Embargoed Release: 07:00hrs Thursday, 10 December 2009
Hartest Holdings Plc
(`Hartest' or `the Group')
Unaudited Interim Results for the Six months ended 30 September 2009
Hartest Holdings plc, the supplier of specialist instrumentation and medical
equipment, announces its Interim Results for the six months ended 30 September
2009 (the `period').
Highlights:
* Group revenue £9.42 million (2008; £10.06 million)
* Operating profit before non-recurring costs £263,000 (2008; £62,000)
* Non-recurring costs of £223,000 primarily relate to planned business
relocation expenses
* Profit before tax £5,000 (2008; Loss before tax £290,000)
* Proposal to restore dividend at 0.67 pence per share
* Discussions continue regarding possible offer by Delta Controls Limited
Geoff Spink, Executive Chairman, commented: "Profitability in the first half of
the year has proved to be better than expected and this trend has continued
across Group operations in recent weeks. The Group typically experiences a
strong bias in trading towards the second half of the financial year, and with
our sound financial base and encouraging future prospects, we are looking
forward to continued improvements in our performance."
Chairman's Statement
I am pleased to present the interim report of Hartest Holdings plc for the six
months to 30 September 2009.
Results
The Group's consolidated revenue for the period was slightly reduced at £9.42
million (2008; £10.06 million) principally because of the continuing effects of
the global economic recession on some areas of the business.
However, in aggregate we managed to maintain or improve margins and we are able
to report a substantial improvement in operating profit for the period at £
263,000 (2008; £62,000) aided by reductions in overheads in a number of areas.
Trading
In the period, we experienced encouraging demand for the specialist products
and services supplied by Group companies, despite the significant changes in
global economic trading conditions that developed in the Autumn of 2008. Sales
generally have held up very well in most sectors, although reductions in sales
did occur in certain areas of the business, notably the automotive paint
testing equipment market served by the Sheen Instruments division of Hartest
Precision Instruments Limited.
During the second half of the last financial year, we took a number of
initiatives both to strengthen gross margins and also to reduce operating costs
and overheads across the Group, as fully reported in the Annual Report at the
time. These measures represented a timely reaction to difficult trading
conditions and as a result, we are now seeing significant improvements in
profitability.
We previously reported our intention to relocate the Hartest Precision
Instruments business in early 2009, from two separate sites at Kingston and
Croydon respectively into a new dedicated facility at Redhill, whilst
concurrently moving the Agar Scientific operation to a new facility close to
its existing location at Stansted. Both relocations were completed smoothly,
contributing to improved margins and operating efficiency, and we incurred
planned non-recurring costs of £190,000 on these moves during the half year.
The planned expenditure on our relocations during the period increased
borrowings, resulting in net debt of £0.6 million (2008; £0.15 million) at the
half year, and representing gearing of 7.5% (2008; 1.7%). However, this
increased level of borrowing was well within our expectations.
Discussions are in hand regarding the sale of the New Addington property, and
the Board is optimistic of a transaction in due course.
Possible Offer
As shareholders will be aware, the Group has been in an Offer Period since 1
July 2009 and, after 26 August 2009 when the initial potential offerors
withdrew their interest, the Group has only been in discussions with Delta
Controls Limited ("Delta"). On 8 October 2009, Delta announced that they were
considering an offer for the Company at a price of 50 pence per share payable
in cash, and on 27 November they announced that the price for their possible
offer had increased to an indicative level of 61 pence per share payable in
cash. At the time of writing there can be no certainty that an offer from
Delta will be forthcoming and in order to ensure that the Company is not
subject to unnecessary speculation and uncertainty, the directors of Hartest
have requested that the Takeover Panel set a deadline for Delta to either make
their offer or withdraw, and this has now been fixed at 1.00 pm on 31 December
2009. Discussions continue in good faith with Delta, and we look forward to
updating shareholders on the possible offer in the near future.
Dividend
The Group suspended dividend payments in December 2008 in order to ensure that
sufficient funds were available to finance the forthcoming subsidiary company
relocations, and also generally to conserve funds at a time of economic
uncertainty. The Group is now on a more sound financial footing with the
relocations successfully completed, and as anticipated at the Annual General
Meeting in September 2009, trading prospects have continued to improve. In view
of this, we are pleased to report that the Board has resolved to resume payment
of dividends. An interim dividend of 0.67 pence per share will be paid to
shareholders on 11 March 2010, based upon members recorded on the Company share
register at 29 January 2010, and the Board anticipates increasing future
dividend payments at a level reflecting profitability.
Prospects
Profitability in the first half of the year has proved to be better than
expected and this trend has continued across Group operations in recent weeks.
The Group typically experiences a strong bias in trading towards the second
half of the financial year, and with our sound financial base and encouraging
future prospects, we are looking forward to continued improvements in our
performance.
Geoff Spink
Executive Chairman
10 December 2009
Hartest Holdings plc
Interim Consolidated Income Statement (Unaudited)
For the Six months ended 30 September 2009
Note 6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2009 Sept 2008 2009
£'000 £'000 £'000
Revenue 9,420 10,058 20,671
Cost of sales (6,109) (6,828) (13,635)
Gross Profit (excluding 3,311 3,230 7,036
non-recurring costs)
Operating Expenses
Overheads (3,048) (3,168) (6,702)
Operating Profit before 263 62 334
non-recurring costs
Non-recurring costs 2 (223) (301) (1,117)
Total Operating Expenses (3,271) (3,469) (7,818)
Operating Profit / (Loss) after 40 (239) (783)
non-recurring costs
Financing cost (35) (51) (82)
Profit / (Loss) before taxation 5 (290) (865)
Taxation 3 - (77) 103
Profit / (Loss) for the year 5 (367) (762)
Attributable to
Equity shareholders of Hartest 5 (367) (762)
Holdings plc
Earnings per share (pence) 5
- Basic 0.06 (4.27) (8.85)
- Fully diluted 0.05 (4.27) (8.85)
Dividends declared and paid in year - (86) (86)
(£'000)
Interim Group Statement of Consolidated Income (Unaudited)
Six months ended 30 September 2009
30 Sept 30 Sept 31 March
2009 2009
2008
£'000 £'000 £'000
Profit / (Loss) for the period 5 (367) (762)
Exchange rate movement on net assets (58) - 34
Write back of revaluation reserve - - (81)
Total comprehensive expensefor the (53) (367) (809)
period, attributable to the equity
shareholders of Hartest Holdings plc
Interim Consolidated Balance Sheet (Unaudited)
As at 30 September 2009
30 Sept 30 Sept 31 March
2009 2009
2008
Fixed Assets £'000 £'000 £'000
Goodwill and intangible assets 4,022 4,092 4,061
Property plant and equipment 1,122 1.579 833
Deferred income tax asset 144 9 141
5,288 5,680 5,035
Current assets
Assets classified as held for resale 750 - 750
Inventories 3,005 3,154 3,042
Trade and other receivables 3,520 3,154 4,489
Cash and cash equivalents 178 291 410
7,453 6,599 8,691
Total assets 12,741 12,279 13,726
Capital and reserves
Share capital 2,097 2,097 2,097
Share premium 2,928 2,928 2,928
Retained 2,861 3,251 2,856
earnings
Other reserve 142 242 195
Total equity 8,028 8,518 8,076
attributable
to the
company's
equity holders
Liabilities
Non current
liabilities
Borrowings 285 361 323
Deferred 10 4 20
income tax
liabilities
Provisions 217 36 239
512 401 582
Current
liabilities
Trade and 3,687 3,022 4,861
other payables
Current income 25 262 131
tax
liabilities
Borrowings 489 76 76
short term
4,201 3,360 5,068
Total 4,713 3,761 5,650
liabilities
Total equity 12,741 12,279 13,726
and
liabilities
Interim Group Cash Flow Statement (Unaudited)
Six months ended 30 September 2009
30 Sept 30 Sept 31 March
2009 2009
2008
£'000 £'000 £'000
Operating profit / (loss) 5 (367) (762)
Adjustment for
Finance costs 35 51 82
Tax - 77 (103)
Depreciation 103 96 384
Amortisation of intangible assets 40 37 75
Share-based payment costs 5 10 10
Profit on sale of assets - - (8)
Decrease in inventory 37 701 813
Decrease in trade and other 888 1,480 141
receivables
(Decrease) in trade and other (1,176) (2,010) (167)
payables
(Decrease) / increase in provisions (22) - 239
Net cash (outflow) / inflow from (85) 75 704
operating activities
Interest paid (35) (51) (98)
Income tax paid (37) (105) (204)
Net cash generated from operating (157) (81) 402
activities
Cash flows from investing activities
Purchase of property, plant and (412) (23) (411)
equipment (`PPE')
Proceeds from sale of PPE 13 - 21
Purchase of intangible assets (1) (46) (53)
Interest received - - 12
Net cash (employed) / generated in (400) (69) (431)
investing activities
Cash flows from financing activities
Repayment of borrowings (38) (38) (76)
Equity dividend paid - (86) (86)
Net cash employed in financing (38) (124) (162)
activities
Effect of exchange rate fluctuations (50) - 36
on foreign balances
Net (decrease) / increase in cash and (645) (274) (155)
cash equivalents
Cash, cash equivalents and bank 410 565 565
overdrafts at the beginning of the
period
Cash, cash equivalents and bank (235) 291 410
overdrafts at the end of the period
Consolidated Interim Statement of Change in Shareholder Equity (Unaudited)
Share Share Other Revaluation Foreign Retained Total
Capital Premium dist reserve exch earnings
reserve
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2,097 2,928 151 81 - 3,704 8,961
2008
Total comprehensive - - - - - (367) (367)
expense
Employee share-based - - 10 - - - 10
compensation
Dividend - - - - - (86) (86)
Balance at 30 2,097 2,928 161 81 - 3,251 8,518
September 2008
Total comprehensive - - - (81) 34 (395) (442)
expense
Balance at 31 March 2,097 2,928 161 - 34 2,856 8,076
2009
Total comprehensive - - - - (58) 5 (53)
expense
Employee share-based - - 5 - - - 5
compensation
Balance at 30 2,097 2,928 166 - (24) 2,861 8,028
September 2009
Notes:
1. Basis of preparation, accounting policies, and approval of interim
statement
The interim financial statements for the six months to 30 September 2009 have
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 2009 with the exception of the adoption of IAS 1, "Presentation of
Financial Statements" (Revised) and IFRS 8, "Operating Segments". The policies
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 2009 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 statements are unaudited and were approved by the Board
of Directors on 9 December 2009.
2. The non-recurring operating expenses in the six months to 30 September 2009
of £223,000 represent primarily expenses in connection with planned
relocations, and special costs in respect of the Offer Period.
3. No material taxation charge has been assumed for the six months to 30
September 2009.
4. An interim dividend of 0.67 pence per share has been proposed by the Board
in respect of the six months to 30 September 2009 (2008: nil). The proposed
dividend is not shown as a liability in the balance sheet.
5. 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
Executive Chairman
William Vandyk Astaire Securities 020 7448 4400
Director
Vikki Krause Hansard Group 07515 922 906
Kirsty Corcoran 020 7245 1100