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FOR RELEASE                       7.00 AM                                                     28th  SEPTEMBER 2009

MOUNT ENGINEERING PLC

('Mount Engineering  plc' or 'the Group')

Unaudited Interim Financial Statements for the Six Months Ended 30 June 2009 

	Six months to 30 June 2009 (unaudited)	Six months to 30 June 2008 (unaudited)	Year to 31 December 2008 (audited)
	£000	£000	£000
Revenue	5,000	5,831	11,778
Gross profit	2,658	2,910	5,529
Operating profit	1,512	1,610	3,257
Profit before tax	1,417	1,530	3,071
Basic earnings per share (pence)	4.3p	4.4p	8.9p
Diluted earnings per share (pence)	4.3p	4.4p	8.9p
Net cash/(debt)	618	(188)	534

   

• Turnover reduced by 14%

• Improved gross margin 53.2%, up from 49.9% 

• Operating margin 30.2%, up from 27.6% 

• Positive operational cash flow of £1.6m

• Interim dividend of 1p per share maintained

We continue to seek new avenues for expanding both our sales network and product ranges. Whilst there is little evidence to suggest that the group's primary oil and gas related fabrication markets are seeing an increase in capital projects, we remain focused on controlling inventory and costs. Overall, the Group has made a steady start to the second half of the year and results remain broadly in line with full year market expectations. 

  For further information contact:

Mount Engineering plc 

Colin Ainger  (Chairman)                                     07778 160365

David Stanham  (Chief Executive)                        07834 046121

Nominated Adviser & Broker

Charles Stanley Securities

Rick Thompson/Philip Davies/Carl Holmes           0207 149 6000

Background Note

Mount Engineering Plc has three operating subsidiaries, Redapt, Raxton and Hi Flow Valves Limited ('Hi Flow').  

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')

 

INTERIM FINANCIAL RESULTS

FOR

THE six MONTHS ENDED 30 june 2009

Chairman's Statement

Results

Trading conditions in the first half of the year deteriorated after an acceptable first quarter, however, the benefit of the changes made to the Group's procurement strategy last year helped produce a satisfactory result overall. Despite a 14% fall in sales to £5m (2008: £5.8m), this resulted in only a 2% reduction in operating profit, before the impact of a £60k write off for abortive acquisition costs incurred in the period, to £1.5m (2008; £1.6m).

Cash generation continued to be excellent, with operational cash flow of £1.6m (2008: £1.43m) which allowed not only the repayment of £0.5m in term loans and £0.3m of dividends, but also the purchase of our own shares for £0.65m. Net cash at the end of the period stands at £618k (2008: £(188)k).

Trading 

Sales from the Ex product lines of Redapt and Raxton saw a noticeable decline over the comparative period in the prior year, primarily due to extensive de-stocking on the part of electrical wholesalers and distributors alike. Due to a strong order book at the beginning of the year, Hi Flow, the valve distribution business, saw a small increase in sales over prior year first half. Forward order visibility throughout the business continues to be very limited.

Gross margins in the first half improved to 53%, primarily as a result of changes in the sub-contract supply base made towards the end of the previous year. The sale of some slow moving stocks previously written down in value also contributed to the improved margins.

Overhead expenses benefitted from across the board cost savings, and the overall reduction of £154k is after absorbing £60k of abortive acquisition costs incurred in the first half. Operating profit margin increased to 30.2% versus 27.6 % prior year.

Dividend 

The board is pleased to announce the maintenance of the interim dividend of 1p per share to be paid on December 2nd to shareholders on the register at 27th November 2009.

Outlook

We continue to seek new avenues for expanding both our sales network and product ranges. Whilst there is little evidence to suggest that the group's primary oil and gas related fabrication markets are seeing an increase in capital projects, we remain focused on controlling inventory and costs. Overall, the Group has made a steady start to the second half of the year and results remain broadly in line with full year market expectations. 

Colin Ainger

Chairman

28 September 2009

  

Mount Engineering Plc

Consolidated Income Statement

for the six months ended 30 June 2009

 

		Six months to 30 June 2009	Six months to 30 June 2008	Year to 31  December 2008
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Revenue		5,000	5,831	11,778
Cost of sales		(2,342)	(2,921)	(6,249)
Gross profit		2,658	2,910	5,529
Overhead expenses		(1,146)	(1,300)	(2,272)
Operating profit		1,512	1,610	3,257
Financial income		22	84	165
Financial expenses		(117)	(164)	(351)
Net financing income (expense)		(95)	(80)	(186)
Profit before tax		1,417	1,530	3,071
Taxation		(397)	(459)	(893)
Profit for the period attributable to equity shareholders of the parent		1,020	1,071	2,178
Earnings per share
Basic earnings per share	2	4.3p	4.4p	8.9p
Diluted earnings per share	2	4.3p	4.4p	8.9p

 

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 2009

 

	Six months to 30 June 2008 (unaudited)	Six months to  30 June 2008 (unaudited)	Year to 31 December 2008 (audited)
	£000	£000	£000
Non-current assets
Intangible assets	13,997	13,989	13,997
Property, plant and equipment	1,407	1,470	1,442
Total non-current assets	15,404	15,459	15,439
Current assets
Inventories	1,871	1,804	1,835
Trade and other receivables	1.886	2,420	2,418
Cash and cash equivalents	3,423	3,561	3,818
Total current assets	7,180	7,785	8,071
Total assets	22,584	23,244	23,510
Current liabilities
Other interest-bearing loans and borrowings	(952)	(993)	(841)
Trade and other payables	(801)	(895)	(1,325)
Current tax payable	(400)	(855)	(465)
Other liabilities	(68)	(182)	(125)
Total current liabilities	(2,221)	(2,925)	(2,756)
Non-current liabilities
Other interest-bearing loans and borrowings	(1,853)	(2,756)	(2,318)
Other financial liabilities	(38)	(20)	(38)
Total non-current liabilities	(1,891)	(2,776)	(2,356)
Total liabilities	(4,112)	(5,701)	(5,112)
Net assets	18,472	17,543	18,398
Equity
Share capital	244	244	244
Share premium	15,532	15,532	15,532
Retained earnings	2,696	1,767	2,622
Total equity attributable to equity holders of the Parent Company	18,472	17,543	18,398

 

  Consolidated Cash Flow Statement

for the six months ended 30 June 2009

 

	Six months to 30 June 2009 (unaudited)	Six months to  30 June 2008 (unaudited)	Year to 31 December 2008 (audited)
	£000	£000	£000
Cash flows from operating activities
Operating profit	1,512	1,610	3,257
Depreciation	35	33	65
(Gain) on disposal of property, plant and equipment	-	-	(5)
Operating cash flows before changes in working capital and provisions	1,547	1,643	3,317
(Increase) in inventories	(35)	(152)	(183)
Decrease/(increase) in trade and other receivables	464	(331)	(239)
Increase/(decrease) in trade and other payables	(383)	274	433
Cash generated from the operations	1,593	1,434	3,328
Tax paid	(459)	(190)	(1,015)
Interest paid	(117)	(164)	(351)
Net cash inflow from operating activities	1,017	1,080	1,962
Cash flows from investing activities
Interest received	22	84	165
Write back of loan arrangement fees	16	-	-
Acquisition of property, plant and equipment	-	-	(6)
Proceeds from sale of property, plant and equipment	-	20	25
Net cash inflow from investing activities	38	104	184
Cash flows from financing activities
Purchase of own shares	(648)	-	-
Dividends paid	(304)	(268)	(512)
Repayment of borrowings	(498)	(447)	(908)
Net cash outflow from financing activities	(1,450)	(715)	(1,420)
Net (decrease)/increase in cash and cash equivalents	(395)	469	726
Opening cash and cash equivalents	3,818	3,092	3,092
Closing cash and cash equivalents	3,423	3,561	3,818

 

  Statement of Changes in Shareholders' Equity

Unaudited 30 June 2008	Share  capital	Share  premium	Retained earnings	Total
	£000	£000	£000	£000
At 1 January 2008	244	15,532	946	16,722
Profit for the six months to 30 June 2008	-	-	1,071	1,071
Credit relating to share based payments	-	-	18	18
Dividends paid	-	-	(268)	(268)
At 30 June 2008	244	15,532	1,767	17,543
Profit for the six months to 31 December 2008	-	-	1,107	1,107
Credit relating to share based payments	-	-	(8)	(8)
Dividends paid	-	-	(244)	(244)
At 31 December 2008	244	15,532	2,622	18,398
Profit for the six months to 30 June 2009	-	-	1,020	1,020
Credit relating to share based payments	-	-	6	6
Dividends paid	-	-	(304)	(304)
Purchase of own shares	-	-	(648)	(648)
At 30 June 2009	244	15,532	2,696	18,472

  Notes 

 

1.        Basis of preparation

The consolidated interim financial statements of the Group for the period ended 30 June 2009  are unaudited and do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006.

This consolidated interim financial information has been prepared on the basis of the recognition and measurement requirements of endorsed IFRS as at 30 June 2009 that are effective (or available for early adoption). The interim statement has been prepared in accordance with the accounting policies of the Group as set out in the Group's audited accounts for the year ended 31 December 2008

Standards currently in issue and adopted by the EU are subject to interpretation issued from time to time by the International Financial Reporting Interpretations Committee (IFRIC). Further standards may be issued by the International Accounting Standards Board that will be adopted for financial years beginning on or after 1 January 2008.  

The comparative figures for the six months ended 30 June 2008 do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. 

2.      Earnings per share

 

The calculation of the basic earnings per share is based on the profit after taxation for the six months ended 30 June 2009 of £1,020,000 (H1 2008 £1,071,000) divided by the weighted average number of shares in issue, being 23,957,477 (H1 2008 :24,401,429). 

This statement is being sent to the shareholders of the Company and will also be available on the Company's website at www.mountengineering.co.uk and from the Company's registered office at The Chocolate Works, Bishopthorpe Road, York, YO23 1DE.

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