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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mang.Bronze | LSE:MNGS | London | Ordinary Share | GB0005617013 | 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% | 10.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMMNGS
RNS Number : 5210N
Manganese Bronze Hldgs PLC
28 September 2012
Friday 28 September 2012
MANGANESE BRONZE HOLDINGS PLC
UNAUDITED HALF-YEAR RESULTS
Manganese Bronze Holdings PLC ("Manganese Bronze" or the "Group"), the leading manufacturer of the distinctive London taxi that is built in Coventry, announces its unaudited half-year results for the six month period ended 30 June 2012.
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2012 2011 2011
Half year Half year Variance Full year
(restated) (restated)
Group revenue GBP34.3m GBP38.7m (11.3%) GBP75.0m
Operating loss* GBP3.1m GBP1.9m (64.2%) GBP4.7m
Finance costs GBP0.4m GBP0.5m 15.0% GBP0.8m
Loss before tax * GBP3.6m GBP2.4m (51.9%) GBP5.5m
Underlying loss per
share* 12.92p 8.32p (55.3%) 19.43p
Net debt GBP11.4m GBP13.6m 16.8% GBP11.1m
* Before exceptional items
Summary
-- Group revenue down 11.3% to GBP34.3m as challenging UK market conditions continued -- UK sales volumes down 22.9% to 577 vehicles (2011: 748) -- International sales volumes up 6.3% to 504 vehicles (2011: 474) -- Operating margins reduced due to supply chain issues and increased warranty costs -- Operating loss before exceptional items increased to GBP3.1m (2011: GBP1.9m) -- Net cash inflow from operating activities of GBP0.2m (2011: GBP1.8m inflow) -- Extension of proposed UK distribution agreement with Geely
-- Discovery of material accounting errors; adjustment to prior year accounts increases previously reported operating losses by GBP4.25m
-- Trading since 30 June 2012 period end broadly in line with revised expectations
Commenting on the results, John Russell, Group Chief Executive, said:
"The Board is disappointed by the Group's results for the Half Year, which reflect continued challenging trading conditions in the UK.
Trading in the period since 30 June 2012 has been broadly in line with revised expectations and better than the level of trading experienced in the second quarter. The Board expects that sales in the final quarter of the year will be at similar levels to the current running rate but this will not allow the Group to return to profit in the second half of the year.
In light of the continuing weak economic outlook for the UK, the Board is taking steps to review its cost base with the objective of achieving a breakeven or better result in the new financial year. However, the level of this profitability is directly linked to UK new vehicle sales volumes, which are difficult to predict in the current economic environment."
For further information, please contact:
Manganese Bronze Holdings PLC ------------------------------------ -------------- John Russell, Group Chief Executive 02476 572108 ------------------------------------ -------------- Grant Thornton UK LLP ------------------------------------ -------------- Philip Secrett/Melanie Frean 020 7383 5100 ------------------------------------ -------------- MC Peat & Co 020 7104 2334 ------------------------------------ -------------- Charlie Peat / John Beaumont ------------------------------------ -------------- FTI Consulting 020 7269 7291 ------------------------------------ -------------- Nick Hasell ------------------------------------ --------------
INTERIM REPORT
To the members of Manganese Bronze Holdings PLC
Summary
Manganese Bronze is disappointed to report an 11.3% reduction in total Group revenue in the first half to GBP34.3m (2011: GBP38.7m). Total vehicle sales fell by 11.5% to 1,081 vehicles (2011: 1,222). International sales increased by 6.3% but this was more than offset by an overall 22.9% decline in UK sales.
The discovery that there have been material accounting errors in the reported results for 2011 and prior periods delayed the release of this Interim Report and, as required by IAS 8, necessitated the restatement of the results for 2011 and prior periods. The effect of the prior year adjustments has been to reduce the equity attributable to the owners of the parent by GBP4.25m but there is no impact on the Group's cash or borrowing position.
The introduction of a new computer system during 2010, which coincided with the outsourcing of components to China, led to a breakdown in operational and accounting controls and procedures. The errors were discovered by the new Group Finance Director and his team who have acted promptly to address the key issues.
The Board engaged forensic accountants to carry out a detailed investigation into the causes of these errors and to make recommendations for improvements to operational and accounting procedures. A preliminary report has been received but some elements of this investigation are still ongoing.
The Group's operating loss before exceptional items increased by 64.2% to GBP3.1m (2011: GBP1.9m), reflecting both the decrease in sales volume and an increase in the cost of warranty claims.
SLTI, the Group's joint venture with Geely Automobile Holdings Limited ("Geely"), made a reduced loss for the half year due to better operating efficiencies despite lower production volumes. The Group's 48% share of the loss amounts to GBP0.5m (2011: GBP0.7m).
The Group has incurred exceptional charges of GBP2.5m (2011: nil) which relate to a provision of GBP0.8m against the costs incurred in transferring production to China that may not be recoverable from SLTI, legal and professional fees of GBP250,000 relating to the forensic accounting investigation and litigation resulting from the 2008 product recall and a GBP1.5m reduction in the deferred tax asset. After taking account of finance costs of GBP0.5m (2011: GBP0.5m), the Group's loss before tax increased by GBP2.2m to GBP4.6m (2011: GBP2.4m).
UK trading/market
Trading in the UK was impacted by a fall in business confidence as the UK economy returned to recession in the second quarter due to the continuing uncertainty of the global macro economic environment which makes forecasting the demand for new vehicles challenging. Taxi drivers in the UK have also had to absorb higher fuel and insurance costs which have reduced their earnings. Consequently there has been a trend towards deferring the purchase of new vehicles and the average age of vehicles taken in part-exchange has increased from 36 months in 2010 to 48 months in 2012. UK new vehicles sales for the first half were down 22.9% at 577 vehicles (2011: 748 vehicles).
Within the UK there were contrasting market conditions. Sales into the London market fell by 13.5% to 442 vehicles (2011: 511), whilst sales into regional markets, at 135 vehicles (2011: 237), fell by 43.0%. This reflects a similar pattern to many retail sectors of the economy, with taxi driver earnings and confidence, particularly in the regions, negatively affected by generally lower disposable income, higher fuel costs, concerns about job security and the potential impact of public sector spending cuts.
In December 2010 the Mayor of London announced an age restriction on the London taxi fleet as part of his Air Quality Strategy. The measures came into effect from 1 January 2012, after which no vehicle over 15 years old can be re-registered for use as a taxi in London. The initial impact of this policy has been to increase the demand for second hand vehicles which are now in short supply. The total fleet of taxis operating in London is also beginning to fall and, with more vehicles having to be retired in the coming months, the demand for new vehicles is expected to increase.
Since the launch of the new Style and Elegance models of TX4 in November 2010, the Group's share of the London market has been broadly stable at 73%. The Group's share of the London market fell in the second quarter of 2012 as a result of a heavily subsidised finance programme on the Mercedes Vito. The launch in June of a competitive but non-subsidised finance offer on the Group's TX4 has lead to a recovery in market share.
As a result of the reduced UK vehicles sales volumes, a period of short-time working was introduced at the Coventry assembly facility, with the production schedule during the second quarter reduced by 18 days. Further, production during November and December will be limited to 20 vehicles per week. The Board would like to thank all of the Group's employees for their commitment, support, and understanding during this challenging period.
Against this backdrop, the parts and finance businesses continue to perform well.
International sales
International sales volumes in the first half of 2012 were a record 504 vehicles (2011: 474), an increase of 6.3%, and included the remaining 500 vehicles of the Azerbaijan order for 1,000 vehicles. Sales and orders for international markets other than Azerbaijan were poor in the first half but are expected to increase in the second half of the year.
The publicity surrounding the Azerbaijan order has generated increased interest in the wider Central and Eastern European region. Prospects for further significant orders from Azerbaijan, Australia, India and Italy remain encouraging.
Geely and SLTI
The Group continues to receive significant financial support from Geely by way of informal extended credit terms. As at 30 June 2012, the Group owed Geely GBP18.6m (US $29.2m) for component parts and vehicles supplied through the SLTI joint venture.
Relationships between the Group and Geely continue to be very positive. The Group has assigned more senior staff to support the SLTI management team in a cost reduction programme which will also deliver improved quality and enhanced supply chain performance. Improving the quality of components should reduce future warranty costs and further enhance customer confidence in the London Taxi.
In addition, the Group continues to collaborate with Geely senior management to develop the launch plans for the TXN, the saloon car based taxi, and other business development opportunities. On 27 July 2012 the Group signed an extension of the agreement with Geely International Corporation for the potential distribution of Geely vehicles in the UK and their on-going after market support.
SLTI made a reduced loss in the first half of 2012, the Group's 48% share of which was a loss of GBP0.5m (2011: GBP0.7m). The TX4 manufacturing operation improved its operating efficiency and reduced its losses to GBP0.1m (2011: GBP0.8m) but the performance of Shanghai Maple Tooling Company ("SMTC") subsidiary declined slightly to GBP0.4m (2011: GBP0.1m). In recognition of the contribution that MBH has made to the improved efficiency and reduced losses of SLTI, the number of expatriate employees working in China has been increased and their roles strengthened to take a greater leadership role in the SLTI organisation. This is specifically aimed at improving the quality of the components manufactured at SLTI and at local Chinese component suppliers in order to improve the overall quality of the London Taxi and reduce future warranty costs which have remained stubbornly high.
Cash, funding and dividends
In the six months to 30 June 2012, there was an operating cash outflow, before movements in working capital of GBP1.9m (2011: nil). There was a net GBP3.0m reduction (2011: GBP2.6m reduction) in working capital with increases in stock of GBP3.5m (2011: GBP2.9m reduction) and a decrease in debtors of GBP0.3m (2011: GBP0.3m increase) offset by an increase in creditors of GBP6.2m (2011: nil) primarily due to the impact of extended credit granted by Geely. With pension contributions of GBP0.6m (2011: GBP0.6m), interest payments of GBP0.2m (2011: GBP0.3m), and a GBP0.1m loss (2011: nil) on cash flow hedging, the Group had a net cash inflow from operations of GBP0.2m (2011: GBP1.8m inflow).
With investment in plant and equipment of GBP0.5m (2011: GBP1.0m) at 30 June 2012 the Group had net cash of GBP2.5m (2011: GBP0.2m) and a stocking loan of GBP13.8m (2011: GBP13.9m). At 30 June 2012 the Group had an undrawn GBP0.7m overdraft facility (2011: GBP1.5m facility that reduced to GBP1.0m from 1 July 2011) provided by HSBC Bank plc ("HSBC"), and a stocking loan facility of GBP13.95m (2011: GBP13.95m) provided by the Lloyds Banking Group PLC. This resulted in GBP3.3m (2011: GBP1.3m) of headroom on the committed borrowing facilities.
Despite the continuing challenging business and economic circumstances, the Group's bankers remain supportive.
As previously announced, dividends, including preference share dividends, can not be paid until the Group returns to profitability and has sufficient distributable reserves. No interim or preference dividends will therefore be paid (2011: nil).
Principal risks and uncertainties
The Group is exposed to a variety of risks in the conduct of its business operations. Set out on pages 14 and 15 of the Group's Annual Report for the year ended 31 December 2011 is a summary of some of the most significant risks, which, in the opinion of the Directors, could impact performance. These risks remain, with updated guidance being provided through this statement.
Prospects
Trading in the period since 30 June 2012 has been broadly in line with revised expectations and better than the level of trading experienced in the second quarter. The Board expects that sales in the final quarter of the year will be at similar levels to the current running rate but this will not allow the Group to return to profit in the second half of the year. In the light of the continuing weak economic outlook for the UK, the Board is taking steps to review its cost base with the objective of achieving a breakeven or better result in the new financial year. However, the level of this profitability is directly linked to UK new vehicle sales volumes, which are difficult to predict in the current macro economic environment.
Cautionary statement
This Interim Report has been prepared solely to provide additional information to shareholders to communicate the Group's strategies and the potential for those strategies to succeed. The Interim Report should not be relied on by any other party for any other purpose.
The Interim Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report, and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
Key Statistics
(before exceptional items)
Six months Six months Year
ended 30 ended 30 ended 31
Jun Jun Dec
2012 2011 2011
(unaudited) (restated) (restated)
Vehicle sales volumes
UK 577 748 1,502
Overseas 504 474 705
Total 1,081 1,222 2,207
GBP000 GBP000 GBP000
From continuing operations:
Revenue 34,286 38,673 74,980
Operating loss (3,068) (1,869) (4,692)
Finance costs - net (426) (501) (798)
Other gains and losses (105) - -
Loss before tax (3,599) (2,370) (5,490)
Net assets 5,340 16,917 11,749
Pence Pence Pence
Underlying loss per ordinary
share (12.92) (8.32) (19.43)
Interim dividend per ordinary
share - - -
Final dividend per ordinary
share - - -
Price range of ordinary
shares (pence)
1 January - 30 June 21.00 - 42.00 37.00 - 57.50 -
1 January - 31 December - - 32.00 - 57.50
Six months Six months
ended 30 ended 30 Year ended
Jun 2012 Jun 2011 31 Dec 2011
(unaudited) (restated) (restated)
Number of ordinary shares
in issue 30,469,927 30,469,927 30,469,927
Market capitalisation
at 1 July GBP9.29m GBP14.17m -
at 1 January 2012 - - GBP9.75m
Net assets per ordinary
share 17.5p 55.5p 38.6p
Consolidated Income statement
for the six months ended 30 June 2012
Six months
Six months ended 30 Six months
ended 30 Jun ended 30
Jun 2012 Jun Six months
2012 before exceptional 2012 after ended Year ended
exceptional items - exceptional 30 Jun 31 Dec
items note 5 items 2011 2011
(unaudited) (unaudited) (unaudited) (restated) (restated)
Notes GBP000 GBP000 GBP000 GBP000 GBP000
Continuing operations
Revenue 4 34,286 - 34,286 38,673 74,980
Cost of sales (32,029) (779) (32,808) (35,618) (69,818)
Gross profit 2,257 (779) 1,478 3,055 5,162
Distribution costs (2,067) - (2,067) (2,084) (3,684)
Administrative expenses 5 (2,743) (250) (2,993) (2,138) (5,738)
Share of results
of joint ventures (515) - (515) (702) (932)
Operating loss (3,068) (1,029) (4,097) (1,869) (5,192)
Finance costs (426) - (426) (501) (798)
Other gains and
losses (105) - (105) - -
Loss before tax (3,599) (1,029) (4,628) (2,370) (5,990)
Tax 5, 6 (335) (1,456) (1,791) (163) (423)
Loss for the period 4 (3,934) (2,485) (6,419) (2,533) (6,413)
Attributable to:
Equity holders of
the parent (3,934) (2,485) (6,419) (2,533) (6,413)
Loss per share
Pence Pence Pence Pence Pence
From continuing
operations
Basic and diluted 8 (12.92) (8.17) (21.09) (8.32) (21.07)
Consolidated Statement of Comprehensive income
for the six months ended 30 June 2012
Six months
ended
30 Jun 2012 Six months
after ended Year ended
exceptional 30 Jun 31 Dec
items 2011 2011
(unaudited) (restated) (restated)
GBP000 GBP000 GBP000
Loss for the period (6,419) (2,533) (6,413)
Gains/(losses) on cash flow hedges 10 97 (165)
Actuarial loss on defined benefit
pension scheme - - (1,441)
Other comprehensive income 10 97 (1,606)
Tax relating to components of other
comprehensive income - (25) 383
Other comprehensive income for the
period 10 72 (1,223)
Total comprehensive income recognised
in period (6,409) (2,461) (7,636)
Attributable to:
Equity holders of the parent (6,409) (2,461) (7,636)
Consolidated Statement of Financial Position
as at 30 June 2012
As at As at As at
30 Jun 2012 30 Jun 2011 31 Dec 2011
(unaudited) (restated) (restated)
Notes GBP000 GBP000 GBP000
---------------------------------- ------ ------------ ------------ ------------
Non-current assets
Intangible assets 9 211 378 234
Property, plant and equipment 10 9,249 9,387 9,690
Investment in joint ventures 11 14,138 14,883 14,653
Deferred tax asset 2,401 4,043 4,192
---------------------------------- ------ ------------ ------------ ------------
Total non-current assets 25,999 28,691 28,769
Current assets
Inventories 12 23,496 19,823 20,040
Trade and other receivables 5,622 5,448 5,199
Cash and cash equivalents 13 2,485 223 1,799
Derivative financial instruments - 97 -
---------------------------------- ------ ------------ ------------ ------------
Total current assets 31,603 25,591 27,038
---------------------------------- ------ ------------ ------------ ------------
Total assets 57,602 54,282 55,807
Current liabilities
Trade and other payables 29,703 15,863 22,713
Borrowings 14 13,835 13,864 12,861
Provisions 2,450 2,202 2,170
Derivative financial instruments 155 - 165
---------------------------------- ------ ------------ ------------ ------------
Total current liabilities 46,143 31,929 37,909
Non-current liabilities
Retirement benefit obligations 16 3,926 3,592 4,405
Provisions 1,552 1,203 1,103
Preference shares 641 641 641
---------------------------------- ------ ------------ ------------ ------------
Total non-current liabilities 6,119 5,436 6,149
---------------------------------- ------ ------------ ------------ ------------
Total liabilities 52,262 37,365 44,058
Net assets 4 5,340 16,917 11,749
Equity
Share capital 7,618 7,618 7,618
Share premium account 25,926 25,926 25,926
Capital redemption reserve 916 916 916
Employee Share Ownership Plan
("ESOP") reserve (47) (47) (47)
Hedging and translation reserves (155) 72 (165)
Retained earnings (28,918) (17,568) (22,499)
---------------------------------- ------ ------------ ------------ ------------
Equity attributable to equity
holders of the parent 5,340 16,917 11,749
Total equity 5,340 16,917 11,749
Consolidated Statement of Changes in Equity
as at 30 June 2012
Equity attributable to equity holders of the parent
-----------------------------------------------------------------------------------------------
Share Capital Hedging
premium redemption and translation Retained Total
Share capital account reserve ESOP reserve reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------------- --------- ------------ ------------- ----------------- ---------- --------
Balance at 1 January
2011 (as originally
reported) 7,618 25,926 916 (47) - (14,168) 20,245
Prior year
adjustment (note 3) - - - - - (867) (867)
--------------------- -------------- --------- ------------ ------------- ----------------- ---------- --------
Balance at 1 January
2011 (restated) 7,618 25,926 916 (47) - (15,035) 19,378
Loss for the period
(restated) - - - - - (2,533) (2,533)
Other comprehensive
income for the
period - - - - 97 - 97
Tax relating to
components of other
comprehensive
income - - - - (25) - (25)
--------------------- -------------- --------- ------------ ------------- ----------------- ---------- --------
Total comprehensive
income for the
period - - - - 72 (2,533) (2,461)
Balance at 30 June
2011 (restated) 7,618 25,926 916 (47) 72 (17,568) 16,917
Loss for the period
(restated) - - - - - (3,880) (3,880)
Other comprehensive
income for the
period - - - - (237) (1,058) (1,295)
Total comprehensive
income for the
period - - - - (237) (4,938) (5,175)
Credit to equity for
share-based
payments - - - - - 7 7
Tax on items taken
direct to equity - - - - - - -
--------------------- -------------- --------- ------------ ------------- ----------------- ---------- --------
Balance at 31
December 2011
(restated) 7,618 25,926 916 (47) (165) (22,499) 11,749
Loss for the period - - - - - (6,419) (6,419)
Other comprehensive
income for the
period - - - - 10 - 10
Total comprehensive
income for the
period - - - - 10 (6,419) (6,409)
Balance at 30 June
2012 (unaudited) 7,618 25,926 916 (47) (155) (28,918) 5,340
Consolidated Cash Flow Statement
for the six months ended 30 June 2012
Six months
ended 30
Jun 2012 Six months
after exceptional ended 30 Year ended
items Jun 2011 31 Dec 2011
(unaudited) (restated) (restated)
GBP000 GBP000 GBP000
Operating activities
Operating loss from continuing operations (4,097) (1,869) (5,192)
Adjustments for:
Share of results of joint ventures 515 702 932
Depreciation of property, plant and
equipment 889 278 613
Amortisation of intangible assets 23 215 359
(Profit)/loss on disposal of property,
plant and equipment - - (1)
Charge for share-based payments - - 7
Increase in provisions 729 720 588
Operating cash flows before movement
in working capital (1,941) 46 (2,694)
(Increase)/decrease in inventories (3,456) 2,875 2,658
Decrease/(increase) in receivables 334 (260) (11)
Increase in payables 6,154 34 6,909
Contribution to defined benefit pension
scheme (600) (600) (1,200)
Cash (used in)/from operations 491 2,095 5,662
Interest paid (226) (325) (676)
Fair value losses on cash flow hedges (105) - -
Net cash (used in)/from operating activities 160 1,770 4,986
Investing activities
Proceeds on disposal of property, plant
and equipment 24 - 116
Purchases of property, plant and equipment (472) (978) (1,731)
Net cash used in investing activities (448) (978) (1,615)
Financing activities
(Decrease)/increase in bank borrowings - (567) (567)
Increase/(decrease) in stocking loan 974 (71) (1,074)
Net cash from/(used in) financing activities 974 (638) (1,641)
Net increase in cash and cash equivalents 686 154 1,730
Cash and cash equivalents at beginning
of period 1,799 69 69
Cash and cash equivalents at end of
period 2,485 223 1,799
Notes to the consolidated financial statements
for the six months ended 30 June 2012
1 General information
Manganese Bronze Holdings PLC is a company incorporated in England and Wales under registration number 61050. The address of the registered office is given in note 18. The nature of the Group's operations and its principal activities are set out in note 4.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates.
The information for the year ended 31 December 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' reported on those accounts. Their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
2 Accounting policies
Basis of preparation
The Interim Report has been prepared in accordance with the AIM Rules for companies and with International Financial Reporting Standards ("IFRS's") as adopted for use in the European Union. However, as permitted, the Group has chosen not to adopt International Accounting Standard 34, "Interim Financial Reporting", in preparing this Interim Report.
The Interim Report is unaudited, and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Interim Report, which was approved by the Board of Directors on 27 September 2012, should be read in conjunction with the financial statements for the year ended 31 December 2011, which are available on the Group's website.
Going concern
The financial statements of the Group have been prepared on a going concern basis. In making this assessment, the Directors have prepared financial forecasts for the period to 31 December 2013 which considers the funding and capital position for the Group. Those forecasts make assumptions in respect of future trading conditions, notably the economic environment and its impact on the Group's revenues and costs. The forecasts take into account foreseeable downside risks, based on the information that is available to them at the time of approval of these financial statements.
Sales volumes in the current year have been below expectations but the Directors believe that demand for new taxis in London will increase in the coming months due to the impact of the Mayor of London's Air Quality Strategy and this might allow the Group to achieve a breakeven or better result in the new financial year. However, in the light of the continuing weak economic outlook for the UK, the level of profitability that could be achieved is directly linked to UK new vehicle sales volumes, which are difficult to predict in the current macro economic environment.
As detailed in note 15, LTI Limited is one of 12 defendants in a legal action that has been listed for a trial in the High Court of the preliminary issues in March 2013. At this stage in the process, it is not possible to produce a reliable estimate either of the probability of the outcome of the litigation or the quantum of any liability.
Consequently, no provision has been made in the forecasts for the outcome of this litigation beyond providing for the legal costs that may arise.
As part of the on-going support by Geely to the Group, LTI Limited enjoys the benefit of informal extended trading terms from Shanghai Maple. As at 30 June 2012, LTI Limited owed Shanghai Maple GBP18.6m (US$29.2m) of which GBP8.9m (US$14.4m) was technically overdue. The Directors have obtained verbal assurances of the continuing support from Geely.
The Group's borrowing facilities are set out in note 14. At 30 June 2012 the Group had GBP3.3m of headroom on its agreed facilities. The existing facilities are due for renewal on 31 March 2013 and the Directors believe that these facilities will be maintained at their existing levels.
The Directors acknowledge that the matters described above represent a material uncertainty that could, in certain adverse circumstances, cast doubt upon the Company's and the Group's ability to continue as a going concern. If such an adverse situation were to arise, the Company and the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, the Board has an expectation that such an adverse situation will not arise.
In the absence of an adverse situation arising, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
Changes in accounting policies
The same accounting policies, presentation and methods of computation are followed in the Interim Report as applied in the Group's latest annual audited financial statements.
3 Prior year adjustments
As previously announced on 14 August 2012, the Directors have identified material accounting errors in the reported financial results for the year ended 31 December 2011 and prior periods and in accordance with the provisions of IAS 8, statements of financial position and the financial results for 2011 and prior periods have been restated.
In August 2010 the Group introduced a new integrated IT system to help to manage the increasingly complex global supply chain and uploaded the closing general ledger balances from the previous IT system. Due to a combination of system and procedural errors, a number of transactions relating to 2010 and 2011 and some residual balances from the previous system were not properly processed through the new IT system. This problem led to the over-statement of inventories and under/over-statement of liabilities in the balance sheets of previous periods.
The effect of the prior year adjustments has been to reduce the equity attributable to the owners of the parent by GBP4,250,000 and the nature of the adjustments and the impact on the Group financial statements are set out below:-
31-Dec 30-Jun 31-Dec
2011 2011 2010
GBP'000 GBP'000 GBP'000
Equity attributable to owners of the
parent as previously reported 15,999 19,412 20,245
Restatement of accounting errors
(Over) statement of inventories (2,992) (3,711) (2,638)
(Under)/over-statement of liabilities (1,258) 1,216 1,771
(Over)/under-statement of debtors - - -
(4,250) (2,495) (867)
Impact of accounting errors on taxation - - -
Equity attributable to the owners of
the parent as restated 11,749 16,917 19,378
A reassessment of the likelihood of recovery following the identification of the prior year adjustments reduced the carrying value of the deferred tax asset (note 5).
4 Operating segment information
For management purposes, the Group is currently organised into three operating divisions - vehicle sales, vehicle services, and Shanghai LTI. These divisions are the basis on which the Group reports its segment information internally to the chief operating decision maker, the Group Chief Executive.
The products and services from which each reportable segment derives its revenues are as follows:
i. The "vehicle sales" segment includes the design, development, UK assembly, and retailing of new purpose-built taxis, along with the sale of used vehicles taken in part exchange, parts, and vehicle maintenance.
ii. The "vehicle services" segment comprises the taxi finance business.
iii. The "Shanghai LTI" ("SLTI") segment is the joint venture based in Shanghai, China, which assembles the London Taxi under license from the Group and manufactures body tooling.
Segmental information about these businesses, which all relate to continuing operations, is presented below:-
Six months
ended 30
Jun Six months
2012 after ended 30 Year ended
exceptional Jun 31 Dec
Income statement items 2011 2011
(unaudited) (restated) (restated)
GBP000 GBP000 GBP000
Revenue
Vehicle sales 33,391 37,870 73,360
Vehicle services 895 803 1,620
Total Group 34,286 38,673 74,980
Result
Vehicle sales (3,752) (1,519) (5,426)
Vehicle services 170 352 1,166
SLTI (515) (702) (932)
Total operating loss from continuing
operations (4,097) (1,869) (5,192)
Finance costs (531) (501) (798)
Loss before tax (4,628) (2,370) (5,990)
Tax (1,791) (163) (423)
Loss after tax (6,419) (2,533) (6,413)
Six months
ended 30
Jun Six months
2012 after ended 30 Year ended
exceptional Jun 31 Dec
Statement of financial position items 2011 2011
(unaudited) (restated) (restated)
GBP000 GBP000 GBP000
Vehicle sales 7,536 19,252 12,436
Vehicle services (581) 290 172
SLTI 14,138 14,883 14,653
Total segment 21,093 34,425 27,261
Unallocated corporate (4,403) (3,867) (4,450)
Net debt (11,350) (13,641) (11,062)
Total Group 5,340 16,917 11,749
5 Exceptional items
Six months Six months
ended 30 ended 30 Year ended
Jun Jun 31 Dec
note 2012 2011 2011
(unaudited) (restated) (restated)
GBP000 GBP000 GBP000
Cost of sales
Provision for irrecoverable
costs i 779 - -
Administrative expenses
Legal costs - TX4 fire litigation ii 150 - 500
Legal and professional fees
- forensic accountancy investigation iii 100 - -
250 - 500
Taxation
Deferred tax asset iv 1,456 - -
2,485 - 500
i. Following a review of debtor balances, a provision has been made against costs incurred during 2008 and 2009 in relation to the transfer of production in China that may not be recoverable from SLTI.
ii. Additional legal costs in relation to the TX4 fire litigation claim (note 15).
iii. Legal and professional fees in relation to the ongoing forensic investigation into the causes of the material accounting errors that gave rise to the prior year adjustment (note 3).
iv. A reassessment of the likelihood of recovery following the identification of the prior year adjustments (note 3) reduced the carrying value of the deferred tax asset.
6 Tax
UK corporation tax for the six month period is calculated at 24.5% (2011: 26.5%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax loss of the six month period.
The Finance Act 2012 was substantively enacted on 3 July 2012 and given Royal Assent on 17 July 2012. This legislation announced headline corporation tax rates to be 24% from 1 April 2012, falling to 23% from 1 April 2013. Deferred tax at 30 June 2012 has been provided at 23%, being the substantively enacted rate expected to apply in the periods in which the timing differences are expected to reverse.
The Budget on 21 March 2012 announced a further reduction to 22% from 1 April 2014 which is expected to be included in Finance Act 2013 and will be substantively enacted when this Act has completed its final House of Commons stage. This has not been factored into the tax calculations in this Interim Report.
The tax charge for the period of GBP335,000 (2011: GBP163,000) has arisen due to the decrease in the Group's deferred tax asset resulting from the reduction in Corporation tax rate from 25% to 23%.
At 30 June 2012, the Group had unused tax losses of GBP18,864,000 available for offset against future taxable profits. No deferred tax has been recognised in respect of these losses due to the unpredictability of future taxable profit streams.
7 Dividends
There are no amounts recognised as distributions to equity holders during the period (2011: nil).
No interim dividend (2011: nil) has been declared.
8 Loss per ordinary share
The calculation of the basic and diluted loss per share is based on the following data:
Six months Six months
ended 30 ended 30 Year ended
Jun Jun 31 Dec
Loss 2012 2011 2011
(unaudited) (restated) (restated)
GBP000 GBP000 GBP000
Loss for the purposes of underlying
loss per share being net loss
(before exceptional items) attributed
to equity holders of the parent (3,934) (2,533) (5,913)
Loss for the purposes of basic
and diluted loss per share being
net loss attributed to equity
holders of the parent (6,419) (2,533) (6,413)
Six months Six months
ended 30 ended 30 Year ended
Number of shares Jun 2012 Jun 2011 31 Dec 2011
(unaudited) (unaudited) (audited)
Number Number Number
Weighted average number of ordinary
shares for the purposes of basic
loss per share 30,438,647 30,438,647 30,438,647
The denominators used in the calculation of loss per share are the same for underlying loss per share and both basic and diluted loss per share.
Six months Six months
ended 30 ended 30 Year ended
Loss per ordinary share Jun 2012 Jun 2011 31 Dec 2011
(unaudited) (restated) (restated)
Pence Pence Pence
Underlying (before exceptionals) (12.92) (8.32) (19.43)
Basic and diluted (after exceptionals) (21.09) (8.32) (21.07)
As the Group incurred a loss for the period, diluted loss per share is the same as basic loss per share.
9 Intangible assets
Development
costs Licences Total
GBP000 GBP000 GBP000
Cost:
At 1 January, 1 July 2011, 1 January
and 30 June 2012 2,299 90 2,389
Accumulated amortisation and impairment:
At 1 January 2011 1,721 75 1,796
Charge for the period 205 10 215
At 1 July 2011 1,926 85 2,011
Charge for the period 139 5 144
At 1 January 2012 2,065 90 2,155
Charge for the period 23 - 23
At 30 June 2012 2,088 90 2,178
Carrying amount:
At 31 December 2010 578 15 593
At 30 June 2011 373 5 378
At 31 December 2011 234 - 234
At 30 June 2012 211 - 211
10 Property, plant and equipment
Freehold
land and Long leasehold Short leasehold Plant and
buildings buildings buildings equipment Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost:
At 1 January 2011 550 4,850 298 25,217 30,915
Additions - - - 978 978
At 1 July 2011 550 4,850 298 26,195 31,893
Additions - - - 753 753
Disposals - - - (250) (250)
At 1 January 2012 550 4,850 298 26,698 32,396
Additions - - - 472 472
Disposals - - - (86) (86)
At 30 June 2012 550 4,850 298 27,084 32,782
Accumulated depreciation
and impairment:
At 1 January 2011 135 663 246 21,184 22,228
Charge for the
period 9 48 11 210 278
At 1 July 2011 144 711 257 21,394 22,506
Charge for the
period 9 49 12 265 335
Disposals - - - (135) (135)
At 1 January 2012 153 760 269 21,524 22,706
Charge for the
period 9 48 12 820 889
Disposals - - - (62) (62)
At 30 June 2012 162 808 281 22,282 23,533
Carrying amount:
At 31 December
2010 415 4,187 52 4,033 8,687
At 30 June 2011 406 4,139 41 4,801 9,387
At 31 December
2011 397 4,090 29 5,174 9,690
At 30 June 2012 388 4,042 17 4,802 9,249
During the period the Group spent GBP472,000 on plant and equipment, including GBP240,890 relating to the Euro 5 emission compliant taxi which was launched on 1 January 2012.
The depreciation charge of GBP889,000 for the period includes GBP477,000 for the commencement of depreciation (from 1 January 2012) of capital expenditure relating to the Euro 5 emission compliant taxi. In aggregate, total capital expenditure incurred that related to the Euro 5 emission compliant taxi to 30 June 2012 was GBP3,703,000.
11 Investment in joint ventures
GBP000
Cost:
At 1 January, 1 July 2011, 1 January and 30
June 2012 16,034
Share of profits/(losses):
At 1 January 2011 (449)
Loss for the period (702)
At 1 July 2011 (1,151)
Loss for the period (230)
At 1 January 2012 (1,381)
Loss for the period (515)
At 30 June 2012 (1,896)
Carrying amount:
At 31 December 2010 15,585
At 30 June 2011 14,883
At 31 December 2011 14,653
At 30 June 2012 14,138
During 2007, the Group finalised the establishment of a joint venture with Chinese car manufacturer Geely Automobile Holdings Limited ("Geely") and Shanghai Maple Automobile Company Limited ("Maple"), to produce the London taxi in Shanghai. The joint venture company, Shanghai LTI Automobile Components Company Limited ("SLTI"), was incorporated in the People's Republic of China on 15 June 2007.
The parties to the joint venture are the Group, holding 48% of the share capital of SLTI, and Geely and Maple, who hold 51% and 1% respectively.
The Group is accounting for its investment on an equity basis, with the total cost of GBP16,034,000 comprising shares of GBP14,250,000 and transaction costs of GBP1,784,000.
On 19 January 2011, the Group pledged its shares in SLTI to Maple as security over the payment obligations of LTI Limited (the Group's wholly-owned subsidiary) to Maple. The recourse which Maple has against the Company in the event that LTI Limited breaches its payment obligations is limited to a maximum amount of US$8 million. In exchange for the pledge of shares, the Group has agreed an extension of credit terms to 120 days for amounts due to Maple relating to the supply of kits of bodies and panels, parts, components and completed vehicles.
12 Inventories
As at As at As at
30 Jun 2012 30 Jun 2011 31 Dec 2011
(unaudited) (restated) (restated)
GBP000 GBP000 GBP000
Raw materials 4,813 2,614 4,831
Work in progress 617 689 982
Finished goods 18,066 16,520 14,227
23,496 19,823 20,040
Finished goods with a carrying amount of GBP13,835,000 (2011: GBP13,864,000) are pledged as security for the Group's stocking loan facility.
13 Cash and cash equivalents
As at As at As at
30-Jun-2012 30-Jun-2011 31-Dec-2011
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Cash at banks and in hand 2,485 223 1,799
Cash at banks and in hand do not attract interest
14 Borrowings
As at As at As at
30-Jun-2012 30-Jun-2011 31-Dec-2011
(unaudited) (unaudited) (restated)
GBP000 GBP000 GBP000
Bank overdrafts - - -
Stocking loan 13,835 13,864 12,861
13,835 13,864 12,861
All borrowings are repayable on demand or within one year.
Other principal features of the Group's borrowings are as follows:
i. The Group's overdraft facility at the period end date of GBP0.7m (2011: GBP1.5m) was provided by HSBC Bank plc ("HSBC") and attracted interest at a rate of 5.0% (2011: 5.0%) above the bank's sterling base rate. This facility is repayable on demand and is secured by a debenture comprising fixed and floating charges over all the Group's assets and undertakings, and first legal mortgage over the Group's freehold property in Broughton Street, Manchester, and long leasehold property in Brewery Road, London.
ii. The Group's stocking loan facility of GBP13.95m (2011: GBP13.95m) is provided by the Lloyds Banking Group PLC and attracts interest linked to the Finance House Base Rate. The stocking loan is secured on the vehicles within finished goods.
At 30 June 2012, the Group had available GBP3.3m (2011: GBP1.3m) of headroom on undrawn committed borrowing facilities in respect of which all conditions precedent had been met. Of this amount GBP0.1m (2011: GBP0.1m) relates to the undrawn element of the stocking loan facility, which can only be drawn down provided the Group has suitable taxis to offer as security.
15 Contingent liabilities
Certain subsidiaries provide warranties, and sometimes extended warranties, in respect of their products. The Directors review the position regularly and consider that appropriate provisions have been made to cover known and expected costs likely to arise under these warranties.
In March 2011 a claim was lodged in the High Court by 436 taxi drivers against LTI Limited and 11 other defendants for alleged financial loss as a result of the 2008 product recall that was undertaken to resolve concerns following 12 under bonnet fires in early production models of the TX4 taxi. The case has been listed for a trial in the High Court of the preliminary issues in March 2013. After carrying out a full and thorough investigation using an independent fire investigator, the Directors believe that the cause of the fires was due to improper servicing by third parties who used flammable solvents to clean the engine compartment. Accordingly, the Board intends to contest the claim and, in the 2011 accounts, provided GBP500,000 to meet the future legal costs of this action. At this stage of the legal process, it is not possible to produce a reliable estimate either, of the probability of the outcome of the litigation, or the quantum of any liability. Consequently, no provision has been made for the outcome of this litigation beyond providing for the legal costs that may arise.
16 Defined benefit scheme
The valuation position of the Group's defined benefit pension scheme (Manganese Bronze Group Pension Scheme), which was closed in 1995, was assessed at 31 December 2011 by a qualified independent actuary using a set of assumptions which are commensurate with the guidance given under IAS19. The defined benefit obligation as at 30 June 2012 is calculated on a year-to-date basis, based on the 30 December 2011 actuarial valuation. There have not been any significant fluctuations or one-time events since that time that would require adjustment to the actuarial assumptions made at 31 December 2011.
Contributions of GBP0.6m (2011: GBP0.6m) were paid into the scheme during the period. Contributions to the scheme for the six months to 31 December 2012 are likely to be in the region of GBP0.6m.
17 Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
During the period, the Group entered into the following transactions with related parties who are not (members) of the Group.
Sale of goods Purchase of goods
---------------------------------------- ----------------------------------------
Six months Six months Six months Six months
ended ended Year ended ended ended Year ended
30-Jun-2012 30-Jun-2011 31-Dec-2011 30-Jun-2012 30-Jun-2011 31-Dec-2011
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Shanghai LTI 894 - 2,518 - - -
Shanghai Maple Automobile
Company Ltd - - - 11,653 8,560 16,077
The following amounts were outstanding at the period end date.
Amounts owed by related parties Amounts owed to related parties
--------------------------- ---------------------------------------- ----------------------------------------
As at As at As at As at As at As at
30-Jun-2012 30-Jun-2011 31-Dec-2011 30-Jun-2012 30-Jun-2011 31-Dec-2011
(unaudited) (restated) (restated) (unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Shanghai LTI 1,708 1,345 1,526 - - -
Shanghai Maple Automobile
Company Ltd - - - 18,571 10,155 11,070
Shanghai LTI ("SLTI") is a related party of the Group because the Group has a 48% shareholding in the company (see note 11).
Shanghai Maple Automobile Company Ltd ("Maple") is a related party of the Group because it is 90% owned by Geely Holding, which is wholly owned by Mr Li Shu Fu and his associates. Mr Li Shu Fu is chairman of Geely Automobile Holdings Ltd, the Group's 51% joint venture partner in SLTI.
Sales of goods to, and purchases from, related parties were made at the contracted rate of cost plus 3%.
On 19 January 2011, the Group pledged its shares in SLTI as security over the amounts owed to Maple (see note 11). Other amounts outstanding are unsecured, with no guarantees given or received.
GBP1,421,000 (2011: GBP662,000) has been provided for doubtful debts in respect of the amounts owed by related parties.
Amounts outstanding will be settled in cash.
18 Copies of this announcement can be obtained from the Company Secretary, Manganese Bronze Holdings PLC, Holyhead Road, Coventry, CV5 8JJ, or from the Group's website at www.manganese.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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