RNS No 7364m
HADLEIGH PLC
1st July 1997
Preliminary Audited Results for the period ended 28 March 1997
Highlights
* Continuing operations
1997 1996
#'000 #'000
Turnover 30,255 26,440 +14%
Operating Profit 2,419 1,863 +30%
Profit before Tax 2,346 1,769 +33%
Earnings per Share 21.8p 16.8p +30%
Dividend per Share 7.0p 5.75p +22%
* All operations
1997 1996
#'000 #'000
Turnover 31,315 28,020 +12%
Profit before Tax 2,127 1,805 +18%
Earnings per Share 18.9p 17.4p +9%
* Final dividend increased to 4.75p (1996: 4.0p) - total
for the year 7.0p (1996: 5.75p)
* Exports 67% of sales, up 20% on 1996
* Operating margin up to 8% (1996: 7%)
* Strong Balance Sheet - net cash #1.3m (1996: #1.6m)
* Capital expenditure #1.8m (1996: #1.0m)
Commenting on the results, Don McFarlane, Hadleigh's Chairman,
said:
"The year under review was another one of very satisfactory
progress for Hadleigh, with both Universal Bulk Handling and
Cookson and Zinn increasing their sales, margins and profits.
The capital investment programme announced last year is well
underway with #1.7 million of equipment already installed and
commissioned.
The markets in which we operate continue to expand but are
competitive. Also the effect of Sterling's increasing value
on our exports cannot be ignored. However, the capital
projects which we are currently implementing are an indication
of our determination to reduce production costs and enhance
margins. We expect to continue the progress of recent years
and if the current business environment remains stable, we can
look forward to a satisfactory outcome in the current year."
For further information please contact:
Hadleigh plc On 1 July 1997 0171 253 2252
Tony Cookson,
Group Chief Executive Thereafter 01473 282500
Rory Shearer,
Group Finance Director
Ludgate Communications 0171 253 2252
Tim Davis
Sarah Harper
Chairman's Statement
The year ended 28 March 1997 was a year of further progress
for your group with a very satisfactory performance from the
continuing operations and the sale of A1 International's
business assets which completes the disposals of our non-core
activities.
RESULTS
Turnover from the continuing operations increased by 14% to
#30.3m (1996: #26.4m). This was led by a significant
improvement in exports, which now represent 67% of group
sales, a very creditable achievement in highly competitive
markets. Operating profit from these operations increased by
30% to #2.42m (1996: #1.86m) which, with a further reduction
in interest costs, increased the profit before tax to #2.35m
(1996: #1.80m). This represents a return on sales of 7.8%
compared with 6.8% last year. Earnings per share from the
continuing operations were 21.8p (1996: 16.8p) an improvement
of 30%.
The disposal of A1 International resulted in a charge to the
profit and loss account of #190,000 including #108,000 of
goodwill, previously written off. Together with the
continuing operations, this resulted in profit on ordinary
activities before taxation of #2.13m (1996: #1.8m) an
improvement of 18%. The taxation charge of #725,000 (1996:
#546,000) leaves a profit on ordinary activities after
taxation of #1.40m (1996: #1.26m) and earnings per share of
18.9p (1996: 17.4p). The board is recommending a final
dividend of 4.75p per share, which together with the interim
dividend of 2.25p makes a total of 7p for the year (1996:
5.75p) an increase of 22%. The dividend, which is covered
three times by adjusted earnings per share, will be payable on
1 October 1997 to shareholders on the register at 4 September
1997.
The capital investment programme announced last year is well
underway with #1.7m of equipment already installed and
commissioned. Despite this expenditure I am pleased to report
the considerable strengthening of the balance sheet over the
past two years, with net cash currently of #1.27m (1996:
#1.62m).
BUSINESS REVIEW
Universal Bulk Handling increased both sales and
profitability, overcoming more challenging market conditions
and adverse exchange rates. The programme to improve the
manufacturing facilities involving the installation of
sophisticated manipulating and welding equipment continues
with a further #1.3m committed in the current year. This
ongoing investment is essential to maintain our competitive
position and improve margins as well as to provide additional
capacity for this expanding company.
Cookson and Zinn continues to improve its performance with
another year of growth in both sales and profitability.
Additional business is being generated from the Continent,
especially the Central European countries. The #1.5m
investment announced in my interim statement is progressing
well with the new factory and semi automatic tank line on
schedule to meet our projected start up date in September.
This investment in new plant and equipment should ensure that
the recent growth in sales and profitability is sustained.
On 28 February we completed the disposal of A1 International,
a small trailer and truck repair business which made little
contribution to profits. As a result the Group is now focused
on its core activities as a specialist engineer designing and
manufacturing highly specialised vessels for the movement and
storage of liquids and gases.
PERSONNEL
Stephen Yapp who had been our Finance Director for the last
four years left us at the end of June. We are very sorry to
lose his services and wish him well in his new appointment. I
would like to welcome Rory Shearer who was appointed Finance
Director on 2 June. Prior to joining Hadleigh, Rory had been
Group Finance Director of Adwest Group Plc for four years.
All of our employees have contributed to the significantly
improved situation of the Group and on behalf of the board I
would like to express our appreciation for the co-operation
and hard work of all concerned.
OUTLOOK
The markets in which we operate continue to expand but are
competitive. Also the effect of Sterling's increasing value
on our exports cannot be ignored. However, the capital
projects which we are currently implementing are an indication
of our determination to reduce production costs and enhance
margins. We expect to continue the progress of recent years
and if the current business environment remains stable, we can
look forward to a satisfactory outcome in the current year."
D D McFARLANE
Chairman
Chief Executive's Review
Last year I stated that our fundamental objective was to
continually improve margin and profit growth. I believe that
a 1.0% improvement in the operating margin from continuing
operations to 8% and a 30% increase in operating profit
demonstrates Hadleigh's ability to fulfil that objective.
Turnover also increased by 14% with virtually all the growth
coming from new exports, advancing overseas sales to record
levels. With a committed policy of achieving ongoing
significant reductions in the unit cost of production we are
confident, despite a more challenging year in prospect, that
in the medium term our operating margins will continue to
grow.
UNIVERSAL BULK HANDLING
Designs and manufactures ISO tank containers for the
intermodal transportation of hazardous and non-hazardous
liquids and gases.
Output increased in line with expectations, exceeding the
projected industry growth of 10% per annum in the global
market for tank containers. Industry forecasts indicate that
in the medium term this trend will be ongoing as environmental
and commercial pressures ensure that international transport
operators adopt evermore safe and efficient methods for moving
hazardous liquids around the world.
Last year I advised of the importance we place on developing
the specialist operator market for our full frame and swap
body units. It is encouraging to be able to report the
considerable progress that Universal Bulk Handling has made in
this direction by more than doubling sales of this product.
The commitment made in focusing on the European operator
market is now beginning to pay dividends as the customer base
continues to expand. We confidently expect our sales, into
this sector of the market, to increase further during the
current year.
The developing economics within the Asia Pacific region
presents Universal Bulk Handling with a significant growth
opportunity as the international chemical producers construct
new production facilities in the area. Having already
established a successful agency agreement in Singapore we
appointed an agent in Japan during the year, from which a
modest, but steady stream of orders is already beginning to
flow. The potential for increasing our share of the Japanese
market is excellent as recent changes in local regulations for
vehicle weights benefit the Universal Beam Tank. Australia is
also emerging as an important market for the use of tank
containers and we expect to enhance our position as a leading
supplier during the coming year. In the medium to longer term
we believe that it will be essential to have local
manufacturing facilities within South East Asia and we are
carefully researching the options available to us.
Our plans to establish a depot in the USA have not come to
fruition. The internal US market is not growing as the
industry generally expected, due largely to fragmented US rail
and road transport networks. Progress is being made to
resolve this problem as a number of the large rail companies
are merging to create a more efficient service, but it will
still be some time before the movement of liquids inside the
US becomes truly intermodal. However, international tank
shipments to and from the major US seaports continue to
increase in line with global growth. We will therefore
monitor developments closely and progress our plans as and
when it is appropriate to do so.
Our policy for targeting sales growth from international
operators requires that we have a programme of continual new
product development. As new chemicals are produced to service
the growing world-wide electronics industry, there is a need
for more specialised equipment which will allow temperature
control, within very strict tolerance limits, to transport
them. The thermal performance of our products is being
improved alongside the development of new and more
sophisticated heating and cooling systems. We are also
continually researching ways of increasing the capacity of the
standard ISO container while at the same time ensuring we
continue to achieve minimum product tare weights.
Sales growth, product development and the maintenance of a
profitable competitive edge requires capital investment. The
#4m investment programme announced last year is now well
underway, with half already committed and a further #1.3m
being commissioned in the next twelve months. By far the
largest proportion of the balance will be on robotic welding
projects with the first units becoming operational during the
second half of the year. Another major step forward is the
installation of an integrated computer management system which
will ensure a more effective control on our inventory,
production costs and use of working capital. It also provides
the capability of electronic data transfer such that customers
are able to have direct access to our engineering facilities
thereby improving our overall customer service.
Universal Bulk Handling is a world class manufacturer
supplying a developing global market. Its continual drive for
a wider customer base, product improvement and reduced unit
manufacturing cost will go a long way towards ensuring that it
remains a highly competitive world leader in this market.
COOKSON AND ZINN
Designs and manufactures double skinned petrol tanks, general
storage tanks and pressure vessels in carbon and stainless
steels.
The improvement in performance which became evident last year
continued with a significant growth in both sales and profits
during this year. By far the largest contributor to this
growth was tripling the exports of petrol tanks into Europe
arising from our agreements with Esso, BP and Jet.
Quite clearly the company's determination over the past five
years to steer the European standard for petrol tanks towards
a UK designed product has proved successful. EN12285 is now
the accepted standard throughout the EU and is being used by a
number of the major petrol retailers for their new service
stations. The most significant boost to exports during the
current year will come from a new five year agreement to
supply petrol tanks to Shell International and their
affiliates in sixteen European countries. The majority of
these are in Central Europe where we understand a significant
proportion of Shell's new investment is being focused.
As far as the UK market is concerned it remains mature. The
oil companies continue their policy of rationalising the
number of retail outlets while at the same time maintaining a
price war with the supermarkets. This clearly does not
provide an environment in which they will commence a major
redevelopment programme of their petrol stations. As in the
recent past, capital is only being invested on essential
projects and in new high volume sites. It may be that the new
Government will follow the lead set by other EU Countries and
demand that all single skin tanks and pipework are replaced by
double wall containment. Should this turn out to be the case
then Cookson and Zinn would see an upturn in its home market.
In light of the projected increase in demand we had no
hesitation in reviewing the capital expenditure plans notified
last year and came to the conclusion that the only way forward
was to invest in a semi automatic petrol tank production line
capable of producing 2,100 units per year which is three times
our current output. The investment will cost #1.5m and
involves the demolition of half our existing facilities, the
construction of a new 3,000m2 factory and the installation of
highly specialised welding and handling equipment. The
project is on schedule to be commissioned by the end of
September. Whilst the medium to longer term benefits of this
project will more than justify the investment, there will
inevitably be some disruption to our business during the first
half of the current year. However, we are confident that the
increased output in the second half of the year will
compensate for this.
A further benefit of this new investment will be a dedicated
facility for the production of general storage tanks and
vessels. This will provide the capacity for further cost
reduction and improved efficiency, essential factors if we are
to maintain the growth in output and profitability seen over
the last two years in this particular sector of our business.
Last year I identified two specific projects under
development. The first, a modular petrol station, is now
well advanced and we expect to be building prototypes for
installation prior to Christmas. If the trials prove
successful the future looks very encouraging for this project.
Our second project, a GRP/Steel composite petrol tank, the
immediate priority has reduced because the two large petrol
retailers who were interested have, for the time being,
decided to use double skin steel tanks.
Cookson and Zinn is now the dominant UK manufacturer of petrol
tanks and is well on the way in establishing itself as a major
European player. We expect the Company to make an increasing
contribution to the Group's future performance.
TONY COOKSON
Group Chief Executive
Consolidated Profit and Loss Account
For the period ended 28 March 1997
1997 1996
#'000 #'000
Turnover
Continuing operations 30,255 26,440
Discontinued operations 1,060 1,580
--------------------
Total turnover 31,315 28,020
Cost of sales (26,316) (23,760)
--------------------
Gross profit 4,999 4,260
--------------------
Operating profit
Continuing operations 2,419 1,863
Discontinued operations (26) 36
--------------------
Total operating profit 2,393 1,899
Loss on sale of business
(including goodwill write off) (190) -
--------------------
Profit on ordinary activities
before interest 2,203 1,899
Net interest payable (76) (94)
---------------------
Profit on ordinary activities
before taxation 2,127 1,805
Tax on profit on ordinary activities (725) (546)
---------------------
Profit on ordinary activities
after taxation 1,402 1,259
Dividends
Interim paid: 2.25p (1996: 1.75p) (168) (127)
Final proposed: 4.75p (1996: 4.00p) (355) (298)
---------------------
Retained profit for the period 879 834
---------------------
Earnings per ordinary share 18.9 17.4
---------------------
Adjusted earnings per ordinary share 21.8 16.8
---------------------
1. Earnings per share has been calculated using the profit on
ordinary activities after taxation of #1,402,000 (1996:
#1,259,000) and by reference to the weighted average number
of shares in issue for the period of 7,426,714 (1996:
7,251,576). The number of shares in issue at 28 March 1997
was 7,465,601 (1996: 7,348,274) ordinary shares.
Adjusted earnings per share has been calculated using the
profit before taxation of #2,127,000 adjusted for the loss
on discontinued activities of #26,000, loss on disposal of
#190,000 and interest payable relating to discontinued
activities of #3,000. This results in a profit before
taxation of #2,346,000, which after applying a tax charge
of #730,000 relating to continuing activities gives a profit
after taxation on continuing activities of #1,616,000.
2. The comparative figures for the period ended 29 March
1996 have been taken from, but do not constitute the group's
statutory accounts for that period. Those statutory accounts
have been reported on by the group's auditor and delivered
to the Registrar of Companies. The report of the auditor was
unqualified and did not contain a statement under Section
237 (2) or (3) of the Companies Act 1985.
3. Copies of the Annual Report and Accounts are being
posted to shareholders. Further copies can be obtained from
the company's registered office: Cromwell Court, 5
Greyfriars Road, Ipswich, Suffolk IP1 1XG.
Consolidated Balance Sheet
at 28 March 1997
1997 1996
#'000 #'000
Fixed assets
Intangible assets 48 71
Tangible assets 8,100 7,131
---------------------
8,148 7,202
Stock 1,772 1,646
Debtors 4,758 4,072
Cash net of medium term loan 1,268 1,616
Creditors: amounts falling
due within one year (7,958) (7,367)
Provisions for liabilities and charges (40) (40)
---------------------
Net assets 7,948 7,129
---------------------
Capital and reserves
Called up share capital 3,733 3,674
Share premium account 1,205 1,156
Revaluation reserve 702 987
Profit and loss account 2,308 1,312
---------------------
Equity shareholders' funds 7,948 7,129
---------------------
The comparative figures for the period ended 29 March 1996
have been taken from, but do not constitute the group's
statutory accounts for that period. Those statutory accounts
have been reported on by the group's auditor and delivered to
the Registrar of Companies. The report of the auditor was
unqualified and did not contain a statement under Section 237
(2) or (3) of the Companies Act 1985.
Consolidated Cash Flow Statement
for the period ended 28 March 1997
1997 1996
#'000 #'000
Operating activities
Net cash inflow from
continuing activities 2,369 2,081
Net cash inflow from discontinued
operating activities (68) 448
---------------------
Cash inflow from operating activities 2,301 2,529
---------------------
Returns on investments and servicing of finance
- interest paid (76) (94)
Taxation
- UK corporation tax paid (604) (263)
Capital expenditure
Payments to acquire intangible fixed assets - (40)
Payments to acquire tangible fixed assets (1,752) (950)
Proceeds from sale of tangible fixed assets - 179
---------------------
(1,752) (811)
---------------------
Acquisitions and disposals 141 -
Equity dividends paid (466) (272)
Cash (outflow)/inflow before use of liquid ---------------------
resouces and financing (456) 1,089
---------------------
Financing
Issue of ordinary share capital 108 60
Repayment of loans (197) (237)
---------------------
(89) (177)
---------------------
(Decrease)/increase in cash in the period (545) 912
---------------------
The comparative figures for the period ended 29 March 1996
have been taken from, but do not constitute the group's
statutory accounts for that period. Those statutory accounts
have been reported on by the group's auditor and delivered to
the Registrar of Companies. The report of the auditor was
unqualified and did not contain a statement under Section 237
(2) or (3) of the Companies Act 1985.
Reconciliation of operating profit to operating cashflows
1997 1996
Continuing Discontinued Continuing Discontinued
#'000 #'000 #'000 #'000
Operating profit
before interest 2,419 (26) 1,863 36
Depreciation/write offs of
tangible fixed assets 364 33 321 42
Depreciation of intangible
fixed assets 23 - 12 -
Loss on sale of tangible
fixed assets - - 18 -
(Increase)/decrease
in stocks (125) (71) 41 57
(Increase)/decrease
in debtors (626) 69 (17) 1,143
Increase/(decrease)
in creditors 314 (73) (157) (830)
--------------------------------------------
Net cash inflow from
operating activities 2,369 (68) 2,081 448
--------------------------------------------
Analysis of net funds
At Other non- At
30 March Cash flow cash changes 28 March
1996 1997
#'000 #'000 #'000 #'000
Current accounts 2,203 (149) - 2,054
Advance payments 972 (396) - 576
-----------------------------------------
Cash in hand and at bank 3,175 (545) - 2,630
Debt due after one year (1,345) - 231 (1,114)
Debt due within one year (214) 197 (231) (248)
-----------------------------------------
Net funds 1,616 (348) - 1,268
-----------------------------------------
Taxation 1997 1996
#'000 #'000
United Kingdom corporation tax at 33% (1996: 33%): 723 587
Under/(over) provision in respect of prior years: 2 (41)
-----------------
725 546
-----------------
The corporation tax charge for the current period has been
calculated on the basis that there is no relief for the goodwill
of #108,000 written off on the disposal of the trade and assets
of A1 International Limited.
The comparative figures for the period ended 29 March 1996 have
been taken from, but do not constitute the group's statutory
accounts for that period. Those statutory accounts have been
reported on by the group's auditor and delivered to the
Registrar of Companies. The report of the auditor was
unqualified and did not contain a statement under Section 237
(2) or (3) of the Companies Act 1985.
END