Interim Results
08 Maio 2003 - 4:01AM
UK Regulatory
RNS Number:8312K
Enodis PLC
08 May 2003
8 May 2003
Interim results for the 26 weeks ended 29 March 2003
Group Financial Highlights
#m (except EPS)
Q203 Q202 H103 H102
Food Equipment adjusted operating profit* 13.4 16.2 23.6 30.4
Effect of disposals and foreign exchange - (3.3) - (5.9)
Like-for-like** Food Equipment operating profits 13.4 12.9 23.6 24.5
Adjusted Group profit/(loss) before tax*** 5.8 6.2 8.3 11.3
Group profit/(loss) before tax (1.8) (4.5) (2.0) (8.2)
Adjusted, diluted EPS 1.2p 1.7p 1.7p 3.2p
Basic, diluted (loss) per share (0.9p) (1.8p) (0.9p) (3.2p)
Net debt 181.0 380.5
Key Points
* Overall results before exceptional items in line with Board's expectations
* Q203 like-for-like** Food Equipment operating profits up 4%
* Food Service Equipment - North America: data indicates improved market share
in H1
* Food Service Equipment - North America: like-for-like H103 operating profits
down 4% due to lower sales to certain Quick Serve Restaurant chains and
margin decline at our North American refrigeration business. Like-for-like
operating profits at most other North American businesses increased
* Food Service Equipment - Europe/Asia: H103 operating profits down #0.7m to
#3.6m, but Q203 #0.4m ahead of prior year at #2.0m
* Continued significant progress in Food Retail Equipment turnaround, with Q203
operating profits of #0.7m compared with Q103 loss of #0.8m
* Net debt continues to reduce - #181.0m at H103 (FY02: #186.1m)
* Before operating exceptional items and goodwill amortisation (see note 3
to the attached results for details).
** Like-for-like adjusted for disposals and foreign exchange (see Other
Financial Information in the attached results for details).
*** Before all exceptional items and goodwill amortisation (see Other
Financial Information in the attached results for details).
The above adjusted information is presented to indicate the underlying
operational performance of the Group.
Andrew Allner, Chief Executive Officer said:
"Overall, first half results before exceptional items were in line with the
Board's expectations at the start of the financial year, with like-for-like Q203
operating profits in Food Equipment up 4%. As already announced, new cost
reduction measures, expected to save up to #9m of costs planned for the second
half, have been implemented to mitigate the likely impact of slower markets. We
anticipate continued progress at Kysor Warren as management actions take effect.
Net debt should continue to decline over the second half, although it will
rise slightly during the third quarter due to seasonal factors. Moving the
office of the CEO to Florida will improve the effectiveness of the executive
team as my successor, Dave McCulloch, and his team continue to implement the
Group's strategy".
For further enquiries:
Andrew Allner Chief Executive Officer 020 7304 6006
Dave McCulloch Chief Operating Officer 020 7304 6006
Dave Wrench Chief Financial Officer 020 7304 6006
Richard Mountain Financial Dynamics 020 7269 7291
A meeting for equity investors and analysts will be held today at 9:00am at the
office of Financial Dynamics. A conference call will be held for 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
Whilst markets have remained difficult, our overall results, before exceptional
items, are in line with the Board's expectations at the time of the announcement
of our FY02 preliminary results in November 2002.
Our Q2 FY03 Food Equipment operating profits* were up 4% on a like-for-like
basis, although reported profits declined #2.8m after including the effects of
disposals and foreign exchange.
In our largest market, North America, we believe we have again increased market
share and most of our businesses in Food Service Equipment - North America
improved like-for-like operating profits in H103. However, the impact of lower
sales to certain Quick Serve Restaurant chains together with pricing and margin
issues at our refrigeration business led to Food Service Equipment - North
American like-for-like operating profits being 4% lower.
We have made further significant progress in improving the performance of Kysor
Warren under its new management team. As a result, Food Retail Equipment made
operating profits in Q203 of #0.7m compared with a loss of #0.8m in Q103.
H103 operating profits in Food Service Equipment - Europe/Asia were down #0.7m
to #3.6m, but were #0.4m ahead in Q2 at #2.0m.
Debt reduced further in H103 reflecting strong operating cash flow. Net debt at
29 March 2003 was #181.0m compared to #186.1m at 29 September 2002 and #380.5m
at 30 March 2002.
Results
H103 profit before tax, goodwill amortisation and exceptional items was #8.3m
(H1 2002: #11.3m). The decrease from the prior year was primarily caused by:
#m
* Loss of H102 operating profits from
businesses sold during FY02 (4.2)
* Impact of adverse foreign exchange rates on operating profit (1.7)
* Lower interest charge 3.7
Like-for-like H103 Food Equipment operating profits were down 4%, with a 5%
reduction in Global Food Service Equipment offset by improved results in Food
Retail Equipment. Like-for-like Q203 operating profits were up 4% compared to
last year with Food Retail Equipment making #0.7m of operating profits, almost
recouping Q103 losses.
* Throughout this discussion, operating profit is before operating
exceptional items and goodwill amortisation. (see note 3 to the attached
results for details)
Exceptional Items
In our Q103 results we recognised exceptional items related to the favourable
settlement of warranty claims arising from disposed businesses (#2.5m), offset
in part by increased legal fee accruals in respect of the Consolidated
Industries litigation (#1.7m), giving rise to a net credit to the profit and
loss account of #0.8m.
On 8 April 2003 we announced that new cost reduction and restructuring measures
were being implemented to mitigate the likely impact of slower markets in the
second half. The Group is taking an exceptional charge for the cost of these
programmes, together with the costs of relocating the office of the CEO to
Tampa. This charge is expected to be approximately #4.5m in total, of which
#1.8m has been recognised in the first half. In addition, as a result of the
slowdown in the property market, approximately #2.5m of exceptional provision
has been recorded for liabilities for vacant leasehold properties.
The total net exceptional costs recognised in H103 are #3.5m.
Cashflow and Financing
Net debt at 29 March 2003 was #181.0m, down from #186.1m at 29 September 2002.
The reduction is the result of strong operating cash inflow, after capital
expenditure but before exceptional items, of #21.0m, offset by interest payments
of #9.7m and tax of #3.1m. Net debt is expected to fall further over the second
half of the year although it will rise slightly during the third quarter due to
seasonal factors.
Earnings Per Share
Adjusted diluted earnings per share are 1.7p (H102: 3.2p). H103 diluted EPS is
calculated on the average number of shares in issue of 399.2m (H102: 307.5m).
Basic loss per share was 0.9p (H102: 3.2p).
REVIEW OF OPERATIONS
Global Food Service Equipment
Global Food Service Equipment comprises our operations in North America,
approximately three quarters of Food Service Equipment sales, and those 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 H103 was flat to
slightly down, with major Quick Serve Restaurant chains scaling back expansion,
offset in part by continuing investment in the full service and limited menu
restaurant sectors. Based on available information we believe we continue to
gain market share.
Generally the markets in Europe as expected continued to be down overall versus
prior year.
Results
Like-for-like H103 sales for our North American operations, including exports,
were up 3% on the prior year with strong performance at a number of businesses
offset by weaker sales to certain Quick Serve Restaurant chains. In absolute
terms, sales at #196.3m were down #34.1m on the prior year, with a decline of
#40.3m due to disposals and adverse foreign exchange movements partially offset
by like-for-like improvements of #6.2m.
Operating profits for Food Service Equipment - North America businesses declined
by #4.5m to #20.1m, of which #3.6m was due to the effect of disposals and
foreign exchange.
The majority of our North America operations improved like-for-like operating
profits. However, the effect of lower sales to certain Quick Serve Restaurant
chains and continued pricing issues and down trading by customers to lower
margin products in our refrigeration business, considerably reduced profits.
Like-for-like H103 third party sales in Food Service Equipment - Europe/Asia
declined by 3%. Like-for-like profits fell by 8% principally due to the
continued effect of low volumes in the UK. The performance of the two UK
businesses affected by factory relocations in FY02 has continued to improve.
Food Retail Equipment
Significant progress has been made in turning around Kysor Warren. There has
been a further marked reduction in the level of losses such that Food Retail
Equipment made profits of #0.7m in Q203 compared with losses of #0.8m in Q103.
The benefits of the focus on quality and productivity implemented by the new
Kysor Warren management team are clear.
H103 turnover in Food Retail Equipment reduced to #48.7m from #92.0m, of which
#31.0m was due to the effects of disposals and foreign exchange. Like-for-like
sales declined by 20% due to reduced sales in Mexico, market share losses at
Kysor Warren and the return to more normal seasonality trends at Kysor Panel
Systems However, the impact of this shortfall was offset by aggressive cost
reductions, reducing H103 losses to #0.1m compared to losses of #0.4m in the
prior year on a like-for-like basis.
Property
We have made continued progress in respect of development of our Felsted
property and expect full year property operating profits of around #4m in H203.
Office of the CEO to Transfer to Florida
As announced on 8th April 2003 the Board of Enodis has concluded that there are
significant benefits to be gained from the consolidation of its executive team
at its Global Operations Centre in New Port Richey (Tampa) Florida. This
facility already houses the heads of finance, human resources, marketing,
purchasing, US sales, operations, legal, and information technology, as well as
the Enodis Technology Centre, which is used extensively for innovative equipment
solutions and customer and industry events. Relocating the office of the CEO to
this facility will result in significantly improved accessibility to the
operations and customers in North America, where approximately three quarters of
the Group's sales are generated.
It is the Group's intention to maintain its primary listing on the London Stock
Exchange and to retain the office of the Chairman and its head office functions
in London.
For family reasons I have decided not to relocate to Florida, but will stay with
the Group until June to assist an orderly transition. I will be succeeded by
Dave McCulloch, 56, who joined the Group in 1986, was appointed to the Board of
Enodis in November 2001 and was appointed Chief Operating Officer in May 2002.
Current Trading and Outlook
As already announced, new cost reduction measures, expected to save up to #9m of
costs planned for the second half and #13m in a full year, have been implemented
to mitigate the likely impact of slower markets in the second half. These
savings will arise from salaried headcount reductions, purchasing and material
efficiency initiatives and reductions in discretionary spending.
The Food Service sector is large with growth driven by disposable income and
lifestyle changes. Although the short term outlook for our business continues
to be uncertain we remain confident of Enodis' ability to capitalise on the
opportunities which will arise.
We continue to focus on growing market share by targeting new markets and
accounts, together with innovative new product development as well as cost
reduction measures.
We expect further progress at Kysor Warren as the new management team continues
to make progress towards the elimination of losses.
Andrew Allner
CEO
8 May 2003
Management's Discussion and Analysis (MD&A)
Under the terms of our 10-3/8% senior subordinated notes we are required to
prepare and furnish an MD&A to the Securities and Exchange Commission (SEC) in
the US on Form 6-K. The MD&A is a US style explanation of our H103 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 case. You will be able to obtain a
copy of the Form 6-K filing on the SEC website at www.sec.gov.
Unaudited group profit and loss account
26 weeks to 29 March 2003 (Half Year)
26 weeks to 29 March 2003 26 weeks to 30 March 2002
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 4) Total items
(note 4) Total
Notes #m #m #m #m #m #m
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Turnover
Food Equipment 310.9 - 310.9 395.6 - 395.6
Property - - - - - -
Total turnover - continuing 2 310.9 - 310.9 395.6 - 395.6
operations
Operating profit/(loss) from continuing
operations before goodwill amortisation
Food Equipment 23.6 (1.6) 22.0 30.4 (3.7) 26.7
Property - (2.5) (2.5) - - -
Corporate costs (4.1) (1.9) (6.0) (4.2) - (4.2)
Continuing operations 19.5 (6.0) 13.5 26.2 (3.7) 22.5
Goodwill amortisation (6.8) - (6.8) (10.1) - (10.1)
Operating profit/(loss) 3 12.7 (6.0) 6.7 16.1 (3.7) 12.4
Profit /(loss) on disposal of
business 4 - 2.5 2.5 - 2.7 2.7
Profit/(loss) on ordinary
activities before interest
and taxation 12.7 (3.5) 9.2 16.1 (1.0) 15.1
Net interest payable and
similar charges (11.2) - (11.2) (14.9) (8.4) (23.3)
Profit/(loss) on ordinary 1.5 (3.5) (2.0) 1.2 (9.4) (8.2)
activities before taxation
Tax on profit/(loss) on
ordinary activities 5 (1.4) - (1.4) (1.4) - (1.4)
Profit/(loss) on ordinary
activities after taxation 0.1 (3.5) (3.4) (0.2) (9.4) (9.6)
Equity minority interests - - - (0.2) - (0.2)
Retained profit/(loss) 0.1 (3.5) (3.4) (0.4) (9.4) (9.8)
Earnings/(loss) per share
(pence) 6
Basic earnings/(loss) per
share (0.9) (3.2)
Adjusted basic earnings/(loss)
per share 1.7 3.2
Diluted earnings/(loss) per
share (0.9) (3.2)
Adjusted diluted earnings/(loss) per
share 1.7 3.2
26 weeks to 26 weeks to
29 March 30 March
2003 2002
(Unaudited) (Unaudited)
Unaudited group statement of total recognised #m #m
gains and (losses)
Gain/(loss) for the period (3.4) (9.8)
Goodwill written back on disposals, previously written - 10.4
off
Currency translation differences on foreign currency net investments 0.3 1.6
Total recognised gains and (losses) for the period (3.1) 2.2
Unaudited group profit and loss account
13 weeks to 29 March 2003 (Second Quarter)
13 weeks to 29 March 2003 13 weeks to 30 March 2002
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 4) Total items (note 4) Total
Notes #m #m #m #m #m #m
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Turnover
Food Equipment 154.1 - 154.1 202.8 - 202.8
Property - - - - - -
Total turnover 2 154.1 - 154.1 202.8 - 202.8
Operating profit/(loss) from continuing
operations before goodwill amortisation
Food Equipment 13.4 (1.6) 11.8 16.2 (1.2) 15.0
Property - (2.5) (2.5) - - -
Corporate costs (2.0) (0.2) (2.2) (2.1) - (2.1)
Continuing operations 11.4 (4.3) 7.1 14.1 (1.2) 12.9
Goodwill amortisation (3.3) - (3.3) (5.1) - (5.1)
Operating profit/(loss) 3 8.1 (4.3) 3.8 9.0 (1.2) 7.8
Profit /(loss) on disposal of
business - - - - - -
Profit/(loss) on ordinary
activities before interest and
taxation 8.1 (4.3) 3.8 9.0 (1.2) 7.8
Net interest payable and
similar charges (5.6) - (5.6) (7.9) (4.4) (12.3)
Profit/(loss) on ordinary
activities before taxation 2.5 (4.3) (1.8) 1.1 (5.6) (4.5)
Tax on profit/(loss) on
ordinary activities (1.0) (0.6) (1.6) (0.8) - (0.8)
Profit/(loss) on ordinary
activities after taxation 1.5 (4.9) (3.4) 0.3 (5.6) (5.3)
Equity minority interests - - - (0.1) - (0.1)
Retained profit/(loss) 1.5 (4.9) (3.4) 0.2 (5.6) (5.4)
Earnings/(loss) per share 6
(pence)
Basic earnings/(loss) per share (0.9) (1.8)
Adjusted basic earnings/(loss) per share 1.2 1.7
Diluted earnings/(loss) per share (0.9) (1.8)
Adjusted diluted earnings/(loss) per share 1.2 1.7
Unaudited group statement of total recognised 13 weeks to 13 weeks to
gains and (losses) 29 March 30 March
2003 2002
(Unaudited) (Unaudited)
#m #m
Gain/(loss) for the period (3.4) (5.4)
Currency translation differences on foreign
currency net investments 3.5 2.7
Total recognised gains and (losses) for the period 0.1 (2.7)
Audited group profit and loss account
52 weeks to 28 September 2002 (Full year)
52 weeks to 28 September 2002
Before Exceptional
exceptional items
items (note 4) Total
Notes #m #m #m
Turnover
Food Equipment 777.1 - 777.1
Property 16.1 - 16.1
Total turnover 2 793.2 - 793.2
Operating profit/(loss) from continuing operations
before goodwill amortisation
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 businesses 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)
Equity minority interests (0.2) - (0.2)
Retained profit/(loss) 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
Group statement of total recognised gains and (losses) 52 weeks to
28 September
2002
#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
29 March 30 March 28 September
2003 2002 2002
#m #m #m
(Unaudited) (Unaudited)
Fixed assets
Intangible assets: Goodwill 227.0 312.9 235.4
Tangible assets 84.8 108.8 88.0
Investments 5.9 6.2 5.9
317.7 427.9 329.3
Current assets
Stocks 84.9 103.8 77.7
Debtors 115.3 183.6 127.4
Deferred tax asset 25.1 27.3 25.3
Cash at bank and in hand 58.7 49.9 72.7
284.0 364.6 303.1
Creditors falling due within one year
Borrowings (38.9) (10.1) (33.4)
Other creditors (170.4) (210.4) (183.8)
(209.3) (220.5) (217.2)
Net current assets/(liabilities) 74.7 144.1 85.9
Total assets less current liabilities 392.4 572.0 415.2
Financed by:
Creditors falling due after more than one year
Borrowings 191.2 404.4 214.1
Provisions for liabilities and charges 47.5 55.1 44.3
238.7 459.5 258.4
Capital and reserves
Called up equity share capital 200.2 125.1 200.2
Share premium account 234.2 234.2 234.2
Profit and loss account (280.7) (247.8) (277.6)
Equity shareholders' funds 153.7 111.5 156.8
Equity minority interests - 1.0 -
392.4 572.0 415.2
Unaudited group cash flow statement
26 weeks to 26 weeks to 52 weeks to
29 March 30 March 28 September
2003 2002 2002
Notes #m #m #m
(Unaudited) (Unaudited)
Net cash flow from operations before exceptional
items 23.9 36.5 100.0
Net cash flow effect of exceptional items (1.8) (16.1) (27.4)
Net cash inflow/(outflow) from operating
activities a 22.1 20.4 72.6
Return on investments and servicing of finance
Interest paid (9.7) (16.4) (23.3)
Financing fees paid - (14.7) (18.9)
(9.7) (31.1) (42.2)
Taxation
Overseas and UK tax paid (3.1) (0.4) (3.3)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (3.3) (6.3) (9.9)
Receipts from sale of tangible fixed assets 0.4 0.6 0.9
(2.9) (5.7) (9.0)
Acquisitions and disposals
Disposal of subsidiary undertakings (1.3) 16.4 88.6
- 16.4 88.6
Cash inflow/(outflow) before financing 5.1 (0.4) 106.7
Financing
Issue of shares - - 70.3
Net drawings/(repayment) of borrowings (19.8) (89.6) (242.5)
Issue of 10-3/8% senior subordinated notes - 100.0 100.0
Capital element of finance lease payments (0.2) - (0.5)
(20.0) 10.4 (72.7)
Increase/(decrease) in cash in the period (14.9) 10.0 34.0
Unaudited notes to the group cash flow statement
(a) Reconciliation of operating profit/(loss) to net cash inflow/(outflow)
from operating activities
26 weeks to 29 March 2003 26 weeks to 30 March 2002
Before Effect of Before Effect of
exceptional exceptional Total exceptional exceptional
items items items items Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
#m #m #m #m #m #m
Operating profit/(loss) 12.7 (6.0) 6.7 16.1 (3.7) 12.4
Depreciation 6.3 - 6.3 8.7 - 8.7
Amortisation of goodwill 6.8 - 6.8 10.1 - 10.1
Provisions (net) (0.6) 3.2 2.6 (0.7) (2.5) (3.2)
(Increase)/decrease in stock (5.5) - (5.5) (0.8) 2.4 1.6
(Increase)/decrease in debtors 14.4 - 14.4 16.3 - 16.3
Increase/(decrease) in creditors (10.2) 1.0 (9.2) (13.2) (12.3) (25.5)
Net cash inflow/(outflow) from
operating activities 23.9 (1.8) 22.1 36.5 (16.1) 20.4
52 weeks to 28 September 2002
Before Effect of
exceptional exceptional
items items
Total
#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 stock 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
29 March 30 March 28 September
2003 2002 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 (14.9) 10.0 34.0
Borrowings repaid - 400.4 400.4
Issue of 10-3/8% senior subordinated notes - (100.0) (100.0)
Net (increase)/decrease in other loans 19.8 (310.8) (157.9)
Net (increase)/decrease in finance leases 0.2 - (1.0)
Translation differences - (14.2) 4.3
Net debt at the end of the period (181.0) (380.5) (186.1)
(c) Reconciliation of net debt to balance sheet
29 March 30 March 28 September
2003 2002 2002
(Unaudited) (Unaudited)
#m #m #m
Cash at bank and in hand 58.7 49.9 72.7
Short term borrowing (38.9) (10.1) (33.4)
Long term borrowing (191.2) (404.4) (214.1)
(171.4) (364.6) (174.8)
Exclude deferred financing costs (9.6) (15.9) (11.3)
(181.0) (380.5) (186.1)
Notes to the unaudited financial statements
1. Basis of Preparation
The accompanying condensed financial statements ("interim financial statements")
have been prepared in accordance with accounting principles generally accepted
in the United Kingdom ("U.K. GAAP"). The interim 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 26 weeks ended 29 March 2003 may not necessarily
be indicative of the operating results that may be achieved for the entire
financial year.
The interim 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 U.S. GAAP on the retained profit/(loss) is summarised in Note 9
to the interim financial statements.
These interim financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Group'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 for the 52
weeks to 28 September 2002 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 26 week period to 29 March 2003 and 30 March 2002
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:
As previously reported Reclassified
Period #m #m
13 weeks ended 30 March 2002 200.1 202.8
26 weeks ended 30 March 2002 390.0 395.6
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
26 weeks to 26 weeks to 13 weeks to 13 weeks to 52 weeks to
29 March 30 March 29 March 30 March 28
September
2003 2002 2003 2002 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
#m #m #m #m #m
Food Service Equipment - North America 196.3 230.4 96.2 123.1 474.1
Food Service Equipment - Europe/Asia 65.9 73.2 33.9 36.2 145.0
Food Retail Equipment 48.7 92.0 24.0 43.5 158.0
Food Equipment 310.9 395.6 154.1 202.8 777.1
Property - - - - 16.1
310.9 395.6 154.1 202.8 793.2
3. Operating profit/(loss)
26 weeks to 29 March 2003 26 weeks to 30 March 2002
Before exceptional Before Exceptional
exceptional items exceptional items
items Total items Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
#m #m #m #m #m #m
Food Service Equipment -
North America 20.1 (1.4) 18.7 24.6 - 24.6
Food Service Equipment -
Europe/Asia 3.6 (0.2) 3.4 4.3 (1.7) 2.6
Food Retail Equipment (0.1) - (0.1) 1.5 (2.0) (0.5)
23.6 (1.6) 22.0 30.4 (3.7) 26.7
Food Equipment
goodwill amortisation (6.8) - (6.8) (10.1) - (10.1)
Food Equipment 16.8 (1.6) 15.2 20.3 (3.7) 16.6
Property - (2.5) (2.5) - - -
Corporate costs (4.1) (1.9) (6.0) (4.2) - (4.2)
12.7 (6.0) 6.7 16.1 (3.7) 12.4
13 weeks to 29 March 2003 13 weeks to 30 March 2002
Before Exceptional Before Exceptional
exceptional items exceptional items
items items
Total Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
#m #m #m #m #m #m
Food Service Equipment
- North America 10.7 (1.4) 9.3 14.8 - 14.8
Food Service Equipment
- Europe/Asia 2.0 (0.2) 1.8 1.6 (0.4) 1.2
Food Retail Equipment 0.7 - 0.7 (0.2) (0.8) (1.0)
13.4 (1.6) 11.8 16.2 (1.2) 15.0
Food Equipment
goodwill amortisation (3.3) - (3.3) (5.1) - (5.1)
Food Equipment 10.1 (1.6) 8.5 11.1 (1.2) 9.9
Property - (2.5) (2.5) - - -
Corporate costs (2.0) (0.2) (2.2) (2.1) - (2.1)
8.1 (4.3) 3.8 9.0 (1.2) 7.8
52 weeks to 28 September 2002
Before Exceptional Total
exceptional items
items
#m #m #m
Food Service Equipment - North America 60.8 0.2 61.0
Food Service Equipment - Europe/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)
4. Exceptional items
(a) Operating exceptional items 26 weeks to 26 weeks to 52 weeks to
29 March 30 March 28 September
2003 2002 2002
(Unaudited) (Unaudited)
#m #m #m
Restructuring costs, cost reduction measures and 1.8 3.7 9.4
inventory write downs
Vacant leasehold provisions 2.5 - -
Legal fee accruals 1.7 - -
6.0 3.7 9.4
Goodwill impairment - - 48.9
Operating exceptional items 6.0 3.7 58.3
On 8 April 2003, the Group announced a restructuring and cost reduction
programme including salaried headcount reduction and the relocation of the CEO's
office to Tampa, Florida. The total cost of these actions is expected to be
approximately #4.5m and #1.8m has been recognised in the first half.
In addition, as a result of a slowdown in the property market, #2.5m has been
recognised in respect of vacant leasehold properties.
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 believes 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 26 weeks to 30 March 2002 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 26 weeks to 26 weeks to 52 weeks to
29 March 30 March 28 September
2003 2002 2002
(Unaudited) (Unaudited)
#m #m #m
Profit/(loss) on disposals 2.5 2.7 (38.1)
In February 2003, the Group paid #1.3m 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 26 weeks ended 29 March 2003.
On 13 December 2001, the Group disposed of Sammic SA and its subsidiary
undertakings for net cash consideration of #18.7m realising a profit on disposal
of #2.7m after writing off goodwill of #10.4m 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 26 weeks to 26 weeks to 52 weeks to
29 March 30 March 28 September
2003 2002 2002
(Unaudited) (Unaudited)
#m #m #m
Deferred financing fees written off - 4.2 4.2
Refinancing fees - 4.2 4.2
- 8.4 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 26 weeks to 26 weeks to 52 weeks to
29 March 30 March 28 September
2003 2002 2002
(Unaudited) (Unaudited)
#m #m #m
The tax charge for the current period comprised:
UK taxation at 30% (2002:30%) - - -
Foreign taxation - current year 1.4 1.8 5.8
- prior year - - (3.8)
1.4 1.8 2.0
Tax relief on exceptional items - deferred taxation - - (0.2)
1.4 1.8 1.8
Deferred taxation - (0.4) (0.8)
1.4 1.4 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.
6. Earnings/(loss) per share
26 weeks to 26 weeks to 13 weeks to 13 weeks to 52 weeks to
29 March 30 March 29 March 30 March 28
September
2003 2002 2003 2002 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
#m #m #m #m #m
Basic and diluted loss attributable to (3.4) (9.8) (3.4) (5.4) (87.0)
shareholders
m m m m m
Basic and diluted weighted average number of 399.2 307.5 399.2 307.5 351.0
shares
26 weeks to 26 weeks to 13 weeks to 13 weeks to 52 weeks to
29 March 30 March 29 March 30 March 28
September
2003 2002 2003 2002 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
pence pence pence pence pence
Basic loss per share (0.9) (3.2) (0.9) (1.8) (24.8)
Effect per share of exceptional items 0.9 3.1 1.2 1.8 15.9
Effect per share of goodwill amortisation and
impairment
1.7 3.3 0.9 1.7 19.3
Adjusted basic earnings per share 1.7 3.2 1.2 1.7 10.4
Diluted loss per share (0.9) (3.2) (0.9) (1.8) (24.8)
Effect per share of exceptional items 0.9 3.1 1.2 1.8 15.9
Effect per share of goodwill amortisation and
impairment
1.7 3.3 0.9 1.7 19.3
Adjusted diluted earnings per share 1.7 3.2 1.2 1.7 10.4
Adjusted earnings per share before exceptional items (note 4) and goodwill
amortisation are disclosed to reflect the underlying performance of the Group.
7. Contingencies
A Group company has recently received a letter from a third party alleging a
breach of contract claim in the amount of #6.8m. The company is in the early
stages of investigating whether the claim has any validity.
8. 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 26 weeks to 29 March 2003 being #1=US$1.58. Results to 30 March 2002 were
translated at the rate of #1=US$1.44 and full year results to 28 September 2002
at #1=US$1.47. The closing rate for the US Dollar at 29 March 2003 was #1=
US$1.57, at 30 March 2002 was #1=US$1.42 and at 28 September 2002 was #1=
US$1.55.
9. Supplementary information for US Investors
Reconciliation to generally accepted accounting principles in the United States.
The interim 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.
26 weeks to 26 weeks to 52 weeks to
29 March 30 March 28 September
2003 2002 2002
#m #m #m
(Unaudited) (Unaudited)
Retained profit/(loss) in accordance with UK GAAP (3.4) (9.8) (87.0)
Items increasing/(decreasing) UK GAAP operating profit/
(loss)(*):
- Goodwill amortisation 6.8 (7.4) (13.5)
- Pension costs (1.0) 0.6 (2.5)
- Sale/leaseback transactions - - 0.1
- Share option plans - - 1.1
- Restructuring charges - (0.4) (0.4)
- Derivative instruments 0.1 1.1 (4.0)
- Other (0.1) (0.5) (0.7)
- Capitalised interest 0.2 - -
- Loss contingency - - 2.4
Items increasing/(decreasing) UK GAAP other non-operating profit/(loss):
- Deferred taxation (1.8) (3.4) (16.5)
- Gain on sale of businesses - 3.5 18.0
Net profit/(loss) in accordance with US GAAP 0.8 (16.3) (103.0)
Net profit/(loss) in accordance with US GAAP is represented by:
Net profit/(loss) from continuing operations (1.7) (16.3) (103.0)
Gain on sale of discontinued operations 2.5 - -
Net profit/(loss) in accordance with US GAAP 0.8 (16.3) (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 annual report 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.
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 recognised. 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.
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:
26 weeks to 26 weeks to 52 weeks to
29 March 30 March 28 September
2003 2002 2002
(Unaudited) (Unaudited)
#m #m #m
Reported net profit/(loss) in accordance with US GAAP 0.8 (16.3) (103.0)
Add: Goodwill amortisation - 17.5 32.5
Adjusted net profit/(loss) 0.8 1.2 (70.5)
At 29 March 2003 the Group had goodwill of #391.0m under US GAAP. Pursuant to
the transitional provisions of SFAS No. 142 the Group has completed the first
step of its transitional goodwill impairment test. The Group is undertaking the
second step of its goodwill impairment test in its Global Food Service Equipment
segment which will be completed by 27 September 2003. If impairment arises, the
Group will record such impairment 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.
Other unaudited financial information
(i) Reconciliation of like-for-like information in the 26 weeks to 29 March
2003 (First half)
26 weeks to 26 weeks Effect of Effect of Proforma Like-for-like
to30 March Foreign
29 March Disposals Exchange H1 2002
2002
2003
a) Turnover #m #m #m #m #m %
Food Service Equipment
- North America 196.3 230.4 (21.1) (19.2) 190.1 3%
Food Service Equipment
- Europe/Asia 65.9 73.2 (7.4) 2.2 68.0 (3%)
Global Food Service Equipment 262.2 303.6 (28.5) (17.0) 258.1 2%
Food Retail Equipment 48.7 92.0 (24.3) (6.7) 61.0 (20%)
Food Equipment 310.9 395.6 (52.8) (23.7) 319.1 (3%)
b) Operating profit before exceptional items and goodwill amortisation
Food Service Equipment
- North America 20.1 24.6 (1.6) (2.0) 21.0 (4%)
Food Service Equipment
- Europe/Asia 3.6 4.3 (0.5) 0.1 3.9 (8%)
Food Service Equipment 23.7 28.9 (2.1) (1.9) 24.9 (5%)
Food Retail Equipment (0.1) 1.5 (2.1) 0.2 (0.4) 75%
Food Equipment 23.6 30.4 (4.2) (1.7) 24.5 (4%)
(ii) Reconciliation of like-for-like information for the 13 weeks to 29
March 2003 (Second quarter)
13 weeks to 13 weeks to Effect of Effect of Proforma Like-for-like
Foreign
29 March 30 March Disposals Exchange Q2 2002
2003 2002
a) Turnover #m #m #m #m #m %
Food Service Equipment
- North America 96.2 123.1 (11.6) (12.2) 99.3 (3%)
Food Service Equipment
- Europe/Asia 33.9 36.2 (2.8) 1.7 35.1 (3%)
Global Food Service Equipment 130.1 159.3 (14.4) (10.5) 134.4 (3%)
Food Retail Equipment 24.0 43.5 (11.1) (3.6) 28.8 (17%)
Food Equipment 154.1 202.8 (25.5) (14.1) 163.2 (6%)
b) Operating profit before exceptional items and goodwill amortisation
Food Service Equipment
- North America 10.7 14.8 (1.2) (1.4) 12.2 (12%)
Food Service Equipment
- Europe/Asia 2.0 1.6 (0.1) - 1.5 33%
Food Service Equipment 12.7 16.4 (1.3) (1.4) 13.7 (7%)
Food Retail Equipment 0.7 (0.2) (0.8) 0.2 (0.8) 188%
Food Equipment 13.4 16.2 (2.1) (1.2) 12.9 4%
(iii) Reconciliation of non-UK GAAP measures
Adjusted Group profit/(loss) before tax
26 weeks to 26 weeks to 13 weeks to 13 weeks to
29 March 30 March 29 March 30 March
2003 2002 2003 2002
#m #m #m #m
Profit/(loss) before tax (2.0) (8.2) (1.8) (4.5)
Add back:
Goodwill amortisation 6.8 10.1 3.3 5.1
Exceptional items 3.5 9.4 4.3 5.6
Adjusted Group profit/(loss) before tax 8.3 11.3 5.8 6.2
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KDLFBXEBZBBL
