A.b.engineering Regulatory News (ASBE)

22 Dec 2006 08:00

Associated British Engineering PLC22 December 2006 ASSOCIATED BRITISH ENGINEERING PLC INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 ASSOCIATED BRITISH ENGINEERING PLC INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 CONTENTS Page Chairman's statement 1 Consolidated income statement 2 Consolidated interim balance sheet 3 Consolidated interim statement of changes in shareholders' equity 4 Consolidated interim cash flow statement 5 Notes to the interim report 6 - 10 ASSOCIATED BRITISH ENGINEERING PLC CHAIRMAN'S STATEMENT INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 SUMMARY OF RESULTS Six months to Six Months to Year to 30 September 2006 30 September 2005 31 March 2006 £'000 £'000 £'000 (restated) Revenue 1,839 1,345 3,278Profit/(Loss) beforeTax 197 (36) (78) Earnings per ShareBasic 15p (3)p (6)pDiluted 15p (3)p (6)p The six month period to 30th September 2006 shows an improvement in theunderlying performance of the Company generated from the results at oursubsidiary British Polar Engineering Limited. The profit before tax is £197,000(2005: (£36,000)) and the earnings per share 15p (2005: 3p loss per share). Thisis satisfactory but if we take account of the outstanding dividends on the twoclasses of Preference Share in issue, being £26,000 for the period, this wouldreduce the earnings per share to 13p; the cumulative outstanding PreferenceShare dividends now stand at £332,000. The Company is now reaching the final stages of negotiation with the PensionsProtection Fund and with the Pensions Regulator, with a view to finallyresolving the outstanding Group pension issues. I am confident that in my nextChairman's Statement I will be in a position to report upon the conclusion ofthese negotiations following which the Board will be able to more activelyconsider the Company's next steps. ASSOCIATED BRITISH ENGINEERING PLC CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Six months to Six months to Year to 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 REVENUE 1,839 1,345 3,278 Cost of sales and overheads (1,663) (1,401) (3,050) ------------- ------------- -------------OPERATING PROFIT/(LOSS) 176 (56) 228 Finance expense - - (340)Finance income 21 20 34 ------------- ------------- -------------PROFIT/(LOSS) BEFORE TAXATION 197 (36) (78) Taxation - - - ------------- ------------- -------------PROFIT/(LOSS) FOR PERIOD 197 (36) (78) ============= ============= ============= PROFIT/(LOSS) PER SHAREBASIC AND DILUTED 15p (3)p (6)p ==== ====== ====== GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE Six months to Six months to Year to 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Actuarial losses on retirement benefit obligation - - (933) Profit/(loss) for the period 197 (36) (78) ------------ ------------ ----------TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR 197 (36) (1,011) ============ ============ ========== ASSOCIATED BRITISH ENGINEERING PLC CONSOLIDATED INTERIM BALANCE SHEET 30 SEPTEMBER 2006 At 30 September At 30 September At 31 March 2006 2005 2006 £'000 £'000 £'000 ASSETSNon-current assetsProperty, plant and equipment 282 299 299 ------------- ------------- -------------Current assetsInventories 1,160 1,386 1,328Trade and other receivables 586 497 670Held for trading investments 65 52 60Cash and cash equivalents 1,588 986 1,205 ------------- ------------- ------------- 3,399 2,921 3,263 ------------- ------------- -------------Total assets 3,681 3,220 3,562 ============= ============= ============= EQUITY AND LIABILITIESCalled up share capital 2,627 2,627 2,627Share premium account 5,038 5,038 5,038Other reserve 11 11 11Retained earnings (9,042) (9,214) (9,239) ------------- ------------- ------------- Equity attributable to theCompany's Equity shareholders (1,366) (1,538) (1,563) ------------- ------------- ------------- LIABILITIESNon-current liabilitiesRetirement benefit obligation 4,395 4,113 4,395Obligations under financeleases - - 1 ------------- ------------- ------------- 4,395 4,113 4,396 ------------- ------------- ------------- Current liabilitiesTrade and other payables 646 641 728Obligations under financeleases 6 4 1 ------------- ------------- ------------- 652 645 729 ------------- ------------- -------------Total liabilities 5,047 4,758 5,125 ------------- ------------- -------------Total equity and liabilities 3,681 3,220 3,562 ============= ============= ============= ASSOCIATED BRITISH ENGINEERING PLC CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Share Other Retained Total Capital Premium reserve Earnings £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2005 2,627 5,038 11 (9,178) (1,502) Loss for the period - - - (36) (36) --------- --------- --------- --------- --------- Balance at 30 September 2005 2,627 5,038 11 (9,214) (1,538) Loss for the period - - - (42) (42) Actuarial losses in definedbenefit plan - - - (933) (933) Defined benefit plan adjustment - - - 950 950 --------- --------- --------- --------- --------- Balance at 1 April 2006 2,627 5,038 11 (9,239) (1,563) Profit for the period - - - 197 217 --------- --------- --------- --------- --------- Balance at 30 September 2006 2,627 5,038 11 (9,042) (1,346) ========= ========= ========= ========= ========= ASSOCIATED BRITISH ENGINEERING PLC CONSOLIDATED INTERIM CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Six months to Six months to Year to 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000Cash flows from operating activitiesCash generated from/ (used in) operations 383 (181) 69Interest received 21 20 34Interest paid - - (4) ------------ ------------ ----------Net cash from/(used in)operating activities 404 (161) 99 ------------ ------------ ---------- Cash flows from investing activitiesProceeds from sale of property, plant and equipment - 6 5Purchase of property,plant and equipment (25) (9) (39)Purchase of held fortrading investments (5) (22) (30) ------------ ------------ ----------Net cash used in investing activities (30) (25) (64) ------------ ------------ ----------Cash flows from financing activitiesNet change in obligations under finance leases 4 (1) (3) ------------ ------------ ---------- Net cash generated from/(used in) financing activities 4 (1) (3) ------------ ------------ ---------- Net increase/(decrease) in cash and cash equivalents 378 (187) 32Cash and cash equivalents at beginning of year 1,205 1,173 1,173 ------------ ------------ ----------Cash and cash equivalents at end of year 1,583 986 1,205 ============ ============ ========== CASH FLOW FROM OPERATING Six months to Six months to Year toACTIVITIES 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Net profit/(loss) 197 (36) (78)Adjustments for:Depreciation 42 41 72Interest income (21) (20) (34)Interest expense - - 4Pension scheme interestexpense - - 336Current service cost - - (37)Changes in working capital:Decrease/(increase) ininventories 168 (113) (55)Decrease/(increase) intrade and otherreceivables 84 (90) (263)(Decrease)/increase inpayables (87) 48 135Decrease in provisions - (11) (11) ------------- ------------- ------------Cash generated from/(used in) operations 383 (181) 69 ============= ============= ============ ASSOCIATED BRITISH ENGINEERING PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION This Group interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The policies set out below have been consistently applied to all periods presented. GOING CONCERN BPE has not been able to meet its statutory obligations concerning the Pension Fund, which has resulted in the need to conclude a settlement with the Pension Regulator and the PPF. All sections of the ABE Pension Fund show an actuarial deficit of £4,395,000 at 31 March 2006 (£4,124,000 at 31 March 2005), but all sections of the Pension Fund, with the exception of the BPE section, are in wind up. The interim report has been prepared on the going concern basis as the Board expect a successful outcome to negotiations with the Pension Regulator and the PPF, as explained in the Chairman's Statement. It therefore considers that the Group has sufficient resources to continue in operational existence for the foreseeable future. BASIS OF CONSOLIDATION The Group interim report incorporates the financial statements of Associated British Engineering plc and its subsidiary undertakings to 30 September each year. All inter-company balances and transactions have been eliminated in full. The Group interim report includes the results of subsidiaries acquired or disposed of during the year from or to the effective date of acquisition or disposal. REVENUE RECOGNITION Revenue is measured at the fair value of the consideration receivable by the Group for goods supplied and services provided, excluding value added tax and trade discounts. Revenue from the sale of spare parts is recognised when the goods are dispatched or, if under a bill and hold arrangement, when they are available for dispatch to a specific customer. Revenue from the sale of engines is recognised in accordance with the performance of contractual terms and specifically when the engines have been satisfactorily tested in accordance with contractual terms. INVENTORIES AND IMPAIRMENT OF INVENTORIES Inventories of raw materials, work in progress and finished goods are valued at the lower of cost and net realisable value. Work in progress and finished goods include an appropriate allocation of overheads. Cost is on a first in, first out basis. Net realisable value is the estimated selling price in the normal course of business, less estimated costs of completion and provision is made for obsolete, slow moving and defective inventories. ASSOCIATED BRITISH ENGINEERING PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) LEASED ASSETS Leases of property, plant and equipment, where the Group has substantially allthe risks and rewards of ownership, are classified as finance leases. Assetsheld under finance leases are capitalised at lease inception at the lower of theasset's fair value and the present value of the minimum lease payments.Obligations related to finance leases, net of finance charges in respect offuture periods, are included as appropriate within borrowings. The interestelement of the finance cost is charged to the income statement over the life ofthe lease so as to produce a constant periodic rate of interest on the remainingbalance of the liability for each period. The property, plant or equipment isdepreciated on the same basis as owned plant and equipment or over the life ofthe lease, if shorter. Leases where the lessor retains substantially all the risks and rewards ofownership are classified as operating leases. Operating lease rentals (net ofany related lease incentives) are charged against profit on a straight linebasis over the period of the lease. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost less depreciation and anyimpairment in value. Freehold land is not depreciated. Depreciation iscalculated to write down the cost of all property, plant and equipment less itsresidual value by annual instalments over their expected useful lives on thefollowing bases: Freehold buildings 5 per centPlant and machinery 7 1/2- 33 1/3 per cent Assets held under finance leases are depreciated over their expected usefullives on the same basis as owned assets or where shorter, over the term of therelevant lease. The gain or loss arising on the disposal or retirement of anasset is determined as the difference between the sales proceeds and thecarrying amount of the asset and is recognised as income. The carrying values of plant and machinery are reviewed for impairment whenevents or changes in circumstances indicate the carrying value may not berecoverable. If any such indication exists, and where the carrying values exceedthe estimated recoverable amount, the assets or cash generating units arewritten down to their recoverable amounts. TAXATION The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the consolidated financial statements. The deferred tax isnot accounted for if it arises from initial recognition of an asset or liabilityin a transaction, other than a business combination, that at the time of thetransaction affects neither accounting nor taxable profit or loss. Deferred taxis determined using tax rates (and laws) that have been enacted or substantiallyenacted by the balance sheet date and are expected to apply when the relateddeferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can beutilised. ASSOCIATED BRITISH ENGINEERING PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED) FOREIGN CURRENCIES Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the exchange rates ruling at the balance sheetdate. All exchange differences are dealt with through the income statement. RETIREMENT BENEFIT COSTS Payments to defined contribution retirement benefit schemes are charged as anexpense as they fall due. Payments made to state-managed retirement benefitschemes are dealt with as payments to defined contribution schemes where theGroup's obligations under the schemes are equivalent to those arising in adefined contribution retirement benefit scheme. For defined benefit retirement schemes, the cost of providing benefits isdetermined using the Projected Unit Credit Method, with actuarial valuationsbeing carried out at each balance sheet date. Actuarial gains and losses arerecognised in full in the period in which they occur. They are recognisedoutside profit or loss and presented in the statement of recognised income andexpense. Past service cost is recognised immediately to the extent that the benefits arealready vested, and otherwise is amortised on a straight-line basis over theaverage period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents thepresent value of the defined benefit obligation as adjusted for unrecognisedpast service cost, and as reduced by the fair value of scheme assets. Any assetresulting from this calculation is limited to past service cost, plus thepresent value of available refunds and reductions in future contributions to theplan. The Group has recognised the actuarial losses and gains immediately within theStatement of Recognised Income and Expenditure in accordance with the provisionsstated within IAS 19 'Employee benefits'. CASH AND CASH EQUIVALENTS Cash and cash equivalents in the balance sheet comprise cash at bank and in handand short term deposits with a maturity of three months or less which aresubject to an insignificant risk of changes in value. FINANCIAL INSTRUMENTS Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. Where the contractual obligations of financial instruments (including sharecapital) are equivalent to a similar debt instrument, those financialinstruments are classed as financial liabilities. Financial liabilities arepresented as such in the balance sheet. Finance costs and gains or lossesrelating to financial liabilities are included in the profit and loss account.Finance costs are calculated so as to produce a constant rate of charge on theoutstanding liability. Where none of the contractual terms of share capital meet the definition of afinancial liability then this is classed as an equity instrument. Dividends anddistributions relating to equity instruments are debited direct to equity. Trade receivables Trade receivables are originally recognised at fair value less any allowance forany uncollectible amounts. An estimate for doubtful debts is made when thecollection of the full amount is no longer probable. Bad debts are written offwhen identified. ASSOCIATED BRITISH ENGINEERING PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED) Trade payables Trade payables are originally recognised at fair value less any adjustment forany unpayable amounts. Investments in securities Investments are recognised and derecognised on a trade date where a purchase orsale of an investment is under a contract whose terms require delivery of theinvestment within the timeframe established by the market concerned, and areinitially measured at fair value, with all transaction costs being written offto the income statement as incurred. Investments are classified as either held for trading or available-for-sale, andare measured at subsequent reporting dates at fair value. Gains and lossesarising from changes in fair value of held for trading financial assets areincluded in the net profit or loss for the period. For available-for-saleinvestments, gains and losses arising from changes in fair value are recogniseddirectly in equity, until the security is disposed of or is determined to beimpaired, at which time the cumulative gain or loss previously recognised inequity is included in the net profit or loss for the period. SHARE BASED PAYMENTS AND SHARE OPTIONS Former employees of the Group have received remuneration in the form of sharebased payment transactions, whereby employees render services in exchange forrights over shares ('equity settled transactions'). The cost of thesetransactions is measured by reference to their fair value at the date at whichthe options are granted. The fair value is determined by using the Black-ScholesOption pricing model. In preparing this interim report in accordance with IFRS1, the Group has elected to apply the share-based payment exemption. It appliedIFRS 2 'Share Based Payment' from 1 April 2004 to those options which wereissued after 7 November 2002 but had not vested by 1 April 2005. IMPAIRMENT OF TANGIBLE ASSETS At each balance sheet date, the Group reviews the carrying amounts of itstangible assets to determine whether there is any indication that those assetshave suffered an impairment loss. If any such indication exists, the recoverableamount of the asset is estimated in order to determine the extent of theimpairment loss (if any). Where the asset does not generate cash flows that areindependent from other assets, the Group estimates the recoverable amount of thecash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value touse. In assessing value in use the estimated future cash flows are discounted totheir present value using a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specific to the asset forwhich the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised as an expense immediately, unless the relevant asset is carried ata revalued amount, in which case the impairment loss is treated as a revaluationdecrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised as income immediately, unless the relevant asset is carriedat a revalued amount, in which case the reversal of the impairment loss istreated as a revaluation increase. ASSOCIATED BRITISH ENGINEERING PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 2. GEOGRAPHICAL SEGMENT ANALYSIS Based on risks and returns the directors consider the primary reporting format is by business segment. The directors consider that there is only one business segment being diesel and related engineering activities. Therefore the disclosures for the primary segment have been given in the consolidated income statement and consolidated interim balance sheet. The secondary reporting format is by geographical analysis by destination as shown below. The following table shows an analysis of the Group's sales by geographical market: Six months to Six months to Year to 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 United Kingdom 1,054 713 1,347 Europe 483 199 769 Middle East 6 4 256 Far East and Australasia 196 217 312 Africa 21 12 57 North and South America 79 185 522 Russia - 15 15 ---------- ---------- ---------- Total 1,839 1,345 3,278 ========== ========== ========== All of the above turnover arises from diesel and related engineering activities and originates in the United Kingdom. All of the assets held by the Group were located in the United Kingdom and all capital expenditure was incurred within the United Kingdom. This information is provided by RNS The company news service from the London Stock Exchange