11th Jun 2010 07:00
ENSOR HOLDINGS PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2010
CHAIRMAN'S STATEMENT
PROGRESS
Despite the difficulties and economic problems faced by the country, the Grouphas made a significant operating profit of £504,000 against a loss last year of£801,000, which included discontinued operations.This result demonstrates the success of our positive actions to combat theworst effects of recession experienced in the second half of last year and thefirst half of this year. Operating profits were improved by stronger buying andcontrol of costs, manpower and stock, albeit in an uncertain market wheremargins were still under pressure.Important markets are still very much in turmoil and there is also a "wait andsee" atmosphere in the construction market, post General Election. Ensor ismaking progress despite these continuing uncertainties. This is a particularlysatisfactory position from which to take advantage of a real economic upturn.Since the half-year, cash flow has continued to be good, further improving ourgearing to 13% (2009: 27%). During the year our borrowings have consequentlyreduced by over £1m. Debtor days across the Group have come down but thereremains a threat of bad debt as the economy improves and there is a demand forincreased working capital.
During the year we have again made substantial payments into our pension scheme, in line with actuarial recommendations. The value of our pension investments has improved significantly during the year, however, the scheme deficit has increased due to the deterioration of bond yields used to calculate the liability for our accounts.
Since the year end we have disposed of our property in Sandbach, Cheshire andearlier this year we applied for permission to develop our Brackley,Northamptonshire site. Both properties had been occupied by Hawkins-Salmon, abusiness we closed last year. Where not currently generating income, our otherconsiderable land assets are being assessed to ensure we obtain maximum valueto the Group.During the year we have investigated possible acquisitions of allied businessesand will continue with this in the future, but a conservative approach seemswise.We propose to pay a final dividend of 0.15p per share. This is a cautiousreturn to dividend payments which I am optimistic we can maintain and build on.We must however recognise that we are still in the grip of recession and beflexible in our short term expectations. Subject to approval at our AGM, thisdividend will be paid on 13 August 2010, to shareholders on the register on 25June 2010.
My sincerest thanks to our shareholders, management, staff, customers and suppliers for their support and contribution during a challenging but positive year.
K A Harrison TDChairman11 June 2010BUSINESS REVIEWThe global recession most markedly affected the results for the second half oflast year, and the first half of this. Whilst the results for last year weresomewhat buoyed by a relatively strong first half, the final six months of thatyear produced a small operating loss as market conditions deteriorateddramatically.
Entering the current financial year, our markets remained troubled by uncertainty, with our sales and margins under pressure as a consequence of reduced demand, competitive pressures and a weak currency.
As the year progressed, we were able to rebuild sales and margin levels, enabling the Group to post a reduced profit for the first half of the year.
Our second half is traditionally eroded by seasonal factors, however the severeweather conditions experienced from early January 2010, were an extremeexample. Nevertheless, the operating profit for the second half of £291,000compares favourably with the loss of £7,000 for the corresponding period of theprevious year.
Trading levels remain well below their pre-recession peak, but the Group businesses have adapted to the current economic challenges.
Significant savings have been made in the cost base of the businesses -particularly in relation to payroll costs. This has been achieved largelythrough non-replacement and natural wastage, but pay restraint has played animportant part, helping to ensure that the critical business structures havenot been damaged.
Moreover, our strong cash performance over the last year, has achieved a reduced level of borrowing, which is more appropriate in uncertain times.
Continuing operations
Turnover reduced by 10.4% to £19.4m (2009: £21.7m), however the majority ofthis erosion was seen in the first half of the year, when sales were down by15.4%. Similarly, the decrease in gross profit from 27.9% last year to 27.4%this, was a consequence of the particularly difficult start to the year, withthe second half showing significant improvement as our markets became morecomposed.The immediate effect of the economic downturn late in 2008, was partiallypostponed into the current year by the forward order position in some of ourBuilding Products businesses. Consequently, those businesses did not show ayear on year improvement in the second half - their improvement is expected tolag behind somewhat for the same reason.
As a consequence of its association with the construction industry, Building Products, which accounts for the majority of group activity, was harder hit than was Packaging, which also benefits from operating a low overhead base.
The impact of reduced sales across the Group throughout the year, was substantially mitigated by cost control which saw administrative expenses reduced by £398,000 compared with the previous year.
The resulting operating profit for the year of £504,000 (2009: £639,000),reflects a distinct upturn during the period. Following a very poor end to lastyear, the first quarter of this year returned operating losses, which werereversed during the second quarter to give an interim operating profit of £188,000. That result was improved by a further £316,000 during the third andfourth quarters of the year, bucking the usual trend.
Financial expenses
Financial expenses of £248,000 (2009: £139,000) comprise borrowing costs and an actuarial calculation reflecting the cost of financing the deficit on the Group's defined-benefit pension scheme.
In common with businesses in all sectors, the interest margin on our borrowingshas increased since the start of the banking crisis, however the total cost wasreduced to £90,000 (2009: £109,000) through strong cash generation and reducedborrowings.The net pension-related cost increased from £30,000 in 2009, to £158,000 thisyear, principally as a consequence of the reduction in value of pension fundinvestments prior to, and following, the banking crisis. The recovery of thoseinvestments during the year stands to reduce next year's financing cost.
Taxation
The Group has benefitted from a tax credit of £127,000 this year. This arose as a result of the write back of a deferred tax provision which was no longer necessary following the crystallisation this year of capital losses on last year's discontinued activities, described below.
Discontinued operations
The activities of Hawkins-Salmon Limited and Powerplus (UK) Limited, werediscontinued on 31 March 2009 and 5 May 2009 respectively. These operationswere treated as discontinued in last year's accounts and their impact in thecurrent year has been positive in relation to the Group's cash flow, throughrecovery of payments made under bank guarantees and through the receipt of
saleproceeds.Cash flow
Net cash of £1,069,000 has been generated over the course of the year, reducing group borrowings to £1,030,000.
Continuing activities generated £1,082,000 from operations, before allowing forcorporation tax payments of £309,000, which were deferred from the previousyear. Inventories and the ageing of receivables have been improved. Capitalexpenditure has been restricted to essential items. Payments to the closedpension scheme were increased slightly to £180,000 following a triennialvaluation.
Year end financial position
The Group ended the current year more confidently than the previous year. Despite the extreme weather conditions, the final quarter represented a stronger performance than did the corresponding period of the previous year, capping a year of improvement. Fears of a double-dip recession are widely abating and our balance sheet is more conservative.
The Group's consolidated balance sheet at 31 March 2010 demonstrates:-
* Borrowings reduced from £2.1m to £1.0m * Gearing reduced from 27% to 13% * Inventories and trade receivables reduced by 8.0%
These changes indicate our caution regarding both debt and risk in current assets, particularly in these uncertain times. Nevertheless, with a strong balance sheet, and low borrowings, the Group is 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 are used in conjunction with the controls described in the CorporateGovernance statement and relate to a wide variety of aspects of the businesses,for example, working capital measures, production yields, quality control,targets, market share information, product return rates, etc. Due to thedifferences 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 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 been adjusted as necessary to adapt to the currentrecession, but not to a damaging degree to ensure that they are able to takeadvantage of any recovery.
The diversified nature of the Group, and lack of over-reliance on any one business, serves to moderate the range of risks to those which are faced by any business in the normal course of events.
Consolidated Income Statement
for the year ended 31 March 2010
2010 2009 £'000 £'000 Revenue 19,443 21,706 Cost of sales (14,109) (15,644) ______ ______ Gross profit 5,334 6,062 Distribution costs (873) (1,068) Administrative expenses (3,957) (4,355) ______ ______ Operating profit 504 639 Financial costs (248) (139) ______ ______ Profit before tax 256 500 Income tax credit/(expense) 127 (47) ______ ______
Profit for the year for continuing operations 383
453
Loss for the year on discontinued operations - (2,732) ______ ______ Profit/(loss) for the year attributable to equity 383 (2,279)shareholders ______ ______ Earnings/(loss) per share Basic and fully diluted Continuing operations 1.3p 1.5p Discontinued operations - (10.8p) ______ ______ Total 1.3p (9.3p) ______ ______ Dividends per share Final dividend proposed 0.15p - ______ ______
Consolidated Statement of Comprehensive Income
£'000 £'000 Profit/(loss) for the year 383 (2,279) Other comprehensive income:
Revaluation of land and buildings - (300)
Actuarial loss (433) (2,047) Related deferred tax 116 526 ------ ------
Total comprehensive income attributable to 66 (4,100)
equity shareholders ====== ====== Consolidated Balance Sheetat 31 March 2010 31 March 31 March 01 April 2010 2009 2008 restated restated £'000 £'000 £'000 ASSETS Non-current assets Property, plant & equipment 4,117 4,231 5,969 Intangible assets 2,438 2,438 3,147 Deferred tax asset 886 770 244 ______ ______ ______ Total non-current assets 7,441 7,439 9,360 ______ ______ ______ Current assets Assets held for sale 742 1,050 - Inventories 2,451 2,769 4,415 Trade and other receivables 4,185 4,571 5,641 ______ ______ ______ Total current assets 7,378 8,390 10,056 ______ ______ ______ Total assets 14,819 15,829 19,416 ______ ______ ______ LIABILITIES Non-current liabilities Retirement benefit obligations (3,165) (2,750) (817) Deferred tax liabilities - (118) (117) ______ ______ ______ Total non-current liabilities (3,165) (2,868) (934) ______ ______ ______ Current liabilities Borrowings (1,030) (2,099) (1,206) Trade and other payables (2,836) (3,140) (5,224) ______ ______ ______ Total current liabilities (3,866) (5,239) (6,430) ______ ______ ______ Total liabilities (7,031) (8,107) (7,364) ______ ______ ______ NET ASSETS 7,788 7,722 12,052 ______ ______ ______ EQUITY Share capital 2,945 2,945 2,945 Share premium 470 470 470 Revaluation reserve 571 571 871 Retained earnings 3,802 3,736 7,766 ______ ______ ______ Total equity attributable to equity 7,788 7,722 12,052shareholders ______ ______ ______Consolidated Statement of Changes in Equityfor the year ended 31 March 2010
Attributable to equity holders of the parent
Issued Share Revaluation Retained Total Capital Premium Reserve Earnings Equity £'000 £'000 £'000 £'000 £'000 Balance as at 1 2,945 470 871 7,766 12,052April 2008 Total - - (300) (3,800) (4,100)comprehensive income Dividends - - - (230) (230) _____ _____ _____ _____ _____ Balance as at 1 2,945 470 571 3,736 7,722April 2009 Total - - - 66 66comprehensive income _____ _____ _____ _____ _____ Balance at 31 2,945 470 571 3,802 7,788March 2010 _____ _____ _____ _____ _____Share premium
The share premium reserve represents the consideration that has been received in excess of the nominal value of shares on issue of new ordinary share capital, less permitted expenses.
Revaluation reserve
The revaluation reserve has arisen as a result of increases in the carrying value 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 2010 2010 2009 £'000
£'000
Net cash generated from/(absorbed by) operations 1,121 (186) _______ _______ Cash flows from investing activities Proceeds from sale of property, plant and 41 43equipment Proceeds from disposal of assets held for sale 308 - Acquisition of property, plant and equipment (221) (278)
Acquisition of going concern - (100) _______ _______
Net cash generated from/(absorbed by) investing 128 (335)activities _______ _______ Cash flows from financing activities Equity dividends paid - (230) Contribution to pension scheme (180) (142) _______ _______ Net cash absorbed by financing activities (180) (372) _______ _______ Net increase/(decrease) in cash and equivalents 1,069 (893) Opening cash and cash equivalents (2,099) (1,206) _______ _______ Closing cash and cash equivalents (1,030) (2,099)
_______ _______Notes 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 £383,000 (2009: £453,000) divided by the weightedaverage number of ordinary shares in issue during the year, 29,445,659 (2009:29,445,659). The loss per share on discontinued operations is based upon theprofit after taxation of £nil (2009: loss: £2,732,000). The fully dilutedearnings per share calculation is based upon the weighted average of 29,445,659shares (2009: 29,662,338). The dilution in 2009 is due to subsisting shareoptions. There is no dilution in 2010 because the market value of the shareswas lower than the option price.
The earnings per share from discontinued operations on a basic and fully diluted basis was 1.3p (2009: (9.3p).
4. Segmental analysis
For management purposes, the Group's business activities are organised into business units based on their products and services and have two primary operating segments as follows:
* Building Products - manufacture, marketing and distribution of materials,
tools, components and access automation equipment to the construction industry; * Packaging - marketing and distribution of packaging materials; * All other segments - not reportable segments per the quantitative and
qualitative thresholds per IFRS 8 which include rubber crumb manufacture
and waste recycling.
These divisions 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 2010 are as follows:
Continuing Discontinued Building Packaging Other Total Building Other Total Eliminations Total Products Products £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 16,932 1,619 892 19,443 - 105 105 - 19,548 ______ _____ _____ _____ ______ _____ _____ _____ _____ Depreciation 217 11 39 267 - 5 5 25 297 ______ _____ _____ _____ ______ _____ _____ _____ _____ Operating 262 220 22 504 - - - - 504profit ______ _____ _____ _____ ______ _____ _____ ______ Financial (248)costs Income tax 127credit _____ Profit for 383the year _____ Capital 176 - 5 181 - 1 1 39 221expenditure ______ _____ _____ _____ ______ _____ _____ _____ _____ Assets 9,554 1,062 775 11,391 - - - 3,428 14,819 Liabilities (2,263) (325) (115) (2,703) - - - (4,328) (7,031) ______ _____ _____ _____ ______ _____ _____ _____ _____ Net assets 7,291 737 660 8,688 - - - (900) 7,788 ______ _____ _____ _____ ______ _____ _____ ______ ______
The Group's revenues and results by reportable segment for the year ended 31 March 2009 are as follows:
Continuing Discontinued Building Packaging Other Total Building Other Total Eliminations Total Products Products £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 19,253 1,628 825 21,706 2,609 946 3,555 25,261 ______ _____ _____ _____ ______ _____ _____ _____ _____ Depreciation 232 14 50 296 127 10 137 27 460 ______ _____ _____ _____ ______ _____ _____ _____ _____ Operating 447 195 (3) 639 (1,375) (65) (1,440) - (801)profit/(loss) ______ _____ _____ _____ ______ _____ _____ ______ Financial (167)costs Income tax (29)expense Loss on (1,282)discontinuance _____ Loss for the (2,279)year _____ Capital 215 1 13 229 - 16 16 33 278expenditure ______ _____ _____ _____ ______ _____ _____ _____ _____ Assets 9,948 1,125 1,296 12,369 742 308 1,050 2,410 15,829 Liabilities (2,482) (211) (369) (3,062) - - - (5,045) (8,107) ______ _____ _____ _____ ______ _____ _____ _____ _____ Net assets 7,466 914 927 9,307 742 308 1,050 (2,635) 7,722 ______ _____ _____ _____ ______ _____ _____ ______ _____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 in one geographical segment, being the United Kingdom. Turnover to customers located outside the United Kingdom accounted for less than 10% of total Group turnover and has therefore not been separately disclosed in accordance with IFRS 8.
Revenue from a single customer did not exceed more than 10% of turnover during the reporting period.
5. Cash flow generated from operations
2010 2009 Continuing operations £'000 £'000
Cash flows from operating activities Profit for the year attributable to equity 383 453shareholders Depreciation charge 292 323 Finance expense 248 139 Income tax expense (127) 47 Profit on disposal of property, plant & (3) (16)equipment _______ _______ Operating cash flow before changes in working 793 946capital Decrease in inventories 318 227 (Increase)/decrease in receivables (58)
395
Increase/(decrease) in payables (83) (528) _______ _______ Cash generated from continuing operations 970 1,040 Interest paid (85) (139) Income taxes paid (241) (66) _______ _______ Net cash generated from continuing activities 644 835 _______ _______ Discontinued operations
Cash flows from operating activities Loss for the year attributable to equity - (2,732)shareholders Depreciation charge 5 137 Finance expense 5 28 Income tax credit 1 (216) Loss on disposal of property, plant & equipment -
1,228
Write off of goodwill in discontinued operation - 709 _______ _______ Operating cash flow before changes in working 11 (846)capital Increase in assets held for sale - (1,050) Decrease in inventories - 1,419 Decrease in receivables 471 675 Increase in payables - (1,191) _______ _______ Cash absorbed by discontinued operations 482 (993) Interest paid (5) (28) Income taxes paid - - _______ _______ Net cash generated from/(absorbed by) 477 (1,021)discontinued activities _______ _______ Net cash generated from/(absorbed by) operations 1,121 (186) _______ _______
6. Reconciliation of net cash flow to movement in net debt
2010 2009 £'000 £'000 Increase/(decrease) in cash in the year 1,069 (893) ______ ______
Movement in net debt arising from cash flow 1,069 (893)
Net debt at 1 April 2009 (2,099) (1,206) ______ ______ Net debt at 31 March 2010 (1,030) (2,099) ______ ______ 7. Basis of preparation The financial information set out in this preliminary announcement of resultsdoes not constitute the Company's statutory accounts for the years ended 31March 2010 or 31 March 2009 but is derived from those accounts. Statutoryaccounts for 2009 have been delivered to the Registrar and those for 2010 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.
8. Other information
The Annual General Meeting of the Company will be held at the Company's registered office, Ellard House, Dallimore Road, Manchester M23 9NX at 10.00 a.m. on Monday 19 July 2010.
The Report and Accounts will be posted to shareholders and be available from the Company's website at www.ensor.co.uk shortly. Additional copies of the Annual Report and of this statement will be available at the Company's registered office.
Enquiries:Ensor Holdings PLC
Roger Harrison / Marcus Chadwick
0161 945 5953Westhouse Securities LimitedTim Feather / Matthew Johnson0113 246 2610
vendorRelated Shares:
ESR.L