Embargoed Release: 07:00hrs Wednesday 10 December 2008
Hartest Holdings Plc
(`Hartest' or `the Group')
Unaudited Interim Results for the Six months ended 30 September 2008
Hartest Holdings plc, the supplier of specialist instrumentation and medical
equipment, announces its Interim Results for the six months ended 30 September
2008 (the `period').
Highlights:
* Group revenue up 2.5% at £10.06 million (2007; £9.82 million)
* Operating profit before non-recurring costs £62,000 (2007; £175,000)
* Non-recurring costs of £301,000 primarily represent redundancy payments and
related inventory write-downs, together with preliminary costs of planned
business relocations
* Loss before tax £290,000 (2007; Profit before tax £85,000)
* Maintained nil net debt position
Peter Ward, Chairman, commented:
"In recent months we have strengthened our subsidiary management teams which
will improve our ability to develop or maintain the value of our businesses
during these extremely challenging times.
The Group typically experiences a strong bias in trading towards the second
half of the financial year and 2008 should prove no exception. It is expected,
however, that the necessary non-recurring expenditure on the forthcoming
relocations is likely to offset the operating results of the Group's trading
operations."
Chairman's Statement
I am pleased to present the interim report of Hartest Holdings plc for the six
months to 30 September 2008.
Results
The Group's consolidated revenue for the period was £10.06 million (2007: £9.82
million) with growth in line with expectations. The Instrumentation Division
experienced reasonable revenue growth; this was partly offset by a shortfall in
the Medical Division, but this division typically experiences a strong bias in
trading towards the final quarter.
As stated at the time of our Annual General Meeting in August, operating
overheads have been kept under close control although gross margins have come
under pressure in some areas. Furthermore, while our general trading
performance remains sound, in the last few weeks the widely reported
deterioration in the global economic climate, coupled with a period of extreme
volatility in currency exchange rates, has resulted in the Group experiencing
lower sales and tighter margins in some areas of the business. To lower our
cost base in line with revenue and profit expectations, we have also incurred a
number of non-recurring expenses, which are predominantly restructuring costs
in specific areas.
Trading
Encouragingly, the organic growth seen last year in the Instrumentation
Division has continued this year. A strong performance by Carnation, with its
`genisys' vehicle power management systems, and by the overseas operations of
Hartest Precision Instruments, has compensated for a slight fallback at Agar,
where we have incurred higher costs to strengthen the management structure. As
we progress into the second half of the year, we will be implementing
pre-planned and necessary relocations; Agar Scientific will relocate at the
termination of its current property lease, and the Hartest Precision
Instruments business will move from two separate locations onto a single site.
The move by Agar had always been expected towards the end of the current
financial year, but in the case of Hartest Precision, the early identification
of suitable premises has accelerated our plans, enabling an earlier delivery of
improved operational efficiencies and cost savings. The relocations will incur
special and non-recurring expenses which will be offset by the generation of
future annual cost savings. The special expenditure will be funded from the
Group's own resources, underwritten by the sale in due course of the freehold
of one of the vacated properties.
In the Medical Services division, the loss of the Candela laser franchise last
year and competitive and currency-based pressure on margins have led to reduced
profitability and, as a result, some restructuring has been undertaken at a
cost of £155,000 in redundancy payments and inventory write-downs. A new
managing director has been appointed at the Medical Services division which
will strengthen the division's ability to manage the tough trading conditions
that we foresee.
We remain operationally debt-free although we have seen a minor reduction in
our net financial assets.
Board Changes
I am pleased to announce the appointment today of Jan Holmström as a
non-executive director. Jan brings a wealth of experience in both executive and
non-executive roles across a broad range of companies in the UK and overseas,
and we are looking forward to working with him.
Dividend
In view of the requirements to fund the necessary business relocations, the
Group has decided that it can best serve the interests of Hartest and its
shareholders by pursuing a prudent policy of suspending dividend payments. As a
result the Board will not declare a dividend at this time, but will review the
situation again at the full year (2007; interim dividend 0.67 pence per share).
Prospects
The Group typically experiences a strong bias in trading towards the second
half of the financial year and this year should prove no exception. It is
expected, however, that the necessary non-recurring expenditure on the
forthcoming relocations is likely to offset the operating results of the
Group's trading operations.
Peter Ward
Chairman
10 December 2008
Interim Consolidated Income Statement (unaudited)
For the half year ended 30 September 2008
Notes 6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2008 Sept 2008
2007
£'000 £'000 £'000
Revenue 10,058 9,815 21,724
Cost of sales (6,828) (6,551) (14,248)
Gross profit (excluding 3,230 3,264 7,476
non-recurring costs)
Net operating expenses excluding (3,168) (3,089) (6,443)
non-recurring costs
Non-recurring costs 2 (301) - -
Operating (loss) / profit (239) 175 1,033
Interest income 3 2 29
Interest expense (54) (92) (178)
(Loss)/profit before taxation (290) 85 884
Taxation 3 (77) (30) (113)
(Loss)/profit for the period
attributable to the holders of the (367) 55 771
company
Earnings per share - pence
Basic (loss)/earnings per share 5 (4.27) 0.64 8.96
Diluted (loss)/earnings per share 5 (3.79) 0.57 7.99
Interim Consolidated Balance Sheet (Unaudited)
As at 30 September 2008
Notes 30 Sept 30 31 March
2008 Sept 2008
2007
Assets £'000 £'000 £'000
Non-current assets
Intangible - goodwill 3,890 3,890 3,890
- other 202 200 193
Property, plant and equipment 1,579 2,302 1,652
Deferred income tax asset 9 - 9
5,680 6,392 5,744
Current assets
Inventories 3,154 3,692 3,855
Trade and other receivables 2,937 3,477 4,570
Cash and cash equivalents 444 268 565
6,535 7,437 8,990
Total assets 12,215 13,829 14,734
Equity
Share capital 2,097 2,097 2,097
Share premium 2,928 2,928 2,928
Retained earnings 3,493 3,259 3,936
Total equity attributable to the
Company's equity holders 8,518 8,284 8,961
Liabilities
Non-current liabilities
Borrowings 361 758 399
Deferred income tax liabilities 36 28 36
Current liabilities
Trade and other payables 3,026 4,488 5,032
Current Income tax liabilities 198 195 230
Borrowings 76 76 76
Total liabilities 3,697 5,545 5,773
Total equity and liabilities 12,215 13,829 14,734
Interim Group Cash Flow Statement (Unaudited)
Six months ended 30 September 2008
Notes 30 Sept 30 Sept 31 March
2008 2007 2008
£'000 £'000 £'000
(Loss) / Profit before tax (367) 55 771
Amortisation / depreciation 133 157 306
Finance cost 51 90 149
Tax 77 30 113
Share based payments 10 17 35
Profit on sale of fixed assets - - (58)
Decrease / (increase) in inventories 701 (279) (441)
Decrease in trade and other 1,633 1,388 294
receivables
Decrease in current liabilities (2,010) (1,202) (75)
Net cash generated from operating 228 256 1,094
activities before interest and tax
Interest paid (54) (92) (181)
Interest received 3 2 29
Income tax paid (105) (37) (85)
Net cash generated from operating 72 129 857
activities
Cash flows from investing activities
Purchase of property, plant and (23) (147) (322)
equipment
Proceeds from sale of investment - - 763
property
Proceeds from disposal of property,
plant and equipment - - 3
Purchase of intangible assets (46) (96) (121)
Net cash used in investing (69) (243) 323
activities
Cash flows from financing activities
Equity dividends paid (86) (86) (144)
Repayment of borrowings (38) (66) (481)
Net cash used in financing (124) (152) (625)
activities
Net (decrease) / increase in cash (121) (266) 555
and cash equivalents
Cash and cash equivalents at 565 10 10
beginning of period
Cash and cash equivalents at end of 444 (256) 565
period*
Cash and cash equivalents at 30 September 2007 comprise cash balances of £268,000
and bank overdraft balances of £524,000.
Consolidated Interim Statement of Change in Shareholder Equity (Unaudited)
Share Share Retained Total
Capital Premium earnings
£'000 £'000 £'000 £'000
Balance at 1 April 2007 2,097 2,928 3,274 8,299
Profit for the period - - 55 55
Employee share-based - - 17 17
compensation
Dividend - - (86) (86)
Balance at 30 September 2007 2,097 2,928 3,259 8,284
Profit for the period - - 716 716
Employee share-based - - 18 18
compensation
Dividend - - (58) (58)
Balance at 31 March 2008 2,097 2,928 3,936 8,961
(Loss) / profit for the - - (367) (367)
period
Employee share-based - - 10 10
compensation
Dividend - - (86) (86)
Balance at 30 September 2008 2,097 2,928 3,493 8,518
Notes:
1. Basis of preparation, accounting policies, and approval of interim
statement
The interim financial statements for the six months to 30 September 2008 has
been prepared in accordance with adopted IFRS however the Group has not applied
IAS 34 `Interim Financial Reporting', which is not mandatory for AIM listed UK
Groups, in the preparation of these interim financial statements.
The accounting policies adopted in the preparation of the interim financial
statements are the same as those set out in the Group's Annual Report and
Accounts 2008. The policies set have been consistently applied to all the years
and periods presented.
The financial information herein does not amount to full statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The financial
information in respect of the year ended 31 March 2008 has been extracted from
the statutory accounts which have been filed with the Registrar of Companies.
The auditors' report on those accounts was unqualified and did not include a
statement under Section 237 of the Companies Act 1985.
The interim financial statement is unaudited and was approved by the Board of
Directors on 9 December 2008.
2. The non-recurring operating expenses in the six months to 30 September 2008
of £301,000 represent costs during the period in respect of redundancy
payments and inventory write-downs during business restructuring, Group
business development costs, and expenses in connection with planned
relocations.
3. The taxation charge for the six months to 30 September 2008 represents a
provision for overseas tax liability.
4. A dividend has not been declared at this time (2007: 0.67 pence per share).
A final dividend of 1 penny per share amounting to £86,000 was paid relating
to the year ended 31 March 2008 following approval at the Annual General
Meeting held on 12 August 2008.
5. Earnings per share
Basic earnings per share ("EPS") is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average of ordinary
shares in issue during the year. For diluted earnings, the weighted average of
ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares.
Copies of the statement will be available for a period of one month to members
of the public free of charge, from the Company's registered office, or can be
downloaded from the website - www.hartest-holdings.com.
Enquiries - please contact:
Geoff Spink Hartest Holdings Plc 01252 749 530
Chief Executive Officer
Robert Porter Hartest Holdings Plc 01252 749 530
Group Finance Director
Vikki Krause Hansard Group 020 7245 1100
Financial Public Relations
William Vandyk Blue Oar Securities 020 7448 4400
Nominated Adviser and Broker