1st Jun 2005 07:00
UMECO PLC01 June 2005 PRESS RELEASE________________________________________________________________________________ 1 June 2005 Preliminary results for the year ended 31 March 2005 STRONG UNDERLYING GROWTH AND EXCELLENT CONTRIBUTION FROM ACQUISITIONS UMECO plc, the leading international provider of value-added services andmaterials to the aerospace, defence and other industries, announces itspreliminary results for the year ended 31 March 2005. Financial highlights • Turnover increased by 31 per cent to £242.4 million (2004: £184.5 million); • Profit before tax* increased by 46 per cent to £14.0 million (2004: £9.6 million); • Earnings per share* up 20 per cent to 28.8p (2004: 24.0p), after adjusting for April 2004 rights issue; • Recommended increased final dividend of 8.75p per share (2004: 8.5p), resulting in a total dividend of 13.25p per share (2004: 12.5p), up 6 per cent; • Operating margin* increased to 6.8 per cent (2004: 5.7 per cent); • Strong operating cash flow of £13.8 million (2004: £9.7 million). Operational highlights • ACG and AMS, both acquired during the year, performed ahead of initial expectations; • At constant exchange rates, underlying sales increased by 12 per cent and operating profit was up by 13 per cent; • Recovery in civil aerospace market started midway through the year; • US defence market remains strong; • Global demand for advanced composite materials increasing at high rate; • Current year has started with strong order books and healthy level of new business activity. (* adjusted to exclude goodwill amortisation and exceptional items) Clive Snowdon, Chief Executive of UMECO plc, commented: "UMECO has had an excellent year with good results from our existing activitiesand with the acquisitions performing even better than we first expected. "The civil aerospace market, our principal sector, is now recovering with buildrates for new aircraft expected to continue to rise over the medium term. The USdefence market remains strong, and global demand for our advanced compositematerials is increasing at a high rate, in the aerospace, motorsport andupper-end automotive markets in particular. "We continue to extend our international presence and to invest in capacity. Forthe current year, a strategic focus will be the development of our activities inthe rapidly expanding Far Eastern market. "We have started 2005 with a strong order book and, with a clear strategy forgrowth in place, we are in a position to look forward to a period of sustainedprogress." For further information, please contact:- UMECO plc Tel: 01926 331 800Clive Snowdon, Chief ExecutiveJohn Beaumont, Finance Directorwww.umeco.com Hogarth Partnership Tel: 020 7357 9477John OlsenBarnaby Fry Chairman's Statement Results and dividend I am very pleased to report that UMECO has had an excellent year with goodresults from our existing activities and from the businesses we have recentlyacquired. The civil aerospace market, which is our principal sector, is nowrecovering with build rates for new aircraft expected to rise over the mediumterm. Turnover was £242.4 million, an increase of £57.9 million; at constant exchangerates the increase would have been £62.6 million. The companies acquired duringthe year, Advanced Composites Group and Avionics Mobile Services, contributed£40.4 million of the reported increase. Turnover from existing activitiesincreased by £17.5 million or £21.3 million at constant exchange rates. Profit before tax, goodwill amortisation and exceptional items was £14.0 million(2004: £9.6 million) an increase of 46 per cent. Acquisitions, net of relatedfunding costs, contributed £3.3 million of this increase. Earnings per share, excluding goodwill amortisation and exceptional items,increased by 20 per cent to 28.8p (2004: 24.0p) after adjusting for the rightsissue in April 2004. The Directors are proposing an increased final dividend of8.75p (2004: 8.5p), making a total for the year of 13.25p per ordinary share(2004: 12.5p) an overall increase of 6 per cent. The final dividend is payableon 12 August 2005 to shareholders on the register on 15 July 2005. Acquisitions In May 2004 the £44.25 million acquisition of the Advanced Composites Group wascompleted, part-funded by a £20.7 million rights issue that was 96.7 per centtaken up by investors. The company has operations in the UK and the USA and is aleading international supplier of high performance advanced composite materialsto OEMs mainly in the motorsport, automotive, aerospace and defence industries. The acquisition of Avionics Mobile Services was completed in July 2004 for aninitial cash consideration of £1.3 million with the vendor being entitled toadditional consideration based on profits for the two years ending 30 June 2006.The company designs and installs sophisticated avionic instruments and has agrowing international customer base. Directors Osman Abdullah, who has served UMECO as a non-executive director since 1993,intends to retire from the Board at this year's Annual General Meeting. He hasmade a significant contribution to the strategic development of the Group overthis period and we wish him a long and happy retirement. The Board have instigated an external search process to identify suitablyqualified candidates to replace Mr Abdullah. Management and employees In March 2005 we announced the promotion of John Smith to become Chief Executiveof UMECO's Repair and overhaul division. John will lead the business developmentplans we have for the division. On behalf of the Board I wish to express our on-going appreciation to all of ouremployees for their significant efforts during the past year. It is pleasing tonote that 45 per cent of eligible employees are participating in the Group'sSAYE share option scheme, underlining their commitment to, and confidence in,UMECO's future. Prospects The civil aerospace market is recovering. Both Airbus and Boeing are planning tobuild more aircraft this year than last, and their growing order books point tofurther increases for the medium term. The US defence market remains strong andRolls-Royce, our largest customer, has been very successful in advancing itsshare in both the new build and after markets. Global demand for advanced composite materials is also increasing at a high rateand we are seeking to grow our share in the upper-end automotive, wind turbine,aerospace and defence markets. UMECO has market leading positions in the key segments in which it operates andwe strive to develop our business at an above average rate of growth. Wecontinue to extend our international presence and invest in capacity to ensurewe are able to meet the increasing demand for our products and services. Taken together with our strong order book, these factors give me considerableconfidence in our immediate and longer term prospects. Brian McGowan, Chairman1 June 2005 Chief Executive's Review Operations Turnover for the year was £242.4 million (2004: £184.5 million) an increase of31 per cent and includes a full year contribution from Tailored LogisticsCorporation ("TLC") compared to two months in the prior year, eleven monthscontribution from the Advanced Composites Group ("ACG") and nine monthscontribution from Avionics Mobile Services ("AMS"). These transactions accountedfor additional turnover of £44.9 million. Against this, adverse foreign exchangerate movements, principally the weakening of the US dollar against sterling, hadthe effect of reducing reported turnover; at constant exchange rates turnoverwould have been £4.7 million higher. On an underlying basis, excluding acquisitions and at constant exchange rates,turnover increased in the year by 12 per cent. This compares favourably whenseen in the context of a 4 per cent increase in deliveries of civil aircraft in2004. Growth has been achieved in most businesses, reflecting additional volumeson existing contracts and the benefits of newly secured business wins. Operating profits referred to in this Review are before goodwill amortisationand exceptional items which provide a more consistent measure of operatingperformance. Operating profit at £16.4 million (2004: £10.5 million) increasedby 56 per cent, on an underlying basis the increase was 13 per cent. Operating margin at 6.8 per cent (2004: 5.7 per cent) reflect the higher marginsat the recently acquired companies and the benefits of operational gearing asvolumes increased, particularly in the second half of the year. UMECO Components 2005 2004 £ million £ million -----------------------Sales 122.7 110.9Operating profit 5.4 4.0 UMECO Components is a leading international provider of value-added distributionand supply chain outsourcing services primarily to OEM customers in theaerospace and defence markets. With its specialisation in the supply of smallcomponents and sophisticated IT systems, significant operational, cost andworking capital benefits can be enjoyed by its growing global customer base. Underlying sales grew in the year by 13 per cent (2004: 3 per cent). The salesimpact of the new contract with Bombardier Aerospace was relatively modest withonly our management fee being recognised as revenue since UMECO is not takingtitle to stock. Operating profit increased in the period by 35 per cent due to a much improvedperformance by Pattonair in the UK, reduced losses at Pattonair SAS, a fullyear's contribution from TLC and a strong performance by Ulogistics Europe. At Pattonair UK, the new senior management team continues to seek furtheroperational improvements and to increase market share with a number of importantcontracts being tendered for. Ulogistics Europe continues to develop its activities with Rolls-Royce, havingtaken responsibility from Pattonair for the contract to supply components to itsGerman operations. The contract was also extended to cover a broader number andincreased value of parts. In addition, during the second half of the year, amajor process improvement was successfully implemented to enhance the flow ofparts to Rolls-Royce's aftermarket customers. In recognition of the expectedgrowth in activity levels, Ulogistics' senior management team has recently beenstrengthened and further investments made in IT systems. Ulogistics North America has successfully implemented the first phase of the newcontract with Bombardier Aerospace covering the customer's principal facility inMontreal, and this implementation will be complete by the end of the currentyear. In December the business moved into its new state of the art premises inMontreal and is now planning the implementation of the next phase of thecontract at the customer's other facilities. As part of an acceleratedimplementation programme the customer agreed to waive the inventory fundingpayment of C$10.0 million we were due to make under the contract during theyear. Abscoa had another good year and moved into its new Fort Worth facility inOctober, maintaining its high levels of customer service during the relocationprocess. The new facility is purpose built and in addition to providingadditional capacity has been designed to achieve much improved productivity. TLC made a positive contribution in the year net of related funding costsalthough the phasing of order intake from the US Department of Defense remainsunpredictable. During the year the UMECO Components established a strategic procurement andengineering activity to take better advantage of its significant and growingmarket position and to support the bidding process on new programmes. Thedivision continues to enjoy a high level of demand from existing and prospectivecustomers for its outsourcing services. From April 2005, the management of the division's US operations has beenintegrated to provide a robust platform to facilitate sustained growth in whatis the major market for its products and services. UMECO Composites 2005 2004 £ million £ million -----------------------Sales 101.9 57.6Operating profit 9.1 4.6 These results include an eleven months contribution from ACG, acquired in May2004. UMECO Composites provides a complete range of advanced composite materials andspecialist chemical products principally to the aerospace, motorsport,automotive and wind energy markets. A growing range of value-added outsourcingservices is provided to major customers. Underlying sales increased by 15 per cent with strong growth coming fromRichmond Aircraft Products, Aeropia and Aerovac Systems. ACG performed well inthe eleven month period of our ownership and exceeded our initial expectations. Operating profit increased by 98 per cent with an excellent contribution fromACG and the existing businesses despite a disappointing performance by Aerovacin France. Excluding ACG, operating profit grew by 13 per cent at constantexchange rates. As reported at the half year our vacuum bagging businesses, Aerovac Systems inEurope and Richmond in the USA, achieved excellent growth and this continued inthe second half year. At constant exchange rates, full year sales growth atthese businesses was 20 per cent and reflects the continued rise in the use ofcomposite materials across a number of industries, and the actions taken toincrease market share. Aerovac in France had a disappointing start to the yearbut following management changes in the autumn saw some recovery in its tradingand prospects. Richmond has secured additional business with Boeing and, withthe 787 expected to go into production in 2006, is anticipating a further risein activity levels. As a result Richmond has leased an additional 20,000 squarefoot facility close to their existing premises. ACG's excellent record of growth in sales and profits achieved prior to ourownership has continued in the period since acquisition. The business hascontinued to achieve its objectives and has exceeded our initial expectations.On an annualised basis and at constant exchange rates sales growth was 12 percent; its operating margins also improved during the year. ACG, in common withAerovac and Richmond, is expecting demand for its product range to grow as theuse of advanced composite material increases in a number of markets, some ofwhich are high growth in their own right. During the year under review capitalinvestments to add capacity were made in both ACG's UK and US facilities and a£7.0 million expansion of its UK facility is planned for the current financialyear. Aeropia achieved 16 per cent sales growth in the year with the contract tosupply Lufthansa Technik coming fully on stream. A number of other new butsmaller contracts were won during the year. RD Taylor achieved a similar level of growth to Aeropia. In autumn 2004 itrenewed its major long term single source agreement with Goodrich's PrestwickService Centre for another three years and has recently broadened the range ofproducts it supplies. In April 2005 it was named by Raytheon Systems as theirService Provider of the Year for 2004. GRP Material Supplies had a better year benefiting from both improved volumesand higher sales prices. As announced on 4 May 2005, GRP has agreed to acquirecertain assets from Ashland Composite Polymers related to their distributionbusinesses in Sweden, Denmark and Norway. The acquisition is expected tocomplete in July 2005 and represents an excellent opportunity for GRP to expandits operations in the UK to Scandinavia. UMECO Repair and overhaul 2005 2004 £ million £ million -----------------------Sales 17.8 16.0Operating profit 1.9 1.9 These results include nine months contribution from AMS, acquired in July 2004. UMECO Repair and overhaul now comprises two companies; AEM, which is one of thelargest independent component repair and overhaul facilities in Europe and AMS,which installs avionic equipment. Underlying sales, excluding the contribution from AMS, fell by 10 per cent. Thisprimarily reflects the unusually high level of business enjoyed with one exportcustomer in the prior year, as previously announced. AMS achieved an excellentresult and sales exceeded our initial expectations for the period by over 50 percent. Profits at AEM were lower than last year as a consequence of the reduced levelof sales in the period. The company continues to develop its capabilities andhas expanded its sales office in Singapore in order to offer an enhanced serviceto customers in the growing Far East market. AMS has been very profitable since our acquisition, securing and delivering on anumber of large installation projects; it entered the current year with a solidorder book. Summary Despite flat market conditions the Group performed well in the year under reviewachieving underlying sales growth of 12 per cent at constant exchange rates,improving operating margins and maintaining our record of good cash generation.ACG and AMS, the two companies acquired during the year, have been quickly andsuccessfully integrated into the Group and both performed ahead of our initialexpectations. We have entered the new financial year with annualised orderintake consistently running approximately £20 million ahead of deliveries. The recovery in the civil aerospace market started mid way through the yearunder review with Boeing and Airbus delivering 4 per cent more aircraft in 2004than the prior year. For 2005 build rates are expected to grow by over 10 percent with further rises anticipated for the medium term. The effect of thesignificant rise in aviation fuel does not currently appear to be affectingpassenger numbers, which are growing by approximately 5 per cent. The majorgrowth in the Far Eastern economies particularly China is driving a big rise inair cargo volumes. Boeing's decision during 2004 to launch the 787 is another very positive sign ofthe market recovery. This aircraft has a significant composite content thatbodes well for our businesses in that segment; additionally Rolls-Royce has wonthe lion's share of orders from the initial customers for the 787 with their newTrent 1000 engine. US defence spending remains at a high level and the development stage of theJoint Strike Fighter continues to provide business opportunities for Groupcompanies. In Europe, Airbus' A400M military transport aircraft project remainson track and will also add to future activity levels. Following the acquisition of ACG, the Group is exceptionally well placed forfurther growth with a high level of demand for our outsourcing services and thesupply of advanced composite material into a number of rapidly growing markets.We will continue to invest to ensure we have the capacity available to meet ourcustomer's expectations. For the current year a strategic focus for the Group is to develop ouractivities in the rapidly expanding Far Eastern market. We anticipate anincreasing demand for our aftermarket products and services and have alreadyexpanded our sales office in Singapore. My management team are in confident mood after a number of very challengingyears and we look forward to the further development of the Group. Clive Snowdon, Chief Executive Finance Director's Review Operating results 2005 2004 £ million £ million ----------- ------------Sales - total 242.4 184.5Sales - acquisitions 40.4 - Operating profit - total 16.4 10.5Operating profit - acquisitions 4.9 - per cent per cent ----------- ------------Operating margin - total 6.8 5.7Operating margin - acquisitions 12.1 - Sales for the year were 31 per cent higher than last year, with the acquisitionsaccounting for two thirds of the increase. Operating profit before goodwillamortisation and exceptional items was £16.4 million, £5.9 million higher thanthe previous year, of which the acquisitions contributed £4.9 million. Theincrease in the existing businesses includes a full year contribution from TLC,partly offset by a lower result from AEM which had benefited from exceptionallyhigh activity levels with an export customer in the previous year. Exchange rates Average Year end 2005 2004 2005 2004 ------- ------- ------- -------US dollar 1.846 1.694 1.890 1.838Euro 1.467 1.441 1.454 1.494 With over 25 per cent of sales being made by overseas subsidiaries, and with aconsiderable amount of UK business transacted in foreign currencies, principallythe US dollar and the Euro, changing exchange rates mask the underlyingperformance of the Group. At constant exchange rates the sales increase for theyear would have been 34 per cent. Interest Debt increased during the year primarily due to the net funding of theacquisition of ACG. Coupled with increasing interest rates, this resulted in aninterest charge of £2.4 million (2004: £0.9 million). Average interest ratespayable in the year were 4.6 per cent and average net debt was £50.7 millioncompared with 3.9 per cent and £22.3 million last year. Interest was covered 6.8times by profit before goodwill amortisation and exceptional items (2004: 11.7times). Goodwill amortisation Goodwill is written off over 20 years, subject to any reviews for impairment.Amortisation increased to £4.1 million from £2.2 million in 2004 largely due toan 11 month charge for ACG. Exceptional items Exceptional costs of £0.6 million were incurred during the year, including costsrelating to the restructuring of Pattonair SAS. Profit before tax The strong contribution from the acquisitions lifted profit before tax to £9.3million. Before goodwill amortisation and exceptional items, profit before taxrose to £14.0 million, an increase of £4.4 million over the previous year. Tax The tax charge on profit before goodwill amortisation and exceptional items was33.6 per cent (2004: 34.4 per cent). The lower rate has been helped by reducedlosses at Pattonair SAS and by the impact of lower average tax rates in theacquisitions. Earnings per share Before goodwill amortisation and exceptional items, basic earnings per sharewere 28.8p, 20 per cent higher than last year after adjusting for the effects ofthe rights issue. After goodwill amortisation and exceptional items, basicearnings per share were 15.4p (2004: 15.8p) Dividends Last year's final dividend of 8.5p was paid in August 2004 and included £0.7million in respect of shares issued under the rights issue in April 2004. Aninterim dividend of 4.5p was paid in December 2004 and a final dividend of 8.75pis proposed, making a total of 13.25p, a 6 per cent increase over last year's12.5p. Operating cash flow 2005 2004 £ million £ million ------------ ------------Operating profit after exceptional items and beforegoodwill amortisation 15.8 10.1Depreciation 2.7 1.8Working capital movement (4.7) (2.2) ------------ ------------Operating cash flow 13.8 9.7 ------------ ------------ per cent per cent ------------ ------------Operating cash flow conversion 87.3 96.0Working capital to sales 20.7 22.1 Operating profit conversion to cash of 87.3 per cent fell from 96.0 per centlast year following a £4.7 million increase in working capital to support higheroverall levels of activity. The ratio of working capital to sales improvedslightly reflecting the impact of the acquisitions. Efforts to improve workingcapital utilisation at Pattonair are proving successful although the impact hasbeen offset by higher stocks at Ulogistics that are required to supportRolls-Royce's increasing activity levels. Capital expenditure Gross capital expenditure of £7.5 million (2004: £2.6 million) was £4.8 millionhigher than depreciation. Major investments in the year included the newbuilding for Abscoa in the USA, the acquisition and refurbishment of the Group'sheadquarters in Leamington Spa, the fit out of our facilities in Montreal tosupport the Bombardier contract and investment in additional production capacityat ACG's facilities in the UK and the USA. Free cash flow Following the major capital expenditure program in the year, operating cash flowless interest, tax and capital expenditure generated £1.2 million (2004: £5.4million). Tax paid was £0.6 million lower than the charge in the profit and lossaccount due mainly to the disposal of obsolete stock at Abscoa. Acquisitions In May 2004 the Group acquired ACG for a total consideration of £46.5 millionincluding expenses. The acquisition was funded by a 1 for 3 rights issue at 270pence per share that raised £20.7 million, after expenses, with the balancebeing funded from debt. The acquisition of AMS was completed in July 2004 for an initial considerationof £1.3 million. Additional consideration is payable in 2006 based on profitsfor the two years ending 30 June 2006. Net indebtedness and gearing 2005 2004 £ million £ million ----------- ------------Net debt 51.3 21.7 per cent per cent ----------- ------------Gearing 61.0 34.3 Net debt rose by £29.6 million during the year due mainly to acquisitions and tothe capital expenditure programme. Group banking facilities were increased to£75.0 million during the year and comprise a dollar denominated term loan andrevolving credit facility, and a sterling overdraft. Whilst gearing rose to 61.0per cent, the Board believes that this is a comfortable level, and debt levelsremain well within the main banking covenant limits. Shareholders' funds Shareholders' funds increased from £62.9 million to £83.7 million. The increasecomprises £20.7 million of net proceeds from the rights issue, a loss for theyear of £0.1 million and a £0.2 million net translation gain on the value of theGroup's investments in its overseas subsidiaries. Pensions The Group operates a number of defined contribution pension schemes and has twodefined benefit schemes, both of which are closed to new members. In addition tothe UMECO defined benefit scheme, ACG has a defined benefit arrangement which isnow reported on as a consequence of the acquisition. The FRS 17 valuation of the UMECO defined benefit scheme at 31 March 2005 showedan increase in the shortfall of the scheme's assets to liabilities, afterassociated tax relief, to £2.3 million from £2.1 million in the previous year.This change was due to revised mortality assumptions offset by a furtherimprovement in global equity markets. The valuation of the ACG scheme showed adeficit of £1.1 million after associated tax relief, compared to £0.8 million at31 March 2004. The combined deficit of the two schemes is approximately 4 percent of the Group's net asset value and current contribution rates have beencalculated to fund the shortfall over the remaining working lives of schememembers. Currency exchange risk The Group seeks to hedge currency exchange risks by matching purchases and salesin its UK businesses that are denominated in foreign currencies. Where this isnot possible, forward currency contracts may be taken out to protect exposures.Group policy prohibits speculation in currency management. The net investment in overseas investments is largely US dollar denominated andthe Group's net debt is also largely denominated in dollars. The continueddecline of the dollar has had a beneficial effect on interest charges which havebeen partly protected by the use of interest rate swaps. These have fixed therate on approximately 24 per cent of the Group's year end debt at below 4 percent. As part of the increased bank facilities agreed at the time of the ACGacquisition, these swaps will be replaced as they expire in the current yearwith new contracts that will cover approximately 70 per cent of net debt and arebased on an average LIBOR of 4.9 per cent. The sterling value of net debt fell by £1.7 million in the year due to theweakening of the US dollar and this benefit was set against the decline in thetranslated value of overseas net assets with the net surplus of £0.2 millionbeing credited to reserves. International Financial Reporting Standards IFRS will apply to the financial statements for the year ending 31 March 2006.The main differences for the Group between current UK GAAP and IFRS are: • goodwill amortisation will be replaced by impairment testing, with any consequent change in value being charged to the profit and loss account; • the cost of share options will be charged to the profit and loss account based on an option pricing model; • financial instruments, including interest and currency hedging arrangements, will be included in the balance sheet at market value with any difference being charged in the profit and loss account; • the deficit in the defined benefit pension schemes will be recognised on the balance sheet; • the proposed final dividend will no longer be included in the balance sheet. The Group intends to disclose its opening balance sheet under IFRS prior tomaking its results announcement for the six months ending 30 September 2005. John Beaumont, Group Finance Director Consolidated Profit and Loss Account________________________________________________________________________________For the year ended 31 March 2005 Before Before goodwill Goodwill goodwill Goodwill amortisation amortisation amortisation amortisation and and and and exceptional exceptional 2005 exceptional exceptional 2004 items items Total items items Total £m £m £m £m £m £m Turnover 242.4 - 242.4 184.5 - 184.5--------------------------------------------------------------------------------Continuing operations 202.0 - 202.0 184.5 - 184.5Acquisitions 40.4 - 40.4 - - --------------------------------------------------------------------------------- Cost of sales (179.5) - (179.5) (140.7) - (140.7)--------------------------------------------------------------------------------Gross profit 62.9 - 62.9 43.8 - 43.8Distribution costs (4.3) - (4.3) (3.9) - (3.9)Administrative expenses (42.2) (4.7) (46.9) (29.4) (2.6) (32.0)--------------------------------------------------------------------------------Operating profit 16.4 (4.7) 11.7 10.5 (2.6) 7.9--------------------------------------------------------------------------------Continuing operations 11.5 (2.9) 8.6 10.5 (2.6) 7.9Acquisitions 4.9 (1.8) 3.1 - - --------------------------------------------------------------------------------- Net interest payable (2.4) - (2.4) (0.9) - (0.9)--------------------------------------------------------------------------------Profit on ordinary activities 14.0 (4.7) 9.3 9.6 (2.6) 7.0 before taxation--------------------------------------------------------------------------------Taxation on profit on ordinary (4.7) 0.4 (4.3) (3.3) 0.5 (2.8) activities--------------------------------------------------------------------------------Profit on ordinary activities 9.3 (4.3) 5.0 6.3 (2.1) 4.2 after taxationMinority interests (0.1) - (0.1) (0.1) - (0.1)--------------------------------------------------------------------------------Profit for the financial year 9.2 (4.3) 4.9 6.2 (2.1) 4.1Dividends paid and proposed (5.0) - (5.0) (3.1) - (3.1)--------------------------------------------------------------------------------Transferred to reserves 4.2 (4.3) (0.1) 3.1 (2.1) 1.0-------------------------------------------------------------------------------- Earnings per share pence pence pence pence pence pence--------------------------------------------------------------------------------Before goodwill amortisation and exceptional items 28.8 - 28.8 24.0 - 24.0Goodwill amortisation and exceptional items - (13.4) (13.4) - (8.2) (8.2)--------------------------------------------------------------------------------On profit for the financial year 28.8 (13.4) 15.4 24.0 (8.2) 15.8--------------------------------------------------------------------------------Diluted earnings per share 28.4 (13.3) 15.1 23.7 (8.1) 15.6-------------------------------------------------------------------------------- Balance Sheet________________________________________________________________________________As at 31 March 2005 Group Company 2005 2004 2005 2004 £m £m £m £m Fixed assetsIntangible assets 73.9 36.2 - -Tangible assets 18.8 9.8 1.5 0.1Investments - - 106.8 60.8-------------------------------------------------------------------------------- 92.7 46.0 108.3 60.9 Current assetsStocks 56.6 48.0 - -Debtors (see note below) 56.9 41.9 39.6 37.2Cash at bank and in hand 6.9 3.6 15.2 3.0-------------------------------------------------------------------------------- 120.4 93.5 54.8 40.2Creditors falling due within one year (97.5) (54.8) (43.9) (8.2)--------------------------------------------------------------------------------Net current assets (see note below) 22.9 38.7 10.9 32.0--------------------------------------------------------------------------------Total assets less current liabilities 115.6 84.7 119.2 92.9 Creditors falling due after one year (30.8) (21.1) (40.7) (36.1) Provisions for liabilities and charges (0.7) (0.4) (0.1) (0.1)--------------------------------------------------------------------------------Net assets 84.1 63.2 78.4 56.7-------------------------------------------------------------------------------- Capital and reservesCalled up share capital 8.1 6.1 8.1 6.1Share premium account 68.3 49.6 68.3 49.6Other reserves - - 0.1 0.1Profit and loss account 7.3 7.2 1.9 0.9--------------------------------------------------------------------------------Equity shareholders' funds 83.7 62.9 78.4 56.7Equity minority interest 0.4 0.3 - --------------------------------------------------------------------------------- 84.1 63.2 78.4 56.7-------------------------------------------------------------------------------- Debtors and net current assets of the Group include amounts due after more thanone year of £1.8 million (2004: £2.4 million). The equivalent amounts for the Company are £38.6 million (2004: £36.4 million). Consolidated Cash Flow Statement________________________________________________________________________________For the year ended 31 March 2005 2005 2004 £m £m Net cash inflow from operating activities 13.8 9.7--------------------------------------------------------------------------------Returns on investments and servicing of finance Interest paid - bank (2.0) (0.7)Interest paid - hire purchase and finance leases (0.1) (0.1)Dividends paid to minority interests - (0.1)--------------------------------------------------------------------------------Net cash outflow from returns on investmentsand servicing of finance (2.1) (0.9)--------------------------------------------------------------------------------TaxationCorporation tax (3.7) (2.6)--------------------------------------------------------------------------------Capital expenditurePurchase of tangible fixed assets (7.0) (1.5)Proceeds of sale of tangible fixed assets 0.2 0.7--------------------------------------------------------------------------------Net cash outflow from capital expenditure (6.8) (0.8)--------------------------------------------------------------------------------Acquisitions (47.1) (5.2)--------------------------------------------------------------------------------Equity dividends paid (4.3) (3.1)--------------------------------------------------------------------------------Net cash outflow before financing (50.2) (2.9) FinancingShare capital issued 20.7 -Draw down of bank loans 59.8 18.0Repayment of bank loans (25.8) (9.8)Capital element of hire purchase and finance leases (0.5) (0.4)repaid--------------------------------------------------------------------------------Net cash inflow from financing 54.2 7.8--------------------------------------------------------------------------------Increase in cash 4.0 4.9-------------------------------------------------------------------------------- Reconciliation of operating profit to net cash inflow from operating activities________________________________________________________________________________For the year ended 31 March 2005 2005 2004 £m £m Operating profit 11.7 7.9Depreciation charges 2.7 1.8Amortisation of goodwill 4.1 2.2(Increase)/decrease in stocks (5.7) 1.7Increase in debtors (7.0) (2.4)Increase/(decrease) in creditors 8.0 (1.5)--------------------------------------------------------------------------------Net cash inflow from operating activities 13.8 9.7-------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net debt________________________________________________________________________________For the year ended 31 March 2005 2005 2004 £m £m Increase in cash 4.0 4.9Repayment of bank loans 25.8 9.8Cash outflow from reduction in hire purchase and financeleases 0.5 0.4--------------------------------------------------------------------------------Reduction in net debt resulting from cash flows 30.3 15.1Draw down of bank loans (59.8) (18.0)Inception of hire purchase and finance leases (0.5) (1.1)Bank loans taken on with acquisition (1.3) -Translation differences 1.7 3.0--------------------------------------------------------------------------------Increase in net debt (29.6) (1.0)Net debt at start of year (21.7) (20.7)--------------------------------------------------------------------------------Net debt at end of year (51.3) (21.7)-------------------------------------------------------------------------------- Statement of Total Recognised Gains and Losses________________________________________________________________________________For the year ended 31 March 2005 Group Company 2005 2004 2005 2004 £m £m £m £m Profit for the financial year 4.9 4.1 6.0 2.4 Foreign exchange translation 0.2 (2.2) - ---------------------------------------------------------------------------------Total recognised gains for the year 5.1 1.9 6.0 2.4-------------------------------------------------------------------------------- Reconciliation of Movements in Shareholders' Funds________________________________________________________________________________For the year ended 31 March 2005 Group Company 2005 2004 2005 2004 £m £m £m £m Profit for the financial year 4.9 4.1 6.0 2.4 Dividends (5.0) (3.1) (5.0) (3.1) Share capital issued 20.7 - 20.7 - Foreign exchange translation 0.2 (2.2) - ---------------------------------------------------------------------------------Net change in shareholders' funds 20.8 (1.2) 21.7 (0.7) Opening shareholders' funds 62.9 64.1 56.7 57.4--------------------------------------------------------------------------------Closing shareholders' funds 83.7 62.9 78.4 56.7-------------------------------------------------------------------------------- Segmental information________________________________________________________________________________ 2005 Continuing 2005 operations Acquisitions 2005 2004 £m £m £m £mTurnover by activity Components 122.7 - 122.7 110.9Composites 64.9 37.0 101.9 57.6Repair and overhaul 14.4 3.4 17.8 16.0-------------------------------------------------------------------------------- 202.0 40.4 242.4 184.5-------------------------------------------------------------------------------- Turnover by destination United Kingdom 134.6 118.7Rest of Europe 45.0 23.9North America 47.9 31.9Rest of world 14.9 10.0-------------------------------------------------------------------------------- 242.4 184.5-------------------------------------------------------------------------------- Turnover by origin United Kingdom 175.2 139.6Rest of Europe 15.9 11.1North America 51.3 33.8-------------------------------------------------------------------------------- 242.4 184.5-------------------------------------------------------------------------------- Before Before goodwill Goodwill goodwill Goodwill amortisation amortisation amortisation amortisation and and and and exceptional exceptional 2005 exceptional exceptional 2004 items items Total items items Total £m £m £m £m £m £mProfit before interest by activity Components 5.4 (1.1) 4.3 4.0 (0.9) 3.1Composites 9.1 (3.3) 5.8 4.6 (1.5) 3.1Repair and overhaul 1.9 (0.3) 1.6 1.9 (0.2) 1.7-------------------------------------------------------------------------------- 16.4 (4.7) 11.7 10.5 (2.6) 7.9-------------------------------------------------------------------------------- Profit before interest by origin United Kingdom 11.5 (2.5) 9.0 7.9 (1.1) 6.8Rest of Europe - (0.4) (0.4) (0.2) - (0.2)North America 4.9 (1.8) 3.1 2.8 (1.5) 1.3-------------------------------------------------------------------------------- 16.4 (4.7) 11.7 10.5 (2.6) 7.9-------------------------------------------------------------------------------- Segmental information________________________________________________________________________________ 2005 2004 £m £mNet assets by activity Components 50.2 47.9Composites 79.8 33.7Repair and overhaul 6.8 6.2Holding company (52.7) (24.6)-------------------------------------------------------------------------------- 84.1 63.2-------------------------------------------------------------------------------- Net assets by origin United Kingdom 26.2 20.8Rest of Europe 7.5 4.8North America 50.4 37.6-------------------------------------------------------------------------------- 84.1 63.2-------------------------------------------------------------------------------- Goodwill amortisation and exceptional items________________________________________________________________________________ 2005 2004 £m £m Goodwill amortisation 4.1 2.2 Exceptional items- re-organisation costs 0.5 0.4- aborted acquisition costs 0.1 --------------------------------------------------------------------------------- 4.7 2.6-------------------------------------------------------------------------------- Dividends________________________________________________________________________________ 2005 2004 £m £m Interim paid 17 December 2004 - 4.5p per share (2004: 4.0p) 1.5 1.0 Final dividend 2004 - paid on shares issued pursuant to rightsissue 0.7 -Proposed final - 8.75p per share (2004: 8.5p) 2.8 2.1-------------------------------------------------------------------------------- 5.0 3.1-------------------------------------------------------------------------------- The final dividend will be payable on 12 August 2005 to shareholders registeredon 15 July 2005. Earnings per share Earnings per share is calculated on profits on ordinary activities aftertaxation for the year attributable to shareholders of £4.9 million (2004: £4.1million). Earnings before goodwill amortisation and exceptional items, whichprovides a consistent measure of operating performance, were £9.2 million (2004:£6.2 million). The weighted average number of ordinary shares in issue was 32.0million (2004: 25.8 million). The weighted average number of shares on a fully diluted basis, was 32.4 million(2004: 26.1 million), after an adjustment for dilutive share options of 0.4million (2004: 0.3 million). The financial information in this statement does not constitute the Company'sstatutory accounts for the years ended 31 March 2004 or 31 March 2005 but isderived from those accounts. Statutory accounts for 2004 have been delivered tothe Registrar of Companies, and those for 2005 will be delivered following theCompany's Annual General Meeting. The Auditors have reported on those accounts;their reports were unqualified and did not contain statements under sub-sections237 (2) or (3) of the Companies Act 1985. This preliminary announcement ofresults for the year ended 31 March 2005 was approved by the Directors on 1 June2005. The Annual General Meeting of the Company will be held at The Falstaff Hotel,Warwick New Road, Leamington Spa, Warwickshire, CV32 5JG on Thursday 28 July2005 at 1.00 pm. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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