TIDMMRX
RNS Number : 5591Z
Metalrax Group PLC
19 March 2012
19 March 2012
Metalrax Group PLC
Preliminary results for the year ended 31 December 2011
Metalrax Group PLC ("Metalrax", the "Group"), the niche supplier
of specialist engineering and consumer durables products, today
announces its preliminary results for the year ended 31 December
2011.
Results
2011 2010
GBP'm GBP'm
On-going revenues 63.0 60.0
On-going gross margins 26.0% 25.4%
Operating profit before exceptional items* and share option costs 2.4 2.3
Total Group operating profit before interest and taxation 2.1 1.9
Total Group profit after taxation 0.1 0.3
+Adjusted total group profit after taxation 1.8 1.2
Basic earnings per 5p Ordinary share 0.11p 0.29p
+Adjusted earnings per 5p Ordinary share 1.48p 1.09p
Cash generated from continuing operations 2.4 4.2
Net debt 6.1 8.3
Gearing 35.3% 49.1%
Dividends paid per 5p Ordinary share nil nil
The prior period on-going revenues and gross margins exclude the
revenue and the cost of sales of businesses sold at the end of
2010, and therefore provides prior period information that is
comparable to the on-going revenues and gross margins of the Group.
There were no revenues or profits from the sold businesses in
2011.
Total Group represents results from continuing and discontinued
operations.
Cash generated from continuing operations is stated before
defined benefit pension contributions and discontinued
operations.
*Exceptional items (note 3) are items of income and expenditure
that, in the judgement of management, should be disclosed
separately on the basis that they are material, either by their
nature or their size, to the understanding of the financial
statements and where not to do so would distort the comparability
of financial performance between years. In 2011, the GBP0.4m charge
(2010: GBPnil) comprises losses on property disposals and
devaluations of properties below historic cost.
+ Adjusted profit/earnings is after adding back of exceptional
items, share option costs and debt issue cost amortisation, and the
tax effect thereon (see note 6).
Highlights
-- On-going revenues from continuing activities are up 5.0% to GBP63.0m (2010: GBP60.0m).
-- On-going gross margins have improved year on year by 0.6% to
26.0% (2010: 25.4%), principally arising from the recovery of raw
material price increases in H2, manufacturing efficiencies and
reduced costs. As anticipated at the half year, there has been a
strong improvement in margins in H2 of 2.7% following the decrease
of 1.3% experienced in the first half.
-- The full year operating profit before exceptional items and
share option costs of GBP2.4m (2010: GBP2.3m) was in line with
market expectations and reflects an improved profitability in the
second half of GBP1.5m (compared to an operating profit of GBP0.9m
in the first half). Operating profit of GBP2.4m (2010: GBP2.3m) is
stated after a charge of GBP0.5m of additional rental costs
following the sale and leaseback of four properties (2010:
GBPnil).
-- The Group made a total profit after taxation for the year of
GBP0.1m (2010: GBP0.3m). Adjusted profit after taxation of GBP1.8m
(2010: GBP1.2m) reflects the additional GBP0.7m of debt issue cost
amortisation following the refinancing on 23 February 2012.
-- Cash generation from continuing operations (before pension
contributions of GBP1.0m) remains positive at GBP2.4m (2010:
GBP4.2m).
-- Net debt has been reduced to GBP6.1m (2010: GBP8.3m) at the
year-end, as a result of cash generation and debt repayments from
asset disposals in the year of GBP4.6m. Gearing has improved year
on year from 49.1% to 35.3% (2009: 73.9%) and, following the
management actions of recent years, net debt is now at a manageable
level.
-- The Group refinanced its banking facilities on 23 February
2012, with total facilities of GBP14.0m of borrowings for a 4 year
term. This refinancing is expected to save circa GBP0.3m of
interest expense per annum based on the current level of bank
borrowings.
-- The pension deficit has decreased by GBP1.3m to GBP3.4m at 31
December 2011 (2010: GBP4.7m). The Group has paid GBP1.0m of
pension deficit contributions during the year (2010: GBPnil).
Commenting on the Group's performance Chairman Andrew Walker
concluded:
"The successful refinancing, ahead of schedule, combined with
the Group's 2011 performance, provides a firm financial footing and
foundations for future growth. Notwithstanding the global
macro-economic conditions, the Group's trading this year has
started well and the Board expects to meet market expectations for
the full year."
For further information, please contact:
Metalrax Group PLC :
----------------------------------- -------------
Andrew Richardson, Chief Executive
Caroline Green, Group Finance
Director 0845 030 3300
----------------------------------- -------------
Arden Partners :
----------------------------------- -------------
Steve Douglas 0121 423 8900
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Jamie Cameron 0207 614 5925
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Chairman's Statement
Building on the profit reported in 2010, Metalrax Group is
reporting its second consecutive year of profit in 2011.
In 2011 the Group succeeded in both of its goals of profitable
revenue growth and reducing borrowings. Overall the group's sales
growth in 2011 was good with the Specialist Engineering businesses
performing strongly whilst the Consumer Durables Business suffered
due to a weaker UK end consumer markets.
Borrowings were reduced with cash generated from operations as
well as cash resulting from the disposal of properties. The Group
has now completed its UK sale and leaseback programme with two
transactions completed in the first half adding to the two
completed in 2010. This programme delivered significant borrowings
reductions although at the expense of increased overheads with the
increased building lease costs. Group profitability increased in
2011 despite this cost increase.
The 2011 results built on the strong 2010 performance and both
years are the outcome of the continued commitment, energy and
support of our employees, which is greatly appreciated.
Since the year end, the Group has completed its refinance ahead
of the expiration of its existing facilities and on improved terms.
The new facilities of up to GBP14m over four years provide the
stable platform the Group needs to build on the foundations put in
place over the last few years and to continue to grow.
Results
Continuing operations delivered 5% on-going revenue growth over
the year with the two divisions delivering markedly different
results reflecting the strength and weakness of their respective
end markets. The Specialist Engineering division grew very strongly
in the first half with a slower growth in the second half
delivering very positive full year growth of 16%. The Consumer
Durables division had a difficult year as a result of a generally
weak end consumer non-food retail market. This division is
reporting a sales decline of 14.7% for the full year.
Operating profit (before exceptional items and share option
costs) for the Group grew by GBP0.1m to GBP2.4m which is in line
with market expectations. It is worth noting that on a comparable
basis to 2010 adding back the increased rental costs of GBP0.5m
resulting from the property sale and leaseback programme,
like-for-like operating profit grew by GBP0.6m. Total Group
operating profit after exceptional items and share option costs was
GBP2.1m compared to GBP1.9m in the prior year.
The Group is reporting a total post-tax profit of GBP0.1m (2010:
GBP0.3m) which results in basic earnings per share of 0.11p
compared to 0.29p in 2010. Adjusted earnings per share of 1.48p
(2010: 1.09p) is stated before exceptional items and debt issue
cost amortisation.
The continued focus on cash resulted in a GBP2.4m operating cash
inflow (before pension contributions of GBP1.0m) from continuing
businesses as well as GBP4.6m of cash realised from property
disposals and deferred consideration from sales of businesses in
2010. After capital expenditure, borrowings costs, taxation and
pensions deficit contributions, this resulted in net debt at the
year-end of GBP6.1m (2010: GBP8.3m) representing gearing of 35.3%
(2010: 49.1%). The gearing level of the Group is now at a
manageable level following the management actions of recent
years.
Dividend
The Group's policy is to make dividend payments that are covered
2.0 to 2.5 times by earnings. There will be no dividend payment in
respect of the period ended 31 December 2011.
Board Changes
The Board composition remained unchanged throughout 2011. The
Board welcomes Caroline Green to the Board in January 2012
following her appointment as Group Finance Director.
Outlook
The successful refinancing, ahead of schedule, combined with the
Group's 2011 performance, provides a firm financial footing and
foundations for future growth. Notwithstanding the global
macro-economic conditions, the Group's trading this year has
started well and the Board expects to meet market expectations for
the full year.
Chief Executive's Operating and Financial Review
2011 was a stable year for the Group with no changes to the
Group structure, Board composition or to the banking facilities.
This stability enabled us to build on the momentum of 2010 and to
focus our efforts on the operating businesses within the Group. In
turn, this focus has contributed towards the further improvement in
operating results of the Group seen in the year.
Whilst we continue on the strategic path of being a specialist
engineering group within niche markets, we have been focused on two
goals which have remained unchanged from 2010:
1. profitable revenue growth, and
2. debt reduction.
With regard to the first goal, 2011 was a good year with revenue
growth and gross margin improvement. The first half saw strong
on-going revenue growth at 16% although this was impacted by
growing economic uncertainty in the second half, particularly the
fourth quarter, resulting in full year growth of on-going revenues
of 5%. Continuing the message from the interim statement, the two
divisions' performance was polarised reflecting their end markets
and this is described below.
2011 on-going gross margin increased by 0.6 points to 26.0%
which reflected a positive swing of nearly 1.9 points from the 1.3
point margin decrease reported at the half year resulting from
input price increases that had not yet been fully passed on to the
customer base at that point in time. The full year margin
improvement demonstrates success in passing on those price rises
over the full year. The full year margin improvement builds on the
1.6 point margin improvement reported in 2010 and is reflective of
our continued focus on profitable revenue growth.
In terms of the second goal, 2011 was also a good year in terms
of borrowings reduction as net debt at year-end was GBP6.1m (2010:
GBP8.3m) which was achieved from both positive cash generated from
continuing operations (GBP2.4m) as well as property disposals
(GBP4.4m). GBP4.4m was realised from property disposals which was
from the outright sale of vacant properties (GBP1.9m) in addition
to the completion of two sale and leaseback transactions (GBP2.5m)
in the year. The additional rental overhead in 2011 associated with
the four sale and leasebacks completed in 2010 and 2011 was
GBP450,000. Gearing at the end of 2009 was 74% and we have
significantly improved this each year down to 35.3% at the close of
2011.
The Group's turnaround to date has been achieved through the
hard work, drive and resilience of our people for which we are
hugely appreciative. Following the completion of our successful
leadership development programme during 2011, we have continued to
invest in training focusing on developing the Group's capabilities
in key areas including sales as well as supply chain and
procurement skills.
2011 Performance
The eight businesses are grouped into 2 divisions, Specialist
Engineering and Consumer Durables and the results are reported in
line with this structure.
Specialist Engineering
This division accounted for 70% of Group on-going revenues in
2011 at GBP47.5m (2010: 63.2%) with strong growth of 16% in the
full year building on growth of 7.8% in the prior year. Growth in
the first half was very strong at 25% although this slowed somewhat
in the second half to 8% reflecting increasing economic
uncertainty. Operating profit before exceptional costs was GBP3.9m,
an improvement of 17% over 2010 (GBP3.4m).
Cooper Coated Coil, the specialist coatings business supplying
the consumer, automotive and printing markets, is the Group's
largest business by revenue and profit contribution. 2011
represented a record year for the business in terms of sales and
profitability driven by key account management, both at home and in
its substantial export customer base, with full year sales growing
14%. The business also saw significant efficiency gains resulting
from recent investments including the regenerative thermal oxidizer
installed in April 2011.
Post Glover LifeLink, the USA-based medical electrical safety
equipment manufacturer also had a record year in terms of revenues
and profits, growing 7.5% in the year. The first half was flat
year-on-year as this late economic cycle sector came out of the
recession but the business had a very strong second half with sales
growth of over 15%.
Weston Body Hardware,which designs and manufacturers specialist
access control systems to a worldwide customer base, had a second
year of strong revenue growth at 23.9% (2010: 42.5%) along with
improved margins. The new management team in this business has
sharpened the strategic focus to ensure increasing profitability as
well as focusing on improving operational efficiency.
Toolspec, the manufacturer of manipulated tube products into the
yellow goods and automotive sectors also had a good year with
growth of 12.8% and some exciting new contract wins including one
to supply components for the new Jaguar C- X16 product launching in
2013. The two smallest businesses in this division, Advanced
Handling and Premier Architectural, both achieved sales growth in
the year although both businesses saw a decline in margins driven
by both external market pressure and some operational
inefficiencies which have been addressed.
Consumer Durables
30% of the Group's revenue came from this division in 2011 at
GBP20.3m (2010: 36.8%). The majority of the division's sales are in
the UK and are to the large grocery multiples, independent
retailers, catering equipment distributors as well as the DIY sheds
- markets which experienced difficult trading conditions throughout
2011. Gross margin improved to 22.3% (2010: 21.6%). Profit before
exceptional costs was disappointing at GBP0.2m (2010: GBP1.0m).
George Wilkinson, manufactures and supplies bakeware, kitchen
tools and gadgets, wine racks and bathroom furniture into UK
retailers and is the second largest company in the Group by
turnover. As a result of the weak non-food consumer market, the
business had a difficult year with turnover contracting by 17.7%
although gross margin in the full year improved year on year. The
new management team has secured good key account wins and is
focusing on improving internal manufacturing and supply chain
processes to strengthen the margin.
Samuel Groves supplies both the catering and retail markets and
had a better year helped by the successful re-launch of its strong
Mermaid brand and grew sales 1.3% in the full year.
Current trading and prospects
The current year budgets have been built on the basis that the
economies in which the Group operates will broadly be the same as
in 2011 and that the divisions will continue to make gains both
with existing and new customers. Any economic downturn or high
rates of escalation in input prices would be a risk. For both
divisions, Sterling's current relative weakness represents firstly
improved export opportunities and we continue to seek opportunities
in key overseas markets and secondly the opportunity to displace
imports which we are exploiting. The board is confident that the
Group has a stable platform and appropriate cost reduction and
operational efficiency plans are in place to counter any potential
adverse market conditions in 2012.
FINANCIAL RESULTS
The Consolidated Income Statement reports the revenue and
operating income and expenditure of the Group's continuing
businesses under IFRS. The discontinued results are in respect of
businesses that were discontinued in 2009.
Revenues
On-going revenues for the year ended 31 December 2011 at
GBP63.0m were 5% higher than the prior year (2010: GBP60.0m). Total
external revenues for the Group were GBP63.0m (2010: GBP65.5m).
Further details of the divisional performances are set out in note
2 of the financial statements.
Operating profit/loss
The operating profit before exceptional items, goodwill
impairment and share option costs at GBP2.4m (2010: GBP2.3m) was in
line with market expectations. Operating profit before net finance
costs and taxation was GBP2.0m (2010: GBP2.1m).
Cash generation
The Group has continued its focus on reducing it bank borrowings
in 2011, through the disposal of assets and cash generation from
the operating businesses, through working capital management and
cost control. GBP4.6m of cash was generated on asset and business
disposals in the year. Cash generated from continuing operations
was GBP2.4m (2010: GBP4.2m) before pension contributions of GBP1.0m
(2010: GBPnil). Cash outflows from discontinued activities were
GBP0.3m (2010: GBP0.2m).
Exceptional items, goodwill impairment and share option
costs
Exceptional items in 2011 relate to the loss on disposal of a
property in Burnley of GBP0.2m and a devaluation of freehold
properties below historical cost of GBP0.2m.
The IFRS 2 share option charge of GBPnil (2010: GBP0.2m) has
been disclosed separately on the face of the income statement as
this is considered to be a non-trading item.
There were no exceptional items incurred in 2010.
Net finance costs
Finance costs incurred in the year comprise bank interest of
GBP0.7m (2010: GBP0.9m), amortisation of debt issue costs GBP1.4m
(2010: GBP0.7m) and the pension finance cost of GBP0.3m (2010:
GBP0.3m). Following the refinance of the Group on 23 February 2012,
the effective interest rate on the old facilities has been
recalculated, resulting in an acceleration of GBP0.7m of debt issue
cost amortisation being charged in the year.
Taxation
The Group is not expecting to pay any UK cash tax in respect of
its 2011 trading results. The tax losses arising in prior years
continue to be recognised as a deferred tax asset in 2011, to the
extent that these losses are recoverable in future periods. The
deferred tax credit in the year to 31 December 2011 relates to
reduced accelerated capital allowances following the disposal and
devaluation of properties.
The effective tax rate of the Group before exceptional items is
16.2% (2010: 19.1%) which is significantly lower than the standard
rate of 27% (2010: 28.0%). The major reconciling items are expenses
not deductible, the reduction in accelerated capital allowances
following the disposal and devaluation of properties, and higher
overseas taxation rates.
Earnings per share
The basic earnings per share were 0.11p compared with 0.29p in
the previous year.
Dividend and dividend policy
The Group is committed to its dividend policy announced in its
2007 Report and Accounts. This progressive and sustainable policy
aims to pay, where appropriate, 40% to 50% of net profit.
The Board does not propose to pay a final dividend for the year,
and therefore there has been no dividend in 2011 (2010: nil). The
Board believes that this is appropriate given the status of the
turnaround plan and is consistent with its stated policy and with
its current focus on cash management.
Property, plant & equipment
The directors have updated the valuation of its commercial
properties in 2011, following the formal valuation exercise that
was commissioned in 2011. The review has resulted in a further
devaluation of our properties by GBP0.4m (2010: GBP0.8m) which has
been reflected in the financial statements. Of the GBP0.4m, GBP0.2m
relates to properties that were previously revalued upwards in 2007
and this has been taken against the revaluation reserve.
The Group has invested GBP1.2m (2010: GBP1.3m) in new capital.
The major items of equipment purchased in the year was the new
Regenerative Thermal Oxidiser (GBP0.4m) at Cooper Coated Coil,
welding robots and jigs (GBP0.1m) at Toolspec, IT systems
developments (GBP0.4m) at Weston Body Hardware and tooling
(GBP0.3m) at George Wilkinson.
Goodwill & Intangibles
The annual review of goodwill supported the carrying value of
goodwill. Of the remaining goodwill at the end of the year of
GBP7.0m, GBP2.8m relates to Specialist Engineering and GBP4.2m
relates to the Consumer Durables Division.
Gross margins
In 2011, total on-going gross margins increased by 0.6 points to
26.0%. Gross margins have decreased year on year in the Specialist
Engineering Division by 0.2% as a result of national price
increases offset in part by the focus on product differentiation,
improved production efficiencies and cost reduction programmes.
Gross margins in the Consumer Durables Division were improved by
0.4% to 22.3% in 2011, as a result of the benefits from the
completion of phase 1 and 2 of the automation of the pressing-lines
at one operation being offset by higher energy bills and
transportation costs.
Overhead reduction
Despite higher carriage and energy costs experienced during
2011, the Group has been committed to reduce overhead spend in the
year to 19.2% of revenue (2010: 22.7%). As well as improved cost
control across the businesses, this includes a reduction in head
office operating costs by GBP0.1m year on year to GBP1.7m in 2011
(2010: GBP1.8m and 2009: GBP2.1m).
Operating margins
Operating margins are stated before exceptional items and
therefore year on year improvements are in line with gross margin
movements. The Group continues to focus on cost management and
where appropriate headcount and discretionary spend has been
reduced to maintain operating margins.
Operating margins in both Divisions are ahead year on year as a
result of the full year impact of cost reduction programmes
initiated in 2010.
Working capital
Working capital management has been a sustained focus for the
Group during 2011. Overall, working capital levels increased by
GBP0.9m (2010: GBP0.1m), to support the underlying 5.0% increase in
trading volumes.
Inventory levels grew by GBP0.4m (2011: GBP0.1m reduction) in
order to service the higher volumes and demand for product. Stock
days increased year on year by nil days in Specialist Engineering
and 15 days in Consumer Durables. Further emphasis will be placed
on reducing inventory levels in 2012.
Debtor days across the Group reduced due to improved cash
collection processes implemented across the Group. This resulted in
a cash inflow of GBP1.7m in 2011 (2010: GBP1.2m outflow). There
have been no bad debts of note during 2011.
Pensions
The pension deficit over the year has decreased by GBP1.3m. The
deficit at 31 December 2011 is GBP3.4m (2010: GBP4.7m). The company
has made contributions of GBP1.0m in the year and the valuation
methodology has moved from RPI to CPI for certain categories of the
deferred members liabilities.
The pension fund concluded its triennial scheme specific
valuation as at 1 January 2008 and the Group has agreed a deficit
recovery plan and future contributions with the Trustees based on
this valuation. The next triennial valuation on 1 January 2011 is
currently being prepared and discussed with the Trustees.
Bank Borrowings
Bank borrowings at 31 December 2011 were GBP6.2m net of cash
(2010: GBP9.8m). Net debt at 31 December 2011 stood at GBP6.1m,
compared with GBP8.3m for the previous year. Net debt is after
taking into account the GBP0.1m of unamortised debt issues costs
(2010: GBP1.5m). GBP1.4m of debt issue costs have been amortised in
the year following the refinancing in February 2012 and the
remaining GBP0.1m has been disclosed as a reduction to
borrowings.
On 23 February 2012, the Group entered into a new 4 year deal
with the Royal Bank of Scotland for bank facilities of up to
GBP14.0m. The new committed bank facilities include Property and
Plant & Machinery loans that mature in February 2016 totalling
GBP3.1m and combined invoice discounting and inventory facilities
of up to GBP10.9m. Applying the new maturity profile to the bank
borrowings at 31 December 2011 would present the following proforma
net debt in the 2011 Group consolidated balance sheet.
Reported Proforma
As at 31 December 2011 GBP'm GBP'm
Cash in hand 3.0 3.0
Bank borrowing due within one year (9.2) (6.1)
----------------------------------------- --------- ---------
Net bank borrowings due within one year (6.2) (3.1)
Bank borrowings due after one year - (3.1)
----------------------------------------- --------- ---------
Total bank borrowings (6.2) (6.2)
Unamortised debt issue costs 0.1 0.1
----------------------------------------- --------- ---------
Net debt at 31 December 2011 (6.1) (6.1)
----------------------------------------- --------- ---------
The new banking facilities with RBS contain a financial covenant
test relating to consolidated EBITDA to bank interest cover, as
well as certain operational covenants including debtor day targets
and inventory turnover targets. There is a risk that a further
downturn in economic conditions may result in a breach of the
banking covenants. In setting the financial covenants, the
directors have negotiated appropriate target EBITDA levels to allow
a degree of flexibility during the economic downturn. The Directors
have reviewed the Group's borrowing requirements for the next
twelve months and the financial covenant tests as set out in the
banking facilities, and can confirm that the preparation of the
Group Accounts on a going concern basis remains appropriate.
Cautionary note
This review of business operations has been prepared solely to
provide additional information to shareholders to allow them to
assess the Company's strategies and the potential for those
strategies to succeed. It should not be relied on by any other
party or for any other purpose.
It contains certain forward-looking statements, made by the
directors in good faith based on the information available to them
up to the time of their approval of this report. Such statements
should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any
such forward-looking information.
Non-GAAP measures
These accounts include a number of non-GAAP measures. The Group
sold some significant businesses in 2009 and accounted for these as
discontinued operations, whilst in 2010 some less significant
business were sold and were accounted for within continuing
operations, in accordance with accounting standards. In order to
provide meaningful analysis to the reader and to aid comparison,
non-GAAP measures have been used in these accounts to split the
2010 continuing results between on-going operations (excluding the
disposed businesses) and results from the disposed businesses. In
2011, all operations are continuing and no businesses were
sold.
Consolidated income statement
Year ended 31 December 2011
2011 2010
Note GBP'm GBP'm
Continuing operations
------------------------------------------- ---- ---- -------- --------
On-going revenues 63.0 60.0
Revenues of sold businesses - 5.5
------------------------------------------- ---- ---- -------- --------
Total Revenues 2 63.0 65.5
Cost of sales (46.7) (48.5)
Gross profit 2 16.3 17.0
Distribution costs (5.3) (5.8)
Administrative expenses (9.0) (9.1)
Operating profit before exceptional
items and share option costs 2 2.4 2.3
Exceptional items* 3 (0.4) -
Share option costs - (0.2)
Operating profit 2.0 2.1
------------------------------------------- ---- ---- -------- --------
Finance expense before debt issue cost
amortisation 4 (1.0) (1.2)
Debt issue cost amortisation 4 (1.4) (0.7)
------------------------------------------- ---- ---- -------- --------
Total finance expense 4 (2.4) (1.9)
(Loss)/profit before income tax (0.4) 0.2
Income tax credit 5 0.4 0.4
Profit for the year from continuing
operations - 0.6
Profit/(loss) from discontinued activities 0.1 (0.3)
Profit for the year 0.1 0.3
Profit for the year attributable to
equity holders of the parent 0.1 0.3
Basic earnings per share 6 0.11p 0.29p
Continuing 6 - 0.47p
Discontinued 6 0.11p (0.18)p
Diluted earnings per share 6 0.11p 0.24p
Continuing 6 - 0.42p
Discontinued 6 0.11p (0.18)p
The prior period on-going revenues and gross margins exclude the
revenue and the cost of sales of businesses sold at the end of
2010, and therefore provides prior period information that is
comparable to the on-going revenues and gross margins of the Group.
There were no revenues or profits from the sold businesses in
2011.
* Exceptional items (note 3) are items of income and expenditure
that, in the judgement of management, should be disclosed
separately on the basis that they are material, either by their
nature or their size, to the understanding of the financial
statements and where not to do so would distort the comparability
of financial performance between years. In 2011, the GBP0.4m charge
(2010: GBPnil) comprises losses on property disposals and
devaluations of properties below historic cost. For further details
see note 3 and the Chief Executive's Operating and Financial
review.
Consolidated statement of comprehensive income
Year ended 31 December 2011
2011 2011 2010 2010
GBP'm GBP'm GBP'm GBP'm
Profit for the year 0.1 0.3
Loss on property valuation (0.2) (0.8)
Actuarial gain on defined benefit pension scheme 0.6 0.7
Tax relating to components of other comprehensive income (0.1) 0.2
Other comprehensive income for the year 0.3 0.1
Total comprehensive income for the year, attributed to equity shareholder of the parent 0.4 0.4
---------------------------------------------------------------------------------------- ----- ----- ----- -----
Consolidated balance sheet
31 December 2011
2011 2010
Note GBP'm GBP'm
Non-current assets
Goodwill 7.0 7.0
Other intangible assets 0.6 0.6
Property, plant and equipment 12.2 14.5
Deferred tax asset 1.3 0.8
21.1 22.9
Current assets
Inventories 7.1 6.7
Trade and other receivables 11.8 13.7
Cash and cash equivalents 3.0 1.5
21.9 21.9
Assets held for sale 8 - 2.5
Total assets 43.0 47.3
Current liabilities
Trade and other payables 12.3 14.6
Provisions 0.2 0.2
Bank borrowings 9.1 2.1
21.6 16.9
Net current assets 0.3 5.0
Non-current liabilities
Bank borrowings - 7.7
Provisions 0.7 1.1
Retirement benefit obligations 9 3.4 4.7
4.1 13.5
Total liabilities 25.7 30.4
Net assets 17.3 16.9
Equity
Share capital (ordinary shares) 6.0 6.0
Share premium 2.7 2.7
Capital redemption reserve 0.3 0.3
Revaluation reserve 1.6 3.0
Other reserve 0.6 0.6
Retained earnings 6.1 4.3
Total equity attributable
to owners of the parent 17.3 16.9
Cash flow statement
Year ended 31 December 2011
2011 2010
GBP'm GBP'm
Loss before tax (including discontinued) (0.3) (0.1)
Finance costs 2.4 1.9
Depreciation 1.3 1.6
Impairment losses 0.2 -
Loss/(profit) on disposal of
assets 0.2 (0.1)
Share-based payment expense - 0.2
Decrease/(increase) in inventories (0.4) 0.1
Decrease/(increase) in trade
and other receivables 1.3 (1.2)
(Decrease)/increase in trade
and other payables (1.8) 1.0
Decrease in provisions (0.2) -
Defined benefit deficit contributions (1.0) -
Other non-cash movements (0.6) 0.6
Cash generated from operations 1.1 4.0
Interest paid (0.8) (0.9)
Income tax paid (0.1) -
Net cash generated from operating
activities 0.2 3.1
Investing activities
Purchase of property, plant and
equipment (1.2) (1.3)
Proceeds from sales of property,
plant and equipment 4.4 2.4
Sales of businesses 0.2 0.4
Net cash generated from investing
activities 3.4 1.5
Financing activities
Repayment of bank loans (4.5) (3.0)
Increase/(decrease)in bank borrowings 2.4 (2.6)
Net cash used in financing activities (2.1) (5.6)
Net increase/(decrease) in cash
and cash equivalents 1.5 (1.0)
Non-cash changes - amortisation
of debt issue costs (1.4) (0.7)
(Increase)/reduction in borrowings (2.4) 2.6
Repayment of bank borrowings 4.5 3.0
Movement in net debt in the year 2.2 3.9
Net debt at start of year (8.3) (12.2)
Net debt at end of year (6.1) (8.3)
Consolidated statement of changes in equity
2011 Capital
Share Capital Share Premium Revaluation Other Redemption Retained
GBP'm Account Reserve Reserve Reserve Earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
Profit for the
year - - - - - 0.1 0.1
Impairment on
property
revaluations - - (0.2) - - - (0.2)
Realised on
property
disposals - - (1.5) - - 1.5 -
Actuarial gain
on defined
benefit pension
schemes - - - - - 0.6 0.6
Tax relating to
components of
other
comprehensive
income - - 0.3 - - (0.4) (0.1)
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
Total
comprehensive
income for the
year - - (1.4) - - 1.8 0.4
Balance at 1
January 2011 6.0 2.7 3.0 0.6 0.3 4.3 16.9
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
Balance at 31
December 2011 6.0 2.7 1.6 0.6 0.3 6.1 17.3
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
2010 Capital
Share Capital Share Premium Revaluation Other Redemption Retained
GBP'm Account Reserve Reserve Reserve Earnings Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
Profit for the
year - - - - - 0.3 0.3
Impairment on
property
revaluations - - (0.8) - - - (0.8)
Realised on
property
disposals - - (0.6) - - 0.6 -
Actuarial gain
on defined
benefit pension
schemes - - - - - 0.7 0.7
Tax relating to
components of
other
comprehensive
income - - 0.2 - - - 0.2
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
Total
comprehensive
income for the
year - - (1.2) - - 1.6 0.4
Balance at 1
January 2010 6.0 2.7 4.2 0.6 0.3 2.7 16.5
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
Balance at 31
December 2010 6.0 2.7 3.0 0.6 0.3 4.3 16.9
---------------- -------------- -------------- --------------- -------- --------------- ---------------- ------
1. Basis of preparation
Metalrax Group PLC (the "Company") is a public limited company
incorporated in the United Kingdom under the Companies Act 2006.
This preliminary announcement is an extract from the consolidated
financial statements of the Company for the year ended 31 December
2011 and comprises the Company and its subsidiaries (together
referred to as the "Group"). The consolidated financial statements
were authorised for issuance on 19 March 2012. The Group financial
statements have been prepared and approved by the Directors in
accordance with International Financial Reporting Standards and
interpretations adopted for use by the EU ("IFRS"), and these parts
of the Companies Act 2006 applicable to companies reporting under
IFRS.
The financial statements have been prepared on the historical
cost basis except that freehold and long leasehold properties and
assets classified as held for sale are held at fair value. The
preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources.
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 31 December 2010
or 2011 within the meaning of Section 434 of the Companies Act
2006, but is derived from those accounts. Statutory accounts for
2010 have been delivered to the Registrar of Companies and those
for 2011 will be delivered following the company's Annual General
Meeting. The auditors' reports on the statutory accounts for the
years ended 31 December 2010 and 31 December 2011 were unqualified
and do not contain statements under s498(2) or (3) Companies Act
2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. The Company will
publish its full financial statements for the year ended 31
December 2011 by 27 April 2012, which will be available on the
Company's website at www.metalraxgroup.co.uk and at the Company's
registered office at Rectory Court, Old Rectory Lane, Alvechurch,
Birmingham, B48 7SX. The Annual General Meeting will be held on
Tuesday 22 May 2012.
The Group's principal accounting policies as set out in the
Annual Report have been applied consistently.
2. Segmental Reporting
Information reported to the Chief Operating Decision Maker
(being the Group's Chief Executive) for the purposes of resource
allocation and assessment of segment performance is focussed on the
activities and markets to which the individual operating business
units serve. The Group's reportable segments under IFRS 8 are
therefore as follows:
-- Specialist Engineering - a variety of precision manufacturing
activities that incorporate value adding technology for unique
applications in the medical, specialist metal coating and premium
automotive sectors.
-- Consumer Durables - manufactures and markets bakeware and
associated ranges of kitchen accessories to both the retail and
commercial markets in the UK and abroad.
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 1. Segment
profit represents the profit earned by each segment without
allocation of central administration costs including directors'
salaries, investment revenue and finance costs, and income tax
expense.
Revenue represents amounts derived from the sale of specialist
products which fall within the Group's ordinary activities after
deduction of trade discounts and value added tax. Intra-Group sales
are charged at prevailing market prices and mostly originate from
the Specialist Engineering segment.
a) Segmental analysis by activity
The following is an analysis of the Group's external revenue and
results by primary reportable segment:
Continuing businesses
-------------------------------------------------
Specialist Consumer Unallocated Total Discontinued Total
Engineering Durables Central Group businesses Group
2011 2011 Costs 2011 2011 2011 2011
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
On-going revenues 47.5 20.3 0.3 68.1 - 68.1
Revenues of sold - - - - - -
businesses
Total revenues 47.5 20.3 0.3 68.1 - 68.1
Inter-group revenues (5.0) (0.1) - (5.1) - (5.1)
Revenue from external
customers 42.5 20.2 0.3 63.0 - 63.0
Gross profit 11.5 4.5 0.3 16.3 - 16.3
Gross margin -
total and ongoing 27.2% 22.3% 100.0% 26.0% - 26.0%
Operating profit/(loss)
before exceptional
costs 3.9 0.2 (1.7) 2.4 - 2.4
Exceptional costs (0.2) (0.2) - (0.4) 0.1 (0.3)
Operating profit/(loss) 3.7 - (1.7) 2.0 0.1 2.1
Net finance expense (2.4) - (2.4)
(Loss)/profit before
taxation (0.4) 0.1 (0.3)
Taxation credit 0.4 - 0.4
Profit after taxation - 0.1 0.1
Other segmental information
Continuing businesses
------------------------------------------------
Specialist Consumer Unallocated Total Discontinued Total
Engineering Durables Central Group businesses Group
2011 2011 Costs 2011 2011 2011
2011
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Capital expenditure 1.0 0.5 - 1.5 - 1.5
Depreciation 0.7 0.4 0.1 1.2 - 1.2
Impairment losses - 0.2 - 0.2 0.1 0.3
Balance sheet
Segment assets 18.1 10.9 9.8 38.8 1.4 40.2
Unallocated
assets 4.3
Segment liabilities (8.1) (4.4) (0.8) (13.3) (1.4) (14.7)
Unallocated
liabilities (12.5)
Net assets 10.0 6.5 9.0 25.5 - 17.3
Year ended 31 December 2010
Continuing businesses
-------------------------------------------------
Specialist Consumer Unallocated Total Discontinued Total
Engineering Durables Central Group businesses Group
2010 2010 Costs 2010 2010 2010
2010
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
On-going revenues 40.6 23.9 0.2 64.7 - 64.7
Revenues of sold
businesses 5.8 - - 5.8 - 5.8
Total revenues 46.4 23.9 0.2 70.5 - 70.5
Inter-group revenues (4.9) (0.1) - (5.0) - (5.0)
Revenue from external
customers 41.5 23.8 0.2 65.5 - 65.5
Gross profit 11.7 5.2 0.1 17.0 (0.1) 16.9
Gross margin -
total 28.0% 21.9% 58.7% 25.8% - 25.8%
Gross margin -
ongoing 27.4% 21.9% 58.7% 25.4% - 25.4%
Operating profit/(loss)
before share options
costs 3.4 1.0 (2.1) 2.3 (0.2) 2.1
Share option costs - - (0.2) (0.2) - (0.2)
Operating profit/(loss) 3.4 1.0 (2.3) 2.1 (0.2) 1.9
Net finance expense (1.9) (0.1) (2.0)
Profit/(loss) before
taxation 0.2 (0.3) (0.1)
Taxation credit 0.4 - 0.4
Profit/(loss) after
taxation 0.6 (0.3) 0.3
Other segmental information
Continuing businesses
------------------------------------------------
Specialist Consumer Unallocated Total Discontinued Total
Engineering Durables Central Group businesses Group
2010 2010 Costs 2010 2010 2010
2010
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Capital expenditure 0.8 0.6 - 1.4 - 1.4
Depreciation 0.9 0.5 0.2 1.6 - 1.6
Impairment losses - - - - - -
Balance sheet
Segment assets 17.8 14.1 11.3 43.2 1.8 45.0
Unallocated assets 2.3
Segment liabilities (8.8) (4.7) (1.6) (15.1) (1.8) (15.9)
Unallocated liabilities (14.5)
Net assets 9.0 9.4 9.7 28.1 - 16.9
b) Segmental analysis by geographical activity
An analysis of the Group's revenue is as follows:
Continuing Discontinued 2011 Continuing Discontinued 2010
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
United Kingdom 34.3 - 34.3 38.0 - 38.0
Rest of Europe 19.1 - 19.1 16.5 - 16.5
North America 5.8 - 5.8 7.8 - 7.8
Rest of World 3.8 - 3.8 3.2 - 3.2
-------------------------------- ---------------- ------------- ------- ---------------- ------------- -------
Revenue from external customers 63.0 - 63.0 65.5 - 65.5
-------------------------------- ---------------- ------------- ------- ---------------- ------------- -------
3. Exceptional items
Exceptional items are items of income and expenditure that, in
the judgement of management, should be disclosed separately on the
basis that they are material, either by their nature or their size,
to the understanding of the financial statements and where not to
do so would distort the comparability of financial performance
between years.
During the year, the Group disposed of two properties at Luton
(Toolspec) and Burnley (George Wilkinson) under sale and leaseback
arrangements which realised a loss on disposal of GBP0.2m (2010:
GBPnil).
The property valuation in 2011 resulted in a devaluation below
historical cost on two properties totalling GBP0.2m (2010:
GBPnil).
Included within the loss from discontinued activities in 2011,
there is an exceptional credit of GBP0.1m relating to the release
of part of the Group's onerous lease provision at Walsall following
a reassessment of the on-going rental costs by the directors (2010:
GBPnil).
There were total exceptional items in 2011 of GBP0.3m (2010:
GBPnil).
Continuing Discontinued 2011 Continuing Discontinued 2010
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Loss on disposal of properties 0.2 - 0.2 - - -
Onerous lease costs - (0.1) (0.1) - - -
Property devaluation 0.2 - 0.2 - - -
Total exceptional items before taxation 0.4 (0.1) 0.3 - - -
Total cash exceptional items - - - - - -
The tax effect of exceptional items in the year is a tax credit
of GBPnil (2010: GBPnil).
4. Finance income and expense
2011 2010
GBP'm GBP'm
Net finance cost of defined benefit
pension scheme (0.3) (0.3)
Interest on bank loans and overdrafts (0.7) (0.9)
Amortisation of debt issue costs (1.4) (0.7)
Net finance expenses (2.4) (1.9)
The Group incurred a total of GBP2.4m in banking, professional
and legal fees to reach completion on the refinancing in 2009.
GBP1.4m has been amortised in the year following the refinancing on
23 February 2012 and the remaining GBP0.1m has been disclosed as a
reduction to borrowings.
5. Income tax Credit
2011 2010
GBP'm GBP'm
Current tax:
UK corporation tax - -
Adjustments in respect of prior years - -
- -
Overseas taxation 0.2 0.2
Current tax charge 0.2 0.2
Deferred tax:
Current year (0.6) (0.6)
Adjustments in respect of prior years - -
Income tax credit (0.4) (0.4)
Factors affecting the tax credit for the
year
Loss before tax (0.3) (0.1)
Tax on ordinary activities at 26.5% (2010:
28.0%) (0.1) -
Effects of:
Expenses not deductible for tax purposes 0.2 0.2
Accelerated capital allowances (0.6) -
Losses recognised - (0.7)
Overseas taxation 0.1 0.1
Tax credit (0.4) (0.4)
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
A number of changes were announced in the UK Government's
Emergency Budget on 22 June 2010. This included a reduction in the
main corporation tax rate from the current 28% to 24% comprising a
1% per annum reduction over the course of a four year period
commencing from 1 April 2011. In addition, the rates of capital
allowances on assets in the main and special pools are expected to
fall from 20% to 18% and from 10% to 8% respectively from 1 April
2012.
6. Earnings per share
The basic and diluted earnings per share are calculated using
the profit attributable to equity holders of the parent. The
adjusted earnings per share uses this figure adjusted by the
post-tax exceptional and other charges.
2011 2011 2010 2010
Continuing Total Continuing Total
GBP'm GBP'm GBP'm GBP'm
Profit for the year - 0.1 0.6 0.3
Add back exceptional items 0.4 0.3 - -
Add back share option charge - - 0.2 0.2
Add back debt cost amortisation 1.4 1.4 0.7 0.7
Adjusted earnings after tax 1.8 1.8 1.5 1.2
Basic earnings per ordinary share
(pence per share) - 0.11 0.47 0.29
Diluted earnings per ordinary
share (pence per share) - 0.11 0.42 0.24
Adjusted basic earnings per ordinary
share (pence per share) 1.50 1.48 1.27 1.09
The weighted average number of shares used in the calculation of
the basic earnings per share and the adjusted earnings per share is
119,897,298 (2010: 119,897,298).
7. Dividends
2011 2010
GBP'm GBP'm
Final dividend for 2011 of nil pence (2010:
final nil pence) - -
Interim dividend for 2011 of nil pence
(2010: interim nil pence) - -
Total equity dividends paid - -
Proposed dividends
The Directors recommend that no final dividend be paid and a
resolution to this effect will be proposed at the Annual General
Meeting to be held on 22 May 2012. Therefore the total dividend for
the year amounts to GBPnil (2010: GBPnil).
8. Assets held for sale
The value of assets held for sale at 31 December 2011 is GBPnil
(2010: GBP2.5m). In 2010 these related to properties that were
being actively marketed and were sold before the approval of the
accounts. The company had GBPnil of assets held for sale at 31
December 2011 (2010: GBP0.4m).
9. Pensions
Defined benefit plans
The major assumptions used by the actuary are below:
2011 2010
%p.a. %p.a.
Inflation 3.0 3.3
Rate of increase in salaries n/a n/a
Pension increases, subject to RPI 3.0 3.3
Revaluation, subject to CPI 2.0
Discount rate 4.8 5.4
Return on plan assets
Equities 7.9 7.7
Property 7.9 7.7
Bonds 3.4 4.6
Other 2.8 4.2
Group pension contract 4.4 5.1
The amounts included in the balance sheet arising from the
Group's and company's obligations in respect of defined benefit
schemes are as follows:
2011 2010
GBP'm GBP'm
Total market value of assets 8.2 8.6
Present value of scheme liabilities (11.6) (13.3)
Gross pension liability (3.4) (4.7)
Deferred tax asset 0.9 1.3
Net pension liability (2.5) (3.4)
10. Post Balance Sheet Events
On 23 February 2012, the Group agreed new banking facilities up
to GBP14.0m for 4 years with The Royal Bank of Scotland. The new
facilities will result in an average interest rate of bank base
rate plus 2.5%. The facilities, being mainly provided by the Bank's
asset based lending team, are secured against the properties (up to
GBP2.9m), plant and machinery (up to GBP0.9m), the debtor ledger
(up to GBP8.5m) and inventory (up to GBP3m) with a maximum facility
of GBP14.0m. The financial covenant is consolidated EBITDA to bank
interest cover, and other operational covenants include debtor day
targets and inventory turnover targets.
11 Annual report Copies of the Annual Report will be posted to Shareholders by Friday 27 April 2012 and will be available from the same date to the public on the Company's website (www.metalraxgroup.co.uk) or from Metalrax Group PLC, Rectory Court, Old Rectory Lane, Alvechurch, Birmingham, B48 7SX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFITVDIRLIF
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