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FOR RELEASE                                        7.00                                 AM 24 SEPTEMBER 2008

MOUNT ENGINEERING Plc

('Mount Engineering' or 'the Group')

(Oil support and services business) 

Unaudited Interim Financial Statements for the Six Months Ended 30 June 2008 

	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007
		Pro Forma
	£000's	£000's
Turnover	5,831	5,392
Gross profit	2,910	2,474
Operating profit	1,610	1,398
Profit before tax	1,530	1,306
Basic earnings per share (pence)	4.4p	3.9p
Diluted earnings per share (pence)	4.4p	3.9p

   

• Turnover increased by 8%

• Operating profit increased by 15%

• Operational cash flow of £1.43m

• Maiden dividend paid of 1.1p

•  Earnings per share increased by 13% 

• Growth in export markets

For further information contact:

Mount Engineering Plc
Colin Ainger (Non-Executive Chairman)	07778 160 365
David Stanham (Chief Executive Officer)	07834 046 121
Blue Oar Securities Plc - Nominated Adviser & Broker
Shane Gallwey / Matt Marchant	020 7448 4400

  

Mount Engineering Plc

 ('Mount Engineering' or 'the Group')

(Oil support and services business) 

Background Note

Mount Engineering has three operating subsidiary companies, Redapt, Raxton and Hi Flow Valves Limited ('Hi Flow'). Each subsidiary has an executive team responsible for the day to day management of the business. A Group team of three executives directs and co-ordinates the subsidiaries. Three experienced non executive directors together with the Chief Executive comprise the Group board.

Redapt, based in the West Midlands, designs and manufactures an extensive range of thread conversion components, adaptors, reducers, stopping plugs, bulkhead penetrators and other products that have multi sector application wherever there is a risk of explosion or fire in hazardous environments or aggressive applications typically in the oil & gas, petrochemical and chemical industries.

Raxton, based in Aldridge, manufactures 'ex' certified thread conversion components. Raxton's main end user markets are the oil & gas, petrochemical and chemical industries. Raxton also extends their business into non-hazardous area applications in more industrial based market segments.

Hi Flow, based in Mildenhall, stocks, distributes and merchants a range of industrial valves and actuators to the oil & gas, petrochemical, process and related industries throughout the world. Hi Flow has signed stocking distributor agreements with a number of suppliers providing a range of cast steel gate, globe check and ball valves. Hi Flow continues to seek additional products that will ensure it can offer a broad range of products. 

     

Mount Engineering Plc

 ('Mount Engineering' or 'the Group')

(Oil support and services business) 

INTERIM FINANCIAL RESULTS

FOR

THE 6 MONTHS ENDED 30 june 2008

Chairman's Statement

Results

I am pleased to announce our results for the 6 months ended 30 June 2008. During the period turnover increased by 8% to £5.831m and operating profits increased by 15% to £1.61m when compared to prior year pro-forma results for the same period. Our improvement in operational margins is primarily the result of increased sales in our higher margin thread conversion and thread adaptor products more than offsetting a decline in lower margin valve distribution sales.

Our cash generation in the period was excellent with operational cash flow of £1.43m which allowed us to repay £447,000 of term loans and our maiden dividend of £268,000. Overall cash balances increased by £469,000 in the period. Net debt as at 30 June 2008 stands at £188,000.

Trading

Demand across the range of Ex certified products supplied by Redapt and Raxton has been buoyant in the first half, mainly driven by continuing high levels of activity in our main oil and gas markets. Our major geographical markets of the UK, Europe and North America, have all seen double digit sales growth in the first half.

At Hi Flow, our valve stockist, first half revenues came in below management's expectations, however, the receipt of a number of higher value orders towards the end of the half, led to Hi Flow entering the second half with its order book standing at its highest level for some eighteen months.

Measures introduced to improve efficiency, and tighter cost controls, have also contributed to the improvement in operating profit margins, which stand at 27.6% versus 25.9% for the prior year. 

Dividend

Following the payment of a maiden dividend in June this year, the board is pleased to announce the payment of an interim dividend of 1p per share on December 3rd to shareholders on the register at 14th November 2008. 

Outlook

The second half of the year has started well, and the Ex certified business will benefit from a price increase negotiated to offset the recent fluctuations in raw material costs. Hi Flow has had an encouraging start to the half but is still looking for further evidence of project awards to bolster the merchanted sales part of the business.

  

Mount Engineering Plc

Consolidated Income Statement

for the six months ended 30 June 2008

	Note	Unaudited	Unaudited	Audited
		Six months to 30 June 2008	Six months to 30 June 2007	Year ended 31 December 2007
			Pro Forma	8 months
		£000	£000	£000
Revenue		5,831	5,392	5,433
Cost of sales		(2,921)	(2,918)	(2,829)
Gross profit		2,910	2,474	2,604
Overhead expenses		(1,300)	(1,076)	(1,150)
Operating profit		1,610	1,398	1,454
Goodwill amortization		-	(160)	-
Financial income		84	-	79
Financial expenses		(164)	(92)	(228)
Profit before tax		1,530	1,146	1,305
Taxation	2	(459)	(344)	(363)
Profit for the period		1,071	802	942
Earnings per share
Basic Earnings per share	3	4.4p	3.3p	5.4p
Diluted Earnings per share	3	4.4p	3.3p	5.4p

There were no recognised gains and losses in the period, or in the prior periods shown, other than the results shown above.

  Mount Engineering Plc

Consolidated Balance Sheet

at 30 June 2008

	Unaudited	Unaudited	Audited
	As at 30 June 2008	As at 30 June 2007	As at 31 December 2007
		Proforma
	£000	£000	£000
Non-current assets
Intangible assets	13,989	6,503	13,989
Property, plant and equipment	1,470	1,567	1,520
Total non-current assets	15,459	8,070	15,509
Current assets
Inventories	1,804	1,643	1,652
Trade and other receivables	2,420	2,513	2,179
Cash and cash equivalents	3,561	318	3,092
Total current assets	7,785	4,474	6,923
Total assets	23,244	12,544	22,432
Equity
Share capital	244	15	244
Share premium account	15,532	2,456	15,532
Retained earnings	1,767	1,362	946
Total equity attributable to equity shareholders	17,543	3,833	16,722
Non-current liabilities
Other interest-bearing loans and borrowings	2,756	5,467	3,270
Other financial liabilities	20	6	38
Total non-current liabilities	2,776	5,473	3,308
Current liabilities
Other interest-bearing loans and borrowings	993	1,263	922
Trade and other payables	895	1,094	893
Current tax payable	855	639	587
Other financial liabilities	-	122	-
Other liabilities	182	70	-
Total current liabilities	2,925	3,188	2,402
Total liabilities	(5,701)	(8,661)	(5,710)
Net equity and liabilities	23,244	12,544	22,432

  Consolidated Cash Flow Statement

for the six months ended 30 June 2008

	Unaudited	Unaudited	Audited
	6 months ended 30 June 2008	6 months ended 30 June 2007	8 months ended 31 December 2007
		Proforma
	£000	£000	£000
Cash flows from operating activities
Profit for the year attributable to equity shareholders	1,610	1,398	1,454
Adjustments for:
Depreciation	33	15	34
Operating profit before changes in working capital and  provisions	1,643	1,413	1,488
Increase in inventories	(152)	(131)	(6)
(Increase)/decrease in trade and other receivables	(331)	70	379
Increase/(decrease) in trade and other payables	274	6	(665)
Cash generated from the operations	1,434	1,358	1,196
Tax paid	(190)	(136)	(402)
Interest paid	(164)	(92)	(228)
Net cash inflow from operating activities	1,080	1,130	566
Cash flows from investing activities
Interest received	84	-	79
Acquisition of subsidiary undertakings net of cash acquired	-	(4,424)	(6,633)
Acquisition of property, plant and equipment	-	(3)	(11)
Disposal of property, plant and equipment	20	-	24
Net cash inflow/(outflow) from investing activities	104	(4,427)	(6,541)
Cash flows from financing activities
Net Proceeds from issue of ordinary shares	-	-	11,405
New loans	-	3,850	-
Dividends paid	(268)	-	-
Repayment of borrowings	(447)	(647)	(2,338)
Net cash (outflow)/ inflow from financing activities	(715)	3,203	9,067
Net increase/(decrease) in cash and cash equivalents	469	(94)	3,092
Opening cash and cash equivalents	3,092	25	-
Closing cash and cash equivalents	3,561	(69)	3,092

   Statement of Changes in Shareholders' Equity

Unaudited	Share capital	Share premium	Retained earnings	Total
	£000	£000	£000	£000
On issue of shares	244	15,532	-	15,776
Profit for the period	-	-	942	942
Credit relating to share based payments	-	-	4	4
Closing shareholders' funds at 31 December 2007	244	15,532	946	16,722
Profit for the period	-	-	1,071	1,071
Credit relating to share based payments	-	-	18	18
Dividends	-	-	(268)	(268)
Closing shareholders' funds at 30 June 2008	244	15,532	1,767	17,543

 

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