Dekel Agri Regulatory News (DKL)

23 Feb 2005 07:00

Dickinson Legg Group PLC23 February 2005 Dickinson Legg Group PLC Interim Results for the Six Months ended 31 December 2004 Dickinson Legg Group is a specialist engineering group, incorporating DickinsonLegg Limited and Spooner Industries Limited. Dickinson Legg Limited is a worldleader in the manufacturing and installation of primary tobacco processingequipment and Spooner Industries Limited is a specialist air drying equipmentmanufacturer for the paper, converting, metals and food industries. • Turnover at Dickinson Legg affected by a lack of major projects, in part offset by improved sales of spare parts. Markets remain depressed and highly competitive • Spooner Industries commenced the year with a very low order book, but recent order successes will result in an improved second half Financials • Turnover £13.804 million (2003: £19.028 million) • Loss before tax £0.62 million (2003: profit £0.062 million) • Exceptional costs related to an aborted transaction £0.31 million (2003: nil) • Diluted adjusted loss per share 1.51p (2003: 0.10p), basic loss per share 2.36p (2003: 0.10p) • Net funds £1.293 million (2003: £1.562 million) For further information, please contact: Dickinson Legg Group PLC 01962 841788Tom Mackie, Chief ExecutiveDavid Heath, Financial Director Rowan Dartington 0117 933 0011Barrie Newton Operating Review The markets for our capital equipment have continued to be depressed which isreflected in the disappointing results for the first half year, with theDickinson Legg Group reporting turnover of £13.804 million and an operating lossbefore exceptionals of £0.295 million. Spooner Industries performance wasseverely restricted by a very low order book at the start of the financial year. A key element of the Company's strategy is to participate in the consolidationof the tobacco processing industry. Following lengthy negotiations and afterundertaking extensive due diligence on a target company, the board took thedecision not to proceed with an acquisition, since it was deemed not to be inthe best interests of our shareholders. This has resulted in an exceptionalcharge of £0.31 million. Dickinson Legg, the primary tobacco process equipment manufacturer and itsIndian Joint Venture had combined revenues of £11.157 million (2003: £11.869million) and an operating profit of £0.448 million (2003: £0.288 million). Newequipment sales were lower due to the lack of major projects, which was in partoffset by improved sales of spares and wear parts in both the UK and USA. Anumber of smaller contracts recently secured will lead to an improvement infinancial performance in the second half year relative to the first half. TheJoint Venture, Dickinson Fowler, performed extremely well in the period as aresult of delivering two major contracts, but lower levels of activity areexpected in the second half year. Spooner Industries, the specialist air drying equipment manufacturer, sufferedfrom a very low order book at the start of the financial period reflected inturnover of £3.507 million (2003: £7.534 million) and an operating loss of£0.478 million (2003: profit £0.162 million). Order intake was slow in the earlypart of the period, but had improved significantly as the period closed. Thisshould lead to a better operating performance in the second half year. A numberof the orders awarded are for the supply of ovens and dryers for the food marketwhich is a result of our recent re-entry into this sector. Results Group turnover at £13.804 million was 27.5% lower than the previous half yearand the operating loss, including the joint venture before exceptional items,was £0.295 million compared to a profit of £0.118 million. The majority of thereduction in sales and the whole of the reduction in profit is attributable toSpooner, as a result of commencing the period with a very low order book. Theimproved operating margin for the tobacco business resulted from a higherproportion of sales arising from spares and the joint venture. The basic loss per share was 2.36p (2003: 0.10p). Diluted adjusted loss pershare before exceptional items was 1.51p (2003: 0.10p). Net funds at the half year were £1.293 million which is a reduction of £0.269million for the comparative period and is £0.682 million lower than the yearending 30 June 2004. The Group net interest charge was reduced from £0.056 million to £0.015 millionin the comparative period. Taxation The tax charge for the period is £0.237million (2003: £0.055million). This is aresult of overseas earnings incurring a tax charge and a charge for shadowAdvance Corporation Tax which has arisen through the payment of cash dividends,combined with the lack of UK taxable profits in this period. This adverse effectwill be less significant in the second half. Dividend In view of the disappointing results and the uncertain prospects, the Directorsare not recommending payment of an interim dividend. Prospects There is no evidence of a sustained upturn in the markets we serve and tradingwill continue to be difficult going forward. The Company continues to have anumber of quality prospects for Dickinson Legg and Spooner Industries, butcompetition remains intense for the available business. The current order booksof the businesses should result in an improved performance in the second half. Trading remains in line with our expectations at the time of the AGM Statementin December 2004. Barry Stevenson, Chairman 23 February 2005 Dickinson Legg Group PLC Group profit and loss account (unaudited)for the six months ended 31 December 2004 Notes Six months to 31 Six months to 31 Year ended 30 December 2004 December 2003 June 2004 (restated - note 5) £000 £000 £000 Turnover including share of joint venture 1 14,664 19,403 43,543 Less: Share of joint venture 1 (860) (375) (1,073)Group turnover 13,804 19,028 42,470 Operating (loss) / profit before exceptional 1 (481) 56 1,345itemsOperating exceptional items 2 (310) - (239)Operating (loss) / profit (791) 56 1,106 Share of operating profit in joint venture 1 186 62 279 (Loss) / profit on ordinary activities 1 (605) 118 1,385before interest Net interest (payable)/receivable Group (26) (65) (79) Joint venture 11 9 54 (Loss) / profit on ordinary activities (620) 62 1,360before taxation Tax on (loss) / profit on ordinary 3 (237) (55) (730)activities (Loss) / profit on ordinary activities after (857) 7 630taxation Dividends 4 - (182) (364) Retained (loss) / profit for the period (857) (175) 266 Basic (loss) / earnings per 20p share (2.36)p 0.10p 1.70p Adjusted EPS (pre-exceptional items) (1.51)p 0.10p 2.20p All results relate to continuing activities Dickinson Legg Group PLC Group balance sheet (unaudited)as at 31 December 2004 31 December 2004 31 December 2003 30 June 2004 (restated - note 5) Notes £000 £000 £000 Fixed assetsIntangible assets 3,159 3,398 3,283Tangible assets 721 1,008 853Investments Interests in joint venture: Share of gross assets 1,286 911 1,329 Share of gross liabilities (565) (389) (734) Share of net assets 721 522 595 4,601 4,928 4,731Current assetsStock 1,536 2,190 1,522Debtors 7,610 10,904 11,896Cash at bank and in hand 1,293 1,564 1,975 10,439 14,658 15,393Current liabilitiesCreditors - amounts falling due within (9,491) (13,185) (13,438)one year Net current assets / (liabilities) 948 1,473 1,955 Total assets less current liabilities 5,549 6,401 6,686 Provisions for liabilities and charges (1,250) (1,403) (1,487) Total net assets 4,299 4,998 5,199 Capital and reservesCalled up share capital 7,271 7,271 7,271Merger reserve 45,234 45,234 45,234Other reserves 39,496 39,496 39,496Profit and loss account (87,702) (87,003) (86,802) Equity shareholders' funds 6 4,299 4,998 5,199 Dickinson Legg Group PLC Group statement of cashflows (unaudited)for the six months ended 31 December 2004 Six months to Six months to Year to 31 December 2004 31 December 2003 30 June 2004 £000 £000 £000 Net cash inflow from operating activities 312 2,245 2,836 Dividends received from joint venture 85 - - Returns on investments and servicing offinanceNet interest paid (15) (56) (79) Taxation (111) (134) (198) Capital expenditurePurchase of fixed assets (18) (78) (157) Cash inflow before financing 253 1,977 2,402 Equity dividends paid to shareholders (909) - - FinancingNet capital element of finance lease - (11) (13)rentals (Decrease) / increase in cash (656) 1,966 2,389 Reconciliation of net cashflows to movement in net funds / (debt) (Decrease) / increase in cash (656) 1,966 2,389 Net repayment of capital element of - 11 13finance leases Change in net funds from cashflows (656) 1,977 2,402 Currency translation differences (26) (15) (27) Movement in net funds in the period (682) 1,962 2,375 Net funds / (debt) at beginning of period 1,975 (400) (400) Net funds at end of period 1,293 1,562 1,975 Dickinson Legg Group PLC Notes to the Interim Statements 1 Segmental analysis By business segment Six months to Year to 31 December 30 June 2004 2003 2004 (restated) £000 £000 £000Turnover:Tobacco processing equipment Group 10,297 11,494 29,166 Joint venture 860 375 1,073 11,157 11,869 30,239 Air drying equipment 3,507 7,534 13,304 Continuing operations 14,664 19,403 43,543 Operating profit/(loss):Tobacco processing equipment Group 262 226 1,937 Joint venture 186 62 279 448 288 2,216 Air drying equipment (478) 162 (56) Other activities (265) (332) (536) Operating (loss) / profit before exceptional items (295) 118 1,624 Exceptional items (310) - (239) Continuing operations (605) 118 1,385 2 Exceptional items Six months to Year to Notes 31 December 30 June 2004 2003 2004 £000 £000 £000 Exceptional items within operating profit: Abortive acquisition costs i (310) - -Restructuring costs ii - - (239) (310) - (239) i Following lengthy discussions and after undertaking extensive due diligence on a target company, the Board of Directors took the decision not to proceed with an acquisition. These costs represent third party services only. ii The comparative amounts relate to the combination of an onerous lease provision and accelerated depreciation as a result of a reorganisation of the company's activities, which has now been completed. 3 Taxation The tax charge for the period is £0.237 million (Dec 2003 : £0.055 million). Thetax charge reflects the combination of foreign corporation taxes and thedisplacement of ACT that was previously recognised. 4 Dividends Due to the result achieved to date and the future trading prospects, no interimdividend has been declared. 5 Prior year adjustment In November 2003 the Accounting Standards Board published Application Note G, "Revenue Recognition", in respect of FRS5 "Reporting the Substance ofTransactions". As a result of this the Directors have reviewed the Group'spolicy in respect of revenue recognition on significant long-term contracts.Previously the elements of contracts in relation to the design & manufacture ofmachinery and the installation & commissioning of the equipment had beenaccounted for separately. Revenue relating to the design & manufacture of themachinery would have been fully recognised on shipment and then the installation& commissioning would have been recognised up to customer acceptance. The policyhas been revised such that, where there is no separate contract, all phases ofthe project are combined and revenue recognised with reference to total costfrom design through to customer acceptance. The effect of this change in policyis to spread the revenue recognition over a longer time period. This change in accounting policy has been recognised in these accounts as aprior year adjustment and comparative figures for the period to December 2003have been restated from those previously disclosed. The comparative figure forthe year ended 30 June 2004 incorporated this change in the Group's policy, fulldetails of the effect on these figures can be found in the Report and Accounts2004. The effect of the prior year adjustment, on the December 2003 comparative, wasto defer £30,000 of profit previously recognised into subsequent periods.Debtors increased by £529,000 and creditors - amounts falling due within oneyear increased by £559,000. 6 Reconciliation of movement in equity shareholders' funds Called up Merger Other Profit and Total equity share capital reserves reserves loss account shareholders' funds £'000 £000 £000 £000 £000 At 1 July 2004 7,271 45,234 39,496 (86,802) 5,199 Retained loss - - - (857) (857) Currency translation - - - (43) (43)differences At 31 December 2004 7,271 45,234 39,496 (87,702) 4,299 7 Accounts The Group results for the six months ended 31 December 2004 and 31 December 2003are neither audited nor reviewed by independent auditors. The results for theyear ended 30 June 2004 set out above are an abridged version of the Group'sfull accounts for that year and do not constitute statutory accounts. Statutoryaccounts for the year ended 30 June 2004 for the United Kingdom subsidiarycompanies have been delivered to the Registrar of Companies and included theauditors' report, in accordance with section 235 of the Companies Act 1985,whichwere unqualified and did not contain a statement under either section 237(2) orsection 237(3) of the Companies Act 1985. Accounting policies have been consistently applied on the basis set out in theGroup's financial statements for the year ended 30 June 2004. This information is provided by RNS The company news service from the London Stock Exchange