RNS No 2154w
WELLINGTON HOLDINGS PLC
21st September 1998
WELLINGTON HOLDINGS PLC
INTERIM RESULTS FOR THE HALF YEAR
TO 30 JUNE 1998
Trading profit from continuing operations up 3% to #3.35m; pro forma
EPS up 4.6% to 8.68p
Restructuring completed and acquisition of CDI Seals Inc.
Wellington Holdings, a global specialist in manufacturing seals and
compounding polymers, announces its interim results for the six months to 30
June 1998.
Highlights:
* Trading profit from continuing operations #3.35m (1997: #3.25m)
* Pre tax profit #1.6m after exceptional costs of #1.4m (1997: #2.9m)
* Pro forma EPS 8.68p (8.30p)
* Interim dividend 2.70p (1997: 2.70p)
* Sale of L & H Polymers completed in July 1998
* Acquisition of CDI Seals in Texas for up to #5.4m cash
* Interest cover 8 times
Divisional Highlights
Seals: operating profit up 9%;
strong growth in US at Dynamic Seals
Compounding: operating profit fell 9%;
Hatcham Rubber now poised to exploit competitive
advantages of single site operations
Commenting on the results and the outlook Brian Kent, Chairman said:
"Much has been achieved in reshaping the company in the last year ...although
market conditions have been unhelpful. Last year's acquisition, Dynamic
Seals, is continuing with strong profit growth, our exit from Conversion was
completed at the end of July and now we have further expanded the Seals
division with the purchase of CDI. These are major strategic achievements and
provide an exciting basis for the future."
For further information contact:
Brian Kent, Chairman Tel: 0181 941 3774
Peter Bennett, Group Chief Executive Tel: 0181 941 3774
David Hardy, Binns & Company Tel: 0171 786 9600
Note: Analyst meeting today at 11:30am at Binns & Company, 16 St Helen's
Place, Bishopsgate,
London EC3A 6DE
Editors Note
The Company manufactures from sites at Hampton (Middlesex), Hertford and
Keighley in the UK and Houston, Texas and Troy, Michigan in USA.
CHAIRMAN'S STATEMENT
This half year has been a period of great change with the company now re-
positioned strategically.
We have appointed a new Chief Executive and disposed of the Conversion
division and simultaneously strengthened the Seals division by the acquisition
of CDI Seals.
The half year operating profit of the ongoing business is #3.35m (#3.25m)
which is up 3% on last year. Pro forma earnings per share rose by 4.6% to
8.68p (8.30p).
The two divisions performed as follows:-
Seals Division
Operating Profit rose 9% to #2.42m from #2.20m. Dynamic Seals continued their
strong growth, based on high levels of activity at major U.S. off-highway
original equipment manufacturers. In the Americas, Hallite Seals
International has substantial after-market business and experienced tougher
conditions as price competition increased. Worldwide sales to the mining
industry were lower. However, new initiatives in France and Italy, and
improved demand in Germany, yielded profit growth. Polytek, the specialist
seal business, has maintained its recovery momentum helped by improving order
levels in aerospace, fluid handling and oil industry products.
Compounding Division
Operating profit fell 9% to #1.31m (#1.43m) due mainly to extended new plant
difficulties as the run up of the single site operation at Hertford for
Hatcham Rubber took longer than expected. The exceptional operating expenses
associated with this were #0.4m. Logistics, planning and management have all
been improved and the business has demonstrated its capacity to produce more
than the two-site operation, with significantly lower operating costs. It is
now in a good position to exploit these important competitive advantages.
Ondura, the tyre retread compounder, had very tough trading conditions as the
strong pound encouraged the importation of foreign tyres at low prices, with
the result that margins were further eroded. We also lost 6 weeks output on
one of our mixing lines due to a machine fire. The equipment is back in
production and our insurance covered all losses.
Plysolene achieved good sales of polymeric pipe insulation due to demand from
the U.K. building industry.
CDI Seals
We are pleased to be able to announce today the acquisition of CDI Seals. It
is being purchased for a maximum of up to #5.4m of which #0.9m is dependent
upon profit growth in the next year and #0.8m is assumed debt. #0.6m is
deferred for four years. In the year to June 1998, CDI reported an operating
profit of #0.45m on #6.5m sales and net assets of #0.9m.
CDI designs and manufactures sealing products from a range of sophisticated
polymeric materials for use in very demanding environments and applications,
including oil extraction and processing, fluid handling and fluid power
systems. It is based in Houston, Texas, and employs 128 people.
The business is an excellent fit with our existing Seals Division operations.
Mr. Bill Heathcott, aged 52, who founded the company in 1974, will continue as
President. It is our intention to add the CDI range of fluid power seals to
our existing Worldwide network and widen our product offering to the oil
industry, where Hallite Polytek and CDI complement each other.
Balance Sheet
Whilst the #2.5m net cash received from the L&H sale reduced gearing
initially, we also decided to proceed with the acquisition for cash of CDI in
Texas which will now result in gearing around 100% for the next 6 months.
Interest cover, however, remains satisfactory at approximately 8 times
interest.
Dividend
The Board has maintained its dividend payment at 2.7p to be paid on 19
November to ordinary shareholders on the register at the close of business on
2 October 1998.
Future
The new executive directors' team, ably led by Peter Bennett as C.E.O., have
had a challenging first three months and I am delighted with the way in which
they have responded to these testing times.
The profile of the Group has now evolved further with two-thirds of the profit
coming from the International Seals business and one-third from the European
Rubber Compounding business.
Much has been achieved in reshaping the company in the last year and it is
disappointing that the market conditions, particularly in the U.K., have been
unhelpful.
Forecasting at this time is impossible with manufacturing being very hard hit
by high interest rates and the strength of the pound. It is unlikely that the
profit generated by the ongoing businesses will exceed that of last year.
However, we are adjusting rapidly to these new conditions.
Last year's acquisition, Dynamic Seals, is continuing with strong profit
growth, our exit from Conversion was completed at the end of July and now we
have further expanded the Seals division with the purchase of CDI. These are
major strategic achievements and provide an exciting basis for the future."
B.H. Kent
Chairman
21 September 1998
GROUP PROFIT AND LOSS ACCOUNT
for half year ended 30 June 1998
Half year to Half year to Full Year to
30 June 30 June 31 December
1998 1997 1997
(unaudited) (unaudited)
#'000 #'000 #'000
TURNOVER
CONTINUED OPERATIONS 24,471 26,841 52,362
DISCONTINUED OPERATIONS 4,927 4,189 7,826
------ ------ ------
29,398 31,030 60,188
====== ====== ======
TRADING PROFIT
CONTINUED OPERATIONS 3,353 3,252 6,644
EXCEPTIONAL OPERATING
EXPENSE (420) 0 (588)
------ ------ ------
2,933 3,252 6,056
DISCONTINUED OPERATIONS 53 76 (115)
------ ------ ------
2,986 3,328 5,941
PROVISIONS FOR
DISCONTINUED OPERATIONS (3,291) (2,291)
LESS PROVISION MADE
IN PREVIOUS YEARS 2,291
------ ------
(1,000) (2,291)
PROFIT BEFORE INTEREST
AND TAXATION 1,986 3,328 3,650
NET INTEREST PAYABLE (417) (396) (829)
------ ------ ------
PROFIT BEFORE TAXATION 1,569 2,932 2,821
TAXATION (621) (918) (1,366)
------ ------ ------
PROFIT AFTER TAXATION 948 2,014 1,455
ORDINARY DIVIDEND (638) (638) (1,962)
------ ------ ------
RETAINED PROFIT/(LOSS) 310 1,376 (507)
====== ====== ======
EARNINGS PER SHARE 4.01p 8.52p 6.15p
PRO FORMA EARNINGS PER SHARE 8.68p 8.30p 17.34p
NET ORDINARY DIVIDEND PER SHARE 2.70p 2.70p 8.30p
CONSOLIDATED BALANCE SHEET
as at 30 June 1998
30 June 30 June 31 December
1998 1997 1997
(unaudited) (unaudited)
#'000 #'000 #'000
FIXED ASSETS 17,894 17,957 19,194
------ ------ ------
CURRENT ASSETS
STOCKS 7,235 7,796 6,969
DEBTORS 14,006 14,069 13,481
CASH AT BANK AND IN HAND 759 1,716 949
------ ------ ------
22,000 23,581 21,399
CREDITORS: amount falling
due within one year (17,240) (19,049) (17,625)
------ ------ ------
NET CURRENT ASSETS 4,760 4,532 3,774
CREDITORS: amounts falling
due after more than one year (7,735) (6,015) (8,341)
PROVISIONS FOR LIABILITIES
AND CHARGES (669) (792) (719)
------ ------ ------
NET ASSETS 14,250 15,682 13,908
====== ====== ======
CALLED UP SHARE CAPITAL 2,364 2,364 2,364
SHARE PREMIUM ACCOUNT 3,148 12,581 12,581
PROFIT AND LOSS ACCOUNT 7,169 8,820 6,827
CAPITAL REDEMPTION RESERVE 1,569 1,569 1,569
GOODWILL WRITE OFF RESERVE 0 (9,652) (9,433)
------ ------ ------
14,250 15,682 13,908
====== ====== ======
SEGMENTAL ANALYSIS
Results for the half year ended 30 June 1998
Half year to Half year to Full Year to
30 June 30 June 31 December
1998 1997 1997
(unaudited) (unaudited)
#'000 #'000 #'000
TURNOVER
SEALS 11,251 10,741 21,861
COMPOUNDING 13,220 16,100 30,501
CONVERSION
DISCONTINUED 4,927 4,189 7,826
------ ------ ------
29,398 31,030 60,188
------ ------- ------
PROFIT ON ACTIVITIES BEFORE
INTEREST AND TAXATION
SEALS 2,426 2,219 4,900
COMPOUNDING
CONTINUING BUSINESS 1,313 1,429 2,474
RESTRUCTURING COSTS (420) 0 (588)
------ ------- ------
893 1,429 1,886
------ ------- ------
CONVERSION
DISCONTINUED 53 76 (115)
PROVISION FOR
DISCONTINUED OPERATIONS (1,000) 0 2,291)
CENTRAL COSTS (386) (396) (730)
------ ------ ------
1,986 3,328 3,650
====== ====== ======
NOTES
1. The comparative figures for the financial year ended 31 December 1997 are
not the company's statutory accounts for that financial year. Those
accounts have been reported on by the company's auditors and delivered to
the registrar of companies. The report of the auditors was unqualified
and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985.
2. The net Interim dividend of 2.7p will be paid on 19 November 1998 to
shareholders on the register on 2 October 1998.
3. The exceptional costs relate to the closure costs of the Hatcham
compounding leasehold site at Croydon and the expansion onto the existing
compounding freehold site at Hertford.
4. As explained in the Chairman's Report, the Board consider that the
business of L & H Polymers no longer meets the Group's strategic ambition.
In the statutory accounts for 1997 the operations of that business were
analysed as "operations to be discontinued" and provision made for
diminution in asset values and liabilities which would crystallise on sale
of the operation. On 31 July 1998 the Group completed the disposal of L &
H Polymers for #2.8m and the increased provision required on its disposal
has been made in the period ending 30 June 1998.
5. The earnings per share have been calculated by reference to the average
number of ordinary shares of 10p each in issue in the period, being
23,641,946, and on the profit after taxation.
In the opinion of the directors there is no material difference between
the calculation of earnings per share calculated on a fully diluted basis.
The pro forma earnings per share is calculated after eliminating both the
provision for loss on disposal and results of the business to be
discontinued, the exceptional costs outlined in note 3 and after adjusting
for the tax effect thereon. The directors believe that the earnings per
share calculated by adjusting for the above gives a more meaningful
indication of the Group's underlying performance.
6. On 19 September 1998 the Group conditionally acquired CDI Seals Inc. of
Houston, Texas, for consideration of up to #4.6m, and the assumption of
circa #0.8m of debt.
7. Financial Reporting Standard 10, Goodwill and Intangible Assets, which
will apply for the year ended 31 December 1998, sets out new rules
relating to Goodwill and includes transitional provision for Goodwill
previously written off. Following approval of the special Resolution at
the Annual General Meeting on 19 May 1998 the Share Premium Account was
reduced by #9,433k on 29 June 1998 and a reserve created to be used to
eliminate the Goodwill Write-Off Reserve. Therefore, in accordance with
FRS10, the balance of the Goodwill Write-Off Reserve of #9,433k was
eliminated against the new reserve.
8. Financial Reporting Standard 11 (Impairment of Fixed Assets and Goodwill)
will be applicable for the year ended 31 December 1998. The directors
intend to consider the implication of its requirement in the year end
financial statements.
9. Copies of the Interim Results are being sent to all registered
shareholders. Further copies may be obtained upon request from the
Company Secretary at 130 Oldfield Road, Hampton, Middlesex TW12 2HT.
END
IR DVFFFVKKZBKK
Wellington Hds. (LSE:WLN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Wellington Hds. (LSE:WLN)
Historical Stock Chart
From Jul 2023 to Jul 2024
