Final Results
Avon Rubber PLC
30 November 2006
Avon Rubber p.l.c.
Strictly embargoed until 07:00 30 November 2006
Preliminary results for the year ended 30 September 2006
30 Sept 30 Sept
2006 2005
£Millions £Millions
___________ ___________
GROUP*
Revenue 230.8 239.7
Operating profit/(loss) 1.6 (2.0)
Operating profit before exceptional items 3.0 6.2
CONTINUING OPERATIONS
Revenue 65.0 46.9
Operating loss (2.5) (3.2)
Operating loss before exceptional items (2.0) (1.9)
DISCONTINUED OPERATIONS
Revenue 165.8 192.8
Operating profit for the year 4.1 1.2
Operating profit for the year before exceptional items 5.0 8.1
LOSS PER SHARE:
Basic (68.9)p (19.1)p
Continuing operations (20.9)p (21.9)p
DIVIDENDS PER SHARE 8.5p 8.5p
*The Group figures are non statutory items which have been reconciled to the Income
Statement within Note 2.
• Year of significant strategic change
• Group now focusing on respiratory protection, dairy, aerosol gaskets and
engineered fabrications
• Revenue on continuing operations up 39%
• Net debt reduced to £1.1 million
• Dividend maintained
• Results prepared under International Financial Reporting Standards (IFRS)
Commenting on the results, Terry Stead, Chief Executive said:
'The last eighteen months has been a period of significant strategic change for
the Group. Having disposed of our Automotive business and closed or restructured
other loss making activities, we are now focused on the opportunities in
respiratory protection, dairy, aerosol gaskets and engineered fabrications. Our
position in respiratory protection has been strengthened by the acquisition of
ISI, the launch of the new escape hood and the transfer into production of the
new M50 range of respirators and their associated filters for the US government.
In the UK we are seeing the benefits of the cost reduction measures taken last
year. We are also experiencing increased demand for our legacy respiratory
protection products and our new escape hood. In North America both our dairy and
engineered fabrications businesses continue to perform well. Since the year end
the overall performance from our continuing operations is improving and we
expect significant growth from the North American respiratory protection
business.
The Board is confident that the strategic changes that have been made have laid
the foundation for a period of exciting and profitable growth for the Group.'
For further enquiries, please contact:
Avon Rubber p.l.c
Terry Stead, Chief Executive 020 7067 0700
Peter Slabbert, Group Finance Director (until 2.00pm)
From 1 December 01225 896 831
Weber Shandwick | Square Mile
Richard Hews 020 7067 0700
Rachel Taylor
Hannah Marwood
An analyst meeting will be held at 09:15 for 09:30 am this morning at the offices
of Weber Shandwick Square Mile, Fox Court, 14 Gray's Inn Road, London,WC1X 8WS.
NOTES TO EDITORS: Avon Rubber p.l.c. is an international polymer engineering
group adding value through material, manufacturing and industry sector
expertise. The Group is currently capitalised at approximately £45 million.
AVON RUBBER p.l.c.
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006
INTRODUCTION
We have completed a major strategic restructuring during the year. We sold our
Automotive business, finalised the restructuring at our Hampton Park West
facility and completed the disposal of Avon Zatec. This repositions the Group in
our chosen markets of respiratory protection, dairy, aerosol gaskets and
engineered fabrications where we believe the opportunities exist for us to
benefit from higher margin growth and sustainable earnings.
Trading was disappointing during the year, particularly in the second half.
Having announced the Automotive disposal in May, the delayed August completion
date meant that we incurred losses associated with customer shutdown periods of
July/August without the benefit of normally improved trading in September.
Interest costs were also higher due to the delayed completion. The short-term
improvements expected at the half year from our respiratory protection business
were not realised as originally planned. This was through a combination of
market factors and the inherent uncertainties associated with the introduction
and approval of new safety critical products in a demanding regulatory
environment, where a large proportion of our sales are now to military users or
other governmental organisations. Once contracts start these provide for
long-term and consistent revenue streams although the exact timing of initial
production orders is less predictable.
The transfer into production of the new generation US military respirator and
the associated filters continues to make progress. We have received further
orders for this respirator and expect the full rate production order shortly.
This will enable our respiratory protection business in Cadillac, Michigan, to
grow and operate at planned levels of profitability. The businesses situated in
Hampton Park West are now showing significant improvements and production rates
of the newly introduced rapid escape hood are approaching targeted levels. Our
North American dairy business and engineered fabrications continue to
demonstrate strong operational performance.
RESULTS
The Group reports full year results for the first time under International
Financial Reporting Standards (IFRS), adopted from the date of transition
being 1 October 2004.
Revenue from continuing operations increased by 39% to £65.0m (2005: £46.9m).
The operating loss decreased from £3.2m in 2005 to £2.5m; however, the operating
loss before exceptional items increased from £1.9m to £2.0m.
The exceptional charges for the year ended 30 September 2006 relate to a
restructuring programme at our Hampton Park West facility to reduce its cost
base and to the impairment of the loss making Mixing facility in Westbury,
offset by a profit on the sale and leaseback of the Hampton Park West site.
Group operating profit on an IFRS basis, but presented in a UK GAAP format, was
£3.0m before exceptional items (2005: £6.2m) and the profit before tax and
exceptional items on a similar basis was £1.7m (2005: £4.8m).
Net interest costs increased to £3.4m (2005: £2.5m) due to higher global
interest rates and higher levels of borrowings through much of the year. This
follows the acquisition of International Safety Instruments (ISI) in June 2005
for an initial cash consideration of £11.7m, high levels of capital expenditure
in our developing respiratory protection business and the later than expected
completion of the sale of our Automotive business. Following this disposal, net
debt reduced to £1.1m (2005: £51.7m) at year end. Prior to the effect of
disposals and a high level of investment ahead of planned growth, we generated
net cash from operating activities of £0.7m (2005: £4.2m). Further investment is
planned for 2007, particularly in product development in our Protection business
and in the working capital associated with planned growth.
After net interest and other finance income the loss before tax was £3.7m (2005:
£4.7m). After a tax charge of £2.0m (2005: £1.1m), the loss for the year from
continuing operations was £5.7m (2005: £5.8m).
The tax charge relates to tax on profits in our US entities and the derecognition
of tax assets in the UK. Tax credits onlosses in the UK are not being
recognised until there is greater certainty about the timing of their utilisation.
The discontinued operations comprising the disposed Automotive business, the
disposed business machines operations at Zatec and the closed business machines
operation at Hampton Park West, incurred a loss for the year of £13.4m (2005:
profit £0.7m). This reflects an operating profit before exceptional items of
£5.0m (2005: £8.1m), a loss on disposal of the Automotive operations of £17.4m,
a loss on disposal of Zatec of £0.6m, £0.9m of exceptional operating costs
relating to the discontinuation of business machine operations in the UK and a
tax credit of £0.6m (2005: charge £0.6m).
The loss per share was 68.9p (2005: 19.1p) and the loss per share on continuing
operations was 20.9p (2005: 21.9p).
PROTECTION AND ENGINEERED PRODUCTS
Sales revenue from continuing businesses increased by 39% to £65.0m (2005:
£46.9m).
This growth originated in three main areas. ISI's full year's sales totalled
£11.3m (2005: £2.3m post acquisition) even though they suffered from a
disappointing second half as a result of delayed Federal grants to fire
departments in the US. Avon Engineered Fabrications' sales increased by 83% to
£8.4m (2005: £4.6m) reflecting strong growth in our military portable storage
tank business. In Protection we experienced an increase in recoverable product
development activity and the commencement of respirator sales from our new
facility in Cadillac, but lower sales in the UK.
Dairy made modest progress in its mature markets with improvements primarily in
the US. The UK Dairy operations stabilised following sales reductions in 2005.
The Aerosol gasket business grew by 5% with further growth, particularly in the
US, being targeted.
The operating loss before exceptional items from continuing businesses was £2.0m
(2005: £1.9m). This loss is shown after absorption of all central costs. Despite
Automotive being part of the Group for much of the year no central costs were
allocated to this segment. These costs have been further reduced since the
disposal.
The operating loss from continuing businesses represents a mixture of profitable
stable businesses, businesses investing for growth and loss making operations:
• Our US based businesses, Hi-Life (dairy), Avon Engineered Fabrications
(flexible fabrications) and ISI (SCBA equipment) all made significant
profit contributions.
• The Protection businesses are resourced for further growth in
respirators and rapid escape hoods. However, in the year, the UK business
experienced a low level of legacy respirator sales.
• Our UK Dairy and Aerosol gasket businesses underperformed due to an
unacceptably high cost base which has now been addressed. The Mixing
operation incurred a significant loss and central costs were at levels
higher than we expect going forward.
The opportunity for improvement clearly lies in delivering the planned revenue
growth, particularly in respiratory protection, cost reductions in the UK
actioned through the now completed restructuring and elimination of loss making
activities.
Discontinued business revenue fell by 15% to £5.5m (2005: £6.5m). Falling
revenues at our business machine blades operation led to the disposal of Zatec
which was completed in September. In addition, we closed our UK business machine
roller manufacturing operation in June, exiting another loss making business in
long-term decline. The loss incurred in the discontinued operations (before
exceptional items) was £0.9m (2005: £0.7m).
AUTOMOTIVE (DISCONTINUED BUSINESS)
Revenue of £160.2m (2005: £186.4m) reflects the reduced trading period of a
little over ten months to 11 August, the challenge of growing sales in a
generally stable market, price down pressures and a disproportionate exposure in
the US market to the traditional Big 3 automotive manufacturers each of whom
continued to lose market share. The resulting operating profit (excluding any
allocation of central costs) was £5.9m (2005: £2.1m after exceptional operating
items of £6.7m). At a trading level therefore, operating profit reduced by
£2.9m. As a percentage of sales this is a reduction from 4.7% in 2005 to 3.7% in
2006, reinforcing our belief that we were unlikely to deliver acceptable returns
from this business going forward. The reduction in profitability resulted
despite significant cost elimination activities, including three facility
closures in recent years along with the accompanying charges and associated
write-offs.
Publicly announced cuts in production by major US customers, after the disposal
was completed, confirm the volatility of the market and support our strategy to
exit this area of our business.
CAPITAL STRUCTURE AND DIVIDEND
At the time of our interim statement in May, and following the disposal of the
Automotive business, we stated that the Board would consider the appropriate
capital structure for the Group. This would require balancing important factors,
including perceived growth/acquisition opportunities, product development
programmes, restructuring plans, on-going pension obligations and distribution
policy.
The Board has undertaken this review and believes the Group is now poised for a
period of organic growth, particularly in respiratory protection. This will
require funding for both working capital and new product development. In
addition, the Board wishes to be in a position to make appropriate acquisitions
in pursuit of the Group's strategy. There is still a deficit in the pension fund
despite improved asset returns in the year, but with the latest valuation taking
account of increased life expectancy. As a result the Board is of the opinion
that, having taken into account current financing availability and potential
debt capacity, any enhanced distribution may inhibit the opportunities for
growth.
The Board is, however, recommending an unchanged final dividend of 4.8p per
share (2005: 4.8p per share) which will be paid on 2 February 2007 to
shareholders on the register on 12 January 2007. When added to the interim
dividend of 3.7p per share (2005: 3.7p per share) the total dividend is
unchanged at 8.5p per share (2005: 8.5p per share). The Board recognises that
this dividend is not covered by current earnings but is committed to returning
to appropriate levels of dividend cover going forward.
OUTLOOK
The last eighteen months has been a period of significant strategic change for
the Group. Having disposed of our Automotive business and closed or restructured
other loss making activities, we are now focused on the opportunities in
respiratory protection, dairy, aerosol gaskets and engineered fabrications. Our
position in respiratory protection has been strengthened by the acquisition of
ISI, the launch of the new escape hood and the transfer into production of the
new M50 range of respirators and their associated filters for the US government.
In the UK we are seeing the benefits of the cost reduction measures taken last
year. We are also experiencing increased demand for our legacy respiratory
protection products and our new escape hood. In North America both our dairy and
engineered fabrications businesses continue to perform well. Since the year end
the overall performance from our continuing operations is improving and we
expect significant growth from the North American respiratory protection
business.
The Board is confident that the strategic changes that have been made have laid
the foundation for a period of exciting and profitable growth for the Group.
CONSOLIDATED INCOME STATEMENT
For the year ended 30 September
Note Year to Year to
30 Sept 06 30 Sept 05
(unaudited) (unaudited)
£'000 £'000
______________________________________________________________________________
Continuing operations
Revenue 2 65,042 46,860
Operating loss from continuing operations 2 (2,461) (3,198)
_______________________________________________________________________________
_______________________________________________________________________________
Operating loss is analysed as:
Before exceptional items (1,997) (1,909)
Exceptional operating charges (464) (1,289)
_______________________________________________________________________________
_______________________________________________________________________________
Interest receivable 123 193
Interest payable (3,493) (2,670)
Other finance income 2,151 1,010
_______________________________________________________________________________
Loss before tax (3,680) (4,665)
Taxation 3 (2,045) (1,116)
_______________________________________________________________________________
Loss for the year from continuing
operations (5,725) (5,781)
Discontinued operations
(Loss)/profit for the year from
discontinued operations 4 (13,402) 735
_______________________________________________________________________________
Loss for the year (19,127) (5,046)
_______________________________________________________________________________
(Loss)/profit attributable to minority interest (209) 115
Loss attributable to equity shareholders (18,918) (5,161)
_______________________________________________________________________________
(19,127) (5,046)
_______________________________________________________________________________
Loss per share 6
Basic (68.9)p (19.1)p
Diluted (68.9)p (19.1)p
Loss per share from continuing operations
Basic (20.9)p (21.9)p
Diluted (20.9)p (21.9)p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 30 September
Year to Year to
30 Sept 06 30 Sept 05
(unaudited) (unaudited)
£'000 £'000
_______________________________________________________________________________
Loss for the financial year (19,127) (5,046)
Actuarial (loss)/gain recognised in
retirement benefit scheme (2,143) 3,974
Movement on deferred tax relating to
retirement benefit liabilities 115 (6,275)
Net exchange differences offset in
reserves (809) 606
_______________________________________________________________________________
Net losses not recognised in income
statement (2,837) (1,695)
_______________________________________________________________________________
Total recognised expense for the year (21,964) (6,741)
_______________________________________________________________________________
Attributable to:
Minority interest (209) 115
Equity shareholders (21,755) (6,856)
_______________________________________________________________________________
Total recognised expense for the year (21,964) (6,741)
_______________________________________________________________________________
CONSOLIDATED BALANCE SHEET
As at 30 September
Note As at As at
30 Sept 06 30 Sept 05
(unaudited) (unaudited)
£'000 £'000
_______________________________________________________________________________
Assets
Non-current assets
Goodwill & intangible assets 17,103 30,296
Property, plant and equipment 20,815 71,294
Investments accounted for using equity method - 146
Trade and other receivables - 604
Deferred tax assets 1,101 3,208
_______________________________________________________________________________
39,019 105,548
Current assets
Inventories 11,257 24,004
Trade and other receivables 15,530 51,227
Derivative financial instruments - 24
Cash and cash equivalents 6,893 8,919
_______________________________________________________________________________
33,680 84,174
Liabilities
Current liabilities
Borrowings 8,000 35,884
Trade and other payables 18,505 47,270
Current tax liabilities 736 1,153
_______________________________________________________________________________
27,241 84,307
_______________________________________________________________________________
Net current assets/(liabilities) 6,439 (133)
_______________________________________________________________________________
Non-current liabilities
Borrowings - 24,754
Deferred tax liabilities 2,293 3,116
Other non-current liabilities 1,071 1,155
Retirement benefit obligations 14,666 23,076
Provisions 3,426 5,615
_______________________________________________________________________________
21,456 57,716
_______________________________________________________________________________
Net assets 24,002 47,699
_______________________________________________________________________________
Shareholders' equity
Ordinary shares 28,275 28,121
Share premium account 34,191 34,070
Revaluation reserve - 1,751
Capital redemption reserve 500 500
Translation reserve (203) 606
Profit and loss account (39,317) (18,114)
_______________________________________________________________________________
Equity shareholders' funds 7 23,446 46,934
Minority interests (equity interests) 556 765
_______________________________________________________________________________
Total equity 24,002 47,699
_______________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September
Note Year to Year to
30 Sept 06 30 Sept 05
(unaudited) (unaudited)
£'000 £'000
_______________________________________________________________________________
Cash flows from operating activities
Cash generated from operations 8 6,261 8,613
Interest received 123 234
Interest paid (3,890) (2,568)
Tax paid (1,750) (2,062)
_______________________________________________________________________________
Net cash from operating activities 744 4,217
_______________________________________________________________________________
Cash flows from investing activities
Acquisition of subsidiaries (net of cash
acquired) - (11,395)
Disposal of subsidiaries (net of cash
disposed) 51,972 -
Net proceeds from sale of property, plant and
equipment 4,935 -
Net purchase of property, plant and equipment - (7,072)
Capitalised development costs (5,182) (4,774)
_______________________________________________________________________________
Net cash generated from/(used in) investing
activities 51,725 (23,241)
_______________________________________________________________________________
Cash flows from financing activities
Net proceeds from issues of ordinary share
capital 275 297
Net movements in loans and finance leases (51,156) 20,058
Decrease/(increase) in derivatives 24 (12)
Dividends paid to shareholders (2,332) (2,293)
_______________________________________________________________________________
Net cash (used in)/ generated from
financial activities (53,189) 18,050
_______________________________________________________________________________
Effects of exchange rate changes (89) 68
_______________________________________________________________________________
Net decrease in cash and cash equivalents (809) (906)
Cash and cash equivalents at beginning of
the year 7,702 8,608
_______________________________________________________________________________
Cash and cash equivalents at end of the year 6,893 7,702
_______________________________________________________________________________
NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS
1. Basis of preparation
Financial Reporting
(a) The figures and financial information for the year ended 30 September 2006
do not constitute the statutory financial statements for that year. Those
financial statements have not yet been delivered to the Registrar, nor have
the auditors reported on them. The financial statements have been prepared
in accordance with our accounting policies published in our IFRS conversion
statement on 11 May 2006, which is available on our website at http:/
www.avon-rubber.com/corporate/pressrelease.htm.
(b) The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC interpretations as
adopted by the European Union (collectively 'IFRS') and with those parts
of the Companies Act 1985 applicable to companies reporting under IFRS.
The 2006 financial statements are the Group's first full year consolidated
financial statements prepared under IFRS, with a transition date to IFRS
of 1 October 2004. Consequently, the comparative figures for 2005 and the
Group's balance sheet as at 1 October 2004 have been restated to comply
with IFRS, with the exception of IAS 32: 'Financial instruments: disclosure
and presentation' and IAS 39: 'Financial instruments: recognition and
measurement' which have been applied from 1 October 2005. In addition,
IFRS 1 on first time adoption allows certain exemptions from retrospective
application of IFRS in the opening balance sheet at 1 October 2004.
For full details, of the 2005 restatement visit the investor section of our
website www.avonrubber.com.
2. Segmental analysis
Due to the differing natures of the products and their markets, Avon Rubber
p.l.c.'s primary reporting segment is by business. The secondary reporting
format comprises the geographical segments by origin.
_____________________________________________________________________________________________
Primary Continuing Discontinued
reporting
format -
business
segments
For the year Protection & Protection &
ended Engineered Automotive Engineered
30 September Products Components Products Total Unallocated Group
2006 £'000 £'000 £'000 £'000 £'000 £'000
_____________________________________________________________________________________________
Revenue 65,042 160,245 5,469 165,714 - 230,756
_____________________________________________________________________________________________
Segment
result
before
exceptional
operating
items (1,997) 5,877 (918) 4,959 - 2,962
Exceptional
operating
items (464) - (917) (917) - (1,381)
_____________________________________________________________________________________________
Segment
result
after
exceptional
operating
items (2,461) 5,877 (1,835) 4,042 - 1,581
Loss on
disposal of
operations - (17,381) (645) (18,026) - (18,026)
Interest
receivable 123 123
Interest
payable (3,493) (3,493)
Other finance
income 2,151 2,151
_____________________________________________________________________________________________
Loss before
tax (2,461) (11,504) (2,480) (13,984) (1,219) (17,664)
Taxation (2,045) 582 - 582 - (1,463)
_____________________________________________________________________________________________
Loss for the
year (4,506) (10,922) (2,480) (13,402) (1,219) (19,127)
_____________________________________________________________________________________________
Loss
attributable
to minority
interest (209)
Loss
attributable
to equity
shareholders (18,918)
_____________________________________________________________________________________________
(19,127)
_____________________________________________________________________________________________
_____________________________________________________________________________________________
Primary Continuing Discontinued
reporting
format -
business
segments
For the year Protection & Protection &
ended Engineered Automotive Engineered
30 September Products Components Products Total Unallocated Group
2005 £'000 £'000 £'000 £'000 £'000 £'000
_____________________________________________________________________________________________
Revenue 46,860 186,391 6,484 192,875 - 239,735
_____________________________________________________________________________________________
Segment
result
before
exceptional
operating
items (1,909) 8,801 (709) 8,092 - 6,183
Exceptional
operating
items (1,289) (6,734) (135) (6,869) - (8,158)
_____________________________________________________________________________________________
Segment
result
after
exceptional
operating
items (3,198) 2,067 (844) 1,223 - (1,975)
Share of post
tax profits
of joint
venture - 78 - 78 - 78
Interest
receivable 193 193
Interest
payable (2,670) (2,670)
Other finance
income 1,010 1,010
_____________________________________________________________________________________________
Loss
before
tax (3,198) 2,145 (844) 1,301 (1,467) (3,364)
Taxation (1,116) (566) - (566) - (1,682)
_____________________________________________________________________________________________
(Loss)/profit
for the year (4,314) 1,579 (844) 735 (1,467) (5,046)
_____________________________________________________________________________________________
Profit
attributable
to minority
interest 115
Loss
attributable
to equity
shareholders (5,161)
_____________________________________________________________________________________________
(5,046)
_____________________________________________________________________________________________
__________________________________________________________________________________________________________
Secondary Continuing Discontinued
reporting
format -
geographical
segments
For the year
ended
30 September North North
2006 Europe America Total Europe America Total Group
£'000 £'000 £'000 £'000 £'000 £'000 £'000
__________________________________________________________________________________________________________
Revenue 22,266 42,776 65,042 91,230 74,484 165,714 230,756
__________________________________________________________________________________________________________
Segment result
before
exceptional
operating
items (7,084) 5,087 (1,997) 946 4,013 4,959 2,962
Exceptional
operating
items (464) - (464) (917) - (917) (1,381)
__________________________________________________________________________________________________________
Segment result
after
exceptional
operating
items (7,548) 5,087 (2,461) 29 4,013 4,042 1,581
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
Secondary Continuing Discontinued
reporting
format -
geographical
segments
For the year
ended
30 September North North
2005 Europe America Total Europe America Total Group
£'000 £'000 £'000 £'000 £'000 £'000 £'000
__________________________________________________________________________________________________________
Revenue 23,962 22,898 46,860 111,124 81,751 192,875 239,735
__________________________________________________________________________________________________________
Segment result
before
exceptional
operating
items (5,287) 3,378 (1,909) 4,309 3,783 8,092 6,183
Exceptional
operating
items (1,289) - (1,289) (5,937) (932) (6,869) (8,158)
__________________________________________________________________________________________________________
Segment result
after
exceptional
operating
items (6,576) 3,378 (3,198) (1,628) 2,851 1,223 (1,975)
__________________________________________________________________________________________________________
Central costs which were previously allocated to all business segments, have
been allocated only to continuing operations.
The exceptional operating items comprise:
________________________________________________________________________________
2006 2005
£'000 £'000
________________________________________________________________________________
Profit on disposal of fixed assets 4,415 -
Fixed asset impairment (3,442) -
Other operating charges - continuing (1,437) (1,289)
________________________________________________________________________________
Exceptional operating items - continuing (464) (1,289)
Other operating charges - discontinued (917) (6,869)
________________________________________________________________________________
(1,381) (8,158)
________________________________________________________________________________
The profit on disposal of fixed assets relates to the profit on the sale and
leaseback of the facility at Hampton Park West, Melksham, UK. The fixed asset
impairment relates to our UK mixing facility. Both these are included in the
Protection and Engineered Products continuing business segment and European
secondary segment.
The other operating charges relate to the restructuring of our UK Protection &
Engineered Products continuing operations (£1,437,000) and the costs associated
with the discontinuance of business machine products manufactured in the UK
(£917,000).
3. Taxation
The split of the tax charge/(credit) between UK and overseas is as follows:
________________________________________________________________________________
Year to Year to Year to Year to
30 Sept 06 30 Sept 06 30 Sept 06 30 Sept 05
Continuing Discontinued Total Total
£'000 £'000 £'000 £'000
________________________________________________________________________________
United Kingdom 1,011 (634) 377 223
Overseas 1,034 52 1,086 893
________________________________________________________________________________
2,045 (582) 1,463 1,116
________________________________________________________________________________
The tax charge relating to the sale of operations is £Nil (2005: £Nil)
4. Results from discontinued operations
30 Sept 06 30 Sept 05
£'000 £'000
________________________________________________________________________________
Revenue 165,714 192,875
Operating profit from discontinued operations 4,042 1,223
________________________________________________________________________________
Operating profit/(loss) is analysed as:
Before exceptional items 4,959 8,092
Exceptional operating items (917) (6,869)
________________________________________________________________________________
Share of post tax profits of joint venture - 78
Taxation on profits from discontinued operations 582 (566)
Loss on disposal (18,026) -
________________________________________________________________________________
(Loss)/profit for the year from discontinued
operations (13,402) 735
________________________________________________________________________________
The loss on disposal has been calculated as follows: Automotive Zatec
£'000 £'000
________________________________________________________________________________
Proceeds from sale 58,729 349
Costs associated with sale (4,880) (16)
________________________________________________________________________________
53,849 333
Taxation on disposal - -
________________________________________________________________________________
Net proceeds from sale 53,849 333
Net assets disposed of (69,330) (978)
________________________________________________________________________________
(15,481) (645)
Other provisions (1,900) -
________________________________________________________________________________
Loss on disposal after tax (17,381) (645)
________________________________________________________________________________
The Group's Automotive components business was sold on 11 August 2006. Zatec was
sold on 29 September 2006.
5. Dividends
The directors are proposing a final dividend in respect of the year ending 30
September 2006 of 4.8p which will absorb an estimated £1,325,000 of
shareholders' funds. The dividend will be paid on 2 February 2007 to
shareholders on the register at noon on 12 January 2007.
In accordance with IFRS the proposed final dividend is not recorded as a
liability nor reflected in the income statement.
6. Earnings per share
Basic loss per share is based on a loss attributable to ordinary shareholders of
£18,918,000 (2005: £5,161,000) and 27,454,995 (2005: 26,963,971) ordinary
shares, being the weighted average of the shares in issue during the period on
which dividends are paid.
Loss per share on continuing operations is based on a loss of £5,725,000 (2005:
£5,781,000).
The company has dilutive potential ordinary shares in respect of the Sharesave
Option Scheme and the Performance Share Plan. The diluted loss per share is not
materially different to the basic loss per share.
7. Reconciliation of changes in equity
Year to Year to
30 Sept 06 30 Sept 05
£'000 £'000
________________________________________________________________________________
At the beginning of the year 46,934 55,405
Loss for the period attributable to equity
shareholders (18,918) (5,161)
Dividends (2,331) (2,294)
Actuarial (loss)/gain recognised in retirement
benefit schemes (2,143) 3,974
Movement on deferred tax relating to retirement
benefit liabilities 115 (6,275)
Net exchange differences offset in reserves (809) 606
New share capital subscribed 275 297
Movement in respect of employee share scheme 323 382
________________________________________________________________________________
At the end of the year 23,446 46,934
________________________________________________________________________________
8. Cash generated from operations
Year to Year to
30 Sept 06 30 Sept 05
£'000 £'000
________________________________________________________________________________
Continuing operations
Loss for the financial year (5,725) (5,781)
Adjustments for:
Tax 2,045 1,116
Depreciation 2,126 2,438
Impairment of fixed assets 3,442 -
Amortisation and impairment of intangibles 613 191
Net interest expense 3,370 2,477
Other finance income (2,151) (1,010)
Movements in working capital and provisions (5,655) (4,041)
Other movements (3,985) 343
________________________________________________________________________________
Cash used in continuing operations (5,920) (4,267)
________________________________________________________________________________
Discontinued operations:
(Loss)/profit for the financial year (13,402) 735
Adjustments for:
Tax (582) 566
Depreciation 5,047 5,813
Loss on sale of subsidiaries 18,026 -
Amortisation and impairment of intangibles 1,128 2,312
Movements in working capital and provisions 1,964 3,554
Other movements - (100)
________________________________________________________________________________
Cash generated from discontinued operations 12,181 12,880
________________________________________________________________________________
Cash generated from operations 6,261 8,613
________________________________________________________________________________
9. Analysis of net debt
Amortisation
As at Cash Disposal of of loan issue Exchange As at
30 Sep 05 Flow subsidiaries costs movements 30 Sept 06
£'000 £'000 £'000 £'000 £'000 £'000
__________________________________________________________________________________________
Cash at bank
and in hand 3,902 68 (2,122) - (25) 1,823
Overdrafts (1,217) 1,226 - - (9) -
Current asset
investments
classified as
cash equivalents 5,017 108 - - (55) 5,070
__________________________________________________________________________________________
Cash and cash
equivalents 7,702 1,402 (2,122) - (89) 6,893
Debt due after
1 year (24,754) 24,754 - - - -
Debt due
within 1 year (34,665) 26,389 - (83) 359 (8,000)
Finance leases (2) 2 - - - -
__________________________________________________________________________________________
(51,719) 52,547 (2,122) (83) 270 (1,107)
__________________________________________________________________________________________
10. Copies of the directors' report and the audited financial statements for the
year ended 30 September 2006 will be posted to shareholders and may also be
obtained from the company's registered office at Hampton Park West, Semington
Road, Melksham, Wiltshire, SN12 6NB, England. (Telephone +44 1225 896871), or
via the corporate website (www.avon-rubber.com).
This information is provided by RNS
The company news service from the London Stock Exchange
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