TIDMSNR
RNS Number : 9309C
Senior PLC
28 February 2022
Senior plc
Results for the year ended 31 December 2021
Robust results; recovery underway
change
(constant
FINANCIAL HIGHLIGHTS Year ended 31 December change currency) (4)
2021 2020
---------------------------------------- ----------- ------------ ---------- -----------
REVENUE GBP658.7m GBP733.6m -10% -6%
---------------------------------------- ----------- ------------ ---------- -----------
OPERATING PROFIT/(LOSS) GBP10.5m GBP(177.3)m
ADJUSTED FOR:
GOODWILL IMPAIRMENT AND WRITE-OFF GBPnil GBP134.3m
NET RESTRUCTURING (INCOME)/COSTS GBP(4.4)m GBP39.0m
OTHER ADJUSTING ITEMS GBPnil GBP7.7m
ADJUSTED OPERATING PROFIT (1) GBP6.1m GBP3.7m +65% +110%
ADJUSTED OPERATING MARGIN (1) 0.9% 0.5% +40 bps +50 bps
---------------------------------------- ----------- ------------ ---------- -----------
PROFIT/(LOSS) BEFORE TAX GBP23.7m GBP(191.8)m
ADJUSTED LOSS BEFORE TAX (1) GBP(1.9)m GBP(6.2)m
---------------------------------------- ----------- ------------ ---------- -----------
BASIC EARNINGS/(LOSS) PER SHARE 5.82p (38.20)p
ADJUSTED EARNINGS/(LOSS) PER SHARE
(1) 0.17p (0.84)p
---------------------------------------- ----------- ------------ ---------- -----------
FREE CASH FLOW (2) GBP14.0m GBP46.5m
---------------------------------------- ----------- ------------ ---------- -----------
NET DEBT EXCLUDING CAPITALISED LEASES GBP79.9m GBP129.4m GBP50m Net debt
(2) decrease / EBITDA
1.9x
---------------------------------------- ----------- ------------ ---------- -----------
NET DEBT (2) GBP153.1m GBP205.9m GBP53m
decrease
---------------------------------------- ----------- ------------ ---------- -----------
ROCE (3) 1.0% 0.5% +50 bps
---------------------------------------- ----------- ------------ ---------- -----------
Summary
-- Full year trading in line with expectations
-- Healthy book to bill ratio of 1.16
-- Positive free cash flow of GBP14.0m
-- Strengthened balance sheet with net debt (excluding capitalised
leases) reduction of GBP50m, modestly ahead of expectations
-- Improved profitability supported by successful restructuring
and cost management actions
-- Overall, recovery underway in core markets including civil aerospace
Commenting on the results, David Squires, Group Chief Executive
Officer of Senior plc, said:
"We have delivered a robust set of results in what was another
very challenging year for our industry. We improved profitability,
generated good free cashflow, won important new contracts and
continued to make good progress on our sustainability goals,
maintaining our sector leading position. That we were able to do
so, while navigating through the impact of pandemic waves, was down
to the skill, application and commitment of our leadership teams
and colleagues around the world.
It is heartening to see recovery underway in our core markets
including civil aerospace and we anticipate that continuing in 2022
and beyond.
While the impact of the pandemic and industry wide supply chain
constraints are still with us, we continue to manage these
diligently. The Board anticipates good progress in 2022, in line
with previous expectations, as we continue the multi-year recovery
back to pre-COVID levels of performance.
Over the medium term we remain committed to delivering a strong
recovery across our two Divisions, driving the Group ROCE to a
minimum of 13.5% in line with our previously stated ambition.
Looking ahead, our differentiated offering in fluid conveyance
and thermal management products coupled with our global footprint
and positioning in attractive and diverse end markets, gives the
Board confidence that Senior is well positioned to build on our
strong capabilities and to capture growth opportunities. Our
continued investment in low carbon technology and advanced
manufacturing combined with our commitment to the highest
sustainability standards provide additional foundations for
continued success."
Further information
Bindi Foyle, Group Finance Director, Senior plc +44 (0)1923 714725
Gulshen Patel, Director of Investor Relations & Corporate
Communications, Senior plc +44 (0)1923 714722
Richard Webster-Smith , Finsbury +44 (0)7796 708551
Notes
This Release represents the Company's dissemination announcement
in accordance with the requirements of Rule 6.3.5 of the Disclosure
and Transparency Rules of the United Kingdom's Financial Services
Authority. The full Annual Report & Accounts 2021, together
with other information on Senior plc, can be found at:
www.seniorplc.com
The information contained in this Release is an extract from the
Annual Report & Accounts 2021, however, some references to
Notes and page numbers have been amended to reflect Notes and page
numbers appropriate to this Release.
The Directors' Responsibility Statement has been prepared in
connection with the full Financial Statements and Directors' Report
as included in the Annual Report & Accounts 2021. Therefore,
certain Notes and parts of the Directors' Report reported on are
not included within this Release.
(1) Adjusted operating profit and adjusted loss before tax are stated
before GBPnil goodwill impairment and write-off (2020 - GBP134.3m,
see Note 4 for further detail), GBP4.4m net restructuring income
(2020 - GBP39.0m net restructuring cost, see Note 4 for further
detail) and GBPnil amortisation of intangible assets from acquisitions
(2020 - GBP7.7m). Adjusted loss before tax is also stated before
income associated with corporate undertakings of GBP21.2m (2020
- GBP4.6m cost, see Note 4 for further detail). Adjusted operating
margin is the ratio of adjusted operating profit to revenue. Adjusted
earnings/loss per share is also stated before exceptional non-cash
tax credit of GBP0.6m (2020 - GBPnil).
(2) See Note 12b and 12c for derivation of free cash flow and of net
debt, respectively.
(3) Return on capital employed ("ROCE") is derived from annual adjusted
operating profit (as defined in Note 4) divided by the average
of the capital employed at the start and end of that twelve-month
period, capital employed being total equity plus net debt (as
derived in Note 12c).
(4) 2020 results translated using 2021 average exchange rates - constant
currency.
The following measures are used for the purpose of assessing covenant
compliance for the Group's borrowing facilities:
-- EBITDA is adjusted loss before tax (defined in Note 4) before
interest (defined below), depreciation, amortisation and profit
or loss on sale of property, plant and equipment. It also excludes
EBITDA from businesses which have been disposed and it is based
on frozen GAAP (pre-IFRS 16). EBITDA for 2021 was GBP42.1m.
-- Net debt is defined in Note 12c. It is based on frozen GAAP (pre-IFRS
16) and as required by the covenant definition, it is restated
using 12-month average exchange rates.
-- Interest is finance costs and investment income before net finance
income of retirement benefits. It also excludes interest from
businesses which have been disposed and it is based on frozen
GAAP (pre-IFRS 16).
The Group's principal exchange rate for the US Dollar applied in the
translation of Income Statement and cash flow items at average 2021
rates was $1.38 (2020 - $1.29) and applied in the translation of balance
sheet items at 31 December 2021 was $1.35 (31 December 2020 - $1.37).
Currently assuming exchange rate for the US Dollar to Pound Sterling
of $1.34: GBP1 average for 2022.
Annual Report
The full Annual Report & Accounts 2021 is now available
online at www.seniorplc.com . Printed copies will be distributed on
or soon after 14 March 2022.
Webcast
There will be a presentation on Monday 28 February 2022 at
11.00am GMT accessible via a live webcast 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 12 countries. It is listed on the main market of the London
Stock Exchange (symbol SNR). Senior designs and manufactures high
technology components and systems for the principal original
equipment producers in the worldwide aerospace & defence, land
vehicle and power & energy markets.
Cautionary Statement
This Release contains certain forward-looking statements. Such
statements are made by the Directors in good faith based on the
information available to them at the time of the Release and they
should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any
such forward-looking information.
GROUP CHIEF EXECUTIVE OFFICER'S STATEMENT
Overview of 2021 results
In 2021, Senior maintained a strong focus on operational
performance and delivered improved profitability, robust free cash
flow generation and further strengthened the balance sheet. This
was despite the continued impact of the coronavirus (COVID-19)
pandemic on our markets and customers .
With markets starting to recover, we saw order intake increasing
with a healthy book to bill ratio of 1.16 for the Group, which
underpins our confidence in a return to growth in 2022, 2023 and
beyond. We announced notable contract extensions and new contract
wins including new orders with Boeing and Honda which help to
demonstrate Senior's reputation as a reliable and innovative
supplier to our blue-chip customer base: attributes which are
highly valued during the uncertain times through which we and our
customers have been navigating.
In our Post-close Trading Update on 14 January 2022, we reported
that, for the full year, both Group revenue and adjusted loss
before tax(1) were in line with management's expectations. Group
revenue was 6% lower than the prior year on a constant currency
basis, part of which was pre-COVID-19 and included Senior Aerospace
Connecticut (which was divested on 22 April 2021) for the full
year.
In Aerospace, revenue declined 12% year-on-year on a constant
currency basis, reflecting that part of 2020 was pre-COVID and 2020
included a full year contribution from Senior Aerospace
Connecticut. Excluding Senior Aerospace Connecticut, revenue for
the full year on an organic, constant currency basis declined by
7%. The year-on-year decline reflected the reduction in civil
aircraft production rates, partly offset by growth from
semi-conductor equipment, defence and space markets.
In Flexonics, revenue grew 10% compared to prior year, on a
constant currency basis. The performance in 2021 benefited from the
recovery in heavy-duty truck and off-highway and passenger vehicle
markets, partially offset by a decline in oil & gas and the
closure of the Senior Flexonics business in Malaysia.
We measure Group performance on an adjusted basis, which
excludes items that do not directly reflect the underlying in-year
trading performance (see Note 4). References below therefore focus
on these adjusted measures.
The decisive actions taken by the Group on managing costs in
2021 have delivered significant benefits and improved
profitability. This has helped us to generate an adjusted operating
profit of GBP6.1m (2020 - GBP3.7m), despite the reduction in Group
revenue. Savings of GBP50m were realised in 2021. The Group's
adjusted operating margin increased by 40 basis points, to 0.9% for
the year.
Adjusted loss before tax reduced to GBP1.9m (2020 - GBP6.2m
loss). The adjusted tax credit was GBP2.6m (2020 - GBP2.7m).
Adjusted earnings per share increased to 0.17 pence (2020 -
adjusted loss per share of 0.84 pence).
Reported profit before tax was GBP23.7m (2020 - GBP191.8m loss).
Basic earnings per share was 5.82 pence (2020 - basic loss per
share of 38.20 pence).
Maintaining a strong focus on cash generation throughout 2021,
the Group delivered free cash flow of GBP14.0m (2020 - GBP46.5m).
Our diligent management of working capital and capital expenditure
have benefited this year's free cash flow and net debt position.
Gross investment in capital expenditure was GBP21.3m (2020 -
GBP26.8m) and the Group incurred GBP2.6m cash outflows (2020 -
GBP32.3m inflows) from working capital. Reflecting the actions
taken, the Group generated net cash flow of GBP57.7m (2020 -
GBP23.2m) in the year, due to free cash flow of GBP14.0m (2020 -
GBP46.5m) and GBP43.7m cash inflows (2020 - GBP23.3m outflows)
primarily related to corporate undertakings and restructuring
activity.
The Group's financial position remains resilient, with GBP208.0m
of headroom on our committed borrowing facilities at 31 December
2021. Net debt at the end of December 2021 was GBP153.1m (including
capitalised leases of GBP73.2m), a reduction of GBP52.8m from
December 2020, after taking into account favourable currency
movements of GBP0.7m and GBP5.6m increase for lease movements.
Considered and effective capital deployment is a strategic
priority for the Group and, in line with our strategy to review the
overall portfolio of our businesses and evaluate their strategic
fit within the Group, on 22 April 2021 we completed the divestiture
of our Senior Aerospace Connecticut, USA, operating business. The
net proceeds for this divestiture were GBP49.7m. As previously
announced, in 2021, we closed our small oil & gas operating
business in Malaysia, Senior Flexonics Upeca, and also our Senior
Aerospace Bosman operating business in the Netherlands following
the seamless transfer of production from Rotterdam to our French
Aerospace sites.
While Group performance in 2021 has improved compared to 2020,
it was still impacted by the pandemic, and as such, the Board
believes it is not appropriate to pay a final dividend for the 2021
financial year. We are optimistic that the recovery currently
underway in our core markets will continue and therefore we
currently expect to resume dividend payments in 2022. We will
continue to follow a progressive dividend policy reflecting
earnings per share, free cash flow generation, market conditions
and dividend cover over the medium term.
(1) Adjusted loss before tax is before amortisation of intangible
assets from acquisitions, goodwill impairment and write-off,
net restructuring income/costs and corporate undertakings.
Delivery of Group Strategy
Senior has a focused and compelling strategy to maximise value
for shareholders, and is confident of delivering its target return
on capital employed of a minimum of 13.5% (post IFRS 16) over the
medium-term through the following:
-- a strategic focus on intellectual property ("IP") rich fluid conveyance
and thermal management;
-- organically growing our Aerostructures business fully utilising
our world class global footprint;
-- maintaining strong focus on efficiencies through our Senior Operating
System as end markets continue to recover;
-- executing on its portfolio optimisation strategy to maximise value
creation; and
-- driving intrinsic strong cash generation.
Senior has maintained its focus on IP-rich technology and
manufacturing, by developing expertise in fluid conveyance and
thermal management technology and capabilities. These capabilities
are supported by a strong body of design and manufacturing process
intellectual property and know-how. Using these technologies and
capabilities, Senior is able to develop and supply proprietary
products, sub-systems and systems for our customers' demanding
applications across a range of diverse and attractive end
markets.
Across the portfolio, our businesses manufacture highly
engineered products and systems with applications that incorporate
pivotal technologies for emissions reduction and environmental
efficiency. We have identified significant current and future
opportunities for the Group in fluid conveyance and thermal
management applications and these capabilities continue to be
highly relevant as the world transitions towards a low carbon
economy.
We have already developed novel solutions for low and zero
carbon applications and are involved in a range of research and
development projects that support the drive for electrification and
hydrogen propulsion systems on land and in the air. This is
discussed further in the "Technology and product design and
development" section below.
As well as our businesses being actively focused on product
offerings for the transition to a low carbon world we continue to
be actively involved in making conventional technology cleaner to
bridge the gap between both worlds. In addition, Senior's
end-markets are evolving to reflect the global effort to achieve
net zero carbon emissions. Senior's technology and product roadmap
is aligned to these trends with a product development strategy that
is compatible with our focus on sustainability.
In addition to our fluid conveyance and thermal management
capabilities, we also have excellent build-to-print precision
machining and structural assembly capabilities. These businesses
focus on a wide range of both complex airframe and aeroengine
applications. Examples include compressor fan blades for multiple
engine types, wing ribs for narrow-body aircraft, complex
structures assemblies for wing and fuselage, highly engineered
engine casings and complex machined products for satellites. Our
Structures businesses are well capitalised with state-of-the-art
equipment and operate across North America, the UK and South-East
Asia.
Our strategy for our Structures businesses as we emerge from the
pandemic is to focus and drive:
-- filling our existing capacity;
-- pursuing some further diversification into Space and Defence;
and
-- growing market share profitably in Civil Aerospace.
We remain confident that our Aerostructures core market will
recover, driving performance improvement and providing the Group
with strategic optionality.
Technology and product design and development
We continue to invest in new technology and product development
in the areas of fluid conveyance, thermal management and Additive
Manufacturing in support of our key markets in Aerospace, Land
Vehicles and Power & Energy, as they transition towards a low
carbon economy.
Aerospace
-- Our traditional fluid conveyance products are entirely compatible
with sustainable aviation fuels, the increasing use of which will
be the fastest route to lowering aviation emissions.
-- Our Additive Manufacturing capabilities are enabling advances
in complex product design for improved performance and weight
reduction for the benefit of our customers.
-- Our world-class capability in thermal management and fluid conveyance
provides opportunities to support the development of electric/hybrid
air vehicle applications.
-- We are leveraging and building upon our long experience of providing
hydrogen fluid handling and distribution products for industrial
markets to support development of both on-aircraft and off-aircraft
hydrogen technologies as this alternative propulsion system evolves.
Land Vehicles
-- Our current exhaust gas recirculation and waste heat recovery
products continue to support evolving Land Vehicle propulsion
systems as they become more efficient and lower their environmental
impact.
-- We focus on product offerings for the transition to a low carbon
economy and engage with our customers' new product development
programmes by providing design and engineering support for cooling
and fluid handling solutions for batteries and electronics on
the growing number of electric/ hybrid vehicles.
-- We are supporting the development of commercial vehicle hydrogen
fuel cell cooling and conveyance by capitalising on our experience
of producing hydrogen fuel cell products in the energy sector.
Power & Energy
-- We continue to develop an established wide range of fluid conveyance
products, bellows and expansion joints for harsh environments
in carbon-free energy generation including solar farms, wind power
plants, hydroelectric, geothermal, fuel cell and nuclear power
applications.
-- Our extensive experience of providing fluid conveyance products
for demanding environments, and specifically hydrogen fuel cell
cooling and conveyance, opens up opportunities in hydrogen production
and infrastructure applications.
Portfolio optimisation
The Group actively reviews its overall portfolio of operating
businesses and evaluates them in terms of their strategic fit
within the Group. Senior has continued its "Prune to Grow" strategy
of portfolio optimisation by divesting, closing, or combining
non-core or performance-challenged assets. Most recently in 2021
we:
-- successfully raised GBP49.7m from the strategic divestment of
the Senior Aerospace Connecticut helicopter structures business;
-- realised value from the sale of the property following the closure
of our oil and gas machining Senior Flexonics Malaysia facility,
which offset some of the closure costs; and
-- completed the transfer of production from the Netherlands to France
and closed the Senior Aerospace Bosman facility.
Senior understands the importance of considered and effective
capital deployment to maximise shareholder value creation.
Expanding Senior's high quality fluid conveyance and thermal
management businesses remains an ongoing priority. Investments are
supported by a business case and are assessed using a rigorous
investment appraisal process.
Sustainability
Senior is a values-driven organisation: we believe with
conviction that how you do business is every bit as important as
what you do. We always put safety and ethics first and we strongly
encourage and promote diversity and inclusivity across our
international operations. For many years, therefore, we have had a
strong focus on Environmental, Social and Governance ("ESG"). As
sustainability themes and issues become ever more important to our
stakeholder groups, our strong track record means that we are well
positioned to meet and exceed their ESG expectations.
Our industry leading ESG disclosures and ratings are evidence of
Senior's longstanding approach to sustainability.
In 2021, we have again made good progress with our key
sustainability metrics and activities:
Environment
-- In 2020, Senior became the first, and remains the only, company
in the Global Aerospace and Defence sector to have its Scope 1,
2 and 3 greenhouse gas emissions targets approved and verified
through the Science-Based Targets Initiative (SBTi) and in 2021
these are now verified "Near Term Net-Zero Targets" in line with
the updated classification system.
-- Maintained our CDP leadership rating of A- for our climate disclosure,
which is defined by CDP as "implementing current best practices".
-- Achieved the highest CDP leadership rating for the work with our
supply chain. Recently, Sonya Bhonsle, Global Head of Value Chains
& Regional Director Corporations, CDP stated, "As a Supplier Engagement
Leader, Senior plc is a trailblazer driving the transition towards
a sustainable net-zero future ".
-- Reduced our SBTi Scope 1 and 2 (market based) carbon emissions
by 18.9% compared to our 2018 base year.
-- 36% of our electricity was sourced from renewable energy, an increase
from 25% in 2020.
-- Recycled 93% of waste produced.
Social
-- Achieved an 81% response rate on our global employee engagement
survey in May 2021. This response rate exceeded the benchmark
for manufacturing companies.
-- Reduced the number of lost time injuries from 21 in 2020 to 18
in 2021. We remain on track to meet our 2025 reduction target.
-- The percentage of women on the Board increased to 50% in 2021
from 43% in 2020.
-- Donated GBP200,000 to UNICEF to support its Covid-19 Vaccines
appeal. Our donation was the equivalent of providing vaccinations
for every Senior employee and their families.
Governance
-- Updated the Group's Code of Conduct with a booklet issued to all
employees and provided training on it.
-- Information security was a key area of focus to safeguard the
Group's assets, particularly as during the pandemic many of the
Group's employees worked from home. During the year, all staff
received training and regular reminders about the risks related
to information security and the importance of awareness of matters
such as fraud, scammers and ransomware, proper use of the internet
and smart downloading.
-- Training on Anti-Money Laundering and the Corporate Criminal Offence
Act was also rolled out to all relevant staff.
Restructuring
The decisive actions the Group took on restructuring and cost
management since 2019 have delivered the expected benefits, with
savings of GBP50m realised in 2021. In 2021, net restructuring
income of GBP4.4m was recognised as our operating businesses
maximised opportunities to realise income from assets that had no
alternative use.
Since its inception in 2019:
-- the cumulative cost of the programme has been GBP46.7m (GBP6m
lower than initially expected);
-- cumulative cash outflow has been GBP19.0m (GBP10m lower than expected);
and
-- savings delivered of GBP4m in 2019, GBP36m in 2020 and GBP50m
in 2021 (a year earlier than initially expected).
These decisive actions taken to insulate the Group through the
pandemic in 2020 and 2021 mean that we are now an even leaner and
more efficient business.
Market Overview
Civil Aerospace (37%(2) of Group)
Production volumes for civil aerospace are expected to be higher
in 2022 than 2021, driven by increasing single aisle rates .
Global air traffic recovery in 2021 showed ongoing progress as
the COVID-19 vaccine delivery gathered pace and travel restrictions
eased globally: in North America, US domestic travel recovered
strongly; in the Asia Pacific region we saw the start of the
re-opening of international travel in the second half of the year;
transatlantic travel opened up in November 2021; and there were
signs of corporate travel picking up. With travel restrictions
being eased, demand for air travel is increasing, driving the
recovery in air traffic and this is expected to improve further
through 2022.
The most recent IATA forecast is that world passenger flows will
return to 2019 levels by the end of 2023. IATA expects domestic
traffic to reach 2019 levels by 2022 and international traffic to
return to 2019 levels by 2025. As demand recovers, production of
new aircraft will be supported by the replacement cycle driven by
the retirement of older, less efficient, aircraft. Beyond this, the
drivers supporting air traffic growth over the long-term of c. 4%
per annum remain in place.
With our diversified product portfolio in the aerospace sector,
including attractive positions across the newest generation of
single aisle aircraft platforms, Senior is well positioned to
benefit from the expected medium-term market recovery.
Defence (18%(2) of Group)
Defence markets are anticipated to remain stable in 2022.
Senior's sales to the Defence sector are primarily focused on the
US defence market, which in fiscal year 2022 is likely to be in the
region of $770 billion following the bipartisan US Senate support
for the National Defence Authorisation Act (NDAA) in December
2021.
Senior is well placed with good content on mature programmes
such as the C-130 transport aircraft, the F-35 Joint Strike Fighter
as well as new programmes such as the USAF T-7A Red Hawk
trainer.
Other Aerospace (11% (2) of Group)
Sales from our Aerospace operating businesses into end markets
outside of the civil aerospace and defence markets are classified
under "Other Aerospace" and include sales into the space,
semi-conductor equipment and medical markets. Using our world class
bellows technology, we manufacture highly engineered proprietary
products to provide unique solutions for semi-conductor
manufacturing equipment.
The semi-conductor equipment market continued to be strong in
2021, reflecting the increase in global demand for microchips.
Robust consumer demand pushed double-digit growth-rates, as a
result of pandemic-related consumer and work-from-home trends, and
was further strengthened by recovering industrial markets such as
automotive. According to the World Semiconductor Trade Statistics
("WSTS"), the global semi-conductor market increased by 26% in 2021
and is forecasted to grow by 9% in 2022.
Land Vehicle (18% of Group)
In Flexonics, Land Vehicle markets are expected to continue to
grow in 2022, as supply chain constraints gradually ease through
the year.
Americas Commercial Transportation ("ACT") Research reported
that North American heavy-duty truck production increased by 23% in
2021. ACT Research is forecasting 2022 production to grow by 13%
and envisages that in 2023, production will increase by 21%,
supported by the pent-up demand from the 2021/22 period and pre-buy
activity ahead of the tightening of emission standards. IHS Markit
Inc. ("IHS") reported that European truck and bus production grew
by 14% in 2021 and is forecasting that it will grow by a further 7%
in 2022.
Passenger vehicle production in 2021, especially during the
second half of the year, was impacted by semi-conductor shortage.
IHS reported that European (including the UK) passenger vehicle
production decreased by 6% in 2021 and is forecasted to grow by 20%
in 2022.
According to the International Energy Agency ("IEA") , i n 2021,
electric car sales more than doubled to 6.6 million, representing
close to 9% of the global car market and more than tripling their
market share over two years. Furthermore, all the net growth in
global car sales in 2021 came from electric cars. With the i
ncreasing adoption of electrification for both land vehicle and
stationary power applications continuing, this market is fast
growing and represents a major opportunity for Senior in the medium
and long term, particularly for our proprietary battery cooling
technology.
(2) Excluding Senior Aerospace Connecticut.
Power & Energy (16% of Group)
Some positive momentum is expected in power & energy markets
now that recovery in the upstream oil & gas sector is
underway.
Global oil demand is forecast to exceed pre pandemic levels
before the end of 2022 and to further strengthen in 2023, in the
absence of any further COVID-related disruption. Industry macro
fundamentals, for upstream oil and gas in particular, are looking
very favourable due to the combination of projected steady demand
recovery, an increasingly tight supply market, and supportive oil
prices. Nevertheless, the rise in geopolitical tensions could have
a potential impact on the supply side.
Global refining capacity, on the other hand, fell for the first
time in 30 years in 2021, as new capacity was outweighed by
closures. We anticipate this stabilising in 2022 although dependent
on geopolitical and economic conditions.
In power generation, the IEA forecasts electricity demand
growing by 2.7% a year on average in 2022-2024. It also forecasts
an acceleration in the growth of renewable capacity in the next
five years, accounting for almost 95% of the increase in global
power capacity through 2026.
We are ensuring we are appropriately resourced to take advantage
of the market recovery led opportunities.
Outlook
Overall, we are seeing recovery underway in our core markets
including civil aerospace and we anticipate that continuing in 2022
and beyond.
While the impact of the pandemic and industry wide supply chain
constraints are still with us, we continue to manage these
diligently. The Board anticipates good progress in 2022(3) , in
line with previous expectations, as we continue the multi-year
recovery back to pre-COVID levels of performance.
Over the medium-term we remain committed to delivering a strong
recovery across our two Divisions, driving the Group ROCE to a
minimum of 13.5% in line with our previously stated ambition.
Looking ahead, our differentiated offering in fluid conveyance
and thermal management products coupled with our global footprint
and positioning in attractive and diverse end markets, gives the
Board confidence that Senior is well positioned to build on our
strong capabilities and to capture growth opportunities. Our
continued investment in low carbon technology and advanced
manufacturing combined with our commitment to the highest
sustainability standards provide additional foundations for
continued success.
DAVID SQUIRES
Group Chief Executive Officer
(3) Currently assuming exchange rate for the US Dollar to Pound Sterling
of $1.34: GBP1 average for 2022.
DIVISIONAL REVIEW
Aerospace Division
The Aerospace Division represents 66%(1) (2020 - 70%(1) ) of
Group revenue and consists of 14(2) operations. These are located
in North America (six), the United Kingdom (four), continental
Europe (two), Thailand and Malaysia. This Divisional review is on a
constant currency basis, whereby 2020 results have been translated
using 2021 average exchange rates and on an adjusted basis to
exclude the charge relating to amortisation of intangible assets
from acquisitions, goodwill impairment and write-off and net
restructuring income/costs. The Division's operating results on a
constant currency basis are summarised below:
2021 2020 (3) Change
GBPm GBPm
Revenue 439.3 498.0 -11.8%
Adjusted operating profit 7.9 5.5 +43.6%
Adjusted operating margin 1.8% 1.1% +70 bps
(1) This number is excluding Senior Aerospace Connecticut
(2) This excludes Senior Aerospace Connecticut and Senior Aerospace
Bosman in The Netherlands.
(3) 2020 results translated using 2021 average exchange rates - constant
currency.
Divisional revenue decreased by GBP58.7m (11.8%) to GBP439.3m
(2020 - GBP498.0m) whilst adjusted operating profit increased by
GBP2.4m (43.6%) to GBP7.9m (2020 - GBP5.5m).
Revenue Reconciliation GBPm
2020 revenue 498.0
Civil aerospace (43.8)
Defence 1.0
Other 9.8
Disposal of business (25.7)
=======
2021 revenue 439.3
=======
Revenue in the Aerospace Division reduced by 11.8% year-on-year
on a constant currency basis, reflecting that part of 2020 was
pre-COVID and 2020 included a full year contribution from Senior
Aerospace Connecticut. Excluding Senior Aerospace Connecticut,
which was divested on 22 April 2021, revenue for the full year on
an organic, constant currency basis declined by 7.1%. The
year-on-year decline reflected the reduction in civil aircraft
production rates, partly offset by growth from semi-conductor
equipment, defence and space markets.
The civil aerospace sector was the most impacted by the pandemic
with Senior's sales decreasing by 15.2% compared to prior year.
This was reflective of aircraft production rates remaining lower in
2021 compared to pre-pandemic levels including the impact of lower
787 production as Boeing address the quality issues.
Excluding the divestment of Senior Aerospace Connecticut, total
revenue from the defence sector increased by GBP1.0m, 0.9% during
the year, as the F-35 production rate increase was partly offset by
the timing gap between the completion of deliveries on parts for
F-35 Lot 14 and the commencement of deliveries on Lot 15 and lower
military aftermarket sales in 2021.
Revenue derived from other markets such as space, power &
energy, medical and semi-conductor equipment, where the Group
manufactures products using very similar technology to that used
for certain aerospace products, increased by GBP9.8m as a result of
the increasing demand in the semi-conductor equipment market and
growth in the space satellite sector.
Even though divisional revenue decreased in 2021, adjusted
operating profit increased by 43.6% to GBP7.9m (2020 - GBP5.5m).
This reflected the drop through impact of the reduction in revenue,
mitigated by additional savings delivered from the restructuring
programme. On an organic basis (excluding Senior Aerospace
Connecticut), the Divisional adjusted operating margin increased by
140 basis points to 1.6% (2020 - 0.2%).
In 2022, we expect production volumes for civil aerospace to be
higher than 2021, driven by increasing single aisle rates.
Positively, in 2021 both Airbus and Boeing confirmed plans to ramp
up single aisle production in the near-term.
-- Airbus increased the A320 Family production to 45 aircraft per
month by the end of 2021. They have stated that the ramp-up is
on trajectory to achieve a monthly rate of 65 aircraft by summer
2023. For production rates beyond 2023, Airbus is still in the
assessment phase and working with suppliers to potentially enable
an increase above rate 65; recently, they have indicated that
they expect to have clarity on their 2024 and 2025 production
targets by the middle of 2022.
-- Boeing announced at their recent earnings call that the 737 programme
is currently producing at a rate of 26 per month , reiterated
that it will continue to progress towards a production rate of
31 per month in early 2022 and stated that the company is evaluating
the timing of further rate increases. Boeing have an order backlog
of around 3,400 aircraft and there are currently 335 MAX aircraft
in inventory with the majority of these expected to be delivered
by the end of 2023. Boeing also stated that since the FAA's approval
to return the 737 MAX to operations in November 2020, 299 737
MAX aircraft have been delivered and that there are 36 operators
who have returned the 737 MAX to service. Furthermore, the Civil
Aviation Administration of China (CAAC) has now issued the appropriate
airworthiness directives (AD's), clearing the way for the 737
MAX to return to service in China in the near future .
-- COMAC recently announced that its C919 aircraft is continuing
its flight certification programme and expect first delivery in
2022.
Recovery in long-haul routes, which typically use wide body
aircraft, is expected to take longer than short-haul routes. IATA
has signalled that this segment will return to 98% of 2019 levels
by 2025 and 106% of 2019 levels by 2026.
-- Airbus continue to expect to increase the A350 Family production
rate, currently at an average production rate of 5 per month,
to around 6 by early 2023. For the A330 Family, production will
increase from around 2 per month to almost 3 per month at the
end of 2022.
-- On the 787 platform, Boeing continues to perform rework on aircraft
in inventory which has led to production being reduced to a very
low rate. This will continue until deliveries resume, with an
expected gradual return to 5 per month over time. Boeing confirmed
on their 26 January 2022 earnings call that they will have 110
airplanes in inventory at the end of the first quarter of 2022.
-- Production of the 767 will continue at a rate of 3 per month.
-- On the 777/777X combined production rate, Boeing announced that
they will be increasing from 2 per month in H1 2021 to 3 per month
in 2022. They are still anticipating first delivery of the 777X
in late 2023.
Business jet flight activity was resilient in 2021, with strong
leisure demand as travel restrictions loosened. With 3.3 million
flights from January through December, business jet traffic was 7%
higher than in 2019, the previous high point for global business
jet demand, according to WingX Global Market Tracker. Activity in
2022 is also continuing this upward trend, with January 2022
traffic increasing 35% when compared to 2021. In regional jets, the
entry into service of Embraer's E175-E2 jet has been delayed until
2027-28 although they continue to sell the current E175 jet. Airbus
reaffirmed that production of the A220, which is currently at
around rate 5 aircraft per month, will rise to around 6 per month
in early 2022. Airbus is also envisaging a monthly production rate
of 14 by the middle of the decade.
We expect defence revenue to be stable in 2022 with bipartisan
support for US defence spending. The strength in US military
spending can be primarily attributed to heavy investment in
research and development and long-term projects such as the 5th
generation F-35 Joint Strike Fighter.
-- Lockheed Martin delivered 142 F-35 aircraft in 2021, which was
higher than the range they set out of 133-139. At their full year
results presentation, they reiterated their existing production
for F-35; 151-153 aircraft in 2022 and then 156 thereafter. They
further stated that the annual production may increase beyond
the planned full-rate production of 156 aircraft per year given
strong recent international order intake.
Senior has a diversified product portfolio in the aerospace
sector and the potential to add content on existing programmes as
our customers recognise and appreciate Senior's financial
resilience, stability, and global footprint. Our businesses are
well capitalised with equipment that can be utilised across civil,
defence and space sectors. We have secured new multi-year contracts
and contract extensions on defence and civil platforms which,
coupled with increasing production rates, will help to underpin our
return to growth in our Aerospace Division in 2022 and beyond. In
2021, new contracts of note that were signed include:
-- Senior Aerospace was awarded a multi-year contract to supply major
floor beam structural assemblies for the Boeing 767 platform.
Production of the structural assemblies will be undertaken from
the Senior Aerospace AMT facility in Arlington, WA, USA with deliveries
commencing January 2022.
-- Senior Aerospace won a multi-year contract to supply quadrant
assemblies for flight control systems on the Boeing 737 and Boeing
777 platforms. The quadrant assemblies for the Boeing 737 Elevator
Control and Boeing 777 Horizontal Stabilizer flight control system
will commence in Q1 2022 from the Senior Aerospace Damar facility
in Monroe, WA, USA.
Flexonics Division
The Flexonics Division represents 34% (2020 - 30%) of Group
revenue and consists of 12(1) operations which are located in North
America (four), continental Europe (two), the United Kingdom (two),
South Africa, India, and China (two) including the Group's 49%
equity stake in a land vehicle product joint venture. This
Divisional review, presented before the share of the joint venture
results, is on a constant currency basis, whereby 2020 results have
been translated using 2021 average exchange rates and on an
adjusted basis to exclude the charge relating to amortisation of
intangible assets from acquisitions, goodwill write-off and net
restructuring income/costs. The Division's operating results on a
constant currency basis are summarised below:
2021 2020 (2) Change
GBPm GBPm
Revenue 219.9 200.0 +9.9%
Adjusted operating profit 12.9 10.5 +22.9%
Adjusted operating margin 5.9% 5.3% +60 bps
(1) This figure excludes Senior Flexonics Upeca, Malaysia following
its closure.
(2) 2020 results translated using 2021 average exchange rates - constant
currency.
Divisional revenue increased by GBP19.9m (9.9%) to GBP219.9m
(2020 - GBP200.0m) and adjusted operating profit increased by
GBP2.4m (22.9%) to GBP12.9m (2020 - GBP10.5m).
Revenue Reconciliation GBPm
2020 revenue 200.0
Land vehicles 33.5
Power & energy (13.6)
2021 revenue 219.9
=======
Recovery is underway across some of our Flexonics end-markets
with sales in 2021 increasing by 9.9% compared to prior year. The
performance in the year benefited from the recovery in heavy-duty
truck and off-highway and passenger vehicle markets, partially
offset by a decline in oil & gas and the closure of the Senior
Flexonics business in Malaysia.
Group sales to land vehicle markets increased by 39.3%. Senior's
sales to the North American truck and off-highway market increased
by GBP19.6m (42.9%), as off-highway sales were strong and market
production of heavy-duty diesel trucks increased by 23%. Sales to
other truck and off-highway regions, including Europe and India,
increased by GBP7.6m (41.1%). Group sales to passenger vehicle
markets increased by GBP6.3m (29.9%) in the year, reflecting higher
demand in our core European and Indian markets.
In the Group's power & energy markets, sales decreased by
GBP13.6m (11.9%) in the year. Sales to oil and gas markets
decreased by GBP11.2m (26.7%), as a result of weaker demand,
particularly for upstream activity and also the closure of our
Senior Flexonics Upeca, Malaysia business. Downstream oil and gas
activity was lower year-on-year because part of the prior year was
pre pandemic with higher levels of economic activity. Some
maintenance projects continue to be deferred. Sales to other power
& energy markets decreased by GBP2.4m.
Adjusted operating profit increased by GBP2.4m compared to prior
year and the divisional adjusted operating margin increased by 60
basis points to 5.9% (2020 - 5.3%). This reflected the drop through
impact of growth in revenue coupled with additional savings
delivered from the restructuring programme which more than offset
the inflationary impact of freight and commodity costs.
Land vehicle markets are expected to continue to grow in 2022,
as supply chain constraints gradually ease through the year.
-- ACT Research is forecasting a 13 % increase in North American
heavy-duty truck production in 2022, and further growth of 21%
i n 2023.
-- The North American medium-duty diesel truck production is forecast
to increase by 11 % in 2022.
-- IHS Markit Inc. forecasts that European truck and bus production
will grow by 7% in 2022 and that passenger vehicle production
will grow by 20% in 2022.
-- Indian passenger vehicle production is forecasted to grow by 7%
in 2022.
Some positive momentum is expected in power & energy markets
now that recovery in the upstream oil & gas sector is
underway.
-- Global oil demand is forecast to exceed pre pandemic levels before
the end of 2022 and to further strengthen in 2023, in the absence
of any further COVID-related disruption. Industry macro fundamentals,
for upstream oil and gas in particular, are looking very favourable,
due to the combination of projected steady demand recovery, an
increasingly tight supply market, and supportive oil prices. Nevertheless,
the rise in geopolitical tensions could have a potential impact
on the supply side.
-- In power generation, the IEA forecasts electricity demand growing
by 2.7% a year on average for 2022-2024. They also forecast the
growth of renewable capacity in the next five years to accelerate,
accounting for almost 95% of the increase in global power capacity
through 2026.
-- According to the IEA, nuclear power sustained significant growth
in 2021; output from nuclear was 8% above 2019 levels, with emerging
market and developing economies increasing their share of global
nuclear output to almost one-third.
We will continue to focus our development efforts on
differentiated technology and products, applicable across a diverse
range of attractive industrial markets. In 2021, new contracts of
note that were signed include:
-- Senior Flexonics Canada was awarded an additional contract with
Bruce Power Limited Partnership as a key supplier for their Major
Component Replacement ("MCR") Project to supply replacement bellows
expansion joints for critical equipment in the primary and secondary
circuits for Reactor Units. The work will be performed at the
Senior Flexonics facility in Ontario, Canada and Senior Flexonics
Pathway facility in Texas, USA.
-- Senior Flexonics was awarded new contracts to supply Honda with
exhaust flexible connectors for the automotive manufacturer's
1.5L and 2.0L gasoline engines. To meet Honda's demanding performance
requirements, Senior Flexonics undertook a rigorous development
to ensure the flexible exhaust connectors met the required durability,
weight and emissions standards. Manufacturing of these components
will be performed at Senior Flexonics' facilities in India and
China and deliveries have recently commenced.
-- Senior Flexonics Olomouc in the Czech Republic has secured the
Group's first contract for a fully electric heavy-duty truck application
for one of our large European truck customers. We will be providing
electronics cooling components.
OTHER FINANCIAL INFORMATION
Group revenue
Group revenue was GBP658.7m (2020 - GBP733.6m). Excluding the
adverse exchange rate impact of GBP36.4m, and the year-on-year
effect of the disposal of GBP25.7m, Group revenue decreased by
GBP12.8m (1.9%), with lower revenues in Aerospace partly offset by
higher revenues in Flexonics year-on-year.
Operating profit/loss
Adjusted operating profit increased by GBP2.4m (64.9%) to
GBP6.1m (2020 - GBP3.7m). Excluding the adverse exchange rate
impact of GBP0.8m, adjusted operating profit increased by GBP3.2m
(110.3%) on a constant currency basis. After accounting for GBPnil
amortisation of intangible assets from acquisitions (2020 -
GBP7.7m), GBPnil goodwill impairment and write-off (2020 -
GBP134.3m) and GBP4.4m net restructuring income (2020 - GBP39.0m
net restructuring cost), reported operating profit was GBP10.5m
(2020 - GBP177.3m loss).
The Group's adjusted operating margin increased by 40 basis
points, to 0.9% for the full year. This improvement in
profitability reflected the savings delivered from the
restructuring programme as well as our focus on cost management
activiti es, which more than offset the drop through effect of the
reduction in revenue and the inflationary impact of freight and
commodity costs . While the impact of the pandemic and industry
wide supply chain constraints are still with us, we continue to
manage these diligently.
Finance costs and investment income
Finance costs, net of investment income decreased to GBP8.0m
(2020 - GBP9.9m) and comprise IFRS 16 interest charge on lease
liabilities of GBP2.6m (2020 - GBP3.0m), net finance income on
retirement benefits of GBP0.4m (2020 - GBP0.9m) and net interest
charge of GBP5.8m (2020 - GBP7.8m). The decrease was mainly due to
lower borrowings including the repayment in October 2020 of $20.0m
(GBP14.6m) US Private Placement Note carrying a high interest
rate.
Tax charge
The adjusted tax rate for the year was 136.8% credit (2020 -
43.5% credit), being a tax credit of GBP2.6m (2020 - GBP2.7m) on
adjusted loss before tax of GBP1.9m (2020 - GBP6.2m loss). The
adjusted tax rate benefits from prior year items as well as
enhanced deductions for R&D expenditure in the US and capital
expenditure in the UK.
The reported tax rate was 2.1% credit, being a tax credit of
GBP0.5m on reported profit before tax of GBP23.7m. This included
GBP2.1m net tax charge against items excluded from adjusted loss
before tax, of which GBP2.9m related to the corporate undertakings
in the year and GBP0.6m credit to the revaluation of UK deferred
tax assets at the substantially enacted 25% corporation tax rate
effective from 1 April 2023. The 2020 reported tax rate was 17.4%
credit, being a tax credit of GBP33.3m on reported loss before tax
of GBP191.8m. This included the tax credit of items excluded from
adjusted profit before tax of GBP30.6m, of which GBP21.7m related
to the reversal of deferred tax liabilities held against goodwill
impaired in 2020.
Cash tax paid was GBP5.3m (2020 - GBP3.5m) and is stated net of
refunds received of GBP0.9m (2020 - GBP0.3m) of tax paid in prior
periods, including refunds arising from the offset of tax losses
against taxable profits of prior periods. Tax payments during the
year are GBP2.3m higher than they would otherwise have been as a
result of coronavirus relief measures in some countries which
allowed the deferral of tax bills normally due in 2020 into
2021.
Earnings/loss per share
The weighted average number of shares, for the purposes of
calculating undiluted earnings/loss per share, increased to 415.7
million (2020 - 414.9 million). The increase arose principally due
to exercising of share-based payment awards during 2021. The
adjusted earnings per share was 0.17 pence (2020 - adjusted loss
per share of 0.84 pence). Basic earnings per share was 5.82 pence
(2020 - basic loss per share of 38.20 pence). See Note 7 for
details of the basis of these calculations.
Return on capital employed (ROCE)
ROCE, a key performance indicator for the Group as defined
above, increased by 50 basis points to 1.0% (2020 - 0.5%). The
increase in ROCE was mainly a result of the increase in adjusted
operating profit compared to prior year.
Cash flow
The Group generated robust free cash flow of GBP14.0m in 2021
(2020 - GBP46.5m) as set out in the table below:
2021 2020
GBPm GBPm
-------------------------------------------------------------- -------- -----------
Operating profit/(loss) 10.5 (177.3)
-------------------------------------------------------------- -------- -----------
Amortisation of intangible assets from acquisitions - 7.7
-------------------------------------------------------------- -------- -----------
Goodwill impairment and write-off - 134.3
-------------------------------------------------------------- -------- -----------
Net restructuring (income)/costs (4.4) 39.0
-------------------------------------------------------------- -------- -----------
Adjusted operating profit 6.1 3.7
-------------------------------------------------------------- -------- -----------
Depreciation (including amortisation of software) 47.8 53.9
-------------------------------------------------------------- -------- -----------
Working capital and provisions movement, net of
restructuring items (2.6) 32.3
-------------------------------------------------------------- -------- -----------
Pension payments above service cost (5.1) (5.0)
-------------------------------------------------------------- -------- -----------
Other items(1) 2.2 2.0
-------------------------------------------------------------- -------- -----------
Interest paid, net (8.0) (10.6)
-------------------------------------------------------------- -------- -----------
Income tax paid, net (5.3) (3.5)
-------------------------------------------------------------- -------- -----------
Capital expenditure (21.3) (26.8)
-------------------------------------------------------------- -------- -----------
Sale of property, plant and equipment 0.2 0.5
-------------------------------------------------------------- -------- -----------
Free cash flow 14.0 46.5
-------------------------------------------------------------- -------- -----------
Corporate undertakings 46.9 (4.2)
-------------------------------------------------------------- -------- -----------
Net restructuring cash paid (0.9) (15.2)
-------------------------------------------------------------- -------- -----------
US Class action lawsuits (2.3) (3.9)
-------------------------------------------------------------- -------- -----------
Net cash flow 57.7 23.2
-------------------------------------------------------------- -------- -----------
Effect of foreign exchange rate changes 0.7 2.4
-------------------------------------------------------------- -------- -----------
IFRS 16 non-cash additions and modifications after
disposals (5.6) (1.9)
-------------------------------------------------------------- -------- -----------
Change in net debt 52.8 23.7
-------------------------------------------------------------- -------- -----------
Opening net debt (205.9) (229.6)
-------------------------------------------------------------- -------- -----------
Closing net debt (153.1) (205.9)
-------------------------------------------------------------- -------- -----------
(1) Other items comprises GBP3.5m share-based payment charges (2020
- GBP3.0m), GBP(0.2m) profit on share of joint venture (2020
- GBP(0.2m)), GBP(1.1m) working capital and provision currency
movements (2020 - GBP(0.7m) before GBP0.5m foreign exchange loss
recycled to the Income Statement on restructuring activities)
and GBPnil profit on sale of fixed assets (2020 - GBP(0.1m) profit).
Capital expenditure
Gross capital expenditure of GBP21.3m (2020 - GBP26.8m) was 0.6
times depreciation excluding the impact of IFRS 16 (2020 - 0.6
times). The disposal of property, plant and equipment raised
GBP0.2m (2020 - GBP0.5m). As previously advised, the Group's
operating businesses are capitalised and prepared for growth.
Therefore, we can expect future capital investment to be at more
normal levels: 2022 capital investment is expected to be slightly
below 2022 depreciation (excluding the impact of IFRS 16). We are
prioritising new investment on health and safety related items;
important replacement equipment for current production; and growth
projects where contracts have been secured.
Working capital
Working capital decreased by GBP 3 .0m in 2021 to GBP 103. 0m
(2020 - GBP106.0m), reflecting our relentless and effective focus
on working capital management. With demand recovery underway in our
key end markets, and some supply chain lead times increasing, we
may see an increase in working capital over the coming months. We
will continue to manage this diligently.
Net debt
Net debt which includes IFRS 16 lease liabilities decreased by
GBP52.8m to GBP153.1m at 31 December 2021 (31 December 2020 -
GBP205.9m). As noted in the cash flow above, the Group generated
net cash flow of GBP57.7m (as defined in Note 12(c) of the
Financial Statements) and benefited from GBP0.7m favourable foreign
currency movements, partially offset by GBP5.6m non-cash changes in
lease liabilities due to additions and modifications.
Net debt excluding IFRS 16 lease liabilities of GBP73.2m (31
December 2020 - GBP76.5m) decreased by GBP49.5m to GBP79.9m at 31
December 2021 (31 December 2020 - GBP129.4m).
Funding and Liquidity
As at 31 December 2021, the Group's gross borrowings excluding
leases and transaction costs directly attributable to borrowings
were GBP132.0m (31 December 2020 - GBP154.4m), with 62% of the
Group's gross borrowings denominated in US Dollars (31 December
2020 - 62%). Cash and bank balances were GBP51.1m (31 December 2020
- GBP23.6m).
The maturity of these borrowings, together with the maturity of
the Group's committed facilities, can be analysed as follows:
Gross Committed
borrowings facilities
GBPm (1) GBPm
Within one year 14.8 14.8
In the second year - 35.9
In years three to five 71.5 191.5
After five years 45.7 45.7
-------------------------------------------------- ------------ --- ------------
132.0 287.9
-------------------------------------------------- ------------ --- ------------
(1) Gross borrowings include other loans and committed facilities,
but exclude leases of GBP73.2m and transaction costs directly
attributable to borrowings of GBP(1.0m).
At the year-end, the Group had committed facilities of GBP287.9m
comprising private placement debt of GBP132.0m and revolving credit
facilities of GBP155.9m. The Group is in a strong funding position,
with headroom at 31 December 2021 of GBP208.0m in cash and undrawn
facilities.
In April 2021, the Group refinanced its US revolving credit
facility of $50.0m (GBP37.0m at year end exchange rate) and
extended the maturity to June 2023.
The weighted average maturity of the Group's committed
facilities at 31 December 2021 was 3.0 years.
The Group has GBPnil (2020 - GBP0.4m) of uncommitted borrowings
which are repayable on demand.
The Group has two existing covenants ("Existing Covenants") for
committed borrowing facilities, which are tested at June and
December: the Group's net debt to EBITDA (defined in the Notes to
the Financial Headlines) must not exceed 3.0x and interest cover,
the ratio of EBITDA to interest must be higher than 3.5x. The
Group's lenders, both banks and US private placement investors,
have been supportive and we agreed covenant relaxations ("New
Covenants") in relation to the June 2020, December 2020, June 2021
and December 2021 testing periods and agreed an additional
September 2021 testing period to provide financial flexibility for
the Group through this unprecedented period.
For the testing period ended 31 December 2021, the New Covenants
required the Group's net debt to EBITDA must not exceed 4.5x,
interest cover must be higher than 3.5x and liquidity headroom must
be higher than GBP40.0m. At 31 December 2021, the Group's net debt
t o EBITDA was 1.9x and interest cover was 7.3x, both comfortably
within the Existing (and New) Covenants limits. The Group's
liquidity headroom at GBP208.0m was also comfortably within
covenant limits.
Going concern and viability
In accordance with provisions 30 and 31 of the 2018 UK Corporate
Governance Code, the Directors have concluded that there is a
reasonable expectation as to the Group's longer-term viability and
have continued to adopt the going concern basis in preparing the
Financial Statements. The full viability statement can be found on
page 64 of the Annual Report & Accounts 2021.
In assessing going concern, taking into account the level of
cash and available committed facilities the Directors concluded
that the Group has sufficient funds, and is forecast to be in
compliance with debt covenants at all measurement dates, to allow
it to operate for the foreseeable future (a period of at least 12
months from the date of approval of the Financial Statements), even
in a severe but plausible downside scenario.
In forming their conclusion, the Board has undertaken a rigorous
assessment of the financial forecasts, key uncertainties,
sensitivities, and has reviewed a severe but plausible downside
scenario, which reflects the probability weighted and cumulative
estimated effects of the Group's principal risks and uncertainties
as disclosed on pages 50 to 55 of the Annual Report & Accounts
2021.
Risks and uncertainties
The principal risks and uncertainties faced by the Group are set
out in detail on pages 50 to 55 of the Annual Report & Accounts
2021.
Bindi foyle
Group Finance Director
Responsibility statement of the Directors in respect of the
Annual Report & Accounts 2021
We confirm that to the best of our knowledge:
1. the Financial Statements, as included in the Annual Report &
Accounts 2021, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company
and the undertakings included in the consolidation taken as a
whole; and
2. the Strategic Report, set out in the Annual Report & Accounts
2021, includes a fair review of the development and performance
of the business and the position of the issuer and the undertakings
included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties that they
face.
We consider the Annual Report & Accounts 2021, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group's
position and performance, business model and strategy.
By Order of the Board
David Squires Bindi Foyle
Group Chief Executive Officer Group Finance Director
25 February 2022 25 February 2022
Consolidated Income Statement
For the year ended 31 December 2021
Year ended Year ended
2021 2020
Notes GBPm GBPm
Revenue 3 658.7 733.6
Trading profit/(loss) 10.3 (177.5)
Share of joint venture profit 9 0.2 0.2
----------- -----------
Operating profit/(loss) (1) 3 10.5 (177.3)
Investment income 0.5 1.1
Finance costs (8.5) (11.0)
Corporate undertakings 4 21.2 (4.6)
----------- -----------
Profit/(loss) before tax (2) 23.7 (191.8)
Tax credit 5 0.5 33.3
----------- -----------
Profit/(loss) for the period 24.2 (158.5)
=========== ===========
Attributable to:
Equity holders of the parent 24.2 (158.5)
=========== ===========
Earnings/(loss) per share
Basic (3) 7 5.82p (38.20)p
=========== ===========
Diluted (4) 7 5.73p (38.20)p
=========== ===========
(1) Adjusted operating profit 4 6.1 3.7
(2) Adjusted loss before tax 4 (1.9) (6.2)
(3) Adjusted earnings/(loss) per
share 7 0.17p (0.84)p
(4) Adjusted and diluted earnings/(loss)
per share 7 0.17p (0.84)p
------------------------------------------- ------ --------
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Year ended Year ended
2021 2020
GBPm GBPm
Profit/(loss) for the period 24.2 (158.5)
----------- -----------
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
(Losses)/gains on foreign exchange contracts
- cash flow hedges during the period (2.1) 2.0
Reclassification adjustments for (gains)/losses
included in profit (1.3) 0.6
----------- -----------
(Losses)/gains on foreign exchange contracts
- cash flow hedges (3.4) 2.6
Foreign exchange (gain)/loss recycled to the
Income Statement on disposal and restructuring
(business closures) (2.9) 0.5
Exchange differences on translation of overseas
operations (3.8) (3.6)
Tax relating to items that may be reclassified 0.8 (0.5)
----------- -----------
(9.3) (1.0)
Items that will not be reclassified subsequently
to profit or loss:
Actuarial gains/(losses) on defined benefit
pension schemes 19.7 (11.4)
Tax relating to items that will not be reclassified (6.4) 1.6
----------- -----------
13.3 (9.8)
Other comprehensive income/(expense) for the
period, net of tax 4.0 (10.8)
----------- -----------
Total comprehensive income/(expense) for the
period 28.2 (169.3)
=========== ===========
Attributable to:
Equity holders of the parent 28.2 (169.3)
=========== ===========
Consolidated Balance Sheet
As at 31 December 2021
Year ended Year ended
2021 2020
Notes GBPm GBPm
Non-current assets
Goodwill 8 150.2 165.0
Other intangible assets 4.2 4.8
Investment in joint venture 9 3.9 3.6
Property, plant and equipment 10 294.6 330.5
Deferred tax assets 5.7 4.7
Retirement benefits 13 72.2 46.5
Trade and other receivables 0.1 0.1
----------- -----------
Total non-current assets 530.9 555.2
----------- -----------
Current assets
Inventories 145.2 147.6
Current tax receivables 2.6 3.0
Trade and other receivables 98.0 85.3
Cash and bank balances 12c) 51.1 23.6
Total current assets 296.9 259.5
----------- -----------
Total assets 827.8 814.7
=========== ===========
Current liabilities
Trade and other payables 143.0 126.1
Current tax liabilities 14.6 19.8
Lease liabilities 0.4 0.5
Bank overdrafts and loans 12c) 14.8 0.4
Provisions 13.8 23.5
Total current liabilities 186.6 170.3
----------- -----------
Non-current liabilities
Bank and other loans 12c) 116.2 152.6
Retirement benefits 13 11.0 10.9
Deferred tax liabilities 10.5 5.5
Lease liabilities 72.8 76.0
Provisions 2.2 2.3
Others 3.4 3.8
----------- -----------
Total non-current liabilities 216.1 251.1
----------- -----------
Total liabilities 402.7 421.4
=========== ===========
Net assets 425.1 393.3
=========== ===========
Equity
Issued share capital 11 41.9 41.9
Share premium account 14.8 14.8
Equity reserve 5.8 5.1
Hedging and translation reserve 28.6 37.9
Retained earnings 343.2 305.1
Own shares (9.2) (11.5)
----------- -----------
Equity attributable to equity holders
of the parent 425.1 393.3
----------- -----------
Total equity 425.1 393.3
=========== ===========
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021 All equity is attributable
to equity holders of the parent
Issued Share Trans-
share premium Equity Hedging lation Retained Own Total
capital account reserve reserve reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2020 41.9 14.8 5.5 (40.2) 79.1 472.5 (14.0) 559.6
Loss for the year 2020 - - - - - (158.5) - (158.5)
Gains on foreign exchange
contracts - cash flow
hedges - - - 2.6 - - - 2.6
Foreign exchange loss/(gain)
recycled to the Income
Statement on restructuring
(business closures) - - - 0.9 (0.4) - - 0.5
Exchange differences on
translation of overseas
operations - - - - (3.6) - - (3.6)
Actuarial losses on defined
benefit pension schemes - - - - - (11.4) - (11.4)
Tax relating to components
of other comprehensive
income - - - (0.5) - 1.6 - 1.1
Total comprehensive income/(expense)
for the period - - - 3.0 (4.0) (168.3) - (169.3)
-------- -------- -------- -------- -------- --------- ------- --------
Share-based payment charge - - 3.0 - - - - 3.0
Tax relating to share-based
payments - - - - - - - -
Purchase of shares held
by employee benefit trust - - - - - - - -
Use of shares held by
employee benefit trust - - - - - (2.5) 2.5 -
Transfer to retained earnings - - (3.4) - - 3.4 - -
Dividends paid - - - - - - - -
-------- -------- -------- -------- -------- --------- ------- --------
Balance at 31 December
2020 41.9 14.8 5.1 (37.2) 75.1 305.1 (11.5) 393.3
======== ======== ======== ======== ======== ========= ======= ========
Profit for the year 2021 - - - - - 24.2 - 24.2
Losses on foreign exchange
contracts - cash flow
hedges - - - (3.4) - - - (3.4)
Foreign exchange loss/(gain)
recycled to the Income
Statement on disposal - - - 2.6 (5.5) - - (2.9)
Exchange differences on
translation of overseas
operations - - - - (3.8) - - (3.8)
Actuarial gains on defined
benefit pension schemes - - - - - 19.7 - 19.7
Tax relating to components
of other
comprehensive income - - - 0.8 - (6.4) - (5.6)
Total comprehensive income/(expense)
for the period - - - - (9.3) 37.5 - 28.2
-------- -------- -------- -------- -------- --------- ------- --------
Share-based payment charge - - 3.5 - - - - 3.5
Tax relating to share-based
payments - - - - - 0.1 - 0.1
Purchase of shares held
by employee benefit trust - - - - - - - -
Use of shares held by
employee benefit trust - - - - - (2.3) 2.3 -
Transfer to retained earnings - - (2.8) - - 2.8 - -
Dividends paid - - - - - - - -
-------- -------- -------- -------- -------- --------- ------- --------
Balance at 31 December
2021 41.9 14.8 5.8 (37.2) 65.8 343.2 (9.2) 425.1
======== ======== ======== ======== ======== ========= ======= ========
Consolidated Cash Flow Statement
For the year ended 31 December 2021
Year ended Year ended
2021 2020
Notes GBPm GBPm
Net cash from operating activities 12a) 27.0 48.9
----------- -----------
Investing activities
Interest received 0.1 0.2
Proceeds on disposal of property,
plant and equipment 0.2 0.5
Purchases of property, plant and
equipment (20.2) (25.2)
Purchases of intangible assets (1.1) (1.6)
Proceeds on disposal activities
net of cash balances 14 51.7 0.4
Net cash generated/(used) in investing
activities 30.7 (25.7)
----------- -----------
Financing activities
Dividends paid - -
New loans 20.0 135.6
Repayment of borrowings (41.1) (142.8)
Repayment of lease liabilities (8.4) (7.9)
Net cash used in financing activities (29.5) (15.1)
----------- -----------
Net increase in cash and cash equivalents 28.2 8.1
Cash and cash equivalents at beginning
of period 23.2 15.1
Effect of foreign exchange rate (0.3) -
changes
----------- -----------
Cash and cash equivalents at end
of period 12c) 51.1 23.2
=========== ===========
Notes to the above Financial Statements
For the year ended 31 December 2021
1. General information
These results for the year ended 31 December 2021 are an excerpt
from the Annual Report & Accounts 2021 and do not constitute
the Group's statutory accounts for 2021 or 2020. Statutory accounts
for 2020 have been delivered to the Registrar of Companies, and
those for 2021 will be delivered following the Company's Annual
General Meeting. The Auditor has reported on both those accounts;
their reports were 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 or equivalent
preceding legislation.
2. Significant accounting policies
Whilst the financial information included in this Annual Results
Release has been prepared in accordance with UK-adopted
international accounting standards, this announcement does not
itself contain sufficient information to comply with UK-adopted
international accounting standards. Full Financial Statements that
comply with UK-adopted international accounting standards are
included in the Annual Report & Accounts 2021 which is
available online at www.seniorplc.com. Printed copies will be
distributed on or soon after 14 March 2022.
At the date of authorisation of the Group's Financial
Statements, there are no relevant and material new standards,
amendments to standards or interpretations which are effective for
the year ended 31 December 2021.
3. Segment information
The Group reports its segment information as two operating
Divisions according to the market segments they serve, Aerospace
and Flexonics, which is consistent with the oversight employed by
the Executive Committee. The chief operating decision maker, as
defined by IFRS 8, is the Executive Committee. The Group is managed
on the same basis, as two operating divisions.
Segment information for revenue and operating profit/(loss) and
a reconciliation to the Group profit/(loss) after tax is presented
below:
Eliminations Eliminations
/ central / central
Aerospace Flexonics costs Total Aerospace Flexonics costs Total
Year Year Year Year Year Year Year Year
ended ended ended ended ended ended ended ended
2021 2021 2021 2021 2020 2020 2020 2020
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
External
revenue 438.9 219.8 - 658.7 525.4 208.2 - 733.6
Inter-segment
revenue 0.4 0.1 (0.5) - 0.8 0.1 (0.9) -
--------- --------- ------------ ------ --------- --------- ------------ --------
Total revenue 439.3 219.9 (0.5) 658.7 526.2 208.3 (0.9) 733.6
========= ========= ============ ====== ========= ========= ============ ========
Adjusted
trading
profit 7.9 12.9 (14.9) 5.9 5.9 11.0 (13.4) 3.5
Share of
joint venture
profit - 0.2 - 0.2 - 0.2 - 0.2
--------- --------- ------------ ------ --------- --------- ------------ --------
Adjusted
operating
profit (Note
4) 7.9 13.1 (14.9) 6.1 5.9 11.2 (13.4) 3.7
Amortisation
of intangible
assets from
acquisitions - - - - (6.3) (1.4) - (7.7)
Goodwill
impairment
and write-off - - - - (112.1) (22.2) - (134.3)
Net restructuring
income/(costs)
(Note 4) 2.2 2.2 - 4.4 (32.5) (6.5) - (39.0)
Operating
profit/(loss) 10.1 15.3 (14.9) 10.5 (145.0) (18.9) (13.4) (177.3)
========= ========= ============ ====== ========= ========= ============ ========
Investment
income 0.5 1.1
Finance
costs (8.5) (11.0)
Corporate
undertakings 21.2 (4.6)
------ --------
Profit/(loss)
before tax 23.7 (191.8)
Tax credit
(Note 5) 0.5 33.3
------ --------
Profit/(loss)
after tax 24.2 (158.5)
====== ========
Trading profit and adjusted trading profit is operating
profit/(loss) and adjusted operating profit respectively before
share of joint venture profit. See Note 4 for the derivation of
adjusted operating profit.
Segment information for assets and liabilities is presented
below:
Assets Year ended Year ended
2021 2020
GBPm GBPm
Aerospace 506.6 563.3
Flexonics 184.9 170.4
Segment assets for reportable segments 691.5 733.7
Unallocated
Central 4.6 2.9
Cash 51.1 23.6
Deferred and current tax 8.3 7.7
Retirement benefits 72.2 46.5
Others 0.1 0.3
----------- -----------
Total assets per Consolidated Balance Sheet 827.8 814.7
=========== ===========
Liabilities Year ended Year ended
2021 2020
GBPm GBPm
Aerospace 148.1 153.9
Flexonics 63.9 55.7
Segment liabilities for reportable segments 212.0 209.6
Unallocated
Central 15.4 14.1
Debt 131.0 153.0
Deferred and current tax 25.1 25.3
Retirement benefits 11.0 10.9
Others 8.2 8.5
----------- -----------
Total liabilities per Consolidated Balance Sheet 402.7 421.4
=========== ===========
Total revenue is disaggregated by market sectors as follows:
Year Year
ended ended
2021 2020
GBPm GBPm
Civil Aerospace 244.5 304.2
Defence 125.0 158.5
Other 69.8 63.5
------- -------
Aerospace 439.3 526.2
Land Vehicles 118.8 89.2
Power & Energy 101.1 119.1
------- -------
Flexonics 219.9 208.3
Eliminations (0.5) (0.9)
------- -------
Total revenue 658.7 733.6
------- -------
Other Aerospace comprises space and non-military helicopters and
other markets, principally including semiconductor, medical, and
industrial applications.
4. Adjusted operating profit and adjusted loss before tax
The presentation of adjusted operating profit and adjusted loss
before tax measures, derived in accordance with the table below,
have been included to identify the performance of the Group prior
to the impact of amortisation of intangible assets from
acquisitions, goodwill impairment and write-off, net restructuring
income/cost, and the income and costs associated with corporate
undertakings. The Board has adopted a policy to separately disclose
those items, where significant in size, that it considers are
outside the results for the particular year under review and
against which the Board measures and assesses the performance of
the business.
COVID-19 introduced unprecedented challenges and economic
disruption. This has directly impacted the business performance of
both the Aerospace and Flexonics Divisions. The Board has not
changed the policy for adjusted measures to present the COVID-19
financial impact, but instead, have described the impact within the
narrative sections of the Strategic Report in the Annual Report and
Accounts.
The adjustments are made on a consistent basis and also reflect
how the business is managed on a day-to-day basis.
The amortisation charge relates to prior years' acquisitions. It
is charged on a straight-line basis and reflects a non-cash item
for the reported year. Goodwill impairment related to the
Aerostructures group of cash generating units (CGU group),
reflecting the significant impact of the COVID-19 pandemic on the
civil aerospace sector, where there has been a significant
reduction in the short-term demand for new aircraft on existing
programmes. Goodwill write-offs related to operating business
closures. The Group implemented a restructuring programme in 2019
which was expanded further in 2020 and 2021 in response to the
impact of COVID-19 on some of the Group's end markets. The
aerospace manufacturing grant, within net restructuring income,
represents incentives specific to only part of the Group for a
limited time period. Corporate undertakings relate to gain on
disposal of a business, bid defence and other costs relating to
corporate activities and are exceptional in nature, being presented
outside the normal operating results of the Group. None of these
charges are reflective of in-year performance. They are therefore
excluded by the Board and Executive Committee when measuring the
performance of the businesses.
Year ended Year ended
2021 2020
GBPm GBPm
Operating profit/(loss) 10.5 (177.3)
Amortisation of intangible assets from acquisitions - 7.7
Goodwill impairment and write-off - 134.3
Net restructuring (income)/cost (4.4) 39.0
Adjusted operating profit 6.1 3.7
=========== ===========
Profit/(loss) before tax 23.7 (191.8)
Adjustments to profit/loss before tax as above (4.4) 181.0
Corporate undertakings (21.2) 4.6
Adjusted loss profit before tax (1.9) (6.2)
=========== ===========
Goodwill impairment and write-off
As previously reported, during the first half of 2020, an
impairment loss of GBP110.5m was recognised in relation to the
goodwill allocated to the Aerostructures CGU group (now within
Aerospace CGU group). This reflected the significant impact of
COVID-19 on the short to medium term outlook for Aerostructures,
given the end market, which is focused on the civil aerospace
sector. In the second half of 2020, write-offs of GBP1.6m and
GBP22.2m were recognised in respect of the closures of Senior
Aerospace Bosman and Senior Flexonics Upeca.
Net restructuring income/(cost)
The Group focused on taking actions to conserve cash to manage
through the pandemic, including curtailing capital expenditure,
tightly managing working capital and implementing further cost
cutting actions. At 31 December 2021, none of the Group's employees
were on furlough (2020 - 7%).
The decisive actions taken on restructuring and cost management
over the last couple of years has delivered the expected benefits.
In addition, the Group has continued to review inventory and asset
exposures on programmes that have been reduced, cancelled or where
the Group will no longer participate. As part of the restructuring
focus, we have assessed critically any inventory or asset exposures
on these programmes and written down the carrying values on excess
holdings and assets where there is no alternate use. Where demand
has picked up on previously reduced or cancelled programmes,
inventory impairments have been reversed to the extent that there
are confirmed orders in place. Our operating businesses have also
worked hard to maximise cash realised from disposal of assets where
there is no alternate use.
The restructuring, which involves business closures and sale of
associated assets, headcount reductions and other benefits, has
resulted in net income of GBP4.4m (2020 - GBP39.0m net cost). Of
this, GBP4.2m income (2020 - GBPnil) related to an aerospace
manufacturing grant, GBP1.0m net income for closures of Senior
Flexonics Upeca and Senior Aerospace Bosman (2020 - GBP10.5m cost),
GBP0.4m cost related to headcount reduction (2020 - GBP13.5m cost)
and GBP1.0m cost related to consultancy and other activities (2020
- GBP1.5m cost). For certain specific programmes, and in
conjunction with the focus on restructuring, management has also
identified inventory impairment reversals of GBP1.4m (2020 -
GBP8.5m charge) where customer demand has increased, and further
impairment provisions on property, plant and equipment in 2021 with
a charge of GBP0.8m (2020 - GBP5.0m charge) to cover the risk where
there are no alternative uses and in part due to customers choosing
to cancel and/or significantly reduce future build rates.
Net cash outflow related to restructuring activities was GBP0.9m
(2020 - GBP15.2m). At 31 December 2021, a restructuring provision
of GBP1.3m (31 December 2020 - GBP8.9m) was recognised and is
expected to be utilised in 2022.
Corporate undertakings
Net income associated with corporate undertakings was GBP21.2m
in 2021, of which GBP24.2m gain relates to the disposal of Senior
Aerospace Connecticut in April 2021, partly offset by GBP3.0m bid
defence and costs relating to other corporate activities. In 2020,
costs of GBP4.6m were incurred relating to employee costs and
external professional fees for the potential divestment of the
Aerostructures business. See Note 14 for further details on the
GBP24.2m gain on disposal.
5. Tax charge
Year ended Year ended
2021 2020
GBPm GBPm
Current tax:
Current year 7.0 3.1
Adjustments in respect of prior periods (6.0) (6.0)
----------- -----------
1.0 (2.9)
----------- -----------
Deferred tax:
Current year (1.7) (31.3)
Adjustments in respect of prior periods 0.2 0.9
----------- -----------
(1.5) (30.4)
----------- -----------
Total tax credit (0.5) (33.3)
=========== ===========
The adjusted tax rate for the year was 136.8% credit (2020 -
43.5% credit), being a tax credit of GBP2.6m (2020 - GBP2.7m) on
adjusted loss before tax of GBP1.9m (2020 - GBP6.2m loss).
The adjusted tax rate benefits from prior year items as well as
enhanced deductions for R&D expenditure in the US and capital
expenditure in the UK.
The reported tax rate was 2.1% credit, being a tax credit of
GBP0.5m on reported profit before tax of GBP23.7m. This included
GBP2.1m net tax charge against items excluded from adjusted loss
before tax, of which GBP2.9m charge related to the corporate
undertakings in the year and GBP0.6m credit to the revaluation of
UK deferred tax assets at the substantially enacted 25% corporation
tax rate effective from 1 April 2023. The 2020 reported tax rate
was 17.4% credit, being a tax credit of GBP33.3m on reported loss
before tax of GBP191.8m. This included the tax credit of items
excluded from adjusted profit before tax of GBP30.6m, of which
GBP21.7m related to the reversal of deferred tax liabilities held
against goodwill impaired in 2020.
Cash tax paid was GBP5.3m (2020 - GBP3.5m) and is stated net of
refunds received of GBP0.9m (2020 - GBP0.3m) of tax paid in prior
periods, including refunds arising from the offset of tax losses
against taxable profits of prior periods. Tax payments during the
year are GBP2.3m higher than they would otherwise have been as a
result of coronavirus relief measures in some countries which
allowed the deferral of tax bills normally due in 2020 into
2021.
6. Dividends
No dividends were recorded in the current or prior period.
7. Earnings/(loss) per share
The calculation of the basic and diluted earnings/loss per share
is based on the following data:
Number of shares Year ended Year ended
2021 2020
million million
Weighted average number of ordinary shares for
the purposes of basic earnings/loss per share 415.7 414.9
Effect of dilutive potential ordinary shares:
Share options 6.8 -
----------- -----------
Weighted average number of ordinary shares for
the purposes of diluted earnings/loss per share 422.5 414.9
=========== ===========
Year ended 2021 Year ended 2020
Earnings/(loss) and earnings/(loss) Earnings EPS Loss EPS
per share
GBPm pence GBPm pence
Profit/(loss) for the period 24.2 5.82 (158.5) (38.20)
Adjust:
Amortisation of intangible
assets from acquisitions net
of tax of GBPnil (2020 - GBP2.0m) - - 5.7 1.38
Goodwill impairment and write-off
net of tax of GBPnil (2020
- GBP21.7m) - - 112.6 27.14
Net restructuring (income)/cost
and tax credit of GBP0.2m (2020
- GBP6.5m) (4.6) (1.11) 32.5 7.83
Corporate undertakings net
of tax of GBP2.9m (2020 - GBP0.4m) (18.3) (4.40) 4.2 1.01
Non-cash tax credit (0.6) (0.14) - -
Adjusted earnings/(loss) after
tax 0.7 0.17 (3.5) (0.84)
========= ======= ======== =========
Earnings/(loss) per share
* basic 5.82p (38.20)p
* diluted 5.73p (38.20)p
* adjusted 0.17p (0.84)p
* adjusted and diluted 0.17p (0.84)p
The denominators used for all basic, diluted and adjusted
earnings/loss per share are as detailed in the table above.
The presentation of adjusted earnings/loss per share, derived in
accordance with the table above, has been included to identify the
performance of the Group prior to the impact of amortisation of
intangible assets from acquisitions, goodwill impairment and
write-off, net restructuring income/cost, corporate undertakings
and non-cash tax credit. The Board has adopted a policy to
separately disclose those items, where significant in size, that it
considers are outside the earnings/loss for the particular year
under review and against which the Board measures and assesses the
performance of the business. See Note 4 for further details.
8. Goodwill
Goodwill decreased by GBP14.8m during the year to GBP150.2m
(2020 - GBP165.0m) due to the disposal of Senior Aerospace
Connecticut of GBP15.1m (see Note 14) and exchange translation
differences of GBP0.3m.
9. Investment in joint venture
The Group has a 49% interest in Senior Flexonics Technologies
(Wuhan) Limited, a jointly controlled entity incorporated in China
which was set up in 2012. The Group's investment of GBP3.9m
represents the Group's share of the joint venture's net assets as
at 31 December 2021 (2020 - GBP3.6m).
10. Property, plant and equipment
During the period, the Group spent GBP20.2m (2020 - GBP25.2m) on
the acquisition of property, plant and equipment. The Group also
disposed of property, plant and equipment with a carrying value of
GBP0.2m (2020 - GBP0.4m) for proceeds of GBP0.2m (2020 - GBP0.5m).
At 31 December 2021, right-of-use assets were GBP67.4m (2020 -
GBP72.5m).
11. Share capital
Share capital as at 31 December 2021 amounted to GBP41.9m. No
shares were issued during 2020 and 2021.
12. Notes to the Consolidated Cash Flow statement
a) Reconciliation of operating profit/(loss) to net cash from
operating activities
Year ended Year ended
2021 2020
GBPm GBPm
Operating profit/(loss) 10.5 (177.3)
Adjustments for:
Depreciation of property, plant and equipment 46.3 52.1
Amortisation of intangible assets 1.5 9.5
Profit on sale of fixed assets - (0.1)
Share-based payment charges 3.5 3.0
Pension payments in excess of service cost (5.1) (5.0)
Corporate undertaking costs (4.8) (4.6)
Share of joint venture (0.2) (0.2)
(Increase)/decrease in inventories (7.2) 19.6
(Increase)/decrease in receivables (16.1) 48.1
Increase/(decrease) in payables and provisions 11.6 (20.1)
Goodwill impairment - 134.3
Restructuring impairment of property, plant
and equipment and software 3.8 8.0
US class action lawsuits (2.3) (3.9)
Working capital and provisions currency movements (1.1) (0.2)
----------- -----------
Cash generated by operations 40.4 63.2
Income taxes paid (5.3) (3.5)
Interest paid (8.1) (10.8)
----------- -----------
Net cash from operating activities 27.0 48.9
=========== ===========
b) Free cash flow
Free cash flow, a non-statutory item, enhances the reporting of
the cash-generating ability of the Group prior to corporate
activity such as acquisitions, restructuring, disposal activities,
financing and transactions with shareholders. It is used as a
performance measure by the Board and Executive Committee and is
derived as follows:
Year ended Year ended
2021 2020
GBPm GBPm
Net cash from operating activities 27.0 48.9
Corporate undertaking costs 4.8 4.6
Net restructuring cash paid 0.9 15.2
US class action lawsuits 2.3 3.9
Interest received 0.1 0.2
Proceeds on disposal of property, plant and
equipment 0.2 0.5
Purchases of property, plant and equipment (20.2) (25.2)
Purchases of intangible assets (1.1) (1.6)
----------- -----------
Free cash flow 14.0 46.5
=========== ===========
c) Analysis of net debt
At 1 At 31
January Net Exchange Other December
2021 cashflow Non cash movement movements(1) 2021
GBPm GBPm GBPm GBPm GBPm GBPm
Cash and bank balances 23.6 27.8 - (0.3) - 51.1
Overdrafts (0.4) 0.4 - - - -
-------- --------- -------- --------- ------------- ---------
Cash and cash equivalents 23.2 28.2 - (0.3) - 51.1
Debt due within
one year - - (14.5) (0.3) - (14.8)
Debt due after one
year (152.6) 21.1 14.5 0.8 - (116.2)
Lease liabilities (76.5) 8.4 - 0.5 (5.6) (73.2)
-------- --------- -------- --------- ------------- ---------
Liabilities arising
from financing activities (229.1) 29.5 - 1.0 (5.6) (204.2)
-------- --------- -------- --------- ------------- ---------
Total (205.9) 57.7 - 0.7 (5.6) (153.1)
-------- --------- -------- --------- ------------- ---------
(1) Other movements include lease additions and modifications of
GBP5.6m.
Year ended Year ended
2021 2020
GBPm GBPm
Cash and cash equivalents comprise:
Cash and bank balances 51.1 23.6
Overdrafts - (0.4)
----------- -----------
Total 51.1 23.2
=========== ===========
Cash and cash equivalents (which are presented as a single class
of assets on the face of the Consolidated Balance Sheet) comprise
cash at bank and other short-term highly liquid investments with a
maturity of three months or less.
d) Analysis of working capital and provisions
Working capital comprises the following:
Year ended Year ended
2021 2020
GBPm GBPm
Inventories 145.2 147.6
Trade and other receivables 98.0 85.3
Trade and other payables (143.0) (126.1)
----------- -----------
Working capital, including derivatives 100.2 106.8
Items excluded:
Foreign exchange contracts 2.8 (0.5)
Deferred consideration relating to disposals
- current - (0.3)
----------- -----------
Total 103.0 106.0
=========== ===========
Working capital and provisions movement, net of restructuring
items, a non-statutory cash flow item, is derived as follows:
Year ended Year ended
2021 2020
GBPm GBPm
(Increase)/decrease in inventories (7.2) 19.6
(Increase)/decrease in receivables (16.1) 48.1
Increase/(decrease) in payables and provisions 11.6 (20.1)
----------- -----------
Working capital and provisions movement, excluding
currency effects (11.7) 47.6
Items excluded:
Decrease/(increase) in restructuring related
inventory impairment 1.5 (9.3)
Decrease/(increase) in net restructuring provision
and other receivables 7.6 (6.0)
----------- -----------
Total (2.6) 32.3
=========== ===========
13. Retirement benefit schemes
At 31 December 2021, aggregate retirement benefit liabilities of
GBP11.0m (2020 - GBP10.9m) comprise the Group's US defined benefit
pension funded schemes with a total deficit of GBP5.3m (2020 -
GBP4.7m) and other unfunded schemes, with a deficit of GBP5.7m
(2020 - GBP6.2m). The retirement benefit surplus of GBP72.2m (2020
- GBP46.5m) comprises the Group's UK defined benefit pension funded
scheme.
The liability and asset values of the funded schemes have been
assessed by independent actuaries using current market values and
discount rates.
14. Disposals
On 22nd April 2021, the Group sold its stand alone,
build-to-print helicopter structures operating business, Senior
Aerospace Connecticut, based in the USA. The decision to sell was
based on its primary focus on build-to-print parts for the rotary
sector, with proceeds from the sale strengthening the Group's
balance sheet and providing greater flexibility for the Group to
operate within its capital deployment framework. For the year ended
31 December 2021, Senior Aerospace Connecticut external revenue was
GBP8.1m (2020: GBP36.2m) and operating profit was GBP0.8m (2020:
GBP5.1m).
A gain of GBP24.2m arose on disposal after taking fair value of
net assets disposed (GBP28.4m including GBP15.1m of goodwill,
GBP7.5m property, plant and equipment and GBP5.8m of working
capital), offset by net cash consideration of GBP49.7m after
GBP1.8m disposal costs, and the previously recorded foreign
exchange gain that has been recycled to the Income Statement of
GBP2.9m.
In 2021 the Group received GBP0.2m (2020: GBP0.4m) deferred
consideration relating to the disposal of its Aerospace business
Senior Aerospace Absolute Manufacturing.
15. Provisions
Provisions include warranty costs of GBP6.9m (2020 - GBP6.6m),
restructuring of GBP1.3m (2020 - GBP8.9m), and other provisions
including contractual matters, claims and legal costs that arise in
the ordinary course of business of GBP7.8m (2020 - GBP10.3m).
During the year ended 31 December 2021, GBP2.3m was paid relating
to the Ametek class action lawsuit in the US, comprising GBP2.4m
provision at 1 January 2021 and GBP0.1m of exchange
differences.
16. Contingent liabilities
The Group is subject to various claims which arise from time to
time in the course of its business including, for example, in
relation to commercial matters, product quality or liability, and
tax audits. Where the Board has assessed there to be a more likely
than not outflow of economic benefits, provision has been made for
the best estimate as at 31 December 2021 (see Note 15). For all
other matters, the Board has concluded that it is not more likely
than not that there will be an economic outflow of benefits. While
the outcome of some of these matters cannot be predicted with any
certainty, the Directors do not expect any of these arrangements,
legal actions or claims, after allowing for provisions already made
where appropriate, to result in significant loss to the Group.
17. Related party transactions
Bloom Energy Corporation is a related party of the Group as
Susan Brennan, an independent non-executive Director of the Group,
was its Executive Vice-President and Chief Operations Officer until
resignation date of 5 August 2021. In 2021, the Group sold GBP2.7m
(2020- GBP2.2m) of components to Bloom Energy Corporation. The
gross receivable position as at 31 December 2021 was GBP0.4m (2020-
GBP0.4m).
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END
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