REG - Avon Rubber PLC - Half-year Report <Origin Href="QuoteRef">AVON.L</Origin> - Part 2
04/05/2016 07:10
- Part 2: For the preceding part double click ID:nRSD1296Xa
amortisation, exceptional items and defined benefit pension scheme costs 9,643 4,526 (960) 13,209
Depreciation of property, plant and equipment (1,915) (897) (20) (2,832)
Amortisation of intangibles (1,168) (189) (4) (1,361)
Segment result before amortisation of acquired intangibles, exceptional items and defined benefit pension scheme costs 6,560 3,440 (984) 9,016
Amortisation of acquired intangibles (786) (871) - (1,657)
Exceptional items (508) - - (508)
Defined benefit pension scheme costs - - (210) (210)
Segment result 5,266 2,569 (1,194) 6,641
Finance income 8 8
Finance costs (162) (162)
Other finance expense (393) (393)
Profit before taxation 5,266 2,569 (1,741) 6,094
Taxation 449 449
Profit for the period 5,266 2,569 (1,292) 6,543
Half year to 31 March 2015
Protection & Defence Dairy Unallocated Group
£'000 £'000 £'000 £'000
Revenue 45,333 17,488 - 62,821
Segment result before depreciation, amortisation and defined benefit pension scheme credit 9,358 3,872 (1,061) 12,169
Depreciation of property, plant and equipment (1,724) (533) (26) (2,283)
Amortisation of intangibles (1,275) (61) (5) (1,341)
Segment result before amortisation of acquired intangibles and defined benefit pension scheme credit 6,359 3,278 (1,092) 8,545
Amortisation of acquired intangibles (130) - - (130)
Defined benefit pension scheme credit - - 493 493
Segment result 6,229 3,278 (599) 8,908
Finance costs (42) (42)
Other finance expense (453) (453)
Profit before taxation 6,229 3,278 (1,094) 8,413
Taxation (1,683) (1,683)
Profit for the period 6,229 3,278 (2,777) 6,730
Year to 30 September 2015
Protection & Defence Dairy Unallocated Group
£'000 £'000 £'000 £'000
Revenue 98,843 35,475 - 134,318
Segment result before depreciation, amortisation, exceptional items, acquisition costs and defined benefit pension scheme credit 21,632 7,707 (2,072) 27,267
Depreciation of property, plant and equipment (3,513) (1,121) (50) (4,684)
Amortisation of intangibles (2,206) (153) (9) (2,368)
Segment result before amortisation of acquired intangibles, exceptional items, acquisition costs and defined benefit pension scheme credit 15,913 6,433 (2,131) 20,215
Amortisation of acquired intangiblesExceptional items and acquisition costs (384)(209) (659)(180) -(215) (1,043)(604)
Defined benefit pension scheme credit - - 318 318
Segment result 15,320 5,594 (2,028) 18,886
Finance income 45 45
Finance costs (192) (192)
Other finance expense (901) (901)
Profit before taxation 15,320 5,594 (3,076) 17,838
Taxation (2,672) (2,672)
Profit for the year from continuing operations 15,320 5,594 (5,748) 15,166
Discontinued operations - loss for the year (1,500) (1,500)
Profit for the year 15,320 5,594 (7,248) 13,666
Revenue by origin
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
16 15 15
£'000 £'000 £'000
Europe 16,553 11,819 23,704
US 49,720 51,002 110,614
66,273 62,821 134,318
Segment assets in Europe and the US were £58.0m and £57.9m respectively (30 September 2015: £52.8m and £55.8m, 31 March 2015: £17.3m and £61.6m).
5. Adjustments and discontinued operations
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
16 15 15
£'000 £'000 £'000
Amortisation of acquired intangible assets 1,657 130 1,043
Recruitment costsIntegration costsAcquisition costs -508- --- 215-389
Defined benefit pension scheme administration costs 210 175 350
Defined benefit pension scheme settlement gain - (668) (668)
2,375 (363) 1,329
The tax impact of the above is a £0.1m reduction in tax payable (31 March
2015: £nil, 30 September 2015: £nil). The deferred tax impact gives rise to a
credit to the income statement of £0.45m (31 March 2015: £nil, 30 September
2015: £0.25m).
The recruitment costs in 2015 relate to the recruitment of main Board
Directors.
The integration costs relate to the acquisition of the Argus thermal imaging
camera business and the relocation of the manufacturing to our Melksham, UK
site.
The acquisition costs in 2015 relate to legal and professional fees on the
acquisition of Hudstar Systems Inc. and InterPuls S.p.A.
Defined benefit pension scheme costs relate to administrative expenses of the
scheme which is closed to future accrual and the defined benefit pension
scheme settlement gain arose following a trivial commutation exercise, both of
which impact operating profit. £0.3m of other finance expense relating to the
pension scheme is also treated as an adjustment (31 March 2015: £0.3m, 30
September 2015: £0.7m).
The 2015 loss for the year from discontinued operations related to
dilapidations costs of former leased premises of a business which was disposed
of in 2006.
6. Finance income and costs
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
16 15 15
£'000 £'000 £'000
Interest payable on bank loans and (162) (51) (192)
overdrafts
Finance income 8 9 45
(154) (42) (147)
Other finance expense
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
16 15 15
£'000 £'000 £'000
Net interest cost: UK defined benefit (318) (329) (654)
pension scheme
Provisions: Unwinding of discount (75) (124) (247)
(393) (453) (901)
7. Taxation
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
16 15 15
£'000 £'000 £'000
United Kingdom - - -
Overseas (449) 1,683 2,672
(449) 1,683 2,672
Effect of exceptional items 550 - 253
Adjusted tax charge 101 1,683 2,925
The statutory effective tax rate for the
period is a credit of 7% (31 March 2015:
charge of 20%, 30 September 2015:
charge of 15%). The adjusted effective
tax rate, where the tax charge and the
profit before taxation are adjusted for
exceptional items, the amortisation of
acquired intangibles and defined benefit
pension scheme costs is 1% (31 March 2015:
20%, 30 September 2015: 15%).
8. Dividends
On 29 January 2016, the shareholders
approved a final dividend of 4.86p per
qualifying ordinary share in respect of
the year ended 30 September 2015. This was
paid on 18 March 2016, absorbing
£1,473,000 of shareholders' funds. The
Board of Directors has declared an interim
dividend of 3.16p (2015: 2.43p) per
qualifying ordinary share in respect of
the year ended 30 September 2016. This
will be paid on 5 September 2016 to
shareholders on the register at the close
of business on 8 August 2016. In
accordance with accounting standards, this
dividend has not been provided for and
there are no corporation tax consequences.
It will be recognised in shareholders'
funds in the year to 30 September 2016 and
is expected to absorb £958,000 (2015:
£732,000) of shareholders' funds.
9. Earnings per share
Basic earnings per share is based on a
profit attributable to ordinary
shareholders of £6,543,000 (2015:
£6,730,000) and 30,248,000 (2015:
30,077,000) ordinary shares being the
weighted average number of shares in issue
during the period.
Adjusted earnings per share is based on a
profit attributable to ordinary
shareholders of £8,686,000 (2015:
£6,696,000) after adding back amortisation
of acquired intangible assets, exceptional
items and defined benefit pension scheme
costs.
The Company has 587,000 (1.9%) (2015:
824,000 (2.7%)) potentially dilutive
ordinary shares in respect of the
Performance Share Plan. 10. Provisions for
liabilities and charges Property
obligations £'000 Balance at 30 September
2015 2,567 Receipts in the period 349
Unwinding of discount 75 Balance at 31
March 2016 2,991
Receipts in the period
349
Unwinding of discount
75
Balance at 31 March 2016
2,991
Property obligations include an onerous lease provision and obligations
relating to former premises of the Group which are subject to dilapidation
risks. Property provisions are subject to uncertainty in respect of the
utilisation, non-utilisation, or subletting of surplus leasehold property and
the final negotiated settlement of any dilapidation claims with landlords.
11. Share capital
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
16 15 15
Number of shares (thousands) 31,023 31,023 31,023
Ordinary shares (£'000) 31,023 31,023 31,023
Share premium (£'000) 34,708 34,708 34,708
During the period 175,000 ordinary shares with a nominal value of £1 each were
purchased by the Avon Rubber p.l.c. Employer Share Ownership Trust at a cost
of £1,812,000 and 10,082 ordinary shares of £1 each were awarded in relation
to the 2015 annual incentive plan.
12. Cash generated from operations
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
16 15 15
£'000 £'000 £'000
Continuing operationsProfit for the 6,543 6,730 15,166
period
Adjustments for:
Taxation (449) 1,683 2,672
Depreciation 2,832 2,283 4,684
Amortisation of intangible assets 3,018 1,471 3,411
Defined benefit pension scheme 210 (493) (318)
costs/(credit)
Net finance expense 154 42 147
Other finance expense 393 453 901
Loss on disposal of intangible assets - - 7
and property, plant and equipment
Movements in working capital and 1,612 (1,077) (3,894)
provisions
Other movements 42 42 85
Cash generated from continuing 14,355 11,134 22,861
operations
Analysed as:Cash generated from 14,712(357) 11,828(694) 24,053(1,192)
continuing operations prior to the
effect of exceptional operating
itemsCash effect of exceptional
operating items
Discontinued operations - loss for the -- -- (1,500)(29)
yearDecrease in payables and provisions
Cash used in discontinued operations - - (1,529)
Cash generated from operations 14,355 11,134 21,332
13. Analysis of net debt
As at Exchange As at
30 Sep 15 Cash flow movements 31 Mar 16
£'000 £'000 £'000 £'000
Cash at bank and in hand 332 422 69 823
Debt due in less than 1 year (2,350) 2,052 (140) (438)
Debt due in more than 1 year (11,143) 2,549 (207) (8,801)
(13,161) 5,023 (278) (8,416)
Borrowing facilities As at As at As at
31 Mar 16 31 Mar 15 30 Sep 15
£'000 £'000 £'000
Total undrawn committed facilities 21,113 26,521 15,194
Bank loans and overdrafts utilised 8,557 - 13,007
Utilised in respect of guarantees 280 370 362
Total Group facilities 29,950 26,891 28,563
All facilities are at floating interest
rates. On 9 June 2014 the Group agreed
new bank facilities with Barclays Bank
and Comerica Bank. The combined
facility comprises a revolving credit
facility of $40m and expires on 30
November 2018. This facility is priced
on the dollar LIBOR plus margin of
1.25% and includes financial covenants
which are measured on a quarterly
basis. The Group was in compliance with
its financial covenants during 2016 and
2015. InterPuls S.p.A has a fixed term
loan of E2.5m which expires in August
2020. This facility is priced on
EURIBOR plus margin of 0.9%.
14. Exchange rates
The following significant exchange
rates applied during the period.
Average Closing rate Average rate Closing rate Average rate Closing rate
rate
H1 2016 H1 2016 H1 2015 H1 2015 FY 2015 FY 2015
US dollar 1.460 1.431 1.539 1.488 1.542 1.517
Euro 1.330 1.252 1.309 1.370 1.351 1.359
Fair value of financial instruments
The fair value of forward exchange contracts is determined by using valuation
techniques using period end spot rates, adjusted for the forward points to the
value date of the contract.
15. Acquisition
On 8 October 2015 the Group acquired the trade and assets of the Argus thermal
imaging business from e2v technologies plc for consideration of £3.5m. Based
in Chelmsford UK, Argus is a leading designer and manufacturer of thermal
imaging cameras for the first responder and fire markets and further
strengthens the Group's product range and distribution capability in these
markets.
The book value of the assets acquired was £1.2m and after accounting policy
adjustments and provisional fair value adjustments of £1.8m, goodwill of £0.5m
was recognised reflecting sales synergies from integration of distribution
channels, access to new markets and the workforce of the acquired business.
Total
£'000
Intangible assets recognised on acquisition 2,277
Deferred tax associated with the initial recognition of intangible assets (455)
Other net assets 1,191
Goodwill 487
Consideration 3,500
16. Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are described on
pages 28-31 of our Annual Report 2015 and remain unchanged at 31 March 2016.
They include: market threat, product development, talent management, business
interruption - supply chain, acquisition integration, quality risks and
product recall, customer dependency and non-compliance with legislation.
CORPORATE INFORMATION
REGISTERED OFFICE
Corporate Headquarters
Hampton Park West
Semington Road
Melksham
Wiltshire
SN12 6NB
Registered in England and Wales No. 32965
V.A.T. No. GB 137 575 643
BOARD OF DIRECTORS
David Evans (Chairman)
Pim Vervaat (Non-Executive Director)
Chloe Ponsonby (Non-Executive Director)
Rob Rennie (Chief Executive)
Andrew Lewis (Group Finance Director)
COMPANY SECRETARY
Miles Ingrey-Counter
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
REGISTRARS & TRANSFER OFFICE
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
BR3 4TU
Tel: 0871 664 0300
(calls cost 10p per minute plus network extras,
lines are open 8.30am-5.30pm Mon-Fri)
BROKERS
Arden Partners plc
SOLICITORS
TLT LLP
PRINCIPAL BANKERS
Barclays Bank PLC
Comerica Inc.
CORPORATE FINANCIAL ADVISER
Arden Partners plc
CORPORATE WEBSITE
www.avon-rubber.com
Hampton Park West l Semington Road l Melksham l Wiltshire l SN12 6NB
l England
Tel: +44 (0) 1225 896 800 l Fax: +44 (0) 1225 896 898 l e-mail:
enquiries@avon-rubber.com
This information is provided by RNS
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