TIDMFENR
RNS Number : 6523C
Fenner PLC
19 April 2017
19 April 2017
Fenner PLC
2017 Half Year Results
Fenner PLC, a world leader in reinforced polymer technology,
today announces its results for the half year ended 28 February
2017.
Highlights
Half year 2017 2016
Revenue GBP307.4m GBP276.8m
Underlying operating profit 1, 4 GBP24.0m GBP15.0m
Underlying profit before taxation 2, 4 GBP16.5m GBP8.1m
Profit/(loss) before taxation GBP13.8m GBP(23.1)m
Operating cash flow 4 GBP34.0m GBP19.1m
Underlying earnings per share 2, 3, 4 6.3p 2.9p
Dividend per share 1.4p 1.0p
---------------------------------------- ---------- -----------
-- Revenue up 11% to GBP307.4m, assisted by market share gains and exchange rates
-- Underlying operating profit up 60% (27% at constant currencies)
-- Underlying operating margin strongly ahead in both divisions
-- Underlying earnings per share up 117% to 6.3p
-- Dividend per share up 40% to 1.4p
-- Strong cash flow resulted in net debt reducing to GBP144.7m
(GBP28.7m lower than February 2016 at constant currencies) and net
debt/EBITDA of 1.9 times (at constant currencies)
-- Expected outcome for the year above previous expectations at
the operating profit level with a further benefit to earnings from
a lower tax rate in the current financial year
Mark Abrahams, Chief Executive Officer, commented:
"It is pleasing that the restructuring of the Group has created
a platform from which we are now growing and making steady market
share gains. We look forward to maintaining this momentum."
1 Underlying operating profit is before amortisation of
intangible assets acquired and exceptional items
2 Underlying profit before taxation and underlying earnings per
share are before amortisation of intangible assets acquired,
exceptional items and notional interest
3 Underlying earnings per share is based on the basic weighted
average number of shares in issue
4 Underlying and non-GAAP measures have been presented to
provide a more meaningful measure of the underlying performance of
the business. Reconciliations of these amounts from the most
directly comparable measures recognised under International
Financial Reporting Standards ("IFRS") are set out in note 1
A live audio webcast of the analyst presentation, hosted by Mark
Abrahams, Chief Executive Officer, and John Pratt, Group Finance
Director, can be accessed at 9.30 am today on the Group's website
www.Fenner.com.
For further information please contact:
Fenner PLC ) today: 020 7067 0700
Mark Abrahams, Chief Executive )
Officer ) thereafter: 01482 626501
John Pratt, Group Finance Director
Weber Shandwick Financial 020 7067 0700
Nick Oborne
Notes to editors:
Fenner PLC is a world leader in reinforced polymer technology,
providing local engineered solutions for performance-critical
applications. The Group operates through two divisions:
Advanced Engineered Products. The AEP division is a group of
nine businesses that use advanced polymeric materials and technical
expertise to provide high value-added solutions to customers' most
challenging engineering problems across a variety of markets,
generally classified as specialist industrial, medical and oil
& gas. AEP's trading names include Hallite, Fenner Precision,
Fenner Drives, Secant Group, Charter Medical, CDI Energy Products
and EGC Critical Components.
Engineered Conveyor Solutions. The ECS division, trading under
the Fenner Dunlop, Fenner and Dunlop brand names, is an established
global leader in the supply of heavyweight conveyor belting and
related services to the mining, industrial and bulk materials
markets. ECS has leading presences in the Northern Hemisphere
(principally North America and Europe) and the Southern Hemisphere
(principally Australia).
Interim management report
In January, we reported that the Group was performing well,
benefiting from both the refocusing of our businesses and from
market share gains. The Group's results for the first half of the
financial year reflect the improvements indicated at that time.
Momentum is being maintained in the second half of the financial
year as the Group continues to deliver its strategy.
Revenue for the period was GBP307.4m (2016: GBP276.8m), an
increase of 11%. Underlying operating profit was GBP24.0m (2016:
GBP15.0m), an increase of 60%. Underlying profit before taxation
was GBP16.5m (2016: GBP8.1m), an increase of 104%. Underlying
earnings per share was 6.3p (2016: 2.9p), an increase of 117%.
A particular feature of the results was the increase in
underlying operating margin which increased to 7.8% (2016: 5.4%)
reflecting operational improvements and efficiencies across many of
the Group's operations. In addition, as the period progressed,
there were increasing benefits from operational gearing as certain
businesses generated revenue growth.
The Group's cash flow was again strong with higher profits and
lower capital expenditure. Net borrowings ended the period at
GBP144.7m (31 August 2016: GBP150.0m) despite currency movements of
GBP5.4m. Measured at constant exchange rates, net debt at 28
February 2017 was GBP28.7m lower than at 29 February 2016.
During the period, the Group acquired the non-controlling
interests in BBCS and LECS, each of which are conveyor service
businesses located in Australia. The Group has no further deferred
consideration payments outstanding. Also during the period, the
Group disposed of Xeridiem Medical Devices and CDI Norway.
Advanced Engineered Products
AEP's revenue was GBP136.9m (2016: GBP139.8m at constant
currencies). After adjusting for business disposals and closures,
like-for-like revenue grew by 4%. Underlying operating profit was
GBP17.9m (2016: GBP15.5m at constant currencies) and underlying
operating margin increased to 13.1% (2016: 11.1%).
The division's results reflect improved operational performances
across its businesses, driven by market share gains, new product
introductions and prudent cost control. Whilst market indicators
showed some softness at the start of the financial year, they
gradually strengthened as the period progressed.
Advanced Sealing Technologies
Advanced Sealing Technologies generated a higher operating
profit and operating margin on slightly increased revenue of
GBP60.1m (2016: GBP59.9m at constant currencies). Excluding
businesses which have been closed or sold (the former CDI
operations in the UK and Norway), revenue increased by 7%.
During the period, there were progressive improvements in oil
& gas industry lead indicators such as rig count, albeit from
very low levels. Notwithstanding this, the average rig count in the
period was below the average for the same period last year.
Both CDI and EGC have continued to make market share gains in
their respective segments of the oil & gas industry, partly as
a result of having introduced new products that reflect customer
demand for higher technical specifications. As a result of both the
improving market and the market share gains, order flow increased
steadily throughout the period.
Hallite performed strongly, delivering revenue growth well ahead
of industry indicators and even greater increases in terms of
operating profit and margins. The strong performance reflects new
product introductions as well as some re-stocking in the supply
chain.
Precision Polymers
Precision Polymers' revenue increased to GBP52.2m (2016:
GBP50.8m at constant currencies) and operating profit and margin
were both well ahead of the previous period.
Precision US finished the period strongly after some softness in
customer ordering in the autumn reflecting uncertainty around the
outcome of the US election as well as normal seasonality
patterns.
Precision UK continues to make good progress as it expands both
its range of elastomeric products and its customer base.
Mandals achieved a modest improvement in revenue for the period;
its order book has improved following management changes and new
product introductions.
Solesis Medical Technologies
Revenue for the period was GBP24.7m (2016: GBP29.3m at constant
currencies and including a contribution from Xeridiem Medical
Devices sold in September 2016). Operating profit and operating
margin were both well ahead of the prior period.
Secant Group is in the final validation phase of its relocation
process. It achieved a strong operating result for the period, with
some third party project delays offset by new developments and
other efficiencies. The business' new product pipeline has been
further strengthened.
Charter Medical continues to trade well following the managerial
and operational changes made last year. Demand for cell therapy
products has been strong.
Engineered Conveyor Solutions
ECS's revenue was GBP170.5m (2016: GBP188.6m at constant
currencies). Underlying operating profit was higher at GBP10.4m
(2016: GBP7.0m at constant currencies) and underlying operating
margin recovered to 6.1% (2016: 3.7%).
In the mining industry, whilst there was a general improvement
in sentiment due to higher commodity prices and mineral extraction
rates, this was not generally reflected in higher orders for
replacement belt; the increased operating profit and margin were
generated by the substantial operating improvements implemented
across the business.
Northern Hemisphere
Revenue for the period was GBP89.8m (2016: GBP103.6m at constant
currencies).
In ECS North America, industrial volumes continued to grow as a
result of the refocusing commenced last year. In mining, whilst
below the corresponding period last year, volumes improved from
recent lows which, when combined with significantly improved
operating efficiencies, increased overall profitability.
In Europe, financial performance was constrained by the ongoing
shortage of major project work.
Southern Hemisphere
Revenue for the period was GBP81.3m (2016: GBP86.7m at constant
currencies).
In Australia, on flat volumes, ECS achieved a higher profit than
in the corresponding period last year reflecting its strengthened
market position and the operational improvements made across the
business. Despite an improved sentiment within the mining industry,
the business has not yet seen a general increase in order intake
although there are now some indications that belt de-stocking is
coming to an end and that project work may resume next year.
ECS China continues to face significant pressures from the
on-going re-organisation of the domestic coal industry.
Financial report
Revenue and profit
Group revenue for the period was GBP307.4m (2016: GBP276.8m or
GBP328.4m at constant currencies). The 2016 amount includes
GBP12.5m in respect of businesses which have been closed or sold.
Underlying operating profit was GBP24.0m (2016: GBP15.0m or
GBP18.9m at constant currencies).
Interest for the period (excluding notional interest) was
GBP7.5m (2016: GBP6.9m or GBP8.0m at constant currencies). EBITDA
interest cover, on a 12 month rolling basis, was 4.9 times (2016:
4.8 times).
Exceptional items during the period amounted to a profit of
GBP2.6m (2016: loss of GBP25.1m); a net gain of GBP4.1m arising on
business disposals was partly offset by a contractual payment due
to the family of the former Chief Executive Officer following his
passing away in January 2017.
Underlying profit before taxation was GBP16.5m (2016: GBP8.1m).
The taxation rate on underlying profit before taxation was lower at
22% (2016: 25%) reflecting the utilisation of previous tax losses
in the current financial year, most notably in the USA. Profit
before taxation was GBP13.8m (2016: loss of GBP23.1m).
Underlying earnings per share amounted to 6.3p (2016: 2.9p).
Basic earnings per share was 5.3p (2016: loss of 9.8p).
Cash flow and borrowings
The Group's cash flow in the period remained strong. Operating
cash flow was GBP34.0m (2016: GBP19.1m) reflecting a higher
operating profit and reduced capital expenditure. Free cash flow
was GBP23.9m (2016: GBP7.2m). The net outflow on business
acquisitions and disposals amounted to GBP8.6m. Dividend payments
were much reduced.
Notwithstanding a further adverse currency movement in the
period due to the continued weakening of sterling against the US
dollar, net debt ended the period at GBP144.7m (31 August 2016:
GBP150.0m). Measured at constant
exchange rates, net debt at 28 February 2017 was GBP28.7m lower than at 29 February 2016.
Calculated on a rolling basis over the 12 months ended 28
February 2017 and at average exchange rates, net debt to EBITDA
improved to 1.9 times (29 February 2016: 2.1 times).
Board of Directors
On 20 December 2016, the Group announced that Vanda Murray OBE
had agreed to take up the role of Non-Executive Chairman of the
Company with immediate effect having been the Acting Non-Executive
Chairman since 8 June 2016.
At the same time, Chris Surch was appointed as Senior
Independent Director and Geraint Anderson as Chairman of the
Remuneration Committee.
Michael E. Ducey was appointed as a non-executive director on 11
January 2017.
The search for a new Chief Executive Officer is continuing. In
order to preserve stability, Mark Abrahams has, as previously
reported, agreed to remain as Chief Executive Officer until an
appointment is made.
Principal risks and uncertainties
The principal risks and uncertainties affecting the Group remain
those set out in the 2016 Annual Report and those which are most
likely to impact the performance of the Group in the remaining
months of the financial year are outlined below.
The Group has started to see positive movements in lead and
current indicators of demand for its belting products and services
but risks remain concerning the strength and durability of recovery
which is likely to be uneven across the different territories in
which the Group operates. Particular issues are recognised in the
USA where the recent pick-up in coal mining may prove to be short
lived and in China where the coal industry continues to be
restructured. The oil & gas industry globally is recovering but
long-term uncertainties remain over the supply and demand balance
and how this will impact on the oil & gas industry in the USA.
Considerable political uncertainty exists in many regions which
may, in due course, have implications for global trade in
commodities and finished goods and for exchange rates.
Dividend
As the Group's earnings recover, it remains the Board's
intention to adopt a progressive dividend policy and to
maintain a one-third/two-thirds split between the interim and final payments.
An increased interim dividend of 1.4p per share (2016: 1.0p) has
been declared.
Outlook
The market drivers in many of the Group's businesses are
starting to look more favourable although in many cases this is
translating only slowly into growing markets for our products. In
the case of oil & gas however, there is a clearly improving
trend. In addition, across our businesses, progress made in new
product development and market share gains remains a driver of
revenue which, combined with a well-controlled cost base, is
improving profitability.
As a result of our actions, we expect the results for the year
to be above previous expectations at the operating profit level
with a further benefit to earnings from a lower tax rate in the
current financial year.
Forward-looking statements
Certain statements contained in this Report, in particular the
Outlook statement, constitute forward-looking statements. Such
forward-looking statements involve risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of Fenner, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such statements. Such risks, uncertainties
and other factors include, among others, exchange rates, the
commodity markets, general economic conditions and the business
environment.
Consolidated income statement
for the half year ended 28 February 2017 (unaudited)
Half year Half year
ended 28 ended Year ended
February 29 February 31 August
2017 2016 2016
Notes GBPm GBPm GBPm
------------------------------------------------ ------ ---------- ------------- -----------
Revenue 3 307.4 276.8 572.5
Cost of sales (211.9) (203.2) (410.3)
Gross profit 95.5 73.6 162.2
Distribution costs (27.4) (25.2) (52.3)
Administrative expenses (45.7) (64.0) (124.6)
Operating profit before amortisation
of intangible assets acquired and exceptional
items 3 24.0 15.0 37.1
Amortisation of intangible assets acquired (4.2) (5.5) (11.0)
Exceptional items 4 2.6 (25.1) (40.8)
Operating profit/(loss) 22.4 (15.6) (14.7)
Finance income 5 0.2 0.3 0.5
Finance costs 6 (8.8) (7.8) (16.1)
Profit/(loss) before taxation 13.8 (23.1) (30.3)
Taxation 7 (3.0) 4.6 5.0
Profit/(loss) for the period 10.8 (18.5) (25.3)
Attributable to:
Owners of the parent 10.2 (19.0) (26.3)
Non-controlling interests 0.6 0.5 1.0
10.8 (18.5) (25.3)
Earnings/(loss) per share
Basic 9 5.3p (9.8)p (13.6)p
Diluted 9 5.2p (9.8)p (13.6)p
Consolidated statement of comprehensive income
for the half year ended 28 February 2017 (unaudited)
Half year Half year
ended 28 ended Year ended
February 29 February 31 August
2017 2016 2016
Notes GBPm GBPm GBPm
--------------------------------------------------- ------ ---------- ------------- -----------
Profit/(loss) for the period 10.8 (18.5) (25.3)
Other comprehensive income/(expense):
Items that will not be reclassified
subsequently to profit or loss
Remeasurements on defined benefit post-retirement
schemes 12 10.5 (0.1) (24.5)
Tax on items that will not be reclassified (2.1) - 3.7
8.4 (0.1) (20.8)
Items that may be reclassified subsequently
to profit or loss
Currency translation differences 28.2 44.3 80.6
Cash flow hedges 16 (0.3) - -
Net investment hedges 16 (9.2) (20.0) (30.8)
Tax on items that may be reclassified 0.4 2.1 (2.3)
19.1 26.4 47.5
Total other comprehensive income for
the period 27.5 26.3 26.7
Total comprehensive income for the period 38.3 7.8 1.4
Attributable to:
Owners of the parent 37.3 6.3 (1.8)
Non-controlling interests 1.0 1.5 3.2
38.3 7.8 1.4
Consolidated balance sheet
at 28 February 2017 (unaudited)
Restated
(note
2) 29
28 February February 31 August
2017 2016 2016
Notes GBPm GBPm GBPm
---------------------------------- ------ ------------ ---------- ----------
Non-current assets
Property, plant and equipment 10 232.9 219.8 228.8
Intangible assets 11 181.9 183.3 178.3
Deferred tax assets 20.8 24.1 28.1
435.6 427.2 435.2
Current assets
Inventories 81.4 80.3 75.3
Trade and other receivables 113.0 108.0 104.9
Assets held for sale - - 2.2
Current tax assets 7.6 6.0 7.2
Derivative financial assets 15 - 1.2 0.6
Cash and cash equivalents 14 116.1 90.9 94.9
318.1 286.4 285.1
Total assets 753.7 713.6 720.3
Current liabilities
Borrowings 14 (97.2) (34.5) (76.7)
Trade and other payables (132.9) (130.8) (117.5)
Liabilities held for sale - - (1.0)
Current tax liabilities (2.3) (2.6) (1.9)
Derivative financial liabilities 15 (1.1) (1.1) (1.1)
Provisions 13 (4.6) (16.5) (17.9)
(238.1) (185.5) (216.1)
Non-current liabilities
Borrowings 14 (163.6) (211.4) (168.2)
Trade and other payables (0.9) (0.6) (0.8)
Retirement benefit obligations 12 (38.3) (26.4) (49.0)
Deferred tax liabilities (1.9) (4.2) (7.5)
(204.7) (242.6) (225.5)
Total liabilities (442.8) (428.1) (441.6)
Net assets 310.9 285.5 278.7
Equity
Share capital 48.5 48.5 48.5
Share premium - 51.7 -
Retained earnings 184.4 69.4 159.2
Exchange reserve 104.8 35.5 76.8
Hedging reserve (26.2) 4.4 (16.9)
Merger reserve - 65.9 -
Shareholders' equity 311.5 275.4 267.6
Non-controlling interests (0.6) 10.1 11.1
Total equity 310.9 285.5 278.7
Consolidated cash flow statement
for the half year ended 28 February 2017 (unaudited)
Restated
(note 2)
Half year Half year
ended 28 ended 29 Year ended
February February 31 August
2017 2016 2016
Notes GBPm GBPm GBPm
---------------------------------------------- ------ -------------- --------------- -----------
Profit/(loss) before taxation 13.8 (23.1) (30.3)
Adjustments for:
Depreciation of property, plant and equipment
and amortisation of intangible assets 17.4 17.4 35.2
Impairment of property, plant and equipment - 2.7 2.9
Impairment of intangible assets - 14.5 25.0
Other exceptional non-cash movements (2.6) 4.9 4.8
Cash payments in respect of prior year
exceptional items (1.7) (2.1) (2.3)
Defined benefit post-retirement costs
charged to operating profit 1.5 1.1 0.8
Cash contributions to defined benefit
post-retirement schemes (2.3) (2.2) (5.2)
Movement in provisions (0.1) (0.4) (0.8)
Finance income (0.2) (0.3) (0.5)
Finance costs 8.8 7.8 16.1
Other non-cash movements 0.1 0.9 1.2
Operating cash flow before movement
in working capital 34.7 21.2 46.9
Movement in inventories (2.3) 1.5 11.1
Movement in trade and other receivables (3.4) 4.4 13.6
Movement in trade and other payables 6.9 (4.9) (9.6)
Net cash from operations 35.9 22.2 62.0
Taxation paid (1.8) (4.3) (6.2)
Net cash from operating activities 34.1 17.9 55.8
Investing activities:
Purchase of property, plant and equipment (4.5) (8.3) (14.2)
Disposal of property, plant and equipment 0.8 0.4 1.9
Purchase of intangible assets (0.6) (0.6) (1.1)
Acquisition of businesses - (5.6) (5.6)
Disposal of businesses 18 5.8 - -
Interest received 0.2 0.3 0.5
Net cash from/(used in) investing activities 1.7 (13.8) (18.5)
Financing activities:
Dividends paid to Company's shareholders 8 (1.9) (7.8) (23.3)
Dividends paid to non-controlling interests (1.0) (0.6) (1.3)
Acquisition of non-controlling interests
in subsidiary undertakings 17 (14.4) - -
Settlement of derivative financial
instruments - 10.5 10.5
Interest paid (7.7) (7.3) (13.7)
Repayment of borrowings (0.8) (17.1) (29.7)
New borrowings 0.9 - 0.6
Net cash used in financing activities (24.9) (22.3) (56.9)
Net increase/(decrease) in cash and
cash equivalents 10.9 (18.2) (19.6)
Cash and cash equivalents at start of
period 90.0 93.1 93.1
Exchange movements 8.0 7.1 16.5
Cash and cash equivalents at end of
period 108.9 82.0 90.0
Cash and cash equivalents comprises:
Cash and cash equivalents 116.1 90.9 94.9
Bank overdrafts (7.2) (8.9) (4.9)
108.9 82.0 90.0
Consolidated statement of changes in equity
for the half year ended 28 February 2017 (unaudited)
Attributable to owners of the parent
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Share Retained Exchange Hedging Merger Non-controlling Total
Share capital premium earnings reserve reserve reserve Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ------------------------ ------------------------ ---------------------------- ------------------------ ------------------------ ------------------------ --------------------- ------------------------ ---------------------
At 1 September 2015 48.5 51.7 111.4 (7.8) 22.3 65.9 292.0 9.2 301.2
(Loss)/profit for the
period - - (19.0) - - - (19.0) 0.5 (18.5)
Other comprehensive income/(expense):
Currency translation
differences - - - 43.3 - - 43.3 1.0 44.3
Net investment hedges - - - - (20.0) - (20.0) - (20.0)
Remeasurements on
defined
benefit
post-retirement
schemes - - (0.1) - - - (0.1) - (0.1)
Tax on other
comprehensive income - - - - 2.1 - 2.1 - 2.1
Total other
comprehensive
income/(expense) - - (0.1) 43.3 (17.9) - 25.3 1.0 26.3
Total comprehensive
income/(expense)
for the period - - (19.1) 43.3 (17.9) - 6.3 1.5 7.8
Transactions with
owners:
Dividends
paid/approved in the
period - - (23.3) - - - (23.3) (0.6) (23.9)
Share-based payments - - 0.3 - - - 0.3 - 0.3
Tax on transactions
with owners - - 0.1 - - - 0.1 - 0.1
Total transactions
with owners - - (22.9) - - - (22.9) (0.6) (23.5)
At 29 February 2016 48.5 51.7 69.4 35.5 4.4 65.9 275.4 10.1 285.5
(Loss)/profit for the
period - - (7.3) - - - (7.3) 0.5 (6.8)
Other comprehensive
income/(expense):
Currency translation
differences - - - 35.1 - - 35.1 1.2 36.3
Net investment hedges - - - 10.5 (21.3) - (10.8) - (10.8)
Remeasurements on
defined
benefit
post-retirement
schemes - - (24.4) - - - (24.4) - (24.4)
Tax on other
comprehensive income - - 3.6 (4.3) - - (0.7) - (0.7)
Total other
comprehensive
income/(expense) - - (20.8) 41.3 (21.3) - (0.8) 1.2 0.4
Total comprehensive
income/(expense)
for the period - - (28.1) 41.3 (21.3) - (8.1) 1.7 (6.4)
Transactions with
owners:
Dividends paid in the
period - - - - - - - (0.7) (0.7)
Share-based payments - - 0.4 - - - 0.4 - 0.4
Tax on transactions
with owners - - (0.1) - - - (0.1) - (0.1)
Capital reduction - (51.7) 117.6 - - (65.9) - - -
Total transactions
with owners - (51.7) 117.9 - - (65.9) 0.3 (0.7) (0.4)
At 1 September 2016 48.5 - 159.2 76.8 (16.9) - 267.6 11.1 278.7
Profit for the period - - 10.2 - - - 10.2 0.6 10.8
Other comprehensive
income/(expense):
Currency translation
differences - - - 27.8 - - 27.8 0.4 28.2
Cash flow hedges - - - - (0.3) - (0.3) - (0.3)
Net investment hedges - - - - (9.2) - (9.2) - (9.2)
Remeasurements on
defined
benefit
post-retirement
schemes - - 10.5 - - - 10.5 - 10.5
Tax on other
comprehensive income - - (2.1) 0.2 0.2 - (1.7) - (1.7)
Total other
comprehensive
income/(expense) - - 8.4 28.0 (9.3) - 27.1 0.4 27.5
Total comprehensive
income/(expense)
for the period - - 18.6 28.0 (9.3) - 37.3 1.0 38.3
Transactions with
owners:
Dividends
paid/approved in the
period - - (5.8) - - - (5.8) (1.0) (6.8)
Share-based payments - - 0.7 - - - 0.7 - 0.7
Transfer of
non-controlling
interests - - 11.7 - - - 11.7 (11.7) -
Total transactions
with owners - - 6.6 - - - 6.6 (12.7) (6.1)
At 28 February 2017 48.5 - 184.4 104.8 (26.2) - 311.5 (0.6) 310.9
Notes to the half yearly financial statements
1. Basis of preparation
The condensed half yearly financial statements for the half year
ended 28 February 2017 have been prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the European Union and
the Disclosure and Transparency Rules of the Financial Services
Authority. They should be read in conjunction with the Group's
financial statements for the year ended 31 August 2016.
After making enquiries, the directors have formed a judgement
that there is a reasonable expectation the Group has adequate
resources to continue in operational existence for the foreseeable
future and for a period of at least 12 months from the date of this
report. Accordingly, the Board has assessed that the going concern
basis of accounting is appropriate in preparing the financial
statements. In forming this view, the directors have reviewed the
Group's cash flow forecasts against availability of financing,
including an assessment of sensitivities to changes in market
conditions. In particular, the Group has sufficient existing cash
balances and bank facilities to repay the private placement loan
notes due in June 2017.
The accounting policies adopted are consistent with those
applied in the preparation of the Group's financial statements for
the year ended 31 August 2016 except for new standards, amendments
or interpretations which have been adopted for the first time for
the year ending 31 August 2017. Except for the change detailed in
note 2, there were no other new standards, amendments or
interpretations adopted by the Group and effective for the first
time for the year ending 31 August 2017 that have had a material
impact on the Group.
The comparative financial information for the year ended 31
August 2016 does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. It has been
extracted from the Group's financial statements for 2016 which have
been filed with the Registrar of Companies. They contained an
unqualified audit report and did not contain a statement under
Section 498 of the Companies Act 2006.
The condensed half yearly financial statements were approved by
the Board of Directors on 19 April 2017.
Alternative performance measures
The directors assess the performance of the Group using a
variety of performance measures.
The results of the Group are frequently presented on an
"underlying" basis, which excludes exceptional items, amortisation
of intangible assets acquired and notional interest, as applicable.
In addition, the directors use certain financial performance
measures that are not defined under IFRS ("non-GAAP measures").
The directors believe the underlying and non-GAAP measures
provide a more meaningful measure of the underlying performance of
the business, as well as being more consistent with the way that
financial information is measured internally by management and
presented to the Board.
Reconciliations of these amounts from the most directly
comparable measures recognised under IFRS are detailed below.
Underlying operating profit
Half year Half year
ended 28 ended 29 Year ended
February February 31 August
2017 2016 2016
GBPm GBPm GBPm
--------------------------------------------------------- ---------- -----------
Operating profit/(loss) 22.4 (15.6) (14.7)
Amortisation of intangible assets acquired 4.2 5.5 11.0
Exceptional items (2.6) 25.1 40.8
Underlying operating profit 24.0 15.0 37.1
Underlying profit before taxation
Half year Half year
ended 28 ended 29 Year ended
February February 31 August
2017 2016 2016
GBPm GBPm GBPm
--------------------------------------------------------- ---------- -----------
Profit/(loss) before taxation 13.8 (23.1) (30.3)
Amortisation of intangible assets acquired 4.2 5.5 11.0
Exceptional items (2.6) 25.1 40.8
Notional interest 1.1 0.6 1.7
Underlying profit before taxation 16.5 8.1 23.2
Underlying earnings per share
A reconciliation is provided in note 9.
1. Basis of preparation continued
Operating cash flow
Half year Half year
ended 28 ended 29 Year ended
February February 31 August
2017 2016 2016
GBPm GBPm GBPm
-------------------------------------------------------------------- ---------- -----------
Net cash from operations 35.9 22.2 62.0
Add back:
Defined benefit post-retirement costs charged
to operating profit (1.5) (1.1) (0.8)
Cash contributions to defined benefit post-retirement
schemes 2.3 2.2 5.2
Movement in provisions 0.1 0.4 0.8
Cash outflow on exceptional items (current
year and prior year) 1.7 5.1 10.4
Other non-cash movements (0.1) (0.9) (1.2)
Included in investing activities:
Purchase of property, plant and equipment (4.5) (8.3) (14.2)
Disposal of property, plant and equipment 0.8 0.4 1.9
Purchase of intangible assets (0.6) (0.6) (1.1)
Finance leases (0.1) (0.3) (0.8)
Operating cash flow 34.0 19.1 62.2
Free cash flow
Half year Half year
ended 28 ended 29 Year ended
February February 31 August
2017 2016 2016
GBPm GBPm GBPm
--------------------------------------------------------- ---------- -----------
Net cash from operating activities 34.1 17.9 55.8
Add back:
Cash outflow on exceptional items (current
year and prior year) 1.7 5.1 10.4
Included in investing activities:
Purchase of property, plant and equipment (4.5) (8.3) (14.2)
Disposal of property, plant and equipment 0.8 0.4 1.9
Purchase of intangible assets (0.6) (0.6) (1.1)
Finance leases (0.1) (0.3) (0.8)
Interest received 0.2 0.3 0.5
Included in financing activities:
Interest paid (7.7) (7.3) (13.7)
Free cash flow 23.9 7.2 38.8
EBITDA
Half year Half year
ended 28 ended 29 Year ended
February February 31 August
2017 2016 2016
GBPm GBPm GBPm
---------------------------------------------------------------- ---------- -----------
Operating profit/(loss) 22.4 (15.6) (14.7)
Depreciation, amortisation and impairment charges 17.4 34.6 63.1
Exceptional items (excluding impairment charges) (2.6) 7.9 12.9
EBITDA 37.2 26.9 61.3
Net debt
A reconciliation is provided in note 14.
2. Changes in accounting policies
In March 2016, the IFRS IC issued an agenda decision in respect
of the treatment of cash pooling arrangements clarifying in which
circumstances these can be offset in accordance with IAS 32
'Financial Instruments: Presentation'. It was determined that where
a Group does not expect to settle subsidiaries' bank balances on a
net basis, these balances cannot be offset. In response to this,
the Group has reviewed its cash pooling arrangements which has
resulted in changes to the amounts that can be offset. Comparative
information for the half year ended 29 February 2016 has been
restated. The impact of this change on 2016 is to increase both
cash and cash equivalents and current borrowings in the
Consolidated balance sheet by GBP8.7m. There was no overall impact
on net debt or net assets.
3. Segment information
IFRS 8 'Operating Segments' requires segment information to be
presented on the same basis as that used for internal management
reporting.
For the purposes of managing the business, the Group is
organised into two reportable segments: Advanced Engineered
Products and Engineered Conveyor Solutions.
Advanced Engineered Products
AEP provides high value-added solutions using advanced polymeric
materials in three related product areas:
* Advanced Sealing Technologies (seals for
upstream/midstream oil & gas and petrochemicals; and
seals for fluid power);
* Precision Polymers (precision belts for power
transmission and motion control; elastomeric
solutions; and specialist hoses); and
* Solesis Medical Technologies (biomedical textile
components and biomaterials; and single-use products
for blood management, bioprocessing and cell
therapy).
----------------------------------------------------------------------
Engineered Conveyor Solutions
ECS manufactures rubber ply, solid woven and steel cord heavyweight
conveyor belt for the mining, industrial and bulk handling markets.
ECS also provides related conveyor services such as maintenance,
design and installation.
----------------------------------------------------------------------
Operating segments within these reportable segments have been
aggregated where they have similar economic characteristics with
similar products and services, production processes, methods of
distribution, customer types and regulatory environments.
The Chief Operating Decision Maker ("CODM") for the purpose of
IFRS 8 is the Board of Directors. The financial position of the
segments is reported to the CODM on a monthly basis and this
information is used to assess the performance of the Group and to
allocate resources on an appropriate basis.
Segment performance is reviewed down to the operating profit
level. Financing costs and taxation are managed on a Group basis so
these costs are not allocated to operating segments.
Transfer prices on inter-segment revenues are on an arm's length
basis in a manner similar to transactions with third parties.
Segment results are analysed as follows:
Half year ended 28 February 2017
--------------------------------------------------------------------------------------------------------------
Advanced Engineered
Engineered Conveyor Unallocated
Products Solutions Corporate Total
GBPm GBPm GBPm GBPm
Total segment revenue 136.9 170.5 - 307.4
Operating profit before
amortisation of intangible
assets acquired and
exceptional items 17.9 10.4 (4.3) 24.0
Amortisation of intangible
assets acquired (3.5) (0.7) - (4.2)
Exceptional items 4.1 - (1.5) 2.6
Operating profit/(loss) 18.5 9.7 (5.8) 22.4
Net finance costs (8.6)
Taxation (3.0)
Profit for the period 10.8
Half year ended 29 February 2016
-------------------------------------------------------------------------------------------------------------
Advanced Engineered
Engineered Conveyor Unallocated
Products Solutions Corporate Total
GBPm GBPm GBPm GBPm
---------------------------- ------------ ----------- --------------------------- -----------------------------
Total segment revenue 120.2 156.6 - 276.8
Operating profit before
amortisation of intangible
assets acquired and
exceptional items 12.8 5.8 (3.6) 15.0
Amortisation of intangible
assets acquired (3.1) (2.4) - (5.5)
Exceptional items (5.4) (19.5) (0.2) (25.1)
Operating profit/(loss) 4.3 (16.1) (3.8) (15.6)
Net finance costs (7.5)
Taxation 4.6
Loss for the period (18.5)
3. Segment information continued
Year ended 31 August 2016
---------------------------------------------------------------------------------------------------------------
Advanced Engineered Unallocated Total
Engineered Conveyor Corporate GBPm
Products Solutions GBPm
GBPm GBPm
------------------------------ ----------------------- ------------------------------- ------------ -------------
Total segment revenue 250.7 321.8 - 572.5
Operating profit before
amortisation of intangible
assets acquired and
exceptional items 29.9 14.2 (7.0) 37.1
Amortisation of intangible
assets acquired (6.3) (4.7) - (11.0)
Exceptional items (8.7) (30.8) (1.3) (40.8)
Operating profit/(loss) 14.9 (21.3) (8.3) (14.7)
Net finance costs (15.6)
Taxation 5.0
Loss for the period (25.3)
Segment assets and liabilities are analysed as follows:
28 February 2017
----------------------------------------------------------------------------------
Advanced Engineered Unallocated Total
Engineered Conveyor Corporate GBPm
Products Solutions GBPm
GBPm GBPm
------------------ ----- -------------------- --------------- ------------ ----------
Assets
Property, plant
and equipment 83.5 148.4 1.0 232.9
Intangible assets 137.0 44.9 - 181.9
Inventories 33.4 48.0 - 81.4
Trade and other
receivables 48.0 63.3 1.7 113.0
Intra-group
receivables 0.1 - (0.1) -
Segment assets 302.0 304.6 2.6 609.2
Unallocated
assets 144.5
Total assets 753.7
Liabilities
Trade and other
payables 36.3 85.3 12.2 133.8
Intra-group
payables 1.4 1.6 (3.0) -
Segment
liabilities 37.7 86.9 9.2 133.8
Unallocated
liabilities 309.0
Total liabilities 442.8
29 February 2016
--------------------------------------------------------------------------------
Advanced Engineered Unallocated Total
Engineered Conveyor Corporate GBPm
Products Solutions GBPm
GBPm GBPm
------------------ ----- --------------- ----------- ---------------- --------------
Assets
Property, plant
and equipment 79.5 139.3 1.0 219.8
Intangible assets 129.7 53.6 - 183.3
Inventories 32.1 48.2 - 80.3
Trade and other
receivables 45.0 60.8 2.2 108.0
Intra-group
receivables 0.1 0.1 (0.2) -
Segment assets 286.4 302.0 3.0 591.4
Unallocated
assets 122.2
Total assets 713.6
Liabilities
Trade and other
payables 34.4 74.9 22.1 131.4
Intra-group
payables 1.4 0.9 (2.3) -
Segment
liabilities 35.8 75.8 19.8 131.4
Unallocated
liabilities 296.7
Total liabilities 428.1
3. Segment information continued
31 August 2016
----------------------------------------------------------------------------
Advanced Engineered Unallocated Total
Engineered Conveyor Corporate GBPm
Products Solutions GBPm
GBPm GBPm
------------------ ----- ------------------- ----------- ------------ ----------
Assets
Property, plant
and equipment 81.8 146.0 1.0 228.8
Intangible assets 134.3 44.0 - 178.3
Inventories 32.2 43.1 - 75.3
Trade and other
receivables 40.3 61.8 2.8 104.9
Assets held for
sale 2.2 - - 2.2
Intra-group
receivables 0.1 0.1 (0.2) -
Segment assets 290.9 295.0 3.6 589.5
Unallocated
assets 130.8
Total assets 720.3
Liabilities
Trade and other
payables 35.4 75.1 7.8 118.3
Liabilities held
for sale 1.0 - - 1.0
Intra-group
payables 1.4 1.5 (2.9) -
Segment
liabilities 37.8 76.6 4.9 119.3
Unallocated
liabilities 322.3
Total liabilities 441.6
Unallocated assets comprise deferred tax assets, current tax
assets, derivative financial assets and cash and cash equivalents.
Unallocated liabilities comprise borrowings, current tax
liabilities, derivative financial liabilities, provisions,
retirement benefit obligations and deferred tax liabilities.
4. Exceptional items
Half year Half year Year ended
ended ended 31 August
28 February 29 February 2016
2017 2016 GBPm
GBPm GBPm
--------------------------------------------------------------- ------------- ------------- -----------
(Credited)/charged to operating profit
Profit on disposal of businesses (4.1) - -
Employment costs 1.5 - -
Restructuring costs - 9.5 15.8
Impairment of goodwill and intangible assets acquired - 14.5 25.0
Impairment of trade receivables - 1.1 -
Total exceptional (credit)/charge (2.6) 25.1 40.8
Credited to taxation
Taxation on exceptional items (credited)/charged to operating
profit (0.3) (4.6) (7.1)
Profit on disposal of businesses relates to the disposals during
the period of Xeridiem Medical Devices, Inc (GBP5.1m profit) and
CDI Energy Products AS (GBP1.0m loss). Further details can be found
in note 18.
Employment costs relate to contractual death in service costs in
respect of the former Chief Executive Officer, Nicholas Hobson. The
amount is held within provisions and is payable after the half year
end.
5. Finance income
Half year Half year Year ended
ended ended 31 August
28 February 29 February 2016
2017 2016 GBPm
GBPm GBPm
-------------------------- ------------- ------------- -----------
Bank interest receivable 0.2 0.3 0.5
6. Finance costs
Half year Half year Year ended
ended ended 31 August
28 February 29 February 2016
2017 2016 GBPm
GBPm GBPm
----------------------------------------------------------------------- ------------- -----------
Interest payable on bank overdrafts and loans 1.2 1.9 3.4
Interest payable on other loans 6.5 5.5 11.2
7.7 7.4 14.6
Less amounts capitalised on qualifying assets - (0.2) (0.2)
Interest payable 7.7 7.2 14.4
Interest on defined benefit post-retirement schemes 0.4 0.4 0.8
Interest on the unwinding of discount on provisions 0.2 0.4 0.8
Finance charge/(credit) on redemption liability on acquisitions 0.5 (0.2) 0.1
Notional interest 1.1 0.6 1.7
Total finance costs 8.8 7.8 16.1
7. Taxation
Half year Half year Year ended
ended ended 31 August
28 February 29 February 2016
2017 2016 GBPm
GBPm GBPm
-------------------------------- ------------- ------------- -----------
UK taxation 1.3 - (0.4)
Overseas taxation 1.7 (4.6) (4.6)
Total taxation charge/(credit) 3.0 (4.6) (5.0)
The taxation charge/(credit) includes credits of GBP0.3m (2016:
GBP4.6m) in respect of exceptional items, GBP0.3m (2016: GBP1.9m)
in respect of amortisation of intangible assets acquired and GBPnil
(2016: GBP0.1m) in respect of notional interest.
The underlying taxation charge was GBP3.6m (2016: GBP2.0m) and
is calculated based on the estimated underlying effective tax rate
for the full year of 22% (2016: 25%).
8. Dividends
Half year Half year Year ended
ended ended 31 August
28 February 29 February 2016
2017 2016 GBPm
GBPm GBPm
------------------------------------------------------------ ------------- ------------- -----------
Dividends paid or approved in the period
Interim dividend for the year ended 31 August 2016 of 1.0p
(2015: 4.0p) per share 1.9 7.8 7.8
Final dividend for the year ended 31 August 2016 of 2.0p
(2015: 8.0p) per share 3.9 15.5 15.5
5.8 23.3 23.3
Dividends neither paid nor approved in the period
Interim dividend for the year ended 31 August 2017 of 1.4p
(2016: 1.0p) per share 2.7 1.9 1.9
The interim dividend for the year ended 31 August 2016 was paid
on 7 September 2016. The final dividend for the year ended 31
August 2016 was approved by shareholders at the Annual General
Meeting on 11 January 2017 and was paid on 9 March 2017. The
interim dividend for the year ending 31 August 2017 is due for
payment on 7 September 2017 and so has not been recognised as a
liability at 28 February 2017. It will be paid to shareholders on
the register on 28 July 2017.
9. Earnings per share
Half year Half year Year ended
ended ended 31 August
28 February 29 February 2016
2017 2016 GBPm
GBPm GBPm
---------------------------------------------------------------- ------------- ------------- ------------
Earnings
Profit/(loss) for the period attributable to owners of
the parent 10.2 (19.0) (26.3)
Amortisation of intangible assets acquired 4.2 5.5 11.0
Exceptional items (2.6) 25.1 40.8
Notional interest 1.1 0.6 1.7
Taxation attributable to amortisation of intangible assets
acquired, exceptional items and notional interest (note
7) (0.6) (6.6) (10.9)
Profit for the period before amortisation of intangible assets
acquired, exceptional items and notional interest 12.3 5.6 16.3
number number number
---------------------------------------------------------------- ------------- ------------- ------------
Average number of shares
Weighted average number of shares in issue 194,002,741 194,002,741 194,002,741
Weighted average number of shares held by the Employee
Share Ownership Plan Trust (114,177) (114,177) (114,177)
Weighted average number of shares in issue - Basic 193,888,564 193,888,564 193,888,564
Effect of contingent long-term incentive plans 1,078,725 - -
Weighted average number of shares in issue - Diluted 194,967,289 193,888,564 193,888,564
pence pence pence
---------------------------------------------------------------- ------------- ------------- ------------
Earnings/(loss) per share
Underlying - Basic (before amortisation of intangible assets
acquired, exceptional items and notional interest) 6.3 2.9 8.4
Underlying - Diluted (before amortisation of intangible assets
acquired, exceptional items and notional interest) 6.3 2.9 8.4
Basic 5.3 (9.8) (13.6)
Diluted 5.2 (9.8) (13.6)
Underlying earnings per share measures have been presented to
provide a more meaningful measure of the underlying performance of
the Group.
10. Property, plant and equipment
Movements in the period are as follows:
GBPm
At 1 September 2016 228.8
Additions 4.6
Disposals (0.7)
Depreciation (12.0)
Exchange movements 12.2
At 28 February 2017 232.9
11. Intangible assets
Movements in the period are as follows:
GBPm
At 1 September 2016 178.3
Additions 0.6
Disposal of businesses (0.1)
Amortisation (5.4)
Exchange movements 8.5
At 28 February 2017 181.9
12. Post-retirement benefits
The Group operates a number of defined benefit post-retirement
schemes for qualifying employees in operations around the world.
The assets of the schemes are held in separate trustee administered
funds. The cost of the schemes is assessed in accordance with the
advice of independent qualified actuaries using the projected unit
credit method.
The principal schemes are the Fenner Pension Scheme, based in
the UK, and the Fenner Dunlop BV Scheme, based in the Netherlands.
The Fenner Pension Scheme was closed to new entrants in 1997. The
most recent triennial actuarial valuation for the Fenner Pension
Scheme was on 31 March 2014. The most recent annual actuarial
valuation for the Fenner Dunlop BV Scheme was on 30 June 2016.
The principal financial assumptions used for the schemes in the
UK and the Netherlands, compared to the 2016 year end, are as
follows:
31 August
28 February 2017 2016
------------------- -------------------
UK Netherlands UK Netherlands
------------------------------------------------- ----- ------------ ------ --------- ------------
Discount rate 2.5% 2.0% 2.0% 1.2%
Inflation rate - RPI 3.3% n/a 2.8% n/a
Inflation rate - CPI 2.6% 2.0% 2.1% 2.0%
Rate of increase in salaries 4.3% 2.0% 3.8% 2.5%
Rate of increase in benefits in payment subject
to Limited Price Index increases:
- capped at 5.0% (based on RPI) 3.1% n/a 2.7% n/a
- capped at 2.5% (based on RPI) 2.1% n/a 1.9% n/a
- capped at 3.0% (based on CPI) 2.1% n/a 1.8% n/a
Movements in the period are as follows:
GBPm
At 1 September 2016 49.0
Charged to operating profit 1.5
Notional interest 0.4
Remeasurements (10.5)
Employer contributions (2.3)
Exchange movements 0.2
At 28 February 2017 38.3
The remeasurements comprise a decrease in liabilities of
GBP16.8m due to changes in assumptions, principally the discount
rate due to an increase in corporate bond yields, less a reduction
in plan assets of GBP6.3m, principally on insurance policies in the
Netherlands.
13. Provisions
Movements in the period are as follows:
Employment Restructuring Property Redemption Total
costs costs and environmental liability GBPm
GBPm GBPm GBPm on acquisitions
GBPm
---------------------- ----------- -------------- ------------------- ----------------- -------
At 1 September 2016 - 4.0 0.7 13.2 17.9
Provisions created
during the
period 1.5 - - - 1.5
Provisions utilised
during the
period - (1.7) (0.1) (14.4) (16.2)
Notional interest on
the unwinding
of discount - - - 0.2 0.2
Notional finance
charge on redemption
liability - - - 0.5 0.5
Exchange movements - 0.2 - 0.5 0.7
At 28 February 2017 1.5 2.5 0.6 - 4.6
Provisions represent the best estimate of obligations at the
balance sheet date. Where the effect of discounting is material,
provisions have been discounted at a suitable pre-tax rate based on
borrowings that match the maturity of the amounts being discounted,
to reflect the risks associated with future cash flows.
The employment costs provision relates to contractual death in
service costs in respect of the former Chief Executive Officer,
Nicholas Hobson. The restructuring costs provision principally
relates to costs associated with the restructuring and closure of
operations. The redemption liability on acquisitions related to the
obligation in respect of put and call options in relation to the
purchase of non-controlling interests in acquisitions. The put and
call options were exercised in November 2016 on completion of the
acquisition of the remaining non-controlling interests in Belle
Banne Conveyor Services Pty Limited and Leading Edge Conveyor
Services Pty Limited.
14. Reconciliation of net cash flow to movement in net debt
Half year Half year Year ended
ended ended 31 August
28 February 29 February 2016
2017 2016 GBPm
GBPm GBPm
------------------------------------------------------- ------------- ------------- -----------
Net increase/(decrease) in cash and cash equivalents 10.9 (18.2) (19.6)
(Increase)/decrease in borrowings resulting from cash
flows (0.1) 17.1 29.1
Movement in net debt resulting from cash flows 10.8 (1.1) 9.5
Finance leases (0.1) (0.3) (0.8)
Exchange movements (5.4) (15.6) (20.7)
Movement in net debt in the period 5.3 (17.0) (12.0)
Net debt at start of period (150.0) (138.0) (138.0)
Net debt at end of period (144.7) (155.0) (150.0)
Net debt is analysed as follows:
28 February Restated 31 August
(note 2)
2017 29 February 2016
GBPm 2016 GBPm
GBPm
--------------------------- ------------ ------------- ----------
Cash and cash equivalents 116.1 90.9 94.9
Current borrowings (97.2) (34.5) (76.7)
Non-current borrowings (163.6) (211.4) (168.2)
(144.7) (155.0) (150.0)
15. Derivative financial instruments
Derivative financial instruments comprise current assets of
GBPnil (2016 year end: GBP0.6m) and current liabilities of GBP1.1m
(2016 year end: GBP1.1m).
Movements in the period are as follows:
Forward Currency Currency Total
currency swaps - cash swaps - net GBPm
contracts flow hedges investment
GBPm GBPm hedges
GBPm
------------------------------------------ ----------- -------------- ------------- ------
At 1 September 2016 1.1 (0.1) (0.5) 0.5
Credited to income statement (0.5) - - (0.5)
Charged to other comprehensive income - 0.3 0.8 1.1
At 28 February 2017 0.6 0.2 0.3 1.1
16. Financial instruments
Hedging
Group financial instruments denominated in US dollars, euros and
Norwegian krone are designated as hedges of the net investment in
overseas subsidiaries. The overall loss on translation to sterling
at 28 February 2017 of GBP9.2m (2016: GBP20.0m) has been recognised
as a net investment hedge loss in the hedging reserve in other
comprehensive income. This comprises a loss of GBP0.8m (2016:
GBP0.1m gain) in respect of derivative financial instruments (note
15) and a loss of GBP8.4m (2016: GBP20.1m) in respect of
borrowings.
The overall cash flow hedge loss of GBP0.3m (2016: GBPnil),
recognised in the hedging reserve in other comprehensive income, is
in respect of derivative financial instruments (note 15).
No ineffectiveness in respect of cash flow hedges or net
investment hedges has been recognised in the Consolidated income
statement.
Fair values for financial instruments
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets and liabilities.
Level 2 - Inputs other than quoted prices that are observable
for the asset or liability, either directly or indirectly.
Level 3 - Inputs that are not based on observable market
data.
Financial instruments comprise cash and cash equivalents,
current and non-current borrowings, trade and other receivables,
trade and other
payables, provisions and derivative financial instruments. At 28
February 2017, all financial instruments are measured at fair value
using level 2 observable inputs. In the prior year, redemption
liability on acquisitions, within provisions, was measured using
level 3 unobservable inputs; this was utilised in full during the
period (note 13).
16. Financial instruments continued
The carrying amount and fair value of borrowings is as
follows:
28 February 2017 Restated (note 31 August 2016
2) 29 February
2016
Carrying Fair Carrying Fair Carrying Fair
amount value amount value amount value
GBPm GBPm GBPm GBPm GBPm GBPm
Current borrowings 97.2 97.7 34.5 34.5 76.7 78.5
Non-current borrowings 163.6 174.5 211.4 229.7 168.2 183.4
260.8 272.2 245.9 264.2 244.9 261.9
There is no material difference between the carrying amount and
fair value of cash and cash equivalents, trade and other
receivables, trade and other payables, provisions or derivative
financial instruments.
17. Acquisitions
On 1 November 2016, the Group acquired the remaining
non-controlling interests in Belle Banne Conveyor Services Pty
Limited and Leading Edge Conveyor Services Pty Limited, both
located in Australia, following the vendors exercising their put
options granted in November 2010 (the date the Group acquired its
controlling interest) for a cash consideration of GBP14.4m.
18. Disposals
On 1 September 2016, the Group disposed of Xeridiem Medical
Devices, Inc, a manufacturer of minimally invasive
catheter and other single-use medical devices, located in Arizona, USA.
On 13 February 2017, the Group disposed of CDI Energy Products
AS, a distributor of seals, principally to the North Sea oil &
gas industry, located in Norway.
The results of neither Xeridiem Medical Devices nor CDI Energy
Products have been disclosed as discontinued operations since
neither represented a separate major line of business or
geographical area of operation, did not form part of a single
coordinated plan to dispose of such operations and were not
acquired exclusively with a view to resale.
Details of the assets and liabilities disposed of are as
follows:
Xeridiem CDI Total
Medical Energy GBPm
Devices Products
GBPm GBPm
Property, plant and equipment 0.2 - 0.2
Intangible assets - 0.1 0.1
Inventories 0.8 0.4 1.2
Trade and other receivables 1.2 0.4 1.6
Cash and cash equivalents - 0.6 0.6
Trade and other payables (1.0) (0.4) (1.4)
Total net assets disposed 1.2 1.1 2.3
Cash proceeds net of expenses 6.3 0.1 6.4
Profit/(loss) on disposal of businesses 5.1 (1.0) 4.1
The effect on the cash flow statement is as follows:
Xeridiem CDI Total
Medical Energy GBPm
Devices Products
GBPm GBPm
Cash proceeds net of expenses 6.3 0.1 6.4
Cash and cash equivalents disposed - (0.6) (0.6)
Net cash flow 6.3 (0.5) 5.8
19. Contingent liabilities
In the normal course of business the Group has given guarantees
and counter indemnities in respect of commercial transactions.
The Group is involved as defendant in a small number of
potential and actual litigation cases in connection with its
business. The directors believe that the likelihood of a material
liability arising from these cases is remote.
20. Related party transactions
Other than the remuneration of executive and non-executive
directors and members of the Executive Committee, there were no
related party transactions during the period.
Responsibility statement
We confirm that to the best of our knowledge:
-- the condensed half yearly financial statements contained in
this document have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union; and
-- the Interim management report contained in this document
includes a fair review of the information required by the
Disclosure and Transparency Rules of the Financial Services
Authority: paragraph DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
paragraph DTR 4.2.8R (disclosure of related party transactions and
changes therein).
The directors of Fenner PLC are as stated in the 2016 Annual
Report, except for Michael E. Ducey who was appointed as a
non-executive director on 11 January 2017. In addition, on 20
December 2016, Vanda Murray became Non-Executive Chairman having
previously been Acting Non-Executive Chairman, Geraint Anderson
replaced Vanda Murray as Chairman of the Remuneration Committee and
Chris Surch replaced Vanda Murray as Senior Independent Director. A
list of current directors is maintained on the Fenner PLC website
at www.fenner.com.
By order of the Board
Vanda Murray OBE John Pratt
Chairman Group Finance Director
19 April 2017 19 April 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRGDSBBBBGRI
(END) Dow Jones Newswires
April 19, 2017 02:00 ET (06:00 GMT)
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