RNS Number:1567H
Fenner PLC
07 November 2007
7 November 2007
Fenner PLC
2007 Preliminary Results
Fenner PLC, the global engineer specialising in reinforced polymer technology,
today announces its preliminary results for the year ended 31 August 2007.
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.
Highlights
* A year of excellent progress across the Group.
* Pre-tax profit up 15% to #33.6m (2006: #29.3m).
* Continuing growth and margin improvement by Advanced Engineered Products
- strong performance by the Seals business in the mining, oil and gas and
semiconductor sectors
- EGC is integrating well, with initial results exceeding pre-acquisition
expectations
- Precision Polymers saw continued progress in hose and industrial markets.
* Strong performance from Conveyor Belting
- trading benefiting from buoyant mining conditions and a strong industrial
sector
- continued growth in Australia, China, North America and Europe.
* The substantial capital investment programme underway will benefit future
years' performance. This is being funded by strong cash flows.
* The Group remains confident of continuing growth this year and beyond.
Commenting on outlook, Colin Cooke, Chairman, said:
"I am pleased to report that the performance achieved in 2006/7 has met our
ambitious growth targets. The fundamentals of our core markets associated with
energy and power generation have remained strong. Against this backdrop, all of
our businesses have delivered robust returns which have culminated in a record
operating profit for the Group.
"In the first few weeks of 2007/8 trading has commenced in line with our
expectations. Current order flow remains healthy and our markets are generally
buoyant. The effect of economic uncertainty, particularly in the US, has not
been seen directly in our businesses, although we are alert to the possibility
of this occurring. The medium and longer term drivers remain strongly positive
and, we believe, endorse our customer led investment strategy. As a consequence
we remain confident of continuing growth this year."
- ends -
For Further Information:
Fenner PLC
Mark Abrahams, Chief Executive 7 November 2007: 020 7067 0700
Richard Perry, Finance Director Thereafter: 01482 626501
Weber Shandwick Financial
Nick Oborne / Stephanie Badjonat/ Hannah Marwood 020 7067 0700
CHAIRMAN'S STATEMENT
Financial Highlights
2007 % increase
#m on 2006
________________________________________________________________________________
Revenue 380.8 -
Operating profit before amortisation of
intangible assets acquired and exceptional items 39.0 +14%
Operating profit 38.2 +13%
Profit before taxation 33.6 +15%
Adjusted earnings per share before amortisation of
intangible assets acquired and exceptional items 15.1p +15%
Basic earnings per share 15.0p +15%
Dividend per share 6.225p + 4%
________________________________________________________________________________
I am pleased to report that the performance achieved in 2006/7 has met our
ambitious growth targets. The fundamentals of our core markets associated with
energy and power generation have remained strong. Against this backdrop, all of
our businesses have delivered robust returns which have culminated in a record
operating profit for the Group.
FINANCIAL HIGHLIGHTS
Group revenue for the year amounted to #380.8m (2006 #379.0m). The growth would
have been #21.0m higher at last year's currency rates. Increased revenue in the
Advanced Engineered Products Division reflected both acquisitive and organic growth,
particularly in our seals businesses. The Conveyor Belting Division benefited from
a continued expansion in the Southern Hemisphere. After a slower first half because
of mild winter weather conditions, order levels for the North American business
normalised in the second half of the year, following the earlier temporary pause
in demand for energy.
Operating profit before amortisation of intangible assets acquired and
exceptional items increased to #39.0m (2006 #34.1m) after absorbing the effect
of #2.7m of adverse currency movements. The underlying growth of 24% has been
facilitated by continuous improvement and development of our integrated service
and product offering.
Exceptional items of #0.2m (2006 #nil) comprised a charge of #2.7m and a gain of
#2.5m. The charge of #2.7m related to the reorganisation associated with the
expansion of the conveyor belting operations in North America and the integration
of EGC, which was acquired in October 2006, into the seals business in Houston,
Texas. The gain of #2.5m related to the profit generated from the Group's disposal
during the year of its non-core interest in KSB Pumps in South Africa.
Operating profit increased to #38.2m (2006 #33.7m). Total net finance costs
incurred were #4.6m (2006 #4.3m) with a resultant profit before taxation of #33.6m
(2006 #29.3m).
The headline and underlying taxation rates were 29% and 30% respectively.
Adjusted earnings per share before amortisation of intangible assets acquired
and exceptional items was 15.1p per share (2006 13.1p). Basic earnings per share
amounted to 15.0p per share (2006 13.0p).
The Group's ability to generate cash is evident from the net cash inflow from
operating activities of #38.8m (2006 #26.3m) emanating from both profit and
working capital management. This has funded the Group's major expansion plans in
the period as capital expenditure incurred rose to #32.0m (2006 #18.8m). The
acquisition of EGC cost #8.8m and the divestment of KSB Pumps generated #5.2m.
Net debt at the end of the year was #36.3m (2006 #33.1m). This benefited from
borrowings being denominated in weaker foreign currencies, giving rise to a gain
of #2.5m.
The Board is recommending a final dividend of 4.15p per share which gives a
total distribution for the year of 6.225p per share (2006 6.0p), a 4% increase
on 2006. This is in line with our policy of paying a one-third interim dividend
and a two-thirds final dividend.
OPERATIONS
The Advanced Engineered Products Division had another strong year, particularly
our seals businesses, where high trading levels continued to be enjoyed in the
mining, oil and gas and semi conductors sectors. These businesses have gone from
strength to strength since their acquisition two years ago. The integration of EGC
has progressed well and the initial results have exceeded pre-acquisition
expectations. The precision polymers businesses saw healthy growth in both hose
and industrial markets, particularly in North America.
The Conveyor Belting Division achieved a further year of growth as the strategic
development of our market strengths progressed in accordance with our plans.
Demand for belting benefited from both the buoyant mining conditions which
prevailed for much of the year and a strong industrial sector. In Australia, the
national coverage of the service businesses broadened to accommodate the needs
of our widely spread customer base. The business in China continued to expand as
the belting requirement from the coal mining sector grew, driven by this
territory's increasing demand for energy. In North America, the improved volumes
in the second half enabled a good full year performance with operational
efficiencies assisting margins. Our substantial capital investment programme
commenced in earnest during the period, the benefits of which will be evident
for years to come. Finally, results from the European businesses have been most
encouraging as economic conditions showed improvement and penetration of new and
emerging markets continued.
PEOPLE
Fenner employs over 3,500 people in its geographically diverse operations around
the world. We are fortunate to have strong teams of talented and dedicated
people throughout the Group. I recognise that the achievements to date could not
have happened without their support and therefore, on behalf of the Board, I
would like to extend my appreciation and gratitude.
OUTLOOK
In the first few weeks of 2007/8 trading has commenced in line with our
expectations. Current order flow remains healthy and our markets are generally
buoyant. The effect of economic uncertainty, particularly in the US, has not been
seen directly in our businesses, although we are alert to the possibility of this
occurring. The medium and longer term drivers remain strongly positive and, we
believe, endorse our customer led investment strategy. As a consequence we
remain confident of continuing growth this year.
Colin Cooke
Chairman
CHIEF EXECUTIVE OFFICER'S REVIEW
INTRODUCTION
Fenner is a world leader in reinforced polymer technology. We will maintain or
achieve leading positions in all our niche markets by continuing to concentrate
on, and invest in, understanding our customers' needs and delivering superior value
added products to satisfy those needs. The commitment and expertise of our workforce
in both established and emerging markets provides a solid platform for profit and
growth.
The Conveyor Belting ("CB") Division continues to be a world leader in the
global conveyor belting market with products including lightweight and
heavyweight conveyor belting for the mining, power generation and industrial
markets.
The Advanced Engineered Products ("AEP") Division is involved in precision
motion control products for the paper handling and mechanical equipment markets,
silicon and EPDM hose production for non-automotive applications and the
specialist sealing business, which manufactures seals products for the mining,
hydraulics, oil and gas, electronics, pumps, valves, compressors, and aerospace
industries. As with CB, AEP demonstrates its market leadership through its
customer responsiveness, product range, quality and the whole-life value of the
product to the customer.
The Group takes pride in being a manufacturer of world class products that are
known for quality and reliability and which provide value added solutions to our
customers. From 3mm wide inkjet printer belts to 1500mm wide High-Vis conveyor
belt for carrying potash, our reputation is key to the Group's success and has
been built up over many years of customer focused trading. Measuring our performance
against customer requirements and their satisfaction, including appropriate "on time
in full" measurement and customer surveys, is a key task throughout the Group.
STRATEGIC OBJECTIVES
Strategic reviews are held periodically and are embedded into the Group's
corporate processes, with the Board and Executive management team devoting a
proportion of each of their meetings to discuss strategic issues. CB and AEP have
separate strategic objectives, with common goals of continued investment and
development in emerging markets, as well as expanding share where possible in
established markets. The possibility of further expansion into other emerging
markets is subject to regular review.
Fenner continues to grow its reputation as a specialist polymer engineering
company, with global operations offering products focused on distinct markets
and managed through two operating divisions. The Group's head office promotes
proactive local autonomy with well defined, timely reporting. Fenner has over
3,500 employees based in 18 countries and where possible we recruit and develop
indigenous management.
Acquisition opportunities are actively sought and evaluated. The capacity and
desire to grow by acquisition is tempered by availability and value of
appropriate targets.
During the year, there was major organic investment across our CB and AEP
operations, demonstrating a clear commitment to achieving our strategic objectives.
Good progress was made on the building work for our Port Clinton operation with the
wide steel cord and fabric presses on track for installation in the first half
of 2008. The current phase of investment in the Toledo operation is complete and
the operational benefits are starting to flow through. Work has also started on
the new bespoke state of the art weaving facility in Georgia. Investment has
been made in South Africa and China to increase both the capacity and product
range of the CB operations in those countries.
Major expansion of the Houston site to accommodate the recently acquired EGC
business has shown encouraging progress. AEP expanded in China with the opening
of new facilities for both the sealing operation and the hose business. The business
also continues to benefit from the new bespoke factory in Hampton which was completed
in 2006.
All investments in new production equipment are required to improve quality and
reduce waste. The CB investments in North America will produce major savings
from reduced waste and improvements in conversion efficiencies. Overall the Group
is addressing capacity constraints and continues to improve on production efficiencies.
After a long and successful partnership with KSB Pumps in South Africa, Fenner
took the opportunity to realise a good exit price for this non-core business
unit which will enable KSB Pumps to develop in the Black Economic Empowerment
environment.
CONVEYOR BELTING
Capacity and temporary weather related local market weakness constrained growth
in the first half. Improved demand and a better mix of business led to an
increase in profitability in the second half.
Internationally traded coal prices, one of the key indicators of the relative
health of the market for conveyor belting, demonstrated by the McCloskey graph,
rose steadily throughout the year. Coal prices are affected by, but not linked to,
oil prices, but coal is seen as a more secure source of basic energy, especially
in China and North America.
High coal stocks and a warm winter depressed demand for Fenner Dunlop Americas
in the first half. Volume recovered in the second half and the long term outlook
remains positive. The slowdown in the North American housing market and concerns
over sub-prime credit had little visible impact on our operations. With a dedicated
sales team, the business strengthened its position with national accounts during
the year which means the business is well placed to exploit both coal and
industrial markets in future years. With recent international investment by
American coal companies, Fenner Dunlop Worldwide is uniquely placed to service
these customers. In industrial markets, continued high levels of construction
activity provided demand for many material handling applications ranging from
forestry to steel manufacturing.
Our UK based operation made gains in market share in Western Europe and
continues to penetrate into new markets opening up in Eastern Europe and the
former Soviet Union.
Domestic industrial markets in Western Europe were steady for the first half of
the year and grew in the second half. Building on the changes made last year,
the European operation continued to improve its margins through the year and to
exploit its diverse product range by improving customer perception of quality
and continuing with its improvements in manufacturing efficiencies.
Operations in China, India and South Africa benefited from continued strength in
the coal industries in their domestic markets, primarily driven by the demand for
power for both industrial and domestic use. New product launches are planned,
including a steel cord line in South Africa to enable the business to expand beyond
the coal dominated product range into such applications as overland conveying.
In Australia, Fenner Dunlop experienced a positive trading year with a
particularly strong first half. The service business offers resilience to the
otherwise cyclical nature of new belting projects. This counterbalance
reinforces the Group's strategy to invest in value added services. The
Australian iron ore market is booming with numerous projects coming on line to
increase production. The business is well placed to supply into these new
projects and to offer the value added after sales services.
Work continued to develop rEscan alongside the Australian service business. In
the Americas, and elsewhere, the service business has been reorganised and is
beginning to implement our successful service model whilst complementing our
existing distribution channels.
ADVANCED ENGINEERED PRODUCTS
AEP is made up of four discrete businesses. They share the same broad strategic
objectives of seeking to provide engineered solutions to customers' needs using
material science and design skills in niche applications which are usually
performance critical. The markets are very diverse and therefore each business
within AEP deploys different tactics and value propositions to achieve their
strategic goals.
Fenner Advanced Sealing Technologies ("FAST") had another record year due to
strong organic growth combined with the EGC acquisition. Demand continued to be
strong for seals for oil, gas and mining applications. FAST continues to focus on
niche performance critical and higher pressure applications for which a strong
advanced materials capability is necessary. A key part of FAST's strategy is to
continue to roll out the Six Sigma continuous improvement programme, with the
primary objective of achieving market leading delivery performance and availability
for its product range. The new facility in Shanghai is being used to develop business
in Asia and there are new customer service operations in India and South America.
To develop new business faster, all seals service subsidiaries have been equipped
with CNC prototyping capability.
The hose business, trading as James Dawson, is a world leading producer of
speciality hoses for diesel engine, truck, bus and off road commercial vehicles.
The hose business successfully relocated its Chinese manufacturing into a purpose
built facility in Shanghai during the year and is now producing hose for the South
East Asian market from the new bespoke factory. Domestic growth combined with exports
increased the sales of our Chinese hose facility by 50%.
Restructuring of the business in the previous year has brought improved market
focus to Fenner Drives and Fenner Precision. Fenner Precision produces polymeric
belts, tyres and rollers for the global office automation market, with increased
focus on mission critical, document handling applications. Fenner Drives continues
to develop a growing range of innovative, proprietary products which solve problems
in the power transmission, motion control and unit handling markets. The key
geographic markets for Fenner Precision and Fenner Drives are North America,
Europe and Asia, where demand continues to be robust. Capacity at the Manheim
facility was increased in late 2006, enabling the business to meet customer
demand.
AEP continues to look for acquisition opportunities to strengthen its current
operating bases and develop its geographical reach.
OUTLOOK
The new year has started in line with our expectations.
Global commodity markets including oil, iron ore and coal remain strong in terms
of price and demand. However, this must be tempered by the weak housing and
infrastructure market in North America plus the, as yet unknown, fallout from the
sub-prime mortgage losses. Although approximately half our business is in North
America, overall our current order intake reflects commodity strength.
Our organic investment programme continued throughout the year in support of our
customers' investments in new projects. The commissioning phase of these programmes
will be completed in the next 6 to 18 months, providing growth in future years.
Our intentions are not limited to organic investment and we continue to look for
strategic acquisition opportunities across all our businesses.
The Fenner businesses are well invested and positioned in geographic locations
where markets offer good growth prospects. We anticipate that the combination of
these factors will enable us to continue our progress in 2008.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document, including those under the caption
"OUTLOOK", constitute forward-looking statements. Such forward-looking
statements involve risks, uncertainties and other factors which may cause the
actual results, performance or achievements of Fenner, or industry results, to
be materially different from any future results, performance or achievements
expressed or implied by such statements. Such risks, uncertainties and other
factors include, among others: growth in the energy markets, general economic
and business conditions, particularly in the US, competition and the ability to
attract and retain personnel.
Mark Abrahams
Chief Executive Officer
GROUP FINANCE DIRECTOR'S REVIEW
REVENUE AND OPERATING PROFIT
Reported Group revenue remained at a similar level to the prior year at #380.8m
(2006 #379.0m). The adverse effect of currency movements was #21.0m which principally
arose from the translation of revenues into sterling using a weaker US dollar.
At constant exchange rates the underlying growth was 6%.
Revenue in the CB Division was #255.8m (2006 #269.5m). The reduction was
principally due to the translation effect of weaker foreign currencies,
particularly the US dollar and South African Rand. Underlying demand for our
products and services remained strong in the principal territories in
which the Group operates.
Revenue in the AEP Division increased to #125.0m (2006 #109.5m) mainly from the
acquisition of EGC and underlying growth in the existing operations, particularly
the seals business.
Group operating profit before amortisation of intangible assets acquired and
exceptional items increased by 14% to #39.0m (2006 #34.1m). At constant exchange
rates the increase was 24%. Divisional profits contributed were #24.2m (2006
#23.8m) from the CB Division and #20.0m (2006 #15.2m) from the AEP Division.
Exceptional items of #0.2m (2006 #nil) comprised restructuring costs associated
with the expansion of the conveyor belting businesses in North America of #1.9m,
integration costs following the acquisition of EGC of #0.8m and a profit on disposal
of joint venture of #2.5m. Amortisation of intangible assets acquired was #0.6m
(2006 #0.4m).
Group operating profit increased to #38.2m (2006 #33.7m).
INTEREST
The net interest cost in the year was #4.6m (2006 #4.3m). By the year end, more
than three quarters of the Group's gross borrowings were at fixed interest
rates. The remaining borrowings and deposits were at floating rates. Interest
cover increased from 7.9 to 8.5 times.
TAXATION
The taxation rate for the year was 29% (2006 30%). The underlying taxation rate
before amortisation of intangible assets acquired and exceptional items remained
at 30%. The taxation rate in the relatively higher taxation rate territories in
North America increased after tax losses were mostly utilised in 2006. This was
offset by the utilisation of tax losses not previously recognised for deferred
taxation in Europe and by the benefit of a tax holiday in China. The net result
of this was an unchanged underlying taxation rate.
EARNINGS PER SHARE AND DIVIDENDS
Basic earnings per share was 15.0p per share (2006 13.0p) and adjusted for
amortisation of intangible assets acquired and exceptional items was 15.1p per
share (2006 13.1p).
The interim dividend of 2.075p per share (2006 1.975p) was paid on 5 September
2007. The Board is recommending a final dividend of 4.15p per share to make a
total dividend for the year of 6.225p per share (2006 6.0p).
ACQUISITIONS AND DISPOSALS
On 1 October 2006, the Group acquired substantially all of the operating assets
and liabilities of EGC, a Houston based manufacturer of fluoroplastic seals and
other related fluoroplastic precision components. EGC was acquired from Compagnie
Plastic Omnium SA, a company quoted on the Paris Stock Exchange. It was acquired
for a cash consideration of #8.8m, inclusive of acquisition
costs.
On 2 January 2007, the Group disposed of its 50% joint venture in KSB Pumps.
This disposal was achieved via a share buyback in which KSB Pumps acquired and
cancelled Fenner held shares for an aggregate value of #6.1m. After deducting
#0.9m of cash and cash equivalents held by KSB Pumps, the net cash inflow was
#5.2m.
CASH FLOW, NET DEBT AND FINANCING
Stronger profits and a reduction in working capital generated an increase in net
cash from operating activities to #38.8m (2006 #26.3m). Capital expenditure increased
to #32.0m (2006 #18.8m) which reflects the investment in the Group's major expansion
programmes. This compares to a depreciation charge of #8.0m (2006 #8.4m). After
funding these expansion programmes and disposing of fixed assets of #0.2m (2006 #0.1m),
the free cash inflow was #7.0m (2006 #7.6m).
The acquisition of EGC and the disposal of KSB Pumps gave a net outflow of #3.6m.
Dividends paid amounted to #9.5m (2006 #8.2m) which, together with an inflow from
other financing activities of #0.4m (2006 #0.3m), resulted in an increase in net
debt before the effects of exchange rates of #5.7m (2006 #1.1m). The translation
effect of weaker exchange rates reduced this amount by #2.5m (2006 #2.5m). Net
debt increased in the year by #3.2m to #36.3m (2006 #33.1m).
The Group is financed principally by a mix of equity, retained earnings, US
dollar private placement loan notes and a committed bank facility. The principal
loan facilities are raised centrally and advanced to operating companies on
commercial terms. Operating companies supplement this funding with local overdraft
and working capital facilities.
Gross debt at the year end amounted to #102.4m, excluding derivatives. During the
year, the Group raised a new $90m US dollar private placement with US based
investors led by Pricoa Capital. These Senior Notes are repayable in June 2017
and carry a fixed interest coupon of 5.78%. The notes are guaranteed by the
Company and the Group's principal UK and North American subsidiaries. They carry
net debt to EBITDA and interest cover covenants. The Group's older private placement
notes stood at $34.1m (2006 $40.9m). These carry a fixed interest coupon of 7.29%
and mature between 2008 and 2012.
The Group has amended its committed revolving credit bank facility with three
leading UK banks during the year. The facility now stands at #75m and its maturity
has been extended by two years to June 2012. Its covenants have also been amended
and are now similar to the 2017 private placement. At 31 August 2007, #33.5m
(2006 #45.3m) of this facility was drawn down.
Cash and cash equivalents at the year end were #66.1m (2006 #41.4m). The
majority of this increase was from part of the proceeds of the new private placement
placed on deposit which are available for investment. Net debt was #36.3m
(2006 #33.1m).
The Group is well placed with medium and long term debt finance and cash resources
to fund its continuing expansion plans.
ACCOUNTING POLICIES
The Group financial statements have been prepared in accordance with IFRS as
adopted by the European Union.
FINANCIAL RISK MANAGEMENT
In the normal course of business, the Group is exposed to certain financial
risks, principally foreign exchange risk, interest rate risk, liquidity risk and
credit risk. These risks are managed by the central treasury function in
conjunction with the operating units, in accordance with risk management
policies that are designed to minimise the potential adverse effects of these
risks on financial performance. The policies are reviewed and approved by the
Board.
The exposures are managed through the use of foreign currency and sterling
borrowings, derivatives and credit management procedures. The use of derivatives
is undertaken only where the underlying interest or currency risk arises from the
Group's operations or sources of finance. No speculative trading in derivatives
is permitted.
In the normal course of business, derivatives have been used to hedge future
cash flows arising from trading transactions relating to the sale and purchase
of goods and services. The Group has chosen not to hedge account for such
transactions under the requirements of IAS 39 'Financial Instruments: Recognition
and Measurement', recognising that cash flows through to the maturity of the
derivative are unaffected. In compliance with IAS 39, all financial instruments
have been measured at their fair value as at the balance sheet date. A charge or
credit to the income statement has been recognised for the loss or gain on these
instruments. In addition, in accordance with IAS 21 'The Effects of Changes in
Foreign Exchange Rates', all foreign currency monetary items have been re-translated
at the closing rate, with changes in value charged or credited to the income
statement.
The interest rate swap entered into in 2006 to hedge interest rate cash flows
continued during the year. This instrument fixes the interest rate on $40m of
floating rate bank borrowings until 2011. At 31 August 2007, the fair value of
this instrument was a liability of #0.7m (2006 #0.6m).
During the year, the Group also swapped $27.2m of the 2017 private placement
into Euro20.0m, with cash flows mirroring the private placement at a fixed rate of
5.05%. This swap matures in June 2017 when the private placement is repayable.
These swaps have been accounted for as hedges in accordance with IAS 39, with
the charge or credit recognised directly in equity.
POST-RETIREMENT BENEFITS
The Group operates a number of defined benefit post-retirement schemes for
qualifying employees in operations around the world. The principal scheme is the
Fenner Pension Scheme which is based in the UK.
The total defined benefit post-retirement liability on the balance sheet, as
calculated by the schemes' actuaries in accordance with IAS 19 'Employee
Benefits', reduced to #14.1m (2006 #29.1m). Of this amount, the Fenner Pension
Scheme represented #13.1m (2006 #26.9m) and the overseas schemes totalled #1.0m
(2006 #2.2m). During the year, the fair value of assets in the schemes has
benefited from rising equity markets whilst the present value of obligations has
reduced as bond yields increased.
Richard Perry
Group Finance Director
Consolidated income statement
for the year ended 31 August 2007
2007 2006
Notes #m #m
________________________________________________________________________________
Revenue 2 380.8 379.0
Cost of sales (268.4) (269.8)
________________________________________________________________________________
Gross profit 112.4 109.2
Distribution costs (36.9) (36.2)
Administrative expenses (37.3) (39.3)
________________________________________________________________________________
Operating profit before amortisation of intangible
assets acquired and exceptional items 39.0 34.1
Amortisation of intangible assets acquired (0.6) (0.4)
Exceptional items 4 (0.2) -
________________________________________________________________________________
Operating profit 2,3 38.2 33.7
Finance income 1.4 1.6
Finance costs (6.0) (5.9)
Share of result of associate - (0.1)
________________________________________________________________________________
Profit before taxation 33.6 29.3
Taxation 6 (9.7) (8.7)
________________________________________________________________________________
Profit for the year 23.9 20.6
________________________________________________________________________________
Attributable to:
Equity holders of the parent 23.7 20.4
Minority interests 0.2 0.2
________________________________________________________________________________
23.9 20.6
________________________________________________________________________________
Earnings per share
Basic 8 15.0p 13.0p
Diluted 8 14.9p 12.8p
________________________________________________________________________________
The result for the year derives from continuing operations.
Consolidated balance sheet
at 31 August 2007
2007 2006
Notes #m #m
________________________________________________________________________________
Non-current assets
Property, plant and equipment 90.2 68.7
Intangible assets 66.5 65.8
Other investments 0.6 0.6
Deferred tax assets 12.5 15.7
________________________________________________________________________________
169.8 150.8
________________________________________________________________________________
Current assets
Inventories 54.5 53.9
Trade and other receivables 61.5 64.0
Current tax assets 0.7 0.6
Cash and cash equivalents 66.1 41.4
Derivative financial instruments 0.2 0.5
________________________________________________________________________________
183.0 160.4
________________________________________________________________________________
Total assets 352.8 311.2
________________________________________________________________________________
Current liabilities
Borrowings (10.2) (8.5)
Trade and other payables (75.1) (67.7)
Current tax liabilities (5.4) (5.7)
Derivative financial instruments (0.7) (0.6)
________________________________________________________________________________
(91.4) (82.5)
________________________________________________________________________________
Non-current liabilities
Borrowings (92.2) (66.0)
Retirement benefit obligations (14.1) (29.1)
Provisions (6.9) (6.5)
Deferred tax liabilities (5.5) (5.1)
________________________________________________________________________________
(118.7) (106.7)
________________________________________________________________________________
Total liabilities (210.1) (189.2)
________________________________________________________________________________
Net assets 142.7 122.0
________________________________________________________________________________
Equity
Share capital 39.6 39.2
Share premium 51.7 49.6
Retained earnings 54.0 33.5
Exchange reserve (4.9) (2.1)
Hedging reserve 0.4 -
Other reserve 1.1 1.1
________________________________________________________________________________
Shareholders' equity 141.9 121.3
Minority interests 0.8 0.7
________________________________________________________________________________
Total equity 10 142.7 122.0
The financial statements were approved by the Board of Directors on 7 November
2007 and signed on its behalf by:
C I Cooke
Chairman
R J Perry
Group Finance Director
Consolidated cash flow statement
for the year ended 31 August 2007
2007 2006
Notes #m #m
________________________________________________________________________________
Profit before taxation 33.6 29.3
Adjustments for:
Depreciation of property, plant and equipment
and amortisation of intangible assets 8.6 8.8
Movement in retirement benefit obligations (2.7) (3.6)
Movement in provisions 0.2 1.6
Finance income (1.4) (1.6)
Finance costs 6.0 5.9
Share of result of associate - 0.1
Profit on disposal of joint venture (2.5) -
Other non-cash movements 0.7 0.1
________________________________________________________________________________
Operating cash flow before movement in working capital 42.5 40.6
Movement in working capital 10.8 (2.4)
________________________________________________________________________________
Net cash from operations 53.3 38.2
Interest received 1.6 1.5
Interest paid (5.9) (5.9)
Taxation paid (10.2) (7.5)
________________________________________________________________________________
Net cash from operating activities 38.8 26.3
________________________________________________________________________________
Investing activities:
Purchase of property, plant and equipment (31.5) (18.6)
Disposal of property, plant and equipment 0.2 0.1
Purchase of intangible assets (0.5) (0.2)
Purchase of investments - (0.3)
Acquisition of businesses 5 (8.8) (0.2)
Acquisition of subsidiary undertakings - (0.3)
Disposal of joint venture 5 5.2 -
________________________________________________________________________________
Net cash used in investing activities (35.4) (19.5)
________________________________________________________________________________
Financing activities:
Equity dividends paid (9.5) (8.2)
Dividends paid to minority shareholders (0.1) (0.1)
Issue of ordinary share capital 0.7 0.3
Minority interest capital introduced - 0.1
Loan repayment from associate - 0.1
Repayment of finance leases (0.3) (0.2)
Repayment of borrowings (34.1) (39.8)
New borrowings 66.3 31.6
________________________________________________________________________________
Net cash from/(used in) financing activities 23.0 (16.2)
________________________________________________________________________________
Net increase/(decrease) in cash and cash equivalents 26.4 (9.4)
Cash and cash equivalents at start of year 41.0 51.3
Exchange movements (1.4) (0.9)
________________________________________________________________________________
Cash and cash equivalents at end of year 66.0 41.0
________________________________________________________________________________
Consolidated statement of recognised income and expense
for the year ended 31 August 2007
2007 2006
#m #m
________________________________________________________________________________
Profit for the year 23.9 20.6
Items recognised directly in equity:
Currency translation differences (2.8) (4.3)
Hedge of net investments in foreign currencies 0.5 0.6
Hedge of interest rate risk (0.1) (0.6)
Actuarial gains on defined benefit pension schemes 12.0 7.8
Taxation on items taken directly to equity (4.3) (2.0)
________________________________________________________________________________
Net income recognised directly in equity 5.3 1.5
________________________________________________________________________________
Total recognised income and expense for the year 29.2 22.1
________________________________________________________________________________
Attributable to:
Equity holders of the parent 29.0 21.9
Minority interests 0.2 0.2
________________________________________________________________________________
Total recognised income and expense for the year 29.2 22.1
Notes
1. Basis of preparation
The preliminary results for the year ended 31 August 2007, which were approved
by the Board of Directors on 7 November 2007, have been prepared in accordance
with International Financial Reporting Standards as adopted by the European
Union.
The preliminary results do not constitute the statutory accounts of the Company
as defined by section 240 of the Companies Act 1985. The preliminary results are
abridged from the Group's audited financial statements. The auditors,
PricewaterhouseCoopers LLP, have reported on those financial statements and given
an unqualified opinion, which did not include a statement under section 237(2) or
237(3) of the Companies Act 1985. The Group financial statements will be filed
with the Registrar of Companies in due course.
The comparative financial information for the year ended 31 August 2006 is derived
from the Group financial statements for that year.
2. Segment information
Advanced
Conveyor Belting Engineered Products Unallocated Total
________________ ________________ ________________ ________________
2007 2006 2007 2006 2007 2006 2007 2006
#m #m #m #m #m #m #m #m
________________________________________________________________________________________________________________________
Revenue 255.8 269.5 125.0 109.5 - - 380.8 379.0
________________________________________________________________________________________________________________________
Operating profit before amortisation of
intangible assets acquired and
exceptional items 24.2 23.8 20.0 15.2 (5.2) (4.9) 39.0 34.1
Amortisation of intangible assets acquired - - (0.6) (0.4) - - (0.6) (0.4)
Exceptional items (1.9) - 1.7 - - - (0.2) -
________________________________________________________________________________________________________________________
Operating profit 22.3 23.8 21.1 14.8 (5.2) (4.9) 38.2 33.7
3. Operating profit
Operating profit has been arrived at after charging/(crediting):
2007 2006
#m #m
________________________________________________________________________________
Depreciation of property, plant and
equipment - owned assets 7.6 8.0
Amortisation of intangible assets acquired 0.6 0.4
Amortisation of other intangible assets 0.4 0.4
Loss on disposal of property, plant and equipment 0.2 0.2
Foreign exchange loss/(gain) 0.1 (0.2)
Research and development costs 1.7 1.9
Government grants (0.1) (0.1)
Operating lease charges 3.1 3.1
Onerous property lease charges - 1.4
Litigation costs 0.5 2.4
Defined benefit past service credit - (1.4)
Exceptional items (note 4) 0.2 -
Auditors' remuneration for audit services 0.5 0.5
Auditors' remuneration for non-audit services
- UK 0.1 0.2
- Overseas - 0.1
________________________________________________________________________________
4. Exceptional items
Exceptional items of #0.2m (2006: #nil) comprised restructuring costs associated
with the expansion of the conveyor belting businesses in North America of #1.9m,
integration costs following the acquisition of EGC of #0.8m and a profit on
disposal of joint venture of #2.5m (note 5).
5. Acquisitions and disposals
On 1 October 2006, the Group acquired substantially all of the operating assets
and liabilities of EGC, a Houston, Texas based manufacturer of
fluoroplastic seals and other related fluoroplastic precision components, from
Compagnie Plastic Omnium SA, a company quoted on the Paris
Stock Exchange. The cash consideration was #8.8m. Net assets acquired were #6.9m
before deducting fair value adjustments of #0.7m, principally to align with
Group accounting policies and intangible assets acquired were #2.1m. This
resulted in goodwill on acquisition of #0.5m.
On 2 January 2007, the Group disposed of its 50% joint venture in KSB Pumps
(S.A.) (Pty) Limited. This disposal was achieved via a share
buyback in which KSB Pumps acquired and cancelled Fenner held shares for an
aggregate value of #6.1m. After deducting cash balances held by KSB Pumps of
#0.9m, the net cash flow was #5.2m. This resulted in a profit on disposal of
#2.5m.
6. Taxation
The taxation charge, based on the profit for the year, comprises:
2007 2006
#m #m
________________________________________________________________________________
Current taxation:
- UK corporation tax - (0.1)
- Overseas tax 9.9 8.3
Deferred taxation (0.2) 0.5
________________________________________________________________________________
9.7 8.7
________________________________________________________________________________
7. Dividends
2007 2006
#m #m
________________________________________________________________________________
Dividends paid or approved in the year
Interim dividend for the year ended 31 August 2006
of 1.975p (2005: 1.975p) per share 3.1 2.2
Final dividend for the year ended 31 August 2006
of 4.025p (2005: 3.85p) per share 6.4 6.0
________________________________________________________________________________
9.5 8.2
________________________________________________________________________________
Dividends not paid or approved in the year
Interim dividend for the year ended 31 August 2007
of 2.075p (2006: 1.975p) per share 3.3 3.1
Final dividend for the year ended 31 August 2007
of 4.15p (2006: 4.025p) per share 6.6 6.3
________________________________________________________________________________
9.9 9.4
________________________________________________________________________________
The interim dividend for the year ended 31 August 2007 was paid on 5 September
2007. The proposed final dividend for the year ended 31 August 2007 is subject
to approval by shareholders at the AGM. Consequently neither have been recognised
as liabilities at 31 August 2007. If approved, the final dividend will be paid
on 14 January 2008 to shareholders on the register on 14 December 2007.
8. Earnings per share
2007 2006
#m #m
________________________________________________________________________________
Earnings
Profit for the year attributable to equity holders
of the parent 23.7 20.4
Amortisation of intangible assets acquired and
exceptional items 0.8 0.4
Taxation attributable to amortisation of intangible
assets acquired and exceptional items (0.6) (0.2)
________________________________________________________________________________
Profit for the year before amortisation of intangible
assets acquired and exceptional items 23.9 20.6
________________________________________________________________________________
Number Number
________________________________________________________________________________
Average number of shares
Weighted average number of shares in issue 158,073,110 156,851,761
Weighted average number of shares held by the
Employee Share Ownership Plan Trust (131,859) (131,859)
________________________________________________________________________________
Weighted average number of shares in issue - basic 157,941,251 156,719,902
Effect of share options and contingent long term
incentive plans 766,733 2,076,873
________________________________________________________________________________
Weighted average number of shares in issue - diluted 158,707,984 158,796,775
________________________________________________________________________________
Pence Pence
________________________________________________________________________________
Earnings per share
Adjusted - before amortisation of intangible assets
acquired and exceptional items 15.1 13.1
Basic 15.0 13.0
Diluted 14.9 12.8
________________________________________________________________________________
Adjusted earnings per share has been presented to provide a clearer understanding
of the underlying performance of the Group.
9. Reconciliation of net cash flow to movement in net debt
2007 2006
#m #m
________________________________________________________________________________
Net increase/(decrease) in cash and cash equivalents 26.4 (9.4)
(Increase)/decrease in borrowings and finance leases
resulting from cash flows (31.9) 8.4
________________________________________________________________________________
Movement in net debt resulting from cash flows (5.5) (1.0)
New finance leases (0.2) (0.1)
Exchange movements 2.5 2.5
________________________________________________________________________________
Movement in net debt in the year (3.2) 1.4
Net debt at start of year (33.1) (34.5)
________________________________________________________________________________
Net debt at end of year (36.3) (33.1)
________________________________________________________________________________
Net debt is defined as cash and cash equivalents and current and non-current
borrowings.
10. Equity
Share Share Retained Exchange Hedging Other Minority Total
capital premium earnings reserve reserve reserve interests equity
#m #m #m #m #m #m #m #m
_______________________________________________________________________________________________________________
At start of prior year 39.1 49.1 15.4 2.2 - 1.1 0.6 107.5
Adoption of IAS 32 and IAS 39
on 1 September 2005 - - 0.1 - - - - 0.1
Total recognised income and
expense for the year - - 26.2 (4.3) - - 0.2 22.1
Equity dividends paid - - (8.2) - - - - (8.2)
Dividends paid to minority
shareholders - - - - - - (0.1) (0.1)
Shares issued in the year 0.1 0.5 (0.3) - - - - 0.3
Share-based payments - - 0.3 - - - - 0.3
_______________________________________________________________________________________________________________
At start of year 39.2 49.6 33.5 (2.1) - 1.1 0.7 122.0
Total recognised income and
expense for the year - - 31.4 (2.8) 0.4 - 0.2 29.2
Equity dividends paid - - (9.5) - - - - (9.5)
Dividends paid to minority
shareholders - - - - - - (0.1) (0.1)
Shares issued in the year 0.4 2.1 (1.8) - - - - 0.7
Share-based payments - - 0.4 - - - - 0.4
_______________________________________________________________________________________________________________
At end of year 39.6 51.7 54.0 (4.9) 0.4 1.1 0.8 142.7
_______________________________________________________________________________________________________________
11. Contingent liabilities
In the normal course of business the Group has given guarantees and counter
indemnities in respect of commercial transactions.
The Group is involved as defendant in a 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 October 2004 our conveyor belting operations in Charlotte and Atlanta, USA
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 has been given to date and will be given as and when required in order
to help expedite the process.
Consolidated income statement - half year analysis
for the year ended 31 August 2007
First half (unaudited) Second half (unaudited) Full year (audited)
2007 2006 2007 2006 2007 2006
#m #m #m #m #m #m
________________________________________________________________________________________________________________
Revenue 185.5 182.0 195.3 197.0 380.8 379.0
________________________________________________________________________________________________________________
Operating profit before amortisation of intangible
assets acquired and exceptional items 16.2 14.5 22.8 19.6 39.0 34.1
Amortisation of intangible assets acquired (0.3) (0.2) (0.3) (0.2) (0.6) (0.4)
Exceptional items 2.1 - (2.3) - (0.2) -
________________________________________________________________________________________________________________
Operating profit 18.0 14.3 20.2 19.4 38.2 33.7
Finance income 0.5 0.9 0.9 0.7 1.4 1.6
Finance costs (2.6) (3.2) (3.4) (2.7) (6.0) (5.9)
Share of result of associate - (0.1) - - - (0.1)
________________________________________________________________________________________________________________
Profit before taxation 15.9 11.9 17.7 17.4 33.6 29.3
Taxation (4.8) (3.5) (4.9) (5.2) (9.7) (8.7)
________________________________________________________________________________________________________________
Profit for the year 11.1 8.4 12.8 12.2 23.9 20.6
________________________________________________________________________________________________________________
Attributable to:
Equity holders of the parent 11.1 8.3 12.6 12.1 23.7 20.4
Minority interests - 0.1 0.2 0.1 0.2 0.2
________________________________________________________________________________________________________________
11.1 8.4 12.8 12.2 23.9 20.6
________________________________________________________________________________________________________________
Earnings per share
Adjusted - before amortisation of intangible
assets acquired and exceptional items 6.2p 5.4p 8.9p 7.7p 15.1p 13.1p
Basic 7.0p 5.3p 8.0p 7.7p 15.0p 13.0p
Diluted 7.0p 5.3p 7.9p 7.5p 14.9p 12.8p
________________________________________________________________________________________________________________
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FSAFAMSWSEDF
Fenner (LSE:FENR)
過去 株価チャート
から 6 2024 まで 7 2024
Fenner (LSE:FENR)
過去 株価チャート
から 7 2023 まで 7 2024
