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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.80 | 1.67% | 48.60 | 47.40 | 48.60 | 48.80 | 48.00 | 48.80 | 120,893 | 10:13:28 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Engineering Services | 247.1M | 11.8M | 0.0523 | 9.29 | 109.55M |
From Apr 2019 to Apr 2024
TIDMRNO
RNS Number : 2497H
Renold PLC
14 November 2018
Renold plc
("Renold", "the Company" or "the Group")
Interim results for the half year ended 30 September 2018 ('the period')
14 November 2018
Renold, a leading international supplier of industrial chains and related power transmission products, announces its interim results which reflect good progress in addressing the short-term issues encountered last year.
Financial highlights
-- Underlying[1] revenue grew by 6.3% in H1; with reported revenue up 4.5%
-- Underlying order intake up by 7.5% when adjusted to exclude the large multi-year UK Couplings order from prior year; unadjusted underlying order intake up 1.7%
-- Underlying adjusted(2) operating profit growth of 36.7% to GBP8.2m; reported operating profit growth of 42.2% to GBP6.4m
Hot Features
Premium
-- Adjusted EBITDA of GBP11.9m; the highest H1 EBITDA delivered under the current strategic plan
-- Leverage ratio 1.3x net debt to adjusted EBITDA (1.2x at 30 September 2017)
Financial Summary Half year ended
30 Sept 30 Sept
2018 2017
GBPm GBPm
-------- --------
Reported interim results
Revenue 99.7 95.4
Operating profit 6.4 4.5
Underlying adjusted interim results[2]
Underlying revenue 99.7 93.8
Underlying adjusted operating profit 8.2 6.0
Profit before tax 4.1 2.4
Basic earnings per share 1.2p 0.8p
Adjusted earnings per share 2.6p 1.8p
---------------------------------------- -------- --------
Strategic plan progress
-- Successful pass through of raw material price increases reflecting commercial focus and differentiation of our products
-- Build programme completed for the new Chinese factory in Jintan, Jiangsu province
-- Commenced the phased transfer of the Chinese factory; warehousing and distribution move underway; manufacturing operations to follow in the coming months
-- Commenced trading in the new Chinese location on the Group's new standard ERP and ancillary systems
-- Further capital investment in enhanced manufacturing capability of GBP2.3m
-- The Board is considering whether moving the Group's stock exchange listing to AIM would provide it with the ability to execute transactions with greater efficiency and certainty
Robert Purcell, Chief Executive of Renold plc, said:
"I am pleased to report that we have made good progress in addressing the short-term issues encountered last year. As a result, adjusted operating profit has improved significantly and adjusted EBITDA of GBP11.9m is the highest delivered in the first half of a year under the strategic plan. The improvement is most pronounced in the Chain division, where we are seeing benefits from the many actions implemented.
"Our strategy is delivering a more robust, higher margin business and we look forward to continuing current momentum into the second half of the year."
Reconciliation of reported, underlying and adjusted results
Revenue Operating Profit
H1 2018/19 H2 2017/18 H1 2017/18 H1 2018/19 H2 2017/18 H1 2017/18
GBPm GBPm GBPm GBPm GBPm GBPm
Reported 99.7 96.2 95.4 6.4 1.1 4.5
Exchange impact - 0.2 (1.6) - (0.1) -
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Underlying 99.7 96.4 93.8 6.4 1.0 4.5
Restructuring costs - - - 1.0 4.1 0.6
Pension administration
costs - - - 0.3 0.5 0.4
Impairment of goodwill - - - - 2.1 -
Amortisation of acquired
intangible assets - - - 0.5 0.4 0.5
Underlying adjusted 99.7 96.4 93.8 8.2 8.1 6.0
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
ENQUIRIES:
Renold plc Peel Hunt LLP Instinctif Partners
Robert Purcell, Chief Executive Mike Bell Mark Garraway
Ian Scapens, Group Finance Sam Cann Rosie Driscoll
Director
Tel: 0161 498 4500 Tel: 020 7418 8900 Tel: 020 7457 2020
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, end users and distributors. The Company has a well-deserved reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.
Further information about Renold can be found on the website at: www.renold.com
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 (the Group). 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.
Chief Executive's Statement
The first half was a strong improvement over the same period last year, with good progress being made in resolving last year's short-term issues. The implementation of sales price increases, to counteract the impact of raw material cost inflation, has been the focus of our commercial teams through the second half of the prior year and into the current year. The success of this programme reflects the differentiated nature of our products and their value to our customers.
Sales price increases have combined with organic volume growth to deliver an underlying revenue improvement of 6.3% compared to the first half of last year.
The issues arising from machine break-downs in the prior year have been resolved, and output from the key German facility has increased accordingly. This has permitted improved inventories of core finished goods lines, thereby improving levels of customer service.
The step forward in the results of the Chain division has strengthened the overall performance of the Group which delivered an adjusted operating profit of GBP8.2m (2017: GBP6.0m), an increase of 36.7%. Adjusted operating margin increased to 8.2% (2017: 6.4%). EBITDA of GBP11.9m (2017: GBP9.5m) for the first half of the year is at the highest level in the first half of any year since the commencement of the strategic plan, and demonstrates the progress being made.
As expected, performance in the Torque Transmission division has been more stable, with the phasing of large project work offsetting the growth being delivered in North America.
Business and Financial Review
Group Results
Underlying Revenue Underlying Adjusted Adjusted Operating
Operating Profit Margin
--------------------- --------------------- ---------------------- ---------------------
2018/19 2017/18 2018/19 2017/18 2018/19 2017/18
First half year GBPm GBPm GBPm GBPm % %
Chain 80.0 74.9 9.5 6.1 11.9 8.1
Torque Transmission 19.7 18.9 2.3 2.4 11.7 12.7
Head office
costs - - (3.6) (2.5) - -
Total 99.7 93.8 8.2 6.0 8.2 6.4
--------------------- ---------- --------- ---------- ---------- ---------- ---------
Trading performance in the period improved as good progress on strategic actions combined with resolution of the short-term issues encountered in the previous year. Underlying revenue grew 6.3% (GBP5.9m) in the period reflecting sales price increases and organic volume growth. Reported revenue was up 4.5% (GBP4.3m), impacted by a small adverse movement in foreign exchange rates between half years.
Order intake in the period grew by 1.7% on an underlying basis. The prior period order intake includes a large multi-year UK Couplings order, and excluding this order from the prior period comparator, adjusted underlying order intake increased by 7.5%. The book to bill ratio for the period was 103% (that is, order intake in the period was 3% higher than revenue) which suggests revenue in the second half should continue to see some improvement.
As a result of the improved revenue performance, the resolution of the prior year issues and the many other projects underway, underlying adjusted operating profit increased by 36.7% to GBP8.2m (2017: GBP6.0m).
Chain
Revenue in the Chain division improved, with underlying revenue up 6.8% (GBP5.1m) to GBP80.0m.
The focus in the second half of the prior year on adjusting sales prices to recover increased raw material costs continued into the first half of the current year. Raw material prices have been more stable during the current year, although increases continue in some markets as a reaction to macro-economic factors such as increased tariffs.
Manufacturing output at our Einbeck, Germany chain facility has improved significantly following the disruption experienced in the first half of the prior year. Freight costs have returned to normal levels and inventories of standard finished goods lines have improved supporting more consistent levels of customer service.
In the period, regional performance was mixed. Underlying revenue increases in Europe were largely driven by sales price increases, with underlying volumes broadly stable. Volume growth was more significant in our North American business as strong order intake in the latter part of the prior year converted into revenue. Our businesses in developing economies continue to deliver growth, whilst our Australasian business experienced slight declines, particularly from South East Asian markets, although order intake has improved more recently.
Underlying adjusted operating profit increased significantly to GBP9.5m (2017: GBP6.1m) benefiting from organic revenue growth, the recovery of higher raw material costs through sales price increases, no repeat of the factory disruption in the prior year and good project execution. This profit improvement is despite headwinds created by union and legislation driven labour rate inflation in Germany highlighted in the preliminary results announcement for the year ended 31 March 2018.
Underlying order intake improved against the first half of the prior year, growing at 5.5% and was broadly flat when compared to the strong order intake experienced in the second half of the prior year. The Chain division book to bill for the first half of the year was 101%.
Torque Transmission
As expected, trading was more stable in the Torque Transmission division. The phasing of the large multi-year Couplings order delivered a material contribution to revenue in the year to 31 March 2018, but the current year will be a comparatively quiet period for the project. Offsetting this revenue gap is strong growth in the North American Torque Transmission business unit which continues to deliver good levels of order intake. Underlying revenue for Torque Transmission as a whole increased by 4.2% to GBP19.7m from GBP18.9m in the prior year.
The change in revenue mix has resulted in slightly lower adjusted operating profit of GBP2.3m for the first half of the year, with an adjusted operating margin of 11.7%.
Underlying order intake reduced by 10.0%, as the major multi-year order for UK Couplings artificially increased the prior period order intake. Removing the effect of this unusually large order, adjusted underlying order intake increased by 14.9%, with growth in North America being particularly strong and growth in Gears also showing some positive signs. The book to bill ratio for the first half of the year of 114% positions the division for further revenue growth in the second half of the year.
Restructuring costs
The major change programme being delivered during the period is the relocation of the Chinese chain factory. A provision of GBP3.1m was created during the year ended 31 March 2018 for certain costs of the move. Further costs relating to the relocation of GBP0.8m have been charged in the period and these comprise the majority of the GBP1.0m restructuring costs incurred in the period.
Strategic Plan Progress Review
Phase 1 - 'Restructuring'
The key element of restructuring activities being delivered in the current year is the relocation of the Chinese chain manufacturing facility to a purpose-built facility in Jintan near Changzhou in Jiangsu province. The build and fit-out programme for the new facility are largely complete and the first stages of the factory transfer are underway.
The opening of the new facility includes the transfer of systems and processes onto the Group's new ERP and associated systems. These systems are a major step forward for the Chinese business which has not previously operated with integrated manufacturing and planning systems and provides an opportunity to deliver greater levels of manufacturing efficiency.
The transfer of manufacturing processes will take place over the next few months and has been phased to reduce risk, with the move fully complete by the end of the financial year.
The new facility offers us many opportunities to improve our Chinese business and its ability to supply both internal and external customers domestically and internationally.
Phase 2 - 'Organic Growth'
During the period, we have delivered organic growth across both our Chain and Torque Transmission divisions.
In a period where certain markets have been delivering stronger growth (e.g. USA) and sales prices have been increasing to reflect raw material cost inflation, we continue to remain focused on identifying and targeting specific sub-sectors of the market where we believe the premium specification and quality of Renold's products provides a benefit to our customers.
In Chain, growth has been achieved in all geographic regions other than Australasia. The product and sector approach continues to create opportunities, not only in the more mature European and American markets, but also in the developing Chinese and Indian markets.
Phase 3 - 'Acquisitions'
We have outlined three types of acquisition that are strategically attractive:
-- New products or sectors - expanding Renold's reach into new customers -- New geographies - providing a platform for existing products into new territories -- Consolidation - to improve performance through consolidation of manufacturing activities
The global chain market remains fragmented and Renold is well placed to become a market consolidator. Given this strategic intent, and in light of Renold's current size and market capitalisation, the Board is considering whether moving the Group's stock exchange listing to AIM would provide it with the ability to execute transactions with greater efficiency and certainty.
Cash Flow and Net Debt
2018/19 2017/18
Half year to 30 September GBPm GBPm
Adjusted operating profit 8.2 6.0
Add back depreciation and amortisation 3.7 3.5
---------------------------------------------- -------- --------
Adjusted EBITDA 11.9 9.5
Net working capital movement (5.8) (2.3)
Pension cash costs (2.6) (3.0)
Movements in provisions (1.5) (1.7)
Income taxes paid (1.2) (3.4)
Other operating cash flows - (0.7)
---------------------------------------------- -------- --------
Net cash flow from operating activities 0.8 (1.6)
Capital expenditure net of disposal proceeds (5.8) (5.9)
Deferred consideration paid for acquisition - (0.5)
Net financing costs (1.1) (0.7)
Other net impacts on net debt - (0.1)
Impact of foreign exchange (0.6) 0.2
---------------------------------------------- -------- --------
Change in net debt (6.7) (8.6)
---------------------------------------------- -------- --------
Net debt (Note 11) (31.0) (26.0)
---------------------------------------------- -------- --------
Cash of GBP3.4m was generated by operations before legacy pension costs. Net debt in the period since 31 March 2018 increased by GBP6.7m to GBP31.0m.
Working capital increased by GBP5.8m in the period. Receivables and payables increased by a net GBP1.4m, principally reflecting the stronger trading through the second quarter of the year. The larger element of working capital increase is inventory, which is GBP4.4m higher. Holdings of finished goods have been deliberately increased following the output issues encountered last year and this is improving levels of customer service. In addition, increased output, particularly in the Chain division, is leading to higher levels of work in progress. Raw material holdings are a further contributor to the inventory increase, particularly in India and China, as lead times have increased.
Capital expenditure of GBP5.8m included investment in the new Chinese factory, in addition to other purchases of plant and equipment.
Net debt of GBP31.0m at 30 September 2018 represents a net debt to adjusted EBITDA leverage ratio of 1.3x (1.2x at 30 September 2017).
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 decreased from GBP97.4m (GBP81.7m net of deferred tax) at 31 March 2018 to GBP94.7m (GBP79.5m net of deferred tax) at 30 September 2018.
The benefit of a 0.2% increase in UK discount rates (to 2.8%) has reduced the value of future liabilities, although a 0.1% increase in inflation rates has partly off-set this. Consequently, the UK deficit is GBP67.1m at 30 September 2018 (31 March 2018: GBP69.6m). The aggregate deficit of the non-UK schemes was broadly unchanged at GBP27.6m (2017: GBP27.8m) as various factors reducing the deficit in local currency were offset by unfavourable foreign exchange variances.
The net financing expense (a non-cash item) was GBP1.2m (2017: GBP1.2m).
Dividend
In light of the continuing investment in capital 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 2017/18 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 current direct impact on the business is limited, but the sustained effect of uncertainty has the potential to reduce demand in end-markets for Renold's products. Renold's 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 market based 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. The next triennial valuation for the UK scheme will take place with an effective date of 5 April 2019.
Outlook
A strong improvement in performance of the Chain division has resulted in improved profitability for the Group in the first half of the year and a recovery in adjusted operating profit margins.
The Group is well diversified and order intake has remained stable in the face of an uncertain macro-economic backdrop and order books remain robust. As a result of continued momentum from the first half of the year, the Group is currently on track to deliver a result for the full year slightly ahead of the Board's previous expectations.
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 2018. 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 14 November 2018 14 November 2018
Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2018
First half 2018/19 (unaudited) First half 2017/18 (unaudited) Full year 2017/18 (audited)
Note Statutory Adjustments Adjusted Statutory Adjustments Adjusted Statutory Adjustments Adjusted
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ---------
Revenue 3 99.7 - 99.7 95.4 - 95.4 191.6 - 191.6
Operating costs (93.3) 1.8 (91.5) (90.9) 1.5 (89.4) (186.0) 8.6 (177.4)
---------------- ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ---------
Operating
profit 6.4 1.8 8.2 4.5 1.5 6.0 5.6 8.6 14.2
Operating
profit is
analysed
as:
Before
adjusting
items 6.4 - 6.4 4.5 - 4.5 5.6 - 5.6
Restructuring
costs 4 - 1.0 1.0 - 0.6 0.6 - 4.7 4.7
Amortisation of
acquired
intangible
assets - 0.5 0.5 - 0.5 0.5 - 0.9 0.9
Impairment of
goodwill - - - - - - - 2.1 2.1
Pension
administration
costs - 0.3 0.3 - 0.4 0.4 - 0.9 0.9
---------------- ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ---------
Operating
profit 6.4 1.8 8.2 4.5 1.5 6.0 5.6 8.6 14.2
Financing costs (1.1) - (1.1) (0.8) - (0.8) (1.7) - (1.7)
Net IAS 19
financing
costs (1.2) 1.2 - (1.2) 1.2 - (2.4) 2.4 -
Discount on
provisions - - - (0.1) 0.1 - (0.1) 0.1 -
---------------- ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ---------
Net financing
costs 5 (2.3) 1.2 (1.1) (2.1) 1.3 (0.8) (4.2) 2.5 (1.7)
Profit before
tax 4.1 3.0 7.1 2.4 2.8 5.2 1.4 11.1 12.5
Taxation 6 (1.4) 0.1 (1.3) (0.6) (0.5) (1.1) (3.6) 1.3 (2.3)
---------------- ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ---------
Profit for the
period 2.7 3.1 5.8 1.8 2.3 4.1 (2.2) 12.4 10.2
---------------- ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ---------
Earnings per
share (pence) 7
Basic 1.2p 1.4p 2.6p 0.8p 1.0p 1.8p (1.0p) 5.5p 4.5p
Diluted 1.1p 1.3p 2.4p 0.8p 1.0p 1.8p (1.0p) 5.5p 4.5p
---------------- ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ---------
Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2018
Note First half 2017/18 Full year 2017/18
First half 2018/19 (unaudited) (audited)
(unaudited)
GBPm GBPm GBPm
------------------------------------ ------ ------------------- --- ------------------- --- ------------------
Other comprehensive
income/(expense):
Items that may be reclassified to
the
income statement in subsequent
periods:
Net gain/(loss) on cash flow hedges (0.8) 0.1 0.4
Foreign exchange translation differences 2.3 (4.2) (5.9)
Foreign exchange differences on loans
hedging the net investment in foreign
operations (0.4) 0.5 0.8
-------------------------------------------- ------------------- --- ------------------- --- ------------------
1.1 (3.6) (4.7)
------------------------------------------- ------------------- --- ------------------- --- ------------------
Items not to be reclassified to the
income statement in subsequent
periods:
Re-measurement gain/(losses) on retirement
benefit obligations 2.2 0.3 2.8
Tax on re-measurement (gains)/losses
on retirement benefit obligations (0.5) (0.5) (1.6)
-------------------------------------------- ------------------- --- ------------------- --- ------------------
1.7 (0.2) 1.2
------------------------------------------- ------------------- --- ------------------- --- ------------------
Other comprehensive income/(expense)
for the period, net of tax 2.8 (3.8) (3.5)
-------------------------------------------- ------------------- --- ------------------- --- ------------------
Total comprehensive income/(expense)
for the period, net of tax 5.5 (2.0) (5.7)
-------------------------------------------- ------------------- --- ------------------- --- ------------------
Attributable to:
Owners of the parent 5.5 (2.0) (5.8)
Non-controlling interests - - 0.1
-------------------------------------------- ------------------- --- ------------------- --- ------------------
5.5 (2.0) (5.7)
------------------------------------------- ------------------- --- ------------------- --- ------------------
Condensed Consolidated Statement of Financial Position
as at 30 September 2018
Note 30 September 30 September 31 March
2018 2017
(unaudited) (unaudited) 2018
GBPm GBPm (audited)
GBPm
---------------------------------- ----- ------------- --- ------------- --- -----------
Assets
Non-current assets
Goodwill 22.9 24.7 21.6
Other intangible fixed assets 7.5 9.1 8.3
Property, plant and equipment 51.2 48.2 47.7
Deferred tax assets 20.0 20.3 20.6
101.6 102.3 98.2
---------------------------------- ----- ------------- --- ------------- --- -----------
Current assets
Inventories 46.4 40.7 41.0
Trade and other receivables 40.7 38.1 36.4
Derivative financial instruments - 0.1 0.4
Cash and cash equivalents 11 12.6 9.5 13.9
---------------------------------- ----- ------------- --- ------------- --- -----------
99.7 88.4 91.7
Total assets 201.3 190.7 189.9
---------------------------------- ----- ------------- --- ------------- --- -----------
Liabilities
Current liabilities
Borrowings 11 (1.0) (2.2) (1.3)
Trade and other payables (42.7) (40.9) (39.6)
Current tax (1.0) (1.3) (1.2)
Derivative financial instruments (0.1) - -
Provisions (4.6) (2.4) (4.6)
---------------------------------- ----- ------------- --- ------------- --- -----------
(49.4) (46.8) (46.7)
---------------------------------- ----- ------------- --- ------------- --- -----------
Net current assets 50.3 41.6 45.0
---------------------------------- ----- ------------- --- ------------- --- -----------
Non-current liabilities
Borrowings 11 (42.1) (32.8) (36.4)
Preference stock 11 (0.5) (0.5) (0.5)
Trade and other payables (0.3) (0.1) (0.3)
Deferred tax liabilities (4.4) (0.3) (4.2)
Retirement benefit obligations 8 (94.7) (100.9) (97.4)
Provisions (2.8) (3.6) (3.3)
---------------------------------- ----- ------------- --- ------------- --- -----------
(144.8) (138.2) (142.1)
---------------------------------- ----- ------------- --- ------------- --- -----------
Total liabilities (194.2) (185.0) (188.8)
---------------------------------- ----- ------------- --- ------------- --- -----------
Net assets /(liabilities) 7.1 5.7 1.1
---------------------------------- ----- ------------- --- ------------- --- -----------
Equity
Issued share capital 12 11.3 11.3 11.3
Share premium 30.1 30.1 30.1
Currency translation reserve 9.1 8.5 15.4
Capital reserve 15.4 15.4 7.1
Other reserves 0.6 1.1 1.4
Retained earnings (61.4) (63.4) (66.2)
---------------------------------- ----- ------------- --- ------------- --- -----------
Equity attributable to owners
of the parent 5.1 3.0 (0.9)
Non-controlling interests 2.0 2.7 2.0
---------------------------------- ----- ------------- --- ------------- --- -----------
Total shareholders' equity 7.1 5.7 1.1
---------------------------------- ----- ------------- --- ------------- --- -----------
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 September 2018
First half Full
year
2018/19 2017/18 2017/18
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------- ------------- --- ------------- --- -----------
Cash flows from operating activities
(Note 9)
Cash generated by operations 2.0 1.8 9.9
Income taxes paid (1.2) (3.4) (3.8)
------------------------------------------- ------------- --- ------------- --- -----------
Net cash flows from operating activities 0.8 (1.6) 6.1
------------------------------------------- ------------- --- ------------- --- -----------
Cash flows from investing activities
Proceeds from property disposals - 0.5 0.5
Purchase of property, plant and equipment (5.5) (5.7) (8.7)
Purchase of intangible assets (0.3) (0.7) (1.4)
Contingent consideration paid for
acquisition - (0.5) (1.2)
Net cash flows from investing activities (5.8) (6.4) (10.8)
------------------------------------------- ------------- --- ------------- --- -----------
Cash flows from financing activities
Financing costs paid (1.1) (0.7) (1.7)
Proceeds from borrowings 5.7 0.5 3.9
Repayment of borrowings - - (0.1)
Net cash flows from financing activities 4.6 (0.2) (2.1)
------------------------------------------- ------------- --- ------------- --- -----------
Net (decrease)/increase in cash and
cash equivalents (0.4) (8.2) (2.6)
Net cash and cash equivalents at
beginning of period 12.3 15.4 15.4
Effects of exchange rate changes (0.6) - (0.5)
------------------------------------------- ------------- --- ------------- --- ----------- Net cash and cash equivalents at end of period 11.3 7.2 12.3 ------------------------------------------- ------------- --- ------------- --- ----------- Cash and cash equivalents (Note 11) 12.6 9.5 13.9 Overdrafts (included in borrowings - Note 11) (1.3) (2.3) (1.6) ------------------------------------------- ------------- --- ------------- --- ----------- Net cash and cash equivalents at end of period 11.3 7.2 12.3 ------------------------------------------- ------------- --- ------------- --- -----------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 September 2018
Share Share Retained Currency Capital Other Attributable Non-controlling Total
capital premium earnings translation redemption reserves to owners interests equity
account reserve reserve of parent
GBPm
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2017 26.7 30.1 (64.9) 12.2 - 1.0 5.1 2.7 7.8
Profit for the
year - - (2.3) - - - (2.3) 0.1 (2.2)
Other
comprehensive
income/(expense) - - 1.2 (5.1) - 0.4 (3.5) (0.8) (4.3)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the year - - (1.1) (5.1) - 0.4 (5.8) (0.7) (6.5)
Reclassification
for cancellation
of deferred
shares (15.4) - - - 15.4 - - - -
Employee share
options:
- value of
employee
services - - (0.2) - - - (0.2) - (0.2)
Balance at 31
March 2018 11.3 30.1 (66.2) 7.1 15.4 1.4 (0.9) 2.0 1.1
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Profit for the
period - - 2.6 - - - 2.6 0.1 2.7
Other
comprehensive
income/(expense) - - 1.7 2.0 - (0.8) 2.9 (0.1) 2.8
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the period - - 4.3 2.0 - (0.8) 5.5 - 5.5
Reclassification
for cancellation
of deferred
shares - - - - - - - - -
Employee share
options:
- value of
employee
services - - 0.5 - - - 0.5 - 0.5
Balance at 30
September 2018 11.3 30.1 (61.4) 9.1 15.4 0.6 5.1 2.0 7.1
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2017 26.7 30.1 (64.9) 12.2 - 1.0 5.1 2.7 7.8
Profit for the
period - - 1.8 - - - 1.8 - 1.8
Other
comprehensive
income/(expense) - - (0.2) (3.7) - 0.1 (3.8) - (3.8)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the period - - 1.6 (3.7) - 0.1 (2.0) - (2.0)
Reclassification
for cancellation
of deferred
shares (15.4) - - - 15.4 - - - -
Employee share
options:
- value of
employee
services - - (0.1) - - - (0.1) - (0.1)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 30
September 2017 11.3 30.1 (63.4) 8.5 15.4 1.1 3.0 2.7 5.7
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Notes to the Interim Condensed Consolidated Financial Statements
1. Corporate information
The interim condensed consolidated financial statements for the six months to 30 September 2018 were approved by the Board on 14 November 2018. 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 and the performance in the half year is set out in the Interim Management Report.
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 2018 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified, did not contain an emphasis of matter paragraph and 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 2018 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 2018.
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 2018, except as noted below.
New and amended standards adopted by the Group
The Group has implemented IFRS 9 Financial Instruments and IFRS 15 Revenue from contracts with customers, both effective for the first time for the financial year beginning on 1 April 2018. Neither standard has had a material impact on the Group's financial position or performance therefore no restatement of the comparative figures has been required.
New standards and interpretations not yet effective and not adopted
There are a number of standards and interpretations issued by the International Accounting Standards Board (IASB) that are effective for the Group's financial statements after this reporting period. These are:
-- Amendment to IAS 19 'Employee Benefits', effective from 1 April 2019 (further detail will be provided in the 2018/19 Annual Report and Financial Statements);
-- IFRIC 23 'Uncertainty over income tax treatments', effective from 1 April 2019 (further detail will be provided in the 2018/19 Annual Report and Financial Statements); and
-- IFRS 16 'Leases', effective from 1 April 2019 (see below for further detail)
IFRS 16 'Leases'
The project to review the impact of IFRS 16 is ongoing. The Group has collated details of all relevant leases (taking advantage of the transition option to rely on classification as a lease under IAS 17), however, the population of leases is subject to change before transition. The Group currently intends to apply the modified retrospective transition basis when adopting IFRS 16 from 1 April 2019 but has not completed the calculations of the exact impact as this will require the relevant discount rates at that date.
The impact of adoption will be to increase EBITDA and Operating Profit as operating lease costs currently charged under IAS 17 will be reclassified to depreciation and interest expenses which are excluded from EBITDA (although included in profit before tax). The interest cost will be front-end loaded which will result in higher costs earlier in the lease than under IAS 17 and lower costs towards the end of the lease. The expected net impact on profit is less than GBP1m per annum (calculations based on using an illustrative discount rate of 5% for all leases).
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 2018, 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 onerous 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 2018.
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 2018 were as follows:
Chain Torque Head office Consolidated
Transmission costs and
eliminations
Period ended 30 September GBPm GBPm GBPm GBPm
2018
------------------------------------- ------ -------------- -------------- -------------
Revenue
External revenue 80.0 19.7 - 99.7
Inter-segment 1.1 1.9 (3.0) -
------------------------------------- ------ -------------- -------------- -------------
Total revenue 81.1 21.6 (3.0) 99.7
------------------------------------- ------ -------------- -------------- -------------
Adjusted operating profit/(loss) 9.5 2.3 (3.6) 8.2
Pension administration costs - - (0.3) (0.3)
Restructuring costs (0.8) - (0.2) (1.0)
Amortisation of acquired
intangible assets (0.5) - - (0.5)
------------------------------------- ------ -------------- -------------- -------------
Segment operating profit/(loss) 8.2 2.3 (4.1) 6.4
Net financing costs (2.3)
------------------------------------- ------ -------------- -------------- -------------
Profit before tax 4.1
------------------------------------- ------ -------------- -------------- -------------
Other disclosures
Working capital 29.1 13.9 1.4 44.4
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
------------------------------------- ------ -------------- -------------- -------------
The segment results for the period ended 30 September 2017 were as follows:
Chain Torque Head office Consolidated
Transmission costs and
eliminations
Period ended 30 September GBPm GBPm GBPm GBPm
2017
------------------------------------- ------ -------------- -------------- -------------
Revenue
External revenue 76.3 19.1 - 95.4
Inter-segment 0.7 1.7 (2.4) -
------------------------------------- ------ -------------- -------------- -------------
Total revenue 77.0 20.8 (2.4) 95.4
------------------------------------- ------ -------------- -------------- -------------
Adjusted operating profit/(loss) 6.1 2.4 (2.5) 6.0
Pension administration costs (0.1) - (0.3) (0.4)
Restructuring costs (0.1) (0.2) (0.3) (0.6)
Amortisation of acquired
intangible assets (0.5) - - (0.5)
------------------------------------- ------ -------------- -------------- -------------
Segment operating profit/(loss) 5.4 2.2 (3.1) 4.5
Net financing costs (2.1)
------------------------------------- ------ -------------- -------------- -------------
Profit before tax 2.4
------------------------------------- ------ -------------- -------------- -------------
Other disclosures
Working capital 28.8 11.3 (2.3) 37.8
Capital expenditure 4.5 0.7 0.7 5.9
Depreciation and amortisation
included in adjusted operating
profit/(loss) 1.8 0.7 1.0 3.5
Amortisation of acquired
intangibles 0.5 - - 0.5
------------------------------------- ------ -------------- -------------- -------------
Total depreciation and amortisation 2.3 0.7 1.0 4.0
------------------------------------- ------ -------------- -------------- -------------
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:
Chain Torque Head office Consolidated
Transmission costs and
eliminations
Period ended 30 September GBPm GBPm GBPm GBPm
2017
----------------------------------- ------ -------------- -------------- -------------
Revenue
External revenue 76.3 19.1 - 95.4
Foreign exchange (1.4) (0.2) - (1.6)
----------------------------------- ------ -------------- -------------- -------------
Underlying external sales 74.9 18.9 - 93.8
----------------------------------- ------ -------------- -------------- -------------
Adjusted operating profit/(loss) 6.1 2.4 (2.5) 6.0
Foreign exchange - - - -
----------------------------------- ------ -------------- -------------- -------------
Underlying adjusted profit/(loss) 6.1 2.4 (2.5) 6.0
----------------------------------- ------ -------------- -------------- -------------
The segment results for the year ended 31 March 2018 were as follows:
Chain Torque Head office Consolidated
Transmission costs and
eliminations
Year ended 31 March 2018 GBPm GBPm GBPm GBPm
------------------------------------- ------ -------------- -------------- -------------
Revenue
External revenue 153.1 38.5 - 191.6
Inter-segment 1.4 3.9 (5.3) -
------------------------------------- ------ -------------- -------------- -------------
Total revenue 154.5 42.4 (5.3) 191.6
------------------------------------- ------ -------------- -------------- -------------
Adjusted operating profit/(loss) 14.7 4.8 (5.3) 14.2
Pension administration costs - - (0.9) (0.9)
Restructuring costs (3.9) (0.2) (0.6) (4.7)
Impairment of goodwill (2.1) - - (2.1)
Amortisation of acquired
intangible assets (0.9) - - (0.9)
------------------------------------- ------ -------------- -------------- -------------
Operating profit/(loss) 7.8 4.6 (6.8) 5.6
Net financing costs (4.2)
------------------------------------- ------ -------------- -------------- -------------
Profit before tax 1.4
------------------------------------- ------ -------------- -------------- -------------
Other disclosures
Working capital 25.9 11.6 0.1 37.6
Capital expenditure 7.2 0.9 1.3 9.4
Depreciation and amortisation
included in adjusted operating
profit/(loss) 4.8 1.6 0.9 7.3
Amortisation of acquired
intangibles 0.9 - - 0.9
------------------------------------- ------ -------------- -------------- -------------
Total depreciation and amortisation 5.7 1.6 0.9 8.2
------------------------------------- ------ -------------- -------------- -------------
The prior year results have been restated using this year's exchange rates as follows:
Chain Torque Head office Consolidated
Transmission costs and
eliminations
Year ended 31 March 2018 GBPm GBPm GBPm GBPm
---------------------------------- ------ -------------- -------------- -------------
Revenue
External sales 153.1 38.5 - 191.6
Foreign exchange (1.2) (0.2) - (1.4)
---------------------------------- ------ -------------- -------------- -------------
Underlying external sales 151.9 38.3 - 190.2
---------------------------------- ------ -------------- -------------- -------------
Adjusted operating profit/(loss) 14.7 4.8 (5.3) 14.2
Foreign exchange (0.1) - - (0.1)
---------------------------------- ------ -------------- -------------- -------------
Underlying adjusted operating
profit/(loss) 14.6 4.8 (5.3) 14.1
---------------------------------- ------ -------------- -------------- -------------
4. Adjusting items
First half Full year
2018/19 2017/18 2017/18
GBPm GBPm GBPm
------------------------------------- -------- -------- ------------
Included in operating costs:
Restructuring costs 1.0 0.6 4.7
Impairment of goodwill - - 2.1
Pension administration costs 0.3 0.4 0.9
Amortisation of acquired intangible
assets 0.5 0.5 0.9
------------------------------------- -------- -------- ------------
Adjusting items 1.8 1.5 8.6
------------------------------------- -------- -------- ------------
First half Full year
2018/19 2017/18 2017/18
GBPm GBPm GBPm
---------------------------------- -------- -------- ----------
Included in net financing costs:
Discount unwind on onerous lease
provision - 0.1 0.1
Net IAS 19 financing costs 1.2 1.2 2.4
1.2 1.3 2.5
---------------------------------- -------- -------- ----------
Various restructuring costs were incurred in the period as part of the STEP 2020 Strategic Plan, relating principally to the China factory relocation (GBP0.8m). This is a significant project which has been underway for around 12 months. The build and fit-out programme for the new facility are largely complete and the first stages of the factory transfer are underway.
Prior year adjusting items
Restructuring costs of GBP4.7m were incurred in the prior year as part of the STEP 2020 Strategic Plan; GBP3.9m relating to the multi-year project to transfer the China Chain manufacturing facility from leased premises in Hangzhou to a purpose built facility near Changzhou in the Jiangsu province.
Also in the prior year, GBP0.3m related to final redundancy and restructuring costs of transferring the HiTec Couplings business, located in Halifax, to our existing Couplings facility in Cardiff. In May 2017 the Halifax property was sold, resulting in a gain on disposal of GBP0.2m The increased manufacturing capability at the Cardiff site permitted the closure of the China Couplings facility with manufacturing moving to Cardiff and South Africa. This incurred further redundancy and restructuring costs of GBP0.3m, with both projects completed in the prior year.
The restructuring of the European distribution and sales operations, cessation of manufacturing operations in New Zealand and the closure of our Singapore site amounted to a further GBP0.4m of restructuring costs in the prior year.
5. Net financing costs
First half Full year
2018/19 2017/18 2017/18
GBPm GBPm GBPm
------------------------------------ -------- -------- ----------
Financing costs:
Interest payable on bank loans and
overdrafts (1.1) (0.7) (1.4)
Amortised financing costs - (0.1) (0.3)
Total financing costs (1.1) (0.8) (1.7)
------------------------------------ -------- -------- ----------
Net IAS 19 financing costs (1.2) (1.2) (2.4)
Discount unwind on provisions - (0.1) (0.1)
Net financing costs (2.3) (2.1) (4.2)
------------------------------------ -------- -------- ----------
6. Taxation
First half Full year
2018/19 2017/18 2017/18
GBPm GBPm GBPm
----------------------------------- -------- -------- ----------
Current tax:
- UK - - -
- Overseas 0.9 0.5 1.1
----------------------------------- -------- -------- ----------
0.9 0.5 1.1
Deferred tax:
- UK 0.1 (0.2) 0.2
- Overseas 0.4 0.3 -
- Effect of changes in corporate
tax rates - - 2.4
- Adjustments in respect of prior
periods - - (0.1)
----------------------------------- -------- -------- ----------
0.5 0.1 2.5
----------------------------------- -------- -------- ----------
Total income tax expense 1.4 0.6 3.6
----------------------------------- -------- -------- ----------
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 period ending 31 March 2019 using rates substantively enacted by 30 September 2018 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 2017. The deferred tax balances were revalued to the lower rate of 17% in the prior year.
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 34.1% (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 2017/18 2017/18
Pence per Pence per Pence per
share share share
----------------------------------------- ----------- ----------- -----------
Basic EPS 1.2 0.8 (1.0)
Diluted EPS 1.1 0.8 (1.0)
Adjusted EPS 2.6 1.8 4.5
Diluted adjusted EPS 2.4 1.8 4.5
----------------------------------------- ----------- ----------- -----------
GBPm GBPm GBPm
----------------------------------------- ----------- ----------- -----------
Profit for calculation of adjusted
EPS
Profit for the financial period 2.6 1.8 (2.2)
Effect of adjusted items, after tax:
- Restructuring costs in operating
costs 1.0 0.6 4.6
- Impairment of goodwill - - 1.7
- Pension administration costs included
in
operating costs 0.3 0.4 0.8
- Discount unwind on adjusting items - 0.1 0.1
- Amortisation of acquired intangible
assets 0.4 0.3 0.6
- US tax reform - - 2.4
- Net pension financing costs 1.4 0.9 2.2
Profit for the calculation of adjusted
EPS 5.7 4.1 10.2
----------------------------------------- ----------- ----------- -----------
Thousands Thousands Thousands
Weighted average number of ordinary
shares
For calculating basic earnings per
share 225,418 225,418 225,418
----------------------------------------- ----------- ----------- -----------
Diluted Earnings Per Share is calculated by adjusting the weighted average number of shares used for the
calculation of basic Earnings Per Share 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 10,012,000 (2018: 6,942,000) additional shares affects EPS as shown above.
The adjusted earnings per share 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 restricting 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
2018 2017 2018
GBPm GBPm GBPm
-------------------------------------- ----------- ----------- --------
Funded plan obligations (220.1) (232.3) (226.1)
Funded plan assets 151.0 158.0 153.8
-------------------------------------- ----------- ----------- --------
Net funded plan obligations (69.1) (74.3) (72.3)
Unfunded obligations (25.6) (26.6) (25.1)
-------------------------------------- ----------- ----------- --------
Total retirement benefit obligations (94.7) (100.9) (97.4)
-------------------------------------- ----------- ----------- --------
Analysed as follows:
Non-current liabilities Retirement benefit obligations (94.7) (100.9) (97.4) ----------------------------------- ------- -------- ------- Net retirement benefit obligation (94.7) (100.9) (97.4) Net deferred tax asset 15.2 17.1 15.7 Retirement benefit obligation net of deferred tax (79.5) (83.8) (81.7) ----------------------------------- ------- -------- -------
The decrease in the Group's pre-tax liability from GBP97.4m at 31 March 2018 to GBP94.7m at 30 September 2018. This primarily reflects the benefit of a 0.2% increase in UK discount rates (to 2.8%) which reduced the value of future liabilities, although a 0.1% increase in inflation rates has off-set this, with the net effect being a reduction in UK liabilities of GBP3.1m, resulting in a deficit of GBP67.1m at 30 September 2018 (31 March 2018: GBP69.6m). The aggregate deficit of the non-UK schemes was broadly unchanged at GBP27.6m (2017: GBP27.8m) as various factors reducing the deficit totalling GBP0.8m were offset by GBP0.6m of unfavourable foreign exchange variances.
9. Cash generated by operations
First half Full year
2018/19 2017/18 2017/18
GBPm GBPm GBPm
---------------------------------- -------- -------- ----------
Operating profit 6.4 4.5 5.6
Depreciation and amortisation 4.2 4.0 8.2
Impairment of goodwill - - 2.1
(Increase) in inventories (4.4) (1.4) (2.6)
(Increase) in receivables (3.7) (2.2) (1.1)
Increase in payables 2.3 1.3 1.1
(Decrease) in provisions (0.5) (1.7) 1.0
Movement on pension plans (2.3) (2.6) (4.4)
Movement on derivative financial - (0.1) -
instruments
Cash generated by operations 2.0 1.8 9.9
---------------------------------- -------- -------- ----------
10. Reconciliation of the movement in cash and cash equivalents to movement in net debt
First half Full year
2018/19 2017/18 2017/18
GBPm GBPm GBPm
------------------------------------------ -------- -------- ----------
(Decrease)/increase in cash and cash
equivalents (0.4) (8.2) (2.6)
Change in net debt resulting from
cash flows (5.7) (0.5) (3.8)
Non-cash movement - amortisation of
refinancing costs - (0.1) (0.3)
Non-cash movement - refinancing costs
capitalised - - 0.3
Foreign currency translation differences (0.6) 0.2 (0.5)
------------------------------------------ -------- ------------ ----------
Change in net debt during the period (6.7) (8.6) (6.9)
Net debt at start of period (24.3) (17.4) (17.4)
------------------------------------------ -------- ------------ ----------
Net debt at end of period (31.0) (26.0) (24.3)
------------------------------------------ -------- ------------ ----------
11. Net Debt
At 30 At 30 At 31
September September March
2018 2017 2018
GBPm GBPm GBPm
-------------------------------- ----------- ----------- -------
Cash and cash equivalents 12.6 9.5 13.9
Borrowings:
Bank overdrafts (1.3) (2.3) (1.6)
Capitalised costs 0.3 0.1 0.3
Sub-total - current borrowings (1.0) (2.2) (1.3)
Bank loans - non-current (42.4) (33.1) (36.7)
Capitalised costs 0.3 0.3 0.3
Preference stock (0.5) (0.5) (0.5)
Total debt (43.6) (35.5) (38.2)
-------------------------------- ----------- ----------- -------
Net debt (31.0) (26.0) (24.3)
-------------------------------- ----------- ----------- -------
12. Called up share capital
At 30 At 30 At 31
September September March
2018 2017 2018
GBPm GBPm GBPm
---------------------------- ----------- ----------- -------
Ordinary shares of 5p each 11.3 11.3 11.3
11.3 11.3 11.3
---------------------------- ----------- ----------- -------
At 30 September 2018, the issued ordinary share capital comprised 225,417,740 ordinary shares of 5p each (2017: 225,417,740 shares) and nil deferred shares of 20p each.
13. Capital commitments
At 30 September 2018 capital expenditure contracted for but not provided for in these accounts amounted to GBP6.3m (30 September 2017: GBP0.7m), predominantly relating to the Chinese chain manufacturing facility move to a purpose-built facility near Changzhou in Jiangsu province (GBP6.0m).
Ends
[1] "Underlying" adjusts prior period results to the current period exchange rates to give a like for like comparison.
[2] See overleaf for reconciliation of reported, underlying and adjusted figures.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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