RNS Number:2854M
Howle Holdings PLC
13 June 2003
HOWLE HOLDINGS PLC
13 JUNE 2003
INTERIM RESULTS
For the six months ended 31 March 2003
Introduction
After the traumas of the previous year, we have sought in this period to consolidate our operations, tighten working
capital management and continue our cost reduction programme.
Our financial performance is affected by our Stock Reduction programme and redundancies but we believe this to be the
proper course to improve cash generation.
The financial outcome for the six months to 31 March 2003 shows Continuing Operations declaring a small profit of
#28,000 (2002: profit #64,000) before Exceptional Charges and Amortisation of Goodwill from sales of #5.9 million
(2002: #6.7 million) and a loss before tax of #122,000 (2002: loss before tax of #485,000).
This represents only step one on our road to recovery, but we are moving in the right direction.
As previously reported, we have ceased operations at Innotek, Greenford. The closure and transfer to Neath is now
complete with NPE-I benefiting from the retention of some ongoing Innotek business.
As a further cost-reduction we are closing Howle France S.A while continuing to sell directly into the territory.
In view of the on-going contraction of some markets, we continue to make cost savings.
Our head-count continues to reduce, March 02 318
March 03 260
an 18% reduction
Stocks have reduced by 3% with tough targets in place for continuing reductions.
The Stock programme must of course be achieved while fully maintaining customer service.
Dividend
Notwithstanding all these actions, we must continue to husband our resources and it would be imprudent to pay an
interim dividend.
Operational Review
Carbide Division
Howle Carbides Ltd (HoCa)
Having absorbed the plant purchased from EAD, both manufacturing plants are now equipped to the highest international
standards. A major sales growth programme is in hand to capitalise on our increasing penetration in both the Oil and
Seal Industries.
Two Manufacturing Improvement Task Forces are in place, concentrating on squeezing more productivity out of existing
equipment.
As NPE-I re-consolidates itself with Canning customers, HoCa has been able to make technical presentations, promoting
our specialist Canning Carbides to a wide audience of Can Makers, leading us into new market areas.
Cutting Division
Richard Lloyd Limited (RLL)
The home market does not expand, so any growth there must be at the expense of our competitors. Our Automotive
clients remain supportive, but continually drive us for enhanced performance. The new Ford "Lion" Diesel project is
now into production at Dagenham. A joint initiative in Milling Carbon-Fibre Aerospace materials shows promise.
We are also, slowly but surely, gaining a better share of Automotive product in North America and Mexico.
An efficiency improvement team, assisted by Advantage West Midlands - a Regional Agency - is at work squeezing more
out of our facilities.
Titman Tip Tools (Titman)
The Manufacturing Project is now bedded-in and we have the benefit of the enhanced throughput.
The market is suffering from the export of a number of UK furniture-making jobs eastwards. We are countering by
seeking new outlets in the extended eastwards-spreading European Union.
Our new Solid Carbide product sales are slowly increasing to the benefit of both Titman and HoCa.
Forming Division
NPE-Innotek, Neath (NPE-I)
The transfer of equipment - along with appropriate training - from Innotek, has provided an enhanced production base.
Innotek business has followed the transfer, enhancing order intake by some 20% in the last four months.
Group
Very much a "heads down and re-group" time. The Group Executive is concentrating on maximising in-house transfers of
work wherever practicable. Our Sales Forces are trading information to mutual benefit, particularly in the Oil
Industry.
Overseas we are seeing growth in Germany and France for HoCa. The strengthening of the Euro is helping margins,
although our Raw Materials priced in Euros are offsetting part of the gain.
India, with its growth in Automotive components, is showing signs of growth, with Tap trials running in key
manufacturers like Bharat Forge and Tata. Our Indian partners are showing a healthy interest in the joint development
and "Silvercut" sales are increasing.
Current Trading
Times remain extremely challenging, with markets under attack in every sector. We react by cost-saving, efficiency
gains, spreading our net wider and reducing debt. Any significant change depends on our ability to face-down
World-Class opposition.
Outlook
We will continue the battle and be as professional as we can in every area. We seek new markets, for instance,
sustainable energy, where some of the conventional Power Generation clients have entered the Wind Power manufacturing
sector.
In these incredibly tough times, we are fortunate to be blessed with a team of people who share our determination to
succeed.
Our employees, customers, suppliers, shareholders and Non-Executive Directors give us great heart - thank you.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
Continuing Discontinued Exceptional 6 months 6 months 12 months
operations operations items ended ended ended
6 months ended 6 months 6 months ended 31 March 31 March 30 September
31 March ended 31 March 2003 2003 2002 2002
2003 31 March
2003
#'000 #'000 #'000 #'000 #'000 #'000
Turnover 5,825 104 - 5,929 6,699 12,919
Cost of sales (3,852) (86) (31) (3,969) (4,705) (8,802)
--------- --------- --------- --------- --------- ---------
Gross profit 1,973 18 (31) 1,960 1,994 4,117
Net operating costs:
Distribution costs (740) (55) (5) (800) (858) (1,788)
Administration (1,021) (24) (44) (1,089) (1,212) (2,281)
expenses
Other operating 28 - - 28 58 79
income
Amortisation of (19) - - (19) (19) (37)
goodwill
--------- --------- --------- --------- --------- ---------
Operating 221 (61) (80) 80 (37) 90
profit/(loss)
Loss on sale of - - (8) (8) (131) (127)
fixed assets
Provision for costs
of fundamental - - 18 18 - (621)
reorganisation
--------- --------- --------- --------- --------- ---------
Profit/(loss) on 221 (61) (70) 90 (168) (658)
ordinary activities
before interest
Interest payable and (212) - - (212) (317) (551)
similar charges
--------- --------- --------- --------- --------- ---------
Profit/(loss) on
ordinary 9 (61) (70) (122) (485) (1,209)
activities before
taxation
Tax on profit/(loss) (40) - - (40) 103 273
on
ordinary activities
--------- --------- --------- --------- --------- ---------
Loss on ordinary
activities after (31) (61) (70) (162) (382) (936)
taxation
Dividends - - - - - -
--------- --------- --------- --------- --------- ---------
Retained loss (31) (61) (70) (162) (382) (936)
========= ========= ========= ========= ========= =========
Loss per share (0.1)p (0.2)p (0.3)p (0.6)p (1.3)p (3.2)p
Dividend per share - - - Nil Nil Nil
Notes to the above:
1. The unaudited results for the six months ended 31 March 2003 contain the operating profits of all business owned
throughout the period. The discontinued operations relate to Howle France SA, which ceased trading in April 2003.
2. The exceptional items in the period ended 31 March 2003 comprise #31,000 of redundancy costs, #18,000 credit,
being part release of an onerous lease provision, #15,000 provision for the closure of Howle France, #9,000 loss on
disposal of fixed assets, #22,000 for costs related to the re-financing of the business and #11,000 of costs incurred
in preparing a leasehold premises for sub-let.
3. Included in the results for the twelve months ended 30 September 2002 are the following exceptional items: a) cost
of sales - redundancy costs of #215,000, b) distribution costs - redundancy costs of #20,000, c) administrative
expenses - redundancy costs of #13,000, legal and professional costs associated with abortive acquisitions, amending
security arrangements in respect of borrowings and the valuation of land and buildings #72,000 and a credit in
respect of a decrease in pension provision deficits of #22,000 and d) interest - bank loan redemption penalty of
#95,000.
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Fixed assets
Tangible assets 9,489 10,005 9,784
Intangible assets 693 717 703
-------- -------- --------
10,182 10,722 10,487
Current assets -------- -------- --------
Stocks 3,492 3,590 3,760
Debtors 3,390 3,405 2,942
Cash at bank and in hand 258 94 218
-------- -------- --------
7,140 7,089 6,920
-------- -------- --------
Creditors - due within one year (5,921) (4,917) (5,126)
-------- -------- --------
Net current assets 1,219 2,172 1,794
-------- -------- --------
Total assets less current liabilities 11,401 12,894 12,281
Creditors - due after (3,542) (4,164) (4,290)
more than one year
Provision for liabilities (415) (572) (379)
and charges
-------- -------- --------
7,444 8,158 7,612
======== ======== ========
Capital and reserves
Share capital 1,956 1,956 1,956
Share premium 2,770 2,770 2,770
Merger reserve 2,780 2,780 2,780
Revaluation reserve 92 92 92
Profit and loss account (154) 560 14
-------- -------- --------
Shareholders' funds (including non-equity) 7,444 8,158 7,612
======== ======== ========
SUMMARY CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Reconciliation of operating profit/(loss)
to net cash inflow from operating activities
Operating profit/(loss) 80 (37) 90
Depreciation and amortisation 374 415 797
Decrease in stocks 268 225 55
(Increase)/decrease in debtors (448) (100) 363
Decrease in creditors (73) (85) (103)
Profit on sale of fixed assets (2) (25) (45)
Cash outflow in respect of final salary pension scheme deficit (4) (5) (9)
Decrease in pension deficit provision - - (22)
Net cash outflow in respect of re-organisation costs - - (90)
-------- -------- --------
Net cash inflow from operating 195 388 1,036
activities
-------- -------- --------
Cash flow statement
Net cash inflow/(outflow) from operating activities
- normal 275 466 1,443
- exceptional (80) (78) (407)
-------- -------- --------
195 388 1,036
Returns on investment and servicing of finance (212) (317) (551)
Taxation (14) - (76)
Capital expenditure (75) (411) (784)
-------- -------- --------
(106) (340) (375)
Equity dividends paid - (174) (174)
-------- -------- --------
Cash outflow before financing (106) (514) (549)
Financing 1,431 (502) (510)
-------- -------- --------
Increase/(decrease) in cash 1,325 (1,016) (1,059)
======== ======== ========
NOTES TO THE SUMMARY CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Reconciliation of net cash flow to movement in net debt
Increase /(decrease) in cash in the period 1,325 (1,016) (1,059)
Loan, hire purchase and finance lease repayments 1,647 502 1,297
Loan advances and refinancing of (3,078) - (787)
plant and machinery
-------- -------- --------
Change in net debt resulting from (106) (514) (549)
cash flows
New finance leases and hire purchase obligations - (617) (717)
-------- -------- --------
Movement in net debt in period (106) (1,131) (1,266)
Net debt at beginning of period (6,627) (5,361) (5,361)
-------- -------- --------
Net debt at end of period (6,733) (6,492) (6,627)
======== ======== ========
Notes to the Interim Results
1. The results of Howle Group plc for the six months to 31/3/03 have been prepared on the basis of the accounting
policies disclosed in the 2002 Annual Report.
2. The calculation of earnings per share is based on the loss on ordinary activities after tax, as shown above,
and on the basis of 29,025,759 average ordinary shares in issue weighted on a time basis (2002: 29,025,759).
3. The financial information given does not constitute statutory accounts within the meaning of Section 240(5) of
the Companies Act 1985 (the "Act"). The statutory accounts for the year ended 30 September 2002, on which the
auditors have given an unqualified opinion, have been filed with the Registrar of Companies and contain no statement
under Sections 237(2) or (3) of the Act.
4. Copies of the Interim results will be sent to shareholders and are available at the Company's registered
office, Cromwell Works, Tenbury Wells, Worcestershire, WR15 8LF.
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