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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Chloride Grp. | LSE:CHLD | London | Ordinary Share | GB0001952075 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 374.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:2905M
Chloride Group PLC
30 October 2001
CHLORIDE GROUP PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2001
Chloride is a focused power protection company with a strong presence in
long-term global markets. Its strengths derive from the application of
innovative technologies and ever higher standards of quality and customer care
to provide total power protection solutions to customers worldwide.
HIGHLIGHTS
Interim results for the six months ended 30 September 2001
* Half year results reflect difficult market conditions, especially in
telecom infrastructure and the US semiconductor sectors
* Turnover on continuing operations #73.6 million (2000: #74.1 million)
* Operating profit on continuing operations before goodwill amortisation
and exceptional items #2.2 million (2000: #7.0 million)
* Cost base reduced by over #3 million a year with one off exceptional
reorganisation costs of #3.9 million
* Adjusted EPS of 0.63p (2000: 2.18p restated)
* Strong balance sheet at period end with shareholders' funds of #81.6
million and net debt of #3.9 million
* Interim dividend maintained at 0.80p per share, demonstrating the
Board's confidence in future performance
* Customers' requirements for business continuity will drive the long-term
demand for power protection solutions
Chairman Norman Broadhurst, commenting on the outlook, said: "Chloride
continues to face a difficult set of trading conditions. Nevertheless, we have
a strong balance sheet and industry-leading product and service offerings.
Chloride is confident that the growth drivers of our power protection markets
will reassert themselves particularly in sectors where business continuity is
critical. We therefore remain confident of the longer-term prospects for the
business but we do not anticipate any major improvement in market conditions
in the second half year."
Enquiries:
Chloride Group PLC All day on 30 October 2001
Keith Hodgkinson (Chief Executive) Tel: 020 7796 4133
Neil Warner (Finance Director) (Hudson Sandler)
Thereafter, tel: 020 7834 5500
Hudson Sandler
Andrew Hayes Tel: 020 7796 4133
Further information on Chloride Group can be found on www.chloridegroup.com.
CHAIRMAN'S STATEMENT
Market conditions
In the first half of the financial year the deteriorating economic outlook
impacted our markets, first in the USA and then progressively in Europe and
elsewhere. At the moment many of our customers are taking a cautious approach
to their expenditure programmes, particularly in the semiconductor and telecom
sectors. The immediate outlook has been further unsettled by the uncertainty
following the terrorist attacks in the USA. However, power protection is a
long-term growth market, with strong drivers in those sectors where business
continuity is critical.
Results
Turnover on continuing operations was #73.6 million (2000: #74.1 million)
while adjusted operating profit was #2.2 million (2000: #7.0 million).
After adjusting for goodwill amortisation of #1.5 million, exceptional
reorganisation costs of #3.9 million, an exceptional goodwill write-off of
#1.1 million and an interest charge of #0.2 million, the loss before tax was
#4.5 million.
Following the application of FRS 19 - Deferred Tax, the tax rate on continuing
pre-tax profits has increased to 25% this half year (2000: 23% - now restated
at 29%).
Adjusted earnings per share fell to 0.63p (2000: 2.18p restated).
The balance sheet remains strong with shareholders' funds of #81.6 million,
net debt of approximately #3.9 million and unutilised committed facilities of
#42 million available for investment in the business. Net operating cash flow
was #0.2 million before reorganisation costs of #3.1 million and related
temporary inventory build-up of #1.0 million.
Dividend
Management has responded quickly to the changing market conditions by
refocusing sales efforts and reducing the Company's cost base in line with
lower than anticipated sales. The Board is confident that an improved
performance will be achieved in the second half and that the Company is well
placed to grow its share in a power protection market enjoying good long-term
growth prospects. Accordingly, the Board is pleased to announce payment of an
unchanged interim dividend of 0.80p (2000: 0.80p).
Payment will be made on 7 December 2001 to shareholders on the register at the
close of business on 9 November 2001.
Operations
Reorganisation
Over the last two years Chloride has been restructured as a power protection
company with management focus on developing resources to support strong
organic growth. However, these growth prospects have reduced in the short term
in certain sectors. Therefore management has moved quickly in response to
these new market conditions to reorganise and reduce the cost base of the
Company. This reorganisation has cost #3.9 million which has been treated as
an exceptional operating item. The reorganisation is expected to generate
savings in the second half of approximately #2.5 million, with annual savings
estimated to be in excess of #3 million. The emphasis has been on reducing
direct costs in line with customer demand and improving efficiency in all
areas of the business. We have created a flatter senior management structure,
eliminating a layer of management, enabling faster decision making and
ensuring that resources are closely aligned to Company objectives. Savings in
the USA and UK were achieved quickly and efficiently. In continental Europe
where our major businesses are located, the process has been more complex and
is expected to be substantially completed in the second half year.
A major part of the European reorganisation has been the closure of the UPS
production facility in Spain. As a result the Board has concluded that the
goodwill associated with the Spanish business is no longer attributable to the
ongoing Sales and Service operation. Therefore, #1.1 million of goodwill has
been written off as an exceptional operating item.
Uninterruptible Power Supplies (UPS) and Service business
UPS is Chloride's major business stream and, together with Service,
represented 74% of our total business. Despite the considerable reduction in
the scale and frequency of large-scale telecom and internet infrastructure
projects, sales were maintained at last year's level and we enter the second
half with an order book up #3.1 million (15%) on 31 March 2001. Performance in
the first half was affected by pressure on margins, as competitors sought to
reduce excess inventory and by a fixed cost base that had increased to support
a higher rate of organic growth.
Rapid action was taken to reduce costs and the reorganisation of our UPS
activities is now completed including the closure of manufacturing in Spain
and the transfer of production to our low cost facility in Thailand.
New products continue to be introduced which provide new sales opportunities
at better margins. In UPS as in all other business sectors, we are focusing on
cash collection in the light of customers' demands for longer payment terms.
Second half performance is expected to benefit from a stronger order book, a
lower cost base and new products.
Chloride Industrial Systems (CIS)
Based in Lyon France, CIS provides customised power protection solutions in
the energy, oil and gas, petrochemical and transport sectors.
CIS generated 8% of Chloride's sales. This business has a high reputation and
is well positioned in markets that have good growth opportunities. However
performance in the short term is being affected by the current uncertainty,
especially in the Middle East which accounts for some 30% of its business.
Power Conditioning
Oneac USA suffered badly from the severe downturn in the semiconductor and
telecom sectors. Sales fell by one third compared with the same period last
year and now represent approximately 12% of Chloride's turnover.
In response to this severe downturn, the workforce was reduced by
approximately one third and a new range of products was introduced for other
market sectors, including medical and retail. Oneac is well placed to exploit
any improvement in market conditions.
Chloride Telecom Systems (CTS)
Based in Dol France, CTS was acquired a year ago to provide entry into the
then fast growing telecom infrastructure power protection market and introduce
a broader range of DC technology to the Chloride sales and distribution
network. CTS represented some 6% of Chloride's first half sales.
Since acquisition we have developed the engineering capability of CTS and
introduced comprehensive product and sales training programmes throughout the
Chloride channels. Although we have had some success with orders in the UK and
the Far East, this has been more than offset by the well-publicised downturn
in investment spending in the telecom infrastructure sector.
The impact of the downturn in this small business has been to reduce order
intake by over 50% and sales by over 35% from last half year to this half
year. We are reducing the cost base of the business while ensuring that key
product development continues to meet customer requirements in readiness for
any upturn in the sector.
Investment
In our markets, we have an enviable reputation for high quality products
incorporating the latest technology supported by industry leading customer
service.
Investment in research and development was increased by 23% to #2.4 million in
the first half year to ensure that products and services continue to meet the
developing demands of our markets.
Outlook
Chloride continues to face a difficult set of trading conditions.
Nevertheless, we have a strong balance sheet and industry-leading product and
service offerings. Chloride is confident that the growth drivers of our power
protection markets will reassert themselves particularly in sectors where
business continuity is critical. We therefore remain confident of the
longer-term prospects for the business but we do not anticipate any major
improvement in market conditions in the second half year.
Norman Broadhurst
London
30 October 2001
Summarised consolidated profit and loss account
(unaudited)
Six Six
Year to months to months to
31 March 30 September 30 September
2001 2001 2000
(as restated) (as restated)
#000 #000 #000
Turnover
166,271 Continuing operations 73,610 74,058
25,467 Discontinued operations - 22,188
191,738 73,610 96,246
Operating profit before goodwill amortisation
and exceptional items
15,782 Continuing operations 2,205 7,003
Exceptional items
- - Reorganisation costs (3,940) -
- - Goodwill write off (1,120) -
(2,835) Goodwill amortisation (1,464) (1,276)
Operating (loss)/profit
12,947 Continuing operations (4,319) 5,727
1,000 Discontinued operations - 971
13,947 (4,319) 6,698
19,054 Profit on disposal of businesses - 22,422
33,001 (Loss)/profit on ordinary activities before (4,319) 29,120
interest
(551) Net interest payable (200) (675)
32,450 (Loss)/profit on ordinary activities before (4,519) 28,445
taxation
15,791 Tax on profit on ordinary activities 361 12,072
16,659 (Loss)/profit on ordinary activities after (4,880) 16,373
taxation
3,792 Dividends 1,905 1,875
12,867 (Loss)/profit retained (6,785) 14,498
Earnings per share
4.80p Adjusted 0.63 p 2.18p
7.04p Basic (2.06)p 6.95p
7.00p Diluted (2.04)p 6.85p
Summarised consolidated balance sheet
(unaudited)
At At At
31 March 30 30
2001 September September
2001 2000
(as (as
restated) restated)
#000 #000 #000
Fixed assets
54,241 Goodwill 50,934 44,978
15,395 Tangible assets 14,583 15,307
9,928 Investments 9,550 8,104
79,564 75,067 68,389
Current assets
31,733 Stocks 31,574 26,948
59,162 Debtors 46,371 48,340
37,071 Cash at bank and in hand 29,741 33,145
127,966 107,686 108,433
79,325 Creditors: amounts falling due within one 61,574 63,787
year
48,641 Net current assets 46,112 44,646
128,205 Total assets less current liabilities 121,179 113,035
25,636 Creditors: amounts falling due after more 26,096 15,863
than one year
12,864 Provisions for liabilities and charges 13,446 12,036
89,705 Net assets 81,637 85,136
89,705 Equity shareholders' funds 81,637 85,136
Summarised consolidated cash flow statement
(unaudited)
Year to Six months Six months
31 March to to
2001 30 September 30 September
2001 2000
#000 #000 #000
12,756 Cash (outflow)/inflow from operating (3,864) 6,030
activities
(551) Returns on investments and servicing of (200) (675)
finance
(7,904) Taxation (1,173) (350)
(9,946) Capital expenditure (933) (4,539)
33,500 Acquisitions and disposals (677) 31,301
(3,585) Equity dividends paid (1,897) (1,669)
Management of liquid resources
(31,323) Net decrease/(increase) in short-term 7,678 (27,044)
deposits
Financing
2,590 Net cash inflow/(outflow) from financing 1,307 (4,065)
(4,463) Increase/(decrease) in cash 241 (1,011)
Statement of total recognised gains and losses
(unaudited)
Year to Six Six
31 March months to months to
2001 30 30
September September
(as 2001 2000
restated) (as
restated)
#000 #000 #000
16,659 (Loss)/profit for the period (4,880) 16,373
3,110 Currency translation differences on foreign (1,315) 1,813
currency net investments
19,769 Total recognised (losses)/gains for the period (6,195) 18,186
Prior year adjustment 803
Total recognised (losses) since the last (5,392)
report
Reconciliation of movements in shareholders' funds
(unaudited)
Year to Six Six
31 March months to months to
2001 30 30
September September
(as 2001 2000
restated) (as
restated)
#000 #000 #000
16,659 (Loss)/profit for period (4,880) 16,373
(3,792) Dividends (1,905) (1,875)
4,409 Goodwill written back on disposal of subsidiary - -
3,110 Exchange adjustments (1,315) 1,813
295 New share capital 32 113
470 Share premium thereon - -
(158) Amounts deducted from the profit and loss - -
accounts in respect of shares issued to the
Quest
20,993 Net (decrease)/increase in shareholders' funds (8,068) 16,424
68,712 Opening shareholders' funds 89,705 68,712
(originally #88,901,000 before prior year
adjustment of #803,000)
89,705 Closing shareholders' funds 81,637 85,136
Notes to the interim financial statements
(unaudited)
1 Segmental information
Year to Six months to Six months to
31 March 2001 30 September 2001 30 September 2000
Profit Profit Profit
before before before
Turnover interest Turnover interest Turnover interest
#000 #000 #000 #000 #000 #000
Continuing Operations
126,663 12,928 Europe 57,723 2,294 54,284 5,304
30,680 3,090 North America 11,296 79 15,537 1,740
8,928 (236) Asia and Australasia 4,591 (168) 4,237 (41)
166,271 15,782 Total 73,610 2,205 74,058 7,003
- - Reorganisation costs - (3,940) - -
- - Goodwill write off - (1,120) - -
- (2,835) Goodwill amortisation - (1,464) - (1,276)
166,271 12,947 73,610 (4,319) 74,058 5,727
Discontinued
operations
25,467 1,000 Operating activities - - 22,188 971
- 19,054 Exceptional gain - - - 22,422
191,738 33,001 73,610 (4,319) 96,246 29,120
2 Preparation of the interim financial statements
The interim financial statements, which are unaudited, have been prepared on
the basis of the accounting policies set out in the 2001 annual report, except
that the Company has adopted Financial Reporting Standard ("FRS") 19,
"Deferred Tax".
The comparative figures for the year ended 31 March 2001 do not comprise full
financial statements and have been extracted from the 2001 statutory accounts,
which have been filed with the Registrar of Companies. The auditors' opinion
on those accounts was unqualified and did not include any statement under
section 237 of the Companies Act 1985.
3 Exceptional items
Exceptional costs in the six months to 30 September 2001 of #5.0 million
includes reorganisation costs of #3.9 million in respect of the previously
announced programme to reduce worldwide costs, together with the associated
goodwill write-off of #1.1 million relating to the cessation of manufacture at
our Spanish operation.
The profit on disposal of businesses in the prior year arose on the disposal
of our former Safety Systems and Power Conversion activities. The results of
these businesses up until the date of their disposal are shown under
Discontinued Operations in the prior year.
4 Taxation
The tax charge provided at the half year is based on the estimated effective
tax rate for each undertaking in the Group applicable to the year to 31 March
2002 as applied to the taxable profits for the period.
5 Earnings per share
Year to At At
31 March 30 30
2001 September September
2001 2000
(as (as
restated) restated)
#000 #000 #000
Weighted average number of 25p ordinary
shares
236.6 - basic and adjusted 237.4 235.6
1.3 Adjustment for shares under option 0.8 3.6
Weighted average number of 25p ordinary
shares
237.9 - diluted 238.2 239.2
16,659 (Loss)/profit for basic and diluted earnings (4,880) 16,733
per share calculations
(19,054) Exceptional items 5,060 (22,422)
10,882 Tax on exceptional items (140) 9,882
2,862 Goodwill amortisation 1,464 1,296
11,349 Profit for adjusted earnings per share 1,504 5,129
calculation
4.80p Earnings per share - adjusted 0.63 p 2.18p
7.04p - basic (2.06)p 6.95p
7.00p - diluted (2.04)p 6.85p
The weighted average number of shares excludes shares held by the Chloride
Group Employee Benefit Trust and the Chloride Quest.
The directors consider that the adjusted earnings per share figures more
accurately reflect the underlying performance of the business.
6 Fixed assets
Investments includes #9.6 million in respect of a holding at 30 September 2001
of 9.5 million of the Company's ordinary shares (2000: #7.7 million in respect
of 10.2 million shares) by the Chloride Group Employee Benefit Trust, which
had a market value in excess of #5.4 million (2000: #19.3 million). The Trust
holds these shares to meet long-term commitments in relation to employee share
option plans and at this time, the directors do not believe that the current
deficit between market and balance sheet value represents an impairment in
value.
7 Prior year adjustment
As explained in note 2, FRS 19, Deferred Tax, has been adopted in the current
year. As a result a prior year adjustment has been made, increasing
shareholders' funds by #803,000.
The prior year adjustment has changed previously reported results as follows:
Year to 31 March 2001 Six months to 30 September 2000
Prior year Prior year
As adjustment Restated As adjustment Restated
reported reported
Profit and
loss account
32,450 - 32,450 Profit before 28,445 - 28,445
taxation
(12,036) (3,755) (15,791) Taxation (9,074) (2,998) (12,072)
20,414 (3,755) 16,659 Profit after 19,371 (2,998) 16,373
taxation
(3,792) - (3,792) Dividends (1,875) - (1,875)
16,622 (3,755) 12,867 Profit 17,496 (2,998) 14,498
retained
Balance sheet
Debtors
1,269 1,048 2,317 - Deferred tax - 1,824 1,824
Provisions for
liabilities
and charges
(145) (245) (390) - Deferred tax (164) (263) (427)
803 Net adjustment 1,561
8 Cash flow statement supporting information
a) Reconciliation of net cash flow to movement in net (debt)/funds
Year to Six months Six months
31 March to to
2001 30 30
September September
2001 2000
#000 #000 #000
(4,463) Increase/(decrease) in cash 241 (1,011)
(2,063) Net cash (inflow)/outflow from movement in (1,182) 4,179
debt and lease financing
31,323 Cash (inflow)/outflow from (decrease)/increase (7,678) 27,044
in liquid resources
(2,608) Debt and finance leases acquired with - -
subsidiary
(147) Exchange translation differences (125) 804
22,042 (Decrease)/increase in net funds (8,774) 31,016
(17,158) Net funds/(debt) at 1 April 4,884 (17,158)
4,884 Net (debt)/funds at 30 September (3,860) 13,858
b) Reconciliation of operating profit to net cash flow
Year to Six months Six months
31 March to to
2001 30 September 30 September
2001 2000
#000 #000 #000
13,947 Operating profit before exceptional items 741 6,698
6,357 Depreciation and goodwill amortisation 3,033 3,218
45 Profit on sale of tangible assets 32 -
(7,834) Decrease/(increase) in stocks 160 (1,594)
(17,242) Decrease/(increase) in debtors 11,789 (3,143)
19,498 (Decrease)/increase in creditors (15,838) 1,629
(2,015) (Decrease)/increase in provisions (676) (778)
- Reorganisation costs (3,105) -
12,756 Cash (outflow)/inflow from operating (3,864) 6,030
activities
c) Analysis of net (debt)/funds
At At At
31 March 30 September 30 September
2001 2001 2000
#000 #000 #000
1,651 Cash 1,999 1,702
(6,427) Overdrafts (6,683) (2,935)
(93) Debt due within one year (88) -
(24,474) Debt due after more than one year (25,568) (15,863)
(497) Discounted trade bills (620) (344)
(696) Finance lease obligations (642) (145)
35,420 Liquid resources 27,742 31,443
4,884 Net (debt)/funds (3,860) 13,858
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