RNS Number:8131V
Chemetall PLC
25 February 2004
Chemetall PLC
Preliminary Results for the fifteen months ended 31 December 2003
Chairman's statement
The past fifteen months have proved to be challenging for the group due to the
continued weak trading environment within the UK manufacturing sector. However,
this has not deflected us from our strategic plan and we have been able to
offset some of the fall in demand and customer closures in our Automotive and
General Industry business by significant gains in the Aerospace and Performance
Products divisions. Furthermore, our Middle East business has shown continued
growth.
Results and dividends
Despite the continuing difficult trading conditions, the Group generated a
profit on ordinary activities before taxation of #3.2 million (twelve months
ended 30 September 2002: #2.5 million) with a turnover for the fifteen months of
#16.8 million (twelve months ended 30 September 2002: #13.8 million).
The Group continues tohold substantial loan assets of #80.9 million (30
September 2002: #74.7 million) with other Chemetall GmbH group companies which
generate interest income and exchange profits or losses, further details of
which are provided in the Operating and financial review.
Preference dividends continue to be paid on the normal due dates.
Change of ultimate parent undertaking
In October 2003 we announced that our ultimate holding company, mg technologies
ag ('mg') intends to sell its chemical business, Dynamit Nobel ('DN'), of which
Chemetall PLC is a part. 'mg' has taken the decision to concentrate on its
engineering businesses. The change is seen as positive as both 'DN' and
Chemetall groups are strong performers in their own right. The outcome of the
bidding process is likely to take several months and in the meantime Chemetall
PLC continues with "business as usual".
Litigation costs - Weir
In October 1998, before Chemetall GmbH acquired Brent International PLC (now
Chemetall PLC), the former Brent International disposed of its Imaging
Management business to Weir Technology Ltd ('Weir'). Subsequently, the Group
received claims from Weir for damages for alleged misrepresentation and claims
under a tax indemnity in the sale agreement. The Group defended elements of
these claims and #0.9 million was paid during the period to meet the claim and
discharge the liability.
Outlook
The outlook for the business in 2004 and beyond is positive. The project list is
strong which, together with an expected easing of market conditions as the year
progresses, strengthens our optimism for the future. We are in the process of
restructuring our sales divisions in order to help us to target our markets and
improve our responsiveness to changes in them. We will continue to tightly
control and monitor our personnel and other operating overheads.
People
The Group remains committed to the full development and training of its
employees. Flexibility and multi-skilling are seenas an important element in
order to develop and grow the business.
Alec Daly CBE
Chairman
Operating and financial review
Divisional analysis
The Aerospace Division's activities continue to thrive. Aerospace and defence
sales inthe fifteen months to 31 December 2003 were 25% above the comparable
previous fifteen-month period. Demand continues to grow for our range of
aluminium cleaning and deoxidising materials and we continue to act as a
preferred supplier of speciality chemicals for Rolls Royce Aerospace Engines.
Automotive Division sales suffered during 2003 mainly as a consequence of the
closures in 2002 of the Ford plant at Dagenham and the Vauxhall plant at Luton.
We have recruited a new business development manager to enable us to redirect
our approach to this important market sector. We have set a modest growth target
for 2004 and early indications are positive.
Our Advanced Technologies Division took the brunt of the downturn in demand and
customer closures. However, we were able to offset some of this effect through
some key new business gains particularly in the automotive components, heavy
equipment, plastic fascia and general industrial market areas.
The Performance Products Division (PPD), which targets service-orientated
industries, has performed well in the latter half of 2003. Over 150 smaller
customers were added to our portfolio in 2003 and significant success was
achieved in the bottled water cleaning, industrial coolant and road transport
cleaning sectors.
Chemetall PLC has recently been accredited with the ISO9000:2000 quality
standard. This is a difficult accreditation to win and one that should provide
us with a competitive edge. Furthermore, we are anticipating approval by March
2004 for the new automotive industry standard ISO TS16949/9000:2000.
Profit performance and analysis
Turnover for the fifteen month period to 31 December 2003 was #16.8 million
(twelve months ended 30 September 2002: #13.8 million) with profit on ordinary
activities before taxation being #3.2 million (twelve months ended 30 September
2002: #2.5 million). The increased profit before taxation over the previous
twelve-month period is attributable mainly to the effect of favourable exchange
movements on the substantial loans held by members of the Group with Chemetall
GmbH or its subsidiaries.
At 31 December 2003 the Group held loans, including interest accrued thereon,
totalling #80.9 million (30 September 2002: #74.7 million). Interest earned on
these loans in the fifteen-month period totalled #3.3 million (Twelve months
ended 30 September 2002: #2.7 million). Favourable exchange movements in the
euro, partially offset by a weaker dollar, resulted in a #1.2 million gain for
the period (compared to an exchange loss of #0.8 million in the twelve months to
30 September 2002).
The Group paid #0.9 million to discharge a claim from Weir Technology Limited
('Weir') following arbitration concerning the disposal bythe Group to Weir of
its Imaging Management business in October 1998. This cost is disclosed as an
exceptional operating item due to its size.
During the period, the Group disposed of it's one remaining freehold-interest,
that of land at Stanton for #46,000.
Cash flow and financing
The net cash inflow from operating activities before exceptional operating items
was #0.9 million (twelve months ended 30 September 2002: #0.3 million).
Exceptional operating items of #850,000 related to the Weir Litigation costs
mentioned above. Cash inflow of #2.0 million was received from Chemetall GmbH
for payment of part of the interest accrued on the loans.
The funds received on payment of loan interest have been used to eliminate bank
overdrafts; any surpluses are remitted to our holding company Chemetall GmbH. At
the period end, the Group had net cash balances of #0.2 million.
Taxation
The Group showed a net tax charge of #0.6 million (Twelve months ended 30
September2002: #1.1 million) benefiting from the adjustments and deductions
relating to prior years and increase in deferred tax asset mainly arising from
losses brought forward from prior periods.
Treasury Policies
The Group's treasury policies, which are approved by the board, seek to
eliminate risk from currency movements affecting sales and purchases denominated
in foreign currencies. We use instruments such as forward currency sale or
purchase contracts where practical and cost effective.
Where appropriate,the Group's financial systems are able to transact business
denominated in foreign currencies.
Consolidated profit and loss account
for the 15 month period ended 31 December 2003
15 months ended Year ended
Note 31 December 30 September
2003 2002
#000 #000
Group turnover 2 16,820 13,794
Cost of sales (8,492) (6,516)
----------- -----------
Gross profit 8,328 7,278
Selling and distribution (6,325) (5,232)
costs
Administrative expenses (3,530) (1,811)
Other operating income 125 82
----------- -----------
Operating (loss)/profit
before exceptional operating
items included in
administration expenses (552) 317
Exceptional operating item - (850) -
litigation costs ----------- -----------
Operating (loss)/profit (1,402) 317
Profit on sale of properties 6 357
held for resale
---------- -----------
(Loss)/profit on ordinary (1,396) 674
activities before interest
Net interest receivable and 4 4,568 1,871
similar income
---------- -----------
Profit on ordinary 3 3,172 2,545
activities before taxation
Taxation on profit on (628) (1,053)
ordinary activities
---------------- ----------------
Profit for the financial 2,544 1,492
period
Dividends on equity and non 5 (1,350) (1,699)
equity shares
---------------- ----------------
Retained profit/(loss) for 1,194 (207)
the period
================ ================
The results for the current and preceding financial period are derived from
continuing operations.
Consolidated balance sheet
at 31 December 2003
Note 31 December 31 December 30 September 30 September
2003 2003 2002 2002
#000 #000 #000 #000
Fixed assets
Intangible 2,906 3,267
Tangible 1,443 1,630
--------------- --------------
4,349 4,897
Current assets
Investments - 40
Stocks 1,082 1,177
Debtors 85,500 80,241
Cash at bank 203 3
and in hand
-------------- ---------------
86,785 81,461
Creditors: (3,838) (4,788)
amounts falling due
within one year
-------------- ---------------
Net current assets 82,947 76,673
--------------- --------------
Total assets less 87,296 81,750
current liabilties
Provisions for (667) (758)
liabilities and charges
--------------- --------------
Net assets 86,629 80,812
=============== ==============
Capital and reserves
Called up share capital 18,889 18,889
Share premium account 29,757 29,757
Profit and loss account 37,983 32,166
--------------- --------------
Shareholders' 6 86,629 80,812
funds =============== ==============
Equity 74,629 68,812
Non-equity 12,000 12,000
--------------- --------------
86,629 80,812
=============== ==============
Consolidated cash flow statement
for the 15 month period ended 31 December 2003
Note 15 months ended 31 December Year ended 30 September
2003 2002
#000 #000 #000 #000
Net cash 7 (22) 257
(outflow)/
inflow from
operating
activities
Returns on
investments
and servicing
of finance
Interest received 2,056 -
Interest paid (73) (28)
Dividends paid on (1,080) (1,080)
non-equity shares
------------- -------------
Net cash
inflow/(outflow)
from returns on
investments and
servicing of finance 903 (1,108)
Taxation (434) (993)
Capital expenditure
and financial investment
Purchase of tangible (118) (99)
fixed assets
Purchase of intangible (6) (30)
fixed assets
Sale of properties 46 1,636
for resale
------------- -------------
Net cash (outflow)/ (78) 1,507
inflow from
capital
expenditure
------------- -------------
Increase/ 9 369 (337)
(decrease) in
cash in the
period
============= =============
Consolidated statement of total recognised gains and losses
for the 15 months ended 31 December 2003
15 months ended Year ended
31 December 30 September
2003 2002
#000 #000
Profit for the financial period 2,544 1,492
Exchange difference on the 4,623 461
retranslation of net investments and
related borrowings
---------------- ----------------
Total recognised gains and losses 7,167 1,953
relating to the period
Prior period adjustment - 963
---------------- ----------------
Total gains andlosses recognised 7,167 2,916
since last annual report
================ ================
Notes to the prliminary announcement
1. Accounting policies
Basis of preparation
The unaudited preliminary results for the fifteen months ended 31 December
2003 have been prepared in accordance with UK generally accepted accounting
principles. The accounting policies applied are those set out inthe Group's
Annual Report and Accounts for the year ended 30 September 2002.
The Group has followed the transitional arrangements of FRS17 "Retirement
Benefits".
Basis of consolidation
The consolidated financial statements include the financial statements of
the Company and its subsidiary and associated undertakings made up to 31
December 2003. The acquisition method of accounting has been adopted. Under
this method the results of subsidiary undertakings acquired or sold during
the period are included in the consolidated profit and loss account from or
to their respective dates of acquisition or disposal. Where appropriate, the
financial statements of overseas subsidiary and associated undertakings are
adjusted to conform to the Group's accounting policies.
2. Turnover
All activities are derived from the development, manufacture and marketing
of specialised industrial chemicals.
3. Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after
charging #850,000 to discharge a claim from Weir Technology Limited
('Weir') following arbitration concerning the disposal by the Group
to Weir of its Imaging Management business in October 1998.
4. Net interest receivable and similar income
15 months ended Year ended
31 December 30 September
2003 2002
#000 #000
Interest receivable and similar income
Wholly receivable within fiveyears:
Loans to group undertakings 3,335 2,739
On cash balances 74 2
Exchange gain/(loss) on loans to 1,232 (842)
group undertakings
---------------- ----------------
4,641 1,899
Interest payable and similar charges
Wholly repayable within five years:
Bank overdrafts (73) (28)
---------------- ----------------
Net interest receivable 4,568 1,871
================ ================
5. Dividends and other appropriations
15 months ended Year ended
31 December 30 September
2003 2002
#000 #000
10p ordinary shares
Interim dividend - 619
9% redeemable preference shares
Dividend payable 1,350 1,080
---------------- ----------------
1,350 1,699
================ ================
6. Reconciliation of movements in shareholders funds
31 December 30 September
2003 2002
#000 #000
At beginning of the period 80,812 80,558
Profit/(loss) for the period 1,194 (207)
Other recognised gains and losses 4,623 461
in the period (net)
---------------- ----------------
At end of the period 86,629 80,812
================ ================
7. Reconciliation of operating profit to operating cash flows
15 months ended Year ended
31 December 30 September
2003 2002
#000 #000
Operating (loss)/profit before (552) 317
exceptional operating items
Exceptional operating item - (850) -
litigation costs paid
---------------- ----------------
Operating (loss)/profit (1,402) 317
Depreciation, amortisation and 672 479
impairment charges
Exchange (loss)/gain on loans to - (843)
subsidiary undertakings
Decrease/(increase) in stocks 95 (74)
Decrease in debtors 1,243 773
Decrease in creditors and other (630) (395)
provisions
---------------- ----------------
Net cash (outflow)/inflow from (22) 257
operating activities
================ ================
8. Analysis of net funds
At the beginning Exchange At the end
of the period Cash flow movement Other of the period
#000 #000 #000 #000 #000
Cash at bank 3 200 - - 203
Bank loans and overdrafts (169) 169 - - -
------
369
Loans to group 74,725 (1,982) 4,083 4,040 80,866
undertakings
----------- -------- ------- ------ ---------
Net funds 74,559 (1,613) 4,083 4,040 81,069
=========== ======== ======= ======= =========
9. Reconciliation of net cash flow to movement in net funds
15 months ended Year ended
31 December 30 September
2003 2002
#000 #000
Increase/(decrease) in cash in 369 (337)
the period
Cash flow from movement in funds (1,982) -
in the period
---------------- ----------------
Change in net funds resulting (1,613) (337)
from cash flows
Non-cash movements on loans (see 4,040 9,810
below)
Translation differences 4,083 (415)
---------------- ----------------
Movement in net funds in the period 6,510 9,058
Net funds at beginning of the period 74,559 65,501
---------------- ----------------
Net funds at the end of the period 81,069 74,559
================ ================
Non-cash movements on loans consist of accrued and current interest being
rolled up into the principal amounts on existing loan to group undertakings.
10. Declaration
The results for the fifteen months ended 31 December 2003 are unaudited.
The results for the year ended 30 September 2002 are an extract from the
full accounts for that period and have been delivered to the Registrar
of Companies; the report of the auditors on those accounts was
unqualified. The accounts for the fifteen months ended 31 December 2003
will be posted to all shareholders shortly. The report of the auditors
on those accounts is expected to be unqualified. The financial
information in this statement does not constitute full statutory
accounts within the meaning of section 240 of the Companies Act 1985.
Ends
For further information, please contact:
Rob Rydings, Chemetall PLC Tel: 01908 361817
This information is provided by RNS
The company newsservice from the London Stock Exchange
END
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