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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Inveresk | LSE:IVS | London | Ordinary Share | GB0004577697 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.625 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:6617J Inveresk PLC 29 September 2006 Inveresk PLC Interim Results for the six months ended 30 June 2006 Highlights *Operating loss of #444,000 (2005 #510,000) arising out of continuing operations at St Cuthberts Mill in Somerset, before exceptional costs and interest. *Interest costs of #325,000 (2005 #536,000) in line with expectations following the sale of the Gemini brand. *Costs continue to be reduced at St Cuthberts with numbers employed falling by 18 to 98. Re-organisation costs including redundancy amounted to #394,000. *Exceptional costs of #526,000 incurred in respect of the closure of the Carrongrove Mill site and preparing both the Carrongrove and Caldwells Mill sites for sale. *Raw material prices and energy costs continue to rise with consequential pressure on gross margins. *New product development of top of the range papers used in the photographic and computer industries, for launch in 4th quarter of 2006. *Significant volumes of new business gained for production of pre-impregnated resin based papers on PM1 for delivery 4th quarter of 2006 and early 2007. *Ministerial approval of the Fife Council Structure Plan awaited from the Scottish Executive allowing the commencement of the redevelopment scheme around Inverkeithing Bay on the banks of the River Forth opposite Edinburgh. *Significant progress on the Carrongrove site with the establishment of a draft Planning Brief and a number of proposals for the redevelopment of the site predominantly into residential housing. "In common with most paper manufacturers we remain concerned by the depressed trading conditions which continue to prevail within the industry. All possible efforts are being expended at our St Cuthberts Mill in Somerset to maximise capacity utilisation allied to the reduction of operating costs. Even within the niche markets in which we operate competitive pressures dictate that measures be taken to improve efficiency. We are very encouraged with the progress we are making with our various Real Estate projects which are so important to future cash generation within the company and the enhancement of shareholder value." Alan Walker Chief Executive Officer CHAIRMAN'S STATEMENT Results The first six months of 2006 have continued to haunt the European paper industry through closures, down scaling and disappointing results in all segments of the industry. Our business is no exception save for the fact that following the sale of our Gemini brand back in 2005 the scale of operations conducted from the mill at St Cuthberts in Somerset has reduced our exposure in a number of key areas to those directly associated with the specialist niche areas in which we operate. Turnover in the six months to 30th June 2006 rose by 3.2% to #7.24m (2005 #7.01m) with an operating loss of #444,000 (2005 loss of #510,000) and is viewed as both unsatisfactory and unsustainable. Shareholders are aware of the strategic direction in which your Board of Directors is refocusing our business in the future by majoring on real estate. After exceptional costs of #920,000 (2005 gain of #5.29m), arising from further reorganisation at St Cuthberts Mill and site closure costs at Carrongrove and Caldwells Mills, and interest charges of #325,000 (2005 #536,000), the Company reports a loss on ordinary activities before taxation of #1.63m (2005 profit of #4.64m). Core Business During the six months under review which continues to be a period of transition the Company comprised:- *Foil and decor based papers produced on PM1 at St Cuthberts Mill in Somerset and used primarily for the furniture and decor markets. *Specialist papers for artists and inkjet computer/photographic products manufactured on PM2 at St Cuthberts Mill in Somerset distributed under a number of proprietorial brands to a wide and varied customer base. *The realisation for development purposes of the Company's substantial land portfolio which extends to approximately 90 acres in various locations. St Cuthberts This business has experienced a difficult six months of trading during which demand has remained flat in all areas, albeit with volumes slightly higher than the corresponding period in 2005, with continued pressure on margins both of a competitive nature and in terms of rising raw material prices as well as energy costs. Trading conditions remain very tough. However as a result of the series of initiatives introduced last year which increased the emphasis on selling and marketing, St Cuthberts has recently won significant new volumes of business which will kick in during the 4th quarter of the current year and from January 2007. Of equal significance is the fact that average run sizes will increase considerably allowing our PM1 machine to benefit from longer runs thereby promoting greater efficiencies and the elimination of down time. Management believe this increased volume of business allied to the steps which have been and continue to be taken to reorganise and reduce our cost structure will restore the business to profit in the short to medium term. Shareholders will recall that we announced at the time of the release of last year's Annual Report that we had established a presence in the Far East with a view to exploiting the clear opportunities which exist throughout that region. Although it is early days, results to date have been encouraging with shipments already supplied to a number of customers where our brands appear to be well recognised and respected. The market potential throughout this entire region remains both real and likely to grow at a much faster rate than in any other geographical area in the world. The current strategic initiatives at St Cuthberts include the following:- *Regular cost reviews in order to operate the mill with the most efficient cost base possible leveraged by the maximisation of throughput and turnover. *More efficient production and the elimination of unnecessary down time allowing the mill to operate close to full capacity. *New product innovation for which St Cuthberts is renowned tailored to the needs of our loyal customers. *Commitment to technical alliances with customers designed to meet customer needs and promote internal efficiencies. Customers are seen as partners. *Promote on-line training throughout all levels at the mill in order to improve output performance and operating efficiencies. *Maintain our reputation for flexibility and creativity which customers have come to expect and which sets St Cuthberts apart from its competitors. *Develop and maximise the competitive edge arising out of brand recognition where our principal brands Bockingford, Saunders Waterford and Somerset are viewed as industry benchmarks on an international basis. Asset Realisation Programme Shareholders will be aware that all plant and equipment at the Caldwells site in Inverkeithing has been sold. The programme at Carrongrove has not moved at the same pace partly due to the more specialised nature of the coated board equipment and the generally depressed state of the industry as a whole which has seen increased amounts of second hand equipment appearing on the world market at the same time. Negotiations for the sale of the paper making machine at Carrongrove continue with a range of international buyers and it is envisaged that contracts will be concluded for the sale of this equipment before the end of the year. Land for Development Inverkeithing Shareholders were updated at the Annual General Meeting in May 2006 since when there have been no further specific developments which need to be reported. Ministerial approval to the overall Structure Plan of Fife Council for Inverkeithing Bay is awaited from the Scottish Executive. The Caldwells Mill has been decommissioned in all material respects and is ready for redevelopment. The Structure Plan for the shores of the River Forth is of considerable proportion and is likely to transform the gateway to the Kingdom of Fife and have a highly positive impact on the landscape. Substantial improvements to the local infrastructure will provide a range of benefits to the entire community. At this stage we continue to work with our professional advisers and, bearing in mind that our land has provided the impetus for the entire project, we remain confident that the eventual development of the early phases of the Structure Plan will deliver significant returns to your Company. At this stage we have held a series of initial discussions with a number of developers regarding the future ownership of this land going forward. These are due to continue for some time to come. Carrongrove In contrast with the speed of change at Caldwells in Inverkeithing where we are part of a wider development programme, the site at Carrongrove is likely to reach the development stage much sooner. Together with our professional advisers we have been working cohesively with Falkirk Council in establishing the site as one predominantly suitable for residential housing and which will significantly enhance the town of Denny. Following more than 20 expressions of interest which we reduced to 13 firm proposals from almost all the major national house building companies, we now have a clear vision as to how this site will be transformed in the future. Your Board of Directors is confident that the strategy we embarked upon back in 2005 is not only the correct one in these difficult times for manufacturing in the United Kingdom but one which will result in greater financial returns for shareholders. We now intend to proceed with a shortlist of 5 or 6 developers to determine the optimum planning brief, site investigations and eventual sale. As in the case of Inverkeithing, the successful development of the Carrongrove estate into residential housing bordering the Fintry countryside and yet set between the two motorways to both Glasgow and Edinburgh some 6 miles from Stirling will have long term benefits to the local community. Finance Pursuant to the sale of Gemini the Balance Sheet of the Company continues to be slimmed through the elimination of working capital at Carrongrove and the retirement of debt. The full impact of the asset realisation programme together with the sale of land for development will eliminate bank debt and provide net cash, the benefit of which will be transferred to shareholders in due course. Interest charges at #325,000 (2005 #536,000) are more or less as expected. Whilst the current bank debt supports the continuing operations at St Cuthberts, increasingly interest costs arise from holding the land assets for sale when appropriate. Outlook and Shareholder Value Whilst the state of the European paper industry gives genuine cause for concern due to the lack of profitability, we believe that we are on course to deliver the new strategic ambitions we set in train back in 2005. We remain in active discussion with a number of international companies who have similar strengths and weaknesses within their paper manufacturing and where the need for consolidation and to fill capacity remains a priority. In the meantime the mill at St Cuthberts is likely to fill its capacity which should improve the mill's short term prospects while we shall continue to advance our real estate interests with a view to harvesting these in due course in order to achieve a debt free status and enhance shareholder value. Jan Bernander Chairman 29th September 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited 26 weeks to 26 weeks to Year ended 30 June 2006 30 June 2005 31 December 2005 (restated) #'000 #'000 #'000 =========== ========== =========== Turnover Continuing operations 7,243 7,013 13,574 Discontinued operations - 13,532 22,811 ----------- ---------- ----------- 7,243 20,545 36,385 Cost of sales (6,614) (17,239) (30,834) ----------- ---------- ----------- Gross profit 629 3,306 5,551 Distribution costs (459) (2,073) (3,503) Administrative expenses (614) (1,342) (3,144) Other operating income - - 7,520 ----------- ---------- ----------- Group operating(loss)/ profit ----------- ---------- ----------- Continuing operations (444) (510) (1,991) Discontinued operations - 401 8,415 ----------- ---------- ----------- (444) (109) 6,424 Fundamental reorganisation charge (394) - (7) (Loss)/gain on sale and termination of businesses (526) 4,685 (2,695) Gain on sale of fixed assets - 601 606 ----------- ---------- ----------- (Loss)/profit before interest (1,364) 5,177 4,328 Net interest payable - Group (325) (536) (880) Other finance income 56 - 370 ----------- ---------- ----------- (Loss)/profit on ordinary activities before taxation (1,633) 4,641 3,818 Taxation on profit/(loss) on ordinary activities - - (4,897) ----------- ---------- ----------- (Loss)/profit on ordinary activities after taxation (1,633) 4,641 (1,079) ----------- ---------- ----------- (Loss)/profit for the financial period (1,633) 4,641 (1,079) ----------- ---------- ----------- Basic (loss)/earnings per share - total (1.2)p 3.4p (0.8)p Basic loss per share - continuing operations (0.6)p (0.4)p (0.9)p Diluted (loss)/earnings per share - total (1.2)p 3.3p (0.8)p Diluted loss per share - continuing operations (0.6)p (0.4)p (0.9)p =========== ========== =========== CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited Interim Interim Year ended 30 June 2006 30 June 2005 31 December 2005 (restated) #'000 #'000 #'000 ========= ========= =========== Fixed assets Tangible assets 10,160 23,440 10,410 Current assets Properties held for sale 10,005 - 10,005 Stocks 2,743 4,309 2,989 Debtors 3,444 8,740 5,462 Debtors - deferred taxation - 3,750 - Cash at bank and in hand 12 75 16 --------- --------- ----------- 16,204 16,874 18,472 Creditors: amounts falling due within one year Bank overdrafts and short term debt (5,931) (5,659) (3,923) Other creditors (4,138) (8,300) (6,048) --------- --------- ----------- (10,069) (13,959) (9,971) Net current assets 6,135 2,915 8,501 Total assets less current liabilities 16,295 26,355 18,911 Creditors: amounts falling due after more than one year (4,923) (6,154) (5,538) Provisions for liabilities and charges (538) (254) (575) --------- --------- ----------- Net assets excluding pension assets/(liabilities) 10,834 19,947 12,798 Pension assets/(liabilities) Defined benefit schemes with net assets 2,105 3,575 2,173 Defined benefit schemes with net liabilities (2,088) (2,825) (3,768) --------- --------- ----------- Net assets including pension assets/(liabilities) 10,851 20,697 11,203 ========= ========= =========== Capital and reserves Called up share capital 1,438 1,438 1,438 Revaluation reserve 11,197 11,205 11,220 Profit and loss account (1,784) 8,054 (1,455) --------- --------- ----------- Total shareholders' funds 10,851 20,697 11,203 ========= ========= =========== CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited Interim Interim Year ended 30 June 2006 30 June 2005 31 December 2005 (restated) #'000 #'000 #'000 ========== ========= =========== Net cash (outflow)/inflow from operating activities (1,169) 4,199 7,788 Returns on investment and servicing of finance (313) (684) (980) Capital expenditure and financial investment 85 417 341 Acquisitions and disposals - - (564) Dividends paid - - (360) ---------- --------- ----------- Net cash (outflow)/inflow before financing (1,397) 3,932 6,225 Financing (615) (615) (1,231) ---------- --------- ----------- (Decrease)/increase in cash in the period (2,012) 3,317 4,994 ========== ========= =========== CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Unaudited Unaudited Audited Interim Interim Year ended 30 June 2006 30 June 2005 31 December 2005 (restated) #'000 #'000 #'000 ========= ========= =========== (Loss)/profit for the financial period - before restatement (1,633) 4,641 (1,079) Unrealised surplus on revaluation of properties - - 60 Exchange adjustments on foreign currency net investments (1) 2 (1) Actuarial gains/(losses) recognised in the pension schemes 1,289 - (3,478) Deferred tax arising on gains in the pension schemes (7) - 228 --------- --------- ----------- Total recognised gains and losses relating to the financial period (352) 4,643 (4,270) Prior year adjustment (note 1) - (241) (241) --------- --------- ----------- Total gains and losses recognised since last interim report (352) 4,402 (4,511) ========= ========= =========== RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Unaudited Audited Interim Interim Year ended 30 June 2006 30 June 2005 31 December 2005 (restated) #'000 #'000 #'000 ========= ========== =========== (Loss)/profit for the financial period (1,633) 4,641 (1,079) Dividends - - (360) --------- ---------- ----------- Retained profit for the financial period (1,633) 4,641 (1,439) Shares purchased by ESOP trust - (82) (126) Treasury shares purchased - (88) (266) Share options expensed - - 1 Other recognised gains/(losses) for the financial period 1,281 2 (3,191) --------- ---------- ----------- Net (decrease)/increase in shareholders' funds (352) 4,473 (5,021) Shareholders' funds at the beginning of financial period 11,203 16,224 16,224 --------- ---------- ----------- Shareholders' funds at the end of financial period 10,851 20,697 11,203 ========= ========== =========== NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES Unaudited Unaudited Audited Interim Interim Year ended 30 June 2006 30 June 2005 31 December 2005 (restated) #'000 #'000 #'000 ========= ========= =========== Reported (loss)/profit on ordinary activities before taxation (1,633) 4,641 3,818 Difference between historical cost depreciation charge and the actual depreciation charge of the year calculated on the revalued amount 23 55 100 --------- --------- ----------- Historical cost (loss)/profit on ordinary activities before taxation (1,610) 4,696 3,918 --------- --------- ----------- ========= ========= =========== Historical cost (loss)/profit for the period retained after (1,610) 4,696 (979) taxation ========= ========= =========== NOTES TO THE INTERIM ACCOUNTS 1. Basis of Preparation The interim accounts for the twenty six weeks ended 30 June 2006 and twenty six weeks ended 30 June 2005, which are unaudited, have been prepared on the basis of accounting policies consistent with those set out in the Company's financial statements for the period ended 31 December 2005. The information for the year ended 31 December 2005 does not constitute statutory accounts and has been abstracted from the financial statements for that period which have been filed with the Registrar of Companies. The independent auditors' report on those accounts was unqualified. As a result of adopting FRS21 "Events after the balance sheet date", a prior year adjustment has been made in respect of the recognition of proposed dividends. The adjustment has not affected the reported net assets at 31 December 2005, but has increased the reported net assets at 30 June 2005 by #360,000. As fully explained in the financial statements for the year ended 31 December 2004 the profit on the sale of a piece of land, which was entered into on 24 March 2005 and concluded on 7 April 2005, was recorded as a profit in the financial statements for the year ended 31 December 2004 as the directors believed at that time that the sale in 2005 was a substitute for a conditional sale of the same piece of land which was entered into in August 2004. The sale recorded in the 2004 financial statements did not conclude post the 2004 year end as the purchaser was unable to proceed to completion. The auditors qualified their opinion on the financial statements for the year ended 31 December 2004 in relation to this accounting treatment, as they believed that the two transactions were separate and that the conclusion of the April 2005 sale was a non-adjusting event so far as the 2004 financial statements were concerned. After further discussions and consideration, the directors now agree that the accounting treatment adopted in the financial statements for the year ended 31 December 2004 was incorrect and have restated the comparative figures in the financial statements for the twenty six weeks ended 30 June 2005. The effect of this prior year adjustment is to increase the profit for the twenty six weeks ended 30 June 2005 by #601,000. 2. Taxation As a result of tax losses brought forward there is anticipated to be no current tax charge or credit in the current year. 3. Interim Dividend There will be no payment of interim dividend for the half year. 4. Earnings/(loss) per share 6 months ended 6 months ended 12 months ended 6 months ended 6 months ended 12 months ended 30 June 30 June 31 December 30 June 30 June 31 December 2006 2005 2005 2006 2005 2005 Earnings/(loss) Earnings/(loss) Earnings/(loss) Earnings/(loss) Earnings/(loss) Earnings/(loss) #'000 (restated) #'000 (restated) #'000 pence per share pence per share pence per share ======== ======== ======== ========= ======== ======== Basic - continuing operations (782) (510) (1,220) (0.6) (0.4) (0.9) Basic - discontinued operations (851) 5,151 141 (0.6) 3.8 0.1 -------- -------- -------- --------- -------- -------- Basic - Total (1,633) 4,641 (1,079) (1.2) 3.4 (0.8) Adjusted for: Exceptional charges/ (credits) 920 (5,286) 2,660 0.7 (3.9) 2.0 Tax relief on exceptional charges/ - - (174) - - (0.1) (credits) Exceptional deferred tax charge - - 3,750 - - 2.7 -------- -------- -------- --------- -------- -------- Adjusted basic (713) (645) 5,157 (0.5) (0.5) 3.8 - Total -------- -------- -------- --------- -------- -------- Diluted - continuing operations (782) (510) (1,220) (0.6) (0.4) (0.9) Diluted - discontinued operations (851) 5,151 141 (0.6) 3.7 0.1 -------- -------- -------- --------- -------- -------- Diluted - (1.633) 4,641 (1,079) (1.2) 3.3 (0.8) Total ======== ======== ======== ========= ======== ======== The adjusted figures are shown to provide shareholders with additional information on operations before exceptional items. Earnings per share are calculated for the issued shares excluding those registered in the name of The Inveresk ESOP Trustee Company Limited in accordance with UITF 13 and those held as Treasury shares. The weighted average number of shares used in each calculation is as follows: 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 31 December 2005 Number of Number of Number of Shares Shares Shares (000s) (000s) (000s) =========== =========== =========== Average of shares in issue during the financial period 135,055 137,186 136,334 Adjustment for the dilutive effect of employee and director share options 2,044 1,778 1,897 ----------- ----------- ----------- Average of shares in issue during the financial period diluted 137,099 138,964 138,231 =========== =========== =========== 5. Provisions for Liabilities and Charges Restructuring Onerous Lease Total #'000 #'000 #'000 =========== =========== =========== At 31 December 2005 551 24 575 Profit and loss charge 920 - 920 Costs incurred in period (957) - (957) Amounts released unused - - - ----------- ----------- ----------- At 30 June 2006 514 24 538 =========== =========== =========== 6. Reconciliation of Operating (Loss)/Profit to Net Cash (Outflow)/Inflow from Operating Activities Unaudited Unaudited Audited Interim Interim Year ended 30 June 2006 30 June 2005 31 December 2005 (restated) #'000 #'000 #'000 ========== ========== =========== Group operating (loss)/profit (444) (109) 6,424 Exceptional items (920) 5,286 (2,096) Depreciation charges 265 554 3,507 Impairment of goodwill - - 564 Expensing of share options - - 1 Amortisation of government grants - - (2) Pension curtailments - - (194) Movement on net pension asset/liability (274) (220) (561) Gain on sale of tangible fixed assets (100) (601) (615) Decrease/(increase) in working capital 341 (694) 456 (Decrease)/increase in provisions (37) (17) 304 ---------- ---------- ----------- Net cash (outflow)/inflow from operating activities (1,169) 4,199 7,788 ========== ========== =========== 7. Movement in Net Debt Unaudited Unaudited Audited Interim Interim Year ended 30 June 2006 30 June 2005 31 December 2005 #'000 #'000 #'000 =========== ========== =========== (Decrease)/increase in cash (2,012) 3,317 4,994 Cash outflow from debt financing 615 615 1,231 ----------- ---------- ----------- Increase/(decrease) in net debt in period (1,397) 3,932 6,225 Net debt at beginning of period (9,445) (15,670) (15,670) ----------- ---------- ----------- Net debt at end of period (10,842) (11,738) (9,445) =========== ========== =========== This information is provided by RNS The company news service from the London Stock Exchange END IR GGGZLNRRGVZM
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