30th Nov 2006 07:03
Avon Rubber PLC30 November 2006 Avon Rubber p.l.c. Strictly embargoed until 07:00 30 November 2006 Preliminary results for the year ended 30 September 2006 30 Sept 30 Sept 2006 2005 £Millions £Millions ___________ ___________GROUP* Revenue 230.8 239.7 Operating profit/(loss) 1.6 (2.0) Operating profit before exceptional items 3.0 6.2 CONTINUING OPERATIONS Revenue 65.0 46.9 Operating loss (2.5) (3.2) Operating loss before exceptional items (2.0) (1.9) DISCONTINUED OPERATIONS Revenue 165.8 192.8 Operating profit for the year 4.1 1.2 Operating profit for the year before exceptional items 5.0 8.1 LOSS PER SHARE: Basic (68.9)p (19.1)p Continuing operations (20.9)p (21.9)p DIVIDENDS PER SHARE 8.5p 8.5p \* The Group figures are non statutory items which have been reconciled to the Income Statement within Note 2. • Year of significant strategic change • Group now focusing on respiratory protection, dairy, aerosol gaskets and engineered fabrications • Revenue on continuing operations up 39% • Net debt reduced to £1.1 million • Dividend maintained • Results prepared under International Financial Reporting Standards (IFRS) Commenting on the results, Terry Stead, Chief Executive said: "The last eighteen months has been a period of significant strategic change forthe Group. Having disposed of our Automotive business and closed or restructuredother loss making activities, we are now focused on the opportunities inrespiratory protection, dairy, aerosol gaskets and engineered fabrications. Ourposition in respiratory protection has been strengthened by the acquisition ofISI, the launch of the new escape hood and the transfer into production of thenew M50 range of respirators and their associated filters for the US government. In the UK we are seeing the benefits of the cost reduction measures taken lastyear. We are also experiencing increased demand for our legacy respiratoryprotection products and our new escape hood. In North America both our dairy andengineered fabrications businesses continue to perform well. Since the year endthe overall performance from our continuing operations is improving and weexpect significant growth from the North American respiratory protectionbusiness. The Board is confident that the strategic changes that have been made have laidthe foundation for a period of exciting and profitable growth for the Group." For further enquiries, please contact: Avon Rubber p.l.c Terry Stead, Chief Executive 020 7067 0700Peter Slabbert, Group Finance Director (until 2.00pm) From 1 December 01225 896 831 Weber Shandwick | Square Mile Richard Hews 020 7067 0700Rachel TaylorHannah Marwood An analyst meeting will be held at 09:15 for 09:30 am this morning at the officesof Weber Shandwick Square Mile, Fox Court, 14 Gray's Inn Road, London,WC1X 8WS. NOTES TO EDITORS: Avon Rubber p.l.c. is an international polymer engineeringgroup adding value through material, manufacturing and industry sectorexpertise. The Group is currently capitalised at approximately £45 million. AVON RUBBER p.l.c. PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006 INTRODUCTION We have completed a major strategic restructuring during the year. We sold ourAutomotive business, finalised the restructuring at our Hampton Park Westfacility and completed the disposal of Avon Zatec. This repositions the Group inour chosen markets of respiratory protection, dairy, aerosol gaskets andengineered fabrications where we believe the opportunities exist for us tobenefit from higher margin growth and sustainable earnings. Trading was disappointing during the year, particularly in the second half.Having announced the Automotive disposal in May, the delayed August completiondate meant that we incurred losses associated with customer shutdown periods ofJuly/August without the benefit of normally improved trading in September.Interest costs were also higher due to the delayed completion. The short-termimprovements expected at the half year from our respiratory protection businesswere not realised as originally planned. This was through a combination ofmarket factors and the inherent uncertainties associated with the introductionand approval of new safety critical products in a demanding regulatoryenvironment, where a large proportion of our sales are now to military users orother governmental organisations. Once contracts start these provide forlong-term and consistent revenue streams although the exact timing of initialproduction orders is less predictable. The transfer into production of the new generation US military respirator andthe associated filters continues to make progress. We have received furtherorders for this respirator and expect the full rate production order shortly.This will enable our respiratory protection business in Cadillac, Michigan, togrow and operate at planned levels of profitability. The businesses situated inHampton Park West are now showing significant improvements and production ratesof the newly introduced rapid escape hood are approaching targeted levels. OurNorth American dairy business and engineered fabrications continue todemonstrate strong operational performance. RESULTS The Group reports full year results for the first time under InternationalFinancial Reporting Standards (IFRS), adopted from the date of transition being 1 October 2004. Revenue from continuing operations increased by 39% to £65.0m (2005: £46.9m).The operating loss decreased from £3.2m in 2005 to £2.5m; however, the operatingloss before exceptional items increased from £1.9m to £2.0m. The exceptional charges for the year ended 30 September 2006 relate to arestructuring programme at our Hampton Park West facility to reduce its costbase and to the impairment of the loss making Mixing facility in Westbury,offset by a profit on the sale and leaseback of the Hampton Park West site. Group operating profit on an IFRS basis, but presented in a UK GAAP format, was£3.0m before exceptional items (2005: £6.2m) and the profit before tax andexceptional items on a similar basis was £1.7m (2005: £4.8m). Net interest costs increased to £3.4m (2005: £2.5m) due to higher globalinterest rates and higher levels of borrowings through much of the year. Thisfollows the acquisition of International Safety Instruments (ISI) in June 2005for an initial cash consideration of £11.7m, high levels of capital expenditurein our developing respiratory protection business and the later than expectedcompletion of the sale of our Automotive business. Following this disposal, netdebt reduced to £1.1m (2005: £51.7m) at year end. Prior to the effect ofdisposals and a high level of investment ahead of planned growth, we generatednet cash from operating activities of £0.7m (2005: £4.2m). Further investment isplanned for 2007, particularly in product development in our Protection businessand in the working capital associated with planned growth. After net interest and other finance income the loss before tax was £3.7m (2005:£4.7m). After a tax charge of £2.0m (2005: £1.1m), the loss for the year fromcontinuing operations was £5.7m (2005: £5.8m). The tax charge relates to tax on profits in our US entities and the derecognition of tax assets in the UK. Tax credits onlosses in the UK are not being recognised until there is greater certainty about the timing of their utilisation. The discontinued operations comprising the disposed Automotive business, thedisposed business machines operations at Zatec and the closed business machinesoperation at Hampton Park West, incurred a loss for the year of £13.4m (2005:profit £0.7m). This reflects an operating profit before exceptional items of£5.0m (2005: £8.1m), a loss on disposal of the Automotive operations of £17.4m,a loss on disposal of Zatec of £0.6m, £0.9m of exceptional operating costsrelating to the discontinuation of business machine operations in the UK and a tax credit of £0.6m (2005: charge £0.6m). The loss per share was 68.9p (2005: 19.1p) and the loss per share on continuingoperations was 20.9p (2005: 21.9p). PROTECTION AND ENGINEERED PRODUCTS Sales revenue from continuing businesses increased by 39% to £65.0m (2005:£46.9m). This growth originated in three main areas. ISI's full year's sales totalled£11.3m (2005: £2.3m post acquisition) even though they suffered from adisappointing second half as a result of delayed Federal grants to firedepartments in the US. Avon Engineered Fabrications' sales increased by 83% to£8.4m (2005: £4.6m) reflecting strong growth in our military portable storagetank business. In Protection we experienced an increase in recoverable productdevelopment activity and the commencement of respirator sales from our newfacility in Cadillac, but lower sales in the UK. Dairy made modest progress in its mature markets with improvements primarily inthe US. The UK Dairy operations stabilised following sales reductions in 2005.The Aerosol gasket business grew by 5% with further growth, particularly in theUS, being targeted. The operating loss before exceptional items from continuing businesses was £2.0m(2005: £1.9m). This loss is shown after absorption of all central costs. DespiteAutomotive being part of the Group for much of the year no central costs wereallocated to this segment. These costs have been further reduced since thedisposal. The operating loss from continuing businesses represents a mixture of profitablestable businesses, businesses investing for growth and loss making operations: • Our US based businesses, Hi-Life (dairy), Avon Engineered Fabrications (flexible fabrications) and ISI (SCBA equipment) all made significant profit contributions. • The Protection businesses are resourced for further growth in respirators and rapid escape hoods. However, in the year, the UK business experienced a low level of legacy respirator sales. • Our UK Dairy and Aerosol gasket businesses underperformed due to an unacceptably high cost base which has now been addressed. The Mixing operation incurred a significant loss and central costs were at levels higher than we expect going forward. The opportunity for improvement clearly lies in delivering the planned revenuegrowth, particularly in respiratory protection, cost reductions in the UKactioned through the now completed restructuring and elimination of loss makingactivities. Discontinued business revenue fell by 15% to £5.5m (2005: £6.5m). Fallingrevenues at our business machine blades operation led to the disposal of Zatecwhich was completed in September. In addition, we closed our UK business machineroller manufacturing operation in June, exiting another loss making business inlong-term decline. The loss incurred in the discontinued operations (beforeexceptional items) was £0.9m (2005: £0.7m). AUTOMOTIVE (DISCONTINUED BUSINESS) Revenue of £160.2m (2005: £186.4m) reflects the reduced trading period of alittle over ten months to 11 August, the challenge of growing sales in agenerally stable market, price down pressures and a disproportionate exposure inthe US market to the traditional Big 3 automotive manufacturers each of whomcontinued to lose market share. The resulting operating profit (excluding anyallocation of central costs) was £5.9m (2005: £2.1m after exceptional operatingitems of £6.7m). At a trading level therefore, operating profit reduced by£2.9m. As a percentage of sales this is a reduction from 4.7% in 2005 to 3.7% in2006, reinforcing our belief that we were unlikely to deliver acceptable returnsfrom this business going forward. The reduction in profitability resulteddespite significant cost elimination activities, including three facilityclosures in recent years along with the accompanying charges and associatedwrite-offs. Publicly announced cuts in production by major US customers, after the disposalwas completed, confirm the volatility of the market and support our strategy toexit this area of our business. CAPITAL STRUCTURE AND DIVIDEND At the time of our interim statement in May, and following the disposal of theAutomotive business, we stated that the Board would consider the appropriatecapital structure for the Group. This would require balancing important factors,including perceived growth/acquisition opportunities, product developmentprogrammes, restructuring plans, on-going pension obligations and distributionpolicy. The Board has undertaken this review and believes the Group is now poised for aperiod of organic growth, particularly in respiratory protection. This willrequire funding for both working capital and new product development. Inaddition, the Board wishes to be in a position to make appropriate acquisitionsin pursuit of the Group's strategy. There is still a deficit in the pension funddespite improved asset returns in the year, but with the latest valuation takingaccount of increased life expectancy. As a result the Board is of the opinionthat, having taken into account current financing availability and potentialdebt capacity, any enhanced distribution may inhibit the opportunities forgrowth. The Board is, however, recommending an unchanged final dividend of 4.8p pershare (2005: 4.8p per share) which will be paid on 2 February 2007 toshareholders on the register on 12 January 2007. When added to the interimdividend of 3.7p per share (2005: 3.7p per share) the total dividend isunchanged at 8.5p per share (2005: 8.5p per share). The Board recognises thatthis dividend is not covered by current earnings but is committed to returningto appropriate levels of dividend cover going forward. OUTLOOK The last eighteen months has been a period of significant strategic change forthe Group. Having disposed of our Automotive business and closed or restructuredother loss making activities, we are now focused on the opportunities inrespiratory protection, dairy, aerosol gaskets and engineered fabrications. Ourposition in respiratory protection has been strengthened by the acquisition ofISI, the launch of the new escape hood and the transfer into production of thenew M50 range of respirators and their associated filters for the US government. In the UK we are seeing the benefits of the cost reduction measures taken lastyear. We are also experiencing increased demand for our legacy respiratoryprotection products and our new escape hood. In North America both our dairy andengineered fabrications businesses continue to perform well. Since the year endthe overall performance from our continuing operations is improving and weexpect significant growth from the North American respiratory protectionbusiness. The Board is confident that the strategic changes that have been made have laidthe foundation for a period of exciting and profitable growth for the Group. CONSOLIDATED INCOME STATEMENTFor the year ended 30 September Note Year to Year to 30 Sept 06 30 Sept 05 (unaudited) (unaudited) £'000 £'000______________________________________________________________________________Continuing operationsRevenue 2 65,042 46,860Operating loss from continuing operations 2 (2,461) (3,198)_______________________________________________________________________________ _______________________________________________________________________________ Operating loss is analysed as:Before exceptional items (1,997) (1,909)Exceptional operating charges (464) (1,289)_______________________________________________________________________________ _______________________________________________________________________________ Interest receivable 123 193Interest payable (3,493) (2,670)Other finance income 2,151 1,010_______________________________________________________________________________ Loss before tax (3,680) (4,665)Taxation 3 (2,045) (1,116)_______________________________________________________________________________ Loss for the year from continuing operations (5,725) (5,781) Discontinued operations(Loss)/profit for the year from discontinued operations 4 (13,402) 735_______________________________________________________________________________ Loss for the year (19,127) (5,046)_______________________________________________________________________________ (Loss)/profit attributable to minority interest (209) 115Loss attributable to equity shareholders (18,918) (5,161)_______________________________________________________________________________ (19,127) (5,046)_______________________________________________________________________________ Loss per share 6Basic (68.9)p (19.1)pDiluted (68.9)p (19.1)p Loss per share from continuing operationsBasic (20.9)p (21.9)pDiluted (20.9)p (21.9)p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the year ended 30 September Year to Year to 30 Sept 06 30 Sept 05 (unaudited) (unaudited) £'000 £'000_______________________________________________________________________________Loss for the financial year (19,127) (5,046)Actuarial (loss)/gain recognised in retirement benefit scheme (2,143) 3,974Movement on deferred tax relating to retirement benefit liabilities 115 (6,275)Net exchange differences offset in reserves (809) 606_______________________________________________________________________________Net losses not recognised in income statement (2,837) (1,695)_______________________________________________________________________________Total recognised expense for the year (21,964) (6,741)_______________________________________________________________________________Attributable to:Minority interest (209) 115Equity shareholders (21,755) (6,856)_______________________________________________________________________________Total recognised expense for the year (21,964) (6,741)_______________________________________________________________________________ CONSOLIDATED BALANCE SHEETAs at 30 September Note As at As at 30 Sept 06 30 Sept 05 (unaudited) (unaudited) £'000 £'000_______________________________________________________________________________AssetsNon-current assetsGoodwill & intangible assets 17,103 30,296Property, plant and equipment 20,815 71,294Investments accounted for using equity method - 146Trade and other receivables - 604Deferred tax assets 1,101 3,208_______________________________________________________________________________ 39,019 105,548Current assetsInventories 11,257 24,004Trade and other receivables 15,530 51,227Derivative financial instruments - 24Cash and cash equivalents 6,893 8,919_______________________________________________________________________________ 33,680 84,174 LiabilitiesCurrent liabilities Borrowings 8,000 35,884Trade and other payables 18,505 47,270Current tax liabilities 736 1,153_______________________________________________________________________________ 27,241 84,307_______________________________________________________________________________Net current assets/(liabilities) 6,439 (133)_______________________________________________________________________________ Non-current liabilitiesBorrowings - 24,754Deferred tax liabilities 2,293 3,116Other non-current liabilities 1,071 1,155Retirement benefit obligations 14,666 23,076Provisions 3,426 5,615_______________________________________________________________________________ 21,456 57,716_______________________________________________________________________________Net assets 24,002 47,699_______________________________________________________________________________ Shareholders' equityOrdinary shares 28,275 28,121Share premium account 34,191 34,070Revaluation reserve - 1,751Capital redemption reserve 500 500Translation reserve (203) 606Profit and loss account (39,317) (18,114)_______________________________________________________________________________Equity shareholders' funds 7 23,446 46,934Minority interests (equity interests) 556 765_______________________________________________________________________________Total equity 24,002 47,699_______________________________________________________________________________ CONSOLIDATED CASH FLOW STATEMENTFor the year ended 30 September Note Year to Year to 30 Sept 06 30 Sept 05 (unaudited) (unaudited) £'000 £'000_______________________________________________________________________________ Cash flows from operating activitiesCash generated from operations 8 6,261 8,613Interest received 123 234Interest paid (3,890) (2,568)Tax paid (1,750) (2,062)_______________________________________________________________________________ Net cash from operating activities 744 4,217_______________________________________________________________________________ Cash flows from investing activitiesAcquisition of subsidiaries (net of cash acquired) - (11,395)Disposal of subsidiaries (net of cash disposed) 51,972 -Net proceeds from sale of property, plant and equipment 4,935 -Net purchase of property, plant and equipment - (7,072)Capitalised development costs (5,182) (4,774)_______________________________________________________________________________ Net cash generated from/(used in) investing activities 51,725 (23,241)_______________________________________________________________________________ Cash flows from financing activitiesNet proceeds from issues of ordinary share capital 275 297Net movements in loans and finance leases (51,156) 20,058Decrease/(increase) in derivatives 24 (12)Dividends paid to shareholders (2,332) (2,293)_______________________________________________________________________________ Net cash (used in)/ generated from financial activities (53,189) 18,050_______________________________________________________________________________ Effects of exchange rate changes (89) 68_______________________________________________________________________________ Net decrease in cash and cash equivalents (809) (906)Cash and cash equivalents at beginning of the year 7,702 8,608_______________________________________________________________________________ Cash and cash equivalents at end of the year 6,893 7,702_______________________________________________________________________________ NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS 1. Basis of preparation Financial Reporting (a) The figures and financial information for the year ended 30 September 2006 do not constitute the statutory financial statements for that year. Those financial statements have not yet been delivered to the Registrar, nor have the auditors reported on them. The financial statements have been prepared in accordance with our accounting policies published in our IFRS conversion statement on 11 May 2006, which is available on our website at http:/ www.avon-rubber.com/corporate/pressrelease.htm. (b) The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as adopted by the European Union (collectively "IFRS") and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The 2006 financial statements are the Group's first full year consolidated financial statements prepared under IFRS, with a transition date to IFRS of 1 October 2004. Consequently, the comparative figures for 2005 and the Group's balance sheet as at 1 October 2004 have been restated to comply with IFRS, with the exception of IAS 32: "Financial instruments: disclosure and presentation" and IAS 39: "Financial instruments: recognition and measurement" which have been applied from 1 October 2005. In addition, IFRS 1 on first time adoption allows certain exemptions from retrospective application of IFRS in the opening balance sheet at 1 October 2004. For full details, of the 2005 restatement visit the investor section of ourwebsite www.avonrubber.com. 2. Segmental analysis Due to the differing natures of the products and their markets, Avon Rubberp.l.c.'s primary reporting segment is by business. The secondary reportingformat comprises the geographical segments by origin. _____________________________________________________________________________________________Primary Continuing Discontinued reporting format - business segments For the year Protection & Protection &ended Engineered Automotive Engineered30 September Products Components Products Total Unallocated Group2006 £'000 £'000 £'000 £'000 £'000 £'000 _____________________________________________________________________________________________ Revenue 65,042 160,245 5,469 165,714 - 230,756_____________________________________________________________________________________________Segment resultbefore exceptionaloperating items (1,997) 5,877 (918) 4,959 - 2,962 Exceptionaloperatingitems (464) - (917) (917) - (1,381)_____________________________________________________________________________________________Segmentresultafterexceptionaloperating items (2,461) 5,877 (1,835) 4,042 - 1,581 Loss ondisposal ofoperations - (17,381) (645) (18,026) - (18,026) Interestreceivable 123 123 Interestpayable (3,493) (3,493) Other financeincome 2,151 2,151_____________________________________________________________________________________________Loss beforetax (2,461) (11,504) (2,480) (13,984) (1,219) (17,664)Taxation (2,045) 582 - 582 - (1,463)_____________________________________________________________________________________________Loss for theyear (4,506) (10,922) (2,480) (13,402) (1,219) (19,127)_____________________________________________________________________________________________Lossattributableto minorityinterest (209) Lossattributableto equityshareholders (18,918)_____________________________________________________________________________________________ (19,127)_____________________________________________________________________________________________ _____________________________________________________________________________________________Primary Continuing Discontinued reporting format - business segments For the year Protection & Protection &ended Engineered Automotive Engineered30 September Products Components Products Total Unallocated Group2005 £'000 £'000 £'000 £'000 £'000 £'000 _____________________________________________________________________________________________ Revenue 46,860 186,391 6,484 192,875 - 239,735_____________________________________________________________________________________________Segmentresultbeforeexceptionaloperating items (1,909) 8,801 (709) 8,092 - 6,183Exceptionaloperatingitems (1,289) (6,734) (135) (6,869) - (8,158)_____________________________________________________________________________________________Segmentresultafterexceptionaloperating items (3,198) 2,067 (844) 1,223 - (1,975)Share of posttax profitsof joint venture - 78 - 78 - 78Interestreceivable 193 193Interestpayable (2,670) (2,670)Other financeincome 1,010 1,010_____________________________________________________________________________________________Lossbeforetax (3,198) 2,145 (844) 1,301 (1,467) (3,364)Taxation (1,116) (566) - (566) - (1,682)_____________________________________________________________________________________________(Loss)/profitfor the year (4,314) 1,579 (844) 735 (1,467) (5,046)_____________________________________________________________________________________________Profitattributableto minorityinterest 115Lossattributableto equityshareholders (5,161)_____________________________________________________________________________________________ (5,046)_____________________________________________________________________________________________ __________________________________________________________________________________________________________Secondary Continuing Discontinuedreportingformat -geographicalsegments For the year ended30 September North North 2006 Europe America Total Europe America Total Group £'000 £'000 £'000 £'000 £'000 £'000 £'000__________________________________________________________________________________________________________ Revenue 22,266 42,776 65,042 91,230 74,484 165,714 230,756__________________________________________________________________________________________________________ Segment resultbeforeexceptionaloperatingitems (7,084) 5,087 (1,997) 946 4,013 4,959 2,962Exceptionaloperatingitems (464) - (464) (917) - (917) (1,381)__________________________________________________________________________________________________________ Segment resultafterexceptionaloperatingitems (7,548) 5,087 (2,461) 29 4,013 4,042 1,581__________________________________________________________________________________________________________ __________________________________________________________________________________________________________ Secondary Continuing Discontinuedreportingformat -geographicalsegments For the year ended30 September North North 2005 Europe America Total Europe America Total Group £'000 £'000 £'000 £'000 £'000 £'000 £'000__________________________________________________________________________________________________________ Revenue 23,962 22,898 46,860 111,124 81,751 192,875 239,735__________________________________________________________________________________________________________ Segment resultbeforeexceptionaloperatingitems (5,287) 3,378 (1,909) 4,309 3,783 8,092 6,183Exceptionaloperatingitems (1,289) - (1,289) (5,937) (932) (6,869) (8,158)__________________________________________________________________________________________________________ Segment resultafterexceptionaloperatingitems (6,576) 3,378 (3,198) (1,628) 2,851 1,223 (1,975)__________________________________________________________________________________________________________ Central costs which were previously allocated to all business segments, havebeen allocated only to continuing operations. The exceptional operating items comprise: ________________________________________________________________________________ 2006 2005 £'000 £'000________________________________________________________________________________Profit on disposal of fixed assets 4,415 -Fixed asset impairment (3,442) -Other operating charges - continuing (1,437) (1,289)________________________________________________________________________________Exceptional operating items - continuing (464) (1,289)Other operating charges - discontinued (917) (6,869)________________________________________________________________________________ (1,381) (8,158)________________________________________________________________________________ The profit on disposal of fixed assets relates to the profit on the sale andleaseback of the facility at Hampton Park West, Melksham, UK. The fixed assetimpairment relates to our UK mixing facility. Both these are included in theProtection and Engineered Products continuing business segment and Europeansecondary segment. The other operating charges relate to the restructuring of our UK Protection &Engineered Products continuing operations (£1,437,000) and the costs associatedwith the discontinuance of business machine products manufactured in the UK(£917,000). 3. Taxation The split of the tax charge/(credit) between UK and overseas is as follows:________________________________________________________________________________ Year to Year to Year to Year to 30 Sept 06 30 Sept 06 30 Sept 06 30 Sept 05 Continuing Discontinued Total Total £'000 £'000 £'000 £'000 ________________________________________________________________________________United Kingdom 1,011 (634) 377 223Overseas 1,034 52 1,086 893________________________________________________________________________________ 2,045 (582) 1,463 1,116________________________________________________________________________________ The tax charge relating to the sale of operations is £Nil (2005: £Nil) 4. Results from discontinued operations 30 Sept 06 30 Sept 05 £'000 £'000________________________________________________________________________________Revenue 165,714 192,875 Operating profit from discontinued operations 4,042 1,223________________________________________________________________________________Operating profit/(loss) is analysed as:Before exceptional items 4,959 8,092Exceptional operating items (917) (6,869)________________________________________________________________________________Share of post tax profits of joint venture - 78Taxation on profits from discontinued operations 582 (566)Loss on disposal (18,026) -________________________________________________________________________________(Loss)/profit for the year from discontinued operations (13,402) 735________________________________________________________________________________The loss on disposal has been calculated as follows: Automotive Zatec £'000 £'000________________________________________________________________________________Proceeds from sale 58,729 349Costs associated with sale (4,880) (16)________________________________________________________________________________ 53,849 333Taxation on disposal - -________________________________________________________________________________Net proceeds from sale 53,849 333Net assets disposed of (69,330) (978)________________________________________________________________________________ (15,481) (645)Other provisions (1,900) -________________________________________________________________________________Loss on disposal after tax (17,381) (645)________________________________________________________________________________ The Group's Automotive components business was sold on 11 August 2006. Zatec wassold on 29 September 2006. 5. Dividends The directors are proposing a final dividend in respect of the year ending 30September 2006 of 4.8p which will absorb an estimated £1,325,000 ofshareholders' funds. The dividend will be paid on 2 February 2007 toshareholders on the register at noon on 12 January 2007. In accordance with IFRS the proposed final dividend is not recorded as aliability nor reflected in the income statement. 6. Earnings per share Basic loss per share is based on a loss attributable to ordinary shareholders of£18,918,000 (2005: £5,161,000) and 27,454,995 (2005: 26,963,971) ordinaryshares, being the weighted average of the shares in issue during the period onwhich dividends are paid. Loss per share on continuing operations is based on a loss of £5,725,000 (2005:£5,781,000). The company has dilutive potential ordinary shares in respect of the SharesaveOption Scheme and the Performance Share Plan. The diluted loss per share is notmaterially different to the basic loss per share. 7. Reconciliation of changes in equity Year to Year to 30 Sept 06 30 Sept 05 £'000 £'000________________________________________________________________________________At the beginning of the year 46,934 55,405Loss for the period attributable to equityshareholders (18,918) (5,161)Dividends (2,331) (2,294)Actuarial (loss)/gain recognised in retirement benefit schemes (2,143) 3,974Movement on deferred tax relating to retirement benefit liabilities 115 (6,275)Net exchange differences offset in reserves (809) 606New share capital subscribed 275 297Movement in respect of employee share scheme 323 382________________________________________________________________________________At the end of the year 23,446 46,934________________________________________________________________________________ 8. Cash generated from operations Year to Year to 30 Sept 06 30 Sept 05 £'000 £'000________________________________________________________________________________Continuing operationsLoss for the financial year (5,725) (5,781)Adjustments for:Tax 2,045 1,116Depreciation 2,126 2,438Impairment of fixed assets 3,442 -Amortisation and impairment of intangibles 613 191Net interest expense 3,370 2,477Other finance income (2,151) (1,010)Movements in working capital and provisions (5,655) (4,041)Other movements (3,985) 343________________________________________________________________________________Cash used in continuing operations (5,920) (4,267)________________________________________________________________________________Discontinued operations:(Loss)/profit for the financial year (13,402) 735Adjustments for:Tax (582) 566Depreciation 5,047 5,813Loss on sale of subsidiaries 18,026 -Amortisation and impairment of intangibles 1,128 2,312Movements in working capital and provisions 1,964 3,554Other movements - (100)________________________________________________________________________________Cash generated from discontinued operations 12,181 12,880________________________________________________________________________________Cash generated from operations 6,261 8,613________________________________________________________________________________ 9. Analysis of net debt Amortisation As at Cash Disposal of of loan issue Exchange As at 30 Sep 05 Flow subsidiaries costs movements 30 Sept 06 £'000 £'000 £'000 £'000 £'000 £'000 __________________________________________________________________________________________Cash at bankand in hand 3,902 68 (2,122) - (25) 1,823Overdrafts (1,217) 1,226 - - (9) -Current assetinvestmentsclassified ascash equivalents 5,017 108 - - (55) 5,070__________________________________________________________________________________________Cash and cashequivalents 7,702 1,402 (2,122) - (89) 6,893Debt due after1 year (24,754) 24,754 - - - -Debt duewithin 1 year (34,665) 26,389 - (83) 359 (8,000)Finance leases (2) 2 - - - -__________________________________________________________________________________________ (51,719) 52,547 (2,122) (83) 270 (1,107)__________________________________________________________________________________________ 10. Copies of the directors' report and the audited financial statements for theyear ended 30 September 2006 will be posted to shareholders and may also beobtained from the company's registered office at Hampton Park West, SemingtonRoad, Melksham, Wiltshire, SN12 6NB, England. (Telephone +44 1225 896871), orvia the corporate website (www.avon-rubber.com). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Avon Protection