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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Renold Plc | LSE:RNO | London | Ordinary Share | GB0007325078 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.30 | -0.62% | 47.80 | 47.50 | 47.80 | 48.00 | 46.00 | 48.00 | 639,935 | 16:25:47 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Engineering Services | 247.1M | 11.8M | 0.0523 | 9.14 | 107.75M |
From Apr 2019 to Apr 2024
TIDMRNO
RNS Number : 1802T
Renold PLC
13 November 2019
Renold plc
("Renold" or the "Group")
Interim results for the half year ended 30 September 2019
13 November 2019
Renold, a leading international supplier of industrial chains and related power transmission products, today announces its unaudited interim results for the half year ended 30 September 2019 (the 'period').
Financial highlights
Hot Features
Premium
Half year ended
30 Sept
30 Sept 2018
2019 (restated(1)
)
GBPm GBPm
Underlying adjusted interim results(2) (from
continuing operations)
Underlying revenue 98.2 100.8
Underlying adjusted operating profit 7.7 7.5
Underlying adjusted operating margin 7.8% 7.4%
Adjusted earnings per share 1.5p 1.6p
Reported interim results (from continuing
operations)
Revenue 98.2 98.2
Operating profit 6.3 5.9
Profit before tax 3.5 3.6
Basic earnings/(losses) per share 1.0p 0.9p
1 See Note 14 for details of the restatement
2 See overleaf for reconciliation of reported, underlying and adjusted figures
-- Underlying revenue from continuing operations down 2.6% to GBP98.2m; reported revenue from continuing operations unchanged
-- Underlying adjusted operating profit from continuing operations GBP7.7m (2018: GBP7.5m); adjusted operating margin 7.8% (2018: 7.4%) reflecting further progress in delivery of strategic initiatives
-- Net debt GBP34.2m (31 March 2019: GBP30.3m); net debt to adjusted EBITDA 1.4x (unchanged from prior year)
-- Adjusted EPS of 1.5p (2018: 1.6p) after deduction of pension administration costs and IAS 19R finance costs
Trading and operational highlights
-- The impact of tougher market conditions on revenue is being offset by improved efficiency from capital investment and operational improvement
-- The new factory in China continues to make progress with improvements in efficiency and reduced headcount and should see accelerating performance in the second half
-- Disposal of the loss-making, non-strategic South African Torque Transmission business unit to management for nominal consideration, securing future routes to market for product manufactured elsewhere in the Group
-- Completed a GBP1.7m share buy-back of the 25% joint venture partner's share of the Indian chain business in November, which becomes a wholly owned subsidiary operating in a growing market with significant potential
Robert Purcell, Chief Executive of Renold plc, said:
"A more challenging economic backdrop impacted on revenue and order intake in the first half of the year. Despite this, ongoing actions to improve the business have sustained profits and improved margins. In addition, we have seen further strategic evolution in the Group's manufacturing footprint with the exit from the non-core South African Torque Transmission business, the purchase of the minority stake in the Indian Chain business and the ongoing successful ramp-up of the Chinese facility.
Assuming no further deterioration in trading conditions, these measures will continue to deliver benefits in the second half and beyond, providing resilience through uncertain markets. As market conditions improve and we return to revenue growth, the operational platform being established will enable us to make further progress in growing margins and returns."
Reconciliation of reported, underlying and adjusted results
Revenue Operating Profit
H1 H1 H1 H1
2019/20 2018/19 2019/20 2018/19
GBPm (restated(1) GBPm (restated(1)
) )
GBPm GBPm
Previously reported 99.7 5.8
Exchange impact 2.6 0.1
Discontinued operations(2) (1.5) 0.1
------------------------------------- ---------- -------------- ---------- --------------
Continuing underlying 98.2 100.8 6.3 6.0
Restructuring costs - - 0.9 1.0
Amortisation of acquired intangible
assets - - 0.5 0.5
Continuing underlying adjusted 98.2 100.8 7.7 7.5
------------------------------------- ---------- -------------- ---------- --------------
(1) See Note 14 for details of the restatement
(2) Reported revenue and operating profit for H1 2019/20 are presented on a continuing basis with no adjustment required for discontinued operations. Revenue and adjusted operating losses for discontinued operations in H1 2019/20 of GBP0.8m and GBP0.3m loss respectively are already deducted in arriving at reported results
ENQUIRIES:
Renold plc Peel Hunt LLP Instinctif Partners Robert Purcell, CEO Mike Bell Mark Garraway Ian Scapens, Group FD Ed Allsopp Rosie Driscoll Tel: 0161 498 4500 Tel: 020 7418 8900 Tel: 020 7457 2020
Cautionary statement regarding forward-looking statements
Some of the information in this document may contain projections or other forward-looking statements regarding future events or the future financial performance of Renold plc and its subsidiaries. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might", the negative of such terms or other similar expressions. Renold plc (the Company) wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Group, including among others, general economic conditions, the competitive environment as well as many other risks specifically related to the Group and its operations. Past performance of the Group cannot be relied on as a guide to future performance.
NOTES FOR EDITORS
Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, metals and mining.
Further information about Renold can be found on their website at: www.renold.com
Chief Executive's Statement
Following a relatively stable first quarter of the year, conditions in a number of international industrial markets weakened during the second quarter, resulting in a decline of underlying revenue from continuing operations for the six-month period of 2.6% versus the same period in the prior year. The decline in revenue most significantly reflects a deterioration in demand from distributors and OEMs in the Group's key European and US industrial chain markets during the late summer period.
Demand for Torque Transmission products was more stable, with stronger US markets more than offsetting weaker demand in other markets.
The ongoing focus on operational efficiency is helping to mitigate the impact of a weakening market environment and has been sufficient to offset the operating profit impact of reduced revenues in the first half of the year. Further cost and efficiency benefits are expected in the second half which will combine with improved efficiency in the new Chinese factory, the removal of losses from the South African business unit and improved performance of the Gears business unit.
Business and Financial Review
Underlying revenue Underlying adjusted Underlying adjusted
operating profit operating margin
----------------------- ------------------------- ------------------------- -------------------------
Six month period 2019/20 2018/19 2019/20 2018/19 2019/20 2018/19
GBPm (restated(1) GBPm (restated(1) % (restated(1)
) ) )
GBPm GBPm %
Chain 78.5 82.1 8.4 9.7 10.7 11.8
Torque Transmission 19.7 18.7 2.1 1.7 10.7 9.1
Head office
costs - - (2.8) (3.9) - -
----------------------- --------- -------------- --------- -------------- --------- --------------
Total from continuing
operations 98.2 100.8 7.7 7.5 7.8 7.4
----------------------- --------- -------------- --------- -------------- --------- --------------
(1) See Note 14 for details of the restatement
Trading performance in the period was mixed. A slowing market for industrial products impacted upon certain business units, particularly in the Chain division. However, some business units continue to deliver growth, including Australasia and India in the Chain Division and our North American Torque Transmission business unit. These pockets of growth have benefitted from an enhanced commercial focus, seeking out sectors of the market where Renold is under-represented, but where Renold's industry leading product capabilities can deliver value to customers over the product's life.
Underlying revenue from continuing operations declined by 2.6% (GBP2.6m) in the period. Reported revenue from continuing operations was unchanged, benefiting from foreign exchange as the US dollar strengthened.
The effect of the slowing market has been more keenly felt in order intake, which on an underlying, continuing basis declined by 8.1% to GBP95.7m (2018: GBP104.1m). While this decline is against a strong prior year comparator, the order intake levels indicate a continuation of subdued revenues into the second half.
As outlined below, there are a number of accounting changes that affect adjusted operating profit, including adoption of IFRS 16 'Leases' (increases adjusted operating profit by GBP0.3m in period ended 30 September 2019; no change in adjusted profit before tax), restatement of prior period results for the historical misstatement at the Gears business unit (reduction of adjusted operating profit by GBP0.6m in period ended 30 September 2018) and re-presentation of adjusting items to no longer adjust for ongoing pension costs (reduces adjusted operating profit in the periods ended 30 September 2018 and 2019 by GBP0.3m and GBP0.4m respectively). Details of these accounting changes are included in Notes 2, 14 and 15.
After applying these accounting changes, underlying adjusted operating profit from continuing operations increased to GBP7.7m (2018: GBP7.5m) with an adjusted operating profit margin of 7.8% (2018: 7.4%).
Chain
Chain division underlying revenue from continuing operations was down 4.4% (GBP3.6m) to GBP78.5m.
Geographic market dynamics have been volatile over the period. A slow start to the year across European markets continued into the second quarter. US markets experienced a stronger first quarter weakening into the second quarter and with limited benefits realised from seasonal agricultural markets, particularly for sugar cane in Mexico.
Sales through distributors across Europe and the US account for the largest element of revenue decline with destocking evident in a number of areas, in addition to the underlying softness in customer demand.
In order to mitigate the impact of slowing revenues in these key geographic regions, our operational management teams have been focused on delivering efficiency benefits from recent investments and through cost actions. This has included headcount reductions in a number of sites, along with production efficiencies which have contributed to reduced material costs.
Progress continues to be made in improving performance in the new Chinese factory. As previously indicated, start-up inefficiencies acted as a drag on margins, particularly in the first quarter of the year. While good progress has been made, opportunity exists to further reduce headcount and improve output and service levels which underpin confidence in an improving contribution through the second half.
Underlying adjusted operating profit from continuing Chain division operations declined to GBP8.4m (2018: GBP9.7m) with the impact of reduced volumes partially mitigated by cost reductions. As a result, underlying adjusted operating profit margin from continuing operations fell from the record 11.8% delivered in the first half of the prior year to 10.7%.
Underlying order intake from continuing operations reflects similar trends to revenue and declined by 5.9%. The Chain division book to bill for the first half of the year was 99% (2018: 101%).
Earlier in November 2019, we completed a share buy-back from the former 25% joint venture partner of our Indian chain business unit. The GBP1.7m share buy-back was funded by cash resources held by the Indian business which is now a wholly owned subsidiary of the Group.
With the weaker macro-economic backdrop expected to continue into the second half of the year, there will be an ongoing focus on delivering improved operational efficiency, including the annualisation of changes already effected and removal of the margin drag from the new Chinese factory experienced in the first half of the year.
Torque Transmission
Trading was more stable in the Torque Transmission division, although the performance of the individual business units differed considerably. Underlying revenue from continuing operations for the division grew by 5.3% to GBP19.7m, with the strongest performance being delivered in the US markets, where revenue was supported by strong order books brought forward from the prior year. Revenue in the Gears business unit remained largely stable, but a revenue decline was experienced in Couplings.
Sales of industrial couplings, mainly into maintenance markets, remained robust but revenue decline was experienced in the HiTec product category, where end customers are more exposed to market cycles. The major multi-year order only delivered limited revenue in the first half as order phasing delivers the larger element during the second half.
Identification of the historical overstatement of profit in the Gears unit resulted in an in-depth review of the business. Restructuring of the team and a reassessment of margin by product has allowed progress to be made in recovering profitability and regaining stability following the disruption, further benefit of which should be seen as the year progresses.
As part of the focus on optimising returns, and as a result of the continued challenges faced in the South African market, the Group disposed of the non-strategic South African Torque Transmission business unit to its management team in late September for nominal consideration. This business unit, which generated revenue of GBP0.8m and an adjusted operating loss of GBP0.3m in the period, would have required significant capital investment and management input to make meaningful progress. The disposal to local management provides a continuing channel to market for products sourced from elsewhere in the Group. The trading results for South Africa have been treated as discontinued operations as outlined in Note 15.
Divisional underlying adjusted operating profit from continuing operations of GBP2.1m was 23.5% higher than the prior year, benefiting from the US growth, resulting in an adjusted operating profit margin of 10.7% (2018: 9.1%).
Underlying order intake from continuing operations of GBP17.9m reduced by 16.4% in the period against a particularly strong order intake period in the prior year. The book to bill ratio for the first half of the year was 91%.
Further progress is expected in the Gears business unit in the second half of the year following the remedial actions taken, which along with the sale of the loss making South African business and improved revenues from the large multi-year Couplings contract in the second half of the year, will help to off-set the impact of the reduced order book.
Impact of adoption of IFRS 16 'Leases'
In the period ended 30 September 2019, the Group has applied IFRS 16 'Leases' for the first time. Adoption of this new accounting standard has increased adjusted operating profit by GBP0.3m. An offsetting increase in finance costs of GBP0.3m resulted in no net impact on adjusted profit before tax. Further detail of the impact of adoption of IFRS 16 'Leases' is outlined in Note 2.
Restructuring costs
Restructuring costs of GBP1.5m, disclosed as a loss from discontinued operations, relate to the disposal of the South African Torque Transmission business unit and comprise asset write downs (GBP1.1m), cash costs (GBP0.1m) and operating losses in the period (GBP0.3m).
Restructuring costs of GBP0.9m, shown as adjusting items in calculating adjusted operating profit, arise principally from headcount reductions and the costs associated with investigating the historical overstatement of profit in the Gears business unit.
Prior period restatement
The misstatement of historical results in the Gears business unit was identified earlier in the financial year and the Annual Report for the year to 31 March 2019 was revised to correct for these issues. Previously reported results for the six months ended 30 September 2018 overstated net assets by GBP2.1m and adjusted operating profit by GBP0.6m and have been corrected by a prior period restatement, which is detailed in Note 14. No restatement for the results for the year ended 31 March 2019 is required as revised results were included in the Annual Report.
Re-presentation of results
As outlined at the time of the preliminary results for 31 March 2019, we have reconsidered the treatment of costs associated with legacy pension schemes across the Group. In previous years, pension administration costs and IAS 19R finance charges have been treated as adjusting items as they are not indicative of the underlying performance of the ongoing business. Renold's treatment of these items has differed from comparable companies and in order to assist users of the financial statements, these legacy pension costs will no longer be treated as adjusting items.
Thus, no adjustment has been made for these pension costs in these interim results and adjusted profit measures for the six months ended 30 September 2018 and the year ended 31 March 2019 have been restated to be comparable. A reconciliation is provided in Note 14. The impact of this change is to reduce adjusted profit after tax by GBP1.7m in each of the periods ending 30 September 2018 and 2019 with a corresponding reduction in adjusted EPS of 0.75p in each period.
Cash Flow and Net Debt
Half year to 30 September 2019/20 2018/19
GBPm (restated(1)
)
GBPm
------------------------------------------------ --------- --------------
Adjusted operating profit from continuing
operations 7.7 7.4
Operating loss from discontinued operation (0.3) (0.1)
Add back depreciation and amortisation 5.1 3.7
------------------------------------------------ --------- --------------
Adjusted EBITDA 12.5 11.0
Net working capital movement (4.4) (5.7)
Pension cash costs (1.8) (2.3)
Restructuring costs (0.9) (1.5)
Income taxes paid (1.4) (1.2)
Other operating cash flows (0.1) -
------------------------------------------------ --------- --------------
Net cash flow from operating activities 3.9 0.3
Capital expenditure net of disposal proceeds (4.6) (5.8)
Repayment of principal under lease liabilities (1.6) -
Net financing costs (1.6) (1.1)
Disposal of business (0.1) -
Impact of foreign exchange 0.1 (0.6)
------------------------------------------------ --------- --------------
Change in net debt (3.9) (7.2)
------------------------------------------------ --------- --------------
Net debt (Note 11) (34.2) (31.5)
------------------------------------------------ --------- --------------
(1) See Note 14 for details of the restatement
Cash of GBP5.7m was generated from operations before legacy pension costs. In line with normal seasonal trends the Group saw an overall cash outflow in the first half with net debt increasing by GBP3.9m to GBP34.2m.
The adoption of IFRS 16 'Leases' results in changes to the presentation of the cash flow, increasing adjusted EBITDA by GBP1.5m (mainly through increased depreciation) and reducing onerous lease costs by GBP0.4m reflected in reduced restructuring costs. The cash costs of the leases are included in the cash flow as repayments of principal under lease liabilities of GBP1.6m and GBP0.3m of lease related financing costs included within net financing costs.
Working capital increased by GBP4.4m. Most of the increase is in Chain inventory (GBP3.9m) and is aimed at improvements in customer service. Receivables and payables together increased GBP0.5m.
Capital expenditure of GBP4.6m largely related to plant and machinery and continues to include the cost of rolling out the Group's standardised IT systems.
Net debt of GBP34.2m at 30 September 2019 represents a net debt to adjusted EBITDA leverage ratio of 1.4x (1.4x at 31 March 2019).
Pensions
The Group has a number of defined benefit pension schemes (accounted for in accordance with IAS 19 'Employee benefits'). The Group's retirement benefit obligations increased from GBP101.9m (GBP85.3m net of deferred tax) at 31 March 2019 to GBP111.5m (GBP93.4m net of deferred tax) at 30 September 2019.
Continuing declines in discount rates have increased the deficits in the key UK and German schemes. In the UK, discount rates falling to 1.8% (30 March 2019: 2.4%) has the effect of increasing the value of future liabilities by GBP18.5m. Strong asset returns and a continuation of mortality experience being greater than the expected levels helped to mitigate the impact of discount rates with the total UK deficit increasing by GBP5.9m to GBP78.5m.
The continued decline in discount rates also impacts upon the non-UK schemes where the deficit, including unfavourable foreign exchange and other movements, increased by GBP3.7m to GBP33.0m.
The net financing expense (a non-cash item) was GBP1.1m (2018: GBP1.2m).
Dividend
In light of the continuing investment in equipment and revenue expenditure to improve the performance of the business, the Board has decided not to declare an interim dividend. The dividend policy will remain under review as margin and cash flow performance continue to develop.
Going concern
The directors have a reasonable expectation that the business has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial information.
Risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group, as well as the risk mitigating controls put in place, remain those detailed on page 32 of the 2018/19 Annual Report and Accounts. These include macro-economic and political uncertainty risks as well as various risks relating to Group treasury activities. Key operational risks are raw material prices and other input cost prices.
During the period, risks relating to macro-economic factors and political uncertainty have continued. The sustained effect of uncertainty has the potential to reduce demand in end-markets for Renold's products. The diverse global customer base and the spread of manufacturing locations can help to mitigate the impact of localised issues, but cannot mitigate the effects of wide-spread reductions in demand.
The valuation of retirement benefit obligations can be significantly impacted by changes to the yields on corporate bonds and inflation prospects. The schemes' investment strategies provide a partial hedge against these risks, and other de-risking strategies are employed where sensible. However, it should be noted that the actual cash flows to support the pension scheme are more stable and subject to long term funding plans which are reviewed every three years. A triennial valuation for the UK scheme is currently underway with an effective date of 5 April 2019.
Outlook
A more challenging economic backdrop has impacted order intake in the first half of the year. While we continue to create opportunities in sectors of the market where Renold is under-represented and where Renold's products can generate value for customers, this has not been sufficient to counter-act the reduction in demand in our traditional markets and this trend is expected to continue into the second half of the year.
However, a continuing focus on efficiency and effectiveness resulting from ongoing strategic initiatives and investments has mitigated the impact on adjusted operating profits of reduced revenues in the first half of the year. These benefits are expected to continue and combine with improved efficiency at the new Chinese factory during the second half of the year. As a result, and assuming no significant further deterioration in trading conditions, the Group remains on track to deliver an overall result for the full year in line with the Board's expectations with a broadly consistent weighting between the first and second halves of the year.
Responsibility statement
The Directors' confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;
-- the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact during the first six months of the financial year and description of principal risks and uncertainties for the remaining six months of the financial year); and
-- the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
The directors of Renold plc are listed in the Annual Report for the year ended 31 March 2019. A list of current directors is maintained on the Group website at www.renold.com.
By order of the Board
Robert Purcell Ian Scapens
Chief Executive Group Finance
Director
13 November 2019 13 November 2019
Condensed Consolidated Income Statement
for the six months ended 30 September 2019
First half 2018/19 Full year 2018/19
(unaudited, restated(1) (audited, re-presented(2)
First half 2019/20 (unaudited) ) )
Statutory Adjustments Adjusted Statutory Adjustments Adjusted Statutory Adjustments Adjusted
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Revenue 3 98.2 - 98.2 98.2 - 98.2 199.6 - 199.6
Operating costs (91.9) 1.4 (90.5) (92.3) 1.5 (90.8) (184.2) (0.6) (184.8)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Operating profit 6.3 1.4 7.7 5.9 1.5 7.4 15.4 (0.6) 14.8
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Operating profit
is analysed
as:
Before adjusting
items 6.3 - 6.3 5.9 - 5.9 15.4 - 15.4
Restructuring
costs 4 - 0.9 0.9 - 1.0 1.0 - 2.9 2.9
Amortisation of
acquired
intangible
assets - 0.5 0.5 - 0.5 0.5 - 0.9 0.9
Pension past
service
credits - - - - - - - (4.4) (4.4)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Operating profit 6.3 1.4 7.7 5.9 1.5 7.4 15.4 (0.6) 14.8
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Net financing
costs 5 (2.8) - (2.8) (2.3) - (2.3) (5.0) 0.4 (4.6)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Profit before
tax 3.5 1.4 4.9 3.6 1.5 5.1 10.4 (0.2) 10.2
Taxation 6 (1.2) (0.2) (1.4) (1.4) (0.1) (1.5) (3.5) 0.5 (3.0)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Profit for the
period
from continuing
operations 2.3 1.2 3.5 2.2 1.4 3.6 6.9 0.3 7.2
Discontinued
operations 15 (1.5) 1.5 - (0.1) 0.1 - (0.2) 0.2 -
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Profit for the
period 0.8 2.7 3.5 2.1 1.5 3.6 6.7 0.5 7.2
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Attributable to:
Owners of the
parent 0.7 2.0 6.5
Non-controlling
interests 0.1 0.1 0.2
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
0.8 2.1 6.7
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Earnings per
share from
continuing
operations 7
Basic 1.0p 1.5p 0.9p 1.6p 3.0p 3.1p
Diluted 0.9p 1.5p 0.9p 1.5p 2.9p 3.0p
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Earnings per
share from
continuing and
discontinued
operations 7
Basic 0.3p 0.9p 2.9p
Diluted 0.3p 0.8p 2.8p
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
(1) See Note 14 for details of the restatement of the results for first half 2018/2019
(2) See Note 14 for the details of the re-presentation of full year 2018/19
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2019
First half
2018/19
(unaudited, Full year
restated(1) 2018/19
)
First half GBPm (audited)
2019/20
(unaudited)
GBPm GBPm
--------------------------------------------- ---- ------------- -------------- ------------
Profit for the period 0.8 2.1 6.7
Other comprehensive income/(expense):
Items that may be reclassified to
the income statement in subsequent
periods:
Net loss on cash flow hedges (0.1) (0.8) (0.7)
Foreign exchange translation differences 3.5 2.3 2.7
Foreign exchange differences on loans
hedging the net investment in foreign
operations (0.4) (0.4) (0.5)
--------------------------------------------------- ------------- -------------- ------------
3.0 1.1 1.5
-------------------------------------------------- ------------- -------------- ------------
Items not to be reclassified to the
income statement in subsequent periods:
Re-measurement (losses)/gains on retirement
benefit obligations (9.5) 2.2 (11.2)
Tax on re-measurement losses/(gains)
on retirement benefit obligations 1.7 (0.5) 2.1
--------------------------------------------------- ------------- -------------- ------------
(7.8) 1.7 (9.1)
-------------------------------------------------- ------------- -------------- ------------
Other comprehensive (expense)/income
for the period, net of tax (4.8) 2.8 (7.6)
--------------------------------------------------- ------------- -------------- ------------
Total comprehensive (expense)/income
for the period, net of tax (4.0) 4.9 (0.9)
--------------------------------------------------- ------------- -------------- ------------
Attributable to:
Owners of the parent (4.2) 4.9 (1.1)
Non-controlling interests 0.2 - 0.2
--------------------------------------------------- ------------- -------------- ------------
(4.0) 4.9 (0.9)
-------------------------------------------------- ------------- -------------- ------------
(1) See Note 14 for details of the restatement
Condensed Consolidated Statement of Financial Position
as at 30 September 2019
30 September
2018
30 September (unaudited, 31 March
2019 restated(1)
)
(unaudited) GBPm 2019
GBPm (audited)
Note GBPm
---------------------------------- ----- -------------- --- -------------- --- ------------
Assets
Non-current assets
Goodwill 24.3 22.9 23.1
Other intangible fixed assets 6.0 7.5 6.6
Property, plant and equipment 57.0 50.8 55.5
Right-of-use assets 9.5 - -
Deferred tax assets 22.9 20.0 21.5
119.7 101.2 106.7
---------------------------------- ----- -------------- --- -------------- --- ------------
Current assets
Inventories 49.1 46.2 44.3
Trade and other receivables 37.1 40.1 37.5
Current tax 1.7 - -
Cash and cash equivalents 11 17.6 12.1 17.6
---------------------------------- ----- -------------- --- -------------- --- ------------
105.5 98.4 99.4
Total assets 225.2 199.6 206.1
---------------------------------- ----- -------------- --- -------------- --- ------------
Liabilities
Current liabilities
Borrowings 11 (0.2) (1.0) -
Trade and other payables (41.5) (43.1) (42.1)
Lease liabilities (3.3) - -
Current tax (1.2) (1.0) (0.4)
Derivative financial instruments (0.5) (0.1) (0.4)
Provisions (0.2) (4.6) (0.8)
---------------------------------- ----- -------------- --- -------------- --- ------------
(46.9) (49.8) (43.7)
---------------------------------- ----- -------------- --- -------------- --- ------------
Net current assets 58.6 48.6 55.7
---------------------------------- ----- -------------- --- -------------- --- ------------
Non-current liabilities
Borrowings 11 (51.1) (42.1) (47.4)
Preference stock 11 (0.5) (0.5) (0.5)
Trade and other payables (5.2) (0.3) (5.4)
Lease liabilities (13.6) - -
Deferred tax liabilities (6.0) (4.4) (5.6)
Retirement benefit obligations 8 (111.5) (94.7) (101.9)
Provisions - (2.8) (2.5)
---------------------------------- ----- -------------- --- -------------- --- ------------
(187.9) (144.8) (163.3)
---------------------------------- ----- -------------- --- -------------- --- ------------
Total liabilities (234.8) (194.6) (207.0)
---------------------------------- ----- -------------- --- -------------- --- ------------
Net (liabilities) / assets (9.6) 5.0 (0.9)
---------------------------------- ----- -------------- --- -------------- --- ------------
Equity
Issued share capital 12 11.3 11.3 11.3
Share premium 30.1 30.1 30.1
Capital reserve 15.4 15.4 15.4
Currency translation reserve 13.4 9.1 10.4
Other reserves (0.5) 0.6 (0.4)
Retained earnings (81.7) (63.5) (69.9)
---------------------------------- ----- -------------- --- -------------- --- ------------
Equity attributable to owners
of the parent (12.0) 3.0 (3.1)
Non-controlling interests 2.4 2.0 2.2
---------------------------------- ----- -------------- --- -------------- --- ------------
Total shareholders' equity (9.6) 5.0 (0.9)
---------------------------------- ----- -------------- --- -------------- --- ------------
(1) See Note 14 for details of the restatement
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 September 2019
First half Full year
2019/20 2018/19 2018/19
(unaudited,
restated(1)
(unaudited) ) (audited)
GBPm GBPm GBPm
------------------------------------------- ------------- -------------- -----------
Cash flows from operating activities
Cash generated by operations (Note
9) 5.3 1.5 10.1
Income taxes paid (1.4) (1.2) (1.8)
------------------------------------------- ------------- -------------- -----------
Net cash flows from operating activities 3.9 0.3 8.3
------------------------------------------- ------------- -------------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (4.0) (5.5) (9.2)
Purchase of intangible assets (0.6) (0.3) (1.6)
Disposal of business (0.1) - -
------------------------------------------- ------------- -------------- -----------
Net cash flows from investing activities (4.7) (5.8) (10.8)
------------------------------------------- ------------- -------------- -----------
Cash flows from financing activities
Repayment of principal under lease
liabilities (1.6) - -
Financing costs paid (1.6) (1.1) (3.0)
Proceeds from borrowings 4.6 5.7 12.0
Repayment of borrowings (1.0) - -
------------------------------------------- ------------- -------------- -----------
Net cash flows from financing activities 0.4 4.6 9.0
------------------------------------------- ------------- -------------- -----------
Net (decrease)/increase in cash and
cash equivalents (0.4) (0.9) 6.5
Net cash and cash equivalents at
beginning of period 17.4 12.3 12.3
Effects of exchange rate changes 0.2 (0.6) (1.4)
------------------------------------------- ------------- -------------- -----------
Net cash and cash equivalents at
end of period 17.2 10.8 17.4
------------------------------------------- ------------- -------------- -----------
Cash and cash equivalents (Note 11) 17.6 12.1 17.6
Overdrafts (included in borrowings
- Note 11) (0.4) (1.3) (0.2)
------------------------------------------- ------------- -------------- -----------
Net cash and cash equivalents at
end of period 17.2 10.8 17.4
------------------------------------------- ------------- -------------- -----------
(1) See Note 14 for details of the restatement
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 September 2019
Share Currency Capital Attributable
Share premium Retained translation redemption Other to owners Non-controlling Total
capital account earnings reserve reserve reserves of parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2018 as
previously
reported 11.3 30.1 (66.2) 7.1 15.4 1.4 (0.9) 2.0 1.1
Prior period
adjustment - - (1.5) - - - (1.5) - (1.5)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2018
(restated(1)
) 11.3 30.1 (67.7) 7.1 15.4 1.4 (2.4) 2.0 (0.4)
Profit for the
year
(restated(1)
) - - 6.5 - - - 6.5 0.2 6.7
Other
comprehensive
income/(expense) - - (9.1) 3.3 - (1.8) (7.6) - (7.6)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the year - - (2.6) 3.3 - (1.8) (1.1) 0.2 (0.9)
Employee share
options:
- value of
employee
services - - 0.4 - - - 0.4 - 0.4
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 31
March 2019 11.3 30.1 (69.9) 10.4 15.4 (0.4) (3.1) 2.2 (0.9)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Impact of change
in accounting
policy (Note 2) - - (4.5) - - - (4.5) - (4.5)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Adjusted balance
at 1 April 2019 11.3 30.1 (74.4) 10.4 15.4 (0.4) (7.6) 2.2 (5.4)
Profit for the
period - - 0.7 - - - 0.7 0.1 0.8
Other
comprehensive
income/(expense) - - (7.8) 3.0 - (0.1) (4.9) 0.1 (4.8)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the period - - (7.1) 3.0 - (0.1) (4.2) 0.2 (4.0)
Employee share
options:
- value of
employee
services - - (0.2) - - - (0.2) - (0.2)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 30
September 2019 11.3 30.1 (81.7) 13.4 15.4 (0.5) (12.0) 2.4 (9.6)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2018
(restated(1)
) 11.3 30.1 (67.7) 7.1 15.4 1.4 (2.4) 2.0 (0.4)
Profit for the
period
(restated(1)
) - - 2.0 - - - 2.0 0.1 2.1
Other
comprehensive
income/(expense) - - 1.7 2.0 - (0.8) 2.9 (0.1) 2.8
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the period - - 3.7 2.0 - (0.8) 4.9 - 4.9
Employee share
options:
- value of
employee
services - - 0.5 - - - 0.5 - 0.5
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 30
September 2018
(restated(1) ) 11.3 30.1 (63.5) 9.1 15.4 0.6 3.0 2.0 5.0
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
(1) See Note 14 for details of the restatement
Notes to the Interim Condensed Consolidated Financial Statements
1. Corporate information
The interim condensed consolidated financial statements for the six months to 30 September 2019 were approved by the Board on 13 November 2019. These statements have not been audited or reviewed by the Group's auditor pursuant to the Auditing Practices Board guidance on the Review of Interim Financial Information.
Renold plc is a limited liability company, incorporated and registered under the laws of England and Wales, whose shares are publicly traded. The principal activities of the Company and its subsidiaries are described in Note 3.
These interim condensed consolidated financial statements do not constitute statutory accounts of the Group within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2019 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified but contained an emphasis of matter paragraph in relation to the revision of historical accounting errors in the Gears business unit (see Notes 27 and 28 of the statutory accounts for the year ended 31 March 2019). The auditor's report did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.
2. Accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the six months ended 30 September 2019 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. It does not include all of the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 March 2019.
The accounting policies, presentation and methods of computation applied by the Group in these interim condensed consolidated financial statements are the same as those applied in the Group's latest audited annual consolidated financial statements for the year ended 31 March 2019, except as noted below.
New and amended standards adopted by the Group
The Group has implemented the following standards for the first time in the financial year beginning on 1 April 2019:
-- Amendment to IAS 19 'Employee Benefits'
The amendments to IAS 19 relate to pension plan amendments, curtailments and settlements and clarify the calculation of current service cost and net interest for the remainder of an annual period when a plan amendment or curtailment occurs. The adoption of the amendments to IAS 19 has not had a material impact on the Group's financial position or performance.
-- IFRIC 23 'Uncertainty over income tax treatments'
The interpretation clarifies that if it is considered probable that a tax authority will accept an uncertain tax treatment, the tax charge should be calculated on that basis. If it is not considered probable, the effect of the uncertainty should be estimated and reflected in the tax charge. In assessing the uncertainty, it is assumed that the tax authority will have full knowledge of all information related to the matter. The Group has assessed the potential impact of the new interpretation and the application of IFRIC 23 at 1 April 2019 has not resulted in a material change to the provisions held for uncertain tax positions.
-- IFRS 16 'Leases'
From 1 April 2019 the Group has adopted IFRS 16 'Leases' on a modified retrospective basis. As permitted under the standard no restatement of prior year comparatives has been performed and the adjustments arising on adoption have been recognised in the opening balance sheet at 1 April 2019.
Approach to transition
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate as of 1 April 2019. The associated right-of-use assets were measured on a retrospective basis as if the new rules had always been applied.
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
- The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
- Reliance on previous assessment of whether leases are onerous and deduction of onerous lease provisions from the initial right-of-use asset recognised;
- The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application;
- The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease; and
- Not to reassess whether a contract is or contains a lease.
The Group's weighted average incremental borrowing rates applied to lease liabilities as at 1 April 2019 are 2.6% in respect of property leases, 4.3% in respect of plant and equipment leases and 4.1% in respect of vehicle leases.
Financial impact
As the Group has used the modified retrospective approach in adopting IFRS 16, comparatives have not been restated. The adoption of this new accounting policy resulted in the following changes to the opening balance sheet at 1 April 2019:
GBPm
-------------------------------------- -------
Increase in right-of-use assets 10.2
Decrease in onerous lease provisions 3.2
Increase in lease liabilities (17.9)
-------------------------------------- -------
Net decrease in retained earnings (4.5)
-------------------------------------- -------
Of the total GBP10.2m of right-of-use assets recognised at 1 April 2019, GBP7.0m related to leases of property, GBP2.2m to leases of machinery and GBP1.0m to leases of vehicles.
The impact on profit or loss for the six month period ended 30 September 2019 was the following:
GBPm
--------------------------------------- ------
Increased depreciation charge (1.2)
Decreased lease rental expense 1.5
--------------------------------------- ------
Net increase in operating profit 0.3
--------------------------------------- ------
Increased finance costs (0.3)
--------------------------------------- ------
Net increase in profit for the period -
--------------------------------------- ------
The adoption of IFRS 16 has also had an impact on the presentation of the payment of lease rentals in the cash flow statement. In the comparative periods, lease rentals were recorded in operating expenses (or where relevant, against the associated onerous lease provision) and therefore deducted in cash flows from operating activities. In the six months ended 30 September 2019, operating expenses includes a depreciation charge which has subsequently been added back within cash flows from operating activities. The interest element of lease repayments is presented within finance costs paid and the principal element of the lease payment has been included within cash flows from financing activities.
The impact on the cash flow statement for the six months ended 30 September 2019 is as follows:
GBPm
------------------------------------------------ ------
Increased operating profit 0.3
Increased depreciation of property plant
and equipment 1.2
Movement in provisions for onerous leases 0.4
------------------------------------------------ ------
Net increase in cash from operating activities 1.9
Repayment of principal element of lease
liabilities (1.6)
Repayment of interest element of lease
liabilities (0.3)
------------------------------------------------ ------
Net decrease in cash used in financing
activities (1.9)
------------------------------------------------ ------
Net change in cash and cash equivalents -
------------------------------------------------ ------
Total cash outflows for leases in the period ended 30 September 2019 were GBP1.9m.
A reconciliation of total operating lease commitments to the IFRS 16 lease liability at 1 April 2019 is as follows:
GBPm
----------------------------------------- ------
Operating lease commitments disclosed
under IAS 17 at 31 March 2019 18.8
Effect of discounting (4.4)
Other(1) 3.5
Lease liabilities recognised at 1 April
2019 17.9
----------------------------------------- ------
(1) Other principally includes inflationary increases of GBP3.7m on long property leases (48 years). These inflationary increases were not previously recognised in the IAS 17 operating lease commitment disclosure.
Accounting policy
Until the year ended 31 March 2019, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases were charged to profit or loss on a straight-line basis over the period of the lease. From 1 April 2019, leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the lease liability and associated finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. The Group has a large number of material property, equipment and vehicle leases.
To the extent that a right-of-control exists over an asset subject to a lease, with a lease term exceeding one year, a right-of-use asset, representing the Group's right to use the underlying leased asset, and a lease liability, representing the Group's obligation to make lease payments, are recognised in the Group's Consolidated Balance Sheet at the commencement of the lease. The right-of-use asset is initially measured at cost and includes the amount of initial measurement of the lease liability and any direct costs incurred, including advance lease payments and an estimate of the dismantling, removal and restoration costs required by the terms and conditions of the lease. Depreciation is charged to the Consolidated Income Statement to depreciate the right-of-use asset from the commencement date until the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The lease term shall include the period of any extension option where it is reasonably certain that the option will be exercised. Where the lease contains a purchase option the asset is written off over the useful life of the asset when it is reasonably certain that the purchase option will be exercised.
The lease liability is measured at the present value of the future lease payments, including variable lease payments that depend on an index and the exercise price of purchased options where it is reasonably certain that the option will be exercised, discounted using the interest rate implicit in the lease, if readily determinable. If the rate cannot be readily determined, the lessee's incremental borrowing rate is used. Finance charges are recognised in the Consolidated Income Statement over the period of the lease. Lease arrangements that are short term in nature or low value are charged directly to the Consolidated Income Statement when incurred. Short-term leases are leases with a lease term of 12 month or less. Low-value assets comprise small items of furniture or equipment.
New standards and interpretations not yet effective and not adopted
At the date of publishing these interim condensed consolidated financial statements, a number of new and revised standards and interpretations have been issued by the International Accounting Standards Board (IASB). None of these new and revised standards and interpretations are considered relevant to the Group and they have not been adopted early.
Going Concern
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 condensed financial statements.
Significant accounting judgements, estimates and assumptions
In the course of preparing these interim condensed consolidated financial statements, no judgements have been made in the process of applying the Group's accounting policies that have had a significant effect on the amounts recognised in the financial statements, other than those involving estimation uncertainty. The key sources of estimation uncertainty are those which applied in the annual consolidated financial statements for the year ended 31 March 2019, namely;
-- assumptions used to evaluate the potential impairment of non-financial assets; -- recognition and valuation of deferred tax assets; -- assumptions used in the valuation of retirement benefit obligations; -- assumptions used to determine future obligations from leases; and
-- judgements and assumptions used to allocate indirect production costs to manufactured and work in progress inventory.
Financial risk management
The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements for the year ended 31 March 2019.
3. Segment information
The Group is organised into business units according to the nature of their products and services. Having considered the management reporting and organisational structure of the Group, the directors have concluded that Renold plc has two reportable operating segments as follows:
-- The Chain segment manufactures and sells power transmission and conveyor chain and also includes sales of Torque Transmission product through Chain National Sales Centres; and
-- The Torque Transmission segment manufactures and sells Torque Transmission products such as gearboxes and couplings used in power transmission with modest sales of chain products.
No operating segments have been aggregated to form the above reportable segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
The segment results for the period ended 30 September 2019 were as follows:
Head office
Torque costs
Period ended 30 September Chain Transmission and eliminations Consolidated
2019 GBPm GBPm GBPm GBPm
------------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue 78.5 19.7 - 98.2
Inter-segment 0.5 2.0 (2.5) -
------------------------------------- ------ -------------- ------------------ -------------
Total revenue 79.0 21.7 (2.5) 98.2
------------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss) 8.4 2.1 (2.8) 7.7
Restructuring costs (0.4) (0.4) (0.1) (0.9)
Amortisation of acquired
intangible assets (0.5) - - (0.5)
------------------------------------- ------ -------------- ------------------ -------------
Segment operating profit/(loss) 7.5 1.7 (2.9) 6.3
Net financing costs (2.8)
------------------------------------- ------ -------------- ------------------ -------------
Profit before tax from continuing
operations 3.5
Taxation (1.2)
Discontinued operations (1.5)
------------------------------------- ------ -------------- ------------------ -------------
Profit after tax and discontinued
operations 0.8
------------------------------------- ------ -------------- ------------------ -------------
Other disclosures
Working capital 36.2 9.3 (0.8) 44.7
Capital expenditure 4.1 0.2 0.6 4.9
Depreciation and amortisation
included in adjusted operating
profit/(loss) 3.2 1.0 0.9 5.1
Amortisation of acquired
intangibles 0.5 - - 0.5
------------------------------------- ------ -------------- ------------------ -------------
Total depreciation and amortisation 3.6 1.0 0.8 5.6
------------------------------------- ------ -------------- ------------------ -------------
The segment results for the period ended 30 September 2018 were as follows:
Head office
Torque costs
Period ended 30 September Chain Transmission and eliminations Consolidated
2018 (restated(1) ) GBPm GBPm GBPm GBPm
------------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue 80.0 18.2 - 98.2
Inter-segment 1.1 1.9 (3.0) -
------------------------------------- ------ -------------- ------------------ -------------
Total revenue 81.1 20.1 (3.0) 98.2
------------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss) 9.5 1.8 (3.9) 7.4
Restructuring costs (0.8) - (0.2) (1.0)
Amortisation of acquired
intangible assets (0.5) - - (0.5)
------------------------------------- ------ -------------- ------------------ -------------
Segment operating profit/(loss) 8.2 1.8 (4.1) 5.9
Net financing costs (2.3)
------------------------------------- ------ -------------- ------------------ -------------
Profit before tax from continuing
operations 3.6
Taxation (1.4)
Discontinued operations (0.1)
Profit after tax and discontinued
operations 2.1
------------------------------------- ------ -------------- ------------------ -------------
Other disclosures
Working capital 29.1 12.7 1.4 43.2
Capital expenditure 5.4 0.1 0.6 6.1
Depreciation and amortisation
included in adjusted operating
profit/(loss) 2.4 0.8 0.5 3.7
Amortisation of acquired
intangibles 0.5 - - 0.5
------------------------------------- ------ -------------- ------------------ -------------
Total depreciation and amortisation 2.9 0.8 0.5 4.2
------------------------------------- ------ -------------- ------------------ -------------
(1) See Note 14 for details of the restatement
The Board also reviews the performance of the business using information presented at consistent exchange rates. The prior year results have been restated using this year's exchange rates as follows:
Head office
Torque costs
Period ended 30 September Chain Transmission and eliminations Consolidated
2018 (restated(1) ) GBPm GBPm GBPm GBPm
----------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue from continuing
operations 80.0 18.2 - 98.2
Foreign exchange 2.1 0.5 - 2.6
----------------------------------- ------ -------------- ------------------ -------------
Underlying external revenue
from continuing operations 82.1 18.7 - 100.8
----------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss)
from continuing operations 9.5 1.8 (3.9) 7.4
Foreign exchange 0.2 (0.1) - 0.1
----------------------------------- ------ -------------- ------------------ -------------
Underlying adjusted profit/(loss)
from continuing operations 9.7 1.7 (3.9) 7.5
----------------------------------- ------ -------------- ------------------ -------------
(1) See Note 14 for details of the restatement
The segment results for the year ended 31 March 2019 were as follows:
Head office
Torque costs
Chain Transmission and eliminations Consolidated
Year ended 31 March 2019 GBPm GBPm GBPm GBPm
------------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue 163.9 35.7 - 199.6
Inter-segment 1.0 4.4 (5.4) -
------------------------------------- ------ -------------- ------------------ -------------
Total revenue 164.9 40.1 (5.4) 199.6
------------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss) 18.4 3.3 (6.9) 14.8
Pension past service credits 4.4 4.4
Restructuring costs (2.2) - (0.7) (2.9)
Amortisation of acquired
intangible assets (0.9) - - (0.9) ------------------------------------- ------ -------------- ------------------ ------------- Operating profit/(loss) 15.3 3.3 (3.2) 15.4 Net financing costs (5.0) ------------------------------------- ------ -------------- ------------------ ------------- Profit before tax from continuing operations 10.4 Taxation (3.5) Discontinued operations (0.2) ------------------------------------- ------ -------------- ------------------ ------------- Profit after tax and discontinued operations 6.7 ------------------------------------- ------ -------------- ------------------ ------------- Other disclosures Working capital 26.8 10.6 2.0 39.4 Capital expenditure 13.0 0.9 1.3 15.2 Depreciation and amortisation included in adjusted operating profit/(loss) 5.0 1.6 1.1 7.7 Amortisation of acquired intangibles 0.9 - - 0.9 ------------------------------------- ------ -------------- ------------------ ------------- Total depreciation and amortisation 5.9 1.6 1.1 8.6 ------------------------------------- ------ -------------- ------------------ -------------
The prior year results have been restated using this year's exchange rates as follows:
Head office
Torque costs
Chain Transmission and eliminations Consolidated
Year ended 31 March 2019 GBPm GBPm GBPm GBPm
----------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue from continuing
operations 163.9 35.7 - 199.6
Foreign exchange 3.5 0.8 - 4.3
----------------------------------- ------ -------------- ------------------ -------------
Underlying external revenue
from continuing operations 167.4 36.5 - 203.9
----------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss)
from continuing operations 18.4 3.3 (6.9) 14.8
Foreign exchange 0.3 0.1 - 0.4
----------------------------------- ------ -------------- ------------------ -------------
Underlying adjusted profit/(loss)
from continuing operations 18.7 3.4 (6.9) 15.2
----------------------------------- ------ -------------- ------------------ -------------
4. Adjusting items
First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
------------------------------------- -------- -------- ----------
Included in operating costs:
Restructuring costs 0.9 1.0 2.9
Amortisation of acquired intangible
assets 0.5 0.5 0.9
Pension past service credits - - (4.4)
Included in financial costs:
Discount unwind on provisions - - 0.1
Amortisation of financing costs on
refinancing - - 0.3
Included in taxation:
Taxation on adjusting items (0.2) (0.1) 0.5
------------------------------------- -------- -------- ----------
Adjusting items 1.2 1.4 0.3
------------------------------------- -------- -------- ----------
Restructuring costs of GBP0.9m arise from redundancy costs associated with headcount reductions, the costs associated with investigating the historical overstatement of profit in the Gears business unit and various other smaller costs associated with restructuring.
Prior period adjusting items
Various restructuring costs were incurred in the prior period as part of the STEP 2020 Strategic Plan, relating principally to the China factory relocation (GBP0.8m) which completed ahead of schedule in the second half of financial year 2018/19.
5. Net financing costs
First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
-------------------------------------------- -------- -------- ----------
Financing costs:
Interest payable on bank loans and
overdrafts (1.2) (1.1) (1.9)
Interest paid on right-of-use lease
liabilities (0.3) - -
Amortised financing costs (0.1) - (0.3)
Amortisation of financing costs on
refinancing - - (0.3)
Loan financing costs (1.6) (1.1) (2.5)
-------------------------------------------- -------- -------- ----------
Net IAS 19 financing costs (1.1) (1.2) (2.4)
Discount unwind on non-current liabilities (0.1) - (0.1)
Net financing costs (2.8) (2.3) (5.0)
-------------------------------------------- -------- -------- ----------
6. Taxation
First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
----------------------------------- -------- -------- ----------
Current tax:
- UK - - -
- Overseas (0.4) (0.9) (1.1)
----------------------------------- -------- -------- ----------
(0.4) (0.9) (1.1)
Deferred tax:
- UK (0.1) (0.1) (1.0)
- Overseas (0.7) (0.4) (1.8)
- Adjustments in respect of prior
periods - - 0.4
----------------------------------- -------- -------- ----------
(0.8) (0.5) (2.4)
----------------------------------- -------- -------- ----------
Total income tax expense (1.2) (1.4) (3.5)
----------------------------------- -------- -------- ----------
Tax charged within the interim results has been calculated by applying the effective tax rate which is expected to apply to Renold Group entities for the year ending 31 March 2020 using rates substantively enacted by 30 September 2019 as required by IAS 34 'Interim Financial Reporting.'
The UK Government announced that it intends to reduce the main rate of corporation tax to 17% with effect from 1 April 2020. This change was substantively enacted in September 2016. The deferred tax balances were revalued to the lower rate of 17% in the year ended 31 March 2017.
Factors affecting current and future tax charges
The Group's tax charge in future years will be impacted by the profit mix, effective tax rates in the different countries where the Group operates and utilisation of tax losses. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries.
The Group's effective tax rate of 34.2% (calculated on unadjusted interim results) is above the UK statutory tax rate of 19%. The main items increasing the Group effective tax rate relative to the UK rate include the current tax liability in Germany at higher corporate tax rates and non-recognition of deferred tax assets in respect of losses in certain jurisdictions where recoverability is considered uncertain.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period by the weighted average number of shares in issue during the period. The calculation of earnings per share is based on the following data:
First half Full year
2018/19 2018/19
2019/20 (restated(1) (re-presented(1)
) )
Pence per Pence per Pence per
share share
share
-------------------------------------------- ------------ --- -------------- --- ------------------
Basic continuing EPS 1.0 0.9 3.0
Diluted continuing EPS 0.9 0.9 2.9
Basic continuing and discontinued
EPS 0.3 0.9 2.9
Diluted continuing and discontinued
EPS 0.3 0.8 2.8
Adjusted EPS 1.5 1.6 3.1
Diluted adjusted EPS 1.5 1.5 3.0
-------------------------------------------- ------------ --- -------------- --- ------------------
GBPm GBPm GBPm
-------------------------------------------- ------------ --- -------------- --- ------------------
Profit for calculation of continuing
and adjusted EPS
Profit for the financial period from
continuing and discontinued operations 0.7 2.0 6.5
Add: Loss for the period from discontinued
operations 1.5 0.1 0.2
-------------------------------------------- ------------ --- -------------- --- ------------------
Profit for the financial period from
continuing operations 2.2 2.1 6.7
Effect of adjusted items, after tax:
- Restructuring costs in operating
costs 0.8 1.0 2.9
- Refinancing costs - - 0.3
- Discount unwind on restructuring
costs - - 0.1
- Pension past service cost - - (3.6)
- Amortisation of acquired intangible
assets 0.4 0.4 0.6
-------------------------------------------- ------------ --- -------------- --- ------------------
Profit for the calculation of adjusted
EPS 3.4 3.5 7.0
-------------------------------------------- ------------ --- -------------- --- ------------------
Thousands Thousands Thousands
Weighted average number of ordinary
shares
For calculating basic earnings per
share 225,418 225,418 225,418
-------------------------------------------- ------------ --- -------------- --- ------------------
(1) See Note 14 for details of the restatement
Diluted EPS is calculated by adjusting the weighted average number of shares used for the calculation of basic EPS as increased by the dilutive effect of potential ordinary shares.
Dilutive shares arise from employee share option schemes where the exercise price is less than the average market price of the Company's ordinary shares during the period. Their dilutive effect is calculated on the basis of the equivalent number of nil cost options. Where the option price is above the average market price, the option is not dilutive and is excluded from the diluted EPS calculation. Inclusion of the dilutive securities, comprising 6,900,055 (2019: 10,012,000) additional shares affects EPS as shown above.
The adjusted EPS numbers have been provided in order to give a useful indication of the underlying performance of the business by the exclusion of adjusting items. Due to the existence of unrecognised deferred tax assets, there was no associated tax credit on some of the restructuring costs and in these instances restructuring costs are therefore added back in full.
8. Retirement benefit obligations
The Group's retirement benefit obligations are summarised as follows:
At 30 At 30 At 31
September September March
2019 2018 2019
GBPm GBPm GBPm
-------------------------------------- ----------- ----------- --------
Funded plan obligations (244.1) (220.1) (237.0)
Funded plan assets 160.9 151.0 152.4
-------------------------------------- ----------- ----------- --------
Net funded plan obligations (83.2) (69.1) (84.6)
Unfunded obligations (28.3) (25.6) (17.3)
-------------------------------------- ----------- ----------- --------
Total retirement benefit obligations (111.5) (94.7) (101.9)
-------------------------------------- ----------- ----------- --------
Analysed as follows:
Non-current liabilities Retirement benefit obligations (111.5) (94.7) (101.9) ----------------------------------- -------- ------- -------- Net retirement benefit obligation (111.5) (94.7) (101.9) Net deferred tax asset 18.1 15.2 16.6 Retirement benefit obligation net of deferred tax (93.4) (79.5) (85.3) ----------------------------------- -------- ------- --------
The increase in the Group's pre-tax liability from GBP101.9m at 31 March 2019 to GBP111.5m at 30 September 2019 primarily reflects the increase in discount rates across all schemes which together increase the value of future liabilities by GBP19.6m. This increase has been partially offset by asset outperformance and experience gains in the UK scheme, which limit the net increase in the deficit to GBP9.6m.
9. Cash generated from operations
First half Full year
2018/19
2019/20 (restated(1) 2018/19
)
GBPm GBPm GBPm
----------------------------------------- --------- --- -------------- --- ----------
Operating profit from continuing and
discontinued operations 6.0 5.8 15.2
Depreciation and amortisation 5.6 4.2 8.6
Loss on disposal of plant and equipment 0.1 - 0.9
Equity share plans (0.2) - 0.4
(Increase) in inventories (3.9) (4.4) (2.6)
Decrease/(increase) in receivables 1.0 (3.5) (0.8)
(Decrease)/increase in payables (1.5) 2.2 1.9
(Decrease) in provisions - (0.5) (4.6)
Cash contribution to pension plans (1.8) (2.3) (4.5)
Pension past service credit (non cash) - - (4.4)
Cash generated from operations 5.3 1.5 10.1
----------------------------------------- --------- --- -------------- --- --------------
(1) See Note 14 for details of the restatement
10. Reconciliation of the movement in cash and cash equivalents to movement in net debt
First half Full year
2018/19
2019/20 (restated(1) 2018/19
)
GBPm GBPm GBPm
------------------------------------------ --------- --- -------------- --- ----------
(Decrease)/increase in cash and cash
equivalents (0.4) (0.9) 6.5
Change in net debt resulting from
cash flows (3.6) (5.7) (12.0)
Non-cash movement - refinancing costs
capitalised - - 0.9
Foreign currency translation differences 0.1 (0.6) (1.4)
------------------------------------------ --------- --- -------------- --- ----------
Change in net debt during the period (3.9) (7.2) (6.0)
Net debt at start of period (30.3) (24.3) (24.3)
------------------------------------------ --------- --- -------------- --- ----------
Net debt at end of period (34.2) (31.5) (30.3)
------------------------------------------ --------- --- -------------- --- ----------
(1) See Note 14 for details of the restatement
11. Net Debt
At 30
September
At 30 2018
September (restated(1) At 31 March
2019 ) 2019
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
Cash and cash equivalents 17.6 12.1 17.6
Borrowings:
Bank overdrafts (0.4) (1.3) (0.2)
Capitalised costs 0.2 0.3 0.2
Sub-total - current borrowings (0.2) (1.0) -
Bank loans - non-current (51.7) (42.4) (48.1)
Capitalised costs 0.6 0.3 0.7
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
Sub-total - non-current
borrowings (51.1) (42.1) (47.4)
Preference stock (0.5) (0.5) (0.5)
Total debt (51.8) (43.6) (47.9)
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
Net debt (34.2) (31.5) (30.3)
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
(1) See Note 14 for details of the restatement
12. Called up share capital
At 30 At 30 At 31
September September March
2019 2018 2019
GBPm GBPm GBPm
---------------------------- ----------- ----------- -------
Ordinary shares of 5p each 11.3 11.3 11.3
11.3 11.3 11.3
---------------------------- ----------- ----------- -------
At 30 September 2019, the issued ordinary share capital comprised 225,417,740 ordinary shares of 5p each (30 September 2018: 225,417,740 shares).
13. Capital commitments
At 30 September 2019 capital expenditure contracted for but not provided for in these accounts amounted to GBP0.9m (30 September 2018: GBP6.3m).
14. Prior period adjustment and re-presentation of the income statement
A prior period adjustment has been recorded in this condensed set of financial statements following the identification of historical accounting issues over the three years ending 31 March 2017, 2018 and 2019, arising from an overstatement of certain asset values and understatement of certain liabilities resulting in an overstatement of profit over this period by GBP2.5m in the Gears business unit, which is part of the Torque Transmission division.
A re-presentation of the income statement has been performed for the six months ended 30 September 2018 and the year ended 31 March 2019. The revised presentation has been performed in order to:
- separately identify the discontinued element of the Group's income statement following the sale of Renold Crofts (Pty) Ltd (see Note 15); and
- remove pension administration costs and IAS 19 financing costs as adjusting items from the Group's 'Adjusted' income statement. In previous years, the pension administration costs and the IAS 19R finance charges have been treated as adjusting items as they relate to historical pension schemes which are not indicative of the underlying performance of the operating businesses. While this continues to be the case, Renold's treatment of these items differs from other companies in the peer group, and in order to assist users of the financial statements, the legacy pension costs will no longer be treated as adjusting items.
The impact, on a line item basis for those affected, on the Condensed Consolidated Statement of Comprehensive Income for the year ended 31 March 2019 and the period ended 30 September 2018, and on the Condensed Consolidated Balance Sheet as at 31 March 2018 and as at 30 September 2018 is as follows:
Condensed
Consolidated
Statement of
Comprehensive
Income
for the year
ended
31 March 2019 Statutory Adjusted(1)
------------------
Pension
admin Full
Full and IAS year
As year As 19 2018/19
previously Discontinued 2018/19 previously Discontinued financing Adjusted
reported operations (re-presented) reported operations costs (re-presented)
------------------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Revenue 202.4 (2.8) 199.6 202.4 (2.8) - 199.6
Operating costs (187.2) 3.0 (184.2) (187.0) 3.0 (0.8) (184.8)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Operating profit 15.2 0.2 15.4 15.4 0.2 (0.8) 14.8
Net financing
costs (5.0) - (5.0) (2.2) - (2.4) (4.6)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Profit before tax 10.2 0.2 10.4 13.2 0.2 (3.2) 10.2
Taxation (3.5) - (3.5) (2.9) - (0.1) (3.0)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Profit/(loss) for
the period from
continuing
operations 6.7 0.2 6.9 10.3 0.2 (3.3) 7.2
Discontinued
operations - (0.2) (0.2) - - - -
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Profit/(loss) for
the period 6.7 - 6.7 10.3 0.2 (3.3) 7.2
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Total
comprehensive
income/(expense)
for the period,
net of tax (0.9) - (0.9)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Attributable to:
Owners of the
parent (1.1) - (1.1)
Non-controlling
interest 0.2 - 0.2
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
(0.9) - (0.9)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
(1) Adjusted for the after-tax effects of restructuring costs, changes in the provision discounts and amortisation of acquired intangible assets.
Condensed
Consolidated
Statement of
Comprehensive
Income
for the six
months
ended 30
September
2018 Statutory Adjusted(1)
------------------
Pension
admin
and First
First IAS half
As half As 19 2018/19
previously Dis-continued 2018/19 previously financing Dis-continued Adjusted
reported Re-statement operations (restated) reported Re-statement costs operations (restated)
------------------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Revenue 99.7 - (1.5) 98.2 99.7 - - (1.5) 98.2
Operating costs (93.3) (0.6) 1.6 (92.3) (91.5) (0.6) (0.3) 1.6 (90.8)
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Operating profit 6.4 (0.6) 0.1 5.9 8.2 (0.6) (0.3) 0.1 7.4
Net financing
costs (2.3) - - (2.3) (1.1) - (1.2) - (2.3)
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Profit before
tax 4.1 (0.6) 0.1 3.6 7.1 (0.6) (1.5) 0.1 5.1
Taxation (1.4) - - (1.4) (1.3) - (0.2) - (1.5)
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Profit/(loss)
for the period
from continuing
operations 2.7 (0.6) 0.1 2.2 5.8 (0.6) (1.7) 0.1 3.6
Discontinued
operations - - (0.1) (0.1) - - - - -
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Profit/(loss)
for the period 2.7 (0.6) - 2.1 5.8 (0.6) (1.7) 0.1 3.6
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Total
comprehensive
income/(expense)
for the period,
net of tax 5.5 (0.6) - 4.9
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Attributable to:
Owners of the
parent 5.5 (0.6) - 4.9
Non-controlling
interest - - - -
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
5.5 (0.6) - 4.9
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
(1) Adjusted for the after-tax effects of restructuring costs, changes in the provision discounts and amortisation of acquired intangible assets.
Condensed Consolidated
Balance Sheet 30 September 2018 31 March 2018
30 Sept
2018
31 March
As previously As previously 2018
reported Restatement (restated) reported Restatement (restated)
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
ASSETS
Non-current assets
Property, plant and
equipment 51.2 (0.4) 50.8 47.7 (0.4) 47.3
Other non-current assets 50.4 - 50.4 50.5 - 50.5
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
101.6 (0.4) 101.2 98.2 (0.4) 97.8
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
Current assets
Inventories 46.4 (0.2) 46.2 41.0 (0.2) 40.8
Trade and other
receivables 40.7 (0.6) 40.1 36.4 (0.3) 36.1
Other current assets 12.6 (0.5) 12.1 14.3 - 14.3
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
99.7 (1.3) 98.4 91.7 (0.5) 91.2
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
TOTAL ASSETS 201.3 (1.7) 199.6 189.9 (0.9) 189.0
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables (42.7) (0.4) (43.1) (39.6) (0.6) (40.2)
Other current
liabilities (6.7) - (6.7) (7.1) - (7.1)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
(49.4) (0.4) (49.8) (46.7) (0.6) (47.3)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
NET CURRENT ASSETS 50.3 (1.7) 48.6 45.0 (1.1) 43.9
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
Non-current liabilities (144.8) - (144.8) (142.1) - (142.1)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
TOTAL LIABILITIES (194.2) (0.4) (194.6) (188.8) (0.6) (189.4)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
NET ASSETS 7.1 (2.1) 5.0 1.1 (1.5) (0.4)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
EQUITY
Other equity items 66.5 - 66.5 65.3 - 65.3
Retained earnings (61.4) (2.1) (63.5) (66.2) (1.5) (67.7)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
Equity attributable
to equity holders of
the parent 5.1 (2.1) 3.0 (0.9) (1.5) (2.4)
Non-controlling
interests 2.0 - 2.0 2.0 - 2.0
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
TOTAL SHAREHOLDERS'
EQUITY 7.1 (2.1) 5.0 1.1 (1.5) (0.4)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
15. Discontinued operations and sale of subsidiary
On 23 September the Group sold its shareholding in Renold Crofts (Pty) Ltd, the legal entity for the South African Torque Transmission business unit, for GBP0.1m consideration. This business unit would have required significant capital investment and management input to make meaningful progress. The disposal to management provides a continuing channel to market for products sourced from elsewhere in the Group.
The results of the discontinued operations, which have been included as a single line item in the consolidated income statement, were as follows:
First half First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
--------------------------------------------- ----------- ----------- ----------
Revenue 0.8 1.5 2.8
Expenses (1.1) (1.6) (3.0)
--------------------------------------------- ----------- ----------- ----------
Loss before tax (0.3) (0.1) (0.2)
Attributable tax expense - - -
--------------------------------------------- ----------- ----------- ----------
Loss for the year generated by discontinued
operations (0.3) (0.1) (0.2)
Loss on disposal of discontinued operations
(see below) (1.2) - -
Net loss attributable to discontinued
operations (attributable to owners
of the parent) (1.5) (0.1) (0.2) --------------------------------------------- ----------- ----------- ----------
The net assets of Renold Crofts (Pty) Ltd at the date of disposal were as follows:
23 September
2019
GBPm
--------------------------------------------- -------------
Property, plant and equipment 0.8
Inventories 0.5
Trade receivables 0.3
Bank balances and cash 0.1
Trade payables (0.7)
Net assets disposed 1.0
Disposal costs 0.3
Loss on disposal of discontinued operations (1.2)
--------------------------------------------- -------------
Total consideration 0.1
Satisfied by:
Deferred consideration 0.1
--------------------------------------------- -------------
Net cash flow arising on disposal:
Cash and cash equivalents disposed
of (0.1)
--------------------------------------------- -------------
The deferred consideration will be settled in cash by the purchaser on or before 23 September 2021. The loss on disposal is included in the loss for the year from discontinued operations.
Ends
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END
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