Interim Results
Dickinson Legg Group PLC
09 February 2006
Dickinson Legg Group PLC
Interim Results for the Six Months ended 31 December 2005
Dickinson Legg Group is a specialist engineering group, incorporating Dickinson
Legg Limited and Spooner Industries Limited. Dickinson Legg Limited is a world
leader in the manufacturing and installation of primary tobacco processing
equipment and Spooner Industries Limited is a specialist air drying equipment
manufacturer for the paper, converting, metals and food industries.
• Dickinson Legg commenced the year with a low order book but increasing
growth in order intake in the period should lead to a significant
improvement in trading performance in the second half year relative to the
first.
• Spooner Industries is expected to make a positive contribution towards
the reduction of its first half deficit.
Financials
• Turnover £11.977 million (2004: £13.804 million)
• Loss before tax £0.89 million (2004: £0.62 million)
• Basic loss per share 2.62p (2004: 2.36p)
• Net funds £0.891 million (2004: £1.293 million)
For further information, please contact:
Dickinson Legg Group PLC 01962 841788
Tom Mackie, Chief Executive
David Heath, Financial Director
Rowan Dartington 0117 933 0011
Barrie Newton
Operating Review
The Chairman's statement at the annual general meeting in December 2005
indicated that trading performance would be heavily biased to the second half.
This is reflected in the results for the first half year, with Dickinson Legg
Group reporting turnover of £11.977 million and an operating loss of £0.834
million. The performance of the tobacco businesses was constrained by a low
order book at the start of the financial year, which has improved in line with
management's expectations.
Dickinson Legg, the primary tobacco process equipment manufacturer and Dickinson
Fowler, its Indian joint venture, had combined revenues of £8.889 million (2004:
£11.157 million) and an operating loss of £0.198 million (2004: profit £0.448
million). Sales of machines, spares and wear parts were lower, than the
comparative period last year. Order intake in the period resulted in a growing
order book and recent successful awards of new projects for Expanded Stem System
(ESS) and High Expansion Drying (HXD), should lead to a significant improvement
in trading performance in the second half year relative to the first. Dickinson
Fowler should have an improved trading performance in the second half as a
result of an increase in orders placed by Dickinson Legg.
Spooner Industries, the specialist air drying equipment manufacturer had
turnover of £3.446 million (2004: £3.507 million) and an operating loss of
£0.296 million (2004: £0.478 million) as a result of pressure on margins and
lack of volume. An increase in activity levels in the second half should lead to
an improvement on the half year trading performance.
Results
Group turnover at £11.977 million was 13.2% lower than the previous half year
and the operating loss, including the joint venture before exceptional items,
was £0.874 million compared to a loss of £0.295 million. The majority of the
reduction in sales and profits is attributable to the tobacco business, which
commenced the year with a low order book. However, despite the competitive
pressures in the market, margins in the tobacco business are being maintained.
Whilst Spooner's losses have been reduced, the combination of erratic volumes
and the pressure on margins will continue to weigh on the business.
The Group's net interest payable in the period was £0.014 million and is in line
with that of the comparative period. The improvement in the interest earned by
the joint venture has been offset by the interest charge arising from the prior
year tax adjustment disclosed in the 2005 Report and Accounts.
The basic loss per share was 2.62p (2004: 2.36p).
Net funds at the half year were £0.891 million, which is a reduction of £0.402
million for the comparative period, but are £0.054 million higher than the year
ended 30 June 2005.
Taxation
The tax charge for the period is £0.064million (2004: £0.237million). This is a
result of our overseas earnings incurring a tax charge and this again will
impact on the second half.
Dividend
The Directors are not recommending payment of an interim dividend.
Prospects
As a result of a much improved order book, Dickinson Legg should produce a
significant improvement in trading performance in the second half year and
Spooner Industries is expected to make a positive contribution towards the
reduction of its first half deficit. The markets we serve are highly competitive
and it is too early to say if the upturn will be sustained in the tobacco
sector.
Barry Stevenson
Chairman
9 February 2006
Dickinson Legg Group PLC
Group profit and loss account (unaudited)
for the six months ended 31 December 2005
Six months to 31 Six months Year
December 2005 to 31 December ended 30
2004 June
2005
Notes £000 £000 £000
Turnover including share of joint venture 1 12,335 14,664 33,452
Less: Share of turnover of joint venture 1 (358) (860) (1,257)
Group turnover 11,977 13,804 32,195
Group operating (loss)/profit before 1 (834) (481) 186
exceptional items
Operating exceptional items 2 - (310) 2,586
Group operating (loss)/profit (834) (791) 2,772
Share of operating (loss)/profit in joint 1 (40) 186 196
venture
(Loss)/profit on ordinary activities before 1 (874) (605) 2,968
interest
Net interest (payable)/receivable
Group (58) (26) -
Joint venture 44 11 42
(Loss)/profit on ordinary activities before (888) (620) 3,010
taxation
Taxation on (loss)/profit on ordinary 3 (64) (237) (1,290)
activities
(Loss)/profit on ordinary activities after (952) (857) 1,720
taxation
Dividends 4 - - -
Retained (loss)/profit for the period (952) (857) 1,720
Basic (loss)/earnings per 20p share (2.62)p (2.36)p 4.73p
All results relate to continuing activities.
Dickinson Legg Group PLC
Group balance sheet (unaudited)
as at 31 December 2005
31 December 2005 31 December 2004 30 June
(restated - 2005
note 5)
Notes £000 £000 £000
Fixed assets
Intangible assets 2,955 3,159 3,059
Tangible assets 464 721 576
Investments
Interests in joint venture:
Share of gross assets 1,414 1,286 1,300
Share of gross liabilities (725) (565) (621)
Share of net assets 689 721 679
4,108 4,601 4,314
Current assets
Stock 1,886 1,536 1,463
Debtors - due within one year 7,455 7,610 7,993
- due after more than one year 1,183 - 2,974
Cash at bank and in hand 921 5,429 3,920
11,445 14,575 16,350
Current liabilities
Creditors - amounts falling due within one (8,148) (13,896) (12,130)
year
Net current assets 3,297 679 4,220
Total assets less current liabilities 7,405 5,280 8,534
Provisions for liabilities and charges (1,583) (1,250) (1,822)
Net assets 5,822 4,030 6,712
Capital and reserves
Called up share capital 7,271 7,271 7,271
Merger reserve 45,234 45,234 45,234
Other reserves 39,496 39,496 39,496
Profit and loss account (86,179) (87,971) (85,289)
Shareholders' funds - equity 6 5,822 4,030 6,712
Dickinson Legg Group PLC
Group statement of cashflows (unaudited)
for the six months ended 31 December 2005
Six months to 31 Six months Year
December 2005 to 31 December to 30
2004 June
2005
£000 £000 £000
Net cash inflow/(outflow) from operating activities 101 312 (196)
Dividends received from joint venture - 85 97
Returns on investments and servicing of finance
Net interest paid (10) (15) -
Taxation (39) (111) (118)
Capital expenditure and financial investment
Purchase of fixed assets (24) (18) (41)
Sale of tangible fixed assets 12 - 19
Equity dividends paid to shareholders - (909) (909)
Increase/(decrease) in cash 40 (656) (1,148)
Reconciliation to net funds
Change in net funds from cashflows 40 (656) (1,148)
Currency translation differences 14 (26) 10
Movement in net funds in the period 54 (682) (1,138)
Net funds at beginning of period 837 1,975 1,975
Net funds at end of period 891 1,293 837
Shown in the balance sheet as:
Cash at bank and in hand 921 5,429 3,920
Included in: Creditors - Amounts falling due within (30) (4,136) (3,083)
one year
Net funds at end of period 891 1,293 837
Dickinson Legg Group PLC
Notes to the Interim Statements
1 Segmental analysis
By business segment Six months to 31 Six months Year
December 2005 to 31 December to 30
2004 June
2005
£000 £000 £000
Turnover:
Tobacco processing equipment
Group 8,531 10,297 22,938
Joint venture 358 860 1,257
8,889 11,157 24,195
Air drying equipment 3,446 3,507 9,257
Continuting operations 12,335 14,664 33,452
Operating (loss)/profit:
Tobacco processing equipment
Group (158) 262 1,261
Joint venture (40) 186 196
(198) 448 1,457
Air drying equipment (296) (478) (481)
Other activities (380) (265) (594)
Operating (loss)/profit before exceptional items (874) (295) 382
Exceptional items - (310) 2,586
Continuing operations (874) (605) 2,968
2 Exceptional items
Six months to Six months to Year to
31 December 31 December 30 June
2005 2004 2005
Notes £000 £000 £000
Exceptional items within operating profit:
Profit on surrender of lease i - - 2,953
Abortive acquisition costs ii - (310) (367)
- (310) 2,586
i The comparative amount relates to an agreement with the Landlord of the
leasehold premises occupied by Spooner Industries Limited in Ilkley, West
Yorkshire, to surrender the existing lease and vacate the current premises
within eighteen months in a deal worth £3.5 million to the Group. Payment
will be received over the remaining eighteen month period through a
combination of cash or land & cash. The value shown is the net value of
the cash and land that will be received less the estimated relocation
costs. In accordance with the agreement, £0.06 million of cash was
received in the year ended 30 June 2005 but there have been no cash inflows
in the six month period to 31 December 2005.
The estimated tax charge on this gain is £1.05 million for which full
provision has been made in the financial statements for the year ended 30
June 2005. This may be mitigated by future actions and options available
to the Group.
ii The comparative amount relates to third party service costs incurred in the
abortive acquisition.
3 Taxation
The tax charge for the period is £0.064 million (Dec 2004: £0.237 million).
The tax charge for this period is entirely foreign corporation taxes.
4 Dividends
The Directors do not recommend the payment of an interim dividend.
5 Prior year adjustment
As reported in the Report and Accounts 2005, the Group had taken advice on the
availability of certain unrelieved Advance Corporation Tax (ACT) utilized by the
Group in prior periods. It would appear that surrendered ACT used by a Group
company since the de-merger from Brunel Holdings plc in December 2002, was not
available. The estimated tax liability was £269,000 and full provision was made
and shown as a prior year adjustment.
The effect of the prior year adjustment on the December 2004 comparative was to
increase Creditors - amounts falling due within one year by £269,000 and reduce
the profit and loss account by the same amount.
6 Reconciliation of movement in equity shareholders' funds
Called up Merger Other Profit and Total equity
share capital reserves reserves loss account shareholders'
funds
£'000 £000 £000 £000 £000
At 1 July 2005 7,271 45,234 39,496 (85,289) 6,712
Retained loss - - - (952) (952)
Currency translation - - - 62 62
differences
At 31 December 2005 7,271 45,234 39,496 (86,179) 5,822
7 Accounts
The Group results for the six months ended 31 December 2005 and 31 December 2004
are neither audited nor reviewed by independent auditors. The results for the
year ended 30 June 2005 set out above are an abridged version of the Group's
full accounts for that year and do not constitute statutory accounts. Statutory
accounts for the year ended 30 June 2005 for the United Kingdom subsidiary
companies have been delivered to the Registrar of Companies and included the
auditors' report, in accordance with section 235 of the Companies Act 1985,
which were unqualified and did not contain a statement under either section 237
(2) or section 237(3) of the Companies Act 1985.
Accounting policies have been consistently applied on the basis set out in the
Group's financial statements for the year ended 30 June 2005.
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