RNS Number:0261B
Wellington Holdings PLC
26 March 2001
WELLINGTON HOLDINGS PLC
Preliminary Results for the year ended 31 December 2000
Record sales and profits for the 'New Wellington'
Wellington Holdings today announces preliminary results for the year ended 31
December 2001, showing a 33% increase in operating profits. This excellent
performance has been achieved through strong global growth in a broad range of
specialist applications.
The "New Wellington" is focused on the manufacture of seals for engineering
and industrial applications, having sold its rubber compounding interests in
1999.
Financial Highlights*
(For continuing operations)
Years ended 31 December
2000 1999
#m #m
Turnover 30.6 24.8 Up 23%
Operating Profit 4.3 3.2 Up 33%
Profit before Taxation 3.5 2.5 Up 40%
Pro forma Earnings per share 10.07 p 7.48p Up 35%
Net Dividend per Share 6.5p 6.5p -
Commenting on the results the Chairman, Brian Kent, said:
'Group sales are at record levels, up 23% for the ongoing seals business with
all parts of the company reporting positive growth.'
'The two U.S. seals companies, bought in 1997 and 1998, have had an excellent
year, with CDI, in Houston, delivering record sales and profit as the oil
industry recovered, and Dynamic, in Detroit, once again having a fine year.'
'We continue to invest in new machinery and tooling to increase capacity, with
capital expenditure some 34% in excess of depreciation. Operational cash flow
in the ongoing business is up 30%.'
'We now have a highly focused successful business which is finding growth
niches in its many broadly spread global markets. The year has started very
well and we look forward to another growth year and more than holding our own
in the seals market worldwide.'
For further information contact:
Brian Kent, Chairman Tel: 020 8941 3774
Peter Bennett, Group Chief Executive Tel: 020 8941 3774
David Hardy, Binns & Co Tel: 020 7786 9600
or visit the Wellington website:-
www.wellingtonholdings.com
*The above figures for both years are calculated after eliminating the
goodwill amortisation and in 1999 the results of the discontinued operations,
all exceptional costs and credits, and all taxation effects thereon. The
sales proceeds from the sale of the compounding division are assumed to have
been received on 1 January 1999. The directors believe that these adjustments
give a more meaningful indication of the Group's underlying performance.
Chairman's Statement - 2000
It is very satisfying to report pro-forma EPS growth of 35% for the 'New'
Wellington seals group and a year of excellent operating profits, up 33% at #
4.3 million before goodwill.
The fact that conditions for U.K. manufacturing have been difficult makes the
achievement all the more noteworthy.
We have invested steadily in sales and technical resources over the last few
years and innovative product and market development represent cornerstones of
our sales success.
Group sales are a record #30.6m, up 23%, for the ongoing seals business, with
all parts of the company reporting positive growth.
This year has seen a very significant shift in our geographical sales and
profit profile, which we have achieved by our withdrawal from the largely U.K.
based rubber compounding business in October 1999 and our two earlier U.S.
seals acquisitions. As a result, the U.S.A. and Canada now account for 53 %
of total sales compared with 32% previously.
The two U.S. companies, bought in 1997 and 1998, have had an excellent year,
with CDI, in Houston, delivering record sales and profit as the oil industry
recovered, and Dynamic, in Detroit, once again having a fine year.
HSI, based at Hampton, U.K., had an excellent year assisted by its worldwide
network of subsidiaries and distributors who all met our expectations of them.
After two years of decline, HSI's mining business recovered strongly.
Despite the strength of sterling, it is very pleasing to report that direct
exports from the U.K. to the rest of the world are up by 36%. We have been
particularly successful in increasing our sales in Asian Pacific markets.
Operating margins, before goodwill, at 14% are good for an engineering
components company and both volume and mix have combined to give a healthy
result.
Balance Sheet
We have continued to invest in new machinery and tooling to increase capacity,
with capital expenditure some 34% in excess of depreciation. Operational cash
flow in the ongoing business has been good and is up 30%.
The bulk of our debt is in dollars and is serviced by dollar cash flows. The
change in year-end exchange rate resulted in an increase in consolidated debt.
We are using our 108% gearing to positive effect and the interest cover at
5.2 times is acceptable.
We expect our gearing to improve, assisted by our continuing strong internal
cash generation.
Dividend
As a result of these very positive results the Board has recommended a
maintained final dividend of 4.3p per share to be paid on 30 May 2001 to
shareholders on the register at the close of business on 6 April 2001, making
6.5p for the year (1999: 6.5p).
Employees
This year has demanded the very best from our many employees around the world
and they have risen to the challenge in a clear and demonstrable way. The
Board of Directors would like to pay tribute to the many record performances
achieved. Our employees remain our most important asset and we will continue
to involve them in our development.
Governance
The Board has reviewed its risk management procedures and the requirements of
the Combined Code of Practice and is satisfied that Wellington has all the
requisite procedures in place appropriate for a company of its size.
Outlook
We now have a highly focused successful business which is finding growth
niches in its many broadly spread global markets. The management team
continues to work to our agreed strategy.
Our cost base is competitive and the wide geographical spread of Wellington
sales reduces investor risk and, through exploitation of global synergies,
assists overall sales growth. Our order books are very good and the year has
started well.
To follow a record year is never easy, especially as our major markets and the
effects of competitive pressures are so difficult to predict at the present
time. However, we look forward to another growth year and more than holding
our own in the seals market worldwide.
B.H. Kent
Chairman
Consolidated profit and loss account
for the year ended 31 December 2000
Total Total
2000 1999
#000 #000
Turnover
Continuing operations 30,570 24,754
Discontinued operations - 12,811
--------- --------
30,570 37,565
Cost of sales (17,810) (26,339)
--------- ---------
Gross profit 12,760 11,226
Net operating expenses (8,648) (9,250)
Operating profit
Continuing operations before goodwill amortisation 4,270 3,200
Goodwill amortisation (158) (144)
-------- ---------
Continuing operations after goodwill amortisation 4,112 3,056
Discontinued operations - (1,080)
-------- --------
4,112 1,976
Loss on sale of discontinued operation - (7,576)
Profit on sale of fixed assets of continuing - 200
operation
-------- --------
Profit/(loss) on ordinary activities before 4,112 (5,400)
interest and taxation
Interest receivable 16 35
Interest payable and similar charges (834) (1,041)
--------- ---------
Profit/(loss) on ordinary activities before taxation 3,294 (6,406)
Tax on profit/(loss) on ordinary activities (1,072) (711)
--------- --------
Profit/(loss) on ordinary activities after taxation
and for the financial year
2,222 (7,117)
Dividend paid and proposed (1,536) (1,536)
-------- ---------
Retained profit/(loss) for the year 686 (8,653)
===== ======
Earnings/(loss) per share
Basic 9.40p (30.10)p
Diluted 9.27p (28.70)p
Proforma earnings per share 10.07p 7.48p
Net dividend per share 6.50p 6.50p
Consolidated balance sheet
at 31 December 2000
2000 1999
#000 #000 #000 #000
Fixed assets
Intangible assets 2,995 2,820
Tangible assets 10,543 9,938
--------- -------
Current assets 13,538 12,758
Stocks 4,378 3,983
Debtors 5,683 5,310
Cash at bank and in hand 866 794
-------- --------
10,927 10,087
Creditors: amounts falling due within (8,167) (6,608)
one year
--------- ---------
Net current assets 2,760 3,479
--------- ----------
Total assets less current liabilities 16,298 16,237
Creditors: amounts falling due after (7,838) (8,230)
more than one year
Provisions for liabilities and (181) (476)
charges
--------- ---------
Net assets 8,279 7,531
===== ======
Capital and reserves
Called up share capital 2,365 2,364
Share premium account 3,156 3,148
Capital redemption reserve 1,569 1,569
Special reserve - 1,816
Profit and loss account 1,189 (1,366)
--------- ---------
Equity shareholders' funds 8,279 7,531
====== ======
Analysis of turnover and profit on ordinary activities before interest and
taxation
All of the result for 2000 relates to the seals activity of the group.
Turnover Profit Turnover Profit
before before
Interest & Interest &
Tax Tax
2000 2000 1999 1999
By activity #000 #000 #000 #000
Seals
Before Goodwill Amortisation 30,570 4,270 24,754 3,200
Goodwill Amortisation (158) - (144)
------ --------
4,112 3,056
Compounding
Discontinued - - 12,811 (1,080)
Loss on sale of discontinued - - - (7,576)
operations
--------- -------- -------- --------
30,570 4,112 37,565 (5,600)
--------- -------- --------- ---------
Profit on sale of property - - - 200
--------- ---------- ---------- ---------
30,570 4,112 37,565 (5,400)
======= ====== ===== =====
Consolidated cash flow statement
for the year ended 31 December 2000
2000 1999
#000 #000 #000 #000
Net cash inflow from continuing operating 5,012 2,739
activities
Returns on investments and servicing of
finance
Interest received 16 35
Interest paid (822) (1,029)
Finance lease interest paid (12) (12)
------- --------
Net cash outflow from returns on investment (818) (1,006)
and servicing of finance
Taxation
Tax refund/(paid) - UK 181 (184)
- Overseas (863) (556)
-------- --------
Tax paid (682) (740)
Capital expenditure and financial investment
Additional goodwill consideration (160) -
Purchase of concessions, licences and (26) (34)
patents
Purchase of tangible fixed assets (1,530) (1,378)
Proceeds from disposal of fixed assets 500 -
------- --------
Net cash outflow from capital expenditure and
financial investment
(1,216) (1,412)
Acquisitions and disposals
Disposal of subsidiary undertaking - 4,800
------- --------
Net cash inflow from acquisitions and - 4,800
disposals
Equity dividends paid (1,536) (1,418)
-------- -------
Net cash inflow before financing 760 2,963
Financing
Repayment of amounts borrowed (1,306) (3,763)
Capital element of finance lease rental 575 (122)
payments
Share capital issued 9 -
-------- -------
Net cash outflow from financing (722) (3,885)
-------- --------
Increase/(decrease) in cash in the year 38 (922)
====== =====
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2000
2000 1999
#000 #000 #000 #000
Increase/(decrease) in cash in the year 38 (922)
Cash outflow from debt and lease financing 731 3,885
------ -------
Change in net debt resulting from cash flow 769 2,963
Translation difference (770) -
Net debt at beginning of year (8,771) (11,734)
-------- --------
Net debt at end of year (8,772) (8,771)
====== =====
Reconciliation of operating profit to net cash inflow from operating
activities
2000 1999
#000 #000
Operating profit 4,112 1,976
Depreciation and amortisation 1,318 1,786
Increase in stocks (395) (321)
(Increase)/decrease in debtors (873) 2,051
Increase/(decrease) in creditors 1,145 (2,633)
Movement in provisions (295) (120)
-------- -------
Net cash inflow from operating activities 5,012 2,739
===== =====
Notes:
1. The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2000 or 1999. The
financial information for 1999 is derived from the statutory accounts for
1999 which have been delivered to the Registrar of Companies. The
auditors have reported on the 1999 accounts, their report was unqualified
and did not contain a statement under S 237 (2) or (3) of the Companies
Act 1985. The statutory accounts for 2000 will be finalised on the basis
of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
2. The final ordinary dividend of 4.3p net will be paid on 30 May 2001 to
shareholders registered on 6 April 2001 subject to shareholders' approval
at the Annual General Meeting to be held on 24 May 2001. An interim
dividend of 2.2p net was paid on 27 November 2000.
3. Earnings per share have been calculated by reference to the weighted
average number of ordinary shares of 10p each in issue in the period being
23,645,164 (1999 23,641,946).
The pro-forma earnings per share is calculated after eliminating the loss on
disposal and the goodwill amortisation and results of the business
discontinued, all exceptional cost and credits and after adjusting for the
tax effects thereon. The proceeds from the sale of the Compounding division
are assumed to have been received on 1 January 1999. The directors believe
that earnings per share calculated by adjusting for the above gives a more
meaningful indication of the Group's underlying performance.
4. The Board considered that the compounding business no longer met the
Group's strategic ambition. On 18 October 1999 the group completed the
disposal of the Compounding division for #4.8m after costs and the loss on
disposal was recorded in the 1999 financial statements. The loss on
disposal of #7,576,000, which included #1,816,000 of goodwill previously
written off to reserves, was recorded in the 1999 financial statements.
5. It is expected that the Annual Report and Accounts will be posted to
shareholders not later than 2 May 2001.
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