6th Jun 2007 07:01
Hampson Industries PLC06 June 2007 6 June 2007 HAMPSON INDUSTRIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Hampson Industries PLC, the international aerospace and specialist engineeringgroup, announces preliminary results under IFRS for the year ended 31 March2007: Corporate highlights • CHI acquisition integrated and performing ahead of expectations. Prior year acquisitions continuing to perform strongly• Bangalore plant commissioned and operational• Continuing strong orderbooks Financial highlights • Revenue increased 41%• Trading profit* up 114%, ahead of market consensus despite £0.8m adverse currency translation impact• Adjusted earnings per share* up 83%• Proposed resumption of dividends - recommended final payment of 0.90p per share• Strong cash generation from operating activities 2007 2006 Change % -------- ------- --------Revenue £146.3m £103.9m +41Trading Profit* £16.5m £7.7m +114Operating Profit £12.5m £3.6m +243Profit Before Tax* £11.4m £4.6m +151Profit Before Tax - statutory basis £6.3m £0.7m +759Earnings per Share* 8.56p 4.68p +83Earnings per Share - statutory basis 4.52p 0.53p +753Dividend per Share 0.90p 0.00pNet cash from operating activities £12.2m (£1.6m)Net Debt £66.8m £61.7m -------- ------- -------- \* Trading profit, profit before tax and earnings per share are all stated toreflect the continuing operations of the Group before exceptional items,re-measurements and amortisation of intangible assets on acquisition. Commenting on the year, Chairman Tony Gilroy, said: "A successful fusion of solid organic growth and contributions from current andprior years' acquisitions has generated results ahead of market expectations.Our strategy of carefully targeted acquisitions and growing strength onimportant strategic platforms will assist us to further deliver long termshareholder value." An analyst meeting will be held at 8.30am on Wednesday 6 June, at Investec'soffices, 2 Gresham Street, London EC2V 7QP. Further information: Kim Ward, Chief Executive +44 (0)1384 472941Howard Kimberley, Finance Director +44 (0)1384 472946Jonathan Gollins/Marylene Guernier, M:Communications +44 (0)20 7153 1268/69www.hampsongroup.com Chairman's Statement Growth & Performance I am pleased to report that the year ended 31 March 2007 has seen the deliveryof a number of milestone achievements by the Hampson Group, with results thathave exceeded expectations. Building on the progress achieved in 2005/06, our growth strategy has continuedto deliver positive results. Revenues grew by 41% to £146 million, and tradingprofit (defined as operating profit before exceptional items, amortisation ofintangible assets on acquisition and changes in the net fair value of derivativefinancial instruments), at £16.5 million, increased by 114% to a record levelfor the Group, despite an adverse currency translation impact of £0.8 million. We achieved increased revenues in all core divisions, with a healthy combinationof solid organic growth and contributions from current and previous years'acquisitions. Each of our recent acquisitions continues to perform well withTexstars, Coast Composites and Lamsco all having won new business in the year.Organic revenue growth excluding recent acquisitions was 30%. Our strategy has been to grow the business with investment in carefully selectednew processes and technologies that provide us with defensible, niche positionsand access to important, high volume programmes that offer attractive growth,with visibility into the future. The acquisition of CHI in January 2007 meetsall these criteria, adding specialist high temperature capabilities to ourrapidly growing portfolio of composite and advanced polymer technologies and animportant strategic position on the F-35 Joint Strike Fighter programme. CHI hasalready been fully integrated into the Hampson Group and together with Texstarsand Coast, forms a portfolio of businesses that enables us to offer an extensivecapability in advanced composites to our major global aerospace customers. In order to respond to the continuous uptrend in the use of composites inairframe manufacture, we have committed to a major capacity expansion project atCoast Composites in California, USA, which will be completed by April 2008. Our Aerospace Components & Structures businesses also performed well in theyear, with revenues up by £29.9 million (59%) and an increase in trading profitof £10.8 million. We are particularly pleased with the turnaround in performanceat our larger UK aerospace facilities where we have worked hard to improveoperational performance through a number of measures. With both Airbus andBoeing increasing production rates, we are anticipating continuing growth for2007/08. The revolutionary new Eclipse 500 Very Light Jet achieved Type Certificationfrom the US Federal Aviation Administration in September 2006 followed byProduction Certification in April 2007. Following a year of continueddevelopment, we expect this key programme to contribute to further growth inrevenues for the Group in 2007/08. Our Automotive Turbocharger business successfully expanded its capability duringthe year with the commissioning of our new manufacturing facility in Bangalore,which provides us with an additional 50,000 square feet of productive capacity.Many opportunities have been identified for growth as our customers increasinglyadopt global sourcing models, looking for competitive sources of supply locatedclose to their growth markets. Results in the year for this division were heldback by the net start-up costs of the new Indian facility, extensive developmentactivity and new model introductions in our UK facility. We expect the new plantto achieve breakeven in 2007/08 and with the improvements we are targeting inthe UK facility, we expect the results to benefit accordingly. Results Profit before tax on an adjusted basis (i.e. before exceptional items,amortisation of intangible assets on acquisition and changes in the net fairvalue of derivative financial instruments) was £11.4 million, an increase of£6.9 million compared to 2005/06. Profit before tax on a statutory basis was £6.3 million, an increase of £5.6million compared to 2005/06. Earnings per share on a management basis were 83% higher, at 8.56p. Measured ona statutory basis, earnings per share increased by 3.99p (753%) to 4.52p. Dividend With the improving results and consequent financial strengthening of the Group,the Board is pleased to recommend the resumption of dividend payments toshareholders. It is the Board's recommendation that a final dividend of 0.90pper share will be paid on 5 October 2007 to shareholders on the register as at 5September 2007. The proposed dividend is covered 4.65 times by earnings. It isour current intention that subject always to prevailing market conditions, thiswill mark the resumption of a policy of progressive increases thereafter. The Future We remain committed, as our key priority, to generating sustainable, attractivereturns for our shareholders. Our internal investments, recent acquisitions andour unrelenting focus on improving performance levels in both existing and newlyacquired businesses have together laid solid foundations to achieve this. Our core markets remain strong and we foresee many opportunities to securefurther sustainable growth. We will continue to take all strategic actionsnecessary to maintain the momentum seen in 2006/07 and look forward withconfidence to another year of positive progress. JA Gilroy6 June 2007 Chief Executive's Statement Turning strategy into results Hampson has made excellent progress in 2006/07. Our acquisition strategyprogressed further, operational improvements have started to bear fruit, our lowcost manufacturing facilities are now operational and we have continued to winbusiness in our core operations. As we survey the results of 2006/07, we can also look forward with confidence tothe year ahead knowing our order books stand at record levels and some of ourmost important programmes have yet to reach maturity. Without doubt it has been a year of great achievement for the Group. We arefinancially stronger and our strategy is delivering results. In aerospace, the acquisition of CHI gives us world-leading technology in aniche where demand for high temperature composite engine components is growing.Each of our composites businesses continues to thrive, and with an expandedtechnology platform and representation on new programmes, we can look forwardwith added confidence to capturing more value as traditional alloys continue tobe substituted with lighter-weight, high-strength composite materials. Our Components & Structures businesses have performed exceptionally well in arising market, recovering from several years of more modest performance. Thisrepresents the culmination of a number of improvement actions executed withdedication by our new management teams. After a further year of development, the Eclipse 500 VLJ achieved its longexpected production certification on 26 April 2007. This outstanding achievementpaves the way for aircraft production volumes to increase, underpinned by a verystrong order book reported at over 2,500 aircraft. We are already in production,are fully-invested and ready to support this important programme at the expectedproduction rates. In automotive, we have brought our new Indian facility into production whilstsupporting our existing customers with pre-production development work and lowvolume proto-typing of new components for next generation turbochargers. Theinevitable need for production line interruptions resulted in a loss ofefficiency during this period which has led to a reduction in profits. Furthercapacity has now been committed to provide a dedicated proto-typing and fullyflexible low volume production line to alleviate this constraint going forward. The use of turbochargers to improve engine efficiency continues to increase andthe longer term prognosis as new programmes bed in is for margin recovery andfurther growth. Investing in technology Over the last three years and excluding the costs of acquisitions, we haveinvested approximately £37 million in capital expenditure in our business, withan emphasis on harnessing the very latest available technology in forming,fabrication, machining, processing and assembly. Hampson now has some of the most advanced manufacturing processes available inour chosen segments. As a result, we are now very much a "House of Technology",and have positioned our business in good shape to benefit from furtherprofitable growth. In parallel we are implementing SAP on a coordinated basis across our largerbusinesses in a major project to unlock further efficiencies, leverage ourcorporate knowledge and to make the application of lean principles a way of lifewithin Hampson. Our People Our people are the main contributor to the success of Hampson and I would liketo pay tribute to their commitment and personally thank them for their efforts,dedication and enthusiasm. I also warmly welcome the CHI team to the HampsonGroup. We share values of professionalism, commitment and excellence and I look forwardto a bright future for the Group built on the quality of our people. Outlook Our order books are at record levels and the outlook for all of our core marketsremains positive. In aerospace, commercial production rates are continuing to increase andmilitary markets are expected to remain strong. We therefore anticipate furthervolume-driven growth in all of our component businesses in 2007/08. New aircraft programmes with increasing composite content including the A350XWBand derivative versions of the Boeing 787 and F-35 are expected to result inrising demand for tooling systems. The demand for turbochargers in the global vehicle fleet continues to rise, withgrowth in Asian markets and the Americas projected to be strongest. Heavycommercial vehicle demand in Western markets is likely to be more muted in 2007/08 but we expect the impact of this to be largely offset by new light vehicleprogrammes. Overall, the foundations have been set for another year of profitable growth andwe look forward with confidence to delivering all-round positive progress in2007/08 and beyond. KS Ward6 June 2007 Group Performance Review Revenues - £146 million (2005/06: £104 million) Revenues from continuing operations of the Group increased by £42 million (41%)in the year ended 31 March 2007, of which £2.6 million was contributed by CHIduring the three month period since acquisition. A further £28.5 million was dueto the full year impact of Coast Composites and Lamsco, which were acquired inDecember 2005. Excluding the impact of these acquired operations, revenues fromexisting businesses grew by 21%, largely reflecting continuing buoyant demandconditions in the global commercial aerospace markets. Aerospace revenues, at £117 million on a combined basis, were £42 million (56%)higher than in the previous year, including the impact of acquisitions andforeign exchange rate adjustments. The largest increase was in the Components &Structures division. Automotive Turbocharger revenues increased by £0.4 million compared to theprevious year. This marks the fifth consecutive year of growth for the division,during which time revenues have grown by over 15% on a compound annual basis,reflecting both market share gains and the impact on the market fordiesel-engined vehicles in particular of progressively tightening fuel emissionregulations. Revenues in the Industrial division were broadly unchanged over the year,although exhibiting some change in mix, with greater sales of lower margincomponents to customers away from the glass container industry. Trading profit* - £16.5 million (2005/06: £7.7 million) Trading profit for the year ended 31 March 2007, at £16.5 million, was at arecord level for the Group, more than double compared with the previous year,despite absorbing approximately £0.8 million of adverse foreign exchange ratemovements as a result of the much weaker US Dollar. Profits earned in US Dollarswere translated into Sterling at an average rate of GBP1=USD1.89 for the yearended 31 March 2007, compared with a rate of GBP1=USD1.74 in 2005/06. The Group's aerospace operations continued to benefit from increasing buildrates across most major programmes, in addition to which, restructuring andother management actions at the larger UK facilities within the Components &Structures division resulted in improved results. The impact of including a fullyear's results for acquisitions in 2005/06 was £6.1 million, and CHI, acquiredin January 2007, contributed £0.5 million of trading profit to the Group in theperiod since acquisition. Trading profit generated by the Automotive Turbocharger division was £1.8million lower than in the previous year due to the inclusion of start-up costsof the new Bangalore plant and the costs of new product development andintroductions at the UK facility in Skelmersdale, UK. The Industrial division experienced weak overall demand from the glass bottleand container manufacturing market together with the deferral of one majorcontract into 2007/08. Trading profits were, as a result, £0.3 million lowerthan in the previous year. \* Trading Profit is defined as Operating Profit before exceptional items, changesin the net fair value of financial instruments and amortisation of intangibleassets on acquisition. The Board considers that this additional measure ofprofit provides the best view of the underlying trading performance of the Groupand that it is therefore helpful to highlight it accordingly. Restructuring and rationalisation charges - £1.1 million (2005/06: £0.9 million) Restructuring and rationalisation charges of £1.1 million were incurred duringthe year. Over £0.7 million were incurred by the Components and Structuresdivision as part of the turnaround in operational performance at our larger UKaerospace facilities. £0.2 million was incurred by the Automotive Division aspart of reorganisation and reducing the cost base. Impairment charges - £2.1 million (2005/06: £2.2 million) During the year ended 31 March 2007, the Group recognised total impairmentcharges on intangible assets of £2.1 million in respect of a terminated contractinvolving one of the Group's subsidiaries. Action is being taken to recover thevalue of those assets together with further costs incurred in relation to thecontract that have been previously expensed. Amortisation of intangible assets on acquisition - £0.7 million (2005/06: £1.5million) IFRS requires the identification and valuation of intangible assets arising onacquisition where these are deemed either to be "separable" or to arise fromcontractual or other legal rights. In accordance with the requirements ofInternational Accounting Standard 38 and International Financial ReportingStandard 3, the Group has identified intangible assets amounting to £2.8 millionon the acquisition of CHI in the year ended 31 March 2007, in respect of whichamortisation of £0.1 million has been charged in the period since acquisition. Changes in the net fair value of financial instruments - £(1.3) million (2005/06: £0.8 million) The Group enters into forward foreign exchange contracts, interest rate swapsand other derivative instruments to hedge its transactional and strategicexposures to interest rate and foreign exchange fluctuations. At 31 March 2007,the net fair value of such instruments was a liability of £0.9 million comparedwith an asset of £0.8 million at the previous year end. The movement relatesprimarily to previous interest rate hedging transactions at beneficial ratesthat matured during the year together with new longer term hedges taken outduring the year. The Group has not applied hedge accounting in the year ended 31 March 2007 andhence the movement on the net fair values between the two balance sheet dateshas been taken to the Income Statement. This has been shown as a separatecomponent of operating profit and total net interest cost for the year. Operating profit - £12.5 million (2005/06: £3.6 million) Operating profit for the year ended 31 March 2007 was £12.5 million, an increaseof £8.9 million (243%) compared with the previous year. The principal underlyingmovements were an increase in trading profit of £8.8 million, increase inrationalisation and restructuring charges of £0.2 million, decrease inimpairment charges of £0.1 million, decrease in the amortisation charge ofintangible assets arising on acquisition of £0.9 million and a higher charge inrelation to the net fair value of non- interest financial instruments of £0.7million. Other net interest payable - £(5.0) million (2005/06: £(3.1) million) Excluding charges in relation to the net fair value of fixed-income financialinstruments, other net interest payable increased by £1.9 million due to theincreased average net borrowings of the Group throughout the year ended 31 March2007 following the acquisitions of Coast Composites and Lamsco in December 2005and Composites Horizons Inc. in January 2007, as well as rises in base borrowingrates. Profit before taxation - £6.3 million (2005/06: £0.7 million) Profit before tax excluding exceptional items, the amortisation of non-operatingintangible assets and changes in the net fair value of financial instrumentsincreased by £6.9 million (151%) for the year ended 31 March 2007. After takingaccount of these items, profit before tax increased by £5.6 million. Taxation - £(2.3) million (2005/06: £(0.4) million) The tax charge of £2.3 million represented an effective rate of 36% on profitbefore tax (2005/06: 53%). The effective rate is influenced most strongly by therelative geographic mix of the Group's profits as between the UK, with aheadline corporation tax rate of 30%, and North America, with an averagecomposite federal and state tax rate of approximately 40%. Other factorsinfluencing the Group's effective rate of tax include adjustments for deferredtaxation in respect of the current and previous year. Earnings per share Basic earnings per share for continuing operations were 4.52p (2005/06: 0.53p).Before exceptional items, the amortisation of non-operating intangible assetsand changes in the net fair value of financial instruments, the equivalentfigure was 8.56p, an increase of 3.88p compared with the prior year. Proposed dividend The Board is recommending that a final dividend of 0.90p per share be paid toshareholders on 5 October 2007, which will mark the resumption of dividendpayments to ordinary shareholders after a period of five years. The proposeddividend is covered 4.65 times by earnings. Cash flow Cash from operations increased by £16.0 million to £18.7 million, reflectingimproved trading conditions within the Group. Continued capital investment inour businesses and the acquisition of CHI resulted in £26.7 million being spenton investing activities, which was largely funded by additional issued sharecapital proceeds and increased borrowings. Over the year there was animprovement in cash of £3.5 million. Acquisitions Net expenditure on acquisitions in the year ended 31 March 2007 was £11.5million (2005/06: £43.8 million), of which £10.7 million was spent on theacquisition of CHI. A further £0.8 million was spent on additional deferredconsideration and costs in relation to prior year acquisitions. Net borrowings Net borrowings of the Group increased by £5.1 million to £66.8 million as at 31March 2007. The ratio of net borrowings to shareholders' equity ("gearing")increased by 0.7 percentage points to 85.9%. Pensions and post employment obligations The Group has been carefully and prudently managing its exposure to liabilitiesarising under defined benefit arrangements for a number of years. The onlydefined benefit pension schemes now in existence have been closed to furtheraccrual of benefit since before May 2000 and were consolidated into a singlescheme with effect from 1 April 2007. The total number of members in the nowcombined scheme has reduced from 170 to 146 during the year ended 31 March 2007.The aggregate gross deficit has also reduced, falling by £0.8 million to £0.2million, despite an increase in mortality rates used in the actuarialcalculation of the defined benefit liabilities. There was no movement during theyear in the actuarially-assessed obligation under the Group's single US postretirement healthcare scheme, which stood at £0.4 million before taking accountof deferred taxation. Shareholders' equity Shareholders' equity increased overall by £5.4 million during the year, standingat £77.8 million at 31 March 2007. The main elements of the movement during theyear were the addition of retained earnings of £4.0 million, the receipt of netproceeds from a placing of new shares £11.3 million to finance part of theacquisition of CHI, an adverse foreign exchange difference of £10.4 millionarising on retranslation of the Group's US Dollar-denominated net assets at asubstantially weaker Dollar/Sterling rate and a small net actuarial gain on theassessment of the Group's post employment defined benefit liability. Cautionary Statement This news release contains forward looking statements which are made in goodfaith based on the information available at the time of their approval. It isbelieved that the expectations reflected in these statements are reasonable butthey may be affected by a number of risks and uncertainties that are inherent inany forward looking statement which could cause actual results to differmaterially from those currently anticipated. Consolidated Income StatementFor the year ended 31 March 2007 2007 2007 ---------- ---------- -------- Before exceptional Exceptional items, re- items, re- measurements measurements and and amortisation of amortisation of intangibles* intangibles* Total £'000 £'000 £'000 ---------- ---------- --------Continuing operations--------------------------------- ---------- ---------- --------Revenue 146,297 - 146,297--------------------------------- ---------- ---------- -------- Operating profit 16,471 (3,983) 12,488--------------------------------- ---------- ---------- --------Analysed as:Trading profit 16,471 - 16,471Restructuring and rationalisationcharges - (1,088) (1,088)Impairment charges - (2,106) (2,106)Changes in net fair value ofderivative financial instruments -non interest instruments - (110) (110)Amortisation of intangible assets on acquisition - (679) (679)--------------------------------- ---------- ---------- -------- Financial income 961 - 961Financial expense (5,990) - (5,990)Changes in net fair value ofderivative financialinstruments - interest instruments - (1,164) (1,164)--------------------------------- ---------- ---------- --------Profit before taxation 11,442 (5,147) 6,295Taxation (2,267)--------------------------------- ---------- ---------- --------Profit after taxation 4,028--------------------------------- ---------- ---------- --------Discontinued operationsPost tax results from discontinuedoperations (43)--------------------------------- ---------- ---------- --------Profit for the financial year 3,985--------------------------------- ---------- ---------- -------- Attributable to:--------------------------------- ---------- ---------- --------- Equity shareholders 3,985- Minority interests - ---------- ---------- -------- 3,985 ---------- ---------- -------- Dividends per 25p ordinary share--------------------------------- ---------- ---------- --------Interim dividend per share 0.00pFinal dividend per share 0.90p--------------------------------- ---------- ---------- -------- Earnings per 25p ordinary share--------------------------------- ---------- ---------- --------Continuing Operations:Earnings per share beforeexceptional items, re-measurements andamortisation of intangibles* 8.56pBasic 4.52pDiluted 4.49p--------------------------------- ---------- ---------- --------Total Operations:Basic 4.47pDiluted 4.44p--------------------------------- ---------- ---------- -------- * Re-measurements relate to changes in net fair value of derivative financialinstruments required under IAS 39. Amortisation of intangibles relate toamortisation of intangible assets on acquisition required under IFRS 3. Consolidated Income StatementFor the year ended 31 March 2006** 2006** 2006** ---------- ----------- -------- Before exceptional Exceptional items, re- items, re- measurements measurements and and amortisation of amortisation of intangibles* intangibles* Total £'000 £'000 £'000 ---------- ----------- --------Continuing operations--------------------------------- ---------- ---------- --------Revenue 103,936 - 103,936--------------------------------- ---------- ---------- -------- Operating profit 7,699 (4,054) 3,645--------------------------------- ---------- ---------- --------Analysed as:Trading profit 7,699 - 7,699Restructuring and rationalisationcharges - (879) (879)Impairment charges - (2,222) (2,222)Changes in net fair value ofderivative financial instruments -non interest instruments - 575 575Amortisation of intangible assets on acquisition - (1,528) (1,528)--------------------------------- ---------- ---------- -------- Financial income 573 - 573Financial expense (3,712) - (3,712)Changes in net fair value ofderivative financial instruments -interest instruments - 227 227--------------------------------- ---------- ---------- --------Profit before taxation 4,560 (3,827) 733Taxation (390)--------------------------------- ---------- ---------- --------Profit after taxation 343--------------------------------- ---------- ---------- --------Discontinued operationsPost tax results fromdiscontinued operations 8--------------------------------- ---------- ---------- --------Profit for the financial year 351--------------------------------- ---------- ---------- -------- Attributable to:--------------------------------- ---------- ---------- --------- Equity shareholders 351- Minority interests ---------------------------------- ---------- ---------- -------- 351--------------------------------- ---------- ---------- -------- Dividends per 25p ordinary share--------------------------------- ---------- ---------- --------Interim dividend per share 0.00pFinal dividend per share 0.00p--------------------------------- ---------- ---------- -------- Earnings per 25p ordinary share--------------------------------- ---------- ---------- --------Continuing Operations:Earnings per share beforeexceptional items,re-measurements andamortisation of intangibles* 4.68pBasic 0.53pDiluted 0.53p--------------------------------- ---------- ---------- --------Total Operations:Basic 0.54pDiluted 0.54p--------------------------------- ---------- ---------- -------- * Re-measurements relate to changes in net fair value of derivative financialinstruments required under IAS 39. Amortisation of intangibles relate toamortisation of intangible assets on acquisition required under IFRS 3. ** Re-presented following the sale of Bolsan West Inc. and separateidentification of changes in fair values of derivative financial instruments,see note 2. Consolidated Balance SheetAs at 31 March 2007 2006 £'000 £'000 ------- -------AssetsNon-current assetsGoodwill 61,600 57,824Intangible assets 22,476 15,723Property, plant and equipment 41,305 39,409Deferred tax assets 4,877 2,238------------------------------ ------- ------- 130,258 115,194 ------- -------Current assetsInventories 27,361 24,393Trade and other receivables - due within one year 35,206 31,227Financial assets - derivatives 189 802Current tax assets 563 -Cash and cash equivalents 10,241 6,776------------------------------ ------- ------- 73,560 63,198 ------- -------Total assets 203,818 178,392------------------------------ ------- -------LiabilitiesCurrent liabilitiesTrade and other payables (36,787) (31,099)Financial liabilities - derivatives (1,126) -Current tax liabilities - (35)Provisions (3,073) (2,197)------------------------------ ------- ------- (40,986) (33,331) ------- -------Non-current liabilitiesFinancial liabilities - borrowings (75,568) (66,890)Deferred tax liabilities (8,812) (4,299)Retirement benefit liabilities (583) (1,391)------------------------------ ------- ------- (84,963) (72,580) ------- -------Total liabilities (125,949) (105,911)------------------------------ ------- -------Net assets 77,869 72,481----------------------------- -------- -------- Shareholders' equityCalled up share capital 23,806 21,870Reserves 53,988 50,571----------------------------- -------- --------Shareholders' equity 77,794 72,441----------------------------- -------- -------- Total shareholders' equity 77,794 72,441Minority interest in equity 75 40----------------------------- -------- --------Total equity 77,869 72,481----------------------------- -------- -------- Consolidated Cash Flow StatementFor the years ended 31 March 2007 2006 £'000 £'000 ------- -------Cash flows from operating activitiesCash generated from operations 18,684 2,685Interest received 604 265Interest paid (5,506) (3,305)Tax paid (1,571) (1,280)--------------------------------- ------- -------Net cash from operating activities 12,211 (1,635)--------------------------------- ------- -------Cash flows from investing activitiesAcquisitions - net of cash acquired (11,493) (43,763)Disposals - net of cash disposed 30 -Dividends received - -Purchase of property, plant and equipment (6,410) (6,298)Purchase of intangible assets (2,045) (389)Proceeds on sale of property, plant and equipment 70 289Development costs (6,883) (4,831)--------------------------------- ------- -------Net cash used in investing activities (26,731) (54,992)--------------------------------- ------- -------Cash flows from financing activitiesNet proceeds from issue of ordinary share capital 11,347 32,329Proceeds from minority interest - 99New borrowings 10,500 64,839Finance lease principal payments (1,449) (1,677)Finance lease interest payments (191) (256)Repayments of loans (1,914) (35,304)--------------------------------- ------- -------Net cash flow used in financing activities 18,293 60,030--------------------------------- ------- -------Currency variations on cash and cash equivalents (308) 146--------------------------------- ------- -------Increase/(decrease) in cash and cash equivalents 3,465 3,549--------------------------------- ------- -------Cash and cash equivalents at the beginning of the period 6,776 3,227--------------------------------- ------- -------Cash and cash equivalents at the end of the period 10,241 6,776--------------------------------- ------- ------- Statement of Recognised Income and ExpenseFor the years ended 31 March 2007 2006 £'000 £'000 ------- ------Currency variations (10,362) 2,750Actuarial gains/(losses) on retirement benefit scheme -gross 304 827Deferred taxation related thereto (91) (274)--------------------------------- ------- ------Net gains/(losses) not recognised in income statement (10,149) 3,303Profit/(loss) for the financial period 3,985 351--------------------------------- ------- ------Total recognised income for the year (6,164) 3,654--------------------------------- ------- ------ Attributable to:--------------------------------- ------- ------- Equity shareholders (6,164) 3,654- Minority interests - - ------- ------ (6,164) 3,654 ------- ------ NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The figures and financial information for the year ended 31 March 2007 do notconstitute the full statutory financial statements for the year. The statutoryfinancial statements for the year ended 31 March 2006 have been filed with theRegistrar of Companies and contained an unqualified audit report. The auditedresults were approved by the Board on 6 June 2007 and have been agreed with theauditors. 2. Re-presentation of 2006 comparatives for presentation purposes The Group has amended its analysis of the Income Statement to separatelyidentify changes in fair value of derivative financial instruments, in order toachieve consistency and comparability of the results of normal tradingperformance. The impact upon trading profit for the year ended 31 March 2006 isa reduction of £575,000. The impact upon operating profit and retained profitfor the year and net assets is £nil. In addition, due to the disposal of Bolsan West Inc. during the year, theirresults have been classified as a discontinued operation and the 2006comparatives amended accordingly. 3. Segmental analysis By primary segment - business group ----------------------------------- --------- --------- --------- --------- --------- ---------For the year ended Aerospace Corporate 31 March 2007 Components and Composites and Automotive and Structures Transparencies Turbocharger Industrial Unallocated Total----------------------------------- --------- --------- --------- --------- --------- --------- £'000 £'000 £'000 £'000 £'000 £'000----------------------------------- --------- --------- --------- --------- --------- ---------Continuing operations:Segment revenue 80,279 36,573 21,168 8,277 - 146,297----------------------------------- --------- --------- --------- --------- --------- ---------Segment trading profit/(loss) 11,002 6,659 1,457 71 (2,718) 16,471----------------------------------- --------- --------- --------- --------- --------- ---------Restructuring andrationalisation charges (737) (47) (233) (15) (56) (1,088)Impairment charges (2,106) - - - - (2,106)Changes in fair value ofderivative financial instruments - - - - (110) (110)Amortisation of intangibleassets on acquisition (185) (494) - - - (679)----------------------------------- --------- --------- --------- --------- --------- ---------Segment operating profit/(loss) 7,974 6,118 1,224 56 (2,884) 12,488Net financing costs - - - - (6,193) (6,193)----------------------------------- --------- --------- --------- --------- --------- ---------Profit/(loss) before taxation 7,974 6,118 1,224 56 (9,077) 6,295Taxation - - - - (2,267) (2,267)----------------------------------- --------- --------- --------- --------- --------- ---------Profit/(loss) for the year after taxation 7,974 6,118 1,224 56 (11,344) 4,028----------------------------------- --------- --------- --------- --------- --------- ---------Discontinued operations:----------------------------------- --------- --------- --------- --------- --------- ---------Post tax results from discontinuedoperations (18) - - - (25) (43)----------------------------------- --------- --------- --------- --------- --------- ---------Profit attributable to minority interests - - - - - ------------------------------------ --------- --------- --------- --------- --------- ---------Net profit/(loss) attributableto equity shareholders 7,956 6,118 1,224 56 (11,369) 3,985----------------------------------- --------- --------- --------- --------- --------- ---------Other information:Segment assets 76,583 79,903 19,237 6,464 16,191 198,378Unallocated assets:- Current taxation assets - - - - 563 563- Deferred taxation assets - - - - 4,877 4,877----------------------------------- --------- --------- --------- --------- --------- ---------Total assets 76,583 79,903 19,237 6,464 21,631 203,818----------------------------------- --------- --------- --------- --------- --------- ---------Segment liabilities (59,080) (9,699) (20,074) (4,079) (24,205) (117,137)Unallocated liabilities:- Current taxation liabilities - - - - - -- Deferred taxation liabilities - - - - (8,812) (8,812)----------------------------------- --------- --------- --------- --------- --------- ---------Total liabilities (59,080) (9,699) (20,074) (4,079) (33,017) (125,949)----------------------------------- --------- --------- --------- --------- --------- ---------Other segment itemsCapital expenditure on intangibleassets 5,405 817 1,009 42 1,655 8,928----------------------------------- --------- --------- --------- --------- --------- ---------Capital expenditure on property,plant and equipment 1,513 1,222 3,933 147 20 6,835----------------------------------- --------- --------- --------- --------- --------- ---------Depreciation 1,934 692 1,057 359 87 4,129----------------------------------- --------- --------- --------- --------- --------- ---------Amortisation 774 518 66 62 49 1,469----------------------------------- --------- --------- --------- --------- --------- --------- ----------------------------------- --------- --------- --------- --------- --------- ---------For the year ended Aerospace Corporate 31 March 2006 Components and Composites and Automotive and(note 2) Structures Transparencies Turbocharger Industrial Unallocated Total----------------------------------- --------- --------- --------- --------- --------- --------- £'000 £'000 £'000 £'000 £'000 £'000----------------------------------- --------- --------- --------- --------- --------- ---------Continuing operations:Segment revenue 50,343 24,409 20,812 8,372 - 103,936----------------------------------- --------- --------- --------- --------- --------- ---------Segment trading profit/(loss) 207 5,037 3,297 353 (1,195) 7,699----------------------------------- --------- --------- --------- --------- --------- ---------Restructuring and rationalisationcharges (401) - (104) (183) (191) (879)Impairment charges (2,119) - (102) - (1) (2,222)Changes in fair value of derivativefinancial instruments - - - - 575 575Amortisation of intangible assets on acquisition (266) (1,262) - - - (1,528)----------------------------------- --------- --------- --------- --------- --------- ---------Segment operating profit/(loss) (2,579) 3,775 3,091 170 (812) 3,645Net financing costs - - - - (2,912) (2,912)----------------------------------- --------- --------- --------- --------- --------- ---------Profit/(loss) before taxation (2,579) 3,775 3,091 170 (3,724) 733Taxation - - - - (390) (390)----------------------------------- --------- --------- --------- --------- --------- ---------Profit/(loss) for the year after taxation (2,579) 3,775 3,091 170 (4,114) 343----------------------------------- --------- --------- --------- --------- --------- ---------Discontinued operations: ----------------------------------- --------- --------- --------- --------- --------- ---------Post tax results fromdiscontinued operations 36 - - - (28) 8----------------------------------- --------- --------- --------- --------- --------- ---------Profit attributable to minorityinterests - - - - - ------------------------------------ --------- --------- --------- --------- --------- ---------Net profit/(loss) attributableto equity shareholders (2,543) 3,775 3,091 170 (4,142) 351----------------------------------- --------- --------- --------- --------- --------- ---------Other information:Segment assets 63,164 72,759 17,948 5,727 16,556 176,154Unallocated assets:- Deferred taxation assets - - - - 2,238 2,238----------------------------------- --------- --------- --------- --------- --------- ---------Total assets 63,164 72,759 17,948 5,727 18,794 178,392----------------------------------- --------- --------- --------- --------- --------- ---------Segment liabilities (42,597) (8,159) (14,116) (4,510) (32,195) (101,577)Unallocated liabilities:- Current taxation liabilities - - - - (35) (35)- Deferred taxation liabilities - - - - (4,299) (4,299)----------------------------------- --------- --------- --------- --------- --------- ---------Total liabilities (42,597) (8,159) (14,116) (4,510) (36,529) (105,911)----------------------------------- --------- --------- --------- --------- --------- ---------Other segment itemsCapital expenditure on intangibleassets 4,149 213 647 207 4 5,220----------------------------------- --------- --------- --------- --------- --------- ---------Capital expenditure on property,plant and equipment 4,139 695 2,888 137 9 7,868----------------------------------- --------- --------- --------- --------- --------- ---------Depreciation 1,659 703 895 405 81 3,743----------------------------------- --------- --------- --------- --------- --------- ---------Amortisation 318 1,299 7 103 36 1,763----------------------------------- --------- --------- --------- --------- --------- --------- By secondary segment - geographical region 2007 2007 2007 2006 (note 2) 2006 2006 ------- ------- --------- --------- ------- -------- Revenue Segment assets Capital Revenue Segment assets Capital expenditure expenditure £'000 £'000 £'000 £'000 £'000 £'000 ------- ------- --------- --------- ------- --------Continuingoperations:UK 68,926 71,228 10,018 52,728 65,915 10,710Europe 16,544 - - 13,920 - -North America 55,702 107,123 2,813 32,361 93,659 1,016Rest of World 5,125 3,836 1,257 4,927 24 1,349Corporate and unallocated - 21,631 1,675 - 18,794 13 ------- ------- --------- --------- ------- -------- 146,297 203,818 15,763 103,936 178,392 13,088 ------- ------- --------- --------- ------- -------- Intra group sales are priced on an 'arms length' basis and are not significantbetween either regions or segments. Corporate and unallocated costs representcorporate costs. Segmental assets comprise all non-current and current assets(as per the balance sheet presentation) but exclude current and deferred taxassets. Segment liabilities include all non-current and current liabilities butexclude current and deferred tax liabilities. Balances relating to taxation arenot allocated to specific segments as these resources are managed centrally andno segments have sufficient autonomy to manage these resources. Segment capitalexpenditure on intangible assets comprise additions to intangible assets, butexcludes assets on acquisition of subsidiary undertakings and intangible assetsresulting from acquisitions through business combinations. Segment capitalexpenditure on tangible assets comprises additions to tangible assets, butexcludes assets on acquisition of subsidiary undertakings. Depreciationrepresents the charge for the year. Amortisation represents the charge for theyear. The results of Composites Horizons Inc., which was acquired during the yearended 31 March 2007, is included within the "Composites and Transparencies"segment and "North America" geographical region. 4. Exceptional items, re-measurements and amortisation of intangibles Restructuring and rationalisation charges These exceptional items reflect the Group's restructuring and rationalisationcosts primarily relating to employment termination and legal costs - £1.1m(2006: £0.9m). Impairment charges During the year the Group undertook a review of the utilisation and carryingvalues of certain assets. As a result of this £2.1m (2006: £2.2m) of impairmentcharges were incurred, as follows: 2007 2006 £'000 £'000 ---------- ---------Impairment of inventories - 1,958Impairment of receivables through customer insolvency - 70Impairment of plant, property and equipment - 194Impairment of intangible assets 2,106 --------------------------- ---------- ---------Total impairment charges 2,106 2,222-------------------------- ---------- --------- An impairment in the carrying value of intangible assets of £2.1m has beencharged in respect of a terminated contract involving one of the Group'ssubsidiaries. Action is being taken to recover the value of those assetstogether with the reimbursement of further costs incurred in relation to thecontract that have been expensed as a component of trading profit. Changes in net fair value of derivative financial instruments IAS 39 requires derivative financial instruments to be valued at the balancesheet date and any difference between that value and the intrinsic value of theinstrument to be reflected in the balance sheet as an asset or liability. Anysubsequent change in value is reflected in the Income Statement unless hedgeaccounting is achieved. Such movements do not affect cash flow or the economicsubstance of the underlying transaction, and thus to aid in year on yearcomparability, the change in value has been identified separately. As a resultthe changes in net fair value of derivative financial instruments were: 2007 2006 £'000 £'000 ------ ------Charges/(credits) included within operating profit 110 (575)Charges/(credits) included within net financing costs 1,164 (227) ------ ------ 1,274 (802) ------ ------ Amortisation of intangible assets on acquisition As required under IFRS 3 'Business Combinations' and IAS 38 'Intangible Assets',intangible assets identified on acquisition have been amortised during the year- £0.7m (2006: £1.5m). 5. Taxation 2007 2006Analysis of charge in period £'000 £'000---------------------------------- ------- -------Current taxCurrent year 987 41Adjustments in respect of prior years 105 142---------------------------------- ------- ------- 1,092 183 ------- -------Deferred taxCurrent year 1,537 155Adjustment in respect of prior years (368) 38---------------------------------- ------- ------- 1,169 193 ------- -------Tax on discontinued activities 6 14---------------------------------- ------- -------Total tax charge 2,267 390---------------------------------- ------- ------- 2007 2006 £'000 £'000 ------- -------Overseas tax included above 853 (1,108)---------------------------------- ------- ------- 6. Dividends 2007 2006 £'000 £'000 ------- -------Equity dividends paid in the year:Previous year final: 0.00p (2006: 0.00p) per 25p ordinary share - -Current year interim: 0.00p (2006: 0.00p) per 25p ordinary share - ----------------------------------- ------- ------- - - ------- ------- In addition, the Directors propose that a final dividend in respect of thefinancial year ended 31 March 2007 of 0.90p per 25p ordinary share, at a cost ofapproximately £860,000. 7. Earnings per share Earnings per share based on continuing activities before exceptional items,re-measurements and amortisation of intangibles, which the directors considergives a useful additional indication of the underlying performance of the Group,is calculated on the earnings of the year adjusted as follows: 2007 2007 2006 (note 2) 2006 (note 2) Earnings Earnings per 25 Earnings Earnings per 25 pence share pence share £'000 pence £'000 pence --------- ---------- --------- ----------Continuing operations:Profit attributableto ordinary shareholders 4,028 4.52 343 0.53Exceptional items,re-measurements andamortisation of intangibles 5,147 5.77 3,827 5.93Taxation on exceptionalitems, re-measurements and amortisationof intangibles (1,544) (1.73) (1,148) (1.78)------------------------ --------- ---------- --------- ---------- 7,631 8.56 3,022 4.68 --------- ---------- --------- ---------- 8. Other information The Group's financial statements for the year ended 31 March 2007 will be sentto shareholders during the week commencing 16 July 2007. The Annual General Meeting will be held on Tuesday 4 September 2007. Group Headquarters and Registered Office: Registrars & Transfer Office:7 Harbour Buildings, Waterfront West Neville Registrars Limited, Neville HouseDudley Road, Brierley Hill, 18 Laurel Lane, HalesowenWest Midlands, DY5 1LN West Midlands, B63 3DATel: +44 (0) 1384 485345Fax:+44 (0) 1384 472962Website: www.hampsongroup.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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