Clyde Process Solutions plc - Final Results
27 May 2009
Clyde Process Solutions plc
(“CPS” together with its subsidiaries, the “Group”)
Preliminary Results Statement for the year ended 28 February 2009
Clyde Process Solutions plc (AIM: CPSP), a provider of customer-driven, material handling solutions for process industries, announces its preliminary results for the year ended 28 February 2009, a period in which the Group has delivered record performance in a challenging economic environment.
Financial highlights
- Group revenue increased 33% to £82.0 million (2008: £61.6 million)
- Operating profit before exceptionals increased 21% to £6.3 million (2008: £5.2 million)
- Profit before tax increased 62% to £5.5 million (2008: £3.4 million)
- EBITDA before exceptionals increased 10% to £7.1 million (2008: £6.5 million)
- Fully diluted EPS rose 16% to 9.28p (2008: 8.03p)
The preliminary results cover, for the first time, twelve months of trading for the Group’s combined entities, MAC Equipment (“MAC”), which was acquired in April 2007, and Clyde Materials Handling (“CMH”).
Operational highlights
- Full integration of the Group’s combined entities in North America, generating significant order wins
- Strong forward order book of £28.1 million at the year end (2008: £25.0 million), which has risen to £32.0 million at the end of April 2009
- Full strategic review of operations successfully completed and yielding results
- Agreed revised banking facility to provide long-term funding and suitable levels of headroom
- Strongly diversified strategy across technologies, customer markets and geographical territories
Commenting on the results, Jim McColl, Chairman of Clyde Process Solutions plc said: “Through the implementation of a well diversified strategy, which has been complemented by focusing on customer contact, costs, credit and cash, the Group has been able to deliver record results in what has been a challenging macro-economic environment.”
“By fully integrating the Group’s combined entities in North America we have been able to secure significant orders, particularly in the food industry, and we believe that this combination will continue to generate contract wins across our other geographical territories. Our key customer markets continue to seek solutions that can reduce energy and the environmental impact of their operations and we believe that our Group is well positioned with the technologies, market focus and global network to solve these challenges, as well as building on these record results.”
- Ends –
For further information please contact:
Clyde Process Solutions plc
Nominated Adviser
James Caithie Tel: +44 (0) 207 492 4777
Dowgate Capital Advisers Limited
Broker
Chris Hardie Tel: +44 (0) 207 398 1600
Arden Partners
Media enquiries
Abchurch Tel: +44 (0) 207 398 7719
Chris Lane / George Parker
Chairman’s and Chief Executive’s Statement
We are pleased to present our financial results for the year ended 28 February 2009, a period in which Clyde Process Solutions plc has delivered record performance in a challenging economic environment.
For the first time, these results reflect a full twelve months of trading for the Group’s combined entities, MAC and CMH. MAC was acquired in 2007 and has proven to be an excellent acquisition for the Group. During the period under review, the Group has fully integrated its North American operations to form a singular presence across all key customer markets. The benefits of this combination can be seen through securing approximately £13 million of contracts in the US sugar industry alone, which was achieved by blending the Group’s pneumatic conveying technology and process expertise with its sales network in this territory. The Group aims to achieve full integration of its global operations in the forthcoming financial year.
During the second half of the financial year, the Group experienced a softening in trading conditions as a direct result of the slowdown of the global economy, particularly in the iron and steel industry, where two substantial contracts from European steel plants were postponed. To address this issue the Board instigated, in January 2009, a full strategic review of the Group’s operations, as well as four key initiatives focused on customer contact, controlling costs, credit control procedures and managing cash.
Since the implementation of these key initiatives, the Group has successfully managed to convert orders and increase its pipeline of prospects, as well as managing costs, credit and cash.
The Board is pleased to report that as a result of these strategic decisions, which have been complemented by underlying strategies, the Group has generated and delivered record levels of order intake, revenue, profits and earnings. Furthermore, the results for the financial year would have been even stronger if macro-economic conditions had remained buoyant.
The diversification across pneumatic conveying and air filtration technologies, key customer markets and geographical territories has been one of the Group’s greatest strengths. The combination of CPS’s entities has enabled the Group to broaden its expertise in North America and key customer markets such as food and chemicals, where the Group continues to experience strong demand for its solutions. The enlarged presence in North America accounts for over 70% of Group revenue, which has had a positive impact on overall financial performance due to the strengthening of the US dollar against a weakening sterling.
The Board remains confident that the enlarged Group will continue to generate significant synergies in the forthcoming financial year across all geographical territories.
Performance
The Group’s financial performance has reached record levels in the last twelve months, which has been achieved, in part, by adopting a global strategy focused on solving energy and environmental issues for an array of key customer markets, which include food, chemicals, metals, minerals and grain. The financial results include, for the first time, twelve months trading for the enlarged Group.
In 2009, total Group revenue grew by £20.4 million to £82.0 million, an increase of 33% on last year (2008: £61.6 million). Operating profit before exceptionals grew by 21% to £6.3 million (2008: £5.2 million), with profits attributable to equity shareholders for the year also rising by 23% to £3.7 million (2008: £3.0 million). In addition, Group Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) before exceptionals for the year have risen by 10% to £7.1 million (2008: £6.5million). If the results for the enlarged Group in the year ended 29 February 2008 had included a full twelve months trading for CPS North America, rather than ten and a half months accounted, performance against the period under review would still have shown significant growth in revenue and profits.
The fully diluted earnings per share (EPS) rose to 9.28p from the previous year comparative of 8.03p, equating to a 16% increase. This comparison emphasises the earnings enhancing nature of the MAC acquisition. Furthermore, the impact of the strengthening of the US dollar against a weakening sterling has generated a significant impact to the financial performance of the Group. With over 70% of Group revenues emanating from North America, CPS has benefited £0.7million at an operating profit level.
In addition, as part of the funding requirement for the acquisition of MAC by the Group, it was decided to put in place an inter company loan. This loan was secured in US dollars and was provided by the Group. The Board took the decision to secure an appropriate form of arrangement which will eliminate the exchange exposure on this item moving forward. This has locked in a gain of £1.6 million from this exchange item and has significantly reduced finance costs for the year ended 28 February 2009.
Strategy
Group strategy in recent years has comprised of three core principles:
- Market driven approach
- Customer focused relationships
- Development and implementation of innovative solutions
The Group has, during the period under review, continued to direct its efforts in developing and delivering on these three principles.
Through interaction with key customer markets, the Group has identified a range of common issues that producers in these industries are focused on solving. These include reducing energy costs, reducing maintenance costs, reducing the environmental impact of operational processes, as well as improving productivity – issues which can be solved by deploying CPS’s pneumatic conveying and air filtration technologies.
This well diversified strategy has focused business development, aftermarket and research and development initiatives in generating a sales pipeline of prospects which have been converted into orders secured at competitive levels of contribution.
Board
We would like to thank our colleagues on the Board for their energy, commitment and continued support during the financial year.
Global Operations
The macro-economic environment has created challenging trading conditions for each of the Group’s global subsidiaries, notably within the iron and steel industry, where customers have experienced a significant reduction in demand. The global steel industry has responded to this decline in demand by cutting production, reducing expansion and capital investments. The Group has seen these macro-economic conditions impact on the steel industry significantly in Europe and South America during the period under review.
However, both the Group’s European and South American subsidiaries have responded positively to this development by directing their business development strategies at other key customer markets, which include food, grain and minerals whilst also starting to absorb the air filtration technology portfolio into their businesses.
§ North America
CPS’s North American operations have played a significant role in the growth and development of the Group by securing contracts across a range of key customer markets. Demand for CPS’s technologies across the food industry remains strong, with enquiries and orders being secured throughout the period. CMH technologies have now been fully integrated with MAC’s sales network and operational infrastructure in North America. Outstanding successes have been generated in the sugar industry by winning over £13 million of contracts. As well as consolidating the Group’s market leading presence in current key customer markets, the Group is, for example, accelerating business development initiatives across the petrochemical industry, as well as focusing on air filtration and aftermarket sales. While decision making processes remain changeable, the Group anticipates its North American operations will contribute significantly to the Group in the forthcoming financial year.
§ Europe
European operations have found trading conditions challenging, especially during the second half of the financial year. In particular, the Group had two postponements of substantial contracts from European steel plants. The Group’s customers have stressed that these projects will be resurrected in due course when steel demand returns to sustainable levels. The Group has worked closely with these customers to conclude the status of work completed and negotiated compensation due in light of these postponements. These projects, which involved the Group installing technology to transport coal, are not anticipated to resume until 2010. These projects represented, at an order intake level, approximately £5 million to the Group. By focusing on customer contact, controlling costs, credit procedures and cash, the Group has generated a nominal profit from its European operations and believes that while trading conditions will continue to remain challenging in Europe, the focus and energy on business development strategies will yield positive returns in the forthcoming financial year.
§ Asia
Asian operations have performed steadily, securing contracts predominately within the metals industry during the period under review. The Group has increased the resource pool within its Chinese operations as the Group prepares the business for growth in the forthcoming financial year. The Group has also initiated business development strategies within the petrochemical and cement industries, as well as completing a market assessment for air filtration technologies in this geographical territory. The Board is confident that the energy and environmental benefits created from the Group’s range of air filtration solutions will be appealing to the Chinese market in the months ahead. The Group is currently establishing plans to take its air filtration technologies to the Chinese market.
§ South America
South American operations have suffered severely from the slowdown in the global economy. Several orders were postponed and cancelled in the second half of the year, particularly in the steel industry. This has resulted in the South American operation generating a loss for the year. However, the Group’s focus on costs, cash and customer contact in recent months, has enabled it to diversify into other key customer markets outside of the steel industry, such as food, chemicals and grain. This has been complemented by introducing the Group’s air filtration solutions into its existing South American sales network and operational infrastructure. While trading conditions will remain challenging for the Group’s South American operations, the Board is confident that by developing a more diversified set of business development strategies, this division will return to profitability in the next financial year.
§ South Africa
In November 2008, the Group opened a new operating subsidiary in South Africa, which is being supported by strong and experienced local management. This new operating subsidiary has enabled the Group to have a stronger presence in the South African market, which is rich in both minerals and metals. Three months after forming this new subsidiary, the team secured a £1 million contract in the platinum industry, which confirmed the market potential that exists for the Group’s technologies in this territory. The Board believes that in establishing a solid operating subsidiary in this new territory there is significant potential for future growth.
People
The Group’s record levels of performance in the financial year are testament to the focus, hard work and dedication of each member of its global teams. We would like to thank each and every employee for their considerable efforts. The Board is extremely grateful for the support of the Group’s people and we encourage them during this challenging economic climate to sustain the drive that has led to the development of our global Group during this period.
Dividend
The Board has, in the last calendar year, issued maiden final and interim dividends to shareholders. However, given the continued challenging market conditions, the Board has taken the prudent view that cash should be retained in the business to strengthen its balance sheet, rather than paid out as dividends in the short term.
Therefore, the Board will not be recommending a final dividend to shareholders but plans to re-adopt a progressive dividend policy, subject to the availability of distributable reserves, and the retention of funds required to finance future growth, once the macro economic situation has improved and the Group has benefited from renewed growth.
Funding
The Group has entered the new financial year in a positive net cash position, with strong, long-term funding in place and the support of its bank. Recently revised terms with CPS’s bank and an amended banking facility has been agreed following a detailed review of the Group’s business, strategy, operational plan and financial projections. The Board felt it appropriate to renegotiate the Group’s banking facility in order to provide long-term funding and suitable levels of headroom given the backdrop of the current macro-economic environment.
This updated facility will provide the Group with prudent levels of headroom as it continues to develop and grow globally. At the end of February 2009 net debt stood at £18.9 million, including cash and cash equivalents of £6.5 million.
The Group’s debt position, as translated into sterling, appears to have increased from the last year end, due to the retranslation of the US dollar denominated debt into sterling. The US dollar debt itself has reduced through the scheduled repayments in the period.
The Board is confident that the revised bank covenants are appropriate for current market conditions and the Group’s trading outlook over the term of the facility. The Board shall continue to focus on working capital management, which is supported by a sustainable, long-term banking facility, which is in place to 2013.
Outlook
The Group enters the 2009 financial year with a strong order book of £28.1 million, which has risen to £32.0 million at the end of April 2009, and has been complemented by a diversified strategy covering a range of technologies, key customer markets and geographical locations. Both these order book figures include £3.5 million of postponed orders from European steel plants. The key initiatives implemented at the beginning of 2009 will continue to be driven forward over the coming months as we aim to navigate our Group through the current economic climate.
The Group will focus on generating significant customer contact, ensuring that its energy efficient, environmentally beneficial pneumatic conveying and air filtration solutions remain at the forefront of capital investment projects; management will control costs across the Group without restricting its business development activities; the Group will remain vigilant to the credit positions of all its customers; and will focus on cash generation across its global operations. The Group will also continue with its strategy of diversification within key geographical markets.
As many global economies predict a decline in growth over the next twelve to eighteen months, the Board anticipates trading conditions to remain challenging during this financial year. The unprecedented stimulus packages provided by the major economies of the world will hopefully result in infrastructure and construction projects being rejuvenated in the next year, helping to fuel demand in commodities such as steel and cement.
A degree of uncertainty surrounds the capital investment projects of the Group’s key customer markets but the Board believes there are opportunities for pneumatic conveying and air filtration in all key customer markets and is committed to the continual implementation of global business development strategies that have generated record financial results for the Group thus far. The Board believes demand for the Group’s technologies in markets such as food, chemicals and grain will remain buoyant, with short term prospects in metals and minerals to continue to be affected by current macro-economic conditions.
The Board believes the medium to long term growth prospects for the Group’s technologies remain strong, which is underpinned by the key drivers of energy and the environment. The Group remains focused on targeting and securing orders across its key customer markets and hopes, as macro-economic conditions improve, for levels of contribution to increase with these orders.
The Group’s strategic diversity gives the Board confidence in delivering long term growth and returns for the Group’s shareholders. The Board strongly believes CPS is well equipped with the technologies, market focus and global network to build on these record results.
Jim McColl Alex Stewart
Chairman Chief Executive
27 May 2009
Consolidated Income Statement
for the year ended 28 February 2009
| Note | Year ended 28 February 2009 | Year ended 29 February 2008 | |
| £’000 | £’000 | ||
| Revenue | 2 | 81,956 | 61,597 |
| Cost of sales | (61,494) | (46,079) | |
| Gross profit | 20,462 | 15,518 | |
| Distribution costs | (6,780) | (5,169) | |
| Administrative costs | (8,069) | (5,316) | |
| Other income | 166 | 181 | |
| Operating profit | 5,779 | 5,214 | |
| Analysed as: | |||
| Operating profit before exceptional items | 6,251 | 5,214 | |
| Exceptional items | 3 | (472) | - |
| Finance income | 1,814 | 113 | |
| Finance expense | (2,043) | (1,894) | |
| Net finance costs | 4 | (229) | (1,781) |
| Share of loss of joint venture | (15) | (5) | |
| Profit before taxation | 5,535 | 3,428 | |
| Current taxation | (1,703) | (862) | |
| Deferred tax charge | (76) | (350) | |
| Recognition of previously unrecognised deferred tax assets | - | 835 | |
| Taxation | (1,779) | (377) | |
| Profit for the period | 3,756 | 3,051 | |
| Profit attributable to minority interest | 7 | 24 | |
| Profit attributable to equity shareholders | 9 | 3,749 | 3,027 |
Earnings per share for profit attributable to the equity holders of the Company during the year
| Basic earnings per share | 5 | 9.91p | 10.31p |
| Diluted earnings per share | 5 | 9.28p | 8.03p |
Group Statement of Recognised Income and Expense
for the year ended 28 February 2009
| Year ended 28 February 2009 | Year ended 29 February 2008 | ||
| £’000 | £’000 | ||
| Net exchange differences on retranslation of foreign operations | 7,508 | 11 | |
| Exchange differences on translation of minority interests | 3 | - | |
| Actuarial (loss) / gain recognised on retirement benefit obligations | (4,835) | 1,201 | |
| Deferred tax movement on retirement benefit obligations | 1,354 | 807 | |
| Movement in interest rate hedging reserve | 183 | (746) | |
| Movement in exchange rate hedging reserve | (476) | - | |
| Deferred tax movement on hedging reserves | 64 | 282 | |
| Net gains recognised directly in equity | 3,801 | 1,555 | |
| Profit for the period | 3,756 | 3,051 | |
| Total recognised income for the period | 7,557 | 4,606 | |
| Attributable to: | |||
| Profit attributable to minority interest | 7 | 24 | |
| Exchange differences on retranslation of minority interest | 3 | - | |
| Total attributable to minority interest | 10 | 24 | |
| Equity shareholders of the parent | 7,547 | 4,582 |
Consolidated Balance Sheet
at 28 February 2009| Note | Year ended 28 February 2009 | Year ended 29 February 2008 | |
| £’000 | £’000 | ||
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 61,667 | 46,100 | |
| Property, plant and equipment | 10,856 | 7,850 | |
| Deferred income tax assets | 4,215 | 2,320 | |
| 76,738 | 56,270 | ||
| Current assets | |||
| Inventories | 5,486 | 3,819 | |
| Trade and other receivables | 21,080 | 15,980 | |
| Current tax receivable | 21 | 8 | |
| Derivative financial instruments | 42 | 3 | |
| Cash and cash equivalents | 7 | 6,486 | 4,587 |
| 33,115 | 24,397 | ||
| LIABILITIES | |||
| Current liabilities | |||
| Bank borrowings and finance leases | 8 | (2,019) | (992) |
| Trade and other payables | (27,000) | (19,774) | |
| Current income tax liabilities | (718) | (216) | |
| Provisions for liabilities and charges | (933) | (610) | |
| Derivative financial instruments | (1,068) | (345) | |
| (31,738) | (21,937) | ||
| Net current assets | 1,377 | 2,460 | |
| Non-current liabilities | |||
| Deferred income tax liabilities | (10,362) | (7,233) | |
| Bank borrowings and finance leases | 8 | (23,353) | (18,190) |
| Investment in joint venture | (35) | (14) | |
| Retirement benefit obligations | (6,588) | (2,207) | |
| Derivative financial instruments | (222) | (441) | |
| Other non-current liabilities | (78) | (84) | |
| (40,638) | (28,169) | ||
| Net Assets | 37,477 | 30,561 | |
| SHAREHOLDERS EQUITY | |||
| Ordinary shares | 9 | 10,094 | 8,044 |
| Share premium | 9 | 24,529 | 18,377 |
| Earn-out shares | 9 | - | 8,202 |
| Other reserves | 9 | (2,586) | (9,865) |
| Retained earnings | 9 | 5,409 | 5,782 |
| Total equity attributable to shareholders | 37,446 | 30,540 | |
| Minority interests | 31 | 21 | |
| Total equity | 37,477 | 30,561 |
Consolidated Cash Flow Statement
for the year ended 28 February 2009| Note | Year ended 28 February 2009 | Year ended 29 February 2008 | |
| £’000 | £’000 | ||
| Cash flows from operating activities | |||
| Cash generated from operations | 6 | 6,188 | 6,907 |
| Tax paid | (1,301) | (293) | |
| Net cash flow from operating activities | 4,887 | 6,614 | |
| Cash flows from investing activities | |||
| Interest received | 141 | 113 | |
| Cash acquired on purchase of subsidiary | - | 2,357 | |
| Proceeds from sale of property, plant and equipment | 43 | 18 | |
| Purchases of intangible fixed assets | (3) | (53) | |
| Purchases of property, plant and equipment | (1,102) | (740) | |
| Net cash flow from investing activities | (921) | 1,695 | |
| Cash flows from financing activities | |||
| Financing costs paid | (2,023) | (1,766) | |
| Proceeds from issue of ordinary share capital (net of issue costs) | - | 20,995 | |
| Repayment of borrowings | (1,129) | (43,710) | |
| Proceeds from borrowings | - | 19,980 | |
| Loan to joint venture | (21) | - | |
| Repayment of capital element of finance leases | (31) | (37) | |
| Dividends paid to shareholders | (641) | - | |
| Net cash flow from financing activities | (3,845) | (4,538) | |
| Increase in cash and cash equivalents | 121 | 3,771 | |
| Effect of exchange rates on cash and cash equivalents | 1,778 | 85 | |
| Cash and cash equivalents at the beginning of the period | 4,587 | 731 | |
| Cash and cash equivalents at the end of the period | 7 | 6,486 | 4,587 |
1. Notes to the preliminary resultsGeneral InformationClyde Process Solutions plc (the Company) is a public limited company incorporated and domiciled in England. The Company has a primary listing on the AIM stock exchange. The address of its registered office and principal place of business is Carolina Court, Lakeside, Doncaster, DN4 5RA.
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, IFRIC interpretations and the Companies Act 1985 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified for financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in the financial statements.
The consolidated financial statements are presented in Sterling and all values are rounded to the nearest £’000 except where otherwise indicated.
2. Segmental information
Primary reporting format - geographical segments
The segment result for the year to 28 February 2009 is as follows:
| Europe | North America | South America | Asia | Africa | Unallocated | Total | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
| Total segment revenue | 15,303 | 60,589 | 2,304 | 5,019 | 337 | - | 83,552 |
| Inter-company segment revenue | (640) | (132) | - | (824) | - | - | (1,596) |
| External segment revenue | 14,663 | 60,457 | 2,304 | 4,195 | 337 | - | 81,956 |
| Operating profit before exceptionals | 469 | 6,467 | (248) | 226 | 62 | (725) | 6,251 |
| Exceptional items | (83) | (372) | (17) | - | - | - | (472) |
| Operating profit/(loss) | 386 | 6,095 | (265) | 226 | 62 | (725) | 5,779 |
| Net finance (costs)/income | (151) | (2,334) | 29 | 2 | (4) | 2,229 | (229) |
| Share of loss of joint venture | - | - | - | (15) | - | - | (15) |
| Profit before taxation | 235 | 3,761 | (236) | 213 | 58 | 1,504 | 5,535 |
| Taxation expense | - | - | - | - | - | (1,779) | (1,779) |
| Profit / (loss) for the period | 235 | 3,761 | (236) | 213 | 58 | (275) | 3,756 |
| Europe | North America | South America | Asia | Africa | Unallocated | Total | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
| Amortisation of intangible fixed assets | 20 | 172 | - | - | - | - | 192 |
| Impairment of trade receivables | 43 | 130 | - | 1 | 48 | - | 222 |
| Depreciation of tangible fixed assets | 165 | 492 | 35 | 13 | - | - | 705 |
Secondary reporting format – business segments
The segmental information for the year to 28 February 2009 is as follows:| Materials Handling | Filtration | Total | |
| £’000 | £’000 | £’000 | |
| Total segment revenue | 62,577 | 20,975 | 83,552 |
| Inter-company segment revenue | (1,596) | - | (1,596) |
| External segment revenue | 60,981 | 20,975 | 81,956 |
3. Exceptional items
During the period, severance payments totalling £330,000 were made to the former CEO of MAC Equipment Inc, a 100% subsidiary of Clyde Process Solutions plc. In addition severance payments totalling £142,000 were made to other Group employees as part of a headcount reduction in reaction to more difficult global trading conditions. These costs have been disclosed as exceptional items in the income statement.
4. Net finance costs
| Year ended 28 February 2009 | Year ended 29 February 2008 | ||
| £’000 | £’000 | ||
| Interest on bank overdrafts | 63 | 123 | |
| Interest on borrowings | 1,514 | 1,300 | |
| Finance lease interest | 12 | 22 | |
| Other interest costs | 7 | - | |
| Net foreign exchange loss on financing activities | - | 207 | |
| Working capital facility non-utilisation fees | 73 | 32 | |
| Net finance cost on retirement benefit obligation | 194 | 67 | |
| Interest rate swap hedge ineffectiveness charge | 114 | - | |
| Working capital arrangement fee and other similar charges | 66 | 143 | |
| Total finance expense | 2,043 | 1,894 | |
| Net foreign exchange gain on financing activities * | (1,673) | - | |
| Interest receivable | (141) | (113) | |
| Total finance income | (1,814) | (113) | |
| Net finance costs | 229 | 1,781 |
* During the year there was a £1.673m gain on a $10m inter-group loan. Hedging instruments have been put in place to prevent any further exchange gain or loss arising.
5. Earnings per ordinary share
The basic earning per share is calculated by dividing the earnings attributable to ordinary shareholders for the financial period by the weighted average number of shares in issue. In calculating the diluted earning per share, warrants and earn-out shares outstanding have been taken into account.
| Year ended 28 February 2009 | Year ended 29 February 2008 | ||
| Profit for the period (£’000) | 3,749 | 3,027 | |
| Weighted average number of shares (number) | 37,815,006 | 29,361,855 | |
| Effect of outstanding share warrants | 5,260 | 120,000 | |
| Effect of earn-out shares | - | 8,201,948 | |
| Effect of earn-out shares up to date of issue | 2,561,704 | - | |
| Adjusted weighted average number of shares (number) | 40,381,970 | 37,683,803 | |
| Basic earnings per share | 9.91p | 10.31p | |
| Diluted earnings per share | 9.28p | 8.03p |
On 18 June 2008 8,201,948 new ordinary shares were issued for nil further consideration under the terms of the acquisition agreement for Clyde Materials Handling Limited.Share warrants exercisable at any time up to 16 March 2008 have now lapsed without exercise. There are no further share warrants outstanding.
6. Cash flows from operations
| Year ended 28 February 2009 | Year ended 29 February 2008 | ||
| £’000 | £’000 | ||
| Operating profit | 5,779 | 5,214 | |
| Amortisation & fair value uplift reversal | 192 | 812 | |
| Depreciation | 705 | 486 | |
| Loss on disposal of property, plant & equipment | 21 | 13 | |
| Loss on hedging instruments direct to equity | (270) | - | |
| Retirement benefit obligation | (648) | (539) | |
| (Increase)/decrease in inventories | (251) | 139 | |
| Increase in trade & other receivables | (1,108) | (2,655) | |
| Increase in trade & other payables | 1,649 | 3,464 | |
| Increase/(decrease) in provisions for liabilities and charges | 119 | (27) | |
| Cash generated from operations | 6,188 | 6,907 |
7. Cash and cash equivalents
The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies:
| 28 February 2009 | 29 February 2008 | ||
| £’000 | £’000 | ||
| Pound Sterling | (1,059) | 1,638 | |
| US Dollar | 6,906 | 2,664 | |
| Chinese Renminbi | 464 | 208 | |
| Brazilian Real | 154 | 127 | |
| South African Rand | 27 | - | |
| Euro | (14) | (12) | |
| Canadian Dollar | 8 | (38) | |
| 6,486 | 4,587 |
| 28 February 2009 | 29 February 2008 | ||
| £’000 | £’000 | ||
| Current | |||
| Bank borrowings | 1,995 | 964 | |
| Current obligations under finance leases | 24 | 28 | |
| 2,019 | 992 | ||
| Non-current | |||
| Bank borrowings | 23,310 | 18,127 | |
| Non-current obligations under finance leases | 43 | 63 | |
| 23,353 | 18,190 | ||
| Total borrowings | 25,372 | 19,182 |
| US Dollar Loans | US Dollar finance leases | GBP finance leases | Total | |||
| Amounts in USD | Translated to GBP | Amounts in USD | Translated to GBP | GBP | GBP | |
| Borrowings at 1 March 2008 | 37,977 | 19,091 | 58 | 29 | 62 | 19,182 |
| Repayments (net of interest) | (2,000) | (1,129) | (38) | (21) | (9) | (1,159) |
| Arrangement fee amortisation | 93 | 53 | - | - | - | 53 |
| Exchange translation effect | - | 7,290 | - | 6 | - | 7,296 |
| Borrowings at 28 February 2009 | 36,070 | 25,305 | 20 | 14 | 53 | 25,372 |
| Equity share capital | Share premium account | Earn-out shares | Other reserves | Retained earnings | Total equity | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
| Balance at 1 March 2007 | 2,568 | 2,898 | 9,500 | (10,556) | 747 | 5,157 |
| Profit attributable to Shareholders | - | - | - | - | 3,027 | 3,027 |
| Exchange adjustments on translation | - | - | - | 11 | - | 11 |
| New shares issued in the year | 5,476 | - | - | - | - | 5,476 |
| Premium on issue of ordinary share capital | - | 15,479 | - | - | - | 15,479 |
| Fair value loss on cash flow hedges | - | - | - | (746) | - | (746) |
| Deferred tax asset on cash flow hedging liability | - | - | - | 282 | - | 282 |
| Amendment to earn-out shares | - | - | (1,298) | 1,144 | - | (154) |
| Deferred tax asset on retirement benefit obligation | - | - | - | - | 807 | 807 |
| Actuarial gain on retirement benefit obligations | - | - | - | - | 1,201 | 1,201 |
| Balance at 29 February 2008 | 8,044 | 18,377 | 8,202 | (9,865) | 5,782 | 30,540 |
| Balance at 1 March 2008 | 8,044 | 18,377 | 8,202 | (9,865) | 5,782 | 30,540 |
| Profit attributable to Shareholders | - | - | - | - | 3,749 | 3,749 |
| Dividends paid to Shareholders | - | - | - | - | (641) | (641) |
| Exchange adjustments on translation | - | - | - | 7,508 | - | 7,508 |
| Earn-out shares issued in the year | 2,050 | 6,152 | (8,202) | - | - | - |
| Actuarial loss on retirement benefit obligations | - | - | - | - | (4,835) | (4,835) |
| Deferred tax movement on actuarial loss | - | - | - | - | 1,354 | 1,354 |
| Fair value movement on interest rate hedging | - | - | - | 183 | - | 183 |
| Fair value movement on exchange rate hedging | - | - | - | (476) | - | (476) |
| Deferred tax movement on hedging reserves | - | - | - | 64 | - | 64 |
| Balance at 28 February 2009 | 10,094 | 24,529 | - | (2,586) | 5,409 | 37,446 |
10. Earnings before interest, tax, depreciation & amortisation
The earnings before interest, tax, depreciation & amortisation (“EBITDA”) as referred to in the Chairman’s and Chief Executive’s Statement is calculated as follows:
| Year ended 28 February 2009 | Year ended 29 February 2008 | ||
| £’000 | £’000 | ||
| Operating profit | 5,779 | 5,214 | |
| Less share of joint venture losses | (15) | (5) | |
| Plus depreciation | 705 | 486 | |
| Plus amortisation | 192 | 535 | |
| Plus inventory fair value write off | - | 237 | |
| EBITDA | 6,661 | 6,467 | |
| Add back exceptional costs | 472 | - | |
| EBITDA before exceptionals | 7,133 | 6,467 |
11. Availability of Accounts
Copies of the full Report and Accounts for the year ended 28 February 2009 will be made available to shareholders. Further copies will be available from Carolina Court, Lakeside, Doncaster, DN4 5RA.