10th Jun 2011 07:00
ENSOR HOLDINGS PLC FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2011 CHAIRMAN'S STATEMENT
- Sales: up 10% to £21,357,000
- Operating profit: up 86% to £938,000
- Proposed total dividend: 0.525p up from 0.15p
I am delighted to be able to report that Ensor has continued to make substantial progress this year with sales up 10% to £21,357,000 (2010: £19,443,000). More importantly, operating profits have increased by 86% to £938,000 (2010: £504,000) and earnings per share have gone up to 2.1p (2010: 1.3p). This organic growth is particularly pleasing as it is against a background of continued recessionary pressures and an uncertain construction industry, a market in which we are highly involved.
During the year, our cash flows have been good. Our profitability, debtor and stock management have allowed us to become debt free and create a net cash position.
Since last year we have successfully changed our banking arrangements with an improvement in the terms we enjoy. We are financially well placed to take advantage of appropriate business or acquisition opportunities, when they arise, to strengthen the Group.
In contrast with last year when the Ensor pension scheme deficit increased, there has been no further impact this year on the balance sheet, as the net value of the assets and liabilities of the scheme is generally unchanged. This has contributed to the reduction in our finance charges to £125,000 (2010: £248,000).
All of our operating subsidiaries have performed well during the year. Wecontinue however to be cautious with our outlook, due to the unknown effects ofgovernment spending cuts, the slow progress of the economy and exchange ratefluctuations. I am happy though, that Ensor is well positioned to make furtherprogress in this new financial year. Sales order intakes and gross margins arecurrently satisfactory. Our emphasis of targeted marketing of well-engineeredproducts and services, into clearly identified sectors, allows us to take alarger share, albeit, of a reduced market. Our China office continues tosupport our UK companies by representing their best interests and seeking newcommercial opportunities.Work to maximise the value of our property assets continues. Our Brackley siteis shortly expected to receive planning permission for residential development,at which point we intend to place the site on the market. During the year wedisposed of our property in Sandbach which was surplus to our needs.The continued improvement in our trading results and the strength of ourbalance sheet has led us to propose a final dividend of 0.35p per share. Thisdividend together with the interim dividend of 0.175p already paid will resultin a total dividend for the year of 0.525p per share. This compares with atotal dividend of 0.15p for the year ended 31 March 2010 and demonstrates ourdetermination to return to being a dividend growth stock. Subject to approvalat our AGM, the final dividend will be payable on 12 August 2011, toshareholders on the register on 1 July 2011.May I once again thank our shareholders for their loyal support and everyone atEnsor for their efforts and hard work which have contributed to these excellentresults.K A Harrison TDChairman10 June 2011Enquiries:Ensor Holdings PLCRoger Harrison/Marcus Chadwick0161 945 5953Westhouse Securities LimitedTim Feather/Matthew Johnson0113 246 2610BUSINESS REVIEW______________________________________________________________________________________
Although remaining below pre-recession levels, Group results continued to improve throughout 2010/11. Whilst both of the preceding two years were distorted by the decline to, and subsequent rise from, the low point of recession, the current year improvement has been relatively consistent. Turnover for the first-half showed an 8% increase against the prior year comparative, and 10% for the second-half.
Gross profit levels have improved overall, from 22.9% to 23.6%, as a result ofseveral small influences, rather than individually significant factors; marketstabilisation, exchange rates, procurement policy, and judicious selling priceincreases being the foremost contributors. Nevertheless, transportation andpackaging material costs in particular have kept margins under pressure.The improvements in sales and gross margin resulted in an increase in grossprofit of £574,000, to £5,035,000 (2010 : £4,461,000), which has been onlyslightly eroded by higher administrative expenses - increased by 3.5%, from £3,957,000 to £4,097,000. However, a significant part of this apparent increaseresults from a re-classification of payroll costs to administrative expensesfrom cost of sales.
The cost base of the Group remained substantially as it was in the previous year. Pay restraint continues to represent a high priority, however recognition has been given in those businesses which have better weathered the recession.
Some additional cost was occasioned by the management of the liabilities of thedefined-benefit pension fund - an objective which will be pursued further asour financial position allows.Building Products, the major segment of Group activities, translated a 9%increase in turnover into a £409,000 increase in operating profit as marginswere strengthened and overheads curbed. Daily sales progressed from £68,000 to£74,200 and gross margins from 22.1% to 23.1%.
Although Packaging achieved strong sales growth, with daily sales up from £ 6,500 to £7,200, gross margins were eroded, from 36.7% to 31.1%, by significantly higher costs for polythene products, driven by escalating oil prices. These influences resulted in a modest increase in segment profit.
Overall, the combined factors of sales growth, margin improvement and controlof overheads, resulted in Group operating profit increasing from £504,000 to £938,000.Financial expensesFinancial expenses comprise borrowing costs and an actuarial calculationreflecting the net cost of financing the deficit in the Group's defined-benefitpension scheme. The reduction in financial expenses, from £248,000 to £125,000,reflects a reduction in both elements.
The cost of financing Group borrowings has reduced, year on year, primarily as a result of strong cash generation and reduced borrowings.
The benefit of our move to Lloyds TSB Bank plc, was limited by the transfer not taking place until February 2011, and by our significantly improved cash position.
The net pension-related cost reduced from £158,000 in 2009/10, to £60,000 this year, principally by reason of the improvement in the value of pension fund investments between March 2010 and March 2011.
Earnings per share
Earnings per share were 2.1p (2010: 1.3p) - up by 62%, although this increase does not reflect the extent of increase in underlying profits, due to the effect of the tax credit in 2010.
Cash flow and financial position
Cash of £1,167,000 (2010: £1,069,000) was generated over the course of the year, eliminating borrowings and leaving the Group in a positive net cash position at the year end.
Cash generated from operations of £1,312,000 was augmented by £200,000 from thesale of a redundant property, and by a reduction in corporation tax payable dueto the utilisation of prior year losses.
Inventories were reduced, despite the increase in activity levels, and the ageing of receivables was maintained, notwithstanding evidence of some deterioration in the ability of some customers to pay.
Payables have increased as a normal consequence of increasing activity levels,but additionally, the increase in corporation tax and VAT liabilities are moremarked than usual due to the previously cited loss relief and the strength ofthe final quarter's trading.
The Group's consolidated balance sheet at 31 March 2011 shows:-
* Borrowings reduced from £1.03m to £nil * Gearing reduced from 14% to nil% * Working capital (inventories, receivables and payables, excluding corporation and deferred tax) reduced from £3.8m to £3.4m
* Total equity attributable to shareholders of £8.1m, which equates to 27.5
pence per share
These changes underline our caution in relation to both debt and risk in current assets, particularly in these uncertain times. Nevertheless, with a strong balance sheet, and available borrowing facilities, the Group remains well-placed to pursue the opportunities which such times may present.
Key performance indicators
In addition to the universal performance indicators of sales, gross margins,operating profit, earnings per share, cash flow and gearing referred to above,or in the Chairman's Statement, indicators of a more activity-specific natureare used within the Group to assess the performance of subsidiary companies.These indicators are used in conjunction with the controls described in theCorporate Governance statement and relate to a wide variety of aspects of thebusinesses, for example, working capital measures, production yields, qualitycontrol, targets, market share information, product return rates, etc. Due tothe differences in size and markets across the Group's businesses it is notpracticable to provide a more detailed analysis of how these indicators areapplied to each of the respective activities.
Principal risks and uncertainties
The directors believe that the most significant risk and uncertainty facing the Group remains that of the general economic outlook for the UK and for the construction sector in particular.
The Group's businesses have adapted to the current economic climate, whilstretaining the capacity to increase market share. Their diversified nature andthe lack of over-reliance on any one business, serves to moderate the range ofrisks.DividendThe directors propose to pay a final dividend of 0.35p per share in respect ofthe financial year ended 31 March 2011 (2010: 0.15p). Dividends of £83,000 werepaid on ordinary shares during the year ended 31 March 2011 (2010: nil).
Share capital
The Companies Act 2006 permits a company to purchase its own shares if thepurchase has been authorised by the shareholders in general meeting. It iscommon practice for quoted companies to seek such authority and the directorsconsider it is prudent for them to do so. At the Annual General Meeting,shareholders will be asked to renew the Company's authority to purchase its ownissued ordinary shares of 10p each at a price of not less than 10p per shareand not more than 5% above the average of the middle-market quotations of theLondon Stock Exchange for the five days before the purchase. The authority isfor the purchase of a maximum of 4,416,848 shares, being approximately 15% ofthe issued share capital, and will expire at the earlier of the conclusion ofthe next Annual General Meeting or 18 months from the date of the Resolution.In addition, the shareholders will be asked to approve the purchase of shareswhich will be issued to M A Chadwick and A E Coyne, who are each directors ofthe Company, in the event that they exercise their options over up to 1,172,415ordinary shares. The purchase price payable by the Company would be calculatedas the average middle-market price for the three days prior to the purchase,subject to a maximum purchase price of 25 pence per share. The total value ofthe purchase by the Company would be limited to a maximum of £152,414, beingthe maximum amount to be subscribed by Mr Chadwick and Mr Coyne for theexercise of the options. The rationale for the resolution is to prevent theoffer for sale of those shares on the open market having a potentiallyprolonged, adverse impact on the Company's share price and to enhance theCompany's earnings and net asset value per share. Taken together, the exerciseof options and purchase of shares would be cash-neutral to the Company and theshares would be purchased from a market maker.
At 31 March 2010 and 2011, the Company did not hold any of its shares in treasury.
Consolidated Income Statementfor the year ended 31 March 2011_____________________________________________________________________________ 2011 2010 £'000 £'000 Revenue 21,357 19,443 Cost of sales (16,322) (14,982) ______ ______ Gross profit 5,035 4,461 Administrative expenses (4,097) (3,957) ______ ______ Operating profit 938 504 Financial costs (125) (248) ______ ______ Profit before tax 813 256 Income tax (expense)/credit (203) 127 ______ ______ Profit for the year attributable to equity 610 383shareholders ______ ______ Earnings per share Basic and fully diluted 2.1p 1.3p ______ ______
Consolidated Statement of Comprehensive Income
£'000 £'000 Profit for the year 610 383 Other comprehensive income: Actuarial loss (80) (433) Income tax relating to components of (108) 116 other comprehensive income Revaluation of land and buildings (26) - ______ ______ Total comprehensive income attributable 396 66 to equity shareholders ______ ______ Consolidated Statement of Financial Positionat 31 March 2011______________________________________________________________________________________ 31 March 31 March 2011 2010 £'000 £'000 ASSETS Non-current assets Property, plant & equipment 4,113 4,117 Intangible assets 2,438 2,438 Deferred tax asset 778 886 ______ ______ Total non-current assets 7,329 7,441 ______ ______ Current assets Assets held for sale 542 742 Inventories 2,390 2,451 Trade and other receivables 4,596 4,185 Cash and cash equivalents 137 - ______ ______ Total current assets 7,665 7,378 ______ ______ Total assets 14,994 14,819 ______ ______ LIABILITIES Non-current liabilities Retirement benefit obligations (3,111) (3,165) Obligations under finance leases (16) - ______ ______ Total non-current liabilities (3,127) (3,165) ______ ______ Current liabilities Borrowings - (1,030) Trade and other payables (3,766) (2,836) ______ ______ Total current liabilities (3,766) (3,866) ______ ______ Total liabilities (6,893) (7,031) ______ ______ NET ASSETS 8,101 7,788 ______ ______ EQUITY Share capital 2,945 2,945 Share premium 470 470 Revaluation reserve 545 571 Retained earnings 4,141 3,802 ______ ______ Total equity attributable to equity 8,101 7,788shareholders ______ ______
The financial statements were approved by the Board and were authorised for issue on 10 June 2011. They were signed on its behalf by:
A R Harrison ) DirectorsM A Chadwick )Consolidated Statement of Changes in Equityfor the year ended 31 March 2011_____________________________________________________________________________
Attributable to equity share holders of the parent
Issued Share Revaluation Retained Total Capital Premium Reserve Earnings Equity £'000 £'000 £'000 £'000 £'000 Balance as at 1 April 2,945 470 571 3,736 7,722 2009 Profit for the year - - - 383 383 Other comprehensive income: Actuarial loss - - - (433) (433) Related deferred tax - - - 116 116 _____ _____ _____ _____ _____ Balance as at 1 April 2,945 470 571 3,802 7,788 2010 Profit for the year - - - 610 610 Other comprehensive income: Actuarial loss - - - (80) (80) Related deferred tax - - - (108) (108) Revaluation of land and - - (26) - (26) buildings Dividends paid (see - - - (83) (83) below) _____ _____ _____ _____ _____ Balance at 31 March 2,945 470 545 4,141 8,1012011 _____ _____ _____ _____ _____ 2011 2010 £'000 £'000 Dividends per share Interim dividend paid 0.175p 0.000p Final dividend proposed 0.350p 0.150p ______ ______ 0.525p 0.150p ______ ______Share premiumThe share premium reserve represents the consideration that has been receivedin excess of the nominal value of shares on issue of new ordinary sharecapital, less permitted expenses.Revaluation reserveThe revaluation reserve has arisen as a result of net increases in the carryingvalue of the Group's land and buildings.
Retained earnings The retained earnings reserve represents profits and losses retained in the current and previous periods.
Consolidated Cash Flow Statementfor the year ended 31 March 2011______________________________________________________________________________________ 2011 2010 £'000 £'000 Net cash generated from operations 1,312 941 _______ _______ Cash flows from investing activities Proceeds from sale of property, plant and 37 41equipment Proceeds from disposal of assets held for 200 308sale Acquisition of property, plant and equipment (295) (221) _______ _______ Net cash generated from investing activities (58) 128 _______ _______ Cash flows from financing activities Equity dividends paid (83) - Amounts repaid in respect of finance leases (4) - _______ _______ Net cash absorbed by financing activities (87) - _______ _______ Net increase in cash and equivalents 1,167
1,069
Opening cash and cash equivalents (1,030) (2,099) _______ _______ Closing cash and cash equivalents 137 (1,030) _______ _______Accounting Policiesfor the year ended 31 March 2011______________________________________________________________________________________
1. Basis of preparation
The consolidated financial statements of Ensor Holdings PLC have been preparedin accordance the Companies Act 2006 and International Financial ReportingStandards (IFRS) as adopted by the European Union in accordance with the rulesof the London Stock Exchange for companies trading securities on theAlternative Investment Market. The Group financial statements have beenprepared under the historical cost convention, as modified by the revaluationof land and buildings, and derivative financial instruments at fair valuethrough profit or loss. The principal accounting policies adopted by the Groupare set out below. 2. Basis of consolidation Where the Company has the power, either directly or indirectly, to govern thefinancial and operating policies of another entity so as to obtain benefitsfrom its activities, the entity is classified as a subsidiary. The consolidatedfinancial statements present the results of the Company and its subsidiaries("the Group") as if they formed one single entity. Intercompany transactionsand balances between Group companies are therefore eliminated in full.The consolidated financial statements incorporate the results of businesscombinations using the purchase method. In the consolidated balance sheet, thesubsidiary's identifiable assets, liabilities and contingent liabilities areinitially recognised at their fair values at the acquisition date. The resultsof acquired operations are included in the consolidated income statement fromthe date on which control is obtained.
3. Earnings per share
The calculation of earnings per share on continuing operations is based uponthe profit after taxation of £610,000 (2010: £383,000) divided by the weightedaverage number of ordinary shares in issue during the year, 29,445,659 (2010:29,445,659). The fully diluted earnings per share calculation is based upon theweighted average number of shares of 29,665,193 (2010: 29,445,659). Thedilution in 2011 is due to subsisting share options. There was no dilution in2010 because the market value of the shares was lower than the option price.The earnings per share on a basic and fully diluted basis was 2.1p (2010:1.3p).
4. Segmental analysis
For management purposes, the Group's business activities are organised into business units based on their products and services and have three primary operating segments as follows:
* Building Products - manufacture, marketing, supply and distribution of
building materials, tools, components and access control equipment to the
construction industry; * Packaging - marketing and distribution of packaging materials; * Other -manufacture of rubber crumb and waste recycling. These segments are the basis on which information is reported to the GroupBoard. The segment result is the measure used for the purposes of resourceallocation and assessment and represents the operating profit of each segmentbefore exceptional operating costs, amortisation and impairment charges, othergains and losses, net finance costs and taxation.
Details of the types of products and services from which each segment derives its revenues are given above.
The accounting policies applied in preparing the management information for each of the reportable segments are the same as the Group's accounting policies.
Inter-segment sales are charged on an arm's length basis.
The Group's revenues and results by reportable segment for the year ended 31 March 2011 are as follows:
Building Packaging Other Unallocated Total Products £'000 £'000 £'000 £'000 £'000 Revenue 18,487 2,046 824 - 21,357 ______ _____ _____ _____ _____ Depreciation 195 14 28 27 264 ______ _____ _____ _____ _____ Operating 670 241 27 - 938profit ______ _____ _____ ______ Financial costs (125) Income tax expense (203) _____ Profit for the year 610 _____ Capital 204 60 55 - 319 expenditure ______ _____ _____ _____ _____ Assets 10,671 1,261 827 2,235 14,994 Liabilities (2,925) (361) (84) (3,523) (6,893) ______ _____ _____ _____ _____ Net assets 7,746 900 743 (1,288) 8,101 ______ _____ _____ ______ ______
The Group's revenues and results by reportable segment for the year ended 31 March 2010 are as follows:
Building Packaging Other Other Unallocated Total Products (see below) £'000 £'000 £'000 £'000 £'000 £'000 Revenue 16,932 1,619 892 105 - 19,548 ______ _____ _____ _____ _____ _____ Depreciation 217 11 39 5 25 297 ______ _____ _____ _____ _____ _____ Operating profit 262 220 22 - - 504 ______ _____ _____ _____ ______ Financial costs (248) Income tax credit 127 _____ Profit for the year 383 _____ Capital 176 - 5 1 39 221 expenditure ______ _____ _____ _____ _____ _____ Assets 9,554 1,062 775 - 3,428 14,819 Liabilities (2,263) (325) (115) - (4,328) (7,031) ______ _____ _____ _____ _____ _____ Net assets 7,291 737 660 - (900) 7,788 ______ _____ _____ _____ ______ _____
The "other" column for 2010 includes revenue, depreciation and capital expenditure for a discontinued operation, Powerplus (UK) Limited, whose business and assets were sold on 5 May 2009. All other operations were continuing.
Income and expenditure arising directly from a reporting segment are identifiedto that segment. Income and expenditure arising from central operations whichrelate to the Group as a whole or cannot reasonably be allocated betweensegments are apportioned on the basis of the individual segments' earnings.
Head office costs are apportioned to the segments on the basis of earnings.
The Group operates almost exclusively in one geographical segment, being theUnited Kingdom. Turnover to customers located outside the United Kingdomaccounted for less than 10% of total Group turnover and has therefore not beenseparately disclosed .
Revenue from a single customer did not exceed more than 10% of turnover during the reporting period.
5. Cash flow generated from operations
2011 2010 £'000 £'000 Cash flows from operating activities Profit for the year attributable to equity 610 383shareholders Depreciation charge 264 297 Financial costs 125 248 Income tax expense/(credit) 203 (127) Profit on disposal of property, plant & (4) (3)equipment _______ _______ Operating cash flow before changes in 1,198 798working capital Decrease in inventories 61 318 (Increase)/decrease in receivables (435)
413
Increase/(decrease) in payables 665 (263) _______ _______ Cash generated from continuing operations 1,489 1,266 Interest paid (171) (84) Income taxes paid (6) (241) _______ _______ Net cash generated from operations 1,312 941 _______ _______
6. Reconciliation of net cash flow to movement in net debt
2011 2010 £'000 £'000 Increase in cash in the year 1,167 1,069 ______ ______
Movement in net debt arising from cash flow 1,167 1,069
Net debt at 1 April 2010 (1,030) (2,099) ______ ______ Net cash/(debt) at 31 March 2011 137 (1,030) ______ ______
At 31 March 2011 the Group had undrawn committed borrowing facilities of £ 3,000,000 (2010: £1,970,000) in respect of these balances.
7. Other information
The financial information set out in this preliminary announcement of resultsdoes not constitute the Company's statutory accounts for the years ended 31March 2011 or 31 March 2010 but is derived from those accounts. Statutoryaccounts for 2010 have been delivered to the Registrar and those for 2011 willbe delivered following the Company's Annual General Meeting. The IndependentAuditors have reported on these accounts. Their reports were unqualified anddid not contain a statement under section 498 of the Companies Act 2006.
The Annual General Meeting of the Company will be held at the Company's registered office, Ellard House, Dallimore Road, Manchester M23 9NX at 10.00 a.m. on Friday 15 July 2011.
The Report and Accounts will be sent to shareholders on 20 June 2011 and be available from the Company's website at www.ensor.co.uk on that date. Additional copies of the Annual Report and of this statement will be available at the Company's registered office.
vendorRelated Shares:
ESR.L