Avon Protection Regulatory News (AVON)

19 May 2005 07:02

Avon Rubber PLC19 May 2005 Strictly embargoed until07.00 19 May 2005 AVON RUBBER p.l.cInterim results for the six months ended 31 March 2005 31 March 31 March 2005 2004 £Millions £Millions --------- --------- TURNOVER 114.9 122.9 OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS AND GOODWILL AMORTISATION (i) 3.1 5.6 OPERATING PROFIT 0.8 5.3 PROFIT BEFORE TAX, EXCEPTIONAL ITEMS AND GOODWILL AMORTISATION (i) 2.5 4.9 PROFIT BEFORE TAX 0.2 4.5 (LOSS)/PROFIT AFTER TAX (0.3) 3.7 (LOSS)/EARNINGS PER SHARE: Basic (1.5)p 13.4p Before exceptional items and goodwill amortisation (i) 6.8p 14.7p Diluted (1.5)p 12.4p DIVIDENDS PER SHARE 3.7p 3.7p NOTE: (i) Management believes that reporting results before goodwill amortisation and exceptional items provides further information for an understanding of underlying business performance for the period. > Improved pre-exceptional profits in Automotive > Closure of hose factory in Spain confirmed > Lower profits in Technical Products > Preparation for US mask programme on plan > Dividend maintained Commenting on the results, Steve Willcox, Chief Executive said: "The availability and pricing of raw materials has improved from theexceptionally difficult pattern experienced during recent months but remains thefocus of our attention. However energy costs are increasing as we enter newcontract periods. There is limited visibility in some of our markets. Automotive markets appear to besoftening overall with the weaker volumes of larger vehicles from traditionalNorth American manufacturers partially offset by increased sales to the "newdomestic" brands and the higher sales of water hose in all markets. In thesecond half, we will see the completion of the planned Automotive restructuringwhich will have a positive impact. We expect improved sales of respirators and flexible storage tanks during thesecond half of the year with further growth in 2006. We will continue toinvest in the substantial programme of work to meet the exciting opportunities in respiratory protection which we intend to develop as a significant part of Group activities. In order to enhance shareholder value, we will remain focussed on operationalefficiency and cash management as we progress our strategic plans to repositionthe Group to achieve a better balance between the various areas of activity." For further enquiries, please contact: Avon Rubber p.l.cSteve Willcox, Chief Executive 020 7067 0700Terry Stead, Group Finance Director (until 2.00pm) (Local/Trade Press) 01225 861100Jayne Hunt Weber Shandwick Square Mile 020 7067 0700Richard Hews Rachel TaylorStephanie Badjonat An analyst meeting will be held at 09.30 this morning at the offices of WeberShandwick Square Mile, Fox Court, 14 Gray's Inn Road, London, WC1X 8WS. High resolution images are available for the media to download free of chargefrom:www.vismedia.co.uk. NOTES TO EDITORS: Avon Rubber p.l.c. is an international polymer engineeringgroup adding value through material, manufacturing and industry sectorexpertise. The Group is currently capitalised at approximately £59 million. Avon is a significant supplier to the world's automotive, engineering, dairy anddefence markets - manufacturing high performance elastomer products. Thebusiness is split into three divisions: Automotive Components, TechnicalProducts and Protection. AVON RUBBER p.l.c. INTERIM RESULTS FOR THE PERIOD ENDED 31 MARCH 2005 INTRODUCTION During the first half we have seen further progress on a number of majorprojects which support our strategic direction. However, as expected, profitbefore tax, amortisation of goodwill and exceptional items reduced to £2.5million from £4.9 million in the first half of the previous financial year, withprofit before tax falling to £0.2 million (2004: £4.5 million). We achieved higher sales and operating profit (before exceptional items) inAutomotive despite softer markets in North America and Europe. Operating profits(before exceptional items) in Europe increased as a result of the improvementactions implemented in 2004. Operating profits from our Orizaba, Mexico plant increased on higher volumes. However, orders for products made in Michigan, USA were lower and this, together with higher material costs, resulted in a reduced total operating profit from the North American region. In October 2004, MG Rover transferred orders for all vibration managementproducts from our Chippenham, UK factory to a Chinese supplier. We remained asupplier of hoses to the company and the subsequent placing of MG Rover inadministration resulted in a provision of £0.9 million against current debts,inventories and tooling, as announced in April 2005. This has been treated as anexceptional cost in the first half. At our Annual General Meeting in January 2005 we confirmed a restructuring ofour global automotive operations and in particular a review of capacity forwater hoses in Western Europe. On 13 May 2005 we informed employees of ourintention to close the Proflex facility at Calaf, Spain and commencedconsultations with the Works Council at the site. The planned closure will bringour capacity more into line with market demand patterns and enable us to focuson our lower cost operations. This, together with certain other reorganisations,will result in an exceptional charge for restructuring of approximately £6.0million this year, of which £1.0 million has been taken in these results. Weexpect that approximately £4.0 million of the £6.0 million will be cash itemsand would expect most of the cash outflow to occur this year. The estimatedannual savings from the restructuring will be about £3.0 million and we expectthese to commence during the second half of 2005 and be fully realised duringthe following year. In Technical Products sales were down by £8.2 million compared to last year at£25.8 million (2004: £34.0 million), which resulted in a lower operating profitof £0.8 million (2004: £4.2 million). As expected, sales of existing respiratory protection products weresubstantially lower than the high levels in the first half of 2004. Thisreflects the reduction in military requirements following a period ofre-equipment and also the transition in the United States Homeland Securitymarket which is preparing for the new National Institute of Safety and Health(NIOSH) Chemical, Biological, Radiological and Nuclear (CBRN) standard forrespirators. Our products are in the final stages of approval to meet thisstandard and we expect sales to commence in the fourth quarter of this financialyear. In the meantime we have further increased the resources dedicated to ourProtection activities in preparation for the many opportunities we foresee inthis sector. The Joint Services General Purpose Mask (JSGPM) respirator programme with theUnited States Department of Defense successfully completed the evaluation phasein March and we are in the final stages of agreeing the details for initialproduction which is due to commence in the final quarter of the 2005 calendaryear. We expect the initial production rate to be 100,000 masks per yearincreasing to 200,000 per year. Our 100% ownership of Avon Engineered Fabrications (formerly the Bell Avon jointventure) has allowed us to invest in upgraded production equipment to meet theincreasing demand for high performance flexible storage tanks. North Americandairy activities continue to perform well while business machine components haveseen weaker volumes. The considerable turmoil in energy prices and raw material supplies resulted inincreased costs and where appropriate we built inventory to avoid disruption. Wehave also increased finished goods stocks in selected areas to cover expecteddemand for respirators and to meet customer requirements during producttransfers. As a result, net borrowings at £35.9 million (2004: £34.7 million)were £1.2 million higher than at the same point last year and £6.2 millionhigher than the September 2004 level. We expect to reduce these planned stockincreases during the second half of the year. RESULTS Sales at £114.9 million (2004: £122.9 million) were down by £8.0 million. Groupoperating profit before exceptional costs and goodwill amortisation was £3.1million (2004: £5.6 million) and £2.7 million (2004: £5.3 million) aftergoodwill amortisation. With net finance costs of £0.6 million (2004: £0.7million) this resulted in a profit before tax, exceptional items and goodwillamortisation of £2.5 million (2004: £4.9 million). The exceptional charge was£1.9 million (2004: £ nil) giving a total operating profit of £0.8 million(2004: £5.3 million). When translating 2004 sales at 2005 exchange rates ("constant exchange rates"),sales were down by £5.3 million from £120.2 million to £114.9 million with groupoperating profit before exceptional costs and goodwill amortisation down by £2.3million at £3.1 million (2004: £5.4 million) on a similar basis. Basic (loss)/earnings per share were (1.5)p (2004: 13.4p) and earnings per sharebefore exceptional charges were 5.5p (2004:13.4p) based on a pre exceptionaleffective tax rate of 29.2% (2004: 18.6%). The increase in the effective taxrate since last year reflects levels closer to actual taxation rates followingthe recognition of deferred tax on losses in 2004. Borrowings increased in the half year by £6.2 million and were higher than lastyear at £35.9 million (2004: £34.7 million). Borrowings have mainly increased asa result of inventory builds in preparation for the closure of the Calaffacility and the anticipated increase in respirator demand in the second half,together with higher holdings of raw materials to avoid supply shortages. Net capital expenditure at £2.3 million (2004: £2.6 million) remained belowdepreciation of £4.5 million (2004: £4.7 million). For the reasons outlinedabove trade working capital as a percentage of sales increased to 14.1% comparedto 12.1% at the year end and 11.7% last year. We remain focussed to reduce thisagain by the year end. Gearing now stands at 53.1% (2004: 52.2%). AUTOMOTIVE COMPONENTS Under the new global management structure, which was designed to reflect thespecific requirements of this market, our automotive activities achievedincreased operating profit (before exceptional items) at constant exchange ratescompared to the first half of last year of £1.9 million (2004: £0.9 million). Sales increased by £2.0 million to £89.1 million (2004: £87.1 million) atconstant exchange rates. On a similar basis, sales in European Automotiveincreased by £1.1 million to £52.9 million (2004: £51.8 million) and increasedby £0.9 million to £36.2 million (2004: £35.3 million) in North America. Thegrowth of business at our water hose factory in Orizaba, Mexico has more thanoffset the reduction due to the market downturn in North America. North American operating profits reduced from £1.6 million in 2004 to £1.2million this year at constant exchange rates. On a similar basis, in Europe thebenefits from cost reductions resulted in an operating profit up by £1.4 millionat £0.7 million (2004: £0.7 million loss). We have already received orders from customers based in Turkey and they,together with other locally based automotive assemblers, have welcomed ourdecision to establish a water hose facility in that country. The actions taken at our factory in Vannes, France returned this business toprofit from a substantial loss in the first half of last year and further work isin hand to move the operation to a sustainable and acceptable level ofprofitability. Our lower cost operations in Portugal and the Czech Republic alsoachieved good progress. These and the Flexo business in Barcelona, Spain willbenefit from the transfer of production from the plant at Calaf, Spain. These changes will bring our costs and capacity profile more into line with ourforecast market requirements and enable us to support customers in appropriategeographical areas. TECHNICAL PRODUCTS Sales at £25.8 million (2004: £34.0 million) were down £8.2 million (or £7.3million at constant exchange rates) with substantially lower sales ofrespiratory protection products, lower demand for business machine componentsand generally weaker markets in most European industrial sectors which wesupply. Operating profit fell accordingly to £0.8 million (2004: £4.2 million). We have added to the resources devoted to the Protection business inanticipation of the production launch for the JSGPM programme, the associatedlogistics support package and the expected growth in demand for professionalproducts for emergency services. Our new mask production facility in Cadillac, Michigan is currently beingequipped and we plan further investments to support a number of attractiveopportunities. We expect our FM12 mask to be approved to the new CBRN standard for the USHomeland Security market during June 2005 following 12 months of testing. Thisstandard is likely to be followed by a number of other countries and somecustomers have been holding back on purchases until products meeting the newstandard are available. We plan to gain approval for the JSGPM derivatives tomeet the new standard as we move into production for the initial militarycontract. Hi-Life, our North American dairy rubberware business based in Wisconsin, USAand its Milk-Rite subsidiary, have achieved further modest sales growth andmaintained excellent operating performance. Our ongoing focus on customerservice and product innovation linked with world class manufacturing practicescontinue to support our leading position in this market. The launch of Milk-Ritein Europe, has led to supply arrangements with a growing number of distributorsand allows us to achieve better margins. Sales to European original equipmentmanufacturers have reduced as expected. Avon Engineered Fabrications has been awarded a number of contracts for itsflexible fluid storage tanks, principally from the US military. A new largepress has been installed at the Picayune, Mississippi factory to increasecapacity and reduce costs for the production of tanks which hold up to 1 millionlitres. The benefits from the strong order book and improved manufacturing costswill be evident during the balance of the financial year. Business machine markets remain mixed in their demand patterns with low volumesin traditional rollers and cleaning blades and higher schedules for newerproduct ranges. In general, other industrial markets such as aerosol gaskets,contract rubber mixing and civil engineering have been weaker although there areexceptions in specific areas. FINANCING Net debt at the end of the first half stood at £35.9 million (2004: £34.7million) an increase of £1.2 million compared to last year and an increase of£6.2 million since the year end. This resulted in gearing of 53.1% (2004:52.2%). Net interest reduced by £0.1 million to £1.1 million (2004: £1.2 million). Whilst capital expenditure was lower than depreciation in the first half of theyear, we expect to increase investment in the second half to support respiratorprogrammes and the growth of water hose demand in Orizaba, Mexico and Turkey. DIVIDEND The Board announces an unchanged interim dividend of 3.7p per share payable on1 July 2005 to holders of ordinary shares on the register at noon on 10 June2005. OUTLOOK The availability and pricing of raw materials has improved from theexceptionally difficult pattern experienced during recent months but remains thefocus of our attention. However energy costs are increasing as we enter newcontract periods. There is limited visibility in some of our markets. Automotive markets appear to besoftening overall with the weaker volumes of larger vehicles from traditionalNorth American manufacturers partially offset by increased sales to the "newdomestic" brands and the higher sales of water hose in all markets. In thesecond half, we will see the completion of the planned Automotive restructuringwhich will have a positive impact. We expect improved sales of respirators and flexible storage tanks during thesecond half of the year with further growth in 2006. We will continue toinvest in the substantial programme of work to meet the exciting opportunities in respiratory protection which we intend to develop as a significant part of Group activities. In order to enhance shareholder value, we will remain focussed on operationalefficiency and cash management as we progress our strategic plans to repositionthe Group to achieve a better balance between the various areas of activity. INDEPENDENT REVIEW REPORT TO AVON RUBBER p.l.c INTRODUCTION We have been instructed by the company to review the financial information whichcomprises consolidated profit and loss account, statement of total gains andlosses, reconciliation of movements in shareholders' funds, consolidated balancesheet information as at 31 March 2005, consolidated cash flow statement,comparative figures and associated notes. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. DIRECTORS' RESPONSIBILITIES The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. REVIEW WORK PERFORMED We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do not expressan audit opinion on the financial information. This report, including theconclusion, has been prepared for and only for the company for the purpose ofthe Listing Rules of the Financial Services Authority and for no other purpose.We do not, in producing this report, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown or into whosehands it may come save where expressly agreed by our prior consent in writing. REVIEW CONCLUSION On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2005. PricewaterhouseCoopers LLPChartered Accountants and Registered AuditorsBristol18 May 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT------------------------------------ Half year to Half year to Year to 31 March 05 31 March 04 30 Sept 04 Note £'000 £'000 £'000-----------------------------------------------------------------------------------Turnover 2 114,886 122,901 239,212-----------------------------------------------------------------------------------Group operating profit before exceptional items and goodwill amortisation 3,052 5,641 10,797 Goodwill amortisation (348) (347) (681) Exceptional operating expenses 3 (1,932) - ------------------------------------------------------------------------------------Total operating profit 2 772 5,294 10,116 Interest (1,067) (1,187) (2,207) Other finance income 504 403 776-----------------------------------------------------------------------------------Profit on ordinary activities before taxation 209 4,510 8,685 Taxation 4 (545) (838) (1,658)-----------------------------------------------------------------------------------(Loss)/profit on ordinary activities after taxation (336) 3,672 7,027 Minority interests (54) (127) (389)-----------------------------------------------------------------------------------(Loss)/profit for the financial year (390) 3,545 6,638 Dividends 6 (1,003) (975) (2,245)-----------------------------------------------------------------------------------Retained (loss)/profit for the financial year (1,393) 2,570 4,393-----------------------------------------------------------------------------------Dividends per share 3.7p 3.7p 8.5p-----------------------------------------------------------------------------------(Loss)/earnings per share 7 Basic (1.5)p 13.4p 25.1p Before exceptional items 5.5p 13.4p 25.1p Before exceptional items and goodwill amortisation 6.8p 14.7p 27.6p Diluted (1.5)p 12.4p 23.5p----------------------------------------------------------------------------------- All of the Group's turnover and operating profit was generated from continuingactivities. There is no material difference between the loss as stated above and thatcalculated on an historical cost basis. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES----------------------------------------------------------- Half year to Half year to Year to 31 March 05 31 March 04 30 Sept 04 £'000 £'000 £'000-----------------------------------------------------------------------------------(Loss)/profit for the period (390) 3,545 6,638 Actuarial gain/(loss) recognised in retirement benefit schemes (net of tax) 4,643 3,540 (753) Net exchange difference on overseas investments 606 (1,606) (672)-----------------------------------------------------------------------------------Total gains for the period 4,859 5,479 5,213 Prior year adjustment - (19,360) (19,360)-----------------------------------------------------------------------------------Total gains/(losses) since last annual report 4,859 (13,881) (14,147)----------------------------------------------------------------------------------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS-------------------------------------------------- Half year to Half year to Year to 31 March 05 31 March 04 30 Sept 04 £'000 £'000 £'000-----------------------------------------------------------------------------------Opening shareholders' funds as previously stated 63,751 80,728 80,728 Prior year adjustment - (20,318) (20,318)-----------------------------------------------------------------------------------Opening shareholders' funds restated 63,751 60,410 60,410 (Loss)/profit for the period (390) 3,545 6,638 Dividends (1,003) (975) (2,245) Actuarial gain/(loss) recognised in retirement schemes (net of tax) 4,643 3,540 (753) Net exchange differences on overseas investments 606 (1,606) (672) Movement in respect of employee share scheme (620) 1 (19) Goodwill resurrected on disposal of subsidiary - 427 392-----------------------------------------------------------------------------------Closing shareholders' funds 66,987 65,342 63,751----------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET-------------------------- As at As at As at 31 March 05 31 March 04 30 Sept 04 £'000 £'000 £'000-----------------------------------------------------------------------------------Fixed assetsIntangible assets 14,618 13,521 14,595Tangible assets 82,437 84,674 85,330Investments 74 - 68----------------------------------------------------------------------------------- 97,129 98,195 99,993-----------------------------------------------------------------------------------Current assetsStocks 23,541 18,055 20,983Debtors - amounts falling due within one year 47,935 48,238 44,137Debtors - amounts falling due after more than one year 790 213 617Investments 4,673 3,858 4,118Cash at bank and in hand 8,286 5,331 5,767----------------------------------------------------------------------------------- 85,225 75,695 75,622-----------------------------------------------------------------------------------Creditors - amounts falling due within one yearShort term borrowings and current instalments of loans 21,362 22,516 24,641Other creditors 49,185 46,231 49,637----------------------------------------------------------------------------------- 70,547 68,747 74,278-----------------------------------------------------------------------------------Net current assets 14,678 6,948 1,344-----------------------------------------------------------------------------------Total assets less current liabilities 111,807 105,143 101,337-----------------------------------------------------------------------------------Creditors - amounts falling due after more than one yearBorrowings 27,515 21,382 14,931Other creditors 241 256 401----------------------------------------------------------------------------------- 27,756 21,638 15,332 Provisions for liabilities and charges 1,950 1,546 1,950-----------------------------------------------------------------------------------Net assets excluding pension liability 82,101 81,959 84,055Pension liability 14,410 15,525 19,654-----------------------------------------------------------------------------------Net assets 67,691 66,434 64,401-----------------------------------------------------------------------------------Capital and reserves Share capital 27,824 27,824 27,824 Share premium account 34,070 34,070 34,070 Revaluation reserve 2,213 2,518 2,213 Capital redemption reserve 500 500 500 Other reserve (1,597) (957) (977) Profit and loss account 3,977 1,387 121-----------------------------------------------------------------------------------Equity shareholders' funds 66,987 65,342 63,751 Minority interests (equity interests) 704 1,092 650----------------------------------------------------------------------------------- 67,691 66,434 64,401----------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT Half year to Half year to Year to 31 March 05 31 March 04 30 Sept 04 Note £'000 £'000 £'000-----------------------------------------------------------------------------------Operating activitiesOperating profit 772 5,294 10,116Goodwill amortisation 348 347 681Depreciation 4,478 4,690 8,934Impairment of fixed assets 400 - -Amortisation of development costs 607 514 1,292Movement in working capital and provisions (6,330) (6,016) 249Other movements (752) 795 456-----------------------------------------------------------------------------------Net cash (outflow)/inflow from operating activities (477) 5,624 21,728 Returns on investments and servicing of finance (989) (1,112) (2,367)Corporation tax paid (1,293) (1,747) (1,994)Net capital expenditure (2,257) (2,626) (6,970)Capitalised development expenditure (788) (500) (2,384)Sale of operations - 2,175 1,884Purchase of shares in subsidiary undertakings - - (1,189)Equity dividends paid (1,268) (1,192) (2,172)-----------------------------------------------------------------------------------Net cash (outflow)/inflow before management of liquid resources and financing (7,072) 622 6,536 Management of liquid resourcesIncrease in investments treated asliquid resources (620) (39) (270) FinancingMovements in loans and finance leases 10,718 (1,778) (7,690)Purchase of own shares - (449) (449)-----------------------------------------------------------------------------------Increase/(decrease) in cash 3,026 (1,644) (1,873)-----------------------------------------------------------------------------------Reconciliation of net cash flow to movement in net debtIncrease/(decrease) in cash 3,026 (1,644) (1,873)Movements in loans and finance leases (10,718) 1,778 7,690Movement in liquid resources 620 39 270Amortisation of loan issue costs (28) (60) (92)Exchange differences 869 3,200 2,340-----------------------------------------------------------------------------------Movement in net debt in the period (6,231) 3,313 8,335Net debt at the beginning of the period (29,687) (38,022) (38,022)-----------------------------------------------------------------------------------Net debt at the end of the period 8 (35,918) (34,709) (29,687)----------------------------------------------------------------------------------- NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. The results for the half years 31 March 2005 and 31 March 2004 are unaudited and have been prepared using accounting policies consistent with those set out in the 2004 Annual Report and Accounts. The comparative information for the year ended 30 September 2004 does not constitute the Company's statutory accounts for that year but is derived from those accounts. The statutory accounts of the company for the year ended 30 September 2004 have been delivered to the Registrar of Companies and an unqualified audit opinion was given. These interim financial statements were approved by the board of directors on 18 May 2005. NOTES TO THE FINANCIAL STATEMENTS 2. SEGMENTAL INFORMATION Half year to Half year to Year to 31 March 05 31 March 04 30 Sept 04 £'000 £'000 £'000-----------------------------------------------------------------------------------a) Turnover by destination Europe 64,653 63,713 127,562 North America 48,584 55,701 105,471 Rest of World 1,649 3,487 6,179----------------------------------------------------------------------------------- 114,886 122,901 239,212-----------------------------------------------------------------------------------b) Turnover by origin Europe 66,001 69,770 135,067 North America 48,885 53,131 104,145----------------------------------------------------------------------------------- 114,886 122,901 239,212-----------------------------------------------------------------------------------c) Operating profit/(loss) by origin Europe (199) 1,710 1,903 North America 2,903 3,584 8,213----------------------------------------------------------------------------------- 2,704 5,294 10,116 Exceptional operating expenses: Europe (1,932) - - North America - - ------------------------------------------------------------------------------------ 772 5,294 10,116-----------------------------------------------------------------------------------d) Turnover by business sector Automotive components 89,135 88,927 175,308 Technical products 25,751 33,974 63,904----------------------------------------------------------------------------------- 114,886 122,901 239,212-----------------------------------------------------------------------------------e) Operating profit by business sector Automotive components 1,855 1,095 2,996 Technical products 849 4,199 7,120----------------------------------------------------------------------------------- 2,704 5,294 10,116 Exceptional operating expenses: Automotive components (1,760) - - Technical products (172) - ------------------------------------------------------------------------------------ 772 5,294 10,116----------------------------------------------------------------------------------- 3. The exceptional charge during the half year ended 31 March 2005 consists of: £'000----------------------------------------------------------------------------------- Impairment of tangible assets 400 Reorganisation costs 639 Provision against MG Rover balances 893----------------------------------------------------------------------------------- 1,932----------------------------------------------------------------------------------- The impairment charge relates to the writedown of tangible assets at Calaf in Spain. 4. Estimated tax rates for the United Kingdom and overseas have been calculated based on the latest projections for the year ending 30 September 2005. These tax rates have been used in determining the tax charge for the six month period to 31 March 2005. 31 March 31 March 2005 2004 £'000 £'000----------------------------------------------------------------------------------- United Kingdom (19% (2004: 20%)) (189) 646 Overseas (28% (2004: 15%)) 734 192----------------------------------------------------------------------------------- 545 838----------------------------------------------------------------------------------- The tax credit on exceptional items included above is £80,000 (2004: nil). 5. Profit and loss accounts of foreign group undertakings are translated at average rates of exchange and balance sheets are translated at period end or year end rates, as appropriate. 6. The cost of the interim dividend on the ordinary shares in issue will be approximately £1,003,000 (2004: £975,000). The dividend will be paid on 1 July 2005 to shareholders on the register at noon on 10 June 2005. 7. Basic loss per ordinary share is based on a loss of £390,000 (2004: £3,545,000 profit) and 26,617,000 (2004: 26,537,000) ordinary shares, being the weighted average of the shares in issue during the period on which dividends are paid. Earnings per ordinary share before exceptional items and tax on exceptional items is based on a profit of £1,462,000 (2004: £3,545,000). Earnings per ordinary share before exceptional items and tax on exceptional items and goodwill is based on a profit of £1,810,000 (2004: £3,892,000). 8. ANALYSIS OF NET DEBT As at Amortisation As at 30 Sept Cash of loan Exchange 31 March 04 flow issue costs movements 05 £'000 £'000 £'000 £'000 £'000---------------------------------------------------------------------------------------- Cash at bank and in hand 5,767 2,505 - 14 8,286 Overdrafts (1,277) 521 - (18) (774) Debt due after one year (14,931) (12,922) (28) 366 (27,515) Debt due within one year (23,361) 2,201 - 572 (20,588) Finance leases (3) 3 - - - Current asset investments 4,118 620 - (65) 4,673---------------------------------------------------------------------------------------- (29,687) (7,072) (28) 869 (35,918)---------------------------------------------------------------------------------------- 9. Copies of this announcement are being sent to shareholders. Copies are also available from the company's registered office at Manvers House, Kingston Road, Bradford on Avon, Wiltshire, BA15 1AA (Telephone: 01225 861100), or via the corporate website (www.avon-rubber.com). 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