9
-------- -------- -------
Equity
Issued share capital 10 41.9 41.9 41.9
Share premium account 14.8 14.8 14.8
Equity reserve 3.6 3.2 4.5
Hedging and translation
reserve 25.9 (19.7) (12.9)
Retained earnings 387.2 380.2 384.7
Own Shares (1.7) (2.2) (2.1)
-------- -------- -------
Equity attributable to
equity holders of the parent 471.7 418.2 430.9
-------- -------- -------
Total equity 471.7 418.2 430.9
-------- -------- -------
Condensed Consolidated Statement of Changes in Equity
For the half-year ended 30 June 2016
All equity is attributable to equity
holders of the parent
Hedging
Issued Share and
share premium Equity translation Retained Own Total
capital account reserve reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2015 41.8 14.8 5.7 (7.2) 359.0 (2.5) 411.6
-------- -------- -------- ------------ --------- -------- -------
Profit for the
period - - - - 48.5 - 48.5
Losses on cash
flow hedges - - - (1.8) - - (1.8)
Exchange differences
on translation
of foreign operations - - - (4.3) - - (4.3)
Actuarial losses
on defined benefit
pension schemes - - - - (1.1) - (1.1)
Tax relating to
components of
other comprehensive
income - - - 0.4 0.8 - 1.2
-------- -------- -------- ------------ --------- -------- -------
Total comprehensive
income for the
period - - - (5.7) 48.2 - 42.5
Issue of share
capital 0.1 - (0.1) - - - -
Share-based payment
charge - - 2.2 - - - 2.2
Tax relating to
share-based payments - - - - (0.2) - (0.2)
Purchase of shares
held by employee
benefit trust - - - - - (0.9) (0.9)
Use of shares
held by employee
benefit trust - - - - (1.3) 1.3 -
Transfer to retained
earnings - - (3.3) - 3.3 - -
Dividends paid - - - - (24.3) - (24.3)
-------- -------- -------- ------------ --------- -------- -------
Balance at 31
December 2015 41.9 14.8 4.5 (12.9) 384.7 (2.1) 430.9
-------- -------- -------- ------------ --------- -------- -------
Profit for the
period - - - - 26.5 - 26.5
Losses on cash
flow hedges - - - (3.3) - - (3.3)
Foreign exchange
gain recycled
to the Income
Statement on disposal
of business - - - (0.4) - - (0.4)
Exchange differences
on translation
of foreign operations - - - 41.4 - - 41.4
Actuarial losses
on defined benefit
pension schemes - - - - (7.2) - (7.2)
Tax relating to
components of
other comprehensive
income - - - 1.1 1.6 - 2.7
-------- -------- -------- ------------ --------- -------- -------
Total comprehensive
income for the
period - - - 38.8 20.9 - 59.7
Issue of share
capital - - - - - - -
Share-based payment
charge - - 0.4 - - - 0.4
Purchase of shares
held by employee
benefit trust - - - - - (1.0) (1.0)
Use of shares
held by employee
benefit trust - - - - (1.4) 1.4 -
Transfer to retained
earnings - - (1.3) - 1.3 - -
Dividends paid - - - - (18.3) - (18.3)
-------- -------- -------- ------------ --------- -------- -------
Balance at 30
June 2016 41.9 14.8 3.6 25.9 387.2 (1.7) 471.7
-------- -------- -------- ------------ --------- -------- -------
All equity is attributable to equity
holders of the parent
Hedging
Issued Share and
share premium Equity translation Retained Own Total
capital account reserve reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1
January 2015 41.8 14.8 5.7 (7.2) 359.0 (2.5) 411.6
-------- -------- -------- ------------ --------- -------- -------
Profit for the
period - - - - 35.3 - 35.3
Gains on cash
flow hedges - - - 0.3 - - 0.3
Exchange differences
on translation
of foreign operations - - - (12.8) - - (12.8)
Tax relating
to components
of other comprehensive
income - - - - 0.4 - 0.4
-------- -------- -------- ------------ --------- -------- -------
Total comprehensive
income for the
period - - - (12.5) 35.7 - 23.2
Issue of share
capital 0.1 - (0.1) - - - -
Share-based payment
charge - - 0.9 - - - 0.9
Purchase of shares
held by employee
benefit trust - - - - - (0.9) (0.9)
Use of shares
held by employee
benefit trust - - - - (1.2) 1.2 -
Transfer to retained
earnings - - (3.3) - 3.3 - -
Dividends paid - - - - (16.6) - (16.6)
-------- -------- -------- ------------ --------- -------- -------
Balance at 30
June 2015 41.9 14.8 3.2 (19.7) 380.2 (2.2) 418.2
-------- -------- -------- ------------ --------- -------- -------
Condensed Consolidated Cash Flow Statement
For the half-year ended 30 June 2016
Half-year Half-year Year
ended ended ended
30 June 30 June 31 Dec
Notes 2016 2015 2015
GBPm GBPm GBPm
Net cash from operating
activities 11a) 39.5 47.4 99.4
---------- ---------- --------
Investing activities
Interest received 0.1 0.1 0.2
Proceeds on disposal of
property, plant and equipment 0.5 0.5 0.7
Purchases of property,
plant and equipment (21.9) (22.3) (46.4)
Purchases of intangible
assets (0.9) (1.0) (2.2)
Proceeds on disposal of
business 13 1.5 - -
Acquisition of Steico - - (60.3)
Acquisition of LPE - (43.6) (43.6)
Loan to joint venture - - (0.1)
Net cash used in investing
activities (20.7) (66.3) (151.7)
---------- ---------- --------
Financing activities
Dividends paid (18.3) (16.6) (24.3)
New loans 26.9 78.4 179.9
Repayment of borrowings (28.9) (27.2) (98.2)
Repayments of obligations
under finance leases (0.4) (0.3) (0.6)
Share issues - - -
Purchase of shares held
by employee benefit trust (1.0) (0.9) (0.9)
Net cash (used in)/ from
financing activities (21.7) 33.4 55.9
---------- ---------- --------
Net (decrease)/ increase
in cash and cash equivalents (2.9) 14.5 3.6
Cash and cash equivalents
at beginning of period 11.6 8.5 8.5
Effect of foreign exchange
rate changes 1.9 (1.0) (0.5)
---------- ---------- --------
Cash and cash equivalents
at end of period 11a) 10.6 22.0 11.6
---------- ---------- --------
Notes to the Condensed Consolidated Interim Financial
Statements
1. General information
These Condensed Consolidated Interim Financial Statements, which
were approved by the Board of Directors on 29 July 2016, have been
reviewed by the auditor, whose report is set out after the
Directors' Responsibility Statement.
The comparative figures for the year ended 31 December 2015 do
not constitute the Group's statutory accounts for 2015 as defined
in Section 434 of the Companies Act 2006. Statutory accounts for
2015 have been delivered to the Registrar of Companies. The
auditor's report on those accounts was unqualified, did not draw
attention to any matters by way of emphasis and did not contain
statements under Sections 498(2) or (3) of the Companies Act
2006.
2. Accounting policies
These Condensed Consolidated Interim Financial Statements have
been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34 "Interim
Financial Reporting" as adopted by the European Union. The
Directors have, at the time of approving these Condensed
Consolidated Interim Financial Statements, a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future, a period of at least 12
months from this reporting date. Accordingly, they continue to
adopt the going concern basis of accounting in preparing these
Condensed Consolidated Interim Financial Statements.
The accounting policies, presentation and methods of computation
adopted in the preparation of these Condensed Consolidated Interim
Financial Statements are consistent with those followed in the
preparation of the Group's Annual Financial Statements for the year
ended 31 December 2015 which were prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. They do not include all the information
required for full annual financial statements and should be read in
conjunction with the Consolidated Financial Statements of the Group
as at and for the year ended 31 December 2015. No material new
standards, amendments to standards or interpretations are effective
for the half-year ended 30 June 2016.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. The
resulting accounting estimates will, by definition, seldom equal
the related actual results. In preparing these Condensed
Consolidated Interim Financial Statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the Consolidated Financial Statements
as at and for the year ended 31 December 2015.
3. Segmental analysis
The Group reports its segment information as two operating
Divisions according to the market segments they serve, Aerospace
and Flexonics. For management purposes, the Aerospace Division is
managed as two sub-divisions, Aerostructures and Fluid Systems, in
order to enhance management oversight; however, these are
aggregated as one reporting segment in accordance with IFRS 8. The
Flexonics Division is managed as a single division.
There has been no change in the basis of segmentation or in the
basis of measurement of segment profit or loss in the period.
Adjusted operating profit, as described in Note 4, is the key
measure reported to the Group's Executive Committee for the purpose
of resource allocation and assessment of segment performance.
Investment income, finance costs and tax are not allocated to
segments, as this type of activity is driven by the central tax and
treasury function.
Segment assets include directly attributable computer software
assets, property, plant and equipment, and working capital assets.
Goodwill, intangible assets from acquisitions, cash, deferred and
current tax, and other financial assets (except for working
capital) are not allocated to segments for the purposes of
reporting financial performance to the Group's Executive
Committee.
Segment liabilities include directly attributable trade payables
and accruals. Debt, finance lease obligations, deferred and current
tax and retirement benefit obligations are not allocated to
segments for the purposes of reporting financial performance to the
Group's Executive Committee.
Business Segments
Segment information for revenue, operating profit and a
reconciliation to entity net profit is presented below.
Eliminations Eliminations
/ central / central
Aerospace Flexonics costs Total Aerospace Flexonics costs Total
Half-year Half-year Half-year Half-year Half-year Half-year Half-year Half-year
ended ended ended ended ended ended ended ended
30 30 30 30 30 30 30 30
June June June June June June June June
2016 2016 2016 2016 2015 2015 2015 2015
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
External
revenue 323.7 126.8 - 450.5 287.2 147.3 - 434.5
Inter-segment
revenue 0.1 0.1 (0.2) - 0.1 0.1 (0.2) -
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Total revenue 323.8 126.9 (0.2) 450.5 287.3 147.4 (0.2) 434.5
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Adjusted
trading profit 41.1 10.8 (4.9) 47.0 37.9 22.3 (4.2) 56.0
Share of
joint venture
profit - 0.2 - 0.2 - 0.2 - 0.2
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Adjusted
operating
profit 41.1 11.0 (4.9) 47.2 37.9 22.5 (4.2) 56.2
Profit/(loss)
on sale and
write-down
of fixed
assets 0.1 - - 0.1 (0.8) - - (0.8)
Amortisation
of intangible
assets from
acquisitions (5.6) (4.2) - (9.8) (2.6) (2.8) - (5.4)
Acquisition
costs - - - - - (0.9) - (0.9)
----------
Operating
profit 35.6 6.8 (4.9) 37.5 34.5 18.8 (4.2) 49.1
---------- ---------- ------------ ---------- ---------- ------------
Investment
income 0.1 0.1
Finance costs (5.0) (4.2)
---------- ----------
Profit before
tax 32.6 45.0
Tax (6.1) (9.7)
---------- ----------
Profit after
tax 26.5 35.3
---------- ----------
Segment information for assets and a reconciliation to total
assets and for liabilities and a reconciliation to total
liabilities is presented below.
30 June 30 June 31 Dec
2016 2015 2015
Assets GBPm GBPm GBPm
Aerospace 405.1 303.1 346.6
Flexonics 144.1 140.0 128.9
Central 4.5 3.6 4.4
-------- -------- -------
Segment assets for reportable
segments 553.7 446.7 479.9
Unallocated
Goodwill 305.8 275.2 284.5
Intangible assets from acquisitions 62.6 46.5 67.9
Cash 13.5 22.0 14.4
Deferred and current tax 10.4 1.4 11.8
Others 3.3 3.6 2.8
-------- -------- -------
Total assets per Balance Sheet 949.3 795.4 861.3
-------- -------- -------
30 June 30 June 31 Dec
2016 2015 2015
Liabilities GBPm GBPm GBPm
Aerospace 110.8 88.9 91.3
Flexonics 46.7 51.0 37.8
Central 7.2 9.5 9.4
-------- -------- -------
Segment liabilities for reportable
segments 164.7 149.4 138.5
Unallocated
Debt 219.4 165.3 207.2
Finance leases 1.4 2.2 1.8
Deferred and current tax 72.8 42.5 67.4
Retirement benefit obligations 17.0 15.1 12.6
Others 2.3 2.7 2.9
-------- -------- -------
Total liabilities per Balance
Sheet 477.6 377.2 430.4
-------- -------- -------
4. Adjusted operating profit and adjusted profit before tax
The provision of adjusted operating profit and adjusted profit
before tax measures, derived in accordance with the table below,
has been included to identify the performance of the Group prior to
the impact of goodwill impairment, impairment of assets held for
sale, amortisation of intangible assets acquired from acquisitions,
acquisition costs and profit or loss on sale and write-down of
fixed assets. These items have been excluded from the adjusted
measures in order to show the underlying current business
performance of the Group in a consistent manner. This also reflects
how the business is managed on a day-to-day basis.
Half-year Half-year Year
ended ended ended
30 June 30 June 31 Dec
2016 2015 2015
GBPm GBPm GBPm
Operating profit 37.5 49.1 72.3
---------- ---------- --------
Amortisation of intangible
assets from acquisitions 9.8 5.4 12.2
Goodwill impairment - - 18.8
Impairment of assets held for
sale - - 1.8
Acquisition costs - 0.9 1.2
(Profit)/loss on sale and write-down
of fixed assets (0.1) 0.8 1.5
---------- ---------- --------
Adjustments to operating profit 9.7 7.1 35.5
---------- ---------- --------
Adjusted operating profit 47.2 56.2 107.8
---------- ---------- --------
Profit before tax 32.6 45.0 63.8
Adjustments to profit before
tax as above 9.7 7.1 35.5
Adjusted profit before tax 42.3 52.1 99.3
---------- ---------- --------
5. Tax charge
Half-year Half-year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
Current tax:
Current year 3.3 7.7
Deferred tax:
Current year 2.8 2.0
---------- ----------
6.1 9.7
---------- ----------
Corporation tax for the half-year ended 30 June 2016 is
calculated at 18.7% (H1 2015 - 21.6%) on profit before tax. On
adjusted profit before tax, an adjusted tax rate of 20.0% (H1 2015
- 21.0%) is charged, representing the estimate of the weighted
average annual corporation tax rate expected for the full financial
year.
6. Dividends
Half-year Half-year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
Amounts recognised as distributions
to equity holders in the period:
Final dividend for the year ended
31 December 2015 of 4.36p (2014 -
3.96p) per share 18.3 16.6
---------- ----------
Interim dividend for the year ending
31 December 2016 of 1.95p (2015 -
1.84p) per share 8.2 7.7
---------- ----------
The interim dividend was approved by the Board of Directors on
29 July 2016 and has not been included as a liability in these
Interim Financial Statements.
7. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Half-year Half-year
ended ended
30 June 30 June
2016 2015
Number of shares million million
Weighted average number of ordinary
shares for the purposes of basic earnings
per share 418.8 417.8
Effect of dilutive potential ordinary
shares:
Share options 4.5 4.8
---------- ----------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 423.3 422.6
---------- ----------
Half-year Half-year Half-year Half-year
ended ended ended ended
30 June 30 June 30 June 30 June
2016 2016 2015 2015
Earnings EPS Earnings EPS
Earnings and earnings
per share ("EPS") GBPm pence GBPm pence
Profit for the period 26.5 6.33 35.3 8.45
Adjust:
Amortisation of intangible
assets from acquisitions
net of tax of GBP2.4m
(H1 2015 - GBP0.9m) 7.4 1.77 4.5 1.07
Acquisition costs net
of tax of GBPnil (H1
2015 - GBPnil) - - 0.9 0.22
(Profit)/loss on sale
and write-down of fixed
assets net of tax of
GBPnil (H1 2015 - GBP0.3m) (0.1) (0.03) 0.5 0.12
Adjusted earnings after
tax 33.8 8.07 41.2 9.86
---------- ---------- ---------- ----------
Earnings per share
- basic 6.33p 8.45p
- diluted 6.26p 8.35p
- adjusted 8.07p 9.86p
- adjusted and diluted 7.98p 9.75p
The earnings figures used to calculate both the basic earnings
per share and the diluted earnings per share are the same.
The denominators used for all basic, diluted and adjusted
earnings per share are as detailed in the "Number of shares"
table.
The provision of an adjusted earnings per share, derived in
accordance with the table, has been included to identify the
performance of the Group prior to the impact of amortisation of
intangible assets acquired from acquisitions, acquisition costs and
profit or loss on sale and write-down of fixed assets. These items
have been excluded from the adjusted measures in order to show the
underlying current business performance of the Group in a
consistent manner. This also reflects how the business is managed
on a day-to-day basis.
8. Goodwill
Goodwill has been reallocated to the two Aerospace sub-divisions
and Flexonics with effect from 1 January 2016, reflecting the way
management now exercises oversight and monitors the Group's
performance. The Group tests goodwill annually for impairment or
more frequently if there are indications that goodwill might be
impaired.
The change in goodwill from GBP284.5m at 31 December 2015 to
GBP305.8m at 30 June 2016 reflects an increase of GBP21.3m due to
foreign exchange differences.
9. Property, plant and equipment
During the period, the Group spent GBP21.9m (H1 2015 - GBP22.3m)
on the acquisition of property, plant and equipment. The Group also
disposed of machinery with a carrying value of GBP0.4m (H1 2015 -
GBP0.6m) for proceeds of GBP0.5m (H1 2015 - GBP0.5m).
10. Share capital
Share capital as at 30 June 2016 amounted to GBP41.9m. No shares
were issued during the period.
11. Notes to the cash flow statement
a) Reconciliation of operating profit to net cash from operating
activities
Half-year Half-year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
Operating profit 37.5 49.1
Adjustments for:
Depreciation of property, plant and
equipment 15.3 13.2
Amortisation of intangible assets
from acquisitions 9.8 5.4
Amortisation of other intangible
assets 0.8 0.4
(Profit)/loss on sale and write-down
of fixed assets (0.1) 0.8
Costs on disposal of business (0.2) -
Share of joint venture (0.2) (0.2)
Share-based payment charges 0.4 0.9
Pension payments in excess of service
cost (4.4) (4.5)
Operating cash flows before movements
in working capital 58.9 65.1
(Increase) / decrease in inventories (7.5) 0.4
Increase in receivables (14.4) (8.0)
Increase / (decrease) in payables 9.0 (1.6)
Working capital currency movements (0.5) (0.1)
Cash generated by operations 45.5 55.8
Income taxes paid (1.4) (4.4)
Interest paid (4.6) (4.0)
---------- ----------
Net cash from operating activities 39.5 47.4
---------- ----------
Cash 13.5 22.0
Overdrafts (2.9) -
Total 10.6 22.0
---------- ----------
Cash and cash equivalents (which are presented as a single class
of assets on the face of the Balance Sheet) comprise cash at bank
and other short-term highly liquid investments with a maturity of
three months or less.
b) Free cash flow
Free cash flow, a non-IFRS item, highlights the total net cash
generated by the Group prior to corporate activity such as
acquisitions, disposals, financing and transactions with
shareholders. It is derived as follows:
Half-year Half-year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
Net cash from operating activities 39.5 47.4
Interest received 0.1 0.1
Proceeds on disposal of property,
plant and equipment 0.5 0.5
Purchases of property, plant and equipment (21.9) (22.3)
Purchase of intangible assets (0.9) (1.0)
---------- ----------
Free cash flow 17.3 24.7
---------- ----------
c) Analysis of net debt
At Non- At
1 January Cash Exchange 30 June
2016 Cash flow Items movement 2016
GBPm GBPm GBPm GBPm GBPm
Cash 14.4 (2.5) - 1.6 13.5
Overdrafts (2.8) (0.4) - 0.3 (2.9)
---------- --------- ------- --------- ----------
Cash and cash equivalents 11.6 (2.9) - 1.9 10.6
Debt due within
one year (25.8) 5.8 (40.4) (2.0) (62.4)
Debt due after
one year (178.6) (3.8) 40.4 (12.1) (154.1)
Finance leases (1.8) 0.4 - - (1.4)
Total (194.6) (0.5) - (12.2) (207.3)
---------- --------- ------- --------- ----------
12. Retirement benefit schemes
Aggregate post-retirement benefit obligations are GBP17.0m (30
June 2015 - GBP15.1m; 31 December 2015 - GBP12.6m). This liability
is made up of net deficits in the Group's UK and US defined benefit
pension schemes, with deficits of GBP2.7m (30 June 2015 - GBP4.6m;
31 December 2015 - GBP0.6m) and GBP8.0m (30 June 2015 - GBP5.3m; 31
December 2015 - GBP6.5m) respectively, and a liability on unfunded
schemes of GBP6.3m (30 June 2015 - GBP5.2m; 31 December 2015 -
GBP5.5m). These values have been assessed by independent actuaries
using current market values and discount rates.
13. Disposals
On 16 February 2016 the Group sold its Senior Aerospace
Composites business which was based in Wichita, Kansas, USA and
included in the Aerospace Division. The business had been
classified as held for sale at 31 December 2015 and presented
separately in the balance sheet. An impairment of assets held for
sale of GBP1.8m had also been recognised in the year ended 31
December 2015.
During the half-year ended 30 June 2016, a loss of GBPnil (H1
2015 - GBPnil) arose on disposal after taking into account the fair
value of net assets disposed after exit costs of GBP1.9m offset by
cash consideration of GBP1.5m and the previously recorded foreign
exchange gain that has been recycled to the income statement of
GBP0.4m.
14. Contingent Liabilities
Contingent liabilities exist in respect of guarantees provided
by the Group in the ordinary course of business for product
delivery, performance and reliability. Various Group undertakings
are parties to legal actions or claims which arise in the ordinary
course of business, some of which could be for substantial amounts.
In May 2015 Senior Aerospace Ketema was named as co-defendant in a
class action lawsuit filed against Ametek, Inc. in the US. The
lawsuit claims that Ametek had polluted the groundwater during its
tenure as owners of the site where Senior Aerospace Ketema is
currently located. While the outcome of some of these matters
cannot precisely be foreseen, based on the information currently
held by the Directors, the Directors do not believe any of these
arrangements, legal actions or claims, after allowing for
provisions already made, are likely to result in significant loss
to the Group.
15. Financial Instruments
Categories of financial instruments
Half-year Half-year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
Carrying value of financial assets:
Cash and cash equivalents 13.5 22.0
Trade receivables 150.9 134.0
Other receivables 2.5 2.0
Loans and receivables at amortised
cost 166.9 158.0
---------- ----------
Currency derivatives used for hedging 2.1 1.0
Total financial assets 169.0 159.0
---------- ----------
Carrying value of financial liabilities:
Bank overdrafts and loans 219.4 165.3
Obligations under finance leases 1.4 2.2
Trade payables 91.7 84.2
Other payables 60.4 59.0
Other financial liabilities at amortised
cost 372.9 310.7
---------- ----------
Currency derivatives used for hedging 10.2 3.0
Total financial liabilities 383.1 313.7
---------- ----------
Half-year Half-year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
Undiscounted contractual maturity of
other financial liabilities:
Amounts payable:
On demand or within one year 227.0 192.1
In the second to fifth years inclusive 113.3 124.7
After five years 68.0 13.2
---------- ----------
408.3 330.0
Less: future finance charges (35.4) (19.3)
---------- ----------
Other financial liabilities at amortised
cost 372.9 310.7
---------- ----------
The carrying amount is a reasonable approximation of fair value
for the financial assets and liabilities noted above except for
bank overdrafts and loans, where the Directors estimate the fair
value to be GBP232.1m (30 June 2015 - GBP174.4m). The fair value
has been determined by applying a make-whole calculation using
prevailing treasury bill yields plus the applicable credit spread
for the Group.
Fair values
The following table presents an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value. All financial instruments are measured at level 2, i.e.
those fair values derived from inputs other than quoted prices that
are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices). There has not
been any transfer of assets or liabilities between levels. There
are no non-recurring fair value measurements.
Half-year Half-year
ended ended
30 June 30 June
2016 2015
GBPm GBPm
Assets:
Foreign exchange contracts - cash
flow hedges 2.1 1.0
---------- ----------
Total assets 2.1 1.0
---------- ----------
Liabilities:
Foreign exchange contracts - cash
flow hedges 10.2 3.0
Total liabilities 10.2 3.0
---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BUGDRBSDBGLC
(END) Dow Jones Newswires
August 01, 2016 02:00 ET (06:00 GMT)
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