RNS Number:5918Q
Chemetall PLC
28 January 2002
Chairman's Statement and
Results for period ending 30 September 2001
For the financial year ending 30 September 2001, the Group has continued the
process of rationalising the Chemetall PLC business to become a UK, Ireland &
Middle East orientated surface treatment chemicals manufacturing organisation.
Our key strategic achievements have been the creation of a faster moving
chemicals division directed towards process chemistry for service industries and
the re-establishment of our business position in the Middle East region.
Continuing operations
Turnover (which includes the UK surface treatment business of Chemetall
Speciality Chemicals Ltd acquired in July 2000) was £14.7 million in the twelve
months to 30 September 2001. Operating profit was £0.9 million compared to an
operating loss, for continuing activities before non-recurring items, of £2.9
million in the nine months to 30 September 2000.
Earnings before tax was £5.6 million largely due to interest income generated
by the investment of the proceeds of the disposal of the Group's overseas
businesses completed in the previous financial period.
Current trading and prospects
The short-term outlook will reflect the slowdown in the UK manufacturing sector.
Sales in the service sector are expected to partially offset this effect.
Sales to the UK automotive sector remain difficult. Recently announced closures
of some key automotive component customers will see sales fall in this market
segment. We will continue the process of adding value to our business by
selling a more diversified product range to existing customers. Operating
margins have been improved during the year through selective price increases and
better raw material procurement. The September 11th effect presents us with
certain business risks especially in the Aerospace sector. As a result, we will
keep a very close watch on operating costs, cash flow and capital expenditure
during the coming twelve months.
The Group continues to generate significant interest income from the loans it
holds with fellow Chemetall group companies.
Employees
We thank our employees, distributors and trading partners for their
dedication and professionalism in helping us to achieve a positive result in
difficult trading circumstances. We remain optimistic that together we can
continue to move the business forward.
Dividends
No interim dividends have been paid to the ordinary shareholders and
no final dividend is proposed. Preference dividends continue to be paid on the
normal due dates.
Alec Daly CBE
Chairman
Operating and financial review
These accounts cover the year ended 30 September 2001. In order to bring the
financial year of Chemetall PLC into line with that of its parent company, the
financial year was changed in the year 2000. Comparative figures therefore
cover a nine-month period to 30 September 2000. It was not considered cost
effective to compile pro-forma comparative figures for the twelve months ended
30 September 2000.
The results for the year ended 30 September 2001 are dominated by inter-group
loan interest payable by Chemetall GmbH or one of its subsidiaries. The loans
arose on the sale of the overseas businesses to various members of the Chemetall
Group and these loans carry commercial rates of interest.
Trading Results
In accordance with FRS3 all businesses sold in the nine months to 30 September
2000 have been treated as discontinued.
Continuing Business
Despite continuing difficult market conditions in the UK, turnover of £14.7
million was achieved in the twelve months to 30 September 2001. The turnover in
the nine months to 30 September 2000 was £9.4 million. The prior period figure
included £0.8 million from the acquisition of the surface treatment business of
Chemetall Speciality Chemicals Limited acquired in July 2000.
The continuing business figures also include the remaining costs of the head
office and divisional and technical activities associated with the former
overseas subsidiaries. These costs have been radically rationalised and will
continue to be reduced in future.
Profit Performance and Analysis
In addition to the trading profit the group received considerable interest
income mainly from Chemetall GmbH and its subsidiaries. The group also
benefited from exchange gains of £0.8m on these outstanding loans to group
undertakings.
Intangible fixed assets
During the year, patents and trademarks were reviewed and assets with a net book
value of £18,000 were written off.
Cash Flow
The net cash inflow from operating activities was £0.4 million
(2000: outflow £0.2m).
Financing
Included in the net assets of £79.6 million were a total of £72.1 million owed
by Chemetall GmbH or its subsidiaries, on loans which carry commercial rates of
interest, and net cash of £0.2 million.
Taxation
The net tax charge for the period was £0.1 million. A tax charge of £1.1
million arose on interest and exchange gains on inter-group loans and a tax
credit of £1.0 million in respect of deferred tax.
Treasury Policies
The Group's treasury policies, which are approved by the board, seek to
eliminate risk from currency movements affecting sales and purchases denominated
in foreign currencies. We use instruments such as forward currency sale or
purchase contracts where practical and cost effective.
Where appropriate, the Group's financial systems are able to transact business
denominated in foreign currencies.
New Accounting Policies and Standards
The Group has adopted FRS17 - Accounting for Pension Costs - insofar as the
information has been given on the closing Balance Sheet numbers in a note to the
accounts.
Consolidated profit and loss account
for the year ended 30 September 2001
12 months ended 30 September 2001 9 months ended 30 September 2000
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Note £000 £000 £000 £000 £000 £000
Group Turnover
Existing business 14,688 - 14,688 8,684 10,068 18,752
Acquisition - - - 753 - 753
_______ _______ _______
2,3 14,688 - 14,688 9,437 10,068 19,505
Group operating profit/(loss)
before exceptional operating
items:
Existing business 3 865 - 865 (2,956) 337 (2,619)
Acquisition 3 - - - 32 - 32
_____ ____ ____ _______ ____ ______
865 - 865 (2,924) 337 (2,587)
Exceptional operating
items 3 - - - (2,107) (13) (2,120)
_____ ____ ____ _______ ____ ______
3 865 - 865 (5,031) 324 (4,707)
Profit on disposal of
discontinued operations - - - - 12,470 12,470
_____ ______ _____ ______ ______ ______
Profit/(loss) on ordinary
activities before interest 865 - 865 (5,031) 12,794 7,763
===== ====== ===== ======= ====== ======
Net interest receivable and
similar income 4,741 2,202
_____ _____
Profit on ordinary activities
before taxation 2 5,606 9,965
Taxation on profit on
ordinary activities (129) 482
_______ _____
Profit for the financial year 5,477 10,447
Preference dividends 4 (1,080) (810)
_______ _______
Retained profit for the
year 8 4,397 9,637
Consolidated balance sheet
at 30 September 2001
Note 2001 2001 2000 2000
£000 £000 £000 £000
Fixed assets
Intangible assets 3,458 3,705
Tangible assets 1,789 2,000
5,247 5,705
Current assets
Investments 1,319 1,399
Stocks 1,103 1,004
Debtors 80,562 80,047
Cash at bank and in hand 171 543
83,155 82,993
Creditors: amounts falling due within one year (7,652) (11,987)
Net current assets
Due within one year 75,503 50,035
Debtors due after more than one year - 20,971
75,503 71,006
Total assets less current liabilities 80,750 76,711
Provisions for liabilities and charges (1,155) (3,029)
Net assets 79,595 73,682
Capital and reserves
Called up share capital 18,889 18,889
Share premium account 29,757 29,757
Profit and loss account 30,949 25,036
Shareholders' funds 8 79,595 73,682
Equity 67,595 61,682
Non-equity 12,000 12,000
79,595 73,682
Consolidated cash flow statement
for the 12 month period ended 30 September 2001
Note 12 months ended 9 months ended
30 September 2001 30 September 2000
£000 £000 £000 £000
Net cash inflow/(outflow) from
operating activities 5 394 (225)
Returns on investments and servicing of finance
Interest received 123 19
Interest paid (44) (152)
Interest element of finance lease rental payments - (6)
Dividends paid on non-equity shares (1,080) (1,080)
Net cash outflow from returns on investments
and servicing of finance (1,001) (1,219)
Taxation (483) 313
Capital expenditure and financial investment
Purchase of tangible fixed assets (1) (372)
Sale of tangible fixed assets - 219
Net cash outflow from capital expenditure (1) (153)
Acquisitions and disposals
Sale of business - 1,015
Cash at bank and in hand of businesses sold - (1,590)
Net cash outflow from disposals - (575)
Net cash outflow before financing (1,091) (1,859)
Financing
Debt due within one year:
New short-term borrowings - 2,110
Repayment of short-term borrowings (2,110) (4,858)
Repayment of loans due from group undertakings 2,818 -
Capital element of finance lease payments - (40)
Net cash inflow/(outflow) from financing 708 (2,788)
Decrease in cash in the period 7 (383) (4,647)
Consolidated statement of total recognised gains and losses
for the 12 months ended 30 September 2001
12 months ended 9 months ended
30 September 2001 30 September 2000
£000 £000
Profit for the financial year 5,477 10,447
Exchange differences on the retranslation of net investments
and related borrowings 1,516 (892)
Total recognised gains and losses relating to the financial year 6,993 9,555
Notes
1 Accounting policies
Basis of preparation and accounting
The unaudited preliminary results for the year ended 30 September 2001 have been
prepared in accordance with UK generally accepted accounting principles. The
accounting policies applied are those set out in the Group's Annual Report and
Accounts for the nine months ended 30 September 2000.
Basis of consolidation
The Group accounts include the accounts of the parent and its subsidiary and
associated undertakings. The results of businesses acquired or sold during the
period are included in the Group accounts from or to their respective dates of
acquisition or disposal. Where appropriate, the financial statements of
overseas subsidiary and associated undertakings are adjusted to conform to the
Group's accounting policies.
2 Segmental information
The table below sets out information for each of the group's geographic areas
of operation.
12 months ended 30 September 2001 9 months ended 30 September 2000
Turnover Profit before Net Assets Turnover Profit before Net Assets
taxation taxation
£000 £000 £000 £000 £000 £000
UK 14,501 865 2,816 8,772 (2,983) 4,350
Middle East 187 - - 665 - -
Continental Europe - - - - 59 -
Exceptional operating items - - - - (2,107) -
Total continuing operations 14,688 865 2,816 9,437 (5,031) 4,350
Continental Europe - - - 1,706 189 -
Americas - - - 8,362 148 -
Exceptional operating items - - - - (13) -
Total discontinued operations - - - 10,068 324 -
Profit on disposal of businesses - - - - 12,470 -
Net interest receivable - 4,741 - - 2,202 -
Cash, loans and overdrafts - - 73,720 - - 64,576
Unallocated assets - - 3,059 - - 4,756
14,688 5,606 79,595 19,505 9,965 73,682
Turnover by destination is not materially different from the turnover by origin stated above.
2 Segmental information (continued)
The table below sets out information for each of the group's industry segments.
12 months ended 30 September 2001 9 months ended 30 September 2000
Turnover Profit before Net Assets Turnover Profit before Net Assets
taxation taxation
£000 £000 £000 £000 £000 £000
Specialised industrial
chemicals 14,688 865 2,816 9,437 (2,924) 4,350
Exceptional operating items - - - - (2,107) -
Total continuing operations 14,688 865 2,816 9,437 (5,031) 4,350
Specialised industrial chemicals - - - 10,068 337 -
Exceptional operating items - - - - (13) -
Total discontinued operations - - - 10,068 324 -
Profit on disposal of businesses - - - - 12,470 -
Net interest receivable - 4,741 - - 2,202 -
Cash, loans and overdrafts - - 73,720 - - 64,576
Unallocated assets - - 3,059 - - 4,756
14,688 5,606 79,595 19,505 9,965 73,682
3 Analysis of continuing and discontinued operations
12 months ended 30 September 2001 9 months ended 30 September 2000
Continuing Discontinued Total Continuing Discontinued Total
£000 £000 £000 £000 £000 £000
Group turnover 14,688 - 14,688 9,437 10,068 19,505
Cost of sales (6,487) - (6,487) (4,732) (4,933) (9,665)
Gross profit 8,201 - 8,201 4,705 5,135 9,840
Selling and distribution costs (5,179) - (5,179) (3,063) (3,178) (6,241)
Administrative expenses
- ordinary (3,346) - (3,346) (4,266) (1,629) (5,895)
- exceptional - - - (2,107) (13) (2,120)
Other operating income 1,189 - 1,189 (300) 9 (291)
Group operating profit/(loss) 865 - 865 (5,031) 324 (4,707)
Administrative expenses for the nine months ended 30 September 2000
have been restated to include costs previously classified as research and
development of £998,000.
4 Dividends and other appropriations
12 months ended 9 months ended
30 September 2001 30 September 2000
£000 £000
9% redeemable preference shares
Dividend payable 1,080 810
5 Reconciliation of operating profit/(loss) to operating cash flows
12 months ended 9 months ended
30 September 2001 30 September 2000
£000 £000
Operating profit 865 (4,707)
Depreciation, amortisation and impairment charges 573 576
Loss on sale of fixed assets - 10
Exchange gain on loans to subsidiary undertakings 817 436
(Decrease)/Increase in restructuring provision (1,503) 1,601
Increase in stocks (99) (43)
Decrease in debtors 125 3,482
Decrease in creditors and other provisions (384) (1,580)
Net cash inflow/(outflow) from operating activities 394 (225)
6 Analysis of net debt
At the beginning Cash flow Exchange Other At the end
of the year movement of the year
£000 £000 £000 £000 £000
Cash at bank 543 (383) 11 - 171
Bank loans and overdrafts (2,110) 2,110 - - -
Loans to group undertakings 71,283 (2,818) 2,005 (788) 69,682
Loans from group undertakings (5,140) - - 788 (4,352)
Net funds 64,576 (1,091) 2,016 - 65,501
7 Reconciliation of net cash flow to movement in net debt
12 months ended 9 months ended
30 September 2001 30 September 2000
£000 £000
Decrease in cash in the period (383) (4,647)
Cash (inflow)/outflow from financing (708) 2,788
Changes in net debt resulting from cash flows (1,091) (1,859)
Debt transferred on disposal of business - 1,150
Translation differences 2,016 -
Movement in net funds in the period 925 (709)
Net funds at beginning of the period 64,576 65,285
Net funds at the end of the period 65,501 64,576
8 Reconciliation of movements in shareholders funds
2001 2000
£'000 £'000
At 1 October 2000 73,682 50,999
Profit for the year 4,397 9,637
Goodwill realised on disposal - 13,938
Other recognised gains and losses in the period (net) 1,516 (892)
At 30 September 2001 79,595 73,682
9 Contingent liabilities
The Company has contingent liabilities in the form of performance guarantees
totalling £1,430,960 (2000: £1,377,970) which expire within 12 months.
The Company received from Weir Technology Limited in March 1999 notice of claims
pursuant to the sale by Brent International BV (and the Company as Guarantor) of
Verbeeck-Marien NV, part of the Imaging Management business sold to Weir in
October 1998. Weir seek rescission of the sale agreement for alleged breach of
warranty and/or alleged misrepresentation and damages which Weir quantifies at
£5.3m for alleged consequential costs or losses. These claims would be subject
to Belgian law and jurisdiction, however, Weir have not yet instituted
proceedings. After taking advice, the Directors consider the claim for
rescission, breach of warranty and/or misrepresentation to be without merit. In
addition, the Company received from Weir in October 2001 notice of claims
relating to 1995 and 1996 under a tax indemnity in the sale agreement. The
claims notified amount to approximately £300,000. The Company has written to
Weir seeking further information. After taking advice, the Directors consider
the claims to be overstated. Weir intend to notify the Company in due course of
claims under the tax indemnity relating to 1997 and 1998.
10 Declaration
The results for the year ended 30 September 2001 are unaudited. The results for
the nine months ended 30 September 2000 are an extract from the full accounts
for that period. The accounts for the nine months ended 30 September 2000 have
been delivered to the Registrar of Companies; the report of the auditors on
those accounts was unqualified. The accounts for the year ended 30 September
2001 will be posted to all shareholders shortly. The report of the auditors on
those accounts is expected to be unqualified. The financial information in this
statement does not constitute full statutory accounts within the meaning of
section 240 of the Companies Act 1985.
For further information, please contact:
Rob Rydings 01908 361817
Chemetall PLC
John Coyle
Clerkenwell Communications 0207 713 0900
07770 687 370
07699 727 796 (pager)
This information is provided by RNS
The company news service from the London Stock Exchange
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