8th Nov 2011 07:00
8 November 2011 Umeco plc (`Umeco') Interim results for the six months to 30 September 2011 Solid first half performance
Umeco, the global provider of advanced composite materials primarily to the aerospace & defence, wind energy, automotive and recreation industries, announces its interim results for the six months to 30 September 2011.
Financial summary - continuing operations
2011 2010 Change £ million £ million Per cent Revenue 105.7 98.5 + 7.3 Adjusted operating profit* 9.4 9.2 + 2.2 Adjusted profit before tax* 8.3 7.7 + 7.8 Pence Pence Change Per cent Adjusted earnings per share* 11.4 11.4 - £ million £ million Net cash/(debt) 10.5 (64.8)
* a definition of adjusted measures is set out in note 1 to this press release.
Financial highlights - continuing operations
* Revenue of £105.7 million, up 7.3 per cent despite slower demand from the
Chinese wind market in second quarter * Adjusted operating profit of £9.4 million, up 2.2 per cent
* Adjusted profit before tax increased by 7.8 per cent and adjusted earnings
per share of 11.4 pence
* Strengthened balance sheet following sale of Pattonair, with net cash ahead
of the Board's expectations at £10.5 million
* Interim dividend of 4.00 pence per share
Operational highlights
* Completed acquisition of Fenotec Ges.i.L assets in August for €2.2 million
bringing us closer to Continental European customers
* Opened China joint venture in September on budget and ahead of schedule -
establishes presence in the world's largest wind energy market and an
important opportunity for Umeco
* All Nippon Airlines took delivery of Boeing's first 787 in September, an
aircraft manufactured with Umeco's materials
* Appointed to the Board of the National Composites Centre in June 2011,
recognising the Group's leading role in the development of new composite
manufacturing technologies and systems
Andrew Moss, Chief Executive of Umeco, said:
"We have delivered a solid first half performance with profits in line with ourexpectations. In the past six months, we have made significant progress withthe successful disposal of Pattonair enabling us to focus on enhancing ourposition as a leading global composite materials and solutions business. Wealso acquired high quality assets for our new business in Germany and openedour joint venture in China, giving us a foothold in the world's largest windenergy market.
We have a focused growth strategy to concentrate on high quality business segments in our key long term growth markets that command attractive margins and to build our footprint in emerging markets. We are well positioned to achieve this by continuing to invest in leading edge innovative technology, knowhow and delivering superior levels of service.
While the macroeconomic environment makes the short term outlook lesspredictable, we remain confident in achieving a full year result in line withour expectations. We are excited by the medium and long term growth prospectsand the potential to generate significant shareholder value as we capitalise onthe structural growth opportunities for advanced composite materials inexisting and emerging markets." - Ends -
There will be a meeting for analysts at 9.00am this morning at Investec, 2 Gresham Street, London EC2V 7QP. Should you wish to attend please contact Natasha Taylor at Tulchan on [email protected] or 0207 353 4200.
Conference call details for those who cannot attend in person:
Dial in: +44 (0) 203 140 0668
Conference ID: 190466
For further information, please contact:
Umeco plc Tel: +44 (0) 1926 331 802 Andrew Moss, Chief Executive Steve Bowers, Finance Director www.umeco.com Tulchan Communications Tel: +44 (0) 207 353 4200 Christian Cowley James Macey White Notes to the press release
1. Adjusted profit and earnings per share measures
Umeco uses adjusted figures as key performance indicators. Adjusted figures arestated before the results of discontinued operations, amortisation andimpairment charges relating to intangible assets, significant items, therevaluation of financial instruments based on their market values andassociated tax effects. The differences between the total and adjusted measuresof operating profit, profit before tax and profit attributable to owners of theCompany are reconciled in note 5 to the unaudited condensed consolidatedinterim financial statements. The narrative in this announcement is based onthe adjusted measures of operating profit, profit before tax and earnings pershare. These provide a more consistent measure of operating performance.
2. Continuing and discontinued operations
Umeco's continuing operations are managed through two business streams:
- Structural Materials - development, manufacture and supply of advanced composite materials; and
- Process Materials - development, manufacture and supply of vacuum bagging materials
On 20 May 2011, Umeco announced the proposed disposal of the Pattonair businessand completion of the divestment took place on 29 July 2011. The Pattonairbusiness was not a discontinued operation or classified as held for sale at 30September 2010 and the results and cash flow for the comparative period havebeen re-presented to show the discontinued operation separately from continuingoperations. A financial summary including discontinued operations is shownbelow: 2011 2010 Change £ million £ million Per cent Revenue 194.6 217.6 - 10.6 Adjusted operating profit* 12.5 13.9 - 10.1 Adjusted profit before tax* 10.6 11.0 - 3.6 Pence Pence Change Per cent Adjusted earnings per share* 14.3 16.1 - 5.0
* a definition of adjusted measures is set out in note 1 to this press release.
Important disclaimer
This announcement of results has been prepared in accordance with the requirements of English company law and the liabilities of the directors in connection with this announcement of results shall be subject to the limitations and restrictions provided by such law. This announcement of results may contain `forward-looking statements' with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition, performance, results, strategic initiatives and objectives. Generally, words such as `may', `could', `will', `expect', `intend', `estimate', `anticipate', `aim', `outlook', `believe', `plan', `seek', `continue' or similar expressions identify forward-looking statements.
These forward-looking statements are not guarantees of future performance.
By
their nature, all forward-looking statements involve risk and uncertaintybecause they relate to future events and circumstances which are beyond theGroup's control, including amongst other things, UK domestic and globaleconomic business conditions, market-related risks such as fluctuations ininterest rates and exchange rates, the impact of competition, inflation,deflation, as well as the impact of tax and other legislation and otherregulations in the jurisdictions in which the Group operates. As a result, theGroup's actual future financial condition, performance and results may differmaterially from the plans, goals and expectations set forth in the Group'sforward-looking statements. The Group undertakes no obligation to update anyforward-looking statements, save in respect of any requirement under applicablelaw or regulation. Nothing in this announcement of results should be construedas a profit forecast.Interim StatementOverviewWe have delivered a solid first half performance overall, with profits in linewith our expectations. Revenues were slightly lower than expected due toweakness in the Chinese wind energy market and lower than anticipated growth inour distribution business. However, this mix of revenues was favourable tooperating margins.Revenue from continuing operations in the six months ended 30 September 2011increased by 7.3 per cent to £105.7 million (2010: £98.5 million). Adjustedoperating profit increased by 2.2 per cent to £9.4 million (2010: £9.2 million)and adjusted operating margins were 8.9 per cent (2010: 9.3 per cent). Adjustedearnings per share were unchanged at 11.4 pence, in line with the Board'sexpectations.The disposal of Pattonair was successfully completed on 29 July 2011 and theresults for this business are shown as a discontinued operation in thefinancial statements. The disposal has substantially strengthened our balancesheet and we ended the period with net cash of £10.5 million, which was aheadof our expectations. This strengthened balance sheet will allow us toaccelerate the development of our leading advanced composites business.In line with our intention of maintaining full year dividend cover at acomparable level to that prior to the disposal of Pattonair, the Directors havedeclared an interim dividend of 4.00 pence (2010: 6.75 pence). The dividend ispayable on 10 February 2012 to shareholders on the register at the close ofbusiness on 13 January 2012.We are pleased with the progress in the first half of the year and look forwardto the benefits of increasing volumes in our aerospace & defence segment, asprojects such as the Foxhound (LPPV) contract awarded to Force ProtectionEurope by the UK Ministry of Defence and Boeing 787 ramp up, and to the Chinesewind energy market commencing recovery in the early part of next year.
Strategy and vision
We have a clear vision to become the leading global advanced composites and material provider, delivering sustained growth in earnings per share and shareholder value.
To achieve this, our strategy is to:
* concentrate on high quality business segments in our key markets that
command attractive margins
* build our footprint in emerging markets in order to exploit the high rates
of growth and capitalise on the trend for our existing customers to move
production to lower cost, higher growth markets
* utilise our expertise by continuing to develop leading edge technology,
leveraging our knowhow to develop market leading solutions and delivering
industry leading levels of customer service
Our key end markets are: * aerospace & defence * wind energy * automotive * recreation * other industrial markets Umeco's focus within these end markets is those segments with underlying longterm growth prospects coupled with a propensity to switch to lighter weighthigh strength advanced composite materials driven by structural factors such asenvironmental regulation, rising fuel costs and safety considerations.Through our unique combination of technology, expertise, knowhow and superiorlevels of responsive service, we help our customers accelerate the move awayfrom metals to advanced composites.
Key developments
Andrew Moss and Steve Bowers were appointed as Chief Executive and FinanceDirector respectively on 20 May 2011. On the same date, Clive Snowdon, formerlyChief Executive, and Doug Robertson, formerly Finance Director, resigned fromthe Board.On 13 June 2011, shareholders approved the disposal of Pattonair to a companyestablished by funds advised by Exponent Private Equity LLP and the transactionwas successfully completed on 29 July 2011 for a net consideration ofapproximately £109.3 million before transaction costs, of which £8.0 million isdeferred. The proceeds of the disposal were used to fully repay the Group'scommitted credit facilities with Lloyds Banking Group. In conjunction with thedisposal, the Group entered into an agreement for a new five year committedmulti currency revolving credit bank facility with HSBC Bank plc and SantanderUK plc, comprising £15.0 million and US$25.0 million tranches.On 8 August 2011, we announced that our German subsidiary, Umeco CompositesGmbH, had purchased certain of the assets of Fenotec Ges.i.L from theadministrator for the cash sum of €2.2 million (£1.9 million). The assetspurchased, which are located in Beelitz near Berlin, comprise freeholdbuildings and high quality production equipment. These will be used tomanufacture Umeco's range of prepreg advanced composite materials. We are welladvanced in the process of introducing our own well proven product range tothis facility. The acquisition provides an excellent opportunity for us to getcloser to our customers in Continental Europe.In September 2010, in line with our strategy to establish a presence in theworld's leading market for wind energy, we announced a joint venture agreementwith our Chinese distributor, Shanghai Leadgo Technology Co., Ltd. tomanufacture vacuum bagging films specifically for the wind energy market. Thefacility was formally opened on 21 September 2011 and has successfullycommenced production ahead of schedule and on budget. This is a significantdevelopment for Umeco in the world's largest market for wind energy.We are delighted that Boeing delivered the first 787 aircraft to All NipponAirlines on 26 September 2011. The 787 has significantly greater compositescontent (in excess of 50 per cent) than previous generations of commercialaircraft and we are proud to be a part of this project, supplying both prepregmaterials used in the aircraft's interior and vacuum bagging materials used inthe process of manufacturing the aircraft's structure. We expect productionvolumes to progressively ramp up over the next two to three years in line withBoeing's forecast build rates.In June 2011, we were appointed to the Board of the National Composites Centrealongside AgustaWestland, Rolls-Royce, Airbus, Vestas and GKN Aerospace. Welook forward to benefiting from a close working relationship with world leadingmanufacturers and UK academia, developing new technologies and promoting theapplication of composites.Product development
Umeco consistently invests in the development of new technologies. It is fundamental to how we add value to our customers and enables us to establish competitive advantage and generate superior margins.
In the civil aerospace sector, MTM®44-1, our leading out-of-autoclave curingprepreg, will be used for the manufacture of wing panels on the Airbus A350XWBand is the first use of out-of-autoclave material on a commercial aircraftstructure. This is a significant milestone for Umeco and the result of over tenyears of development effort including participation in a number of grant aidedcollaborative programmes.Our Structural Materials business in the USA was awarded US$2.0 million offunding from the United States Navy for research & development efforts insupport of our out-of-autoclave materials and technology development. This isthe third phase of a programme to increase the technology readiness level ofour materials to permit deployment on military and other air and spacevehicles. The programme of work will be undertaken over the next two years.
We have successfully completed a collaborative project to demonstrate the automated processing and manufacture of cost effective advanced composites structures for the automotive industry in partnership with ABB Ltd, Bentley Motors Ltd and ESI Group. A follow-on project with Aston Martin is currently in progress.
In the rail industry, our MTM®82S-C prepreg has been hailed a resounding success for Bombardier's Class 379 Passenger trains used on the Stansted Airport rail link. Our materials provide a significant weight reduction, over 40 per cent, compared to the previous design being used by Bombardier.
Review of business operations
Structural Materials
Structural Materials develops, manufactures and supplies a broad range ofadvanced composite materials to all of our major end markets. It accounted for61.2 per cent of the Group's revenue and 50.0 per cent of adjusted operatingprofit in the period. It also has a growing European presence in thedistribution of composite resins, reinforcements and related products. Ourdistribution business is strategically important because it provides a platformand channel to composites markets that are expected to migrate over time to ourhigher value added advanced composite materials.Structural Materials enjoyed a solid half year. Revenues from the lower margindistribution business, that will provide an additional channel for our otherhigher value products, increased significantly, though less than expected,following the establishment of businesses in Finland and France in the secondhalf of last year. Margins were better than expected due to a favourable mix,though lower than in the prior period due to the increase in distributionrevenues, an increase in net research & development expenditure following thecompletion of a number of grant aided projects, and the dual running costsassociated with the relocation of our operations in California. 2011 2010 Change Continuing operations £ million £ million Per cent Revenue 64.7 56.6 + 14.3 Adjusted operating profit 4.7 5.4 - 13.0 Per cent Per cent Adjusted operating margin 7.3 9.5 Working capital to sales 13.1 10.8 Revenue by end market was: 2011 2010 Change £ million £ million Per cent Aerospace & defence 22.8 22.3 + 2.2 Wind energy 0.3 0.6 - 50.0 Automotive 5.8 5.9 - 1.7 Recreation 16.3 13.3 + 22.6 Other 19.5 14.5 + 34.5 64.7 56.6 + 14.3Aerospace & defenceStructural Materials' aerospace & defence revenues increased by 2.2 per centduring the period, with lower demand from Boeing 787 due to development buildphasing offsetting modest growth on other programmes. With the delivery of thefirst 787 in September, we anticipate an improved performance in the secondhalf.We remain pleased with the progress we are making with our out-of-autoclavematerials, including for the Airbus 350XWB programme for which our firstproduction order has been booked with deliveries commencing next year. In March2011, we received orders for ballistic protection materials to be used on the200 vehicle Foxhound (LPPV) contract awarded to Force Protection Europe by theUK Ministry of Defence. This order commenced shipping towards the end of thefirst half, a little later than we expected, and the balance of the contractwill be delivered in the second half of the current financial year. We lookforward to the Ministry of Defence placing a follow-on order for the Foxhoundvehicle although the timing of this is uncertain.
Wind energy
Structural Materials' revenue in the wind energy sector is small and currentlyrelated to materials used in the manufacture of tooling. We have developed anumber of new technologies in this area and the initial interest from customersis encouraging.AutomotiveRevenue in the automotive sector was broadly unchanged year-on-year, reflectingthe phasing of certain vehicle projects. We are, however, expecting activity toimprove in the coming months as a number of new projects are scheduled to enterproduction. Automotive represents a very substantial market opportunity for theGroup. We have a number of technologies under development that will helpdeliver more cost effective composites solutions for our OEM customers.
Recreation
Revenue in this market sector, which includes motorsport, marine and othersporting goods applications, grew by 22.6 per cent. A large part of this growthresulted from winning further market share in Formula 1, contributing torevenue growth in motorsport of 37.0 per cent. This is an example of ourability to deliver time critical, high performance solutions to a verydemanding customer base. Revenue in the high value recreational market improvedmarkedly, benefiting in particular from contracts won in the second half of theprior year relating to customised composite solutions for a marketand technology leader in sporting goods.
Other industrial markets
Applications where the high strength, lightweight characteristics of advancedcomposite materials are attractive arise in a wide range of industries. Umeco'sportfolio of composite materials has a diverse customer base including those inhealthcare, electrical equipment and industrial machinery. Revenue grew by 34.5per cent, as market conditions improved and we expanded the geographic coverageof our European distribution business into Finland and France. Revenue fromthis distribution activity grew by 59.1 per cent to £11.4 million. Excludingdistribution, revenues grew by 12.3 per cent.
Process Materials
Process Materials develops, manufactures and supplies vacuum bagging materialsto the composites industry and other markets. It accounted for 38.8 per cent ofGroup revenue and 50.0 per cent of adjusted operating profit in the period.Process Materials revenue growth was held back by the slowdown of demand in theChinese wind market coupled with the impact of destocking the distributionchannel ahead of the opening of our manufacturing joint venture in September.Excluding China, revenue increased by 5.9 per cent during the period. Marginsin Process Materials benefited from favourable mix, resulting from an increasein civil aerospace revenues, and the pricing actions taken in the second halfof the prior year. 2011 2010 Change Continuing operations £ million £ million Per cent Revenue 41.0 41.9 - 2.1 Adjusted operating profit 4.7 3.8 + 23.7 Per cent Per cent Adjusted operating margin 11.5 9.1 Working capital to sales 19.1 13.0 Revenue by end market was: 2011 2010 Change £ million £ million Per cent Aerospace & defence 14.0 12.6 + 11.1 Wind energy 11.1 13.5 - 17.8 Automotive 1.8 1.7 + 5.9 Recreation 1.6 1.5 + 6.7 Other 12.5 12.6 - 0.8 41.0 41.9 - 2.1Aerospace & defenceOur aerospace & defence revenues grew by 11.1 per cent despite a marked declinein the US Defence activity following the cessation of the F22 build programme.We are encouraged by renewed activity in commercial aerospace both in the USAand at Airbus, where build rates are increasing.
Wind energy
Our revenues in the wind energy market declined by 17.8 per cent, howeverexcluding China our revenues grew by 3.9 per cent. We anticipated a decline inactivity as we switched from producing materials for China in Europe to ourjoint venture but this was exacerbated by a reduction in demand from Chinesecustomers. After a record 2010, there has been a tightening of governmentregulation and, coupled with bottlenecks in the electricity grid, turbineproducers are reacting to this slow down in demand by destocking. We expectthis lower level of activity to continue over the next few months and tocommence recovery in the early part of next year. We remain confident about thelong term growth potential of this important market.
Automotive, recreation, and other industrial markets
Revenues in the automotive, recreation and other industrial sectors grewslightly overall. Growth in demand from composites markets was offset by adecline in the demand for specialist films not directly related to compositesapplications in Continental Europe, where activity fell back to levels lastseen in 2009/10. Looking forward, we expect this specialist films product lineto respond to the macro economic factors impacting European markets.
Finance
Net interest charges for continuing operations, excluding revaluations of financial instruments, were £1.1 million (2010: £1.5 million). The decrease principally reflects the repayment of debt following completion of the Pattonair divestment.
Adjusted profit before tax from continuing operations was £8.3 million, anincrease of 7.8 per cent. The effective tax rate on adjusted profit before taxfrom continuing operations was 32.6 per cent compared with 27.6 per cent in theyear to 31 March 2011. This increase in the tax rate reflects a greaterweighting of profits towards the USA where effective tax rates are higher.Net cash at 30 September 2011 was £10.5 million compared with net debt of £74.3million at 31 March 2011. Working capital, provisions and retirement benefitobligations increased by £6.0 million, reflecting the higher revenue in theperiod. Working capital as a percentage of sales was 14.5 per cent (2010: 9.8per cent), with the increase reflecting investment in working capital that willsupport expected growth in activity levels in the second half year. Operatingcash flow from continuing operations of £5.5 million (2010: £9.6 million)represented a cash conversion of 58.5 per cent (2010: 104.3 per cent) ofadjusted operating profit.Gross capital expenditure from continuing operations was £7.5 million (2010: £2.8 million), which compares to depreciation for continuing operations of £1.8million (2010: £1.9 million). The principal elements of capital expenditure inthe period were £2.7 million relating to the relocation and expansion ofStructural Materials' Californian operations, £1.9 million for the assetspurchased in Germany from Fenotec Ges.i.L and £1.6 million for equipment tomanufacture bagging films for the aerospace market. This investment in ourproduction capabilities led to a free cash outflow of £5.6 million (2010: £4.7million inflow).
Our new five year committed multi currency revolving credit bank facility, comprising £15.0 million and US$25.0 million tranches, provides us with the financial flexibility to invest in opportunities that can deliver long term returns.
Equity attributable to shareholders at 30 September 2011 was £171.8 million.
In the period from 1 April 2011 until completion of the disposal on 29 July2011, Pattonair generated adjusted operating profit of £3.1 million (six monthsto 30 September 2010: £4.7 million). The total profit from discontinuedoperations disclosed in the statement of comprehensive income of £2.1 millionincludes a gain of £3.4 million in respect of the recycling of historic foreignexchange translation gains which have previously been recognised in thetranslation reserve.Proceeds received from the Pattonair disposal were in line with the terms weannounced on 20 May 2011. The net cash inflow relating to Pattonair in theperiod, including proceeds received net of cash balances disposed andattributable corporate costs, was £89.5 million. Under the terms of thedisposal agreement, deferred consideration of £8.0 million is receivable ininstalments during the year to 31 March 2013.
Outlook
We have delivered a solid first half performance with profits in line with ourexpectations. In the past six months, we have made significant progress withthe successful disposal of Pattonair enabling us to focus on enhancing ourposition as a leading global composite materials and solutions business. Wealso acquired high quality assets for our new business in Germany and openedour joint venture in China, giving us a foothold in the world's largest windenergy market.
We have a focused growth strategy to concentrate on high quality business segments in our key long term growth markets that command attractive margins and to build our footprint in emerging markets. We are well positioned to achieve this by continuing to invest in leading edge innovative technology, knowhow and delivering superior levels of service.
While the macroeconomic environment makes the short term outlook lesspredictable, we remain confident in achieving a full year result in line withour expectations. We are excited by the medium and long term growth prospectsand the potential to generate significant shareholder value as we capitalise onthe structural growth opportunities for advanced composite materials inexisting and emerging markets.
Principal risks and uncertainties
With the exception of the risk relating to completion of the Supply Chaindisposal, which no longer comprises a risk following a successful completion on29 July 2011, the Board considers the principal risks facing the Group for theremaining six months of the year to be unchanged from those reported in the2011 Annual Report.These risks are detailed on pages 20 to 22 of the 2011 Annual Report and relateto the following areas: economic climate; availability of debt; reduction indemand from the civil aerospace sector; technological developments; failure ofsuppliers; acquisitions; financial risks; interruption or failure of ITsystems; competition and retention of customers; product failure; pricefluctuations of key raw materials; and loss of key management and personnel.
Unaudited Condensed Consolidated Statement of Comprehensive Income
_______________________________________________________________________________
For the six months to 30 September 2011
Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented Note £ million £ million £ million Continuing operations Revenue 3 105.7 98.5 207.4 Cost of sales (74.2) (67.9) (143.9) Gross profit 31.5 30.6 63.5 Administrative expenses (24.1) (24.1) (52.1) Operating profit 5 7.4 6.5 11.4 Financial income 4 0.6 0.8 1.5 Financial expense 4 (1.5) (2.1) (4.3) Profit before tax 5 6.5 5.2 8.6 Income tax - UK (1.6) (0.7) (2.2) Income tax - overseas (0.6) (0.8) 0.3 Income tax - total 6 (2.2) (1.5) (1.9) Profit from continuing operations 4.3 3.7 6.7 Discontinued operation Profit/(loss) from discontinued 10 2.1 2.7 (4.5) operation (net of income tax) Profit attributable to owners of 5 6.4 6.4 2.2 the Company Other comprehensive (expense)/ income Foreign exchange translation (1.1) (2.1) (1.7) differences on foreign operations Actuarial gain in pension schemes - - 1.2 (1.1) (2.1) (0.5) Income tax on other comprehensive - - (0.4) (expense)/income Other comprehensive (expense)/ (1.1) (2.1) (0.9) income Total comprehensive income 5.3 4.3 1.3 attributable to owners of the Company
Unaudited Condensed Consolidated Statement of Comprehensive Income (continued)
_______________________________________________________________________________
For the six months to 30 September 2011
Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented Note Pence Pence Pence Earnings per share Total Basic earnings per share 8 13.3 13.2 4.5 Diluted earnings per share 8 13.1 13.1 4.4 Continuing operations Basic earnings per share 8 9.0 7.7 13.9 Diluted earnings per share 8 8.9 7.6 13.7 Discontinued operations Basic earnings per share 8 4.3 5.5 (9.4) Diluted earnings per share 8 4.2 5.5 (9.3)
Unaudited Condensed Consolidated Balance Sheet
_______________________________________________________________________________
As at 30 September 2011 As at 30 September As at 31 2011 2010 March 2011 Note £ million £ million £ million Assets Non-current assets Property, plant & equipment 39.2 45.9 33.3 Intangible assets 9 110.5 138.2 111.5 Deferred tax assets 2.3 1.8 2.6 152.0 185.9 147.4 Current assets Inventories 28.9 164.4 25.6 Trade & other receivables 52.4 72.7 53.5 Income tax receivable 1.4 5.5 1.4 Cash 20.3 43.6 5.6 Assets classified as held for sale - - 281.6 103.0 286.2 367.7 Total assets 255.0 472.1 515.1 Liabilities Current liabilities Trade & other payables (50.3) (160.2) (53.3) Financial liabilities - (0.2) (0.2) Income tax payable (9.2) (8.7) (7.6) Loans & borrowings (2.9) (1.8) (25.6) Liabilities classified as held for - - (130.1) sale (62.4) (170.9) (216.8) Non-current liabilities Other payables (1.1) (0.5) (0.4) Deferred tax liabilities (9.0) (9.4) (9.4) Retirement benefit obligation (0.6) (3.8) (2.0) Loans & borrowings (6.9) (106.6) (111.4) Provisions (3.2) (3.4) (3.5) (20.8) (123.7) (126.7) Total liabilities (83.2) (294.6) (343.5) Net assets 171.8 177.5 171.6 Equity Share capital 12.0 12.0 12.0 Share premium 115.6 115.5 115.5 Translation reserve 5.8 6.5 6.9 Retained earnings 38.4 43.5 37.2 Equity attributable to owners of the 171.8 177.5 171.6 Company
Unaudited Condensed Consolidated Statement of Cash Flows
_______________________________________________________________________________
For the six months to 30 September 2011
Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented Note £ million £ million £ million Cash flows from operating activities - continuing operations Profit for the period - continuing 4.3 3.7 6.7 operations Depreciation 1.8 1.9 3.7 Amortisation & impairment charges 2.0 2.7
5.3
Profit on disposal of property, plant (0.1) - - & equipment Financial income (0.6) (0.8) (1.5) Financial expense 1.5 2.1 4.3 Share based payments expense 0.3 0.1 0.2 Own shares held 0.1 0.1 0.2 Income tax expense 2.2 1.5 1.9 11.5 11.3 20.8 Increase in inventories (3.3) (2.6) (5.6) Decrease/(increase) in trade & other 7.3 0.1 (10.0) receivables (Decrease)/increase in trade & other (9.1) 1.5 11.6 payables Decrease in other provisions (0.2) (0.1)
-
Decrease in retirement benefit obligation (0.7) (0.6) (1.2)
Cash generated from operations 5.5 9.6 15.6 Net financial expense paid (1.3) (1.6) (3.8) Tax paid (2.3) (0.5) (2.9) Net cash flow from operating 1.9 7.5 8.9 activities - continuing operations Cash flows from investing activities - continuing operations Acquisition of property, plant & (7.5) (2.8) (6.5) equipment Proceeds from sale of property, plant & - - 0.1 equipment Disposal of subsidiaries, net of cash 10 112.0 - (1.9) disposed Acquisition of subsidiaries, net of - - (0.1) cash acquired Net cash flow from investing 104.5 (2.8) (8.4) activities - continuing operations
Unaudited Condensed Consolidated Statement of Cash Flows (continued)
_______________________________________________________________________________
For the six months to 30 September 2011
Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented Note £ million £ million £ million Cash flows from financing activities - continuing operations Proceeds from issue of share capital 0.1 - - Drawdown of bank loans 16.1 5.3 17.9 Repayment of bank loans (120.1) (31.5) (37.0) Repayment of lease finance liabilities (0.1) (0.1)
(0.2)
Dividends paid to owners of the - - (8.5) Company Net cash flow from financing activities - continuing operations (104.0) (26.3) (27.8) Discontinued operations Net cash flow from operating (22.3) 6.3 9.7 activities Net cash flow from investing (0.3) 0.2 (0.7) activities Net cash flow from financing 0.1 - - activities Net cash flow from discontinued (22.5) 6.5 9.0 operations Net decrease in cash 11 (20.1) (15.1) (18.3) Cash at start of period 38.4 56.5 56.5 Effect of exchange rate fluctuations (0.4) 0.8 0.2 Net cash at end of period 17.9 42.2 38.4
Unaudited Condensed Consolidated Statement of Changes in Equity
_______________________________________________________________________________
For the six months to 30 September 2011
Share Share Translation Retained capital premium reserve earnings Total £ million £ million £ million £ million £ million At 1 April 2011 12.0 115.5 6.9 37.2 171.6 Total comprehensive income/ (expense) Profit attributable to - - - 6.4 6.4 owners of the Company Other comprehensive (expense)/income Foreign exchange - - 2.3 - 2.3 translation differences on foreign operations Recycling of cumulative - - (3.4) - (3.4) currency translation reserve on disposal Total other comprehensive (expense)/income - - (1.1) - (1.1) Total comprehensive - - (1.1) 6.4 5.3 (expense)/income Transactions with owners, recorded directly in equity Cost of share based - 0.1 - 0.3 0.4 payments Dividends payable - - - (5.5) (5.5) Total transactions with - 0.1 - (5.2) (5.1) owners At 30 September 2011 12.0 115.6 5.8 38.4 171.8 Share Share Translation Retained capital premium reserve earnings Total £ million £ million £ million £ million £ million At 1 April 2010 12.0 115.5 8.6 42.3 178.4 Total comprehensive income/ (expense) Profit attributable to - - - 6.4 6.4 owners of the Company Other comprehensive (expense)/income Foreign exchange - - (2.1) - (2.1) translation differences on foreign operations Total other comprehensive (expense)/income - - (2.1) - (2.1) Total comprehensive - - (2.1) 6.4 4.3 (expense)/income Transactions with owners, recorded directly in equity Cost of share based - - - 0.1 0.1 payments Dividends payable - - - (5.3) (5.3) Total transactions with - - - (5.2) (5.2) owners At 30 September 2010 12.0 115.5 6.5 43.5 177.5 Share Share Translation Retained capital premium reserve earnings Total £ million £ million £ million £ million £ million At 1 April 2010 12.0 115.5 8.6 42.3 178.4 Total comprehensive income/ (expense) Profit attributable to - - - 2.2 2.2 owners of the Company Other comprehensive (expense)/income Foreign exchange - - (1.7) - (1.7) translation differences on foreign operations Actuarial gain in pension - - - 1.2 1.2 schemes Income tax on other - - - (0.4) (0.4) comprehensive income Total other comprehensive (expense)/income - - (1.7) 0.8 (0.9) Total comprehensive - - (1.7) 3.0 1.3 (expense)/income Transactions with owners, recorded directly in equity Cost of share based - - - 0.4 0.4 payments Dividends paid - - - (8.5) (8.5) Total transactions with - - - (8.1) (8.1) owners At 31 March 2011 12.0 115.5 6.9 37.2 171.6
Notes to the Unaudited Condensed Consolidated Interim Financial Statements _______________________________________________________________________________
For the six months to 30 September 2011
1 Basis of preparation & accounting policies
Umeco plc (the `Company') is domiciled in the UK. The unaudited condensed consolidated interim financial statements of the Company as at, and for the six months to, 30 September 2011 comprise interim financial information for the Company and its subsidiaries (together referred to as the `Group' or `Umeco').
This interim financial information has been prepared applying the accountingpolicies, presentation and basis of consolidation which were applied in thepreparation of the Company's published consolidated financial statements forthe year to 31 March 2011, which were prepared in accordance with InternationalFinancial Reporting Standards as adopted by the European Union (`AdoptedIFRS'), except for the following accounting standards and interpretations whichare effective for the Group from 1 April 2011: * Amendments to IFRIC 14 `Prepayment of a minimum funding requirement' * IFRIC 19 `Extinguishing financial liabilities with equity instruments' * Amendments to IAS 24 `Related party transactions' The adoption of the accounting standards listed above has not had a materialimpact on Umeco's unaudited condensed consolidated interim financial statementsfor the period to 30 September 2011.Statements of comprehensive income and statements of cash flows of overseassubsidiaries are translated into sterling at average rates of exchange for theperiod, balance sheets are translated at period end rates. The currencies whichmost influence Umeco's financial statements are the US dollar and Euro. Therelevant exchange rates for these currencies were: Six months to 30 September Year to 31 March 2011 2011 2010 2010 2011 2011 Closing Average Closing Average Closing Average rate rate rate rate rate rate US dollar 1.558 1.621 1.576 1.521 1.603 1.556 Euro 1.161 1.137 1.154 1.186 1.130 1.177 On 20 May 2011, a new five year revolving credit facility was established,comprising £15.0 million and $25.0 million tranches. After considering thenature and duration of these facilities and making appropriate enquiries, basedon the strength of the Group's balance sheet, current expectations of futuretrading and on the facilities available to the Group, the Directors believethey have reasonable grounds for stating that the Company and the Group haveadequate resources to continue in operational existence for the foreseeablefuture which is considered to be a period of 12 months following the date ofthese unaudited condensed consolidated interim financial statements. For thisreason, they continue to adopt the going concern basis in preparing thefinancial statements.The unaudited condensed consolidated interim financial statements for the sixmonths to 30 September 2011 have been prepared in accordance with theDisclosure and Transparency Rules of the Financial Services Authority and withIAS34 `Interim Financial Reporting' as adopted by the European Union. They donot include all of the information required for annual financial statements andshould be read in conjunction with the 2011 Annual Report, which containsannual financial statements for the year to 31 March 2011 prepared inaccordance with Adopted IFRS.The condensed consolidated interim financial statements have not been auditedor reviewed by auditors pursuant to the Auditing Practices Board's Guidance onFinancial Information. The unaudited condensed consolidated interim financialstatements were approved by the Board of Directors on 8 November 2011.The comparative financial information for the year to 31 March 2011 does notconstitute the Company's statutory accounts for that financial year. Thestatutory accounts for the year to 31 March 2011 have been filed with theRegistrar of Companies and contain a report of the auditors. This report, whichis unqualified, does not include references to any matter to which the auditorsdrew attention by way of emphasis without qualifying their report and does notcontain a statement under Section 498 (2) or (3) of the Companies Act 2006. Theconsolidated financial statements of the Group as at and for the year to 31March 2011 are available upon request from the Company's registered office orcan be downloaded from its website.On 20 May 2011, the Company announced the proposed sale of Pattonair. This salewas approved by shareholders at the General Meeting held on 13 June 2011 andcompleted on 29 July 2011. Following the disposal of Pattonair, the resultshave been classified as a discontinued operation. Comparative information forthe period to 30 September 2010 has been re-presented in line with thesegmental analysis adopted in the consolidated financial statements of theGroup for the year to 31 March 2011.
Divestments and assets held for sale
The results and cash flows of major lines of business that are held for salehave been classified as discontinued operations. Businesses that are divestedare de-consolidated from the date on which control ceases.
When the carrying value of an asset will be recovered principally through a sale transaction expected to take place within twelve months of the balance sheet date rather than through continuing use, it is classified as held for sale and stated at the lower of carrying value and fair value less costs to sell.
Immediately before classification as held for sale, the assets, or componentsof a disposal group, are re-measured in accordance with the Group's accountingpolicies. Thereafter, generally the assets, or disposal group, are measured atthe lower of their carrying amount and fair value less costs to sell. Anyimpairment loss on a disposal group is first allocated to goodwill, and then toremaining assets and liabilities on a pro rata basis, except that no loss isallocated to inventories, financial assets, deferred tax assets and employeebenefit assets which continue to be measured in accordance with the Group'saccounting policies. Impairment losses on initial classification as held forsale and subsequent gains or losses on re-measurement are recognised in profitor loss. Gains are not recognised in excess of any cumulative impairment loss.
Discontinued operations
A discontinued operation is a component of the Group's business that representsa separate major line of business or geographical area of operations that hasbeen disposed of or is held for sale, or is a subsidiary acquired exclusivelywith a view to resale. Classification as a discontinued operation occurs upondisposal or when the operation meets the criteria to be classified as held forsale, if earlier. When an operation is classified as a discontinued operation,the comparative Consolidated Statement of Comprehensive Income is re-presentedas if the operation had been discontinued from the start of the comparativeperiod.
2 Risks, estimates, judgements and forward-looking statements
A summary of the principal risks faced by Umeco are set out in this press release. It is the Directors' opinion that these are the risks that could impact on the performance of the Group and that they are also applicable to the current financial year.
Umeco has a continuous process for identifying, evaluating and managing thesignificant risks it faces, which has been in place throughout the six monthsto 30 September 2011 and up to the date of approval of these unauditedcondensed consolidated interim financial statements. This process ensures theproper management and mitigation of such risks.In the process of applying the Group's accounting policies, management has madea number of judgements. The process of preparing these unaudited condensedconsolidated interim financial statements inevitably requires the Group to makeestimates and assumptions concerning the future and the resulting accountingestimates may not equal the related actual results. The estimates andjudgements that have the most significant effect on the amounts included withinthese unaudited condensed consolidated interim financial statements were thesame as those that applied to the annual financial statements for the year to31 March 2011.3 Segmental reportingUmeco has two continuing reportable segments, as described below, which are theGroup's strategic business units. The strategic business units offer differentproducts and services, and are managed separately as they require differenttechnology and marketing strategies. For each of the strategic business units,the Chief Executive reviews internal management reports on a monthly basis. Thefollowing summary describes the operations of each of Umeco's reportablesegments:
Structural Materials - development, manufacture and supply of advanced composite materials; and
Process Materials - development, manufacture and supply of vacuum bagging materials.
Details of the calculation of adjusted operating profit are shown in note 5.
Information regarding reportable segments
Continuing operations Six months to Year to 30 September 31 March 2011 2010 2011 £ million £ million £ million Structural Materials External revenue 64.7 56.6 120.0 Inter-segment revenue 0.1 0.1 0.3 Adjusted operating profit 4.7 5.4 10.8 Depreciation 1.1 1.1 2.1 Amortisation 1.4 1.9 3.8 Trading assets 41.0 30.5 33.3 Capital expenditure 5.2 2.3 5.1 Continuing operations Six months to Year to 30 September 31 March 2011 2010 2011 £ million £ million £ million Process Materials External revenue 41.0 41.9 87.4 Inter-segment revenue - - 0.1 Adjusted operating profit 4.7 3.8 8.7 Depreciation 0.7 0.7 1.5 Amortisation 0.6 0.8 1.5 Trading assets 29.4 21.6 25.9 Capital expenditure 2.3 0.4 1.4 Discontinued operations Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented £ million £ million £ million External revenue 88.9 119.1 252.5 Inter-segment revenue - - - Adjusted operating profit 3.1 4.7 13.8 Depreciation 0.6 0.9 1.8 Amortisation - - - Trading assets - 78.0 81.3 Capital expenditure 0.3 0.3 1.1 Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented £ million £ million £ million Revenue Total revenue for reportable 105.8 98.6 207.8 segments Elimination of inter-segment (0.1) (0.1) (0.4) revenue Group revenue 105.7 98.5 207.4 Six months to Year to 30 September 31 March 2011 2010 2011 £ million £ million £ million Depreciation Total depreciation for reportable 1.8 1.8 3.6 segments Corporate depreciation - 0.1 0.1 Group depreciation 1.8 1.9 3.7 As at As at 30 September 31 March 2011 2010 2011 £ million £ million £ million Net assets Total trading assets for reportable 70.4 130.1 59.2 segments Corporate net assets and 5.3 (2.0) - unallocated items Goodwill and intangible assets 110.5 138.2 111.5 Income tax and deferred tax (14.5) (10.8) (13.0) Dividends payable (5.5) (5.3) - Financial liabilities - (0.2) (0.2) Provisions and retirement benefit (4.9) (7.7) (5.9) obligations Net cash/(debt) 10.5 (64.8) (74.3) Assets held for sale - excluding - - 94.3 net debt Group net assets 171.8 177.5 171.6
Information regarding geographical segments
In presenting information on the basis of geographical segments, segment revenue is provided based on the geographical location of the customer and the geographical location of the business unit. Segment assets are based on the geographical location of the assets.
Six months to 30 September 2011 Continuing Discontinued Total £ million £ million £ million Revenue by location of customer UK 23.5 48.9 72.4 France 7.7 7.6 15.3 Italy 10.2 4.9 15.1 Rest of Europe 21.2 7.0 28.2 USA 29.5 14.6 44.1 Rest of World 13.6 5.9 19.5 Total 105.7 88.9 194.6 Six months to 30 September 2010 Continuing Discontinued Total Re-presented Re-presented £ million £ million £ million Revenue by location of customer UK 19.7 71.0 90.7 France 5.7 9.4 15.1 Italy 10.0 6.1 16.1 Rest of Europe 17.4 9.7 27.1 USA 30.3 16.2 46.5 Rest of World 15.4 6.7 22.1 Total 98.5 119.1 217.6 Year to 31 March 2011 Continuing Discontinued Total £ million £ million £ million Revenue by location of customer UK 43.3 146.8 190.1 France 11.5 19.8 31.3 Italy 21.5 14.1 35.6 Rest of Europe 40.9 21.6 62.5 USA 59.3 34.8 94.1 Rest of World 30.9 15.4 46.3 Total 207.4 252.5 459.9 Six months to 30 September 2011 Continuing Discontinued Total £ million £ million £ million Revenue by location of business unit UK 43.8 54.0 97.8 France 10.6 9.0 19.6 Italy 8.9 5.4 14.3 Rest of Europe 5.4 4.4 9.8 USA 37.0 14.5 51.5 Rest of World - 1.6 1.6 Total 105.7 88.9 194.6 Six months to 30 September 2010 Continuing Discontinued Total Re-presented Re-presented £ million £ million £ million Revenue by location of business unit UK 38.7 76.7 115.4 France 10.0 11.0 21.0 Italy 9.6 6.8 16.4 Rest of Europe 3.5 6.6 10.1 USA 36.7 16.4 53.1 Rest of World - 1.6 1.6 Total 98.5 119.1 217.6 Year to 31 March 2011 Continuing Discontinued Total £ million £ million £ million Revenue by location of business unit UK 82.0 160.9 242.9 France 22.7 23.6 46.3 Italy 19.4 15.6 35.0 Rest of Europe 9.1 14.2 23.3 USA 74.2 34.5 108.7 Rest of World - 3.7 3.7 Total 207.4 252.5 459.9 Six months to 30 September 2011 Continuing Discontinued Total Non-current assets by location of £ million £ million £ million business unit UK 61.2 - 61.2 France 2.3 - 2.3 Italy 22.6 - 22.6 Rest of Europe 2.3 - 2.3 USA 62.6 - 62.6 Rest of World 1.0 - 1.0 Total 152.0 - 152.0 Six months to 30 September 2010 Continuing Discontinued Total Re-presented Re-presented Non-current assets by location of £ million £ million £ million business unit UK 61.5 11.3 72.8 France 2.4 2.2 4.6 Italy 22.3 12.1 34.4 Rest of Europe 0.4 - 0.4 USA 60.0 13.4 73.4 Rest of World - 0.3 0.3 Total 146.6 39.3 185.9 Year to 31 March 2011 Continuing Discontinued Total Non-current assets by location of £ million £ million £ million business unit UK 62.0 11.8 73.8 France 2.4 2.1 4.5 Italy 22.3 12.5 34.8 Rest of Europe 0.4 - 0.4 USA 59.8 12.7 72.5 Rest of World 0.5 0.6 1.1 Total 147.4 39.7 187.1
4 Financial income and expense
Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented £ million £ million £ million Financial income - continuing operations Revaluation of financial instruments 0.2 0.2 0.3 Interest income - 0.1 0.1 Expected return on pension scheme 0.4 0.5 1.1 assets 0.6 0.8 1.5 Financial expense - continuing operations Interest on bank loans and overdrafts 1.1 1.6
3.2
Interest cost on retirement benefit 0.4 0.5 1.1 obligation 1.5 2.1 4.3
5 Reconciliation of adjusted profit measures
Umeco uses adjusted figures as key performance indicators, as these areconsidered to provide a more consistent measure of operating performance.Adjusted figures are stated before the results of discontinued operations,amortisation and impairment charges relating to intangible assets, significantitems, the revaluation of financial instruments based on their market valuesand associated tax effects. The differences between the total and adjustedprofit measures are reconciled below. The narrative in this interim resultsannouncement is based on the adjusted measures of operating profit, profitbefore tax and earnings per share. Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented £ million £ million £ million Operating profit - continuing operations Total operating profit 7.4 6.5 11.4 Exclude - significant items - - 2.8 - amortisation of intangible assets 2.0 2.7
5.3
Adjusted operating profit - continuing operations 9.4 9.2 19.5 Profit before tax - continuing operations Total profit before tax 6.5 5.2 8.6 Exclude - significant items - - 2.8 - amortisation of intangible assets 2.0 2.7
5.3
- revaluation of financial instruments (0.2) (0.2) (0.3)
Adjusted profit before tax - continuing operations 8.3 7.7 16.4 Profit attributable to owners of the Company Total profit attributable to owners of 6.4 6.4 2.2 the Company Exclude - significant items - - 2.8 - amortisation of intangible assets 2.0 2.7
5.3
- revaluation of financial instruments (0.2) (0.2) (0.3) - loss/(profit) after tax of 1.4 (2.7) 4.5 discontinued operation - profit on disposal of discontinued (3.5) - - operation - associated tax effects (0.6) (0.6) (2.6) Adjusted profit attributable to owners of the Company - continuing operations 5.5 5.6 11.9 Pence Pence Pence Adjusted earnings per share - continuing operations 11.4 11.4 24.6 No significant items were incurred during the six months to 30 September 2011(2010: £nil). Significant items of £2.8 million were incurred during the yearto 31 March 2011, this mainly comprised £2.5 million relating to therestructuring of the North American sales organisation, including terminationof a sales agency agreement relating to a significant number of StructuralMaterials' North America customers.
6 Income tax
The effective tax rate on profit before tax from continuing operations for theperiod is 33.2 per cent (2010: 28.8 per cent, year to 31 March 2011: 22.4 percent). The effective rate of tax on adjusted profit before tax from continuingoperations for the period is 32.6 per cent (2010: 27.3 per cent, year to 31March 2011: 27.6 per cent).Income tax expense for the six months to 30 September 2011 is recognised basedon management's best estimate of the average income tax rate expected for theyear to 31 March 2012 applied to the profit before tax for the six months to 30September 2011.7 Dividends
The Directors have declared an interim dividend of 4.00 pence per share, payable on 10 February 2012 to shareholders on the register at the close of business on 13 January 2012. In accordance with IAS10 `Events after the Reporting Period', this dividend has not been reflected in the interim results. The amount of this interim dividend is £1.9 million.
The following dividends were paid and declared by the Company:
Six months to 30 September Year to 31 March 2011 2011 2010 2010 2011 2011 Pence Pence Pence per share £ million per share £ million per share £ million Dividends payable or paid Previous year 11.50 5.5 11.00 5.3 11.00 5.3 final Current year - - - - 6.75 3.2 interim 11.50 5.5 11.00 5.3 17.75 8.5 Dividends declared or proposed Interim 4.00 1.9 6.75 3.2 6.75 3.2 Final - - - - 11.50 5.5 4.00 1.9 6.75 3.2 18.25 8.7
The final dividend for the year to 31 March 2011 of 11.50 pence per share was approved by shareholders on 2 August 2011. This dividend was held as a liability at 30 September 2011 and was paid on 7 October 2011.
8 Earnings per share
Earnings per share is calculated on profit attributable to owners of theCompany of £6.4 million (2010: £6.4 million, year to 31 March 2011: £2.2million). Adjusted profit attributable to owners of the Company, which providesa consistent measure of operating performance, was £5.5 million (2010: £5.6million, year to 31 March 2011: £11.9 million) as shown in note 5. Six months to Year to 30 September 31 March 2011 2010 2011 Million Million Million Weighted average number of shares in issue Basic 48.2 48.1 48.1 Dilutive effect of share options 0.3 0.4 0.8 Diluted 48.5 48.5 48.99 Intangible assets Goodwill Customer Total relationships, contracts & orders £ million £ million £ million Cost At 1 April 2011 98.9 33.0 131.9 Foreign exchange translation 0.8 0.6 1.4 At 30 September 2011 99.7 33.6 133.3 Amortisation & impairment losses At 1 April 2011 0.8 19.6 20.4 Amortisation charge - 2.0 2.0 Foreign exchange translation - 0.4 0.4 At 30 September 2011 0.8 22.0 22.8 Net book value At 30 September 2011 98.9 11.6 110.5 At 1 April 2011 98.1 13.4 111.5 An annual impairment test was performed on goodwill as at 31 March 2011, asrequired by IAS36 `Impairment of Assets'. This did not identify the need forany impairment. Management have not identified any indicators of impairment togoodwill as at 30 September 2011. Goodwill Customer Total relationships, contracts & orders £ million £ million £ million Cost At 1 April 2010 125.2 36.2 161.4 Foreign exchange translation (2.5) (1.2) (3.7) At 30 September 2010 122.7 35.0 157.7 Amortisation & impairment losses At 1 April 2010 0.8 16.5 17.3 Amortisation charge - 2.7 2.7 Foreign exchange translation - (0.5) (0.5) At 30 September 2010 0.8 18.7 19.5 Net book value At 30 September 2010 121.9 16.3 138.2 At 1 April 2010 124.4 19.7 144.1
No acquisitions occurred during the six months to 30 September 2010.
Goodwill Customer Total relationships, contracts & orders £ million £ million £ million Cost At 1 April 2010 125.2 36.2 161.4 Additions 0.1 - 0.1 Foreign exchange translation (2.7) (1.6) (4.3) Transfer to assets held for sale (23.7) (1.6) (25.3) At 31 March 2011 98.9 33.0 131.9 Amortisation & impairment losses At 1 April 2010 0.8 16.5 17.3 Amortisation charge - 5.3 5.3 Foreign exchange translation - (0.6) (0.6) Transfer to assets held for sale - (1.6) (1.6) At 31 March 2011 0.8 19.6 20.4 Net book value At 31 March 2011 98.1 13.4 111.5 At 1 April 2010 124.4 19.7 144.1 10 Discontinued operationsOn 20 May 2011, the Group announced the proposed disposal of the Supply Chainbusiness to a company established by funds advised by Exponent Private EquityLLP, for a cash consideration of £145.8 million. The net disposal proceeds were£112.0 million, in addition to which deferred consideration of £8.0 million isreceivable in the year to 31 March 2013.The Supply Chain business was not a discontinued operation or classified asheld for sale at 30 September 2010 and the results and cash flow for thecomparative period have been re-presented to show the discontinued operationseparately from continuing operations. The Supply Chain business was disclosedas held for sale as at 31 March 2011.
The following subsidiaries of Umeco plc, together with their place of operation and country of incorporation, form the Supply Chain business and have been treated as discontinued.
Incorporated and operated in Great Britain and registered in England and Wales:Pattonair (Derby) Limited;Pattonair Limited;Pattonair Properties Limited;
Pattonair (Wolverhampton) Limited;
Orchard House Limited - a non trading company; and
Aviation Supplies Co. Limited - a non trading company.
Incorporated and operated elsewhere:
Pattonair (Berlin) GmbH, which is incorporated and operated in Germany;
Ulogistics Canada, Inc., which is incorporated and operated in Canada;
Pattonair USA, Inc., and Uniseal, Inc., which are incorporated and operated in the United States of America;
Pattonair SAS, which is incorporated and operated in France;
Pattonair S.R.L, which is incorporated and operated in Italy;
Pattonair Asia Pte. Limited, which is incorporated and operated in Singapore;
Pattonair do Brasil Servi§os E Logstica Ltda which is incorporated and operated in Brazil; and
Pattonair (Xi'an) Trading Limited, which is incorporated and operated in China.
On 8 July 2010, the Group completed the sale of the business and assets of Advanced Composites Group SA (Pty) Limited (`South Africa') which is incorporated and operated in South Africa. Its results have accordingly been presented separately from continuing operations and are disclosed as a discontinued operation for the year to 31 March 2011.
The results of the discontinued operations included in the unaudited condensed consolidated statement of comprehensive income are as follows:
Six months to 30 September 2011 Supply Chain South Africa Total £ million £ million £ million Revenue 88.9 - 88.9 Cost of sales (72.3) - (72.3) Gross profit 16.6 - 16.6 Administrative expenses (14.6) - (14.6) Operating profit 2.0 - 2.0 Net financial expense (1.8) - (1.8) Profit before tax 0.2 - 0.2 Income tax - total (1.6) - (1.6) Loss after tax (1.4) - (1.4) Profit on disposal 3.5 - 3.5 Profit attributable to owners of the Company 2.1 - 2.1 Six months to 30 September 2010 Supply Chain South Africa Total £ million £ million £ million Revenue 118.7 0.4 119.1 Cost of sales (97.2) (0.4) (97.6) Gross profit 21.5 - 21.5 Administrative expenses (16.7) (0.1) (16.8) Operating profit/(loss) 4.8 (0.1) 4.7 Net financial expense (1.0) - (1.0) Profit/(loss) before tax 3.8 (0.1) 3.7 Income tax - total (0.9) (0.1) (1.0) Profit/(loss) attributable to owners of the Company 2.9 (0.2) 2.7 Year to 31 March 2011 Supply Chain South Africa Total £ million £ million £ million Revenue 251.9 0.6 252.5 Cost of sales (203.4) (0.7) (204.1) Gross profit/(loss) 48.5 (0.1) 48.4 Administrative expenses (34.8) - (34.8) Operating profit/(loss) 13.7 (0.1) 13.6 Net financial expense (2.3) - (2.3) Profit/(loss) before tax 11.4 (0.1) 11.3 Income tax - total (3.1) (0.2) (3.3) Profit/(loss) after tax 8.3 (0.3) 8.0 Write down of assets held for sale (12.5) -
(12.5)
Loss attributable to owners of the Company (4.2) (0.3) (4.5) Six months to 30 September 2011 Supply Chain South Africa Total £ million £ million £ million Cash flows from discontinued operations Net cash flow from operating (22.3) - (22.3) activities Net cash flow from investing (0.3) - (0.3) activities Net cash flow from financing 0.1 - 0.1 activities Net cash flow from discontinued (22.5) - (22.5) operations Six months to 30 September 2010 Supply Chain South Africa Total £ million £ million £ million Cash flows from discontinued operations Net cash flow from operating 6.3 - 6.3 activities Net cash flow from investing (0.3) 0.5 0.2 activities Net cash flow from discontinued 6.0 0.5 6.5 operations Year to 31 March 2011 Supply Chain South Africa Total £ million £ million £ million Cash flows from discontinued operations Net cash flow from operating 9.6 0.1 9.7 activities Net cash flow from investing (1.2) 0.5 (0.7) activities Net cash flow from discontinued 8.4 0.6 9.0 operations The divestment had the following effect on the financial position of the Group: £ million Property, plant & equipment 14.2 Intangible assets 11.2 Deferred tax assets 2.0 Inventories 160.7 Trade & other receivables 65.3 Income tax receivable 3.2 Cash 10.4 Trade & other payables (135.5) Income tax payable (0.9) Loans & borrowings (1.0) Other payables (88.6) Provisions (0.2) Net assets disposed of 40.8 Consideration received (£48.5 million, net of disposal costs of £7.6 million)
(40.9)
Recycling of cumulative currency translation reserve on disposal (3.4) Profit arising on disposal (3.5) Net consideration received of £48.5 million includes £8.0 million of deferredconsideration, payable in instalments in the year to 31 March 2013, and isbefore receipt of intercompany debt payable by Pattonair to the Group oncompletion. The net cash flow from disposals of £89.5 million shown in theunaudited condensed consolidated statement of cash flows comprises total cashreceived, net of cash disposed and expenses paid to date, and net of cash flowsfrom discontinued operating, investing and financing activities. As at As at 30 September 31 March 2011 2010 2011 £ million £ million £ million Operating profit - discontinued operations Total operating profit - discontinued 2.0 4.7 13.6 operations Exclude - significant items 1.1 - 0.2 Adjusted operating profit - discontinued operations 3.1 4.7 13.8 Profit before tax - discontinued operations Total profit before tax - discontinued 0.2 3.7 11.3 operations Exclude - significant items 2.1 - 0.2 - revaluation of financial instruments - (0.4) (0.4) Adjusted profit before tax - discontinued operations 2.3 3.3 11.1 Profit attributable to owners of the company Total profit/(loss) attributable to owners of the Company - discontinued operations 2.1 2.7 (4.5) Exclude - significant items 3.3 - 0.2 - write down of assets held for sale - -
12.5
- profit on disposal of subsidiaries (3.5) -
-
- revaluation of financial instruments - (0.4) (0.4) - associated tax effects (0.5) - (0.1) Adjusted profit attributable to owners of the Company - discontinued 1.4 2.3 7.7 operations Pence Pence Pence Adjusted earnings per share - discontinued operations 2.9 4.7 16.2
11 Reconciliation of net cash to movement in net cash/(debt)
Six months to Year to 30 September 31 March 2011 2010 2011 Re-presented £ million £ million £ million Net decrease in cash (20.1) (15.1) (18.3) Drawdown of bank loans (16.1) (5.3) (17.9) Repayment of bank loans 120.1 31.5 37.0 Repayment of lease finance liabilities 0.1 0.1 0.2 84.0 11.2 1.0 Effect of exchange rate fluctuations 0.8 3.6 4.3 Movement in net debt 84.8 14.8 5.3 Net debt at start of period (74.3) (79.6) (79.6) Net cash/(debt) at end of period 10.5 (64.8)
(74.3)
Net cash/(debt) comprises cash balances, bank overdrafts, bank loans and lease finance obligations.
12 Contingent liabilitiesA claim for €3.2 million has been made against Advanced Composites Group(`ACG'), part of the Structural Materials business stream, from MultiOne DesignS.A. (`MOD') in respect of material supplied by ACG. ACG does not admitliability and the Group considers the likelihood of the claim being successfulto be remote.Interim Results
_______________________________________________________________________________
For the six months to 30 September 2011
STATEMENT OF DIRECTORS' RESPONSIBILITIES This interim results announcement complies with the Disclosure and TransparencyRules (DTR) of the United Kingdom`s Financial Services Authority in respect ofthe requirements to produce a half-yearly financial report. This interimresults announcement is the responsibility of, and has been approved by, theDirectors of Umeco plc.
The Directors confirm that to the best of their knowledge:
* the condensed set of financial statements has been prepared in accordance
with IAS34 `Interim Financial Reporting' as adopted by the European Union;
* the interim management report includes a fair review of the information required by DTR 4.2.7R (an indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of financial statements, together with a
description of the principal risks and uncertainties for the remaining six
months of the financial year); and * the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions that
have taken place in the first six months of the current financial year and
that have materially affected the financial position or the performance of
the enterprise during that period, together with disclosure of any changes
in the related parties transactions described in the last annual report
that could have a material effect on the financial position or performance
of the enterprise in the first six months of the current financial year). By order of the BoardSJ BowersFinance Director8 November 2011
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