RNS Number:8417T
Fenner PLC
09 November 2005
9 November 2005
Fenner PLC
2005 Preliminary Results
Fenner PLC, the global engineer specialising in reinforced polymer technology,
today announces its preliminary results for the year ended 31 August 2005.
Fenner is the world leader in the global conveyor belting market. Its products
include lightweight and heavyweight conveyor belting for the mining and power
generation markets, precision motion control products for the computer, copier
and mechanical equipment markets, and sealing products for the mining,
hydraulics and oil and gas industries.
Group Highlights:
* The Group has benefited from an unprecedented worldwide demand for
energy, particularly in China
* Operating profit, before goodwill amortisation and exceptional items,
increased by 32% to #21.3m (2004: #16.1m) on turnover up by 20% to #313.0m
(2004: #260.6m)
* Pre-tax profit increased by 88% to #12.0m* (2004: #6.4m*)
* Heavyweight belting made strong progress, particularly in North America;
operations in China have been expanded
* Precision Polymers in UK and North America performed well, benefiting
from recovery in levels of industrial activity
* Wellington Holdings, acquired for #45.7m in May 2005, outperformed
expectations and has materially grown the Group's higher margin precision
polymers operations
* Capex and rationalisation programmes have created opportunities for
further productivity improvements across all operations
* The Group's strengthened balance sheet leaves it well placed to exploit
opportunities
* Outlook is positive
* after exceptional items of #3.5m (2004: #6.2m) and goodwill amortisation of
#1.9m (2004: # 1.1m)
Commenting on outlook, Colin Cooke, Chairman, said:
"Significant progress has been made during the last year with an increasingly
encouraging trend in performance.
"We have made a strong start to the new year with many of our markets showing
continuing, robust strength. A buoyant energy sector has been a significant
factor in our recent growth and the confidence of our customers in this area is
an encouraging sign.
"Asian demand has provided the opportunity for further new developments as the
region becomes a more significant part of the Group. Overall we look forward to
another year of healthy progress as we consolidate the benefits of our
acquisition strategy."
For Further Information:
Fenner PLC
Mark Abrahams, Chief Executive 9 November 2005: 020 7067 0700
Richard Perry, Finance Director Thereafter:01482 626501
Weber Shandwick Square Mile
Nick Oborne / Stephanie Badjonat 020 7067 0700
Chairman's Statement
Following a solid first half performance, Group profit before tax for the year
increased 88% to #12.0m. We have benefited from an unprecedented worldwide
demand for energy particularly in China. Our capital expenditure and
rationalisation programmes have created opportunities for productivity
improvements throughout our operations.
The acquisition of Wellington Holdings plc ("Wellington") in May has provided a
valuable addition to our niche precision polymer businesses. Our strengthened
balance sheet leaves us well placed to exploit these opportunities.
We are encouraged by our strong start to the year and by current positive
indications for the future.
Turnover and Profits
Group turnover increased 20% to #313.0m (2004 #260.6m) which includes #10.8m
from the former Wellington businesses acquired on 20 May 2005. Turnover growth
in our underlying businesses amounted to 16% reflecting the strong recovery in
the heavyweight belting market driven by global energy demands.
Group operating profit for the year before goodwill amortisation and exceptional
items amounted to #21.3m (2004 #16.1m) including #1.9m from the former
Wellington businesses. After goodwill amortisation and exceptional items, Group
operating profit amounted to #15.8m (2004 #8.7m).
Turnover for the second half year reached #171.7m (2004 #139.8m) generating an
operating profit before goodwill amortisation and exceptional items of #14.7m
(2004 #10.6m) reflecting a strong second half performance characteristic of the
markets in which the Group operates.
Following an improved first half performance, our heavyweight belting businesses
made further progress building on the significant volume recovery particularly
in North America. Despite intense raw material price pressures, profit margins
have continued to improve.
The Precision Polymers businesses in both the UK and North America have
performed well, benefiting from a recovery in levels of industrial activity.
The former Wellington businesses outperformed our expectations during the final
quarter of our financial year.
Exceptional items of #3.5m (2004 #6.2m) principally arose from impairment costs,
giving a Group profit before tax of #12.0m (2004 #6.4m). As a result of the much
improved operating performance, Group earnings per share before goodwill
amortisation and exceptional items increased to 9.34p per share (2004 7.67p) and
after goodwill amortisation and exceptional items to 5.28p (2004 2.19p).
Dividends
The Board recommends a final dividend maintained at 3.85p, which, together with
the interim dividend of 1.975p, represents a total for the year of 5.825p (2004
5.825p). The underlying dividend cover is 1.6 after adjusting for goodwill
amortisation, exceptional items and the element relating to shares that were
only in issue for three months of the year.
Cash Resources and Investment
We have raised a net #56.3m from shareholders during the year. #45.7m was
invested in the Wellington acquisition. The balance was applied to reducing our
existing debt levels whilst we examine the opportunities available for further
investment. Net borrowings at the year end amounted to #33.9m (2004 #39.4m).
People
The progress in improving our margin returns is a demonstration of the
commitment by all our employees, whom I thank for their efforts in this regard.
Our AGM in January 2006 will mark the retirement from the Board of Tom
Glucklich, who has been a non-executive director of the Company for over 10
years. I would like to take this opportunity to thank Tom for his support and
intellectual contribution during that period and to wish him every success for
the future.
I am pleased to announce the appointment on 1 November 2005 of David Campbell as
a non-executive director of the Company. David was formerly Chief Executive of
British Vita plc and following the retirement of Tom Glucklich in January 2006,
will chair the Company's Remuneration Committee.
Outlook
We have made a strong start to the new year with many of our markets showing
continuing, robust strength. A buoyant energy sector has been a significant
factor in our recent growth and the confidence of our customers in this area is
an encouraging sign.
Asian demand has provided the opportunity for further new developments as the
region becomes a more significant part of the Group. Overall we look forward to
another year of healthy progress as we consolidate the benefits of our
acquisition strategy.
Colin Cooke
Chairman
Chief Executive Officer's Review
2005 saw a transformation in the Group with the acquisition of Wellington
Holdings plc in May. As a result we have now increased the high-margin Precision
Polymer's turnover to a third of the Group's. We believe this also improves our
profit and cash generating ability and provides a further platform for growth.
Since the acquisition, the Wellington business, now renamed Fenner Advanced
Sealing Technologies, has performed above our initial expectations and has
already started to deliver the synergies envisaged.
During the year we saw many of our markets strengthen as the combination of
Chinese demand and surging energy prices benefited many of our operations, both
directly and indirectly. These developments have been particularly favourable to
our Asia Pacific businesses, encouraging us to expand further our operations in
China with three additional new major projects in progress, which are detailed
below.
Asia Pacific
Our Chinese conveyor belting operation continued to gain momentum with strong
sales growth. As China's burgeoning economy surged ahead on the strength of its
exports and insatiable demand for energy, coal producers endeavoured to match
the requirements.
The ensuing drive for coal productivity improvements has proved beneficial for
our heavy duty products, as existing and new customers realise the value of
utilising higher performance belting. This upward trend has supported our
capital investment to date with further plant expansion planned to service our
broadening customer base in this increasingly important territory for the Group.
The hose operation in Shanghai received additional investment during the year to
accommodate output levels which are increasing as new business is gained. Slow
but steady progress is being made towards tighter truck emissions legislation
that requires changes to be made to original equipment manufacturers' designs,
which in turn increases demand for our products. These positive developments
underpin our capital expenditure programme for the commissioning of a dedicated
world-class manufacturing hose facility capable of meeting market demand.
The acquisition of Wellington Holdings plc brought numerous new and exciting
opportunities to the Group. These included the identification of gaps in their
geographical coverage in locations where we have existing knowledge and
expertise. To exploit these distinctive competencies, plans are underway for
further penetration of seals' markets in China with the construction of a new
plant.
Production of computer peripherals has progressively migrated to South East Asia
in recent years, and the overwhelming majority of our mini-pitched timing belts
are shipped into the region. Accordingly, our presence has been strengthened in
South East Asia to support existing office equipment accounts and to identify
and develop new business opportunities.
Australia recorded a solid return from both the heavyweight conveyor belting and
service operations. Strong coal market conditions, enhanced by lower Chinese
coal exports in order to serve their domestic demand, facilitated a year-on-year
improvement in this sector. The performance was particularly encouraging in our
network of national service operations where the focus is on the provision of
solutions tailored to meet our customers' existing and future requirements. This
network was further strengthened during the year through the acquisition of L&K
Conveyor Services which has enhanced our presence in Western Australia and
provides a strong foundation for further penetration of this territory.
Our Indian conveyor belting operation enjoyed a successful first full year as a
wholly owned subsidiary, following the prior year's restructuring of the Group's
interest.
North America
Our conveyor belting operations experienced a continuation of the market and
productivity improvements from the latter part of the previous year although
rising oil prices caused upward pressure on input costs. Sales to the mining
sector were particularly strong as reinvestment programmes commenced,
underpinned by the buoyant global demand for energy which has held coal prices
at near record levels. Sales to industrial markets improved through a
combination of the recovery in the economic conditions and the increasing value
of our organisational support structure. A dedication to solving all conveying
challenges, with the use of the latest technology, has uniquely positioned the
business to develop key partnerships with our customers.
Precision polymer operations encountered more volatile demand patterns as US
markets faced rising oil prices and consequent raw material price inflation.
Despite these effects, the industrial products group successfully continued to
deploy their strategy of product line expansion and channel exploitation. The
development programme included the launch of two new products in the year. The
T-Max range of belt and chain tensioners was expanded through the launch of the
innovative, light-duty RT-3000 rotary tensioner. A new, patented variant of
PowerTwist link belt has been developed specifically to meet the market demand
for roller conveyor systems to carry higher loads, faster and more quietly.
The markets have responded favourably to both of these carefully targeted
product launches. These, together with our marketing alliances, have contributed
to incremental sales growth. Market demand in the office equipment segment was
slow in the first few months of the year, but recovered considerably in the
second half. Our continuous improvement programme increased production yields,
but nevertheless, capacity was flexed to meet customer demand for mini-pitch
timing belts. Planning is now well advanced for a building extension to
accommodate an increase in capacity with completion scheduled for 2006.
The newly-acquired seals operations benefited from buoyant energy markets. To
enhance growth further new applications, including the semi conductor processing
industry, were developed. The design of new sealing solutions, such as the
patented SigmaSeal is encouraging. This seal, which is generating interest in
new markets, has unique self-energising and low friction properties suitable to
the control valve industry.
Europe
The environment for our UK based heavyweight conveyor belting operation became
increasingly difficult during the year with declining demand from both the UK
and German coal industries. Against this, the demand from our worldwide potash
customers remained robust and further penetration of Eastern European, Ukrainian
and Russian coal markets was achieved. Whilst raw material prices increased
significantly during the year, sales pricing action coupled with improved
purchasing enabled margins to be maintained.
Weak economic conditions prevailed in most of our major European industrial
markets, which together with the threat from the competition over an otherwise
flat market, led to a difficult year for our Dutch operation. As a consequence,
action to address the cost base was implemented in the second half through a
reduction in the workforce whilst overall productivity improvements were
achieved through additional investment in new plant and systems.
James Dawson at Lincoln built upon the solid foundations established in recent
years to record a good performance overall. Demand from the speciality vehicle
and business machine markets was generally strong allowing the benefits from
recent capital investment programmes to be realised. Further recognition of the
accomplishments of this operation was gained in the year with the Queen's Award
for Enterprise in International Trade.
The Poynton (Cheshire) hose facility, which was acquired in February 2004,
continued to perform well. The projected market synergy between Poynton's EPDM
hose and Lincoln's silicone hose products is now beginning to be realised and is
expected to lead to continued steady growth of sales of Poynton products.
Fenner Drives Europe, formerly BTL in Leeds, experienced a continuing reduction
in demand from traditional markets, reflecting the general decline in UK
manufacturing. However, this decline was more than offset as programmes of
innovative marketing, product line expansion and increased activity in Europe
took effect.
At the end of the year, the UK operations of both James Dawson and Fenner Drives
were restructured. James Dawson now operates exclusively in the world markets
for commercial and speciality vehicles, focusing upon capitalising on recent
investments in the specialist hose business. The industrial rubber and business
machine products of James Dawson have been brought under the responsibility of
Fenner Drives Europe.
Sales from our European seals operations exceeded expectations in the period
since acquisition with strong demand from longwall mining equipment and the oil
and gas industry. As we enter the new year, the planned relocation of the UK
operation to a new facility is progressing satisfactorily. The factory and
offices which are currently under construction at Hampton will replace the
existing network of 1920's buildings. The benefits of the move will follow the
completion which is scheduled for the second half of 2006.
Africa
An increase in demand for energy in South Africa caused a heightened activity in
the region's coal mining industry and the commissioning of previously mothballed
power generation plants. This environment enabled the achievement of a further
successful year by our conveyor belting operation, despite the keen competition
within the local market.
The Group's other South African operation, KSB, improved as the year progressed
following softer volumes into agricultural markets in the early months and
higher contract volumes in the second half-year.
Significant progress has been made during the last year with an increasingly
encouraging trend in performance. As we enter the new financial year we do so
with confidence that most of our businesses are seeing healthy market conditions
with opportunities for growth.
Mark Abrahams
Chief Executive Officer
Fenner PLC
Group Profit and Loss Account
For the financial year ended 31 August 2005
2005 2004
Note #000 #000
--------------------------------------------------------------------------------
Turnover 2 313,012 260,595
Continuing operations 302,193 260,595
Acquisitions 10,819 -
Operating profit before goodwill amortisation and
exceptional items 2 21,255 16,101
Goodwill amortisation (1,904) (1,149)
Exceptional items 3 (3,502) (6,214)
--------- --------
Operating profit 15,849 8,738
Continuing operations 14,775 8,738
Acquisitions 1,074 -
Share of operating loss in associated undertaking (20) 489
Profit on sale of associated undertaking - 695
--------- --------
Profit on ordinary activities before interest 15,829 9,922
Net interest payable (3,761) (3,458)
Share of net interest payable in associated (43) (69)
undertaking --------- --------
Profit on ordinary activities before taxation 12,025 6,395
Taxation on profit on ordinary activities 4 (4,514) (3,052)
--------- --------
Profit on ordinary activities after taxation 7,511 3,343
Minority equity interests (980) (976)
--------- --------
Profit for the year 6,531 2,367
Dividends 5 (8,174) (6,324)
--------- --------
Retained loss for the year (1,643) (3,957)
--------------------------------------------------------------------------------
Earnings per share*
Adjusted - before goodwill amortisation, exceptional
items and profit on sale of operations 6 9.34p 7.67p
Basic - after goodwill amortisation, exceptional
items and profit on sale of operations 6 5.28p 2.19p
Diluted - after goodwill amortisation, exceptional
items and profit on sale of operations 6 5.25p 2.17p
--------------------------------------------------------------------------------
*Comparative figures have been restated following a placing and open offer on 20
May 2005 (note 8). All of the Group's activities are continuing operations.
Fenner PLC
Group Balance Sheet
At 31 August 2005
2005 2004
Note #000 #000
--------------------------------------------------------------------------------
Fixed assets
Intangible assets - Goodwill 60,422 20,676
- Other 26 5
Tangible assets 62,851 57,513
Investments - Associated undertaking 233 344
- Other 262 262
--------- ---------
123,794 78,800
--------- ---------
Current assets
Stocks 54,922 43,391
Debtors 70,255 55,456
Cash at bank and in hand 52,091 32,229
--------- ---------
177,268 131,076
Creditors - Amounts falling due within one year (116,214) (82,718)
--------- ---------
Net current assets 61,054 48,358
--------- ---------
Total assets less current liabilities 184,848 127,158
Creditors - Amounts falling due after more than one year (49,741) (55,037)
Provisions for liabilities and charges (11,948) (7,670)
--------- ---------
Net assets 123,159 64,451
--------------------------------------------------------------------------------
Capital and reserves
Called up share capital 39,141 27,150
Share premium account 49,088 4,238
Revaluation reserve 3,985 3,991
Other reserve 1,122 16,758
Profit and loss account 25,489 8,602
--------- ---------
Shareholders' funds - Equity interest 8 118,825 60,739
Minority equity interests 4,334 3,712
--------- ---------
Total funds employed 123,159 64,451
--------------------------------------------------------------------------------
The accounts were approved by the Board of Directors on 9 November 2005 and
signed on its behalf by
CI Cooke Chairman
RJ Perry Group Finance Director
Fenner PLC
Group Cash Flow Statement
for the financial year ended 31 August 2005
2005 2004
Note #000 #000 #000 #000
-----------------------------------------------------------------------------------
Net cash inflow from operating activities 21,315 14,191
Dividends received from associated undertaking - 77
Returns on investments and servicing of finance
Interest received 1,142 1,142
Interest paid (4,565) (4,874)
Interest element of finance lease rental payments (10) (2)
Dividends paid to minority shareholders (477) (511)
-------- -------
Net cash outflow from returns on investments
and servicing of finance (3,910) (4,245)
Taxation (5,590) (2,591)
Capital expenditure and financial investment
Purchase of tangible fixed assets (8,031) (7,999)
Purchase of investments and secured loans - (744)
Sale of tangible fixed assets 130 43
-------- -------
Net cash outflow on capital expenditure and
financial investment (7,901) (8,700)
Acquisitions and disposals
Purchase of subsidiary undertakings 7 (44,199) (2,796)
Sale of subsidiary undertakings (19) 11
Net proceeds on disposal of associated undertaking
and purchase of related subsidiary - 1,279
-------- -------
Net cash outflow on acquisitions and disposals (44,218) (1,506)
Equity dividends paid (6,324) (6,015)
-------- --------
Net cash outflow before financing (46,628) (8,789)
Financing
Issue of ordinary share capital 56,340 4,684
Loan repayment from associated undertaking 70 68
Capital element of finance lease repayments (106) (11)
Repayment of bank and other borrowings (7,436) (3,968)
New bank and other borrowings 26,332 916
-------- -------
Net cash inflow from financing 75,200 1,689
-------- --------
Increase in cash 28,572 (7,100)
--------------------------------------------------------------------------------------------
Fenner PLC
Statement of Total Recognised Gains and Losses
for the financial year ended 31 August 2005
2005 2004
#000 #000
--------------------------------------------------------------------------------
Profit for the year 6,531 2,367
Currency translation differences on foreign currency net
investments 1,715 1,378
--------- ---------
Total recognised gains and losses since last annual report 8,246 3,745
--------------------------------------------------------------------------------
Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities
for the financial year ended 31 August 2005
2005 2004
#000 #000
--------------------------------------------------------------------------------
Operating profit 15,849 8,738
Non cash items
Depreciation and amortisation 10,156 7,097
Others including the effect of foreign exchange rate changes 278 1,040
Working capital movements
Stocks (6,356) (119)
Debtors (3,353) (1,898)
Creditors 3,259 1,885
Provisions 1,482 (2,552)
--------- ---------
Net cash inflow from operating activities 21,315 14,191
--------------------------------------------------------------------------------
Reconciliation of Net Cash Flow to Movement in Net Debt
for the financial year ended 31 August 2005
2005 2004
#000 #000
--------------------------------------------------------------------------------
Increase in cash 28,572 (7,100)
Cash inflow from increase in loans and finance leases (18,790) 3,063
--------- ---------
Decrease in net debt resulting from cash flows 9,782 (4,037)
Effect of foreign exchange rate changes 234 9,117
Loans and finance leases acquired with subsidiaries (4,452) -
New finance leases (55) -
--------- ---------
Decrease in net debt 5,509 5,080
Opening net debt (39,416) (44,496)
--------- ---------
Closing net debt (33,907) (39,416)
--------- ---------
Gearing (closing net debt / shareholders' funds) 28.5% 64.9%
--------------------------------------------------------------------------------
Fenner PLC
Notes
1 Basis of preparation
The preliminary announcement, which was approved by the Board on 9 November
2005, has been prepared on the basis of the accounting policies set out in the
2004 Annual Report.
The profit and loss account, balance sheet and cash flow statement are abridged
from the Group's full accounts on which the auditors, PricewaterhouseCoopers
LLP, have given an unqualified opinion which did not include a statement under
section 237(2) or 237(3) of the Companies Act 1985. The statutory accounts will
be filed with the Registrar of Companies in due course.
The profit and loss account and the cash flow statement for the year ended 31
August 2004 and the balance sheet as at that date are an abridged version of the
statutory accounts for that period which, together with an unqualified audit
report, have been filed with the Registrar of Companies.
2 Segmental information by geographical origin
Operating profit before
goodwill amortisation
Turnover and exceptional items
--------------------------------------------------------------------------------
2005 2004 2005 2004
#000 #000 #000 #000
--------------------------------------------------------------------------------
Europe 91,585 80,298 167 2,145
North America 144,053 119,413 10,584 5,471
Africa 30,791 26,594 4,494 4,402
Rest of world 50,709 39,237 6,010 4,083
Inter-segment sales (4,126) (4,947) - -
------------------------------------------------
313,012 260,595 21,255 16,101
--------------------------------------------------------------------------------
3 Exceptional items
The exceptional charge of #3,502,000 (2004 #6,214,000) comprises:
- property and plant impairments of #2,574,000 (2004 #502,000);
- acquisition integration costs of #328,000 (2004 #2,175,000)
- other amounts of #600,000 (2004 #6,079,000) which principally comprise an
asset impairment relating to the Group's investment in United Polymers Limited
and professional costs relating to proceedings against the Welsh Development
Agency (WDA) for damages in relation to the provision by the WDA of defective
manufacturing facilities.
During 2004 the re-commissioning of the Canadian facility, which was mothballed
in the prior year, gave rise to a provision release of #2,542,000
The related tax credit amounts to #378,000 (2004 #735,000).
4 Taxation on profit on ordinary activities
The tax charge, based on the profit for the year comprises
2005 2004
#000 #000
--------------------------------------------------------------------------------
Current taxation
UK corporation tax 280 34
Overseas taxation 5,104 3,714
Deferred taxation (870) (696)
---------- ----------
4,514 3,052
--------------------------------------------------------------------------------
5 Dividends
2005 2004
#000 #000
--------------------------------------------------------------------------------
Ordinary shares
Dividend payable - interim 1.975p (2004 1.975p) 2,148 2,145
Dividend proposed - final 3.85p (2004 3.85p) 6,028 4,181
Adjustment to prior year final dividend 6 6
---------- ---------
8,182 6,332
Amount due to the Employee Share Ownership Plan Trust (8) (8)
---------- ---------
8,174 6,324
--------------------------------------------------------------------------------
If approved, the final dividend of 3.85p per share (2004 3.85p) will be paid on
16 January 2006 to shareholders on the register on 16 December 2005. UK income
tax at the lower rate of 10% is deemed to have been paid in respect of these
dividends but will not in most cases be recoverable by shareholders.
6 Earnings per share
In view of the significance of the exceptional items, goodwill amortisation and
profit on sale of operations, in the current and prior years, the directors
consider it appropriate to disclose earnings per share calculated both before
and after these items.
2005 2004
#000 #000
Earnings
Profit for the year 6,531 2,367
Goodwill amortisation, exceptional items and
profit on sale of operations 5,406 6,668
Tax attributable to exceptional items and profit
on sale of operations (378) (735)
----------- ----------
Earnings for the year before goodwill amortisation,
exceptional items and profit on sale of operations 11,559 8,300
--------------------------------------------------------------------------------
Number Number
-------------------------
Weighted average number of ordinary shares in issue
during the year*
Weighted average number of shares in issue 123,908,805 108,348,584
Weighted average number of shares held by the
Employee Share Ownership Plan Trust (133,769) (134,684)
----------- ---------
Weighted average number of shares in issue - basic 123,775,036 108,213,900
Weighted average effect of share options and
contingent long term incentive plan shares 735,681 945,675
----------- ---------
Weighted average number of shares in issue - diluted 124,510,717 109,159,575
--------------------------------------------------------------------------------
Pence Pence
--------------------------------------------------------------------------------
Earnings per share*
Basic - after goodwill amortisation, exceptional
items and profit on sale of operations 5.28 2.19
Goodwill amortisation, exceptional items and
profit on sale of operations 4.37 6.16
Tax attributable to exceptional items and profit
on sale of operations (0.31) (0.68)
----------- ----------
Adjusted - before goodwill amortisation, exceptional
items and profit on sale of operations 9.34 7.67
--------------------------------------------------------------------------------
Diluted earnings per share after goodwill amortisation, exceptional items and
profit on sale of operations amount to 5.25p (2004 2.17p).
Diluted earnings per share before goodwill amortisation, exceptional items and
profit on sale of operations amount to 9.28p (2004 7.60p).
*Comparative figures have been restated following a placing and open offer on 20
May 2005 (note 8).
7 Acquisitions
Wellington Holdings plc was acquired during the year through the acquisition of
its entire share capital for a total cash consideration of #44,312,000 together
with shares issued valued at #1,420,000. The acquisition was completed on 20 May
2005.
The Group's other acquisitions were the business and assets of L&K Conveyors and
service branches of Rob Harvey.
The combined cash flow impact of these acquisitions and provisional fair value
of the assets acquired is
Provisional
fair value
#000
Intangible fixed assets 22
Tangible fixed assets 4,703
Stock, debtors less creditors (645)
Cash at bank and in hand 294
----------
Total net assets acquired 4,374
Goodwill arising 41,649
----------
Consideration 46,023
Deferred consideration and accrued costs (136)
Cash at bank and in hand of operations acquired (294)
Shares issued (1,420)
Deferred consideration in respect of previous acquisitions 26
----------
Cash outflow in respect of the acquisition of subsidiary undertakings 44,199
--------------------------------------------------------------------------------
8 Reconciliation of movements in shareholders' funds
2005 2004
#000 #000
--------------------------------------------------------------------------------
1 September 2004 60,739 58,428
Profit for the year 6,531 2,367
Dividends (8,174) (6,324)
Share capital issued* 57,760 4,684
UITF17 share award accrual 254 206
Currency translation differences on foreign currency net
investments 1,715 1,378
---------- ----------
Net increase in shareholders' funds 58,086 2,311
---------- ----------
31 August 2005 118,825 60,739
--------------------------------------------------------------------------------
*Share capital issued represents a placing and open offer of 46,611,102 ordinary
shares and an issue of 1,192,933 ordinary shares to Wellington Holdings plc
shareholders as part of the Wellington acquisition.
9 Contingent assets and liabilities
The Group has disposed of certain businesses in prior years, which included
obligations under certain property leases and grants. Should the purchasers of
the businesses default on these commitments, the future obligation could revert
to the Group.
In the normal course of business the Group has given guarantees and counter
indemnities in respect of commercial transactions and has entered into forward
contracts for the sale and purchase of foreign currencies by reference to its
forecast requirements.
Proceedings have continued against the Welsh Development Agency ("WDA"),
claiming substantial damages in relation to the provision by the WDA of
defective manufacturing facilities. The proceedings are now the subject of
litigation.
The Group is involved as defendant in a number of potential and actual
litigation cases in connection with its business, primarily in North America.
The directors believe that the likelihood of a material liability arising from
these cases is remote.
In early October 2004, our conveyor belt operations in Charlotte and Atlanta
received notification from the Anti-Trust Division of the US Department of
Justice of their intention to enquire into possible anti-trust violations by
Fenner. Every co-operation is being given in order to clarify and expedite the
process.
Fenner PLC
Group Profit and Loss Account
First Half/ Second Half Split
for the year ended 31 August 2005
First half Second half
(unaudited) (unaudited) Total year
----------------------- --------------------- -------------------
2005 2004 2005 2004 2005 2004
#000 #000 #000 #000 #000 #000
-----------------------------------------------------------------------------------------------------------------------
Turnover 141,339 120,836 171,673 139,759 313,012 260,595
------------------------------------------------------------------------------
Operating profit before goodwill
amortisation and exceptional items 6,571 5,453 14,684 10,648 21,255 16,101
Goodwill amortisation (691) (550) (1,213) (599) (1,904) (1,149)
Exceptional items (556) (1,756) (2,946) (4,458) (3,502) (6,214)
------------------------------------------------------------------------------
Operating profit 5,324 3,147 10,525 5,591 15,849 8,738
Share of operating loss in
associated undertaking (5) 269 (15) 220 (20) 489
Profit on sale of associated
undertaking - - - 695 - 695
------------------------------------------------------------------------------
Profit on ordinary activities before
interest 5,319 3,416 10,510 6,506 15,829 9,922
Net interest payable (1,695) (1,778) (2,066) (1,680) (3,761) (3,458)
Share of net interest payable in
associated undertaking (22) (34) (21) (35) (43) (69)
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Profit on ordinary activities
before taxation 3,602 1,604 8,423 4,791 12,025 6,395
Taxation on profit on ordinary activities (1,332) (819) (3,182) (2,233) (4,514) (3,052)
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Profit on ordinary activities after
taxation 2,270 785 5,241 2,558 7,511 3,343
Minority equity interests (384) (378) (596) (598) (980) (976)
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Profit for the period 1,886 407 4,645 1,960 6,531 2,367
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Earnings per share*
Adjusted - before goodwill amortisation,
exceptional items and profit on sale
of operations 2.72p 2.22p 6.62p 5.45p 9.34p 7.67p
Basic - after goodwill amortisation,
exceptional items and profit on sale
of operations 1.69p 0.38p 3.59p 1.81p 5.28p 2.19p
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*Comparative and first half figures have been restated following a placing and open offer on 20 May 2005 (note 8).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Fenner (LSE:FENR)
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