ENSOR HOLDINGS PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2009
CHAIRMAN'S STATEMENT
There is no doubt that we are in the midst of recession and that the markets
that the Ensor Group works within, particularly the building industry, have
been hard hit. This was certainly true in Q3 and Q4 of our financial year just
ended.
Work within the Group during the last six months has been to protect margins,
manage costs and increase our customer portfolio, albeit in a reduced market.
We are preparing therefore to be able to take maximum benefit from the future
general economic recovery.
In March this year we announced that, following a recent poor performance at
Hawkins-Salmon Limited ("Hawkins-Salmon"), one of our subsidiaries, the best
course of action was to place it into administration. This has now been
substantially completed and we have minimised the impact to our balance sheet.
Although we are unhappy that this action was necessary, the difficult decisions
have been taken and we can now move on.
Overall, our balance sheet has been affected by three main events during the
year. Firstly, the losses at Hawkins-Salmon of which a large amount of the
total was goodwill write off. Secondly, the need to protect our pensioners by
providing additional investment capital to boost our pension fund which has
been depleted by a collapsed stock market. Finally, we have accepted a
revaluation of our extensive property portfolio to reflect estimated current
market rates.
The instability of exchange rates and material prices, such as steel products
from the Far East which rose by up to 30% during 2008, has challenged margins.
Competitive market conditions have also made it difficult to implement the
necessary selling price increases. Against this background however, we believe
the results from our continuing activities have been satisfactory, given the
very testing economic conditions.
Although sales and operating profits were down by 7% and 66% respectively in
the continuing businesses and cashflow was adversely affected by the losses in
discontinued activities, our gearing remains manageable at 27% of net assets.
There are many challenges ahead but, at the same time, we recognise that good
commercial opportunities will present themselves and we intend to capitalise on
these as they arise.
Given the extraordinary circumstances created by the recession, we feel it is
prudent that we should propose not to pay a dividend this year and so maintain
our reserves and start to strengthen our balance sheet.
We are cautious with our outlook for the coming year as a sustained rise out of
recession is not forecast until 2010. Excluding a further deterioration in the
economic climate, we believe we are now conditioned as a Group to enable us to
prepare for continued progress when the economy improves generally.
May I thank all the people who work within the Ensor companies for their
fantastic effort and significant contribution to our current results and future
prosperity.
Ken Harrison TD
Chairman
12.June.2009
BUSINESS REVIEW
In common with many businesses connected to the construction industry and the
property market, the continuing operations within the group have seen a
downturn in demand and a hardening of markets during the period.
The directors have taken the decision to consolidate the Group's operations
into a core group of stronger performers resulting in the termination of two
business operations, which are detailed under "discontinued operations" below.
Continuing operations
The downturn in the markets and the necessity to concentrate resources on
discontinuing two non-core activities has had the impact of reducing the
turnover derived from continuing operations by 6.8% to £21.7m from £23.3m.
Sales per working day have reduced from £94,000 in the previous financial year
to £86,000 this year as a result of customers' business failures and reduced
ordering. Sales levels weakened in each successive quarter of 2008/09 as the
recession began to bite and then worsened but the decline appears to have
bottomed out in Q4.
In order to maintain even this reduced level of turnover under such difficult
circumstances, margins have been eroded from 32% to 28%. In addition to
competitive pressures, the weakness of sterling against the US dollar and
against the euro added significantly to our cost of sales during the year.
However, the directors are confident that the condensed group will be in a
stronger position to weather the current economic downturn and take advantage
of any recovery as soon as it happens.
Costs have been contained, with the result that the continuing operations have
remained profitable, generating an operating profit of £500,000 compared with £
1,627,000 in the previous financial year.
Following structure reviews across the Group, overheads are now running at
around 10% less than they were at the corresponding point last year.
Reductions in capital expenditure and tight control over stock ordering have
meant that continuing operations remained cash positive, despite the difficult
market conditions, generating cash of £686,000. Efforts have been made to
ensure debts are collected promptly in these difficult conditions, and debtor
days have remained relatively stable at 63 days, compared to 62 days in March
2008.
Discontinued operations
Hawkins-Salmon
Following the relocation of the timber processing part of the business from
Brackley, Northamptonshire to Sandbach, Cheshire, necessitated by the
termination of the lease of the premises at Brackley, operational difficulties
and the loss of several customers propelled the business into a decline which,
despite best efforts, could not be halted. Management changes made during the
year significantly improved the efficiency of the business in the second half,
leading us to report in December 2008 that the problems had been identified and
addressed. Unfortunately, the worsening state of the wider economy thwarted any
significant recovery thereafter.
The company suffered losses of almost £1.3m in the financial year and, with no
prospect of reversing the position, the directors took the decision to
safeguard the remainder of the Group, and requested the appointment of
administrators to the company with a view to maximising realisations from the
sale of the assets. The assets have now been sold under an agreement for
partially deferred consideration and recoveries are being credited to Ensor
Holdings as they arise. Although a significant loss has arisen on the
administration, this was necessary to stem the trading losses.
Powerplus (UK) Limited ("Powerplus")
An opportunity arose to dispose of the assets of Powerplus and negotiations
took place from February 2009 onwards resulting in the sale of the business,
after the year end, to a competitor at approximately book value. The activities
of Powerplus are dissimilar to the remainder of the Group, and the company has
struggled to maintain its market position. The disposal allows the Directors to
concentrate on the Group's core activities without distraction.
Financial position at year end
The Group's property portfolio has been revalued downwards by £300,000 to
reflect current market conditions, although this situation is expected to be
temporary. The loss realised on the disposal of Hawkins Salmon has depleted the
balance sheet somewhat, and efforts will be concentrated on improving the
strength of the balance sheet as the economy recovers.
Following a period of improvement, the global economic climate has taken its
toll on the Group's pension fund deficit, principally as a result of a
reduction in the value of the fund's investments between March 2008 and March
2009.
Key performance indicators
In addition to the universal performance indicators of sales, gross margins,
operating profit, earnings per share, cash flow and gearing referred to above,
or in the Chairman's Statement, indicators of a more activity-specific nature
are used within the Group to assess the performance of subsidiary companies.
These are used in conjunction with the controls described in the Corporate
Governance statement and relate to a wide variety of aspects of the businesses,
for example, working capital measures, production yields, quality control,
targets, market share information, product return rates, etc. Due to the
differences in size and markets across the Group's businesses it is not
practicable to provide a more detailed analysis of how these indicators are
applied to each of the respective activities.
Principal risks and uncertainties
The directors continue to focus on maintaining the Group's core business in the
current climate of uncertainty, in order that the businesses will be in a
strong position to take advantage of recovery in the markets when the economic
environment improves.
Audited Consolidated Income Statement
for the year ended 31 March 2009
2009 2008
Restated
£'000 £'000
Revenue 21,706 23,290
Cost of sales (15,644) (15,743)
______ ______
Gross profit 6,062 7,547
Distribution costs (1,068) (1,151)
Administrative expenses (4,374) (4,577)
______ ______
Operating profit 620 1,819
Financial expenses (120) (192)
______ ______
Profit before tax 500 1,627
Income tax expense (47) (476)
______ ______
Profit for the year for continuing operations 453 1,151
Loss for the year on discontinued operations (2,732) 43
______ ______
(Loss)/profit for the year attributable to equity (2,279) 1,194
shareholders
______ ______
(Loss)/earnings per share:
Continuing operations
Basic 1.5p 3.9p
Fully diluted 1.5p 3.8p
______ ______
Discontinued operations
Basic and fully diluted (9.3p) 0.1p
______ ______
Dividends per share
Interim dividend paid 0.00p 0.42p
Final dividend proposed 0.00p 0.78p
______ ______
0.00p 1.20p
______ ______
Audited Consolidated Balance Sheet
at 31 March 2009
2009 2008
£'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 4,231 5,969
Intangible assets 2,438 3,147
______ ______
Total non-current assets 6,669 9,116
______ ______
Current assets
Assets held for resale 1,050 -
Inventories 2,769 4,415
Trade and other receivables 4,571 5,641
______ ______
Total current assets 8,390 10,056
______ ______
Total assets 15,059 19,172
______ ______
LIABILITIES
Non-current liabilities
Retirement benefit obligations (1,980) (572)
Deferred tax (118) (117)
______ ______
Total non-current liabilities (2,098) (689)
______ ______
Current liabilities
Cash and cash equivalents (2,099) (1,206)
Trade and other payables (3,140) (5,225)
______ ______
Total current liabilities (5,239) (6,431)
______ ______
Total liabilities (7,337) (7,120)
______ ______
NET ASSETS 7,722 12,052
______ ______
EQUITY
Share capital 2,945 2,945
Share premium 470 470
Revaluation reserve 571 871
Retained earnings 3,736 7,766
______ ______
Total equity attributable to equity shareholders 7,722 12,052
______ ______
Other Audited Statements
for the year ended 31 March 2009
Consolidated Statement of Recognised Income and Expense (SORIE)
2009 2008
£'000 £'000
(Loss)/profit for the financial year (2,279) 1,194
Actuarial (loss)/gain (2,047) 518
Related deferred tax 526 (155)
______ ______
Total recognised income and expense for the financial (3,800) 1,557
period
______ ______
Consolidated Statement of Changes in Shareholders' Equity
2009 2008
£'000 £'000
Opening shareholders' equity at 1 April 2008 12,052 10,825
Recognised income and expense for the (3,800) 1,557
financial period
Dividends paid (230) (330)
Transfer from revaluation reserve for (300) -
impairment of property valuations
______ ______
Closing shareholders' equity at 31 March 2009 7,722 12,052
______ ______
Audited Consolidated Cash Flow Statement
for the year ended 31 March 2009
2009 2008
£'000 £'000
Net cash (absorbed by)/generated from (216) 2,096
operations
_______ _______
Cash flows from investing activities
Proceeds from sale of property, plant and 43 146
equipment
Acquisition of property, plant and equipment (278) (501)
Acquisition of going concern (100) (818)
_______ _______
Net cash absorbed by investing activities (335) (1,173)
_______ _______
Cash flows from financing activities
Repayment of loans - (50)
Capital element of finance lease payments - (4)
Equity dividends paid (230) (330)
Contribution to pension scheme in excess of (112) (141)
charge to income
_______ _______
Net cash absorbed by financing activities (342) (525)
_______ _______
Net (decrease)/increase in cash and (893) 398
equivalents
Opening cash and cash equivalents (1,206) (1,604)
_______ _______
Closing cash and cash equivalents (2,099) (1,206)
_______ _______
NOTES
1. Accounting policies
Basis of preparation
The consolidated financial statements of Ensor Holdings PLC have been prepared
in accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union and as applied in accordance with the provisions of the
Companies Act 1985 for the first time. The Group financial statements have
been prepared under the historical cost convention, with the exception of the
Group's properties which have been stated at an impaired deemed cost in
accordance with the requirements of IFRS.
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity so as to obtain benefits
from its activities, the entity is classified as a subsidiary. The consolidated
financial statements present the results of the Company and its subsidiaries
(The Group) as if they formed one single entity. Intercompany transactions and
balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the consolidated balance sheet, the
subsidiary's identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date. The results
of acquired operations are included in the consolidated income statement from
the date on which control is obtained.
2. Earnings per share
The calculation of earnings per share on continuing operations is based upon
the profit after taxation of £453,000 (2008 : £1,151,000) divided by the
weighted average number of ordinary shares in issue during the year, 29,445,659
(2008: 29,445,659). The loss per share on discontinued operations is based upon
the loss after taxation of £2,732,000 (2008: profit £43,000). The fully diluted
earnings per share calculation is based upon the weighted average of 29,662,338
shares (2008: 30,305,708). The dilution in both years is due to subsisting
share options.
3. Analysis of changes in net debt
At At
31 March 31 March
2008 Cashflows 2009
£'000 £'000 £'000
Bank overdraft (1,206) (893) (2,099)
______ ______ ______
4. Reconciliation of net cash flow to movement in net debt
2009 2008
£'000 £'000
(Decrease)/increase in cash in the year (893) 398
Cash outflow from repayment of debt - 54
______ ______
Movement in net debt arising from cash flow (893) 452
Net debt at 1 April 2008 (1,206) (1,658)
______ ______
Net debt at 31 March 2009 (2,099) (1,206)
______ ______
5. Basis of preparation
The financial information set out in this preliminary announcement of results
does not constitute the Company's statutory accounts for the years ended 31
March 2009 or 31 March 2008 but is derived from those accounts. Statutory
accounts for 2008 have been delivered to the Registrar and those for 2009 will
be delivered following the Company's Annual General Meeting. The Independent
Auditors have reported on these accounts. Their reports were unqualified and
did not contain statements under section 237(2) or (2) of the Companies Act
1985.
6. Other information
The Annual General Meeting of the Company will be held at the Company's
registered office, Ellard House, Dallimore Road, Manchester M23 9NX at 10.00
a.m. on Monday 27 July 2009.
The Report and Accounts will be posted to shareholders and be available from
the Company's website at www.ensor.co.uk shortly. Additional copies of the
Annual Report and of this statement will be available at the Company's
registered office.
Enquiries:
Ensor Holdings PLC
Roger Harrison/Marcus Chadwick
0161 945 5953
Hanson Westhouse Limited
Tim Feather/Matthew Johnson
0113 246 2610