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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:2400D Inveresk PLC 23 September 2004 Inveresk PLC Interim results for the six months ended 30 June 2004 HIGHLIGHTS * Profits before interest decline to #1.254m (2003: #2.021m) against a background of depressed European markets coupled with margin pressure and significant adverse currency influences. * Retained profits attributable to shareholders amount to #0.730m (2003: #1.609m) * Interest costs of #0.524m (2003: #0.412m) in line with expectations following the series of rate increases by the Bank of England. * At Carrongrove successful re-launch of Gemini and the introduction of InverX Pure and InverX Superfine offering potential for entry into new international markets. * At St Cuthberts successful introduction of new products including a range of partial pre-impregnated resin based foils and top quality artist papers. * Pulp prices remain fairly steady throughout the period and in line with expectations. * Asset realisation programme on track in terms of sales and cash generation. Progress on development plans for the Inverkeithing site in consultation with Fife Council and its regeneration of the community surrounding Inverkeithing. * The welcome appointment of well-renowned industry leader, Stephen Mason, as a non-executive director to the Board of Inveresk plc. "The six month period under review has been most frustrating. The volume of tonnes sold whilst on a par with last year has seen profits eroded by adverse currency influences. We remain highly committed to our customers' needs and through our asset realisation programme expect significant enhancement to shareholder value in due course. We welcome Stephen Mason to our Board of Directors". Alan Walker, Chief Executive Officer CHAIRMAN'S STATEMENT Results As forecast when delivering our trading update at the Annual General Meeting on 27 April 2004, the first half of this year has experienced difficult trading conditions within the paper sector including the speciality niche paper markets in which we operate. In common with most other export orientated businesses, the results for the six months to 30 June 2004 have been heavily influenced by adverse currency movements with both the US dollar and Euro weakening against # sterling. Despite the volume of tonnes sold of 21,156 being almost identical to that sold in the same period in 2003, our sales, more than 60% of which are to export markets, in the six months to 30 June 2004 have declined by 8.8% to #19.986m from #21.922m in the first six months of the previous year. Mainly as a result of the adverse currency movements, profits before interest have declined to #1.254m from #2.021m despite being enhanced by the gain on sale from assets no longer required within the core business. The negative impact of currency on profits was restricted to #842k year on year as a result of forward hedging of both the Euro and US dollar and the forward purchase at a fixed price of a portion of our US dollar denominated pulp supplies. Marketing conditions remain generally depressed with strong competition restricting our ability to increase margin contribution. Core Businesses During the period the Group comprised: * The Foil, Decor and Artist Paper business based at the St Cuthberts Mill in Somerset. * The Graphics Boards business based at the Carrongrove Mill, Denny, Stirlingshire in Scotland. St Cuthberts The performance of this mill in the first half of the year has been disappointing. The volumes of foil based furniture and decorative papers have been depressed in line with the poor market conditions prevalent in the furniture industry throughout Europe. Our order book remains volatile which creates difficulties for our production team and their ability to operate the mill efficiently so as to minimise down time. Margins have remained under pressure in part due to currency influences but also due to end users looking to reduce their raw material supply costs. In response to this the Mill has successfully introduced a new range of partially pre-impregnated resin based papers (PPIP) whose technical features appeal to a number of our major European customers with whom we work closely in terms of technical development and innovation. In artist papers demand has remained steady throughout the period as our principal brands, Bockingford and Somerset, gain wider appeal throughout the global market. The rate of expansion needs to be faster in this highly specialised and lucrative niche field and steps are being taken to extend our product range in a number of ways so as to build increased brand awareness internationally. Carrongrove In contrast to the volatility experienced at St Cuthberts, our Graphic Boards business has performed steadily throughout the period against a background of depressed market conditions throughout Europe. Whilst not achieving its full potential Carrongrove remains a well managed and significantly profitable business with a diverse customer base throughout the UK and continental Europe. The measures taken in 2003 to improve production efficiency through planned maintenance programmes and capital expenditure have continued throughout the first half of 2004. The re-launch in autumn 2003 of the mill's principal brand Gemini was a great success and has been complemented by the introduction of a wider range of products to include InverX Pure and InverX Superfine which have been well received by our customers, both in the UK and further afield. The planned expansion into the United States and Canada has taken place albeit at a slower pace than originally envisaged due in part to the number of trials carried out in the local US market and the currency influences already referred to above. A major risk factor within this mill can be the level of pulp prices. These have remained fairly steady throughout the period and remain in line with budget expectations. Protective steps have been taken to "buy" forward and also "hedge" the currency exposure created by purchasing pulp in US dollars. Asset Realisation Programme Shareholders will be fully aware of this programme which commenced late in 2003 following the surrender of the lease by our tenant at Caldwells Mill in Inverkeithing. The plan is twofold:- * To turn the plant and paper making equipment located at the Caldwells Mill into cash. * To secure planning consents that will permit alternative uses for the land assets located in Inverkeithing so as to enhance shareholder value and eliminate debt. I am pleased to advise that the plan is progressing satisfactorily with equipment realisations already in excess of #2.2M to buyers from all corners of the world. Missives have also been exchanged in respect of the sale of Borelands Reservoir on which a profit of approximately #700k will be realised. We continue to work closely with the strategic planners at Fife Council and Scottish Enterprise to achieve the joint objective of creating a new infrastructure around the Inverkeithing area which will offer an improved environment for the town and its catchment area adjacent to the Forth Road and Rail Bridges not far from Edinburgh. The project will take time to deliver but we are already in discussion with developers and financiers with whom we intend to work closely in the future. Fife Council's master plan for the community has just been announced and is now out for public consultation and we expect to play an integral part in the regeneration of Inverkeithing and its surrounding bay. Finance The Balance Sheet remains sound with no material deficit on the pension funds and tax losses of in excess of #20M remain available for set-off against future profitability. Borrowings are in line with expectations with the shortfall in sales compensated for by the sale of paper making equipment at the Caldwells Mill. Interest charges of #0.524m (2003: #0.412m) are in line with the expected upward movement in interest base rates imposed by the Bank of England. Our corporate ambition remains to become debt free over time through the asset realisation programme referred to above. Costs remain a constant focus of attention. The continuous burden of regulation and increasing level of statutory requirements from Government and the EU cast a shadow over manufacturing industry in the UK. Energy costs continue to rise but we have taken steps at both mills to ensure that operating costs are kept under constant review in line with our level of activity. Shareholder Value One of our principal objectives and duties lies in the enhancement of shareholder value. The new Inveresk has been fortunate in being the beneficial owner of a diverse but valuable portfolio of assets which are no longer required within the core business. Your Board will continue in its efforts to harvest these assets over time so as to produce a debt free balance sheet with which to meet the challenges of the future. Non-Executive Director Your Board is particularly pleased to be able to announce the appointment as a non-executive director of Stephen Mason who until his recent retirement was the Chairman of the UK, Ireland and South Africa operations of PaperlinX. His legendary career within the paper industry has spanned no less than 36 years where he was one of the leading forces in establishing paper merchanting as a global business. Inveresk will benefit enormously from Stephen's vast experience and knowledge of the industry where the relationship and commitment to our network of paper merchants remains a cornerstone of Inveresk's ongoing future strategy. Outlook In common with our peer group of industry manufacturers we recognise that the market is still suffering from a general lack of demand. We remain highly specialised within the niche sectors we serve and continue to work with our UK and European customers in terms of technical development and the introduction of innovative products designed to specific customer requirements. The industry faces significant challenges as costs rise and Health & Safety regulation continues to bite ever deeper. Inevitably consolidation within the paper industry has and will continue to be a symptom of size and economies of scale. As a small specialist producer we are regularly examining the many and varied opportunities to improve shareholder value through strategic alliances or merger with or acquisition of other European producers. This process is ongoing and will be relentlessly pursued. For the remainder of the year much depends on the strength of # sterling against the Euro and also the US dollar in the run up to the US Presidential Election in November. This will ultimately determine the level of profitability to be recorded for the year as a whole. Central overheads remain firmly under control. We have a strong and focused management team and will continue to search out opportunities which will enable us to build shareholder value. Jan Bernander, Chairman 23 September 2004 CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited 26 weeks to 26 weeks to Year ended 30 June 30 June 31 December 2004 2003 2003 #'000 #'000 #'000 ----------- ----------- ----------- Turnover 19,986 21,922 39,742 Cost of sales (16,361) (17,097) (31,995) ----------- ----------- ----------- Gross profit 3,625 4,825 7,747 Distribution costs (1,808) (1,756) (3,189) Administrative expenses (1,334) (1,112) (2,530) ----------- ----------- ----------- Group operating profit 483 1,957 2,028 Fundamental reorganisation credit - 64 704 Gain on sale and termination of businesses 771 - 1,216 ----------- ----------- ----------- Profit before interest 1,254 2,021 3,948 Net interest payable - Group (524) (412) (645) Other finance expense - - (271) ----------- ----------- ----------- Profit on ordinary activities before taxation 730 1,609 3,032 Taxation on profit on ordinary activities - - 130 ----------- ----------- ----------- Profit for the financial period 730 1,609 3,162 Dividends - - (360) ----------- ----------- ----------- Retained profit for the period 730 1,609 2,802 ----------- ----------- ----------- Basic earnings per share 0.5 p 1.8 p 2.7 p Diluted earnings per share 0.5 p 1.7 p 2.7 p Earnings per share before exceptional items 0.1 p 1.7 p 1.1 p ----------- ----------- ----------- CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited Interim Interim Year ended 30 June 30 June 31 December 2004 2003 2003 (restated) (restated) #'000 #'000 #'000 ----------- ----------- ----------- Fixed assets Tangible assets 24,210 27,591 26,394 ----------- ----------- ----------- Current assets Stocks 4,791 4,299 4,842 Debtors 7,943 7,545 7,808 Debtors - deferred taxation 3,750 3,750 3,750 Cash at bank and in hand 61 123 70 ----------- ----------- ----------- 16,545 15,717 16,470 ----------- ----------- ----------- Creditors: amounts falling due within one year Bank overdrafts and short term debt (7,480) (4,375) (8,146) Other creditors (7,423) (10,836) (8,478) ----------- ----------- ----------- (14,903) (15,211) (16,624) ----------- ----------- ----------- Net current assets/(liabilities) 1,642 506 (154) ----------- ----------- ----------- Total assets less current liabilities 25,852 28,097 26,240 Creditors: amounts falling due after more than one year (8,000) (8,000) (8,000) Provisions for liabilities and charges (312) (3,332) (601) ----------- ----------- ----------- Net assets excluding pension assets/(liabilities) 17,540 16,765 17,639 Pension assets/(liabilities) Defined benefit schemes with net assets 3,110 - 3,166 Defined benefit schemes with net (3,229) (3,373) (3,910) liabilities ----------- ----------- ----------- Net assets including pension assets/(liabilities) 17,421 13,392 16,895 ----------- ----------- ----------- Capital and reserves Called up share capital 1,438 6,282 1,438 Investment in own shares (605) (400) (400) Share premium account - 22,072 - Revaluation reserve 11,279 11,459 11,369 Capital redemption reserve - 173 - Profit and loss account 5,309 (26,194) 4,488 ----------- ----------- ----------- Total equity shareholders' funds 17,421 13,392 16,895 ----------- ----------- ----------- CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited Interim Interim Year ended 30 June 30 June 31 December 2004 2003 2003 #'000 #'000 #'000 ----------- ----------- ----------- Net cash outflow from operating activities (983) (5,465) (9,192) Returns on investment and servicing of finance (512) (466) (886) Capital expenditure and financial 2,152 (156) 167 investment ----------- ----------- ----------- Net cash inflow/(outflow) before financing 657 (6,087) (9,911) Financing - 4,512 8,827 ----------- ----------- ----------- Increase/(decrease) in cash in the period 657 (1,575) (1,084) ----------- ----------- ----------- CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Unaudited Unaudited Audited Interim Interim Year ended 30 June 30 June 31 December 2004 2003 2003 #'000 #'000 #'000 ----------- ----------- ----------- Profit for the period 730 1,609 3,162 Exchange adjustments on foreign currency net 1 (3) (4) investments Actuarial gains recognised in the pension schemes - - 3,672 Deferred tax arising on gains in the pension - - (1,361) schemes ----------- ----------- ----------- Total recognised gains and losses relating to the financial period 731 1,606 5,469 ----------- ----------- ----------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Unaudited Audited Interim Interim Year ended 30 June 30 June 31 December 2004 2003 2003 #'000 #'000 #'000 ----------- ----------- ----------- Profit for the financial period 730 1,609 3,162 Dividends - - (360) ----------- ----------- ----------- Retained profit for the financial period 730 1,609 2,802 Shares purchased by ESOP trust (205) (100) (100) Other recognised gains/(losses) for the financial period 1 (3) 2,307 Issue of ordinary shares - 6,346 6,346 Loans converted to equity - 2,200 2,200 ----------- ----------- ----------- Net increase/(reduction) in shareholders' funds 526 10,052 13,555 ----------- ----------- ----------- Shareholders' funds at beginning of financial period 16,895 3,340 3,340 (originally #17,295,000 restated for prior year adjustment of -#400,000) ----------- ----------- ----------- Shareholders' funds at end of financial period 17,421 13,392 16,895 ----------- ----------- ----------- NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES Unaudited Unaudited Audited Interim Interim Year ended 30 June 30 June 31 December 2004 2003 2003 #'000 #'000 #'000 ----------- ----------- ----------- Reported profit on ordinary activities before taxation 730 1,609 3,032 Difference between historical cost depreciation charge and the actual depreciation charge of the year calculated on the revalued amount 90 90 180 ----------- ----------- ----------- Historical cost profit on ordinary activities before taxation 820 1,699 3,212 ----------- ----------- ----------- ----------- ----------- ----------- Historical cost profit for the period retained after 820 1,699 2,982 taxation, minority interests and dividends ----------- ----------- ----------- NOTES TO THE INTERIM ACCOUNTS 1. Basis of Preparation The interim accounts for the twenty six weeks ended 30 June 2004 and twenty six weeks ended 30 June 2003, 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 2003, except for the adoption of UITF38 "Accounting for ESOP schemes", which has been adopted in this period with the 2003 interim and full year figures being restated accordingly. Following the adoption of UITF38 the investment in own shares is included in share capital and reserves with the effect of reducing net assets at 31 December 2003 and 30 June 2003 by #400,000 to #13,392,000 and #16,895,000 respectively. The information for the year ended 31 December 2003 does not constitute statutory accounts and has been abstracted, following restatement for UITF38, from the financial statements for that period which have been filed with the Registrar of Companies. The independent auditors' report on those accounts was unq ualified. The valuation of net liabilities of the defined benefit pension schemes in the interim accounts at 30 June 2004 reflects the opening balance sheet position adjusted for current service costs and contributions made to the schemes. A full review and update of the net pension assets/liabilities for the defined benefit pension schemes will be carried out for the end of the financial year. 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. The deferred tax asset continues to represent the directors' estimate of losses that will be utilised in the foreseeable future based on current levels of profitability and will be reviewed at the end of the financial 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 2004 2003 2003 2004 2003 2003 Earnings/(loss) Earnings/(loss) Earnings/(loss) Earnings/(loss) pence per share Earnings/(loss) Earnings/(loss) #'000 #'000 #'000 pence per share pence per share ---------- --------- --------- --------- --------- --------- --------- Basic 730 1,609 3,162 0.5 1.8 2.7 Adjusted for: Exceptional costs (771) (64) (1,920) (0.6) (0.1) (1.6) Tax Relief on exceptional 231 19 - 0.2 - - costs ---------- --------- --------- --------- --------- --------- --------- Adjusted 190 1,564 1,242 0.1 1.7 1.1 basic --------- --------- --------- --------- --------- --------- ---------- Diluted 730 1,609 3,162 0.5 1.7 2.7 ---------- --------- --------- --------- --------- --------- --------- 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. 6 months ended 6 months ended 12 months ended 30 June 30 June 31 December 2003 2004 2003 Number of Number of Number of Shares Shares Shares (000s) (000s) (000s) ----------- ----------- ----------- Average of shares in issue during the financial period 139,996 91,407 116,309 Adjustment for the dilutive effect of employee and director share options 966 1,500 1,214 ----------- ----------- ----------- Average of shares in issue during the financial period diluted 140,962 92,907 117,523 ----------- ----------- ----------- 5. Provisions for Liabilities and Charges Restructuring Onerous Lease Total #'000 #'000 #'000 ----------- ----------- ----------- At 31 December 2003 412 189 601 Charge/(credit) to profit and loss - - - Costs incurred (218) - (218) Amounts released unused (71) - (71) ----------- ----------- ----------- At 30 June 2004 123 189 312 ----------- ----------- ----------- 6. Reconciliation of Operating Profit/(Loss) to Net Cash Inflow/(Outflow) from Operating Activities Unaudited Unaudited Audited Interim Interim Year ended 30 June 30 June 31 December 2004 2003 2003 #'000 #'000 #'000 ----------- ----------- ----------- Group operating profit 483 1,957 2,028 Exceptional items 771 64 1,920 Depreciation charges 527 935 1,089 Impairment of fixed assets - - 1,319 Amortisation of government grants - - (3) Net Pension asset/liability (625) (242) (700) Gain on sale of tangible fixed assets (700) - (599) Increase in working capital (1,150) (6,595) (9,931) Decrease in provisions (289) (1,584) (4,315) ----------- ----------- ----------- Net cash outflow from operating activities (983) (5,465) (9,192) ----------- ----------- ----------- 7. Movement in Net Debt Unaudited Unaudited Audited Interim Interim Year ended 30 June 30 June 31 December 2004 2003 2003 #'000 #'000 #'000 ----------- ----------- ----------- Increase/(decrease) in cash 657 (1,575) (1,084) Cash outflow from debt financing - 1,834 (281) Loans converted to equity - 2,200 - Translation differences - - - ----------- ----------- ----------- Decrease/(increase) in net debt in period 657 2,459 (1,365) Net debt at beginning of period (16,076) (14,711) (14,711) ----------- ----------- ----------- Net debt at end of period (15,419) (12,252) (16,076) ----------- ----------- ----------- This information is provided by RNS The company news service from the London Stock Exchange END IR GGGZLNZFGDZM
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