Senior Engng Group - Final Results
April 02 1998 - 2:32AM
UK Regulatory
RNS No 4402e
SENIOR ENGINEERING GROUP PLC
2nd March 1998
SENIOR ENGINEERING GROUP plc
Preliminary Results for the Year Ended
31 December 1997
* Operating profits of continued operations up 17.0% to
#42.0m (#35.9m)
* Underlying earnings per share up 33.2% to 10.18p (7.64p)
* Group's net cash inflow from operating activities up
59.2% to #68.3 m (#42.9 m)
* Record capital expenditure and acquisitions net of disposals
of #44.4m (#27.2m)
* Balance sheet remains strong with net debt of only #19.3m
representing gearing of 14.8%
* Final dividend increased by 10.9% to 2.64p (2.38p) making
a total 4.24p (3.82p) for the year
Speaking today, Dr Alan Watkins, Chairman of Senior said:
"I believe that Senior has made significant progress.
The Group is in excellent financial health and we look
forward to the future with growing confidence."
For further information, please contact:
Senior Engineering Group plc On 2 April 0171 253 2252
Dr A K Watkins, Chairman Thereafter 01923 775547
A R Parrish, Group Chief Executive
T B Garthwaite, Group Finance Director
Ludgate Communications 0171 253 2252
Tim Davis
Sarah Harper
Internet users will, for the first time, be able to view this
announcement, together with other information about the Senior
Engineering Group, on the web site http://www.segplc.com
Notes to Editors:
Senior Engineering Group plc ("Senior") is a specialist
international engineering group with a market
capitalisation of approximately #560 million. It is
organised into two principal divisions - Flexonics and
Engineered Products & Services. The Flexonics Division,
which provides over 90% of the Group's operating profits,
is a world leading design and manufacturing
business specialising in thin-walled metallic flexible
tubing and bellows, servicing the Automotive, Aerospace
(including Space) and Industrial markets. Engineered
Products & Services is comprised of Precision Tube, Air
Systems and Heat Treatment.
PRELIMINARY RESULTS
For the year ended 31 December 1997
At the beginning of 1997, the Board set three key
objectives. First, to deliver improved results for
shareholders; second, to develop a sound base on which to
grow the business over the longer term; and third, to
ensure that we have the right management in place to
capitalise on the many opportunities that exist for each
of the Group's companies. I believe that in all three
areas the Group has made significant progress.
Financial Highlights
The turnover of continuing operations - Flexonics and
Engineered Products & Services - increased by 5.0% to
#473.7m (1996: #451.2m), producing operating profits
before exceptional income up 17.0% to #42.0m (1996:
#35.9m), confirming a further improvement in return on
sales, now at 8.9% (1996: 8.0%). This performance is all
the more creditable given that it is after taking into
account the impact of adverse foreign exchange movements
on the translation of turnover and operating profit of
#25.1m and #2.0m respectively.
The significant growth in the Flexonics Division has
increased its return on sales to 11.8% (1996: 9.4%), with
turnover up 12.4% to #329.2m (1996: #292.8m) and
operating profits by 41.5% to #38.9m (1996: #27.5m).
Although Flexonics continues to capitalise on its strong
growth in the world's automotive markets, it is the
Aerospace sector that has seen its sales and profits grow
most rapidly, whilst the Industrial sector reported
turnover for the year slightly down, although still
showing a satisfactory increase in profitability.
In contrast, Engineered Products & Services' turnover
reduced by 9.0% to #146.5m (1996: #161.0m), with
operating profit down by 63.1% to #3.1m (1996: #8.4m).
The Precision Tube and Air Systems businesses continued
to experience challenging trading conditions together
with costs of rationalisation, much of it borne in the
second half of the year. These results were, in part,
mitigated by a good profit performance in the Heat
Treatment businesses.
The overall improvement in the Group's operating profit,
together with exceptional income of #1.2m (arising out of
an insurance claim in respect of a fire in the Flexonics
factory at Dourdan, France) and significantly lower
interest charges, have given rise to profits before
taxation of #43.1m (1996: #2.7m). With both the interim
and final dividends being paid as Foreign Income
Dividends (FIDs), the Group is expected to save #3.2m in
cash for the full year in Advance Corporation Tax (ACT),
following which the tax charge has reduced from 29.9% in
1996 to 26.0%. Earnings per share were 10.48p (1996:
loss per share 1.29p). Underlying earnings per share,
which exclude one-off specified exceptionals and the
impact of discontinued operations, increased by 33.2% to
10.18p (1996: 7.64p). Given the Group's very
satisfactory performance, the Board is recommending a
final dividend of 2.64p, which, when taken with the
interim dividend of 1.60p, makes a total distribution for
the year of 4.24p (1996: 3.82p), an increase of 11%.
The increased emphasis on cash generation has also
yielded excellent results with net cash inflow from
operating activities increasing by 59.2% to #68.3m (1996:
#42.9m). This improvement has enabled the Group to end
the year with net debt largely unchanged at #19.3m (1996:
#20.5m), representing gearing of only 14.8% (1996:
15.9%), having funded record capital expenditure of
#23.4m (1996: #18.3m) and acquisitions, net of disposals,
of #21.0m (1996:#8.9m).
Corporate Development
With Thermal Engineering sold in January 1997, management
was able to renew its focus on the development of the
continuing businesses. Significant emphasis was placed on
acquisitions, in particular those designed to broaden
Flexonics' rapidly growing range of products and its
geographic spread. These acquisitions included Ketema
(California, USA) for #12.5m (Aerospace); the formation
of a joint venture, Inalsa Flexonics (India),
representing an investment of #2.2m (Industrial); and the
acquisition of Metal Fab (Florida, USA) for #11.2m
(Industrial). Heat Treatment benefited from the
acquisition of UK-based Nitrotec Services for #3.0m and
Astra Heat Treatment for #0.3m.
Since the year end, this momentum has accelerated, with
the acquisition within Flexonics of Bosman in Holland for
#2.3m (Aerospace) and Bredan in Denmark for #4.4m
(Industrial) and, within Engineered Products & Services,
Accles & Pollock in the UK for #1.1m (Precision Tube) and
the remaining 50% interest in Traitement Thermique
Iberique (TTI) in Spain for #2.8m (Heat Treatment).
Equal emphasis has been placed on cost reduction at
Engineered Products & Services which has responded well
to organisational and management changes whilst managing
its increasing capital expenditure programme. The Board
is confident that this Division's performance will
improve substantially in the medium term.
The Board, Senior Management and Personnel
Following Andrew Parrish's arrival as Group Chief
Executive in January 1997, the Board has been
significantly strengthened. Bill Kowal was promoted from
within Flexonics to Division Director - Flexonics North
America. Glenn Timms joined from Guinness plc as
Director - Corporate Development and has responsibility
for developing and implementing Senior's global
acquisition programme.
At senior management level, Carl Francis joined from
Siebe plc as Division Director - Engineered Products &
Services; Peter David from Williams Holdings plc as
Director - Operations Development, with particular
responsibility for the post-acquisition integration
process; and Michael Oxborrow from Van der Horst Ltd as
Director - Senior Asia, based at our Singapore office.
Further strengthening and restructuring of the management
within the divisions has also taken place.
On behalf of the Board, I would like to thank all our
employees for their hard work and dedication. Although
some areas of the Group still face challenging trading
conditions, much has been achieved. I am grateful to
everybody for their continuing support and efforts
towards the further development of the Group.
Outlook
The new year has started well. Flexonics shows every
sign of building on its impressive growth rate of recent
years and the actions taken at Engineered Products &
Services are starting to produce improved performance.
The Group is in excellent financial health.
Although we recognise the problems potentially posed in
our markets by factors outside our control, including
Asian economic difficulties and exchange rate volatility,
we have cash generative businesses with revitalised
management focusing on expansion, both organic and
through acquisition. We therefore look forward to the
future with growing confidence.
Dr A K Watkins
Chairman
SENIOR ENGINEERING GROUP plc
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 December 1997
1997 1996
#m #m
Turnover
Continuing operations 443.6 451.2
Acquisitions 30.1
--------
473.7
Discontinued operations 5.6 123.6
-------- --------
479.3 574.8
-------- --------
Operating profit
Continuing operations 39.3 35.9
Acquisitions 2.7
--------
42.0
Discontinued operations - (2.0)
-------- --------
42.0 33.9
Profit on sale of fixed assets
in continuing operations 1.2 0.5
Loss on disposal of
discontinued operations - (29.3)
-------- --------
Profit on ordinary activities before
interest and taxation 43.2 5.1
Interest receivable 3.2 2.2
Interest payable (3.3) (4.6)
-------- --------
Profit on ordinary activities before
taxation 43.1 2.7
Tax on profit on ordinary activities (11.2) (6.6)
-------- --------
Profit/(loss) for the financial year 31.9 (3.9)
Dividends (12.9) (11.7)
-------- --------
Profit/(loss) for the year 19.0 (15.6)
-------- --------
Earnings/(loss) per share 10.48p (1.29)p
-------- --------
Underlying earnings per share 10.18p 7.64p
-------- --------
Dividends per share 4.24p 3.82p
-------- --------
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 1997
1997 1996
#m #m
Profit/(loss) for the financial year 31.9 (3.9)
Unrealised loss on property revaluation - (1.2)
Currency translation differences
on overseas assets (2.1) (3.5)
------- -------
Total recognised gains and losses
relating to the year 29.8 (8.6)
------- -------
There is no material difference between profits/(losses)
as reported and those profits/(losses) restated on an
historical cost basis.
SENIOR ENGINEERING GROUP plc
GROUP BALANCE SHEET
As at 31 December 1997
1997 1996
#m #m
Fixed assets
Tangible assets 90.0 87.8
Investment in associated undertaking 0.8 0.9
-------- --------
90.8 88.7
-------- --------
Current assets
Stocks 61.4 64.5
Debtors 112.7 120.5
Investments - bank deposits 11.1 15.1
Cash 21.1 17.5
-------- --------
206.3 217.6
Creditors: Amounts falling due
within one year (115.0) (130.6)
-------- --------
Net current assets 91.3 87.0
-------- --------
Total assets less current liabilities 182.1 175.7
Creditors: Amounts falling due after
more than one year (47.3) (44.8)
Provisions for liabilities and charges (3.3) (1.8)
-------- --------
Net assets 131.5 129.1
-------- --------
Capital and reserves
Called-up share capital 30.5 30.4
Share premium 0.8 87.4
Reserves 99.5 11.3
-------- --------
Shareholders' funds 130.8 129.1
Minority interests 0.7 -
-------- --------
Total capital employed 131.5 129.1
-------- --------
SENIOR ENGINEERING GROUP plc
GROUP CASH FLOW STATEMENT
For the year ended 31 December 1997
1997 1996
#m #m
Net cash inflow from
operating activities 68.3 42.9
Returns on investments and
servicing of finance
Interest received 2.1 2.6
Interest paid (3.3) (4.7)
-------- --------
Net cash outflow from returns on
investments and servicing of finance (1.2) (2.1)
Taxation paid
U.K. corporation tax (4.1) (2.2)
Overseas tax (6.9) (5.4)
-------- --------
(11.0) (7.6)
Capital expenditure and
financial investments
Purchase of tangible fixed assets (23.4) (18.3)
Sale of property, plant and
equipment 1.7 3.2
Maturity of investments
- bank deposits 2.5 0.6
-------- --------
Net cash outflow from capital
expenditure and financial investments (19.2) (14.5)
Acquisitions and disposals
Purchase of subsidiary
undertakings (31.1) (9.0)
Net cash acquired with
subsidiary undertakings 0.1 0.1
Sale of business 10.0 -
-------- --------
Net cash outflow from
acquisitions and disposals (21.0) (8.9)
Dividends paid on ordinary shares (12.1) (11.2)
Management of liquid resources
Maturity of short-term deposits 3.2 22.7
Investment in short-term deposits (7.1) (3.2)
-------- --------
Net cash (outflow)/inflow from
management of liquid resources (3.9) 19.5
Financing
Share issues 0.5 1.4
New loans initiated by Group 9.1 14.4
Repayment of existing loans (7.0) (38.7)
-------- --------
2.1 (24.3)
-------- --------
Increase/(decrease) in cash
in the period 2.5 (4.8)
-------- --------
SENIOR ENGINEERING GROUP plc
Notes:
1. Segment Information
Group turnover, operating profit and net assets are
analysed as follows -
a) By class of business -
Turnover Operating profit Net assets
1997 1996 1997 1996 1997 1996
#m #m #m #m #m #m
Flexonics 329.2 292.8 38.9 27.5 105.1 89.5
-------------- -------------- -----------
Engineered Products
& Services
Precision Tube 70.6 76.5 2.7 3.7 20.7 19.4
Air Systems 60.7 69.7 (2.2) 3.0 13.6 18.1
Heat Treatment 15.2 14.8 2.6 1.7 11.6 9.7
-------------- -------------- -----------
146.5 161.0 3.1 8.4 45.9 47.2
-------------- -------------- -----------
Total 475.7 453.8 42.0 35.9 151.0 136.7
Inter-segment sales (2.0) (2.6) - - - -
-------------- -------------- -----------
Total continuing
operations 473.7 451.2 42.0 35.9 151.0 136.7
Discontinued operations 5.6 123.6 - (2.0) 2.7 13.4
-------------- -------------- -----------
479.3 574.8 42.0 33.9 153.7 150.1
-------------- -------------- -----------
Discontinued operations reflect the turnover and operating results of
the Thermal Engineering Division sold in January 1997.
Additional operating profit arising from acquisitions relating to
Ketema A & E (#2.3 million) and Nitrotec Services (#0.4 million) has
been included within Flexonics and Heat Treatment respectively.
b) By geographical market -
Turnover Turnover Operating Net assets
by by profit
destination origin by origin
1997 1996 1997 1996 1997 1996 1997 1996
#m #m #m #m #m #m #m #m
United Kingdom 151.7 155.1 184.5 184.9 11.3 13.7 58.3 55.7
Rest of Europe 110.2 125.8 84.8 102.1 1.6 5.2 28.9 31.1
North America 191.3 152.9 200.3 160.8 29.1 16.3 58.7 47.3
Rest of World 27.7 28.9 8.5 9.1 - 0.7 5.1 2.6
------------ ------------ ----------- -----------
480.9 462.7 478.1 456.9 42.0 35.9 151.0 136.7
Inter-segment
sales (7.2)(11.5) (4.4) (5.7) - - - -
------------ ------------ ----------- -----------
Total continuing
operations 473.7 451.2 473.7 451.2 42.0 35.9 151.0 136.7
Discontinued
operations 5.6 123.6 5.6 123.6 - (2.0) 2.7 13.4
------------ ------------ ----------- -----------
479.3 574.8 479.3 574.8 42.0 33.9 153.7 150.1
------------ ------------ ----------- -----------
c) Net assets reconciliation -
1997 1996
#m #m
Net assets, as above 153.7 150.1
Unallocated liabilities, net (2.9) (0.5)
Net borrowings (19.3) (20.5)
---------------
Net assets, per balance sheet 131.5 129.1
---------------
SENIOR ENGINEERING GROUP plc
Notes :
2. Group Cash Flow Statement
a) Reconciliation of operating profit to net cash inflow
from operating activities -
1997 1996
#m #m
Group operating profit 42.0 33.9
Depreciation charges 15.9 16.3
(Increase)/decrease in stocks (1.1) 2.6
Increase in debtors (6.2) (1.3)
Increase/(decrease) in creditors 18.0 (8.0)
Working capital currency variations (0.3) (0.6)
------- -------
Net cash inflow from operating activities 68.3 42.9
------- -------
Within the Group's total 1996 cash flow from operating
activities of #42.9 million, the Thermal Engineering
Division (discontinued on disposal in January 1997)
contributed an inflow on trading of #2.7 million.
b) Reconciliation of net cash flow to movement in net
debt -
1997 1996
#m #m #m #m
Increase/(decrease) in cash
in the period 2.5 (4.8)
(Increase)/decrease in loans (2.1) 24.3
Increase/(decrease) in liquid
resources 3.9 (19.5)
Decrease in current asset
investments due after one year (2.5) (0.6)
-------- --------
Change in net debt resulting
from cash flows 1.8 (0.6)
Currency variations on net
borrowings (0.6) 2.8
-------- --------
Movement in net debt in
the period 1.2 2.2
Net debt at 1 January (20.5) (22.7)
-------- --------
Net debt at 31 December (19.3) (20.5)
-------- --------
3. Dividends
The proposed final dividend is at the rate of 2.64p per
share making 4.24p for the year and is payable on 3 June
1998 to shareholders on the register at the close of
business on 1 May 1998.
SENIOR ENGINEERING GROUP plc
Notes :
4. Earnings per Share
The calculations of earnings per share and underlying
earnings per share are shown below and have been based on
the weighted average number of shares in issue and
ranking for dividend during 1997.The dilution that would
arise from the future exercise of share options is not
material.
Total Group Continuing Operations
before
Exceptional items
1997 1996 1997 1996
#m #m #m #m
Operating profit 42.0 33.9 42.0 35.9
Profit on sale of fixed assets 1.2 0.5 - -
Loss on disposal of operations - (29.3) - -
Interest payable, net (0.1) (2.4) (0.1) (2.4)
------- ------ ------ ------
Profit before taxation 43.1 2.7 41.9 33.5
Taxation (11.2) (6.6) (10.9) (10.3)
------- ------ ------ ------
Profit/(loss) after taxation 31.9 (3.9) 31.0 23.2
------- ------ ------ ------
Average number of shares 304.5m 303.5m 304.5m 303.5m
------- ------ ------ ------
Earnings/(loss) per share 10.48p (1.29)p
------- ------
Underlying earnings per share 10.18p 7.64p
------- ------
The provision of an underlying earnings per share
has been included to identify the performance of the
continuing operations before exceptional items and
thus excludes the results from discontinued operations
together with the impact of the losses on disposal of
operations and profit on sale of fixed assets.
5. Reconciliation of movements in shareholders' funds
Reserves
Share Share Profit and
capital premium loss
account account
Group - #m #m #m
At 1 January 1997 30.4 87.4 9.1
Profit for the financial year - - 31.9
Dividends - - (12.9)
Share issues 0.1 0.4 -
Transfers - (87.0) 87.0
Goodwill - - (15.7)
Currency variations - - (2.1)
---------------------------------
At 31 December 1997 30.5 0.8 97.3
---------------------------------
Revaluation Total Total
reserve - reserves
property
Group - #m #m #m
At 1 January 1997 2.2 11.3 129.1
Profit for the financial year - 31.9 31.9
Dividends - (12.9) (12.9)
Share issues - - 0.5
Transfers - 87.0 -
Goodwill - (15.7) (15.7)
Currency variations - (2.1) (2.1)
---------------------------------
At 31 December 1997 2.2 99.5 130.8
---------------------------------
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 1997 or 1996 but is derived from
those accounts. Statutory accounts for 1996 have been
delivered to the Registrar of Companies, and those for
1997 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 Section 237(2) or (3) of the
Companies Act 1985.
END
FR AAVUKWKKSRUR
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