1st Quarter Results
10 Fevereiro 2003 - 5:01AM
UK Regulatory
RNS Number:2535H
Enodis PLC
10 February 2003
10 February 2003
Enodis plc
First quarter results for the 13 weeks ended 28 December 2002
Group Financial Highlights
#m (except EPS)
Q103 Q102
Operating profits *
FSE - North America 9.4 9.8
FSE - Europe and Asia 1.6 2.7
FSE - Global 11.0 12.5
FRE (0.8) 1.7
Adjusted Group profit/(loss) before tax* 2.5 5.1
Group profit/(loss) before tax (0.2) (3.7)
Adjusted, diluted EPS* 0.5p 1.4p
Net debt 182.0 376.1
* before exceptional items and goodwill amortisation
Key Points
* Results in line with expectations
* Food Service Equipment - North America: like-for-like operating
profit ** up 8% with evidence of further market share gains
* Global Food Service Equipment operating profit down 12%, reflecting
disposals and foreign exchange effects
* Significant progress in Food Retail Equipment - reduced losses
versus Q402
* Q102 operating profits include #2.1m profit contribution from
businesses subsequently sold
* Net debt at #182.0m less than half prior year figure
** like-for-like adjusted for disposals and foreign exchange
Andrew Allner, Chief Executive Officer said:
"The Q1 results are in line with our expectations. However, given the recent
signs of increasing nervousness among our customer base about the political
situation and economic outlook, and the impact of adverse foreign exchange
movements, we are becoming a little more cautious about the likely full year
outturn. We continue to take the appropriate measures to mitigate the impact of
this difficult trading environment, and are confident that the consistent
implementation of our strategy will leave Enodis strongly positioned when growth
is resumed."
For further enquiries:
Andrew Allner Chief Executive Officer 020 7304 6006
Dave Wrench Chief Financial Officer 020 7304 6006
Andrew Lorenz Financial Dynamics 020 7269 7291
Conference calls will be held for shareholders/analysts at 9:30am and
bondholders at 11:00am today. For details, please contact Sorrel Beynon at
Financial Dynamics on 020 7269 7291 or Kaylie Thomson at Enodis on 020 7304
6024.
Chief Executive Officer's Review
Overview
As anticipated markets have continued to be weak. Our Q1 results are, however,
in line with the Board's expectations.
Improved like-for-like performance at Food Service Equipment - North America (8%
up on Q102) has offset continuing weaker European performance. Whilst Kysor
Warren continues to make operating losses, these have been significantly reduced
since Q402 as its new management team's focus on quality and productivity has
improved operations and hence results.
We have generated #10.2m of positive pre-exceptional operating cashflow after
capital expenditure. There was a #0.5m free cash inflow during the quarter,
after #5.7m of semi-annual interest payments on our 10 3/8% senior
subordinated notes.
Net debt at #182.0m is less than half the Q102 balance and has reduced slightly
since our Financial Year end of 28 September 2002 primarily due to the weakening
of the dollar.
Results
Q103 profit before tax, exceptional items and goodwill amortisation was #2.5m
(Q102: #5.1m). The decrease from prior year was primarily caused by:
#m
* Loss of Q102 operating profits from
businesses sold during FY02 (2.1)
* Reduced Food Retail Equipment results (2.5)
* Decreased interest charge 1.4
Like-for-like Q103 Global Food Service Equipment operating profit* was flat
compared to Q102, masking an 8% increase in Food Service Equipment - North
America like-for-like profits.
Operating margins declined to 5.2% (Q102: 6.3%) principally as a result of lower
margins in Food Service Equipment - Europe/Asia and losses in Food Retail
Equipment. Food Service Equipment - North America margins declined slightly to
9.4%.
* In this discussion, operating profit is before exceptional items and goodwill
amortisation.
Exceptional Items
Q103 exceptional items comprise the following: #m
Favourable settlement of disposal warranty claims 2.5
Increased legal fee accruals in respect of (1.7)
Consolidated Industries litigation
Net credit 0.8
More details are contained in Note 4 to the attached unaudited financial
statements.
Cashflow and Financing
Pre-exceptional operating cash inflow, after capital expenditure, was #10.2m
reflecting little movement in net working capital during the quarter.
After interest and tax, there was a #0.5m free cash inflow. #5.7m of
semi-annual interest was paid in respect of our 10 3/8% senior subordinated
notes.
Net debt reduced by #4.1m compared to the level at 28 September 2002,
predominantly due to the weakening of the US$ from $1.55:#1 to $1.60:#1 at
period end.
Interest in Q103 was #1.4m lower than Q102 due to the impact of lower principal
balances offset by higher interest rates on our senior notes.
Earnings Per Share
Adjusted diluted earnings per share are 0.5p (Q102:1.4p having adjusted for the
bonus element of last year's Rights Issue).
REVIEW OF OPERATIONS
Global Food Service Equipment
Global Food Service Equipment comprises our operations in North America,
approximately 76% of Food Service Equipment sales, and our operations in Europe/
Asia.
At the time of our preliminary announcement in November we stated that we did
not anticipate any improvement in the North American food service equipment
markets for the year as a whole. We believe the market in Q103 is up some 5%
compared to Q102 during which period demand was of course adversely impacted by
the events of September 11, 2001.
The markets in Europe were, as expected, mixed and continued to be down versus
prior year as Europe lagged North America.
Results
Like-for-like Q1 sales for our North American operations, including exports,
were up 10% on the prior year, partially reflecting the impact of September 11,
2001 which reduced the comparative figures. In absolute terms, sales at #100.1m
were down #7.2m on the prior year, predominantly due to the effect of disposals
and foreign exchange movements.
The 4% decline in reported operating profits in Food Service Equipment - North
America reflected the impact of disposals and foreign exchange. Corresponding
like-for-like operating profits were up 8% as most of our continuing businesses
performed strongly. However, at our North American refrigeration business
pricing issues and a move to lower margin products reduced profits.
Weak European markets led to overall flat like-for-like sales. However,
like-for-like profits fell by 35%, principally due to the continued effects of
low volume and factory relocations in two of our UK businesses, although in both
cases significant improvement has been seen since Q402.
Food Retail Equipment
Returning Kysor Warren, and therefore Food Retail Equipment, to profitability
remains a key priority, although it will take some time. Significant action has
been taken by the new management team to improve customer satisfaction, product
quality and productivity. Early signs are encouraging, with trial orders being
received from several customers that had previously decided to source product
elsewhere - a positive lead indicator for the future.
The underlying run rate of losses at Kysor Warren was significantly lower than
in Q402.
Results
Like-for-like sales were down 25% on the prior year, due to lower sales at our
operations in Mexico and unseasonally higher sales in Kysor Panel Systems in
Q102, along with some price erosion.
Like-for-like operating profits were down as a consequence of lower sales
however this was offset by aggressive cost control.
Property
We have now signed contracts in respect of the next phase of development of our
Felsted property, which we continue to expect to contribute to full year
property profits of around #4m (FY02 #8m).
Current Trading and Outlook
Our Q1 results were as we anticipated at the start of FY 03, in what is
seasonally our weakest quarter. Given recent signs of increasing nervousness
among our customer base about the political situation and economic outlook, we
are becoming a little more cautious about the likely full year outturn. Were
the present #/US$ rate of $1.65:#1 to be maintained, compared with last year's
average rate of $1.47:#1, our US operating results would be reduced by some #5m
with an offsetting benefit to the interest charge of approximately #1m.
Management continues to focus on customer satisfaction, cost control and cash
management to mitigate the impact of this difficult trading environment. We
expect our Food Service Equipment - North America business to build on the
market share progress achieved over the last year. In Food Retail Equipment we
anticipate further progress at Kysor Warren as our management actions take
effect.
A J Allner
Chief Executive Officer
10 February 2003
Management Discussion and Analysis (MD&A)
Under the terms of our 10 3/8% senior subordinated notes we are required to
prepare an MD&A and file it with the Securities and Exchange Commission (SEC) in
the US on Form 6-K. This is a US style explanation of our Q103 results and
contains more detail of certain matters for example liquidity and capital
resources, historical cashflows and legal proceedings including more detail on
the status of the Consolidated Industries cases. You will be able to obtain a
copy of the filing on the SEC website at www.sec.gov.
Unaudited group profit and loss account
13 weeks to 28 December 2002 (First Quarter)
13 weeks to 28 December 2002 13 weeks to 29 December 2001
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items (note 4) items (note 4)
Notes #m #m #m #m #m
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Turnover
Food Equipment 156.8 - 156.8 192.8 - 192.8
Property - - - - - -
Total turnover 2 156.8 - 156.8 192.8 - 192.8
Profit/(loss) from operations
Food Equipment 10.2 - 10.2 14.2 (2.4) 11.8
Property - - - - - -
Corporate costs (2.1) (1.7) (3.8) (2.1) - (2.1)
Continuing operations 8.1 (1.7) 6.4 12.1 (2.4) 9.7
Goodwill amortisation (3.5) - (3.5) (5.0) - (5.0)
Operating profit/(loss) 3 4.6 (1.7) 2.9 7.1 (2.4) 4.7
Profit /(loss) on disposal of
business 4 - 2.5 2.5 - 2.7 2.7
Profit/(loss) on ordinary
activities before interest and
taxation 4.6 0.8 5.4 7.1 0.3 7.4
Net interest payable and similar
charges (5.6) - (5.6) (7.0) (4.1) (11.1)
Profit/(loss) on ordinary
activities before taxation (1.0) 0.8 (0.2) 0.1 (3.8) (3.7)
Tax on profit/(loss) on ordinary
activities 5 (0.4) 0.6 0.2 (0.6) - (0.6)
Profit/(loss) on ordinary
activities after taxation (1.4) 1.4 0.0 (0.5) (3.8) (4.3)
Minority interests - - - (0.1) - (0.1)
Profit/(loss) for the period (1.4) 1.4 0.0 (0.6) (3.8) (4.4)
Equity dividends - - - - - -
Retained result (1.4) 1.4 0.0 (0.6) (3.8) (4.4)
Earnings/(loss) per share (pence) 6 (Restated)
Basic earnings/(loss) per share - (1.5)
Adjusted basic earnings/(loss)
per share 0.5 1.4
Diluted earnings/(loss) per share - (1.5)
Adjusted diluted earnings/(loss)
per share 0.5 1.4
Statement of total recognised #m #m
gains and (losses)
Gain/(loss) for the period - (4.4)
Goodwill written back on - 10.4
disposals, previously written off
Currency translation differences
on foreign currency net
investments (3.2) (1.1)
Total recognised gains and
(losses) for the period (3.2) 4.9
Prior period adjustment - 26.9
Total recognised gains and
(losses) since last annual report (3.2) 31.8
Audited group profit and loss account
52 weeks to 28 September 2002
52 weeks to 28 September 2002
Before Exceptional Total
exceptional items
items (note 4)
Notes #m #m #m
Turnover
Food Equipment 777.1 - 777.1
Property 16.1 - 16.1
Total turnover 2 793.2 - 793.2
Profit/(loss) from operations
Food Equipment 67.2 (8.9) 58.3
Property 8.0 - 8.0
Corporate costs (7.9) (0.5) (8.4)
67.3 (9.4) 57.9
Goodwill amortisation/impairment (19.0) (48.9) (67.9)
Operating profit/(loss) 3 48.3 (58.3) (10.0)
Profit/(loss) on disposal of business 4 - (38.1) (38.1)
48.3 (96.4) (48.1)
Net interest payable and similar charges (29.3) (8.4) (37.7)
Profit/(loss) on ordinary activities before taxation 19.0 (104.8) (85.8)
Tax on profit/(loss) on ordinary activities 5 (1.2) 0.2 (1.0)
Profit/(loss) on ordinary activities after taxation 17.8 (104.6) (86.8)
Minority interests (0.2) - (0.2)
Profit/(loss) for the period 17.6 (104.6) (87.0)
Equity dividends - - -
Retained result 17.6 (104.6) (87.0)
Earnings/(loss) per share (pence) 6
Basic earnings/(loss) per share (24.8)
Adjusted basic earnings/(loss) per share 10.4
Diluted earnings/(loss) per share (24.8)
Adjusted diluted earnings/(loss) per share 10.4
Statement of total recognised gains and (losses) #m
Gain/(loss) for the period (87.0)
Goodwill written back on disposals, previously written off 65.1
Currency translation differences on foreign currency net
investments (5.7)
Total recognised gains and (losses) for the period (27.6)
Prior period adjustment 26.9
Total recognised gains and (losses) since last annual report (0.7)
Unaudited group balance sheet
28 December 29 December 28 September
2002 2001 2002
#m #m #m
(Unaudited) (Unaudited)
Fixed assets
Intangible assets: goodwill 225.7 310.9 235.4
Tangible assets 83.6 108.7 88.0
Investments 5.9 6.9 5.9
315.2 426.5 329.3
Current assets
Stocks 76.5 105.4 77.7
Debtors 106.1 184.6 127.4
Deferred tax asset 25.1 27.0 25.3
Cash at bank and in hand 59.2 26.9 72.7
266.9 343.9 303.1
Creditors falling due within one year
Borrowings (31.4) (388.5) (33.4)
Other creditors (155.1) (189.3) (183.8)
Net current assets/(liabilities) 80.4 (233.9) 85.9
Total assets less current liabilities 395.6 192.6 415.2
Financed by:
Creditors falling due after more than one year
Borrowings 199.2 14.5 214.1
Provisions for liabilities and charges 42.9 58.2 44.3
242.1 72.7 258.4
Capital and reserves
Called up equity share capital 200.2 125.1 200.2
Share premium account 234.2 239.0 234.2
Profit and loss account (280.9) (245.1) (277.6)
Equity shareholders' funds 153.5 119.0 156.8
Equity minority interests - 0.9 -
395.6 192.6 415.2
Unaudited group cash flow statement
13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
Notes #m #m #m
(Unaudited) (Unaudited)
Net cash flow from operations before exceptional
items 11.0 2.3 100.0
Net cash flow effect of exceptional items (0.9) (11.2) (27.4)
Net cash inflow/(outflow) from operating
activities a 10.1 (8.9) 72.6
Return on investments and servicing of finance
Interest paid (8.2) (5.7) (23.3)
Financing fees paid - - (18.9)
(8.2) (5.7) (42.2)
Taxation
Overseas and UK tax paid (1.5) (1.6) (3.3)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1.2) (2.8) (9.9)
Receipts from sale of tangible fixed assets 0.4 0.1 0.9
(0.8) (2.7) (9.0)
Acquisitions and disposals
Disposal of subsidiary undertakings - 16.6 88.6
- 16.6 88.6
Equity dividends paid - - -
Cash inflow/(outflow) before financing (0.4) (2.3) 106.7
Financing
Issue of shares - - 70.3
Net drawings/(repayment) of borrowings (12.7) (10.1) (242.5)
Issue of 10 3/8% senior subordinated notes - - 100.0
Capital element of finance lease payments (0.2) (0.1) (0.5)
(12.9) (10.2) (72.7)
Increase/(decrease) in cash in the period (13.3) (12.5) 34.0
Unaudited group cash flow statement
(a) Reconciliation of operating profit/(loss) to net cash inflow/(outflow)
from operating activities
13 weeks to 28 December 2002 13 weeks to 29 December 2001
Before Effect of Total Before Effect of Total
exceptional exceptional exceptional exceptional
items items items items
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
#m #m #m #m #m #m
Operating profit/(loss) 4.6 (1.7) 2.9 7.1 (2.4) 4.7
Depreciation 3.3 - 3.3 4.5 - 4.5
Amortisation of goodwill 3.5 - 3.5 5.0 - 5.0
Provisions (net) (0.2) (0.4) (0.6) (0.3) (1.2) (1.5)
(Increase)/decrease in stocks 0.3 0.1 0.4 (1.2) - (1.2)
(Increase)/decrease in debtors 20.2 - 20.2 16.9 - 16.9
Increase/(decrease) in creditors (20.7) 1.1 (19.6) (29.7) (7.6) (37.3)
Net cash inflow/(outflow) from
operating activities 11.0 (0.9) 10.1 2.3 (11.2) (8.9)
52 weeks to 28 September 2002
Before Effect of Total
exceptional exceptional
items items
#m #m #m
Operating profit/(loss) 48.3 (58.3) (10.0)
Depreciation 15.7 - 15.7
Amortisation/impairment of goodwill 19.0 48.9 67.9
Provisions (net) (2.2) (5.6) (7.8)
(Increase)/decrease in stocks 5.5 5.9 11.4
(Increase)/decrease in debtors 19.7 - 19.7
Increase/(decrease) in creditors (6.0) (18.3) (24.3)
Net cash inflow/(outflow) from operating
activities 100.0 (27.4) 72.6
(b) Reconciliation of net cash flow to movement in net debt
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited)
#m #m #m
Net debt at the start of period (186.1) (365.9) (365.9)
Increase/(decrease) in net cash in the period (13.3) (12.5) 34.0
Borrowings repaid - 10.1 400.4
Issue of 10 3/8% senior subordinated notes - - (100.0)
Net (increase)/decrease in other loans 12.7 - (157.9)
Net (increase)/decrease in finance leases 0.2 0.1 (1.0)
Translation differences 4.5 (7.9) 4.3
Net debt at the end of the period (182.0) (376.1) (186.1)
Unaudited group cash flow statement
(c) Reconciliation of net debt to balance sheet
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited)
#m #m #m
Cash 59.2 26.9 72.7
Short term borrowing (31.4) (388.5) (33.4)
Long term borrowing (199.2) (14.5) (214.1)
(171.4) (376.1) (174.8)
Deferred financing costs (10.6) - (11.3)
(182.0) (376.1) (186.1)
Notes to the unaudited financial statements
1. Basis of Preparation
The accompanying condensed financial statements ("quarterly financial
statements") have been prepared in accordance with accounting principles
generally accepted in the United Kingdom ("U.K. GAAP"). The quarterly financial
statements are unaudited but include all adjustments (consisting of normal
recurring adjustments) which the Group's management considers necessary for a
fair presentation of the financial position of the Group as of such dates and
the operating results and cash flows for those periods. Certain information and
footnote disclosures normally included in statutory financial statements
prepared in accordance with U.K. GAAP have been condensed or omitted. The
results of operations for the 13 weeks ended 28 December 2002 may not
necessarily be indicative of the operating results that may be achieved for the
entire financial year.
The quarterly financial statements have been prepared on the basis of the
accounting policies set out in the Group's financial statements for the year
ended 28 September 2002.
U.K. GAAP differs in certain significant respects from accounting principles
generally accepted in the United States of America ("U.S. GAAP"). The
application of the latter would have affected the determination of profit/(loss)
to the extent summarised in Note 8 to the quarterly financial statements.
These quarterly financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
annual report.
The accounts in this statement do not comprise full accounts within the meaning
of section 240 of the Companies Act 1985. The figures for the 52 weeks to 28
September 2002 are based upon the 2002 Annual Report but do not comprise
statutory accounts for that period. The audited financial statements have been
delivered to the Registrar of Companies. The Auditors made an unqualified
report on those accounts and their report did not contain any statement under
section 237 (2) or (3) of the Companies Act 1985. The figures for the 13 week
period to 28 December 2002 and 29 December 2001 have been extracted from
underlying accounting records and have not been audited.
Freight and shipping revenues have previously either been booked against the
original freight costs or reflected as part of turnover. As of 29 September
2002, we have chosen to adopt a consistent treatment of these revenues as part
of turnover. All comparative disclosures have been reclassified in this
respect. The impact on turnover is:
Period As previously reported Reclassified
#m #m
13 weeks ended 29 December 2001 189.9 192.8
52 weeks ended 28 September 2002 783.2 793.2
The reclassification did not have any impact on gross profit or operating profit
for any period.
2. Turnover
13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited)
#m #m #m
Food Service Equipment - North America 100.1 107.3 474.1
Food Service Equipment - Europe and Asia 32.0 37.0 145.0
Food Retail Equipment 24.7 48.5 158.0
Food Equipment 156.8 192.8 777.1
Property - - 16.1
156.8 192.8 793.2
Notes to the unaudited financial statements (continued)
3. Operating profit/(loss)
13 weeks to 28 December 2002 13 weeks to 29 December 2001
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items items
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
#m #m #m #m #m #m
Food Service Equipment -
North America 9.4 - 9.4 9.8 - 9.8
Food Service Equipment -
Europe and Asia 1.6 - 1.6 2.7 (1.3) 1.4
Food Retail Equipment (0.8) - (0.8) 1.7 (1.1) 0.6
10.2 - 10.2 14.2 (2.4) 11.8
Food Equipment goodwill
amortisation (3.5) - (3.5) (5.0) - (5.0)
Food Equipment 6.7 - 6.7 9.2 (2.4) 6.8
Property - - - - - -
Corporate costs (2.1) (1.7) (3.8) (2.1) - (2.1)
4.6 (1.7) 2.9 7.1 (2.4) 4.7
52 weeks to 28 September 2002
Before exceptional Exceptional items Total
items
#m #m #m
Food Service Equipment - North America 60.8 0.2 61.0
Food Service Equipment - Europe and Asia 9.7 (2.5) 7.2
Food Retail Equipment (3.3) (6.6) (9.9)
67.2 (8.9) 58.3
Food Equipment goodwill amortisation/impairment (19.0) (48.9) (67.9)
Food Equipment 48.2 (57.8) (9.6)
Property 8.0 - 8.0
Corporate costs (7.9) (0.5) (8.4)
48.3 (58.3) (10.0)
Notes to the unaudited financial statements (continued)
4. Exceptional items
(a) Operating exceptional items 13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited)
#m #m #m
Legal fee accruals 1.7 - -
Restructuring costs and inventory write downs - 2.4 9.4
1.7 2.4 9.4
Goodwill impairment - - 48.9
Operating exceptional items 1.7 2.4 58.3
The Group has reassessed its accruals for legal costs for defending the claims
in the Consolidated Industries litigation following an adverse summary judgement
on some of the claims totalling $8.6m. The Group is advised that the adverse
decision is incorrect, and intends to appeal the decision. The Group's view of
the outcome of the Consolidated litigation remains unchanged.
Restructuring costs in the 13 weeks to 29 December 2001 and the 52 weeks to 28
September 2002 principally represent costs associated with the closure of excess
operating capacity in our Food Retail Equipment Group. This includes the write
down of inventory at Kysor Warren reflecting the decline in the business and
employee termination costs that resulted from a headcount reduction of 30.
There was also further rationalisation of administration functions and
simplification of management structures in the European businesses within the
Global Food Service Equipment Group.
Following downturns in the US economy, in particular in the retail markets, it
was necessary to reassess the carrying value of goodwill in respect of the
Scotsman acquisition during 2001 and 2002. In accordance with the methodology
presented in FRS11 "Impairment of Fixed Assets and Goodwill", which requires
consideration of the net present value of estimated future cash flows, the fair
value was reassessed and compared to the carrying value of net assets, including
the carrying value of the goodwill. In 2001, an impairment of #100m was booked.
In 2002, due to the poor performance of Kysor Warren, the carrying value of
goodwill was written down by a further #48.9m.
(b) Disposal of businesses 13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited)
#m #m #m
Profit/(loss) on disposals 2.5 2.7 (38.1)
In February 2003, the Group paid #1.25m to release it from the majority of the
warranties and indemnities that were given at the time of the disposal of one of
its subsidiaries. As a result, associated accruals of #2.5m have been credited
to the profit and loss account in the 13 weeks ended 28 December 2002.
Notes to the unaudited financial statements (continued)
On 13 December 2001, the Group disposed of Sammic SA and its subsidiary
undertakings for net consideration of #18.7m realising a profit on disposal of
#2.7m after writing off #10.4m of goodwill previously not charged against
reserves.
During the 52 weeks to 28 September 2002, in addition to Sammic SA, the Group
disposed of Belshaw Bros Inc, Austral Refrigeration Pty Ltd, Aladdin Temp-Rite
and Prolon LLC. The Group realised a loss on these disposals of #44.1m after
writing off goodwill of #54.7m previously charged against reserves.
In December 2001, #2.1m was paid to Nobia AB in respect of the value of net
assets transferred following the sale of the Building and Consumer Products
business in June 2001. As part of the disposal proceeds the Group had received
a #20.0m vendor loan note and share warrants. In June 2002, Nobia AB's shares
were listed on the Stockholm Stock Exchange and the Group received #24.4m being
#20.0m for the vendor loan note, #0.4m compensation for early repayment of the
note and #4.0m for the sale of the shares arising from the exercise of the
warrants. After writing off deferred finance fees arising from the early
repayment of debt and other associated costs, the net profit on disposal was
#3.3m.
The net cash consideration, after expenses, of all the above disposals has been
used to repay debt.
(c) Net interest payable and similar charges 13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited)
#m #m #m
Deferred financing fees written off - 4.1 4.2
Refinancing fees - - 4.2
- 4.1 8.4
Deferred finance fees written off of #4.2m in the 52 weeks to 28 September 2002
related to amounts previously capitalised in respect of the multi-currency
revolving credit facility that was replaced by the refinancing announced on 20
February 2002.
Refinancing fees represent amounts paid to banks in relation to the termination
of our previous multi-currency revolving credit facility and costs associated
with the bridging facility under the Group's new arrangements.
5. Taxation
(a) Analysis of charge in period 13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited)
#m #m #m
The tax charge for the current period comprised:
UK taxation at 30% (2001:30%) - - -
Foreign taxation - current year 0.4 0.7 5.8
- prior year - - (3.8)
0.4 0.7 2.0
Tax relief on exceptional items - deferred taxation (0.6) - (0.2)
(0.2) 0.7 1.8
Deferred taxation - (0.1) (0.8)
(0.2) 0.6 1.0
(b) The Group tax rate benefits from the effect of tax losses brought forward. A current tax charge arises
principally because of profits arising in overseas countries where there are no available losses.
Notes to the unaudited financial statements (continued)
6. Earnings/(loss) per share
13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited/Restated)
#m #m #m
Basic and diluted loss attributable to shareholders 0.0 (4.4) (87.0)
Basic and diluted weighted average number of shares 399.2 307.5 351.0
13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
(Unaudited) (Unaudited/
Restated)
pence pence Pence
Basic loss per share 0.0 (1.5) (24.8)
Effect per share of exceptional items (0.4) 1.2 15.9
Effect per share of goodwill amortisation and impairment 0.9 1.7 19.3
Adjusted basic earnings per share 0.5 1.4 10.4
Diluted loss per share 0.0 (1.5) (24.8)
Effect per share of exceptional items (0.4) 1.2 15.9
Effect per share of goodwill amortisation and impairment 0.9 1.7 19.3
Adjusted diluted earnings per share 0.5 1.4 10.4
Adjusted earnings per share before exceptional items (note 4) and goodwill
amortisation are disclosed to reflect the underlying performance of the Group.
The period ended 29 December 2001 has been restated for the bonus element of the
rights issue completed on 9 April 2002. The theoretical ex-rights price was
82.2p.
7. Foreign currency translation
The results of subsidiary companies reporting in currencies other than Pounds
Sterling have been translated at the average rate prevailing for each month for
the 13 weeks to 28 December 2002, the average exchange rate for sales and profit
being #1=$1.57. Results to 29 December 2001 were translated at the rate of #1=
$1.45 and full year results to 28 September 2002 at #1=$1.47. The closing rate
for the US Dollar at 28 December 2002 was #1=$1.60, at 29 December 2001 was #1=
$1.45 and at 28 September 2002 was #1=$1.55.
Notes to the unaudited financial statements (continued)
8. Supplementary information for US Investors
Reconciliation to generally accepted accounting principles in the United States.
The quarterly financial statements have been prepared in accordance with UK
GAAP, which differs in certain significant respects from US GAAP. The following
is a summary of the adjustments to operating profit/(loss) and net profit/(loss)
for the period required when reconciling such amounts recorded in the
consolidated financial statements to the corresponding amounts in accordance
with US GAAP, considering the differences between UK GAAP and US GAAP.
13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
#m #m #m
(Unaudited) (Unaudited)
Profit/(loss) in accordance with UK GAAP 0.0 (4.4) (87.0)
Items increasing/(decreasing) UK GAAP operating profit/
(loss)(*):
- Goodwill amortisation 3.5 (3.8) (13.5)
- Pension costs (0.5) 0.3 (2.5)
- Sale/leaseback transactions - - 0.1
- Share option plans - - 1.1
- Restructuring charges - (0.4) (0.4)
- Derivative instruments - (1.8) (4.0)
- Other - (0.5) (0.7)
- Capitalised interest 0.1 - -
- Loss contingency - - 2.4
Items increasing/(decreasing) UK GAAP other non-operating profit/(loss):
- Deferred taxation (0.4) (1.3) (16.5)
- Gain on sale of businesses - 2.4 18.0
Net profit/(loss) in accordance with US GAAP 2.7 (9.5) (103.0)
Net profit/(loss) in accordance with US GAAP is represented by:
Net profit/(loss) from continuing operations 0.2 (9.5) (103.0)
Net profit /(loss) from discontinuing operations - - -
Gain on sale of discontinued operations 2.5 - -
Net profit/(loss) in accordance with US GAAP 2.7 (9.5) (103.0)
(*) All adjustments exclude the effect of taxes, with all tax related
adjustments included within the deferred taxation line item.
Description of differences
A discussion of the material variations in the accounting principles, practices
and methods used in preparing the audited consolidated financial statements in
accordance with UK GAAP from the principles, practices and methods generally
accepted in the US is provided in the consolidated financial statements as of 28
September 2002. There are no new material variations between UK GAAP and US
GAAP accounting principles, practices and methods used in preparing the
unaudited consolidated interim financial statements other than those discussed
below.
Notes to the unaudited financial statements (continued)
Adoption of new accounting standards
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard ("SFAS") No. 142, "Goodwill and other
Intangible Assets". SFAS 142 is effective for fiscal years beginning after 15
December 2001 for all goodwill and other intangible assets recognised in an
entity's statement of financial position at that date, regardless of when those
assets were initially recognized. SFAS 142 requires, among other things, the
discontinuance of goodwill amortisation and an annual test for impairment. In
addition, the standard includes provisions for the reclassification of certain
existing recognised intangibles as goodwill, reassessment of the useful lives of
existing recognised intangibles, reclassification of certain intangibles out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairments of goodwill. SFAS 142 also
requires the Group to complete a transitional goodwill impairment test six
months from the date of adoption.
With respect to goodwill amortisation, the Group adopted SFAS No. 142 effective
29 September 2002. The application of the non-amortisation provisions of SFAS
No. 142 for goodwill for the 13 weeks ended 28 December 2002 resulted in a
reduction of amortisation expense by #3.5m under US GAAP. The Group estimates
that there will be a reduction of amortisation expense by #14.8m for the fiscal
year ending 27 September 2003.
A reconciliation of previously reported net profit/(loss) to the amounts
adjusted for the exclusion of the amortisation of goodwill under US GAAP is as
follows:
13 weeks to 13 weeks to 52 weeks to
28 December 29 December 28 September
2002 2001 2002
#m #m #m
Reported net profit/(loss) in accordance with US GAAP 2.7 (9.5) (103.0)
Add: Goodwill amortisation - 8.8 32.5
Adjusted net profit/(loss) 2.7 (0.7) (70.5)
At 28 December 2002 the Group had goodwill of #385.6m. Pursuant to the
transitional provisions of SFAS No. 142, the Group will complete the first step
of its transitional goodwill impairment test during the second quarter of fiscal
2003. If impairment is indicated the second step of its transitional goodwill
impairment test to measure the impairment loss requirements will be completed
prior to fiscal year-end. The Group will record such impairment, if necessary,
as a cumulative effect of accounting change effective 29 September 2002. The
cumulative effect of accounting change recorded could be material to the
consolidated results of operations or financial position under US GAAP.
Notes to the unaudited financial statements (continued)
OTHER FINANCIAL INFORMATION: Reconciliation of like-for-like information
13 weeks to Effect of 13 weeks to
28 December Foreign Proforma 29 December Effect of Proforma Like-for-like
2002 Exchange Q1 2003 2001 Disposals Q1 2002
a) Turnover #m #m #m #m #m #m %
Food Service
Equipment
- North America 100.1 7.8 107.9 107.3 (9.5) 97.8 10%
Food Service
Equipment
- Europe and Asia 32.0 (0.4) 31.6 37.0 (4.6) 32.4 (2)%
Food Service
Equipment 132.1 7.4 139.5 144.3 (14.1) 130.2 7%
Food Retail
Equipment 24.7 1.8 26.5 48.5 (13.2) 35.3 (25)%
Food Equipment 156.8 9.2 166.0 192.8 (27.3) 165.5 0%
b) Operating profit
Food Service
Equipment
- North America 9.4 0.8 10.2 9.8 (0.4) 9.4 8%
Food Service
Equipment
- Europe and Asia 1.6 (0.1) 1.5 2.7 (0.4) 2.3 (35)%
Food Service
Equipment 11.0 0.7 11.7 12.5 (0.8) 11.7 0%
Food Retail
Equipment (0.8) (0.1) (0.9) 1.7 (1.3) 0.4 (325)%
Food Equipment 10.2 0.6 10.8 14.2 (2.1) 12.1 (11)%
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFEAKANESKDEFE
