REG - Senior PLC - Senior plc Interim Results Release 2024
05/08/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240805:nRSE0657Za&default-theme=true
RNS Number : 0657Z Senior PLC 05 August 2024
Senior plc
Interim Results for the half-year ended 30 June 2024
Robust results, full-year expectations unchanged
FINANCIAL HIGHLIGHTS Half-year to 30 June change change (
(constant
currency)
(4))
2024 2023
REVENUE £501.4m £482.3m +4% +7%
OPERATING PROFIT £20.6m £20.8m -1% +2%
ADJUSTED OPERATING PROFIT ((1)) £25.1m £22.9m +10% +13%
ADJUSTED OPERATING MARGIN ((1)) 5.0% 4.7% +30 bps +30 bps
PROFIT BEFORE TAX £13.2m £13.5m -2% +1%
ADJUSTED PROFIT BEFORE TAX ((1)) £18.4m £17.6m +5% +8%
BASIC EARNINGS PER SHARE 2.63p 2.80p -6%
ADJUSTED EARNINGS PER SHARE ((1)) 3.55p 3.53p +1%
INTERIM DIVIDEND PER SHARE 0.75p 0.60p +25%
FREE CASH FLOW ((2)) £3.0m £(11.8)m +125%
NET DEBT EXCLUDING CAPITALISED LEASES ((2)) £156.1m £132.0m £24m increase
- 30 June 2024 / 31 December 2023
ROCE ((3)) 7.3% 6.3% +100bps
Highlights
● Robust trading performance with sales up 7%((4)) and adjusted operating profit
up 13%((4))
● Continued growth in order book, book-to-bill of 1.15
● Notable contract wins in both Aerospace and Flexonics divisions
● Full-year outlook unchanged with good growth anticipated for the full-year
● Interim dividend increased by 25% to 0.75p
Commenting on the results, David Squires, Group Chief Executive Officer of
Senior plc, said:
"Senior has delivered a robust set of results that are in line with our
expectations.
Our Aerospace revenue and profits have grown strongly notwithstanding 737 MAX
volumes being subdued as a consequence of the ongoing situation at Boeing.
Our Flexonics Division continued to perform well, maintaining double digit
margins, albeit revenues and profits were lower as land vehicle markets
started to normalise and upstream oil & gas customers reduced inventory
levels.
For the full-year we still expect to maintain good performance in Flexonics
with H1 slightly higher than H2 due to a return to more typical levels of land
vehicle demand.
The Group's diversified position across key civil and defence aircraft
platforms, strong order intake and increasing aircraft build rates are
expected to drive good growth in Aerospace for the full-year. Higher
volumes, operational efficiency benefits and improved pricing are expected to
result in H2 performance being higher than H1.
Overall, the Board's expectations of good growth for the Group in 2024 are
unchanged."
Further information
Bindi Foyle, Group Finance Director, Senior plc +44 (0) 1923 714 725
Tom Bindloss, Head of Treasury and Interim Investor Relations, Senior plc +44 (0) 1923 714 743
Richard Webster-Smith, FGS Global +44 (0) 7796 708 551
Notes
This Release, together with other information on Senior plc, can be found at:
www.seniorplc.com (http://www.seniorplc.com)
(1) Adjusted operating profit and adjusted profit before tax are stated before
£0.8m amortisation of intangible assets from acquisitions (H1 2023 - £1.1m),
£nil net restructuring costs (H1 2023 - £0.9m), £nil US pension settlement
costs (H1 2023 - £0.1m), £2.6m site relocation costs (H1 2023 - £nil) and
£1.1m US class action lawsuit (H1 2023 - £nil). Adjusted profit before tax
is also stated before costs associated with corporate undertakings of £0.7m
(H1 2023 - £2.0m). A reconciliation of adjusted operating profit to
operating profit is shown in Note 4. Adjusted operating margin is the ratio
of adjusted operating profit to revenue.
(2) See Note 12b and 12c for derivation of free cash flow and of net debt,
respectively.
(3) Return on capital employed ("ROCE") is derived from annual adjusted operating
profit (as defined in Note 4) divided by the average of the capital employed
at the start and end of that twelve-month period, capital employed being total
equity plus net debt (as derived in Note 12c).
(4) Constant currency is H1 2023 results translated using H1 2024 average exchange
rates.
The following measures are used for the purpose of assessing covenant
compliance for the Group's borrowing facilities:
● EBITDA is adjusted profit before tax and before interest, depreciation,
amortisation and profit or loss on sale of property, plant and equipment. It
also excludes EBITDA from businesses which have been disposed and includes
EBITDA for businesses acquired and it is based on frozen GAAP (pre-IFRS 16).
EBITDA for the 12-month period ending June 2024 was £85.8m.
● Net debt is defined in Note 12c. It is based on frozen GAAP (pre-IFRS 16)
and as required by the covenant definition, it is restated using 12-month
average exchange rates.
● Interest is adjusted finance costs and finance income before net finance
income of retirement benefits. It also excludes interest from businesses
which have been disposed and it is based on frozen GAAP (pre-IFRS 16).
● The definition of adjusted items in the Condensed Consolidated Income
Statement is included in Note 4.
The Group's principal foreign exchange translation exposure is to the US
Dollar. The average rate applied in the translation of Income Statement and
cash flow items for H1 2024 was $1.26 (H1 2023 - $1.23) and the rate applied
in the translation of balance sheet items at 30 June 2024 was $1.26 (30 June
2023 - $1.27; 31 December 2023 - $1.27). Our current assumption is that the
average US Dollar to Pound Sterling exchange rate for the full-year 2024 is
$1.27.
Webcast
There will be a presentation on Monday 5 August 2024 at 09:30am BST accessible
via a live webcast on Senior's website at www.seniorplc.com/investors
(http://www.seniorplc.com/investors) . The webcast will be made available on
the website for subsequent viewing.
Note to Editors
Senior is a FTSE 250 international manufacturing Group with operations in 12
countries. It is listed on the main market of the London Stock Exchange
(symbol SNR). Senior's Purpose is "we help engineer the transition to a
sustainable world for the benefit of all our stakeholders." Senior designs
and manufactures high technology components and systems for the principal
original equipment producers in the worldwide aerospace & defence, land
vehicle and power & energy markets.
Cautionary Statement
This Interim Management Report ("IMR") has been prepared solely to provide
additional information to enable shareholders to assess the Group's strategy
and business objectives and the potential for the strategy and objectives to
be fulfilled. It should not be relied upon by any other party or for any
other purpose.
This IMR contains certain forward-looking statements. Such statements are
made by the Directors in good faith based on the information available to them
at the time of their approval of this IMR and they should be treated with
caution due to the inherent uncertainties, including both economic and
business risk factors, underlying any such forward-looking information.
INTERIM MANAGEMENT REPORT 2024
Senior has delivered a robust set of results in the first half of 2024 that
are in line with our expectations.
The Group saw strong order intake during the period, with a healthy
book-to-bill ratio of 1.15 which underpins our confidence in continued growth
in 2024 and beyond. Both Aerospace and Flexonics divisions recorded good
order intake, with some notable contract wins including from Airbus, Collins
Aerospace, Spirit AeroSystems and land vehicle OEMs (details in the divisional
reviews below), demonstrating the broad, diversified and high-quality nature
of our business.
For the first half of 2024, Group revenue increased by 7% on a constant
currency basis to £501.4m with growth in the Aerospace Division and an
anticipated reduction in the Flexonics Division. Adverse exchange rates had
an impact of £12.3m to total sales.
In Aerospace, revenue increased 14% year-on-year on a constant currency
basis. The increase reflected the ramp up in civil aircraft production rates
notwithstanding 737 MAX volumes being subdued following the Alaskan Airlines
incident in January 2024. We saw steady growth in the defence market and a
return to growth in sales to semiconductor equipment customers (which is
included in "Other Aerospace"). In Flexonics, revenue was down 6% compared
to prior year, on a constant currency basis. As expected, this was due to
land vehicle markets starting to normalise and a rebalancing of inventory by
our upstream oil & gas customers.
We measure Group performance on an adjusted basis, which excludes items that
do not directly reflect the underlying trading performance in the period (see
Note 4). References below therefore focus on these adjusted measures.
The Group's adjusted operating profit increased by 13% on a constant currency
basis to £25.1m (H1 2023 - £22.9m). Adjusted operating margin increased by
30 basis points, to 5.0% for the half-year. The increase in profitability
for the Group was driven by improved profit in Aerospace more than offsetting
the expected volume-related reduction in profit in Flexonics.
Overall, our Aerospace division continues to make good progress operationally.
Build rates on most aircraft types have been increasing, with the obvious
exception of the Boeing 737 MAX due to the well documented issues. Our
business in Thailand is making good progress, having been significantly
affected over the past year by the fire at a key supplier in February 2023.
The supplier's factory has been rebuilt and we were pleased to have made our
first shipments to customers in July using parts from the new factory.
Volumes from the new factory will increase steadily over coming months as
parts are requalified. Generally, we have seen our supply chain stabilising
as a result of specific actions we and our suppliers have implemented.
However, a few hotspots remain, and we are mindful of comments from
customers about continuing pressures in some parts of the aerospace ecosystem.
We have been closely following the discussions between Boeing and the FAA
regarding the 737 MAX, noting the understandably cautious approach to
increasing production volumes. Increases are taking longer than the industry
might have hoped at the start of the year. We have agreed sensible
production schedules with Boeing and other customers that take account of
likely build rates and inventory levels. The operating businesses most
exposed to the 737 MAX programme were resourced for significantly higher build
rates coming into the year and have been protecting this resource,
particularly skilled labour, whilst awaiting clarity from customers on demand
for those products affected. This cost base is now being realigned to the
agreed production schedules.
The Group's adjusted profit before tax increased by 5% to £18.4m (H1 2023 -
£17.6m) reflecting higher adjusted operating profit more than offsetting
higher net interest costs of £6.7m (H1 2023 - £5.3m). The adjusted tax
charge was £3.7m (H1 2023 - £3.0m). With the adjusted effective tax rate
increasing to 20.1% from 17.0%, adjusted earnings per share increased 1% to
3.55 pence (H1 2023 - 3.53 pence).
Reported operating profit was £20.6m (H1 2023 - £20.8m) and this performance
is further described in the Other Financial Information section below.
Profit before tax was £13.2m (H1 2023 - £13.5m) and basic earnings per share
was 2.63 pence (H1 2023 - 2.80 pence).
The Group generated free cash flow of £3.0m (H1 2023 - £11.8m outflow) in
the first half of 2024. The improvement over prior year was primarily due to
lower working capital outflows and higher cash profits more than offsetting
higher investment in capital expenditure and higher tax and interest
payments. Cash outflows from working capital were £19.8m (H1 2023 - £38.5m
outflows) reflecting increased trading in the period. Inventory was higher
particularly in Aerospace with planned investment to enable us to meet the
strong increase in demand from our customers and as a result of 737 MAX
production being lower than initially resourced for. Receivables were higher
as a result of revenue growth. Gross capital expenditure was £16.9m (H1
2023 - £13.7m) which was 0.9x depreciation (excluding the impact of IFRS 16).
The Group experienced a net cash outflow of £18.5m (H1 2023 - £18.1m) in the
six months to June 2024, due to free cash flow of £3.0m (H1 2023 - £11.8m
outflow) offset primarily by £10.7m contingent consideration paid for Spencer
Aerospace following its strong growth post acquisition, £7.0m dividends paid
and £3.0m purchase of shares held by the employee benefit trust.
Net debt at the end of June 2024 was £233.1m (including capitalised leases of
£77.0m), an increase of £29.3m from December 2023, after taking into account
adverse currency movements of £0.5m and a £10.3m increase for lease
movements, primarily for lease extensions at existing facilities. Period end
net debt to EBITDA was 1.8x and the headroom on our committed borrowing
facilities at 30 June 2024 was £158.4m.
Return on capital employed ("ROCE") increased by 100 basis points to 7.3% (H1
2023 - 6.3%). This improvement in ROCE keeps the Group on track to deliver
our Group ROCE target of 13.5% over the medium-term.
Reflecting the confidence in the Group's performance, financial position and
future prospects, the Board has approved an interim dividend of 0.75 pence per
share (H1 2023 - 0.60 pence), representing 25% growth. This will be paid on
15 November 2024 to shareholders on the register at close of business on 18
October 2024. In the medium-term, we will continue to follow a progressive
dividend policy reflecting earnings per share, free cash flow generation,
market conditions and dividend cover.
Delivery of Group Strategy
Our Purpose is "we help engineer the transition to a sustainable world for the
benefit of all our stakeholders". We do this by:
● Using our technology expertise in fluid conveyance and thermal management to
provide safe and innovative products for demanding applications in some of the
most hostile environments.
● Enabling our customers, who operate in some of the hardest-to-decarbonise
sectors, to transition to low-carbon and clean energy solutions.
● Staying at the forefront of climate disclosure and action by ensuring our own
operations achieve our Net Zero commitments.
As we address these challenges with our customers, we aim to "keep one foot in
today, and one foot in tomorrow". This enables us to be both practical about
the realities our customers are facing in today's world, and yet deliver
better designed, lighter or more efficient products that help them move
increasingly into a lower carbon future of tomorrow.
Our extensive design expertise, intellectual property and know-how, and
technology, supports our strategic focus on fluid conveyance and thermal
management. This enables us to develop and supply proprietary products,
sub-systems and systems for our customers' demanding applications across a
range of diverse and attractive end markets.
Our strategy of focusing on fluid conveyance and thermal management is
positioning Senior to offer pivotal technologies for emissions reduction and
environmental efficiency, capabilities that continue to be highly relevant as
the world transitions towards a low-carbon economy. Not only are we actively
focused on new product offerings that support the transition to a low-carbon
world, but we are actively involved in making conventional technology cleaner
to bridge the gap between both worlds.
Spencer Aerospace ("Spencer"), our high-pressure fittings business, which was
acquired in November 2022, has continued to grow strongly with sales up by
over 40% in H1 2024 compared to H1 2023. We continue to pursue multiple new
business opportunities, both in Spencer's traditional North American home
markets, and in Europe where the company is working collaboratively with our
French business, Senior Aerospace Ermeto. This collaboration has offered
Spencer a channel into European markets and customers that they would not
previously have been able to access while at the same time broadening Senior's
product offering in Europe.
We continue to invest in markets where we believe there is significant growth
potential and where the Group's skills and knowledge can be exploited, such as
Aerospace highly-engineered standard components. This market has high
barriers to entry and attractive returns. We are focussing our efforts in
this sector on broadening our product portfolio for specific products such as
flanges, couplings and fittings while also expanding our production capacity
to meet high levels of customer demand.
Considered and effective capital deployment
We understand the importance of considered and effective capital deployment
towards maximising shareholder value creation. The Group has a medium-term
pre-tax ROCE target of at least 13.5% on a post IFRS 16 basis. Our strategy
of expanding Senior's high-quality fluid conveyance and thermal management
businesses remains a priority. We have a rigorous appraisal process to
evaluate the business case of all significant investments.
The Group actively reviews its overall portfolio of operating businesses and
evaluates them in terms of their strategic fit in order to grow returns,
maximise Group operating efficiency and optimise value for shareholders.
We continue to progress strategic options for our Aerostructures business
including the potential divestment of the business. Within the period,
revenue in Aerostructures grew strongly by 16% from £121.9m to £141.2m on a
constant currency basis. We have secured notable new contract awards and
important contract renewals bringing pricing up-to-date from various
customers, with multiple ongoing discussions regarding attractive new business
opportunities.
Market Overview
In the first half of 2024, our core markets across the Group were largely as
expected.
Civil Aerospace (46% of Group)
Air traffic continued to increase, with all regions showing improvements in
the six months to the end of June 2024. According to the International Air
Transport Association ("IATA"), the latest data showed that total demand,
measured in Revenue Passenger Kms (RPKs), increased by 13.4% compared to the
same period in 2023. Air traffic is forecast to continue to grow as incomes
increase, especially in developing markets in Asia. Demand for new aircraft
is forecast to grow by 3-4%, driven by growth in air traffic and ongoing fleet
replacement.
During the first half of 2024, Airbus made two adjustments to the production
rates of its commercial aircraft programmes. Firstly, it increased its
target build rate for the A350 from 10 per month in 2026 to 12 in 2028.
Secondly, for the A320 family of aircraft, it extended the date by which the
monthly build rate would reach 75 from 2026 to 2027, citing concerns around
engine and interiors supply. Increased production rate targets for all its
other commercial aircraft programmes remain unchanged. Production rate
targets are: A220, 14 per month in 2026; A320 family, 75 per month in 2027;
A330, 4 per month in 2024; A350, 12 per month in 2028.
Following the Alaskan Airlines incident, Boeing's build rates for the 737 MAX
remain below the previously stated target of 38 per month. Boeing plans to
increase production steadily to 38 per month by the end of 2024. Boeing has
previously said they are aiming for a build rate of 50 per month in 2025/26.
On the 787 programme production rates were below five per month during H1
2024, according to Boeing, and are expected to return to 5 per month by the
year end. They have previously said they expect to move gradually to 10 per
month by 2025/26. The 777X programme has entered flight testing and entry
into service is expected in 2025.
Embraer is forecasting that it will deliver approximately 100 of its E2 jets
per annum in 2026, up from 72 - 80 in 2024. Year to date, global business
jet activity is down by 2% year-on-year, however, longer-term trends in line
with GDP growth remain in place. Global deliveries of business jets are
anticipated to increase by 10% year-on-year in 2024 and by 2% per annum over
the next decade, according to Honeywell's Global Business Aviation Outlook.
Defence (13% of Group)
Senior's sales to the Defence sector are primarily focused on US military
aircraft platforms such as the F-35 and C-130J.
Lockheed Martin has stated that they continue to produce at 156 F-35 aircraft
per year and expect to deliver 75-100 in the second half of 2024.
Other Aerospace (Adjacent Markets) (8% of Group)
Sales from our Aerospace operating businesses into end markets outside of the
civil aerospace and defence markets are classified under "Other Aerospace" and
include sales into the semiconductor equipment, space and medical markets.
Using our world class bellows technology, we manufacture highly engineered
proprietary products to provide unique solutions for semiconductor
manufacturing equipment and medical device markets.
In the semiconductor sector global sales of wafer fab equipment are forecast
to grow by 3% in 2024 driven by investment in China and demand for AI-related
chips (Source: Semi.org).
Land Vehicle (20% of Group)
Demand in heavy-duty truck markets during the first half was resilient, while
the off-highway market was down and the light vehicle market experienced mixed
conditions.
According to Americas Commercial Transportation ("ACT") research, North
American heavy-duty truck production grew by 4% in the first half of 2024
compared to H1 2023. At the time of our FY results in March 2024, ACT had
been expecting a market decline of 16% in 2024 but now are predicting a
decline of 9%. This improvement is due to the strength in demand from
private fleets, and the vocational and Mexican truck markets. However,
inventory levels of heavy-duty trucks in North America have increased 41%
year-on-year and the order backlog is down 27% compared to H1 2023, according
to ACT.
S&P data shows that European heavy-duty truck production was down 1%
year-on-year in H1 2024 and production for the full-year 2024 is forecast to
be down by 14% when compared to 2023.
Whilst it is too early to predict what will happen in 2025, the global
commercial vehicle market is expected to grow at low single digit compound
annual growth rate through the cycle.
In the off-highway sector, demand for construction, mining and utility
vehicles was down during H1 due to softer market conditions in both North
America and Europe and continued weakness in China. This softness was caused
by lower demand in the construction and agricultural equipment sectors. It
is expected to persist into H2, with demand in these markets being down by up
to 10% year-on-year in 2024.
Light vehicle production in the first half of 2024 benefitted from better
conditions within the supply chain, but this was offset by weak economic
growth in Europe. According to S&P, European light vehicle production
was down 5% in the first half of the year and is expected to be down by 5% for
the full year. The North American market is anticipated to be up by 1% in
2024. In India, the other light-vehicle market to which Senior has
significant exposure, production in 2024 is forecast to increase by 4%, driven
by robust domestic demand.
In the European EV sector in H1 2024 compared to H1 2023, registrations of
BEVs were up by 2%, of PHEVs up by 1% and of hybrids up by 21% (Source: ACEA).
Although near-term growth rates have reduced, especially in some specific
markets such as Italy, Germany and the USA, the long-term outlook remains
positive as new environmental policies in Europe and the USA drive adoption in
the commercial vehicle sector and the economics of passenger EVs continues to
improve.
Power & Energy (13% of Group)
In the first half of 2024, activity in the downstream oil & gas sector has
remained stable, focussing on maintenance work by refinery companies in North
America. In the medium-term, investment in new refining capacity is most
likely to be in Asia and the Middle East, with the former driven by robust
demand growth and the latter by the availability of cheap natural gas
feedstock. In the upstream oil & gas sector, activity in international
and offshore markets continues to be robust, however onshore in North America
is subdued. Separately, the Group is experiencing the effects of certain
customers destocking as they rebalance their inventory levels.
Growth in electricity demand is forecast to continue increasing steadily,
rising from 2.2% in 2023 to an average 3.4% per annum in 2024-2026. In
developing markets, demand is being driven by economic growth, while in
developed markets, data centres, the development of AI technologies and the
reshoring of manufacturing is responsible. This demand will be met by both
renewable and conventional power generation, with the latter playing a crucial
role in offsetting the intermittency of the former. As a zero-carbon
electricity source, momentum in nuclear power has continued building; further
accelerated given the importance of security of energy supply. The
International Atomic Energy Agency has noted that nuclear energy has an
important role to play in enabling countries to move away from fossil fuels,
achieve their net zero targets, and reinforce climate resilience in energy
systems.
Sustainability
Our dedication to sustainability is ingrained in our core Values, forming the
foundation of our Purpose. Our Environmental, Social, and Governance ("ESG")
programmes are dynamic and continually advancing. Notably, we have achieved
class-leading "A" scores from CDP for both our disclosure and actions on
climate and our supplier engagement in 2023. These achievements underscore
our ongoing commitment to sustainability, reflecting our proactive stance in
addressing environmental challenges and fostering positive social and
governance practices.
In May 2024, Senior received an award from Safran, a major aerospace customer,
recognising our leading commitment to decarbonisation.
In the first half of 2024, we continue to make good progress with our key
sustainability metrics and activities:
Environment
● We remain on track to achieve our Scope 1, 2 and 3 Science Based Target
initiative ("SBTi") verified Near Term Targets.
● CDP "A" rating for supplier engagement.
● Safran Low Carbon Supplier competition award.
Social
● We undertook a Global Employee Engagement Survey in the first half of 2024 and
were pleased to see improvements in the participation rate, engagement, and
health & wellbeing scores.
● Our Lost Time Injury Illness Rate shows a reduction, with a figure of 0.27 in
June 24 down from 0.32 in December 2023.
● Currently, 57% of the Board Directors are female, including the Chair of the
Audit Committee, the Senior Independent Director, who is also Chair of the
Remuneration Committee, and the Group Finance Director. The Chair of the
Audit Committee is also the non-executive Director with Board responsibility
for employee engagement. Two of the Directors (29%) are from ethnic minority
backgrounds.
Governance
● As previously reported, two new non-financial performance measures were
introduced for 2024 (carbon reduction and employee engagement) to the
Company's annual bonus targets.
● Adoption of an enhanced Group Fraud Policy.
Outlook
Senior has delivered a robust set of results that are in line with our
expectations.
For the full-year we still expect to maintain good performance in Flexonics
with H1 slightly higher than H2. Robust demand in our downstream oil &
gas and nuclear business is helping to offset the ongoing rebalancing of
inventory by our upstream oil & gas customers and the return to more
typical levels of land vehicle market demand.
The Group's diversified position across key civil and defence aircraft
platforms, strong order intake and increasing aircraft build rates are
expected to drive good growth in Aerospace for the full-year. Regarding the
737 MAX, we have agreed sensible schedules with Boeing and other customers
that take into account ongoing production demand and current customer
inventory levels. Overall, higher volumes, operational efficiency benefits
and improved pricing are expected to result in Aerospace H2 performance being
higher than H1.
At a Group level, we expect to continue to largely mitigate the impact of
lower 737 MAX production with growth in other business. Overall, the Board's
expectations of good growth for the Group in 2024 are unchanged((1)).
DAVID SQUIRES
Group Chief Executive Officer
((1)) Our current assumption is that the average US Dollar to Pound Sterling
exchange rate for the full-year 2024 is $1.27.
DIVISIONAL REVIEW
Aerospace Division
The Aerospace Division represents 67% (H1 2023 - 63%) of Group revenue and
consists of 14 operations. These are located in North America (six), the
United Kingdom (four), France (two), Thailand and Malaysia. This Divisional
review is on a constant currency basis, whereby H1 2023 results have been
translated using H1 2024 average exchange rates and on an adjusted basis to
exclude amortisation of intangible assets from acquisitions, net restructuring
costs, US pension settlement costs, site relocation costs and US class action
lawsuit. The Division's operating results on a constant currency basis are
summarised below:
H1 2024 H1 2023 ((1)) Change
Revenue £338.7m £296.6m +14.2%
Adjusted operating profit £16.2m £11.6m +39.7%
Adjusted operating margin 4.8% 3.9% +90bps
((1)) H1 2023 results translated using H1 2024 average exchange rates - constant
currency.
Divisional revenue increased by £42.1m (14.2%) to £338.7m (H1 2023 -
£296.6m) whilst adjusted operating profit increased by £4.6m (39.7%) to
£16.2m (H1 2023 - £11.6m).
Revenue Reconciliation
H1 2023 revenue £296.6m
Civil aerospace £35.8m
Defence £3.2m
Other adjacent markets £3.1m
H1 2024 revenue £338.7m
Contract Wins
The Aerospace Division has been awarded several new or extended contracts this
year from the following customers:
- Airbus SA. A multi-year contract extension for the manufacture and supply of
various aerostructures parts from our businesses in Thailand and Malaysia.
- Airbus Atlantic. A new contract for the supply of business class seat
structures from our business in Thailand.
- Spirit AeroSystems. A 5-year contract extension for the supply of large
diameter precision formed and machined structural components for various
Boeing commercial programmes from our Jet Products business in California.
- Collins Aerospace (RTX). New multi-year production contracts for the supply
of precision formed and machined thrust reverser structural components for
commercial aerospace platforms at Airbus and Boeing from our Jet Products
business in California.
- Deutsche Aircraft. A new life of programme contract for the design,
development and manufacture of high-pressure ducting for the sustainable
D328eco aircraft from our SSP business in California and our Bird Bellows
business in the UK.
- Rolls-Royce. A new 5-year contract for the supply of aerofoils for the Pearl
engine family and manufacturing will be undertaken at our business in
Thailand.
H1 Performance
Revenue in the Aerospace Division increased by 14.2% year-on-year on a
constant currency basis, benefiting from the overall recovery in demand across
all market sectors. The year-on-year increase reflected the ramp up in civil
aircraft production rates notwithstanding 737 MAX volumes being subdued
following the Alaskan Airlines incident in January 2024. Defence and other
adjacent markets (mainly the semiconductor equipment market) also contributed
to growth in the division.
The civil aerospace sector had good growth during the period with Senior's
sales increasing by 18.2% compared to prior year. Aircraft production rates
were higher in H1 2024 compared to H1 2023, with the exception of Boeing 737
MAX, driven particularly by Airbus's 320 single aisle family and regional
jets. 22% of civil aerospace sales were from widebody aircraft in the first
half of 2024, with the other 78% sales being from single aisle, regional and
business jets.
Our high-pressure fittings business, Spencer Aerospace, has continued to grow
strongly with sales up by over 40% in H1 2024 compared to H1 2023.
Total revenue from the defence sector increased by £3.2m (5.1%) with higher
sales to F35 and Eurofighter programmes with legacy programmes remaining
stable.
Revenue derived from other adjacent markets such as space, power & energy,
medical and semiconductor equipment, where the Group manufactures products
using very similar technology to that used for certain aerospace products,
increased by £3.1m (8.2%) as a result of the rebound in demand from the
semiconductor equipment market.
During the period, adjusted operating profit increased by 39.7% to £16.2m (H1
2023 - £11.6m) and the adjusted operating margin increased by 90 basis points
to 4.8% (H1 2023 - 3.9%).
Overall, the division continues to make good progress operationally. Our
business in Thailand is now making good progress, having been significantly
affected over the past year by the fire at a key supplier in February 2023.
The supplier's factory has been rebuilt and our deliveries using parts made in
the new factory will increase steadily over coming months as parts are
requalified. Generally, we have seen our supply chain stabilising as a
result of specific actions we and our suppliers have implemented. However, a
few hotspots remain, and we are mindful of comments from customers about
continuing pressures in some parts of the aerospace ecosystem.
Regarding the 737 MAX, increased production volumes are taking longer than the
industry might have hoped at the start of the year. The operating businesses
most exposed to the 737 MAX programme were resourced for significantly higher
build rates coming into the year and have been protecting this resource,
particularly skilled labour, whilst awaiting clarity from customers on demand
for those products affected. Our cost base is now being realigned as we have
agreed sensible production schedules with Boeing and other customers that take
account of likely build rates and inventory levels.
H2 Outlook
Currently we expect H2 sales to be slightly higher than H1 as increases in
most commercial aircraft build rates are partially offset by the ongoing 737
MAX situation. Overall, higher volumes, operational efficiency benefits and
improved pricing are expected to result in Aerospace H2 performance being
higher than H1.
Flexonics Division
The Flexonics Division represents 33% (H1 2023 - 37%) of Group revenue and
consists of 12 operations which are located in North America (four),
continental Europe (two), the United Kingdom (two), South Africa, India, and
China (two including the Group's 49% equity stake in a land vehicle product
joint venture). This Divisional review, presented before the share of the
joint venture results, is on a constant currency basis, whereby H1 2023
results have been translated using H1 2024 average exchange rates and on an
adjusted basis to exclude site relocation costs. The Division's operating
results on a constant currency basis are summarised below:
H1 2024 H1 2023 ((1)) Change
Revenue £163.6m £173.8m -5.9%
Adjusted operating profit £17.9m £19.5m -8.2%
Adjusted operating margin 10.9% 11.2% -30bps
((1)) H1 2023 results translated using H1 2024 average exchange rates - constant
currency.
Divisional revenue decreased by £10.2m (-5.9%) to £163.6m (H1 2023 -
£173.8m) and adjusted operating profit decreased by £1.6m (-8.2%) to £17.9m
(H1 2023 - £19.5m).
Revenue Reconciliation
H1 2023 revenue £173.8m
Land vehicle £(2.9)m
Power & energy £(7.3)m
H1 2024 revenue £163.6m
Contract Wins
The Flexonics Division has been awarded a number of important contracts this
year which include:
- Several new or extended contracts with North American heavy-duty truck OEMs
with supply from our Bartlett business, with facilities in the USA and Mexico.
- New contract signed with European OEM for heavy-duty truck with supply from
multiple Senior Flexonics operating businesses.
- New contracts with passenger vehicle OEMs in Europe with supply from our
Olomouc business in the Czech Republic.
- Catofin contract with an Indian customer to manufacture and supply expansion
joints for a new Catofin production facility supplied by our Pathway business
in the USA.
- Numerous petrochemical, nuclear and other industrial contracts awarded to our
Pathway business in the USA.
H1 Performance
Overall, and as expected, Senior's sales to land vehicle markets decreased in
the period due to demand starting to normalise to more typical levels
following a strong 2023. Group sales to land vehicle markets decreased by
2.9% driven by these softer market conditions partially mitigated by the
benefit from the launch and ramp up of new programmes in North America and
Europe. Senior's sales to the North American truck market increased by
£1.6m (5.1%) with market production increasing by 3.7%. Our North American
off-highway sales decreased £2.7m (-14.0%) reflecting lower demand from our
customers. Sales to other truck and off-highway regions, including Europe
and India, decreased by £0.7m (-2.7%). Group sales to passenger vehicle
markets decreased by £1.1m (-4.6%) in the year.
In the Group's power & energy markets sales decreased by £7.3m (-10.0%)
in the first half. Sales to other power & energy markets increased by
£1.9m (4.1%) reflecting growth in sales to power generation, nuclear and
renewables industry customers. Sales to oil and gas customers decreased by
£9.2m (‑34.7%) as a result of lower demand due to anticipated destocking
in 2024 by certain upstream oil and gas customers. Downstream oil & gas
sales remained healthy.
As expected, adjusted operating profit decreased by £1.6m compared to prior
period as a result of lower sales. The divisional adjusted operating margin
remained in double digits at 10.9% (H1 2023 -11.2%).
H2 Outlook
As we enter H2, although land vehicle customer demand has held up well, ACT
research are now forecasting a decline in the North American heavy-duty truck
market of 9% in the full-year 2024. S&P data shows that European
heavy-duty truck production for the full-year 2024 is forecast to be down by
14%. Currently, therefore, we expect H1 performance to be slightly higher
than H2 due to this return to more typical levels of land vehicle market
demand in the second half of the year and ongoing rebalancing of inventory by
our upstream oil & gas customers, partially offset by robust demand in our
downstream oil and gas and nuclear business.
OTHER FINANCIAL INFORMATION
Operating profit
Adjusted operating profit increased by £2.2m (9.6%) to £25.1m (H1 2023 -
£22.9m). Excluding the adverse exchange rate impact of £0.7m, adjusted
operating profit increased by £2.9m (13.1%) on a constant currency basis.
After accounting for £0.8m amortisation of intangible assets from
acquisitions (H1 2023 - £1.1m), £2.6m site relocation costs (H1 2023 -
£nil) and £1.1m US class action lawsuit (H1 2023 - £nil), reported
operating profit was £20.6m (H1 2023 - £20.8m). Net restructuring costs
and US pension settlement costs were £nil in the first half of the year (H1
2023 - £0.9m and £0.1m respectively). Reported operating profit in the
Aerospace Division was £12.0m (H1 2023 - £9.6m) and reported operating
profit in the Flexonics Division was £18.3m (H1 2023 - £20.8m).
Site relocation costs of £2.6m (H1 2023 - £nil) include £2.3m related to
the transfer of some manufacturing from Senior Aerospace SSP's facility in
California, US, to its cost competitive facility in Mexico. The majority of
this cost relates to recognition of an impairment of £1.9m of property, plant
and equipment. The Group also incurred £0.3m costs related to the transfer
of our Senior Flexonics Crumlin business to a nearby high-tech facility to
better showcase its design, development, test and qualification capabilities
in support of the Group's strategic initiatives.
Finance costs and income
Finance costs, net of finance income and before interest unwind of contingent
consideration increased to £6.7m (H1 2023 - £5.3m) and comprise IFRS 16
interest charge on lease liabilities of £1.6m (H1 2023 - £1.5m), net finance
income on retirement benefits of £1.0m (H1 2023 - £1.0m) and net interest
charge of £6.1m (H1 2023 - £4.8m). This increase was driven by higher
underlying interest rates on variable rate debt and higher levels of
indebtedness in H1 2024 versus the prior period.
Gross finance costs, including interest unwind of contingent consideration
were £11.6m (H1 2023 - £9.6m) and finance income was £4.2m (H1 2023 -
£2.9m).
Tax charge
The adjusted tax rate for the period was 20.1% (H1 2023 - 17.0%), being a tax
charge of £3.7m (H1 2023 - £3.0m) on adjusted profit before tax of £18.4m
(H1 2023 - £17.6m). The adjusted tax rate benefitted from enhanced
deductions for R&D expenditure in the USA as well as the geographical mix
of taxable profits. The reported tax rate was 17.4%, being a tax charge of
£2.3m on reported profit before tax of £13.2m. This included £1.4m tax
credit against items excluded from adjusted profit before tax, of which £0.2m
credit related to amortisation of intangible assets from acquisitions, £0.7m
related to site relocation costs, £0.3m related to US class action lawsuit
and £0.2m related to corporate undertakings in the half-year. The 2023
half-year reported tax rate was 14.1%, being a tax charge of £1.9m on
reported profit before tax of £13.5m. This included £1.1m tax credit
against items excluded from adjusted profit before tax, of which £0.3m credit
related to amortisation of intangible assets from acquisitions, £0.3m credit
related to net restructuring costs and a £0.5m credit related to corporate
undertakings.
Cash tax paid was £5.0m (H1 2023 - £2.4m) and is stated net of refunds
received of £nil (H1 2023 - £2.7m) of tax paid in prior periods, arising
from the offset of tax losses against taxable profits of prior periods.
Earnings per share
The weighted average number of shares, for the purposes of calculating
undiluted earnings per share, decreased to 413.8 million (H1 2023 - 413.9
million). The decrease arose principally due to the purchase of shares held
by the employee benefit trust during 2023 and the first half of 2024. The
adjusted earnings per share was 3.55 pence (H1 2023 - 3.53 pence). Basic
earnings per share was 2.63 pence (H1 2023 - 2.80 pence). See Note 7 for
details of the basis of these calculations.
Return on capital employed ("ROCE")
ROCE, a key performance indicator for the Group as defined above, increased by
100 basis points to 7.3% (H1 2023 - 6.3%). The increase in ROCE was mainly a
result of the significant increase in the last twelve month period in adjusted
operating profit compared to prior half-year.
Cash flow
The Group generated free cash flow of £3.0m in H1 2024 (H1 2023 - £11.8m
outflow) as set out in the table below:
H1 2024 H1 2023
£m
£m
Operating profit 20.6 20.8
Amortisation of intangible assets from acquisitions 0.8 1.1
Net restructuring costs - 0.9
US pension settlement - 0.1
Site relocation costs 2.6 -
US class action lawsuit 1.1 -
Adjusted operating profit 25.1 22.9
Depreciation (including amortisation of software) 24.4 25.0
Working capital and provisions movement, net of restructuring items (19.8) (38.5)
Pension contributions (0.3) (0.3)
Pension service and running costs 1.0 0.7
Other items((1)) 1.4 0.4
Interest paid, net (6.9) (6.0)
Income tax paid, net (5.0) (2.4)
Capital expenditure (16.9) (13.7)
Sale of property, plant and equipment - 0.1
Free cash flow 3.0 (11.8)
Corporate undertakings (12.0) 0.1
Net restructuring costs paid (0.3) (0.6)
US pension settlement - (0.8)
Site relocation costs paid (0.7) -
Dividend from Joint Venture 1.5 -
Dividends paid (7.0) (4.1)
Purchase of shares held by employee benefit trust (3.0) (0.9)
Net cash flow (18.5) (18.1)
Effect of foreign exchange rate changes (0.5) 8.9
IFRS 16 non-cash additions and modifications including acquisition (10.3) (2.4)
Change in net debt (29.3) (11.6)
Opening net debt (203.8) (178.9)
Closing net debt (233.1) (190.5)
(1) Other items comprises £2.6m share-based payment charges (H1 2023 - £1.4m),
£(0.7m) profit on share of joint venture (H1 2023 - £(0.6m)), £(0.5m)
working capital and provision currency movements (H1 2023 - £(0.3m)) and
£nil profit on sale of fixed assets (H1 2023 - £(0.1m)).
Capital expenditure
Gross capital expenditure of £16.9m (H1 2023 - £13.7m) was 0.9 times
depreciation excluding the impact of IFRS 16 (H1 2023 - 0.7 times). The
disposal of property, plant and equipment was profit neutral (H1 2023 - £0.1m
profit). For the full-year 2024, capital investment is expected to be
slightly above depreciation (excluding the impact of IFRS 16). We are
prioritising new investment on growth projects where contracts have been
secured, important replacement equipment for current production and
sustainability related items.
Working capital
Working capital balances increased by £19.7m in the first half of 2024 to
£180.6m (31 December 2023 - £160.9m), after £0.2m adverse foreign currency
movements. The underlying increase reflects increased trading in the period.
Inventory was higher particularly in Aerospace with planned investment to
enable us to meet the strong increase in demand from our customers and as a
result of 737 MAX production being lower than initially resourced for.
Receivables were higher as a result of revenue growth. In the first half
of 2024, working capital increased as a percentage of sales by 170 basis
points to 18.4% (31 December 2023 - 16.7%). For the full-year 2024, we
currently expect working capital to be around 17% to 18% of sales. Our
medium-term target remains for working capital as a percentage of sales to
reduce towards the 15% level.
Retirement benefit schemes
The retirement benefit surplus in respect of the Group's UK defined benefit
pension plan ("the UK Plan") decreased by £1.8m to £46.7m (31 December 2023
- £48.5m) mainly due to £2.3m net actuarial losses and £0.6m running costs
partly offset by £1.1m net interest income. Retirement benefit deficits in
respect of the US and other territories decreased by £0.2m to £7.8m (31
December 2023 - £8.0m).
The triennial actuarial valuation of the UK Plan as at 5 April 2022 showed a
surplus of £24.5m (5 April 2019 - deficit of £10.2m). The Group's deficit
reduction cash contributions, including administration costs, to the UK Plan
ceased on 30 June 2022.
The estimated cash contributions expected to be paid during the full-year 2024
in the US funded plans is £0.8m (£1.5m was paid in 2023).
Net debt
Net debt which includes IFRS 16 lease liabilities increased by £29.3m to
£233.1m at 30 June 2024 (31 December 2023 - £203.8m). As noted in the cash
flow above, the Group generated net cash outflow of £18.5m (as defined in
Note 12c), before £0.5m adverse foreign currency movements and £10.3m
non-cash changes in lease liabilities due to additions and modifications.
Net debt excluding IFRS 16 lease liabilities of £77.0m (31 December 2023 -
£71.8m) increased by £24.1m to £156.1m at 30 June 2024 (31 December 2023 -
£132.0m), due to free cash flow of £3.0m and £1.5m dividend received from
the Joint Venture more than offset by £10.7m contingent consideration paid
for Spencer Aerospace following the strong growth post acquisition, £10.0m
outflow for dividends and purchase of shares, £4.9m capital repayment of
leases, £2.3m net cash outflows related to corporate undertakings, site
relocation and restructuring and £0.7m adverse foreign currency movements.
Funding and Liquidity
At 30 June 2024, the Group held committed borrowing facilities of £314.5m and
the Group had headroom of £158.4m under these committed facilities. In the
first half, the US RCF of $50m was extended by a year and will now mature in
June 2026. The weighted average maturity of the Group's committed facilities
is 3.0 years at 30 June 2024. Net debt (defined in Note 12c) was £233.1m,
including £77.0m of capitalised leases which do not form part of the
definition of debt under the committed facilities and do not impact the
Group's lending covenants.
The Group has two covenants for committed borrowing facilities, which are
tested at June and December: the Group's net debt to EBITDA (defined in the
Notes to the Financial Headlines) must not exceed 3.0x and interest cover, the
ratio of EBITDA to interest must be higher than 3.5x. At 30 June 2024, the
Group's net debt to EBITDA was 1.8x and interest cover was 10.7x, both
comfortably within covenant limits. For all testing periods within the Going
Concern Period (defined in Note 2), there is sufficient headroom to remain
within the covenant limits and the Group's committed borrowing facilities,
even in a severe but plausible downside scenario.
Going concern basis
The Directors have, at the time of approving these Condensed Consolidated
Interim Financial Statements, a reasonable expectation that the Group has
adequate resources to continue in operational existence for the Going Concern
Period. Accordingly, they continue to adopt the going concern basis of
accounting in preparing these Condensed Consolidated Interim Financial
Statements, having undertaken a rigorous assessment of the financial
forecasts. Further details are provided in Note 2.
Risks and uncertainties
The principal risks and uncertainties faced by the Group have been reviewed
during the first half of 2024. The Group's principal risk list as at 30 June
2024 and for the remaining six months of the financial year has remained
unchanged from those set out in detail on pages 62 to 69 of the Annual Report
& Accounts 2023 (available at www.seniorplc.com (http://www.seniorplc.com)
). Details regarding the mitigating actions the Board has established in
response to the risks and uncertainties can also be found on the same pages of
the Annual Report & Accounts 2023. These mitigating actions are reviewed
and updated regularly.
The first half of 2024 presented additional headwinds flowing from some of the
Group's key aerospace customers who continue to wrestle with operational
challenges. The impact of demand and build rate variability, heightened
scrutiny of quality and safety conformance and the potential for disruption
resulting from merger and acquisition activity are being carefully monitored
with mitigating actions being deployed accordingly.
The Group's risk and assurance framework continues to serve as an effective
foundation from which to monitor and address our evolving business climate.
Additional information regarding the risk and assurance framework is set out
on pages 58 to 61 of the Annual Report and Accounts 2023 (available at
www.seniorplc.com (http://www.seniorplc.com) ).
Responsibility statement of the Directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
1. the condensed set of financial statements has been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted for use by the UK;
2. the Interim Management Report herein includes a fair review of the information
required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
By Order of the Board
David Squires Bindi Foyle
Group Chief Executive Officer Group Finance Director
2 August 2024 2 August 2024
INDEPENDENT REVIEW REPORT TO SENIOR PLC
Conclusion
We have been engaged by Senior plc ("the Company") to review the condensed set
of financial statements in the half-yearly financial report for the six months
ended 30 June 2024 which comprises the Condensed Consolidated Income
Statement, the Condensed Consolidated Statement of Comprehensive Income, the
Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of
Changes in Equity, the Condensed Consolidated Cash Flow Statement, and the
related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the
UK. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Mike Barradell
for and on behalf of KPMG LLP
Chartered Accountants
5 Canada Square, London, E14 5GL
2 August 2024
Condensed Consolidated Income Statement
For the half-year ended 30 June 2024
Notes Half-year Half-year Year
ended
ended
ended
30 June
30 June
31 Dec
2024
2023
2023
£m £m £m
Revenue 3 501.4 482.3 963.5
Trading profit 19.9 20.2 36.9
Share of joint venture profit 9 0.7 0.6 1.0
Operating profit ((1)) 3 20.6 20.8 37.9
Finance income 4.2 2.9 10.1
Finance costs (11.6) (9.6) (20.5)
Corporate undertakings 4 - (0.6) (4.7)
Profit before tax ((2)) 13.2 13.5 22.8
Tax (charge)/credit 5 (2.3) (1.9) 8.3
Profit for the period 10.9 11.6 31.1
Attributable to:
Equity holders of the parent 10.9 11.6 31.1
Earnings per share
Basic ((3)) 7 2.63p 2.80p 7.52p
Diluted ((4)) 7 2.57p 2.72p 7.32p
((1)) Adjusted operating profit 4 25.1 22.9 45.8
((2)) Adjusted profit before tax 4 18.4 17.6 38.3
((3)) Adjusted earnings per share 7 3.55p 3.53p 10.28p
((4)) Adjusted and diluted earnings per share 7 3.47p 3.43p 10.00p
Condensed Consolidated Statement of Comprehensive Income
For the half-year ended 30 June 2024
Half-year Half-year Year
ended
ended
ended
30 June
30 June
31 Dec
2024
2023
2023
£m £m £m
Profit for the period 10.9 11.6 31.1
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
(Losses)/gains on foreign exchange contracts- cash flow hedges during the (2.9) 0.8 2.7
period
Reclassification adjustments for losses included in profit 0.2 0.9 0.9
(Losses)/gains on foreign exchange contracts- cash flow hedges (2.7) 1.7 3.6
Exchange differences on translation of overseas operations (2.5) (18.3) (16.9)
Tax relating to items that may be reclassified 0.6 (0.5) (0.9)
(4.6) (17.1) (14.2)
Items that will not be reclassified subsequently to profit or loss:
Actuarial losses on defined benefit pension schemes (2.0) (3.3) (2.6)
Tax relating to items that will not be reclassified 0.5 0.8 0.6
(1.5) (2.5) (2.0)
Other comprehensive expense for the period, net of tax (6.1) (19.6) (16.2)
Total comprehensive income/(expense) for the period 4.8 (8.0) 14.9
Attributable to:
Equity holders of the parent 4.8 (8.0) 14.9
Condensed Consolidated Balance Sheet
As at 30 June 2024 Notes 30 June 2024 30 June 2023 31 Dec 2023
£m £m £m
Non-current assets
Goodwill 8 193.8 193.2 193.3
Other intangible assets 32.4 33.6 33.1
Investment in joint venture 9 4.2 4.6 5.1
Property, plant and equipment 10 284.0 283.1 284.7
Deferred tax assets 23.9 12.2 20.7
Retirement benefits 11 46.7 48.0 48.5
Trade and other receivables 0.5 0.6 0.8
Total non-current assets 585.5 575.3 586.2
Current assets
Inventories 221.9 199.4 207.5
Current tax receivables 2.7 2.0 2.3
Trade and other receivables 144.3 147.1 141.7
Cash and bank balances 12c) 36.4 35.7 47.6
Total current assets 405.3 384.2 399.1
Total assets 990.8 959.5 985.3
Current liabilities
Trade and other payables 188.1 183.2 188.4
Current tax liabilities 7.7 18.1 10.0
Lease liabilities 12c) 13.0 11.2 12.4
Bank overdrafts and loans 12c) 27.0 - 1.8
Provisions 13 12.0 16.1 10.5
Deferred and contingent consideration 12.5 36.1 10.5
Total current liabilities 260.3 264.7 233.6
Non-current liabilities
Bank and other loans 12c) 165.5 155.1 177.8
Retirement benefits 11 7.8 9.9 8.0
Deferred tax liabilities 9.6 4.7 7.0
Lease liabilities 12c) 64.0 59.9 59.4
Provisions 13 13.5 5.7 15.0
Contingent consideration 6.8 15.1 18.5
Others 9.2 6.2 8.9
Total non-current liabilities 276.4 256.6 294.6
Total liabilities 536.7 521.3 528.2
Net assets 454.1 438.2 457.1
Equity
Issued share capital 14 41.9 41.9 41.9
Share premium account 14.8 14.8 14.8
Equity reserve 7.2 6.3 7.9
Hedging and translation reserve 32.7 34.4 37.3
Retained earnings 367.1 351.8 368.0
Own Shares (9.6) (11.0) (12.8)
Equity attributable to equity holders of the parent 454.1 438.2 457.1
Total equity 454.1 438.2 457.1
Condensed Consolidated Statement of Changes in Equity
For the half-year ended 30 June 2024
All equity is attributable to equity holders of the parent
Issued Share Equity Hedging Translation Retained Own Total
share
premium
reserve
reserve
reserve
earnings
shares
equity
capital
account
£m £m £m £m £m £m £m £m
Balance at 1 January 2023 41.9 14.8 6.4 (38.8) 90.3 346.5 (11.7) 449.4
Profit for the period - - - - - 31.1 - 31.1
Gains on foreign exchange contracts- cash flow hedges - - - 3.6 - - - 3.6
Exchange differences on translation of overseas operations - - - - (16.9) - - (16.9)
Actuarial losses on defined benefit pension schemes - - - - - (2.6) - (2.6)
Tax relating to components of other comprehensive income - - - (0.9) - 0.6 - (0.3)
Total comprehensive income/(expense) for the period - - - 2.7 (16.9) 29.1 - 14.9
Share-based payment charge - - 4.1 - - - - 4.1
Tax relating to share-based payments - - - - - 0.9 - 0.9
Purchase of shares held by employee benefit trust - - - - - - (5.6) (5.6)
Use of shares held by employee benefit trust - - - - - (4.5) 4.5 -
Transfer to retained earnings - - (2.6) - - 2.6 - -
Dividends paid - - - - - (6.6) - (6.6)
Balance at 31 December 2023 41.9 14.8 7.9 (36.1) 73.4 368.0 (12.8) 457.1
Profit for the period - - - - - 10.9 - 10.9
Losses on foreign exchange contracts- cash flow hedges - - - (2.7) - - - (2.7)
Exchange differences on translation of overseas operations - - - - (2.5) - - (2.5)
Actuarial losses on defined benefit pension schemes - - - - - (2.0) - (2.0)
Tax relating to components of other comprehensive income - - - 0.6 - 0.5 - 1.1
Total comprehensive (expense)/income for the period - - - (2.1) (2.5) 9.4 - 4.8
Share-based payment charge - - 2.6 - - - - 2.6
Tax relating to share-based payments - - - - - (0.4) - (0.4)
Purchase of shares held by employee benefit trust - - - - - - (3.0) (3.0)
Use of shares held by employee benefit trust - - - - - (6.2) 6.2 -
Transfer to retained earnings - - (3.3) - - 3.3 - -
Dividends paid - - - - - (7.0) - (7.0)
Balance at 30 June 2024 41.9 14.8 7.2 (38.2) 70.9 367.1 (9.6) 454.1
All equity is attributable to equity holders of the parent
Issued Share Equity Hedging Translation reserve Retained Own Total
share
premium
reserve
reserve
earnings
shares
equity
capital
account
£m £m £m £m £m £m £m £m
Balance at 1 January 2023 41.9 14.8 6.4 (38.8) 90.3 346.5 (11.7) 449.4
Profit for the period - - - - - 11.6 - 11.6
Gains on foreign exchange contracts- cash flow hedges - - - 1.7 - - - 1.7
Exchange differences on translation of overseas operations - - - - (18.3) - - (18.3)
Actuarial losses on defined benefit pension schemes - - - - - (3.3) - (3.3)
Tax relating to components of other comprehensive income - - - (0.5) - 0.8 - 0.3
Total comprehensive (expense)/income for the period - - - 1.2 (18.3) 9.1 - (8.0)
Share-based payment charge - - 1.4 - - - - 1.4
Tax relating to share-based payments - - 0.4 - - - - 0.4
Purchase of shares held by employee benefit trust - - - - - - (0.9) (0.9)
Use of shares held by employee benefit trust - - - - - (1.6) 1.6 -
Transfer to retained earnings - - (1.9) - - 1.9 - -
Dividends paid - - - - - (4.1) - (4.1)
Balance at 30 June 2023 41.9 14.8 6.3 (37.6) 72.0 351.8 (11.0) 438.2
Condensed Consolidated Cash Flow Statement
For the half-year ended 30 June 2024
Notes Half-year Half-year Year
ended
ended
ended
30 June
30 June
31 Dec
2024
2023
2023
£m £m £m
Net cash generated/(used in) from operating activities 12a) 14.4 (1.7) 41.4
Investing activities
Interest received 3.2 1.9 4.3
Proceeds on disposal of property, plant and equipment - 0.1 0.7
Purchases of property, plant and equipment (16.3) (12.9) (33.7)
Purchases of intangible assets (0.6) (0.8) (2.2)
Acquisition of Spencer (10.7) 0.3 (23.9)
Dividend from joint venture 1.5 - -
Net cash used in investing activities (22.9) (11.4) (54.8)
Financing activities
Dividends paid (7.0) (4.1) (6.6)
New loans 98.3 84.1 136.2
Repayment of borrowings (83.8) (66.8) (96.2)
Purchase of shares held by employee benefit trust (3.0) (0.9) (5.6)
Repayment of lease liabilities (4.9) (5.0) (10.2)
Net cash (used)/generated in financing activities (0.4) 7.3 17.6
Net (decrease)/increase in cash and cash equivalents (8.9) (5.8) 4.2
Cash and cash equivalents at beginning of period 45.8 42.7 42.7
Effect of foreign exchange rate changes (0.5) (1.2) (1.1)
Cash and cash equivalents at end of period 12c) 36.4 35.7 45.8
Notes to the Condensed Consolidated Interim Financial Statements
1. General information
These Condensed Consolidated Interim Financial Statements of Senior plc ("the
Group"), which were approved by the Board of Directors on 2 August 2024, have
been reviewed by KPMG LLP, the Group's auditor, whose report is set out after
the Directors' Responsibility Statement.
The comparative figures for the year ended 31 December 2023 do not constitute
the Group's statutory accounts for 2023 as defined in Section 434(3) of the
Companies Act 2006. Statutory accounts for 2023 have been delivered to the
Registrar of Companies. The auditor's report on those accounts was
unqualified, did not draw attention to any matters by way of emphasis and did
not contain statements under Sections 498(2) or (3) of the Companies Act 2006.
2. Accounting policies
Basis of preparation
These Condensed Consolidated Interim Financial Statements have been prepared
in accordance with the Disclosure and Transparency Rules of the Financial
Conduct Authority and with IAS 34 "Interim Financial Reporting" as adopted for
use by the UK.
The Annual Financial Statements of the Group for the year ending 31 December
2024 will be prepared in accordance with UK-adopted international accounting
standards. As required by the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority, these Condensed Consolidated Interim
Financial Statements have been prepared by applying the accounting policies
and presentation that were applied in the preparation of the published Annual
Financial Statements of the Group as at and for the year ended 31 December
2023, which were prepared in accordance with UK-adopted international
accounting standards.
These Condensed Consolidated Interim Financial Statements do not include all
the information required for full Annual Financial Statements and should be
read in conjunction with the Annual Financial Statements of the Group as at
and for the year ended 31 December 2023.
Going Concern
The Directors have, at the time of approving these Condensed Consolidated
Interim Financial Statements, a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future, being a period of at least 12 months from this reporting date (the
"Going Concern Period"). Accordingly, they continue to adopt the going
concern basis of accounting in preparing these Condensed Consolidated Interim
Financial Statements, having undertaken a rigorous assessment of the financial
forecasts.
The Board has considered projections, including severe but plausible downsides
covering the Going Concern Period based on the experiences over recent years,
including the robust trading performance in the first half of 2024. These
projections are borne out of extensive scenario testing, based on a variety of
end market assumptions, while taking account of appropriate mitigating actions
within the direct control of the Group.
The Group has two covenants for committed borrowing facilities, which are
tested at June and December: the Group's net debt to EBITDA (defined in the
Notes to the Financial Headlines) must not exceed 3.0x and interest cover, the
ratio of EBITDA to interest must be higher than 3.5x. At 30 June 2024, the
Group's net debt to EBITDA was 1.8x and interest cover was 10.7x, both
comfortably within covenant limits. The Group's liquidity headroom at 30
June 2024 was £158.4m. For all testing periods within the Going Concern
Period, there is sufficient headroom to remain within the covenant limits and
the Group's committed borrowing facilities, even in a severe but plausible
downside scenario.
Based on the above assessment, the Board has concluded that the Group will
continue to have adequate financial resources to realise its assets and
discharge its liabilities as they fall due over the Going Concern Period.
Accordingly, the Directors have formed the judgement that it is appropriate to
prepare these Condensed Consolidated Interim Financial Statements on the going
concern basis.
New policies and standards
The accounting policies, presentation and methods of computation adopted in
the preparation of these Condensed Consolidated Interim Financial Statements
are consistent with those followed in the preparation of the Group's Annual
Financial Statements for the year ended 31 December 2023, which were prepared
in accordance with UK-adopted international accounting standards.
At the date of authorisation of these Condensed Consolidated Interim Financial
Statements, several new standards and amendments to existing standards have
been issued, some of which are effective. None of these standards and
amendments have a material impact on the Group.
The preparation of the Condensed Consolidated Interim Financial Statements
requires management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The Group's latest
Annual Financial Statements for the year ended 31 December 2023, which are
available via Senior's website www.seniorplc.com (http://www.seniorplc.com) ,
set out the key sources of estimation uncertainty and the critical judgements
that were made in preparing those Financial Statements.
3. Segmental analysis
The Group reports its segment information as two operating divisions according
to the market segments they serve, Aerospace and Flexonics, which is
consistent with the oversight employed by the Executive Committee. The chief
operating decision maker, as defined by IFRS 8, is the Executive Committee.
The Group is managed on the same basis, as two operating divisions.
Business Segments
Segment information for revenue and operating profit and a reconciliation to
the Group profit after tax is presented below:
Aerospace Flexonics Eliminations Total Aerospace Flexonics Eliminations Total
/ central
/ central
costs
costs
Half-year Half-year Half-year Half-year Half-year Half-year Half-year Half-year
ended
ended
ended
ended
ended
ended
ended
ended
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
2024
2024
2024
2024
2023
2023
2023
2023
£m £m £m £m £m £m £m £m
External revenue 338.0 163.4 - 501.4 303.8 178.5 - 482.3
Inter-segment revenue 0.7 0.2 (0.9) - 0.3 0.1 (0.4) -
Total revenue 338.7 163.6 (0.9) 501.4 304.1 178.6 (0.4) 482.3
Adjusted trading profit 16.2 17.9 (9.7) 24.4 11.6 20.2 (9.5) 22.3
Share of joint venture profit - 0.7 - 0.7 - 0.6 - 0.6
Adjusted operating profit 16.2 18.6 (9.7) 25.1 11.6 20.8 (9.5) 22.9
Amortisation of intangible assets from acquisitions (0.8) - - (0.8) (1.1) - - (1.1)
Net restructuring costs - - - - (0.9) - - (0.9)
US pension settlement - - - - - - (0.1) (0.1)
Site relocation costs (2.3) (0.3) - (2.6) - - - -
US class action lawsuit (1.1) - - (1.1) - - - -
Operating profit 12.0 18.3 (9.7) 20.6 9.6 20.8 (9.6) 20.8
Finance income 4.2 2.9
Finance costs (11.6) (9.6)
Corporate undertakings - (0.6)
Profit before tax 13.2 13.5
Tax charge (2.3) (1.9)
Profit after tax 10.9 11.6
Trading profit and adjusted trading profit is operating profit and adjusted
operating profit respectively before share of joint venture profit. See Note
4 for the derivation of adjusted operating profit.
Segment information for assets and liabilities is presented below.
30 June 30 June 31 Dec
2024
2023
2023
Assets £m £m £m
Aerospace 664.6 637.7 646.5
Flexonics 212.4 219.0 215.4
Segment assets for reportable segments 877.0 856.7 861.9
Unallocated
Central 4.1 4.6 4.0
Cash 36.4 35.7 47.6
Deferred and current tax 26.6 14.2 23.0
Retirement benefits 46.7 48.0 48.5
Others - 0.3 0.3
Total assets per Consolidated Balance Sheet 990.8 959.5 985.3
30 June 30 June 31 Dec
2024
2023
2023
Liabilities £m £m £m
Aerospace 192.8 173.1 183.1
Flexonics 81.6 82.8 79.9
Segment liabilities for reportable segments 274.4 255.9 263.0
Unallocated
Central 15.1 18.0 22.2
Debt 192.5 155.1 179.6
Deferred and current tax 17.3 22.8 17.0
Retirement benefits 7.8 9.9 8.0
Deferred and contingent consideration 19.3 51.2 29.0
Others 10.3 8.4 9.4
Total liabilities per Consolidated Balance Sheet 536.7 521.3 528.2
Total revenue is disaggregated by market sectors as follows:
Half-year Half-year Year
ended
ended
ended
30 June
30 June
31 Dec
2024
2023
2023
£m £m £m
Civil Aerospace 232.0 201.4 410.5
Defence 65.6 63.8 132.6
Other 41.1 38.9 73.4
Aerospace 338.7 304.1 616.5
Land Vehicles 97.8 104.0 201.7
Power & Energy 65.8 74.6 146.3
Flexonics 163.6 178.6 348.0
Eliminations (0.9) (0.4) (1.0)
Total revenue 501.4 482.3 963.5
Other Aerospace comprises space and non-military helicopters and other
markets, principally including semiconductor, medical, and industrial
applications.
4. Adjusted operating profit and adjusted profit before tax
The presentation of adjusted operating profit and adjusted profit before tax
measures, derived in accordance with the table below, has been included to
identify the performance of the Group prior to the impact of amortisation of
intangible assets from acquisitions, net restructuring cost, US pension
settlement, site relocation costs, US class action lawsuit and costs
associated with corporate undertakings. The Board has a policy to separately
disclose items it considers are outside the normal course of management
oversight and control on a day-to-day basis and are not reflective of in-year
trading performance. Indicative criteria such as period to which the item
relates and external driven factors that are outside of the control of the
Group in combination with the magnitude and consistency of application are
also considered.
The amortisation charge relates to the acquisition of Spencer Aerospace. It
is charged on a straight-line basis and reflects a non-cash item for the
reported year. The Group implemented a restructuring programme in 2019,
which had residual activity in 2023 in response to further specific end market
conditions. The US pension settlement related to closure of a US defined
benefit scheme in 2023. Site relocation costs relate to transfer of business
activities into new or existing cost competitive facilities to support the
Group's strategic initiatives. The US class action lawsuit relates to an
historic legal matter. Corporate undertakings relate to business acquisition
and disposal activities. None of these charges are reflective of in year
performance. Therefore, they are excluded by the Board and Executive
Committee when measuring the operating performance of the businesses.
Half-year Half-year Year
ended
ended
ended
30 June
30 June
31 Dec
2024
2023
2023
£m £m £m
Operating profit 20.6 20.8 37.9
Amortisation of intangible assets from acquisitions 0.8 1.1 2.2
Net restructuring cost - 0.9 5.6
US pension settlement - 0.1 -
Site relocation costs 2.6 - 0.1
US class action lawsuit 1.1 - -
Adjusted operating profit 25.1 22.9 45.8
Profit before tax 13.2 13.5 22.8
Adjustments to profit before tax as above 4.5 2.1 7.9
Corporate undertakings - 0.6 4.7
Corporate undertakings - discount unwind 0.7 1.4 2.9
Total Corporate undertakings 0.7 2.0 7.6
Adjusted profit before tax 18.4 17.6 38.3
Site relocation costs
In the first half of 2024, £0.3m of site relocation costs (H1 2023 - £nil)
related to the transfer of our Senior Flexonics Crumlin business to a nearby
high-tech facility in Wales to better showcase its design, development, test
and qualification capabilities in support of the Group's strategic
initiatives. The Group also recognised an impairment of £1.9m of property,
plant and equipment and costs of £0.4m related to the transfer of existing
business to other cost competitive facilities.
US class action lawsuit
In June 2022 a wage and hour class action lawsuit was filed against one
business based in California, USA. This lawsuit alleged violations of state
regulations concerning meal and rest breaks and related penalties covering the
period 2021 through the first half of 2024. Mediation took place in April
2024, resulting in a Company agreed settlement and related costs of £1.1m, of
which no payments have made as at 30 June 2024. Court approval and payment
is expected by the end of the first half of 2025.
Corporate undertakings
In the first half of 2024, the Group recorded £0.7m relating to interest
unwind of Spencer acquisition contingent consideration. In the first half of
2023, the Group recorded £2.0m costs related to the acquisition of Spencer,
of which £1.4m is interest unwind of deferred and contingent consideration
and £0.6m is unwind of initial fair value uplift and other corporate costs.
5. Tax charge
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Current tax:
Current year charge 2.0 3.0
Irrecoverable withholding tax 0.2 0.2
2.2 3.2
Deferred tax:
Current year charge/(credit) 0.1 (1.3)
0.1 (1.3)
Total tax charge 2.3 1.9
Tax for the half-year ended 30 June 2024 is calculated at 17.4% (H1 2023:
14.1%) on the profit before tax, representing the half-year allocation of the
estimated weighted average annual tax rate expected for the full financial
year in accordance with IAS 34. The estimated tax rate is weighted to
reflect the tax impact of significant events taking place during the interim
period.
The UK tax rate of 25% has been applied to the UK profits for the period (H1
2023: 23.5%, being an effective tax rate as a result of the change in the UK
tax rate from 19% to 25% with effect from 1 April 2023).
The group is paying close attention to proposals under Pillar 2 of the OECD's
Base Erosion Profit Shifting (BEPS) project and the impact this may have on
the group's future tax position. Pillar 2 rules were substantively enacted
in the UK on 20 June 2023, with application from 1 January 2024. The group
does not expect material top-up tax to be payable in any jurisdiction.
We have applied the guidance contained in International Tax Reform - Pillar
Two Model Rules (Amendments to IAS 12) released on 23 May 2023 that provides
for a temporary mandatory exception from deferred tax accounting for Pillar 2.
6. Dividends
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Amounts recognised as distribution to equity holders in the period:
Final dividend for the year ended 31 December 2023 of 1.70p (2022: 1.00p) per 7.0 4.1
share
Interim dividend for the year ending 31 December 2024 of 0.75p (2023: 0.60p) 3.1 2.5
per share
The interim dividend was approved by the Board of Directors on 2 August 2024
and has not been included as a liability in these Condensed Consolidated
Interim Financial Statements, in accordance with the requirements of IFRS.
7. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
Number of shares million million
Weighted average number of ordinary shares for the purposes of basic earnings 413.8 413.9
per share
Effect of dilutive potential ordinary shares:
Share options 10.0 12.2
Weighted average number of ordinary shares for the purposes of diluted 423.8 426.1
earnings per share
Half-year Half-year Half-year Half-year
ended
ended
ended
ended
30 June
30 June
30 June
30 June
2024
2024
2023
2023
Earnings EPS Earnings EPS
Earnings and earnings per share ("EPS") £m Pence £m Pence
Profit for the period 10.9 2.63 11.6 2.80
Adjust:
Amortisation of intangible assets from acquisitions net of £0.2m tax credit 0.6 0.14 0.8 0.20
(H1 2023 - £0.3m credit)
Net restructuring cost net of £nil tax (H1 2023 - £0.3m credit) - - 0.6 0.15
US pension settlement net of £nil tax (H1 2023: £nil) - - 0.1 0.02
Corporate undertakings net of £0.2m tax credit (H1 2023 - £0.5m credit) 0.5 0.12 1.5 0.36
Site relocation costs net of £0.7m tax credit (H1 2023 - £nil) 1.9 0.46 - -
US class action lawsuit net of £0.3m tax credit (H1 2023 - £nil) 0.8 0.20 - -
Adjusted earnings after tax 14.7 3.55 14.6 3.53
Earnings per share
- basic 2.63p 2.80p
- diluted 2.57p 2.72p
- adjusted 3.55p 3.53p
- adjusted and diluted 3.47p 3.43p
The denominators used for all basic, diluted and adjusted earnings per share
are as detailed in the table above.
The presentation of adjusted earnings per share, derived in accordance with
the table above, has been included to identify the performance of the Group
prior to the impact of amortisation of intangible assets from acquisitions,
net restructuring cost, US pension settlement, site relocation costs, US class
action lawsuit and corporate undertakings.
The Board has a policy to separately disclose items it considers are outside
the normal course of management oversight and control on a day-to-day basis
and are not reflective of in-year trading performance. Indicative criteria
such as period to which the item relates and external driven factors that are
outside of the control of the Group in combination with the magnitude and
consistency of application are also considered. See Note 4 for further
details.
8. Goodwill
The change in goodwill from £193.3m at 31 December 2023 to £193.8m at 30
June 2024 reflects an increase of £0.5m due to foreign exchange differences.
The Group tests goodwill annually for impairment or more frequently if there
are indications that goodwill might be impaired. No such indicators have
been identified at 30 June 2024.
9. Investment in joint venture
The Group has a 49% interest in Senior Flexonics Technologies (Wuhan) Limited,
a jointly controlled entity incorporated in China. The Group's investment of
£4.2m (30 June 2023: £4.6m; 31 December 2023: £5.1m) represents the Group's
share of the joint venture's net assets as at 30 June 2024. During the first
half of 2024, the Group received £1.5m dividend from the joint venture (H1
2023 - £nil).
10. Property, plant and equipment
During the period, the Group invested £16.3m (H1 2023: £12.9m) on the
acquisition of property, plant and equipment (excluding right-of-use assets).
The Group also disposed of machinery with a carrying value of £nil (H1
2023: £nil) for proceeds of £nil (H1 2023: £0.1m).
At 30 June 2024, right-of-use assets were £67.3m (30 June 2023: £63.8m; 31
December 2023: £64.4m). Right-of-use asset depreciation was £5.2m for the
six months ending 30 June 2024 (H1 2023: £5.3m).
11. Retirement benefit schemes
Aggregate retirement benefit liabilities of £7.8m (30 June 2023: £9.9m; 31
December 2023: 8.0m) comprise the Group's US defined benefit pension funded
schemes with a total deficit of £2.7m (30 June 2023: £4.7m; 31 December
2023: £2.8m) and other unfunded schemes, with a deficit of £5.1m (30 June
2023: £5.2m; 31 December 2023: £5.2m).
The retirement benefit surplus of £46.7m (30 June 2023: £48.0m; 31 December
2023: £48.5m) comprises the Group's UK defined benefit pension funded
scheme. The liability and asset values of the funded schemes have been
assessed by independent actuaries using current market values and discount
rates.
12. Notes to the Cash Flow Statement
a) Reconciliation of operating profit to net cash from operating activities
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Operating profit 20.6 20.8
Adjustments for:
Depreciation of property, plant and equipment 23.5 24.2
Amortisation of intangible assets 1.7 1.9
Share of joint venture (0.7) (0.6)
Share-based payment charges 2.6 1.4
Profit on sale of fixed assets - (0.1)
Pension contributions (0.3) (0.3)
Pension service and running costs 1.0 0.7
Increase in inventories (15.0) (14.1)
Increase in receivables (4.0) (25.6)
(Decrease)/increase in payables and provisions (1.1) 1.5
Site relocation costs 1.9 -
US pension settlement - (0.7)
US class action lawsuit 1.1 -
Corporate undertaking costs (1.3) (0.2)
Working capital and provisions currency movements (0.5) (0.3)
Cash generated by operations 29.5 8.6
Income taxes paid (5.0) (2.4)
Interest paid (10.1) (7.9)
Net cash from operating activities 14.4 (1.7)
b) Free cash flow
Free cash flow, a non-statutory item, enhances the reporting of the
cash-generating ability of the Group prior to corporate activity such as the
items reconciling reported profit before tax and adjusted profit before tax
defined in Note 4, financing and transactions with shareholders. It is
derived as follows:
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Net cash from operating activities 14.4 (1.7)
Net restructuring costs paid 0.3 0.6
US pension settlement paid - 0.8
Site relocation costs paid 0.7 -
Corporate undertaking costs paid 1.3 0.2
Interest received 3.2 1.9
Proceeds on disposal of property, plant and equipment - 0.1
Purchases of property, plant and equipment (16.3) (12.9)
Purchase of intangible assets (0.6) (0.8)
Free cash flow 3.0 (11.8)
c) Analysis of net debt
At Net Non Exchange Other Lease At
1 January
Cash flow
Cash
movement
Movements
30 June
2024
2024
£m £m £m £m £m £m
Cash and bank balances 47.6 (10.7) - (0.5) - 36.4
Overdrafts (1.8) 1.8 - - - -
Cash and cash equivalents 45.8 (8.9) - (0.5) - 36.4
Debt due within one year - - (27.0) - - (27.0)
Debt due after one year (177.8) (14.5) 27.0 (0.2) - (165.5)
Lease liabilities ((1)) (71.8) 4.9 - 0.2 (10.3) (77.0)
Liabilities arising from financing activities (249.6) (9.6) - - (10.3) (269.5)
Total (203.8) (18.5) - (0.5) (10.3) (233.1)
( )
((1)) The change in lease liabilities in the six months ended 30 June 2024 includes
lease rental payments of £6.5m (£1.6m of these payments relates to lease
interest), £0.2m exchange movement and £10.3m other movements related to
lease additions and modifications.
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
Cash and Cash equivalents comprise: £m £m
Cash and bank balances 36.4 35.7
Total 36.4 35.7
Cash and cash equivalents (which are presented as a single class of assets on
the face of the Condensed Consolidated Balance Sheet) comprise cash at bank
and other short-term highly liquid investments with a maturity of three months
or less.
d) Analysis of working capital and provisions
Working capital comprises the following:
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Inventories 221.9 199.4
Trade and other receivables 144.3 147.1
Trade and other payables (188.1) (183.2)
Working capital, including derivatives 178.1 163.3
Items excluded:
Foreign exchange contracts 2.5 0.5
Total 180.6 163.8
Working capital and provisions movement, net of restructuring items, a
non-statutory cash flow item, is derived as follows:
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Increase in inventories (15.0) (14.1)
Increase in receivables (4.0) (25.6)
(Decrease)/increase in payables and provisions (1.1) 1.5
Working capital and provisions movement, excluding currency effects (20.1) (38.2)
Items excluded:
Increase in restructuring related inventory impairment - (0.4)
Decrease in net restructuring provision 0.3 0.1
Total (19.8) (38.5)
13. Provisions
Current and non-current provisions include warranty costs of £17.7m (30 June
2023: £16.8m; 31 December 2023: £17.9m), restructuring of £0.2m (30 June
2023: £0.1m; 31 December 2023: £0.5m) and other provisions including
contractual matters, claims and legal costs that arise in the ordinary course
of business of £7.6m (30 June 2023: £4.9m; 31 December 2023: £7.1m).
Warranty costs include a provision of £10.9m related to one specific disputed
commercial matter (30 June 2023: £9.9m; 31 December 2023: £11.0m). The
range of reasonably possible outcomes considered by the Board is £5.4m, which
reflects a reasonably possible increase or decrease of £2.7m. No further
details on the matter are disclosed to avoid prejudicing the contractual
position.
14. Share capital
Share capital as at 30 June 2024 amounted to £41.9m (30 June 2023 and 31
December 2023: £41.9m). No shares were issued during the period.
15. Contingent liabilities
The Group is subject to various claims which arise from time to time in the
course of its business including, for example, in relation to commercial
matters, product quality or liability, and tax audits. Where the Board has
assessed there to be a more likely than not outflow of economic benefits, a
provision has been made for the best estimate as at 30 June 2024 (see Note
13). For all other matters, the Board has concluded that it is not more
likely than not that there will be an economic outflow of benefits. While
the outcome of some of these matters cannot be predicted with any certainty,
the Directors do not expect any of these arrangements, legal actions or
claims, after allowing for provisions already made where appropriate, to
result in significant loss to the Group.
16. Related party transaction
Barbara Jeremiah, Senior Independent Non-Executive Director and Chair of the
Remuneration Committee was appointed a non-executive director of Johnson
Matthey Plc with effect from 1 July 2023. Johnson Matthey Plc, a related
party of the Group, has been renting excess car parking space from one of the
Group's operating businesses on a rolling monthly basis. The lease contract
was in place prior to the acquisition of Thermal Engineering in 2013 by the
Group. In the first six month of 2024, £0.04m car park rental was received
(H1 2023 - £0.04m). There are no outstanding amounts at 30 June 2024 (30
June 2023: £nil).
The Group has also related party relationships with a number of pension
schemes (see Note 11) and with Directors and Senior Managers of the Group.
17. Financial Instruments
Categories of financial instruments
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Carrying value of financial assets:
Cash and bank balances 36.4 35.7
Trade receivables 129.9 129.5
Other receivables 0.3 0.2
Financial assets at amortised cost 166.6 165.4
Foreign exchange contracts- cash flow hedges 1.0 3.2
Foreign exchange contracts- held for trading 0.3 -
Total financial assets 167.9 168.8
Carrying value of financial liabilities:
Bank overdrafts and loans 192.5 155.1
Lease liabilities 77.0 71.1
Trade payables 105.6 98.4
Deferred consideration - 23.0
Other payables 61.8 56.0
Financial liabilities at amortised cost 436.9 403.6
Contingent Consideration - fair value through profit or loss 19.3 28.2
Foreign exchange contracts- cash flow hedges 5.4 6.8
Foreign exchange contracts- held for trading 0.2 0.1
Total financial liabilities 461.8 438.7
Half-year Half-year
ended
ended
30 June
30 June
2024
2023
£m £m
Undiscounted contractual maturity of financial liabilities at amortised cost:
Amounts payable:
On demand or within one year 215.5 196.3
In the second to fifth years inclusive 187.4 178.7
After five years 91.4 72.7
494.3 447.7
Less: future finance charges (57.4) (44.1)
Financial liabilities at amortised cost 436.9 403.6
The carrying amount is a reasonable approximation of fair value for the
financial assets and liabilities noted above except for bank overdrafts and
loans, where the Directors estimate the fair value to be £187.5m (30 June
2023: £145.8m). The fair value has been determined by applying a make-whole
calculation using prevailing treasury bill yields plus the applicable credit
spread for the Group.
Fair values
The following table presents an analysis of financial instruments that are
measured subsequent to initial recognition at fair value. All financial
instruments are measured at either level 2 or level 3. Level 2 are those
fair values which are derived from inputs other than quoted prices that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices). Level 3 are those fair values which
are derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
There has not been any transfer of assets or liabilities between levels.
There are no non-recurring fair value measurements.
Half-year ended Level 1 Level 2 Level 3 Total
30 June 2024
£m
£m
£m
£m
Assets:
Foreign exchange contracts - cash flow hedges - 1.0 - 1.0
Foreign exchange contracts - held for trading - 0.3 - 0.3
Total assets - 1.3 - 1.3
Liabilities:
Contingent consideration - fair value through profit or loss - - 19.3 19.3
Foreign exchange contracts - cash flow hedges - 5.4 - 5.4
Foreign exchange contracts - held for trading - 0.2 - 0.2
Total liabilities - 5.6 19.3 24.9
Half-year ended Level 1 Level 2 Level 3 Total
30 June 2023
£m
£m
£m
£m
Assets:
Foreign exchange contracts - cash flow hedges - 3.2 - 3.2
Total assets - 3.2 - 3.2
Liabilities:
Contingent consideration - fair value through profit or loss - - 28.2 28.2
Foreign exchange contracts - cash flow hedges - 6.8 - 6.8
Foreign exchange contracts - held for trading - 0.1 - 0.1
Total liabilities - 6.9 28.2 35.1
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EAXPAEEPLEFARecent news on Senior
See all newsREG - Senior PLC - Grant of Share Options
AnnouncementREG - Senior PLC - Result of AGM
AnnouncementREG - Senior PLC - Trading Statement
AnnouncementREG - Senior PLC - Director/PDMR Shareholding
AnnouncementREG - Senior PLC - Director/PDMR Shareholding
Announcement