31st May 2005 07:02
Unidare PLC31 May 2005 Unidare plcInterim statement for the six months ended 31 March 2005 andthe disposal of Daalderop B.V. The Directors of Unidare plc announce that for the six months ended 31 March2005: •Sales increased by 12% to €110.8m (17% to €116.3m on a constant currency basis) (2004: €99.2m). •EBITDA (operating profit before interest, tax, depreciation and amortisation) increased by 56% to €8.5m (2004: €5.4m). •Operating profit increased by 85% to €6.8m (2004: €3.7m). •Profit before tax increased by 102% to €6.5m (2004: €3.2m). •Adjusted earnings per share increased by 107% to 23.8cent (2004: 11.5cent). •Net debt decreased to €10.3m (September 2004: €18.1m). The Directors also announce that Unidare has entered into a conditionalagreement to sell Daalderop, its Dutch based manufacturing business, to 3i Groupplc and 3i Managed Funds ("3i") for a total consideration of €55.0 million, andsubject to the successful completion of the disposal, propose to return €47.6million (€2.40 per share) to shareholders by way of a capital distribution. Review of operations Distribution - North America ORS Nasco, a leading pure wholesaler servicing the industrial, oilfield,welding, rental and safety supplies sectors, increased its sales by 18% to$102.3m (2004: $86.6m), its EBITDA to $5.1m (2004: $2.9m) and its operatingprofit to $4.5m (2004: $2.3m). The increase in sales was achieved through growth across all markets served dueto a continued focus on marketing initiatives, helped by good economic activity,while sales to the oilfield sector benefited from the increased activity levelsassociated with high oil prices. Despite higher freight charges, a more efficient utilisation of the logisticsinfrastructure, together with an increase in the average order size, helped todrive further improvements in productivity, resulting in an increase in theoperating margin to 4.4% (2004: 2.7%). Distribution - Europe UK based Eland Cables (formerly Eland Electrical), which mainly distributesspecialised electrical cables and accessories to the rail, telecom and equipmentmanufacturing sectors, increased sales to Stg£8.2m (2004: Stg£6.5m), EBITDA toStg£0.6m (2004: Stg£0.1m) and operating profit to Stg£0.5m (2004: Stg£0.01m). Eland has benefited from the decision taken last year to concentrate itsbusiness on cables. An improvement in traditional cable sales and the successfulcompletion of a sizeable rail contract, together with improvements inproductivity through expense control, resulted in the operating marginincreasing to 6% (2004: 0%). Manufacturing - Europe Daalderop, our Netherlands based manufacturer of electric water heaters, gasfired condensing Combi boiler central heating systems and OEM products,increased sales to €20.4m (2004: €18.8m), EBITDA to €3.9m (2004: €3.3m) andoperating profit to €3.4m (2004: €2.7m). While plant efficiencies were offset by continued high copper prices, improvedsales of its core water heaters and combi boilers more than compensated for areduction in subcontract sales due to the phased withdrawal of its majorcustomer. The operating margin improved to 16.5% (2004: 14.5%) Proposed disposal of Daalderop B.V. and capital distribution Unidare has entered into a conditional agreement to sell its Dutch basedmanufacturing business, Daalderop, to 3i for a total consideration of €55.0m,subject to the approval of Unidare plc's shareholders at an extraordinarygeneral meeting, approval by the Netherlands Competition Authority and therebeing no material adverse change in the business between signing and completion.The disposal of Daalderop will be effected through the sale of the entire issuedshare capital of Unidare Nederland B.V. Review of the business Daalderop is based in Tiel, the Netherlands, and manufactures electric waterheaters, gas fired condensing Combi boiler central heating systems and OEMproducts. It is a major player in the Netherlands market for electric waterheaters. In the year ended 30 September 2004, Daalderop generated an operatingprofit of €5.7m on turnover of €35.7m. While Daalderop has been making good progress in developing sales of its gasCombi boiler, it remains a minority player in the international market place.Further strong growth of the business requires it to have an enhancedinternational presence which, in turn, requires significant investment both interms of capital and sales / service infrastructure. The Board concluded,following an investigative process, that the interests of stakeholders would bebest served by a sale of Daalderop to 3i. Financial effects of the proposed disposal The net proceeds, after deduction of costs of approximately €1.4m and based onadjusted net debt at 31 March 2005 of approximately €3.8m, will be approximately€49.8m, of which €1.4m is deferred, contingent on the satisfactory resolution ofcertain taxation matters. This compares with a net book value as at 31 March2005 of €14.3m. The profit after taxation on the disposal, adjusting forgoodwill previously written off to reserves of €6.2m, will be approximately€29.3m. Capital distribution The Board has considered the appropriate capital structure for the Group postcompletion and has concluded that Unidare should return €47.6m to shareholders(€2.40 per share) together with up to €1.5m to share option holders in respectof existing share options if and when those options are exercised. The capitaldistribution will be effected by way of the issue and immediate redemption offully paid-up redeemable bonus shares. As a result, an interim dividend is notconsidered appropriate. Related party transaction The Nominations and Compensation Committee of the Board (comprising John B.McGuckian and Brian G. Hill) decided that it was in the best interests ofshareholders to create a bonus scheme for Jack Hayes and Kevin Gallen inrelation to the possible disposal of Daalderop. The potential awards vary fromzero to €465,000 for Jack Hayes and zero to €235,000 for Kevin Gallen, withpayment of 75 per cent. due on completion of the transaction and 25 per cent. atthe discretion of the Nominations and Compensation Committee. Both directorswill qualify for the maximum payment under the terms of the scheme if completionoccurs. The bonus payments are conditional upon the approval of shareholders atthe extraordinary general meeting. Shareholder information A circular, giving details of the proposed sale and the capital distribution andcontaining the notice for the extraordinary general meeting, will be posted toshareholders in the near future. Outlook Should the proposed Daalderop sale be completed, our business interest isexpected to cease as from 30 June 2005, which would have a significant impact onour full year's trading results. We expect ORS Nasco and Eland to continue tomake progress, but at a lower rate of growth than the first half, which hadlower comparative bases, and in the case of Eland, a sizeable rail contract. The Board believes that the optimal way to maximise shareholder value is tocontinue to add value to our businesses and realise their up-side potential. Jack HayesExecutive Chairman31 May 2005 Consolidated Profit and Loss Account (unaudited)for the six months ended 31 March 2005 2005 2004 -------- -------- •'000 •'000 Turnover 110,756 99,220 -------- --------Operating profit before goodwill amortisation 7,356 4,256Goodwill amortisation (524) (561) -------- --------Operating profit 6,832 3,695Interest and other finance costs (352) (480) -------- --------Profit before taxation 6,480 3,215Taxation (est.) (2,300) (1,500) -------- --------Profit after taxation retained for the period 4,180 1,715 -------- --------Earnings per share (cent) 21.1 8.7Adjusted earnings per share (cent) 23.8 11.5 Segmental informationby class of business and geographical location (unaudited)for the six months ended 31 March 2005 Turnover Operating Profit --------------- --------------- 2005 2004 2005 2004 -------- --------- -------- --------- •'000 •'000 •'000 •'000 Distribution - North America 78,493 71,030 3,490 1,910- Europe 11,877 9,419 716 10 -------- --------- -------- --------- 90,370 80,449 4,206 1,920Manufacturing - Europe 20,386 18,771 3,359 2,715 -------- --------- -------- --------- 110,756 99,220 7,565 4,635Central costs (209) (379) -------- --------- 7,356 4,256Goodwill amortisation (524) (561) -------- --------- -------- --------- 110,756 99,220 6,832 3,695 -------- --------- -------- --------- Consolidated Balance Sheetas at 31 March 2005 --------- --------- --------- 31 March 2005 31 March 2004 30 Sept. 2004 (Unaudited) (Unaudited) (Audited) --------- --------- --------- •'000 •'000 •'000 Fixed assetsIntangible assets - goodwill 14,926 16,865 16,167Tangible assets 23,199 23,823 23,319 --------- --------- --------- 38,125 40,688 39,486 --------- --------- ---------Current assetsStocks 31,340 38,047 32,762Debtors 27,457 26,540 26,381Cash in hand and at bank 729 172 349 --------- --------- --------- 59,526 64,759 59,492 --------- --------- ---------Amounts falling due within oneyearCreditors (26,076) (28,841) (22,602)Bank overdrafts and loans (878) (2,747) (1,333) --------- --------- --------- (26,954) (31,588) (23,935) --------- --------- ---------Net current assets 32,572 33,171 35,557 --------- --------- ---------Total assets less currentliabilities 70,697 73,859 75,043 --------- --------- ---------Amounts failing due after oneyearBank loans (10,168) (18,469) (17,130)Provisions for liabilities andcharges (2,347) (2,060) (2,269) --------- --------- --------- (12,515) (20,529) (19,399) --------- --------- --------- 58,182 53,330 55,644 --------- --------- --------- --------- Capital and reservesCalled up share capital 5,970 5,961 5,961Capital conversion reserve 345 345 345Share premium account 38,458 38,430 38,430Profit and loss account 13,409 8,594 10,908 --------- --------- ---------Equity shareholders' funds 58,182 53,330 55,644 --------- --------- --------- Consolidated Cash Flow Statement (unaudited)for the six months ended 31 March 2005 ----------- ----------- Six months Six months ended ended 31 March 2005 31 March 2004 ----------- ----------- •'000 •'000Reconciliation of operating profitto operating cash flowOperating profit 6,832 3,695Depreciation 1,103 1,173Amortisation of goodwill 524 561Decrease / (increase) in stocks 280 (4,801)Increase in debtors (1,756) (2,738)Increase in creditors 4,306 8,519Decrease in relocation provision - (200) ----------- -----------Net cash inflow from operatingactivities 11,289 6,209 ----------- ----------- Returns on investment and servicing of financeInterest paid (438) (469) ----------- ----------- Taxation Taxation paid (2,304) (1,507) ----------- ----------- Dividends Equity dividends paid (989) - ----------- ----------- Capital Expenditure Purchase of fixed assets (551) (4,403)Deferred property consideration received - 1,951 ----------- ----------- (551) (2,452) ----------- -----------Acquisition / disposal of subsidiaries Disposal consideration received 69 60Deferred consideration paid - (1,539) ----------- ----------- 69 (1,479) ----------- -----------Financing Issue of share capital 37 - ----------- ----------- Net cash inflow 7,113 302 Translation gain 684 941 ----------- -----------Decrease in net debt in the period 7,797 1,243Net debt at beginning of period (18,114) (22,287) ----------- -----------Net debt at end of period (10,317) (21,044) ----------- ----------- Movements in the Profit and Loss Accountfor the six months ended 31 March 2005 •'000At 30 September 2004 10,908Profit after taxation retained for the period 4,180Translation loss (1,679) ---------At 31 March 2005 13,409 --------- Movements in Equity Shareholders' Funds for the six months ended 31 March 2005 2005 2004 ----------- ---------- •'000 •'000Profit after taxation retained for the period 4,180 1,715Issue of share capital 37 -Translation loss (1,679) (1,663) ----------- ----------Net addition to equity shareholders' funds 2,538 52Equity shareholders' funds at beginning of period 55,644 53,278 ----------- ----------Equity shareholders' funds at end of period 58,182 53,330 ----------- ---------- Statement of Total Recognised Gains and Lossesfor the six months ended 31 March 2005 2005 2004 ----------- ---------- •'000 •'000Profit after taxation retained for the period 4,180 1,715Translation loss (1,679) (1,663) ----------- ----------Total recognised gains in period 2,501 52 ----------- ---------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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