Lincat Group PLC: Interim Results | Company Announcements

Thursday 14 August, 2008

Lincat Group PLC

Interim Results

RNS Number : 2758B

Lincat Group PLC

14 August 2008

LINCAT GROUP PLC

Interim report for the half year to 30 June 2008

Lincat Group plc, the AIM-listed manufacturer of commercial catering appliances, bar equipment and domestic range cookers, announces its interim results to 30 June 2008.

Highlights

	Headline operating profit of £2.8m on turnover of £17.2m
	Gross margin up from 50.7% to 51.3%
	Headline basic EPS up 8% to 33.3p
	Interim dividend raised 4% to 10.2p per share
	Contracts exchanged in April 2008 for the sale of IMC's vacant Hertfordshire site for £7.5m; £1m received as non-refundable deposit
	£4.670m of net cash generated by operations
	Net debt of £5.7m at period end (31 December 2007: £9.0m)

Martin Craddock, Chairman:

'Despite challenging trading conditions, the Group has once again delivered a robust result and generated strong cash flow. We remain on course to repay any outstanding bank loans by the end of June 2009.'

Contacts:

Martin Craddock, Chairman

Paul Bouscarle, Chief Executive

Lincat Group plc

01522 875555

14 August 2008

Chairman's statement

In the first half of 2008 our businesses have delivered a solid performance under increasingly challenging trading conditions. Our strong cash flow has enabled us to reduce net debt by £3.3m in the six months and to propose an interim dividend of 10.2p per share, an increase of 4% on the previous interim dividend of 9.8p per share paid in October 2007.

Financial results

Group turnover of £17.2m in the period compares with £17.1m for the same period last year, reflecting a pronounced slow-down in demand in the second quarter of the year. The value of export sales, many of which are invoiced in Euros, was boosted by the strength of the Euro against the Pound and increased by 7%.

An increase in our gross margin from 50.7% to 51.3% for the six month period reflects the emphasis placed on effective purchasing and efficient manufacturing around the Group. Input cost pressures remain a concern, however, and there is no doubt that we are currently operating in a more inflationary environment than for many years.

In February, Lincat Ltd exhibited at Hotelympia 2008, the UK catering industry's biennial trade show, where it launched several new products including steamers and convection ovens designed for use in the public sector in particular. With a dedicated Business Development Manager and a comprehensive heavy-duty product range, Lincat is increasingly able to penetrate the public sector, an important business area, providing an opportunity for growth against the general market trend.

Higher operating expenses, in part due to the costs of Lincat's presence at Hotelympia 2008, reduced half-year headline operating profit from £3.0m to £2.8m, a still commendable return of 16.1% on sales. Net interest charges of £276k (2007: net interest earned of £75k) reflect the costs of servicing the term loan taken out to fund the repurchase of 1,925,925 shares under the terms of the tender offer in July 2007. I am pleased to report that the term loan is being repaid ahead of schedule and interest charges in the second half of the year are expected to be substantially lower than in the first half.

Dividend

As stated above, the Board has declared an interim dividend of 10.2p per share, which compares with 9.8p per share paid in respect of the same period last year. This dividend will be payable on 10 October 2008 to shareholders on the register at the close of business on 19 September 2008.

Current trading

With the exception of Britannia, we anticipate a similar performance in the second half, with little or no volume growth in our established markets. In contrast, Britannia is expected to deliver a much stronger result as it completes a major public sector project, all of which will be invoiced in the second half of the year.

Our organic growth strategy, bolstered by selective acquisitions where an attractive return can be expected, will continue. All of our operations have ambitious new product and market development programmes and these will be pursued irrespective of the prevailing market conditions, as we remain convinced both of the long-term prospects of our market sector and of our ability to prosper therein.

Martin Craddock

Chairman

14 August 2008

CONSOLIDATED INCOME STATEMENT

		6 months	6 months	18 months
		to 30/06/08	to 30/06/07	to 31/12/07
	Notes	£'000	£'000	£'000
Continuing Operations
Revenue	1	17,190	17,111	49,986
Cost of sales		(8,374)	(8,438)	(25,172)
Gross profit		8,816	8,673	24,814
Other operating expenses		(6,049)	(5,628)	(16,755)
Headline operating profit before exceptional items		2,767	3,045	8,059
Exceptional items	2	-	(174)	(979)
Operating profit		2,767	2,871	7,080
Net finance costs	3	(230)	110	(41)
Profit before taxation		2,537	2,981	7,039
Taxation		(726)	(892)	(2,245)
Profit after tax from continuing operations		1,811	2,089	4,794
Earnings per share
From continuing operations
Basic	4	33.3p	29.1p	72.1p
Diluted	4	33.2p	29.0p	71.8p

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

Actuarial (losses)/gains on defined benefit pension scheme	(586)	634	812
Tax on items taken directly to equity	164	(190)	(227)
Net income recognised directly in equity	(422)	444	585
Profit for the period	1,811	2,089	4,794
Total recognised income and expense for the period	1,389	2,533	5,379

CONSOLIDATED BALANCE SHEET

		As at	As at	As at
		30/06/08	30/06/07	31/12/07
	Notes	£'000	£'000	£'000
ASSETS
Non-current assets
Goodwill		693	692	693
Other intangible assets		159	145	158
Property, plant & equipment		9,088	8,504	9,199
Retirement benefit surplus	6	-	260	164
Deferred tax asset		105	11	-
		10,045	9,612	10,214
Current assets
Inventories		3,940	3,819	4,429
Trade and other receivables		6,256	7,316	6,634
Cash and cash equivalents		344	4,552	73
		10,540	15,687	11,136
Non-current assets classified as held for sale	5	2,178	2,178	2,178
Total assets		22,763	27,477	23,528
LIABILITIES
Non-current liabilities
Bank loans		(5,074)	-	(6,884)
Retirement benefit obligation	6	(375)	-	-
Deferred tax liabilities		(342)	(539)	(447)
		(5,791)	(539)	(7,331)
Current liabilities
Trade and other payables		(5,759)	(5,205)	(4,221)
Current tax liabilities		(817)	(752)	(801)
Bank overdrafts and loans		(966)	-	(2,207)
Provisions		(467)	(378)	(468)
		(8,009)	(6,335)	(7,697)
Total liabilities		(13,800)	(6,874)	(15,028)
Net assets		8,963	20,603	8,500
Shareholders' equity
Issued share capital		543	720	543
Share premium account		2	1,398	2
Investment in own shares		(16)	-	(16)
Capital redemption reserve		-	254	-
Other reserves		874	874	874
Retained earnings		7,560	17,357	7,097
Total equity	7	8,963	20,603	8,500

CONSOLIDATED CASH FLOW STATEMENT

		6 months	6 months	18 months
		to 30/06/08	to 30/06/07	to 31/12/07
	Notes	£'000	£'000	£'000
Net cash from operating activities	8	3,665	3,109	4,868
Investing activities
Interest received		1	81	215
Disposal proceeds of property, plant & equipment		22	32	107
Non-refundable deposit on sale of property	5	1,000	-	-
Purchase of intangible assets		(21)	(6)	(83)
Purchases of property, plant & equipment		(379)	(306)	(2,226)
Acquisition of subsidiary		-	(351)	(346)
Net cash released by/(used in) investing activities		623	(550)	(2,333)
Financing activities
Dividends paid		(960)	(519)	(2,136)
Purchase of share capital		-	-	(13,000)
Repayment of borrowings		(2,047)	-	(1,419)
Proceeds on issue of shares		-	329	346
New bank loans raised		-	-	9,500
Net cash used in financing activities		(3,007)	(190)	(6,709)
Increase/(decrease) in cash and cash equivalents		1,281	2,369	(4,174)
Cash and cash equivalents at beginning of the period		(937)	2,183	3,237
Cash and cash equivalents at end of the period		344	4,552	(937)
Cash and cash equivalents
Cash in hand and at bank		344	4,552	73
Bank overdrafts		-	-	(1,010)
		344	4,552	(937)

BASIS OF PREPARATION AND ACCOUNTING POLICES

The financial information presented here does not comprise full accounts within the meaning of Section 240 of the Companies Act 1985.

The interim figures set out in this statement are unaudited but have been prepared on a basis consistent with the statutory financial statements for the 18 months to 31 December 2007. The figures for the 18 months to 31 December 2007 have been extracted from the statutory financial statements for that period, which have been filed with the Registrar of Companies, carry an unqualified audit report and do not contain a statement under Section 237 (2) or Section 237 (3) of the Companies Act 1985.

Notes to the consolidated financial statements

1.	Segmental information

Business Segment

Revenue	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
	£'000	£'000	£'000
Lincat - commercial catering equipment	10,734	10,467	30,543
IMC - bar equipment and kitchen machinery	4,877	4,974	14,410
Mercury - domestic range cookers	891	985	3,266
Britannia - kitchen ventilation systems	1,091	1,067	3,232
Inter-segment sales	(403)	(382)	(1,465)
Continuing operations	17,190	17,111	49,986

Business Segment

Profit	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
	£'000	£'000	£'000
Lincat	1,918	2,057	5,982
IMC	1,142	1,048	2,080
Mercury	(75)	(21)	46
Britannia	17	(12)	77
Continuing operations	3,002	3,072	8,185
Central costs	(235)	(201)	(1,105)
Net finance (costs)/income	(230)	110	(41)
Taxation	(726)	(892)	(2,245)
Profit for the period	1,811	2,089	4,794

Geographical segment

Revenue	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
	£'000	£'000	£'000
United Kingdom	14,314	14,432	42,476
Rest of Europe	1,985	1,885	5,183
North America	19	28	89
Rest of World	872	766	2,238
Continuing operations	17,190	17,111	49,986

2.	Exceptional items

	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
	£'000	£'000	£'000
IMC relocation costs	-	174	466
Britannia onerous lease costs	-	-	83
Tender offer costs	-	-	430
Total exceptional items	-	174	979

3.	Finance income and cost

	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
	£'000	£'000	£'000
Interest receivable	3	86	216
Interest payable	(279)	(11)	(364)
Pension: expected return on plan assets	241	220	668
Pension: interest cost	(195)	(185)	(561)
Total finance (cost)/income	(230)	110	(41)

4.	Earnings per share

	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
	£'000	£'000	£'000
Earnings
From continuing operations	1,811	2,089	4,794
Exceptional items	-	174	979
Tax on exceptional items	-	(52)	(165)
Headline earnings	1,811	2,211	5,608
Average number of shares during year	'000	'000	'000
For basic earnings per share	5,434	7,176	6,646
Dilutive effect of Sharesave Scheme options	15	20	29
For diluted earnings per share	5,449	7,196	6,675
Earnings per share - headline
Basic	33.3p	30.8p	84.4p
Diluted	33.2p	30.7p	84.0p
Earnings per share - continuing operations
Basic	33.3p	29.1p	72.1p
Diluted	33.2p	29.0p	71.8p

5.	Assets held for sale

	As at	As at	As at
	30/06/08	30/06/07	31/12/07
	£'000	£'000	£'000
IMC's Hertfordshire site	2,178	2,178	2,178

On 11 April 2008, the directors entered into an unconditional contract for the sale of IMC's vacant Hertfordshire site for £7.5 million; a non-refundable deposit of £1 million was received on exchange of contracts. A further £1 million is receivable on 30 September 2008, with the balance receivable on completion at 30 June 2009.

6.	Retirement benefit obligation

	As at	As at	As at
	30/06/08	30/06/07	31/12/07
	£'000	£'000	£'000
Gross surplus/(deficit) at beginning of period	164	(413)	(739)
Contributions	31	36	135
Current service cost	(30)	(32)	(151)
Finance income	46	35	107
Actuarial (loss)/gain	(586)	634	812
Gross (deficit)/surplus at end of the period	(375)	260	164
Deferred tax asset/(liability)	105	(78)	(46)
Net (deficit)/surplus	(270)	182	118

The defined benefit scheme was reviewed by a qualified actuary as at 30 June 2008. The principal assumptions were:

	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
Retail price inflation	3.9%	3.1%	3.2%
Discount rate	6.7%	5.8%	5.8%
Pension increases in payment	3.6%	3.1%	3.1%
General salary increases	3.9%	3.1%	3.2%

7.	Changes in shareholders' equity

	As at	As at	As at
	30/06/08	30/06/07	31/12/07
	£'000	£'000	£'000
Balance at beginning of the period	8,500	18,252	17,809
Tender offer	-	-	(13,000)
Share issue	-	329	346
Dividends paid	(960)	(519)	(2,136)
Total recognised income and expense for the period	1,389	2,533	5,379
Share based payments	34	8	102
Balance at end of the period	8,963	20,603	8,500

8.	Net cash from operating activities

	6 months	6 months	18 months
	to 30/06/08	to 30/06/07	to 31/12/07
	£'000	£'000	£'000
Operating profit from continuing operations	2,767	2,871	7,080
Adjustments for:
- Depreciation and amortisation	506	478	1,379
- Share based payments	34	8	102
- Decrease in provisions	(1)	(193)	(706)
- Decrease/(increase) in inventories	489	462	(240)
- Decrease/(increase) in receivables	380	(898)	(163)
- Increase/(decrease) in trade and other payables	495	1,068	(537)
Cash generated by operations	4,670	3,796	6,915
Interest paid	(248)	(13)	(361)
Corporation tax paid	(757)	(674)	(1,686)
Net cash from operating activities	3,665	3,109	4,868

This information is provided by RNS

The company news service from the London Stock Exchange

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