12th Jun 2009 11:05
ENSOR HOLDINGS PLC FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2009 CHAIRMAN'S STATEMENT
There is no doubt that we are in the midst of recession and that the markets that the Ensor Group works within, particularly the building industry, have been hard hit. This was certainly true in Q3 and Q4 of our financial year just ended.
Work within the Group during the last six months has been to protect margins, manage costs and increase our customer portfolio, albeit in a reduced market. We are preparing therefore to be able to take maximum benefit from the future general economic recovery.
In March this year we announced that, following a recent poor performance at Hawkins-Salmon Limited ("Hawkins-Salmon"), one of our subsidiaries, the best course of action was to place it into administration. This has now been substantially completed and we have minimised the impact to our balance sheet. Although we are unhappy that this action was necessary, the difficult decisions have been taken and we can now move on.
Overall, our balance sheet has been affected by three main events during the year. Firstly, the losses at Hawkins-Salmon of which a large amount of the total was goodwill write off. Secondly, the need to protect our pensioners by providing additional investment capital to boost our pension fund which has been depleted by a collapsed stock market. Finally, we have accepted a revaluation of our extensive property portfolio to reflect estimated current market rates.
The instability of exchange rates and material prices, such as steel products from the Far East which rose by up to 30% during 2008, has challenged margins. Competitive market conditions have also made it difficult to implement the necessary selling price increases. Against this background however, we believe the results from our continuing activities have been satisfactory, given the very testing economic conditions.
Although sales and operating profits were down by 7% and 66% respectively in the continuing businesses and cashflow was adversely affected by the losses in discontinued activities, our gearing remains manageable at 27% of net assets.
There are many challenges ahead but, at the same time, we recognise that good commercial opportunities will present themselves and we intend to capitalise on these as they arise.
Given the extraordinary circumstances created by the recession, we feel it is prudent that we should propose not to pay a dividend this year and so maintain our reserves and start to strengthen our balance sheet.
We are cautious with our outlook for the coming year as a sustained rise out of recession is not forecast until 2010. Excluding a further deterioration in the economic climate, we believe we are now conditioned as a Group to enable us to prepare for continued progress when the economy improves generally.
May I thank all the people who work within the Ensor companies for their fantastic effort and significant contribution to our current results and future prosperity.
Ken Harrison TDChairman12.June.2009BUSINESS REVIEW
In common with many businesses connected to the construction industry and the property market, the continuing operations within the group have seen a downturn in demand and a hardening of markets during the period.
The directors have taken the decision to consolidate the Group's operations into a core group of stronger performers resulting in the termination of two business operations, which are detailed under "discontinued operations" below.
Continuing operations
The downturn in the markets and the necessity to concentrate resources on discontinuing two non-core activities has had the impact of reducing the turnover derived from continuing operations by 6.8% to £21.7m from £23.3m. Sales per working day have reduced from £94,000 in the previous financial year to £86,000 this year as a result of customers' business failures and reduced ordering. Sales levels weakened in each successive quarter of 2008/09 as the recession began to bite and then worsened but the decline appears to have bottomed out in Q4.
In order to maintain even this reduced level of turnover under such difficult circumstances, margins have been eroded from 32% to 28%. In addition to competitive pressures, the weakness of sterling against the US dollar and against the euro added significantly to our cost of sales during the year.
However, the directors are confident that the condensed group will be in a stronger position to weather the current economic downturn and take advantage of any recovery as soon as it happens.
Costs have been contained, with the result that the continuing operations have remained profitable, generating an operating profit of £500,000 compared with £ 1,627,000 in the previous financial year.
Following structure reviews across the Group, overheads are now running at around 10% less than they were at the corresponding point last year.
Reductions in capital expenditure and tight control over stock ordering have meant that continuing operations remained cash positive, despite the difficult market conditions, generating cash of £686,000. Efforts have been made to ensure debts are collected promptly in these difficult conditions, and debtor days have remained relatively stable at 63 days, compared to 62 days in March 2008.
Discontinued operationsHawkins-Salmon
Following the relocation of the timber processing part of the business from Brackley, Northamptonshire to Sandbach, Cheshire, necessitated by the termination of the lease of the premises at Brackley, operational difficulties and the loss of several customers propelled the business into a decline which, despite best efforts, could not be halted. Management changes made during the year significantly improved the efficiency of the business in the second half, leading us to report in December 2008 that the problems had been identified and addressed. Unfortunately, the worsening state of the wider economy thwarted any significant recovery thereafter.
The company suffered losses of almost £1.3m in the financial year and, with no prospect of reversing the position, the directors took the decision to safeguard the remainder of the Group, and requested the appointment of administrators to the company with a view to maximising realisations from the sale of the assets. The assets have now been sold under an agreement for partially deferred consideration and recoveries are being credited to Ensor Holdings as they arise. Although a significant loss has arisen on the administration, this was necessary to stem the trading losses.
Powerplus (UK) Limited ("Powerplus")
An opportunity arose to dispose of the assets of Powerplus and negotiations took place from February 2009 onwards resulting in the sale of the business, after the year end, to a competitor at approximately book value. The activities of Powerplus are dissimilar to the remainder of the Group, and the company has struggled to maintain its market position. The disposal allows the Directors to concentrate on the Group's core activities without distraction.
Financial position at year end
The Group's property portfolio has been revalued downwards by £300,000 to reflect current market conditions, although this situation is expected to be temporary. The loss realised on the disposal of Hawkins Salmon has depleted the balance sheet somewhat, and efforts will be concentrated on improving the strength of the balance sheet as the economy recovers.
Following a period of improvement, the global economic climate has taken its toll on the Group's pension fund deficit, principally as a result of a reduction in the value of the fund's investments between March 2008 and March 2009.
Key performance indicators
In addition to the universal performance indicators of sales, gross margins, operating profit, earnings per share, cash flow and gearing referred to above, or in the Chairman's Statement, indicators of a more activity-specific nature are used within the Group to assess the performance of subsidiary companies. These are used in conjunction with the controls described in the Corporate Governance statement and relate to a wide variety of aspects of the businesses, for example, working capital measures, production yields, quality control, targets, market share information, product return rates, etc. Due to the differences in size and markets across the Group's businesses it is not practicable to provide a more detailed analysis of how these indicators are applied to each of the respective activities.
Principal risks and uncertainties
The directors continue to focus on maintaining the Group's core business in the current climate of uncertainty, in order that the businesses will be in a strong position to take advantage of recovery in the markets when the economic environment improves.
Audited Consolidated Income Statementfor the year ended 31 March 2009 2009 2008 Restated £'000 £'000 Revenue 21,706 23,290 Cost of sales (15,644) (15,743) ______ ______ Gross profit 6,062 7,547 Distribution costs (1,068) (1,151) Administrative expenses (4,374) (4,577) ______ ______ Operating profit 620 1,819 Financial expenses (120) (192) ______ ______ Profit before tax 500 1,627 Income tax expense (47) (476) ______ ______ Profit for the year for continuing operations 453 1,151 Loss for the year on discontinued operations (2,732) 43 ______ ______ (Loss)/profit for the year attributable to equity (2,279) 1,194shareholders ______ ______ (Loss)/earnings per share: Continuing operations Basic 1.5p 3.9p Fully diluted 1.5p 3.8p ______ ______ Discontinued operations Basic and fully diluted (9.3p) 0.1p ______ ______ Dividends per share Interim dividend paid 0.00p 0.42p Final dividend proposed 0.00p 0.78p ______ ______ 0.00p 1.20p ______ ______Audited Consolidated Balance Sheetat 31 March 2009 2009 2008 £'000 £'000 ASSETS Non-current assets Property, plant & equipment 4,231 5,969 Intangible assets 2,438 3,147 ______ ______ Total non-current assets 6,669 9,116 ______ ______ Current assets Assets held for resale 1,050 - Inventories 2,769 4,415 Trade and other receivables 4,571 5,641 ______ ______ Total current assets 8,390 10,056 ______ ______ Total assets 15,059 19,172 ______ ______ LIABILITIES Non-current liabilities Retirement benefit obligations (1,980) (572) Deferred tax (118) (117) ______ ______ Total non-current liabilities (2,098) (689) ______ ______ Current liabilities Cash and cash equivalents (2,099) (1,206) Trade and other payables (3,140) (5,225) ______ ______ Total current liabilities (5,239) (6,431) ______ ______ Total liabilities (7,337) (7,120) ______ ______ NET ASSETS 7,722 12,052 ______ ______ EQUITY Share capital 2,945 2,945 Share premium 470 470 Revaluation reserve 571 871 Retained earnings 3,736 7,766 ______ ______ Total equity attributable to equity shareholders 7,722 12,052 ______ ______Other Audited Statementsfor the year ended 31 March 2009
Consolidated Statement of Recognised Income and Expense (SORIE)
2009 2008 £'000 £'000 (Loss)/profit for the financial year (2,279) 1,194 Actuarial (loss)/gain (2,047) 518 Related deferred tax 526 (155) ______ ______
Total recognised income and expense for the financial (3,800) 1,557 period
______ ______
Consolidated Statement of Changes in Shareholders' Equity
2009 2008 £'000 £'000 Opening shareholders' equity at 1 April 2008 12,052 10,825 Recognised income and expense for the (3,800) 1,557financial period Dividends paid (230) (330) Transfer from revaluation reserve for (300) -impairment of property valuations ______ ______ Closing shareholders' equity at 31 March 2009 7,722 12,052 ______ ______ Audited Consolidated Cash Flow Statementfor the year ended 31 March 2009 2009 2008 £'000 £'000 Net cash (absorbed by)/generated from (216) 2,096operations _______ _______ Cash flows from investing activities Proceeds from sale of property, plant and 43 146equipment Acquisition of property, plant and equipment (278) (501) Acquisition of going concern (100) (818) _______ _______ Net cash absorbed by investing activities (335) (1,173) _______ _______ Cash flows from financing activities Repayment of loans - (50) Capital element of finance lease payments - (4) Equity dividends paid (230) (330) Contribution to pension scheme in excess of (112) (141)charge to income _______ _______ Net cash absorbed by financing activities (342) (525) _______ _______ Net (decrease)/increase in cash and (893) 398equivalents Opening cash and cash equivalents (1,206) (1,604) _______ _______ Closing cash and cash equivalents (2,099) (1,206) _______ _______NOTES1. Accounting policies Basis of preparation
The consolidated financial statements of Ensor Holdings PLC have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985 for the first time. The Group financial statements have been prepared under the historical cost convention, with the exception of the Group's properties which have been stated at an impaired deemed cost in accordance with the requirements of IFRS.
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity so as to obtain benefits from its activities, the entity is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries (The Group) as if they formed one single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated balance sheet, the subsidiary's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.
2. Earnings per share
The calculation of earnings per share on continuing operations is based upon the profit after taxation of £453,000 (2008 : £1,151,000) divided by the weighted average number of ordinary shares in issue during the year, 29,445,659 (2008: 29,445,659). The loss per share on discontinued operations is based upon the loss after taxation of £2,732,000 (2008: profit £43,000). The fully diluted earnings per share calculation is based upon the weighted average of 29,662,338 shares (2008: 30,305,708). The dilution in both years is due to subsisting
share options.
3. Analysis of changes in net debt
At At 31 March 31 March 2008 Cashflows 2009 £'000 £'000 £'000 Bank overdraft (1,206) (893) (2,099) ______ ______ ______
4. Reconciliation of net cash flow to movement in net debt
2009 2008 £'000 £'000 (Decrease)/increase in cash in the year (893) 398 Cash outflow from repayment of debt - 54 ______ ______ Movement in net debt arising from cash flow (893) 452 Net debt at 1 April 2008 (1,206) (1,658) ______ ______ Net debt at 31 March 2009 (2,099) (1,206) ______ ______5. Basis of preparation
The financial information set out in this preliminary announcement of results does not constitute the Company's statutory accounts for the years ended 31 March 2009 or 31 March 2008 but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar and those for 2009 will be delivered following the Company's Annual General Meeting. The Independent Auditors have reported on these accounts. Their reports were unqualified and did not contain statements under section 237(2) or (2) of the Companies Act 1985.
6. Other information
The Annual General Meeting of the Company will be held at the Company's registered office, Ellard House, Dallimore Road, Manchester M23 9NX at 10.00 a.m. on Monday 27 July 2009.
The Report and Accounts will be posted to shareholders and be available from the Company's website at www.ensor.co.uk shortly. Additional copies of the Annual Report and of this statement will be available at the Company's registered office.
Enquiries:Ensor Holdings PLCRoger Harrison/Marcus Chadwick0161 945 5953Hanson Westhouse LimitedTim Feather/Matthew Johnson0113 246 2610
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