ENSOR HOLDINGS PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2010
CHAIRMAN'S STATEMENT
PROGRESS
Despite the difficulties and economic problems faced by the country, the Group
has made a significant operating profit of £504,000 against a loss last year of
£801,000, which included discontinued operations.
This result demonstrates the success of our positive actions to combat the
worst effects of recession experienced in the second half of last year and the
first half of this year. Operating profits were improved by stronger buying and
control of costs, manpower and stock, albeit in an uncertain market where
margins were still under pressure.
Important markets are still very much in turmoil and there is also a "wait and
see" atmosphere in the construction market, post General Election. Ensor is
making progress despite these continuing uncertainties. This is a particularly
satisfactory position from which to take advantage of a real economic upturn.
Since the half-year, cash flow has continued to be good, further improving our
gearing to 13% (2009: 27%). During the year our borrowings have consequently
reduced by over £1m. Debtor days across the Group have come down but there
remains a threat of bad debt as the economy improves and there is a demand for
increased working capital.
During the year we have again made substantial payments into our pension
scheme, in line with actuarial recommendations. The value of our pension
investments has improved significantly during the year, however, the scheme
deficit has increased due to the deterioration of bond yields used to calculate
the liability for our accounts.
Since the year end we have disposed of our property in Sandbach, Cheshire and
earlier this year we applied for permission to develop our Brackley,
Northamptonshire site. Both properties had been occupied by Hawkins-Salmon, a
business we closed last year. Where not currently generating income, our other
considerable land assets are being assessed to ensure we obtain maximum value
to the Group.
During the year we have investigated possible acquisitions of allied businesses
and will continue with this in the future, but a conservative approach seems
wise.
We propose to pay a final dividend of 0.15p per share. This is a cautious
return to dividend payments which I am optimistic we can maintain and build on.
We must however recognise that we are still in the grip of recession and be
flexible in our short term expectations. Subject to approval at our AGM, this
dividend will be paid on 13 August 2010, to shareholders on the register on 25
June 2010.
My sincerest thanks to our shareholders, management, staff, customers and
suppliers for their support and contribution during a challenging but positive
year.
K A Harrison TD
Chairman
11 June 2010
BUSINESS REVIEW
The global recession most markedly affected the results for the second half of
last year, and the first half of this. Whilst the results for last year were
somewhat buoyed by a relatively strong first half, the final six months of that
year produced a small operating loss as market conditions deteriorated
dramatically.
Entering the current financial year, our markets remained troubled by
uncertainty, with our sales and margins under pressure as a consequence of
reduced demand, competitive pressures and a weak currency.
As the year progressed, we were able to rebuild sales and margin levels,
enabling the Group to post a reduced profit for the first half of the year.
Our second half is traditionally eroded by seasonal factors, however the severe
weather conditions experienced from early January 2010, were an extreme
example. Nevertheless, the operating profit for the second half of £291,000
compares favourably with the loss of £7,000 for the corresponding period of the
previous year.
Trading levels remain well below their pre-recession peak, but the Group
businesses have adapted to the current economic challenges.
Significant savings have been made in the cost base of the businesses -
particularly in relation to payroll costs. This has been achieved largely
through non-replacement and natural wastage, but pay restraint has played an
important part, helping to ensure that the critical business structures have
not been damaged.
Moreover, our strong cash performance over the last year, has achieved a
reduced level of borrowing, which is more appropriate in uncertain times.
Continuing operations
Turnover reduced by 10.4% to £19.4m (2009: £21.7m), however the majority of
this erosion was seen in the first half of the year, when sales were down by
15.4%. Similarly, the decrease in gross profit from 27.9% last year to 27.4%
this, was a consequence of the particularly difficult start to the year, with
the second half showing significant improvement as our markets became more
composed.
The immediate effect of the economic downturn late in 2008, was partially
postponed into the current year by the forward order position in some of our
Building Products businesses. Consequently, those businesses did not show a
year on year improvement in the second half - their improvement is expected to
lag behind somewhat for the same reason.
As a consequence of its association with the construction industry, Building
Products, which accounts for the majority of group activity, was harder hit
than was Packaging, which also benefits from operating a low overhead base.
The impact of reduced sales across the Group throughout the year, was
substantially mitigated by cost control which saw administrative expenses
reduced by £398,000 compared with the previous year.
The resulting operating profit for the year of £504,000 (2009: £639,000),
reflects a distinct upturn during the period. Following a very poor end to last
year, the first quarter of this year returned operating losses, which were
reversed during the second quarter to give an interim operating profit of £
188,000. That result was improved by a further £316,000 during the third and
fourth quarters of the year, bucking the usual trend.
Financial expenses
Financial expenses of £248,000 (2009: £139,000) comprise borrowing costs and an
actuarial calculation reflecting the cost of financing the deficit on the
Group's defined-benefit pension scheme.
In common with businesses in all sectors, the interest margin on our borrowings
has increased since the start of the banking crisis, however the total cost was
reduced to £90,000 (2009: £109,000) through strong cash generation and reduced
borrowings.
The net pension-related cost increased from £30,000 in 2009, to £158,000 this
year, principally as a consequence of the reduction in value of pension fund
investments prior to, and following, the banking crisis. The recovery of those
investments during the year stands to reduce next year's financing cost.
Taxation
The Group has benefitted from a tax credit of £127,000 this year. This arose as
a result of the write back of a deferred tax provision which was no longer
necessary following the crystallisation this year of capital losses on last
year's discontinued activities, described below.
Discontinued operations
The activities of Hawkins-Salmon Limited and Powerplus (UK) Limited, were
discontinued on 31 March 2009 and 5 May 2009 respectively. These operations
were treated as discontinued in last year's accounts and their impact in the
current year has been positive in relation to the Group's cash flow, through
recovery of payments made under bank guarantees and through the receipt of sale
proceeds.
Cash flow
Net cash of £1,069,000 has been generated over the course of the year, reducing
group borrowings to £1,030,000.
Continuing activities generated £1,082,000 from operations, before allowing for
corporation tax payments of £309,000, which were deferred from the previous
year. Inventories and the ageing of receivables have been improved. Capital
expenditure has been restricted to essential items. Payments to the closed
pension scheme were increased slightly to £180,000 following a triennial
valuation.
Year end financial position
The Group ended the current year more confidently than the previous year.
Despite the extreme weather conditions, the final quarter represented a
stronger performance than did the corresponding period of the previous year,
capping a year of improvement. Fears of a double-dip recession are widely
abating and our balance sheet is more conservative.
The Group's consolidated balance sheet at 31 March 2010 demonstrates:-
* Borrowings reduced from £2.1m to £1.0m
* Gearing reduced from 27% to 13%
* Inventories and trade receivables reduced by 8.0%
These changes indicate our caution regarding both debt and risk in current
assets, particularly in these uncertain times. Nevertheless, with a strong
balance sheet, and low borrowings, the Group is well placed to pursue the
opportunities which such times may present.
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 most significant risk and uncertainty facing the Group remains that of the
general economic outlook for the UK and for the construction sector in
particular.
The Group's businesses have been adjusted as necessary to adapt to the current
recession, but not to a damaging degree to ensure that they are able to take
advantage of any recovery.
The diversified nature of the Group, and lack of over-reliance on any one
business, serves to moderate the range of risks to those which are faced by any
business in the normal course of events.
Consolidated Income Statement
for the year ended 31 March 2010
2010 2009
£'000 £'000
Revenue 19,443 21,706
Cost of sales (14,109) (15,644)
______ ______
Gross profit 5,334 6,062
Distribution costs (873) (1,068)
Administrative expenses (3,957) (4,355)
______ ______
Operating profit 504 639
Financial costs (248) (139)
______ ______
Profit before tax 256 500
Income tax credit/(expense) 127 (47)
______ ______
Profit for the year for continuing operations 383 453
Loss for the year on discontinued operations - (2,732)
______ ______
Profit/(loss) for the year attributable to equity 383 (2,279)
shareholders
______ ______
Earnings/(loss) per share
Basic and fully diluted
Continuing operations 1.3p 1.5p
Discontinued operations - (10.8p)
______ ______
Total 1.3p (9.3p)
______ ______
Dividends per share
Final dividend proposed 0.15p -
______ ______
Consolidated Statement of Comprehensive Income
£'000 £'000
Profit/(loss) for the year 383 (2,279)
Other comprehensive income:
Revaluation of land and buildings - (300)
Actuarial loss (433) (2,047)
Related deferred tax 116 526
------ ------
Total comprehensive income attributable to 66 (4,100)
equity shareholders
====== ======
Consolidated Balance Sheet
at 31 March 2010
31 March 31 March 01 April
2010 2009 2008
restated restated
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant & equipment 4,117 4,231 5,969
Intangible assets 2,438 2,438 3,147
Deferred tax asset 886 770 244
______ ______ ______
Total non-current assets 7,441 7,439 9,360
______ ______ ______
Current assets
Assets held for sale 742 1,050 -
Inventories 2,451 2,769 4,415
Trade and other receivables 4,185 4,571 5,641
______ ______ ______
Total current assets 7,378 8,390 10,056
______ ______ ______
Total assets 14,819 15,829 19,416
______ ______ ______
LIABILITIES
Non-current liabilities
Retirement benefit obligations (3,165) (2,750) (817)
Deferred tax liabilities - (118) (117)
______ ______ ______
Total non-current liabilities (3,165) (2,868) (934)
______ ______ ______
Current liabilities
Borrowings (1,030) (2,099) (1,206)
Trade and other payables (2,836) (3,140) (5,224)
______ ______ ______
Total current liabilities (3,866) (5,239) (6,430)
______ ______ ______
Total liabilities (7,031) (8,107) (7,364)
______ ______ ______
NET ASSETS 7,788 7,722 12,052
______ ______ ______
EQUITY
Share capital 2,945 2,945 2,945
Share premium 470 470 470
Revaluation reserve 571 571 871
Retained earnings 3,802 3,736 7,766
______ ______ ______
Total equity attributable to equity 7,788 7,722 12,052
shareholders
______ ______ ______
Consolidated Statement of Changes in Equity
for the year ended 31 March 2010
Attributable to equity holders of the parent
Issued Share Revaluation Retained Total
Capital Premium Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000
Balance as at 1 2,945 470 871 7,766 12,052
April 2008
Total - - (300) (3,800) (4,100)
comprehensive
income
Dividends - - - (230) (230)
_____ _____ _____ _____ _____
Balance as at 1 2,945 470 571 3,736 7,722
April 2009
Total - - - 66 66
comprehensive
income
_____ _____ _____ _____ _____
Balance at 31 2,945 470 571 3,802 7,788
March 2010
_____ _____ _____ _____ _____
Share premium
The share premium reserve represents the consideration that has been received
in excess of the nominal value of shares on issue of new ordinary share
capital, less permitted expenses.
Revaluation reserve
The revaluation reserve has arisen as a result of increases in the carrying
value of the Group's land and buildings.
Retained earnings
The retained earnings reserve represents profits and losses retained in the
current and previous periods.
Consolidated Cash Flow Statement
for the year ended 31 March 2010
2010 2009
£'000 £'000
Net cash generated from/(absorbed by) operations 1,121 (186)
_______ _______
Cash flows from investing activities
Proceeds from sale of property, plant and 41 43
equipment
Proceeds from disposal of assets held for sale 308 -
Acquisition of property, plant and equipment (221) (278)
Acquisition of going concern - (100)
_______ _______
Net cash generated from/(absorbed by) investing 128 (335)
activities
_______ _______
Cash flows from financing activities
Equity dividends paid - (230)
Contribution to pension scheme (180) (142)
_______ _______
Net cash absorbed by financing activities (180) (372)
_______ _______
Net increase/(decrease) in cash and equivalents 1,069 (893)
Opening cash and cash equivalents (2,099) (1,206)
_______ _______
Closing cash and cash equivalents (1,030) (2,099)
_______ _______
Notes
1. Basis of preparation
The consolidated financial statements of Ensor Holdings PLC have been prepared
in accordance the Companies Act 2006 and International Financial Reporting
Standards (IFRS) as adopted by the European Union in accordance with the rules
of the London Stock Exchange for companies trading securities on the
Alternative Investment Market. The Group financial statements have been
prepared under the historical cost convention, as modified by the revaluation
of land and buildings, and derivative financial instruments at fair value
through profit or loss. The principal accounting policies adopted by the Group
are set out below.
2. 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.
3. Earnings per share
The calculation of earnings per share on continuing operations is based upon
the profit after taxation of £383,000 (2009: £453,000) divided by the weighted
average number of ordinary shares in issue during the year, 29,445,659 (2009:
29,445,659). The loss per share on discontinued operations is based upon the
profit after taxation of £nil (2009: loss: £2,732,000). The fully diluted
earnings per share calculation is based upon the weighted average of 29,445,659
shares (2009: 29,662,338). The dilution in 2009 is due to subsisting share
options. There is no dilution in 2010 because the market value of the shares
was lower than the option price.
The earnings per share from discontinued operations on a basic and fully
diluted basis was 1.3p (2009: (9.3p).
4. Segmental analysis
For management purposes, the Group's business activities are organised into
business units based on their products and services and have two primary
operating segments as follows:
* Building Products - manufacture, marketing and distribution of materials,
tools, components and access automation equipment to the construction
industry;
* Packaging - marketing and distribution of packaging materials;
* All other segments - not reportable segments per the quantitative and
qualitative thresholds per IFRS 8 which include rubber crumb manufacture
and waste recycling.
These divisions are the basis on which information is reported to the Group
Board. The segment result is the measure used for the purposes of resource
allocation and assessment and represents the operating profit of each segment
before exceptional operating costs, amortisation and impairment charges, other
gains and losses, net finance costs and taxation.
Details of the types of products and services from which each segment derives
its revenues are given above.
The accounting policies applied in preparing the management information for
each of the reportable segments are the same as the Group's accounting
policies.
Inter-segment sales are charged on an arm's length basis.
The Group's revenues and results by reportable segment for the year ended 31
March 2010 are as follows:
Continuing Discontinued
Building Packaging Other Total Building Other Total Eliminations Total
Products Products
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 16,932 1,619 892 19,443 - 105 105 - 19,548
______ _____ _____ _____ ______ _____ _____ _____ _____
Depreciation 217 11 39 267 - 5 5 25 297
______ _____ _____ _____ ______ _____ _____ _____ _____
Operating 262 220 22 504 - - - - 504
profit
______ _____ _____ _____ ______ _____ _____ ______
Financial (248)
costs
Income tax 127
credit
_____
Profit for 383
the year
_____
Capital 176 - 5 181 - 1 1 39 221
expenditure
______ _____ _____ _____ ______ _____ _____ _____ _____
Assets 9,554 1,062 775 11,391 - - - 3,428 14,819
Liabilities (2,263) (325) (115) (2,703) - - - (4,328) (7,031)
______ _____ _____ _____ ______ _____ _____ _____ _____
Net assets 7,291 737 660 8,688 - - - (900) 7,788
______ _____ _____ _____ ______ _____ _____ ______ ______
The Group's revenues and results by reportable segment for the year ended 31
March 2009 are as follows:
Continuing Discontinued
Building Packaging Other Total Building Other Total Eliminations Total
Products Products
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 19,253 1,628 825 21,706 2,609 946 3,555 25,261
______ _____ _____ _____ ______ _____ _____ _____ _____
Depreciation 232 14 50 296 127 10 137 27 460
______ _____ _____ _____ ______ _____ _____ _____ _____
Operating 447 195 (3) 639 (1,375) (65) (1,440) - (801)
profit/(loss)
______ _____ _____ _____ ______ _____ _____ ______
Financial (167)
costs
Income tax (29)
expense
Loss on (1,282)
discontinuance
_____
Loss for the (2,279)
year
_____
Capital 215 1 13 229 - 16 16 33 278
expenditure
______ _____ _____ _____ ______ _____ _____ _____ _____
Assets 9,948 1,125 1,296 12,369 742 308 1,050 2,410 15,829
Liabilities (2,482) (211) (369) (3,062) - - - (5,045) (8,107)
______ _____ _____ _____ ______ _____ _____ _____ _____
Net assets 7,466 914 927 9,307 742 308 1,050 (2,635) 7,722
______ _____ _____ _____ ______ _____ _____ ______ _____
Income and expenditure arising directly from a reporting segment are identified
to that segment. Income and expenditure arising from central operations which
relate to the Group as a whole or cannot reasonably be allocated between
segments are apportioned on the basis of the individual segments' earnings.
Head office costs are apportioned to the segments on the basis of earnings.
The Group operates in one geographical segment, being the United Kingdom.
Turnover to customers located outside the United Kingdom accounted for less
than 10% of total Group turnover and has therefore not been separately
disclosed in accordance with IFRS 8.
Revenue from a single customer did not exceed more than 10% of turnover during
the reporting period.
5. Cash flow generated from operations
2010 2009
Continuing operations £'000 £'000
Cash flows from operating activities
Profit for the year attributable to equity 383 453
shareholders
Depreciation charge 292 323
Finance expense 248 139
Income tax expense (127) 47
Profit on disposal of property, plant & (3) (16)
equipment
_______ _______
Operating cash flow before changes in working 793 946
capital
Decrease in inventories 318 227
(Increase)/decrease in receivables (58) 395
Increase/(decrease) in payables (83) (528)
_______ _______
Cash generated from continuing operations 970 1,040
Interest paid (85) (139)
Income taxes paid (241) (66)
_______ _______
Net cash generated from continuing activities 644 835
_______ _______
Discontinued operations
Cash flows from operating activities
Loss for the year attributable to equity - (2,732)
shareholders
Depreciation charge 5 137
Finance expense 5 28
Income tax credit 1 (216)
Loss on disposal of property, plant & equipment - 1,228
Write off of goodwill in discontinued operation - 709
_______ _______
Operating cash flow before changes in working 11 (846)
capital
Increase in assets held for sale - (1,050)
Decrease in inventories - 1,419
Decrease in receivables 471 675
Increase in payables - (1,191)
_______ _______
Cash absorbed by discontinued operations 482 (993)
Interest paid (5) (28)
Income taxes paid - -
_______ _______
Net cash generated from/(absorbed by) 477 (1,021)
discontinued activities
_______ _______
Net cash generated from/(absorbed by) operations 1,121 (186)
_______ _______
6. Reconciliation of net cash flow to movement in net debt
2010 2009
£'000 £'000
Increase/(decrease) in cash in the year 1,069 (893)
______ ______
Movement in net debt arising from cash flow 1,069 (893)
Net debt at 1 April 2009 (2,099) (1,206)
______ ______
Net debt at 31 March 2010 (1,030) (2,099)
______ ______
7. 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 2010 or 31 March 2009 but is derived from those accounts. Statutory
accounts for 2009 have been delivered to the Registrar and those for 2010 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 a statement under section 498 of the Companies Act 2006.
8. 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 19 July 2010.
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
Westhouse Securities Limited
Tim Feather / Matthew Johnson
0113 246 2610