A.b.engineering Regulatory News (ASBE)

20 Jul 2007 16:22

Associated British Engineering PLC20 July 2007 A • B • E ASSOCIATED BRITISH ENGINEERING PLC• PRELIMINARY ANNOUNCEMENT ASSOCIATED BRITISH ENGINEERING PLC CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 MARCH 2007 The Group made a pre-tax profit of £302,000 from continuing operations comparedwith a pre-tax loss of £78,000 last year. There is an additional charge inrespect of the interest on the pension fund liability, with the pension funddeficit increasing from £4,395,000 to £5,078,000. This was in contrast to an improvement in the underlying performance from theonly operating subsidiary, British Polar Engines Limited ('BPE'). We have been in continual negotiations with the Trustees of the ABE PensionFund, and the satisfactory conclusion of these, which is anticipated by theBoard in the near future, would result in the division of the fund and only theobligations for the BPE section of the ABE Pension Fund would need to beaccounted for by ABE going forward. BPE has not been able to meet its statutory obligations concerning itscontributions to the Pension Fund, which is in respect of the whole deficit ofthe fund including companies that ceased to be part of ABE as far back as 1996.This has resulted in the need to conclude a settlement with the Trustees of thePension Fund which is likely to require the blessing of the Pension Regulatorand possibly the Pensions Protection Fund ('PPF'). The full financialimplications of a settlement cannot be quantified at this stage. All sections of the Pension Fund show an actuarial deficit of £5,078,000 at 31March 2007 (£4,395,000 at 31 March 2006), and all sections of the Pension Fund,with the exception of the BPE section, are in wind up. Further details of thePension Fund are set out in note 9 to the preliminary announcement. BPE again improved its performance significantly and made an operating profit of£592,000 against a profit of £337,000 last year. The Board of BPE should becongratulated on its endeavours in continuing to develop its business from astable platform. At long last the Board feels that a final resolution of the Pension Fund issuesis in sight and will be announcing at the appropriate time any completion ofcontractual arrangements with the relevant parties. Thereafter the Board will beable to devote more time to the future development of the Group, with thepension matters resolved and the operating subsidiary BPE performing well. The Board has continued to keep the central costs of the Company at as low alevel as is reasonably possible and recognises that its priority will be to finda suitable corporate transaction to take the Group forward. The Board and I are very grateful for the patience of the shareholders in whathas been a long and hard road to the resolution of the Pension issues. D A H BrownChairman Date: 19 July 2007 ASSOCIATED BRITISH ENGINEERING PLC GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2007 ________________________________________________________________________________ 2007 2006 £'000 £'000 REVENUE 3,861 3,278 Operating costs (3,304) (3,050) ________ ________OPERATING PROFIT 557 228 Finance expense (305) (340)Finance income 50 34 ________ ________ PROFIT/(LOSS) BEFORE TAXATION 302 (78) Taxation - - ________ ________ PROFIT/(LOSS) FOR THE YEAR 302 (78) ======== ========PROFIT/(LOSS) PER SHAREBASIC AND DILUTED 23p (6)p ======== ======== GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED 31 MARCH 2007 ________________________________________________________________________________ 2007 2006 £'000 £'000 Actuarial losses on retirement benefit (410) (933)obligation Profit/(loss) for the year 302 (78) ________ ________ TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR (108) (1,011) ======== ======== ASSOCIATED BRITISH ENGINEERING PLC GROUP BALANCE SHEET 31 MARCH 2007 ________________________________________________________________________________ 2007 2006 £'000 £'000ASSETS Non-current assetsProperty, plant and equipment 274 299 ________ ________Current assets Inventories 1,266 1,328Trade and other receivables 1,179 670Held for trading investments 74 60Cash and cash equivalents 1,642 1,205 ________ ________ 4,161 3,263 ________ ________Total assets 4,435 3,562 ======== ======== EQUITY AND LIABILITIES Called up share capital 2,627 2,627Share premium account 5,038 5,038Other reserve 11 11Retained earnings (9,347) (9,239) ________ ________Equity attributable to the Company's Equityshareholders (1,671) (1,563) ________ ________ LIABILITIES Non-current liabilities Retirement benefit obligation 5,078 4,395Cumulative preference shares - -Obligations under finance leases 4 1 ________ ________ 5,082 4,396 ________ ________Current liabilitiesTrade and other payables 1,023 728Obligations under finance leases 1 1 ________ ________ 1,024 729 ________ ________Total liabilities 6,106 5,125 ________ ________Total equity and liabilities 4,435 3,562 ======== ======== ASSOCIATED BRITISH ENGINEERING PLC GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2007 ________________________________________________________________________________ 2007 2006 £'000 £'000 Cash flows from operating activities Cash generated from operations 446 69Interest received 50 34Interest paid (3) (4) ________ ________ Net cash from operating activities 493 99 ________ ________ Cash flows from investing activities Proceeds from sale of property, plant andequipment - 5Purchase of property, plant and equipment (38) (39)Purchase of trading investments (14) (30) ________ ________ Net cash used in investing activities (52) (64) ________ ________ Cash flows from financing activities Repayments of obligations under finance leases (4) (3) ________ ________ Net cash used in financing activities (4) (3) ________ ________ Net increase in cash and cash equivalents 437 32 Cash and cash equivalents at beginning of year 1,205 1,173 ________ ________Cash and cash equivalents at end of year 1,642 1,205 ======== ======== CASH FLOW FROM OPERATING ACTIVITIES 2007 2006 £'000 £'000 Net profit/(loss) 302 (78)Adjustments for:Depreciation 67 72Loss on disposal of fixed assets 3 -Interest income (50) (34)Interest expense 3 4Pension scheme interest expense 302 336Current service cost (29) (37)Changes in working capital:Increase in inventories 62 (55)Increase in trade and other receivables (509) (263)Increase in payables 295 135Decrease in provisions - (11) ________ ________Cash generated from operations 446 69 ======== ======== ASSOCIATED BRITISH ENGINEERING PLC GROUP ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2007________________________________________________________________________________ BASIS OF PREPARATION The preliminary announcement has been prepared in accordance with applicableaccounting standards as stated in the interim financial statements for the sixmonths ended 30 September 2006, and have remained unchanged from the prior year. A number of new International Financial Reporting Standards, amendments tostandards and interpretation are not yet effective for the year ended 31 March2007, and have not been applied. ASSOCIATED BRITISH ENGINEERING PLC NOTES TO THE PRELIMINARY STATEMENT FOR THE YEAR ENDED 31 MARCH 2007________________________________________________________________________________ 1. SEGMENTAL REPORTING Based on risks and returns the directors consider that the primary reportingformat is by business segment. The directors consider that there is only onebusiness segment being diesel and related engineering activities. The secondary reporting format is by geographical analysis by destination asshown below. The following table shows an analysis of the Group's sales bygeographical market: 2007 2006 £'000 £'000 United Kingdom 1,974 1,347Europe 798 769Middle East 110 256Far East and Australasia 684 312Africa 31 57North and South America 264 522Russia - 15 ________ ________ 3,861 3,278 ======== ======== All of the above revenue arises from diesel and related engineering activitiesand originates in the United Kingdom. In the year ended 31 March 2007 and 31 March 2006 all of the assets held by thegroup were located in the United Kingdom and all capital expenditure wasincurred within the United Kingdom. 2. OPERATING COSTS 2007 2006 £'000 £'000 Changes in inventories (69) 55Raw materials used 1,835 1,580Staff costs 1,164 1,120Depreciation and amortisation 67 72Other expenses 307 223 ________ ________ 3,304 3,050 ======== ======== 3. OPERATING PROFIT 2007 2006 £'000 £'000Operating profit is stated after chargingDepreciation on owned assets 65 70Depreciation on assets held under finance leases 2 2Auditor's remuneration:Audit of the company pursuant to legislation 9 9Audit of subsidiaries 26 21Taxation 8 8Operating lease rental on plant and machinery 24 25Operating lease rental on land and buildings 54 54Pension provision reversal - (11)Foreign exchange loss 2 3 ======== ======== 4. NET FINANCE EXPENSE 2007 2006 £'000 £'000 Interest on obligations under finance leases 3 47% Cumulative preference dividend - -8% Cumulative redeemable preference dividend - -Pension interest cost less expected return on scheme assets 302 336 ________ ________ 305 340Interest receivable (50) (34) ________ ________ 255 (306) ======== ======== The Company is required to pay cumulative dividends on the non-equity shares.However, the Company has insufficient distributable reserves to pay thisdividend which has been provided in accordance with the Company's Articles ofAssociation. Further information is disclosed within note 7 of the notes to thispreliminary announcement. 5. PROFIT/(LOSS) PER SHARE The calculation of profit/(loss) per ordinary share is based on the profit/(loss) attributable to ordinary shareholders divided by the weighted averagenumber of shares in issue during the year. 2007 2006 Weighted Per Weighted Average shares Average Per shares Profit number of amount Loss Number of amount £'000 Shares pence £'000 Shares Pence Basic and diluted profit/(loss) per share 302 1,313,427 23p (78) 1,313,427 (6) ====== ========= ====== ====== ========= ====== 6. PROPERTY, PLANT AND EQUIPMENT Freehold land and Plant and buildings machinery Total £'000 £'000 £'000COSTAt 1 April 2005 689 1,434 2,123Additions - 39 39Disposals - (97) (97) _________ _________ _________ At 31 March 2006 689 1,376 2,065Additions - 44 44Disposals - (62) (62) _________ _________ _________At 31 March 2007 689 1,358 2,047 _________ _________ _________ACCUMMULATED DEPRECIATIONAt 1 April 2005 489 1,297 1,786Charge for year 32 40 72Eliminated on disposals - (92) (92) _________ _________ _________ At 31 March 2006 521 1,245 1,766Charge for year 32 35 67Eliminated on disposals - (60) (60) _________ _________ _________ At 31 March 2007 553 1,220 1,773 _________ _________ _________ 6. PROPERTY, PLANT AND EQUIPMENT (continued) Freehold land and Plant and buildings machinery Total £'000 £'000 £'000CARRYING AMOUNTSAt 31 March 2007 136 138 274 ========= ========= =========At 31 March 2006 168 131 299 ========= ========= ========= Plant and machinery assets with a carrying amount of £14,000 (2006: £10,000) areheld under finance leases. The amount of depreciation in respect of such assetsamounted to £2,000 (2006: £2,000) for the year. 7. CALLED UP SHARE CAPITAL 2007 2006 £'000 £'000 Authorised:1,699,078 ordinary shares of £2 each 3,398 3,398750,000 7% cumulative preference shares of £1 each 750 7501,681,443 8% cumulative redeemable preference shares of £1 each 1,681 1,681 ________ ________ 5,829 5,829 ======== ========Nominal value: Allotted and fully paid:1,313,427 ordinary shares of £2 each 2,627 2,627555,000 7% cumulative preference shares of £1 each 555 555157,395 8% cumulative redeemable preference shares of £1 each 157 157 ________ ________ 3,339 3,339 ======== ========Carrying value:Equity shares:1,313,427 ordinary shares of £2 each 2,627 2,627 ======== ======== Shares classed as financial liabilities555,000 7% Cumulative preference shares of £1 each - -157,395 8% Cumulative redeemable preference shares of £1 each - - ________ ________ - - ======== ======== There were no shares allotted during the course of the years ended 31 March 2007or 31 March 2006. The Company has one class of ordinary share which carries no right to fixedincome. The Company also has two classes of cumulative preference shares, whichcarry the right to fixed returns of 7% and 8% per annum respectively. The 7% cumulative preference shares and 8% cumulative redeemable preferenceshares, classified as debt under IAS 32, are non voting unless the dividends aresix months in arrears or the resolution relates to the winding up of the Companyor affects the rights attaching to them. The Company has the power to redeem the8% Cumulative preference shares at par (together with arrears of dividends) atany time. Since the dividends are more than six months in arrears, the 8%Cumulative redeemable preference shares of £1 each have 50 votes per share andthe 7% Cumulative preference shares of £1 each have 4 votes per share. 7. CALLED UP SHARE CAPITAL (continued) In accordance with IAS 39 the 7% cumulative preference shares and the 8%cumulative redeemable preference shares are required to be carried at fair valuewithin the financial statements. As there is no expectation of being able toredeem the preference shares in the foreseeable future the fair value is deemedto be zero. The 7% cumulative preference shares are accruing a dividend of£39,000 per annum and the 8% cumulative redeemable preference shares areaccruing a dividend of £13,000 per annum. At 31 March 2007 total dividendarrears of £360,000 (2006: £308,000) had accrued, representing arrears to dateof 49 pence per share relating to the 7% cumulative preference shares and 56pence per share relating to the 8% cumulative redeemable preference shares. Under IAS 32 the preference dividends should be disclosed as finance charges andany arrears of dividends included with accruals. IAS 39 also permits the totalof accumulated arrears of dividends to be discounted. As the company has nodistributable reserves and there is no expectation of being able to pay thedividend arrears in the foreseeable future as a result of anticipated futurecash flows, the accrued dividends are deemed to have a carrying value of zeroand therefore have been discounted to zero. 8. STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT Share Share Other Retained Capital Premium reserve Earnings Total £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2005 2,627 5,038 11 (9,178) (1,502)Loss for the year - - - (78) (78)Actuarial losses in defined benefit plan - - - (933) (933)Defined benefit plan adjustment - - - 950 950 _______ _______ _______ _______ _______Balance at 31 March 2006 2,627 5,038 11 (9,239) (1,563)Profit for the year - - - 302 302Actuarial losses in defined benefit plan - - - (410) (410) _______ _______ _______ _______ _______Balance at 31 March 2007 2,627 5,038 11 (9,347) (1,671) ======= ======= ======= ======= ======= 9. RETIREMENT BENEFIT SCHEMES The Group operates a defined benefit pension scheme, holding the assets in aseparate trustee administered fund ("the ABE Pension Fund"). The requiredcontributions are assessed with the advice of an independent qualified actuaryusing the projected unit credit method. The Group also has a designated Grouppersonal pension plan which meets stakeholder requirements. The Company is in the process of leaving the ABE Pension Scheme and hasnegotiated 'in principle' Heads of Terms with the Trustees of the scheme. 2007 2006 £'000 £'000 (a) Pension cost (recognised in Income Statement) Operating charge Current service cost 121 109 ________ ________ Total operating charge 121 109 ________ ________ Other finance charges Interest on pension scheme liabilities 697 663 Expected return on pension scheme assets (395) (327) ________ ________ Net finance charge 302 336 ________ ________ Total pension cost recognised in the Income Statement 423 445 ======== ======== (b) Benefit liability Present value of funded obligations 14,496 14,088 Fair value of plan assets (9,418) (9,693) ________ ________ Net liability 5,078 4,395 ======== ======== The major categories of plan assets are as follows: Equities 1,438 4,103 Bonds 7,956 4,673 Cash 24 (33) Other - 950 ________ ________ 9,418 9,693 ======== ========(c) Change in benefit obligation Benefit obligation at beginning of the year 14,088 12,186 Current service cost 121 109 Interest cost 697 663 Actuarial losses 17 1,519 Contributions by plan participants 25 24 Benefits paid (452) (413) ________ ________ Benefit obligation at end of the year 14,496 14,088 ======== ======== (d) Change in plan assets Fair value of plan assets at beginning of the year 9,693 8,062 Expected return on plan assets 395 327 Actuarial (losses)/gains on plan assets (394) 586 Contributions made by employer 151 157 Contributions by plan participants 25 24 Benefits paid (452) (413) Defined benefit plan adjustment - 950 ________ ________ Fair value of plan assets at end of the year 9,418 9,693 ======== ======== The cumulative amount of actuarial loss recognised in the statement ofrecognised income and expense is £103,000 (2006: £405,000). The expected long term return on cash is equal to bank base rates at the balancesheet date. The expected return on bonds is determined by reference to UnitedKingdom long dated gilt and bond yields at the balance sheet date. The expectedrate of return on equities and property have been determined by setting anappropriate risk premium above gilt/bond yields having regard to marketconditions at the balance sheet date. The expected rates have then all beenreduced to reflect the level of anticipated future expenses. The expected long term rates of return (net of expenses) are as follows: 2007 2006 % per annum % per annum Equities 5.4 5.4Bonds 3.0 3.0Cash 1.5 1.5 ________ ________Overall rate of return for the plan 3.3 4.1 ======== ======== The actual return on the plan assets over the year ended 31 March 2007 was1.93%. (e) Principal actuarial assumptions Inflation 3.2% 3.0% Rate of increase in pensionable salaries 4.2% 4.0% Discount rate 5.4% 5.0% Pension in payment increases 3.0% 2.8% Revaluation rate for deferred pensioners 3.2% 3.0% Estimate of contributions to be paid in the next accounting period £135,000 £161,000 Pre retirement mortality AM92,-5 (males) AM92,-5 (males) AF92,-5 (females) AF 92,-5 (females) Post retirement mortality PMA92 (males) PMA92 (males) PFA92 (females) PFA92(females) 9. RETIREMENT BENEFIT SCHEMES (continued) 2007 2006 2005 (f) History of experience gains and losses (i) Difference between the expected and actual return on scheme (liabilities)/assets: (a) Amount (£'000) (395) 586 569(b) Percentage of scheme assets (4)% 7% 7% (ii) Experience (gains) and losses on scheme liabilities (a) Amount (£'000) 324 (424) 444(b) Percentage of present values of scheme liabilities (2)% (3)% 4% 10. PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in the preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985 but is derived from the 2007 financial statements. Statutory accounts for2006, which were prepared under International Financial Reporting Standards andcontained an unqualified auditor's report, have been delivered to the Registrarof Companies, and those for 2007 will be delivered in due course. The auditorshave reported on the accounts for the year ended 31 March 2007 and their reportwas unqualified and did not contain statements under section 237(2) or (3) ofthe Companies Act 1985. The auditors have included an emphasis of matter statement with regard to goingconcern. They have drawn attention to the Directors statement that 'BPE has notbeen able to meet its statutory obligations concerning the Pension Fund, whichhas resulted in the need to conclude a settlement with the Trustees of the ABEPension Fund, the Pension Regulator and the PPF. All sections of the ABE Pension Fund show an actuarial deficit of £5,078,000 at31 March 2007 (£4,395,000 at 31 March 2006), but all sections of the PensionFund, with the exception of the BPE section, are in wind up. The financialstatements have been prepared on the going concern basis as the Board expects asuccessful outcome to negotiations with the Trustees of the ABE Pension Fund,the Pension Regulator and the PPF, as explained in the Chairman's Statement. Ittherefore considers that the Group has sufficient resources to continue inoperational existence for the foreseeable future.' D A H Brown Date: 19 July 2007 Enquiries:Mr D.A.H. Brown (Chairman) This information is provided by RNS The company news service from the London Stock Exchange