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Name | Symbol | Market | Type |
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Wt Batterymetal | LSE:WATT | London | Exchange Traded Fund |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 17.01 | 16.83 | 16.945 | 0 | 12:04:28 |
RNS No 5926b WATTS BLAKE BEARNE & CO PLC 29th September 1998 WATTS BLAKE BEARNE & CO PLC INTERIM RESULTS TO 30 JUNE 1998 1998 1997 Sales #50.4m #50.5m Operating profit * #5.9m #6.1m Operating margin * 11.8% 12.1% Pre-tax profit * #5.2m #5.5m Earnings per share * 15.7p 15.0p Interim Dividend 4.4p 4.4p * before exceptional costs relating to Southacre, Devon quarry extension #5.5m PTP had same foreign exchange rate applied; reported PTP is #4.6m Watts Blake Bearne, world leader in Ball Clays * Creditable results despite difficult trading conditions * Sales volume growth from major divisions in Europe, offset by slow first quarter in U.S.A. and impact of economic crisis in Asia * Sales up 5% at constant exchange rates * Strong cash flow; gearing reduced to 26% from 30% at last year end * Interest cover before exceptional costs 8 times (1997: 9.5 times) * US$55m debt placement successfully concluded; 7 times over-subscribed * Volumes from Devon Clays 7% up on last year, exports 11% higher on growth in European sanitaryware and tile markets * Growth in revenues and profits from German Division * New joint venture commenced in China (domestic sanitaryware, electro- porcelain) * Investment increased in R & D * Board encouraged by start of second-half trading Enquiries: Dr. Graham Lawson, Chief Executive, Direct Line: +44 (0) 1626 322 302 Dr. Michael Young, Finance Director, Direct Line: +44 (0) 1626 322 312 Tel: 0171 450 4440 (29th September 1998) until 12 noon WBB switchboard: 01626 332 345 WBB Web site: http://www.wbb.co.uk Peter Binns, John Wade: Binns & Co - Tel: 0171 786 9600 A briefing for analysts is being held at 9:00am for 9:15am start today at The Court Room, The Merchant Taylors' Hall, 30 Threadneedle Street, London EC2. Editor's Note: Watts Blake Bearne ("WBB") is the leading international ball clay producer, whose operations are in the UK, Germany, Europe, the USA and the Asia-Pacific region. WBB specialises in the supply of ball clays, kaolins and prepared ceramic bodies to the ceramics and other industries worldwide. Ball Clay is a relatively rare mineral, but is an important white-firing plastic component in ceramics such as sanitaryware, tiles and tableware. CHAIRMAN'S STATEMENT In a period of some turbulence in financial markets and many of the world's economies, I am pleased to report, apart from exceptional costs to which I refer below, a solid and creditable result from your Company for the first six months of 1998. Profit before Taxation and exceptional costs at #5.2m compares well with #5.5m for the first half of 1997, noting that it would have equalled last year had the same foreign exchange rates applied. The reported Profit before Taxation is #4.6m. Earnings per share are 15.7p (1997:15.0p) excluding exceptional costs and 13.8p on a fully charged basis. The interim dividend is maintained at 4.4p per share. The dividend will be payable on 20th November 1998 to shareholders on the Register at the close of business on 9th October 1998. In the light of strong cash flow in the first half-year, gearing has reduced to 26% from 30% at the last year-end (30 June 1997:22%) and interest cover before exceptional costs is 8 times (1997:9.5 times). The Balance Sheet and Cash Flow Statement each reflect the US $55m debt placement, which was concluded in February and has already been referred to in the 1997 Annual Report. In the Balance Sheet an amount of #5m due in December 1998 in respect of the second instalment for the purchase late last year of extensive mineral reserves in Germany continues to be included under "Other Creditors". Shareholders will be aware that our UK Division's application for a quarry extension was called into Public Inquiry in 1997. At the end of August it became apparent that independent experts advising us had misinterpreted a crucial piece of data relating to the behaviour of river flows. As a result, management decided to withdraw the application. We are currently engaged on the urgent preparation of a re-submission. Costs relating to the first design have accordingly been written off against the first half-year profits and are treated as exceptional. Otherwise, the pattern shown in the Group Profit & Loss Account portrays encouraging sales volume growth for our major divisions in Europe, offset by a slow first quarter in USA and the impact of the economic crisis in Asia. Management continues to pursue opportunities for new ventures, consistent with its strategy outlined in the 1997 Annual Report. It is the nature of today's global ceramics market that such developments are more likely to arise in developing regions of the world, such as Asia, South America and Eastern Europe. We recognise the potential risks that this strategy involves. We believe, however, that the balance management brings between entrepreneurial zeal and financial control will favour success and add long-term value to your Company. We are encouraged by the way second half trading has started. Results for the full year, however, will also inevitably be affected by the exceptional costs noted here. I conclude by congratulating management and all employees throughout the Group on their fine effort in producing a result, which, apart from matters outside their control, was most satisfactory for the first half of 1998 and was achieved despite difficult trading conditions. Michael Beckett Chairman CHIEF EXECUTIVE'S REVIEW OF OPERATIONS The stability of the Group's results, exceptional costs apart, is not only a credit during a period of worldwide volatility in financial markets, but reflects the energetic development of the business which management continues to pursue. The exceptional costs relate to the first design of our Southacre quarry extension in Devon which, because of a misinterpretation by one of our external experts of data concerning water flows in the proposed river diversion, we decided to abandon. This decision was taken because our confidence that this scheme would now meet our high standards of ecological and environmental performance had been lowered significantly. The specific clays we seek to gain from the quarry extension remain important to our UK Division and we have already commenced work on a new design. Inevitably, implementation of this key project will be delayed, possibly by two years, but we have sufficient reserves to maintain security of supply to our customers in the meantime. Measured in local currency, sales growth has been achieved in all Divisions except those in the UK and the USA. Like other international groups, however, we are affected by Sterling's continued strength, which has translated growth in underlying operating profit into a slightly lower value compared to the first half of 1997. Our operating margin has inevitably been affected by the economic crisis in Asia, which impacts not only our businesses located in that region, but also important export sales of speciality clays, particularly from the UK. Operating margin is also tempered by product mix changes, especially in the UK and Germany, the impact of which has been neutralised by prudent cost management. It should not be inferred, therefore, from our reported operating margin (before exceptional costs) of 11.8% (1997:12.1%) that management has eased its pressure on cost control; this is emphatically not so. Our core UK Division, WBB Devon Clays, recorded a profit (before exceptional costs) just 3.5% below the 1997 level, mainly due to loss of high-value business in Asia. In the Pacific Clays Division, our established ventures in Thailand and Indonesia continue to operate profitably having secured much of the business lost in the region by Devon Clays. However, reduced customer off-take and the depreciation of local currencies have resulted in a significant overall reduction in profit derived by the Group from its business in the region. Despite the downturn in Asian sales, volumes from Devon Clays were 7% ahead of last year, with exports 11% higher due to encouraging growth in the European sanitaryware and tile markets. The strength of Sterling continues to maintain pressure on prices. Good progress has been made in the sale of non-clay products from Devon, with sales significantly ahead of last year's level. In the USA, markets were poor during the first quarter, a legacy of inventory reduction by some customers, although these have now picked up in line with our expectations. It is pleasing to note significant production and sales success in our newly constituted Eastern Europe Division through its Ukranian joint venture as well as continuing growth in revenues from our German Division following the purchase of key mineral reserves in Germany at the end of last year. Real price increases remain difficult to achieve. I am pleased to report, however, that prudent cost management has resulted in gross margin improvements in most of the Divisions. Shareholders are aware that a high proportion of our direct costs are fixed in nature, so margins have also improved as a result of the sales volume increases achieved in a number of operations throughout the Group. Despite the demands of our investment in developing our strategic technology base and the embryonic divisions in Asia and Eastern Europe, overheads across the Group have been strictly controlled. We have, in this first half, incurred pre-operational expenses in relation to our newest joint venture in China, which has now commenced production for plant trials in the domestic sanitaryware and electro-porcelain sectors. Following the successful debt placement initiative we completed in February, we have both ready funds and financial capacity to conclude negotiations in bringing suitable target acquisitions and further joint ventures into the WBB Group. I am pleased to advise that interest earned on our surplus funds more than covers its servicing cost thus relieving the pressure on making important purchases in unwarranted haste. The interest charge in the Profit and Loss Account reflects higher levels of net borrowing which have largely arisen from the purchase of German mineral reserves in December last year. We continue to pursue our strategy for long term profitable growth. We are determined to source and market world-class clay minerals to both developing and mature centres of population using the excellent resources that underpin WBB: its people, minerals, technical know-how and financial capacity. I look forward to reporting to you continued success in this quest in our Annual Report next year. Graham Lawson Chief Executive GROUP PROFIT & LOSS ACCOUNT Six months ended Year to 30.06.98 30.06.97 31.12.97 #'000 #'000 #'000 Unaudited Unaudited Notes Turnover United Kingdom 4,894 4,904 9,809 Germany 8,727 8,478 16,361 Rest of Europe 25,143 23,140 45,950 North America 5,858 6,801 12,755 Rest of World 5,763 7,200 13,862 _________ _________ ________ 50,385 50,523 98,737 Operating Costs (44,446) (44,417) (85,802) _________ _________ _________ Operating Profit 5,939 6,106 12,935 Exceptional Costs 1 (640) - - _________ _________ _________ Profit on Ordinary activities before interest 5,299 6,106 12,935 Net Interest (739) (638) (1,295) _________ _________ _________ Profit on Ordinary Activities before Taxation 4,560 5,468 11,640 Tax on Profit on Ordinary Activities (1,710) (2,297) (4,428) _________ _________ _________ Profit on Ordinary Activities after Taxation 2,850 3,171 7,212 Minority Interests 47 (24) (156) Dividends (929) (926) (3,719) _________ _________ _________ Balance Retained 1,968 2,221 3,337 ======== ======== ======== Earnings per ordinary share Including exceptional costs Basic 4 13.8p 15.0p 33.5p Fully diluted 13.4p 14.5p 33.1p Earnings per ordinary share Excluding exceptional costs Basic 15.7p 15.0p 33.5p Fully diluted 15.3p 14.5p 33.1p Dividend per Ordinary Share 3 4.4p 4.4p 17.6p STATEMENT OF RECOGNISED GAINS & LOSSES 6 Months 6 Months 12 Months 1998 1997 1997 Unaudited Unaudited Profit for the financial year 2,897 3,147 7,056 Currency translation differences on foreign currency net investments (1,161) (2,241) (4,375) _________ _________ _________ 1,736 906 2,681 _________ _________ _________ GROUP CASH FLOW STATEMENT 6 Months 6 Months 12 Months 1998 1997 1997 Notes Unaudited Unaudited Cash flow from operating activities 2 8,627 8,400 16,553 _________ _________ _________ Returns on investments and servicing of finance Interest received 268 128 320 Interest paid (1,007) (765) (1,615) Preference dividend (3) (3) (6) Dividend paid to a minority shareholder in a subsidiary - - (15) _________ _________ _________ (742) (640) (1,316) _________ _________ _________ Taxation Taxation paid (1,132) (1,834) (4,882) _________ _________ _________ Capital expenditure Purchase of tangible fixed assets (4,381) (2,654) (10,435) Purchase of intangible fixed assets (175) - (29) Sale of tangible fixed assets 219 81 837 assets _________ _________ _________ (4,337) (2,573) (9,627) _________ _________ _________ Acquisitions (53) - - _________ _________ _________ Equity dividends paid - - (3,407) _________ _________ _________ Cash inflow/(outflow) before financing 2,363 3,353 (2,679) Financing issue of shares 11 273 286 increase in borrowings 7,560 2,901 3,066 _________ _________ _________ Increase in cash in period 9,934 6,527 673 ======== ======== ======== Reconciliation of net cash flow to movement in net borrowings Increase in cash in period 9,934 6,527 673 Cash inflow from increase in borrowings (7,560) (2,901) (3,066) _________ _________ _________ Change in net borrowings resulting in cash flows 2,374 3,626 (2,393) Translation difference 297 178 562 _________ _________ _________ Movement in net borrowings in period 2,671 3,804 (1,831) Opening net borrowings (22,387) (20,556) (20,556) _________ _________ _________ Closing net borrowings (19,716) (16,752) (22,387) ======== ======== ======== GROUP BALANCE SHEET SUMMARY 30.06.98 30.06.97 31.12.97 #'000 #'000 #'000 Unaudited Unaudited Fixed Assets Intangible assets 226 30 45 Tangible assets 90,554 84,142 91,886 Investments 1,052 1,415 1,017 _________ _________ _________ 91,832 85,587 92,948 _________ _________ _________ Current Assets Stocks 8,691 7,482 9,504 Trade Debtors 21,404 20,061 19,164 Other Debtors 5,532 4,129 4,240 Cash at bank and in hand 13,852 10,490 4,014 _________ ________ _________ 49,479 42,162 36,922 Creditors Amounts falling due within one year Borrowings (145) (5,398) (5,294) Other Creditors (22,331) (15,728) (19,924) _________ _________ _________ Net Current Assets 27,003 21,036 11,704 _________ _________ _________ Total assets less current liabilities 118,835 106,623 104,652 Creditors Amounts falling due after more than one year Borrowings (33,423) (21,844) (21,107) Other Creditors (33) (176) (144) Provisions for liabilities and charges (9,225) (8,811) (8,195) _________ _________ _________ Total Net Assets 76,154 75,792 75,206 _________ _________ _________ Capital and Reserves Called up share capital 5,408 5,389 5,407 Reserves 69,916 70,119 69,109 _________ _________ _________ Total Shareholders' funds 75,324 75,508 74,516 Minority interests 830 284 690 _________ _________ _________ 76,154 75,792 75,206 _________ _________ _________ Net Borrowings 19,716 16,752 22,387 As a percentage of shareholders' funds 26% 22% 30% NOTES TO THE ACCOUNTS 1. Exceptional Costs Exceptional costs refer to the first design, now withdrawn, for a proposed quarry extension in the UK with associated river diversion. 2. Reconciliation of Operating Profit to Operating Cash Flows 6 Months 6 Months 12 Months 1998 1997 1997 Unaudited Unaudited Operating profit 5,939 6,106 12,935 Exceptional costs (640) - - _________ _________ _________ Profit on Ordinary Activities 5,299 6,106 12,935 Depreciation 4,076 4,188 7,453 Profit on disposal of fixed assets (53) (69) (201) Share of profit of associated undertaking (38) (108) (369) Increase in other provisions and deferred income 1,179 932 (136) Decrease/(Increase) in stocks 672 594 (1,557) Increase in debtors (2,672) (1,615) (1,347) Increase/(Decrease) in creditors 164 (1,628) (225) _________ _________ _________ Net cash inflow from operating activities 8,627 8,400 16,553 _________ _________ _________ 3. Dividends Proposed The dividend will be payable on 20th November 1998 to shareholders on the Register at the close of business on 9th October 1998. 4. Earnings per Ordinary Share The earnings per ordinary share have been calculated on Group Profit (after tax, minority interests, preference dividends and exceptional costs) of #2,894m (1997: #3,144m) and on a weighted average of issued ordinary shares of 21,044,501 (1997: 21,024,024). The fully diluted earnings per share are calculated on a weighted average of 21,616,929 shares (1997: 21,634,975). On the face of the Group Profit and Loss Account, earnings per share are shown both including and excluding exceptional costs. The Directors believe that for 1998 the calculation for earnings per share excluding the exceptional costs together with the associated tax relief gives the most appropriate measure of the underlying earnings capacity of the Group. 5. Foreign Currency Exchange Rates 1998 Half-year 1997 Half-year 1997 Year-end Average As at Average As at Average Year end 30.06.98 30.06.97 Deutschmark 3.00 3.02 2.77 2.89 2.85 2.96 US Dollar 1.66 1.66 1.63 1.66 1.64 1.64 Portuguese Escudo 307.12 309.00 278.55 291.72 288.38 302.64 French Franc 10.06 10.12 9.34 9.73 9.58 9.90 Dutch Guilder 3.38 3.40 3.11 3.25 3.21 3.34 Italian Lira 2,958.68 2,967.36 2,739.73 2,824.86 2,808.99 2,906.98 Ukrainian Hryvna 3.38 3.45 2.88 2.94 2.98 3.12 Singapore Dollar 2.74 2.88 2.33 2.38 2.45 2.78 Hong Kong Dollar 12.82 12.89 12.65 12.88 12.69 12.72 Indonesian Rupiah 17,274.14 25,000.00 3,937.01 4,048.58 4,816.19 7,708.79 Thai Baht 70.88 70.49 42.08 43.01 52.71 78.99 If the average exchange rates extant for the half-year in 1997 had been applicable in 1998, turnover would have been approximately #52.9m and profit before taxation approximately #5.5m. 6. The interim results are unaudited. The financial information does not amount to full accounts within the meaning of section 20 of the Companies Act 1985 (as amended). Full accounts for the year to 31 December 1997 with an unqualified audit report have been filed with the Registrar of Companies. Further copies of the Interim Statement are available from: The Company Secretary WATTS BLAKE BEARNE & CO PLC Park House, Courtenay Park Newton Abbot TQ12 4PS Telephone: +44(0) 1626 332345 Fax: +44(0)1626 332344 END IR SELFUAUAUFEU
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