HAMP.L Regulatory News (HAMP)

26 Nov 2009 07:00



26 November 2009

Hampson Industries PLC

Unaudited results for the six month period ended 30 September 2009

Hampson Industries PLC ("Hampson" or "the Group"), the international aerospace and specialist engineering group, announces interim results for the six month period ended 30 September 2009.

Corporate highlights

Financial highlights

	Six months to 30 September 2009	Six months to 30 September 2008	Change %
Continuing operations:
Revenue	£97.0m	£110.5m	(12)
Trading profit*	£14.6m	£20.0m	(27)
Operating profit	£17.0m	£17.4m	(2)
Profit before tax - statutory basis	£13.5m	£12.5m	8
Underlying profit before tax*	£11.0m	£16.1m	(32)
Earnings per share - statutory basis	5.95p	6.46p	(8)
Underlying earnings per share*	4.80p	8.30p	(42)
Dividend per share - interim	0.80p	0.80p
Cash generated from operations	£11.1m	£9.6m
Net debt	£140.7m	£114.0m
Exchange rates (GBP 1 = US$):
Average for period	1.60	1.94
Period end	1.59	1.82

* Trading profit, profit before tax and earnings per share are all stated to reflect the continuing operations of the Group before restructuring and rationalisation charges, impairment charges, gains and losses on disposal or closure of businesses, changes in the net fair value of financial instruments and amortisation of intangible assets on acquisition. The Board considers that this measure of profit provides the best view of the trading performance of the Group.

Commenting on the first half results, Chairman Chris Geoghegan said: 

"Although the immediate outlook for our core markets remains uncertain, present customer indications and the scale of new work in the pipeline all point to a gradual increase in the release of new orders in the months ahead. Tooling order books have increased in September and October and with leading indicators now generally more encouraging, we are cautiously optimistic of seeing further order strengthening over the second half.

"In the longer term, our strong market positioning and the projected increase in the use of carbon composite structures in airframe manufacture leave us very well positioned to grow our business and generate attractive returns for our shareholders."

Further information:

Kim Ward, Chief Executive	+44 (0)1384 472 941
Howard Kimberley, Finance Director	+44 (0)1384 472 946
Marylene Guernier, M:Communications	+44 (0)20 7920 2369

HAMPSON INDUSTRIES PLC

HALF YEAR REPORT 2009

Cautionary Statement

This Half Year Report and accompanying announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Hampson's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are; increased competition, the loss of or damage to one or more key customer relationships, engineering-led or other delays in the development or launch of major new aerospace programmes, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects.

Hampson undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

Hampson Industries PLC

Half Year Report 2009

Chairman's Statement 

Compared with the record results achieved in 2008/09 and against a much more challenging economic backdrop, Group revenue and underlying profitability have decreased in the first six months of 2009/10. We have, however, achieved tangible progress in streamlining our portfolio and improving competitiveness. 

Revenue declined by 12% to £97.0 million and underlying profit before tax, at £11.0 million, was 32% lower than in the first half of 2008/09. The statutory measure of profit before tax improved by 8% to £13.5 million, due largely to an increase in the net fair value of financial instruments.

Compared to the first half of 2008/09, our performance was impacted by significantly lower revenues in our Aerospace Components & Structures division and steeply reduced demand in the Automotive Turbocharger division. The termination of the Eclipse 500 programme, the disposal of our aerospace machining operations and reduced activity in our legacy metallic aerostructures and shims businesses were the principal reasons behind the reduction. 

Hampson is now the world's leading independent producer of tight tolerance aerospace tooling systems required in the manufacture of advanced carbon composite airframe structures. With their improved strength-to-weight characteristics, such lightweight composite materials are starting to revolutionise the way aircraft are designed and assembled, providing us with considerable future growth opportunities across every sector of the aerospace market.

Whilst the long term outlook is for sustained growth in demand for aerospace tooling systems, the unexpected extent of the development delays in several high profile aerospace programmes including the B787 Dreamliner, B747-8 and A350, held back the performance of our tooling businesses in the first half. These enforced delays have resulted in the temporary deferral of orders placed with our businesses for development and production rate tooling. 

Boeing has recently reported that the engineering issues that have caused the latest launch delays to the Dreamliner are being resolved and that it expects that the first flight will take place by 31 December 2009. We anticipate that this, together with Boeing's recently announced intention to establish a second Dreamliner assembly line in South Carolina, will have a positive impact on the release of further tooling orders.

In light of the more challenging overall trading environment, rapid and decisive action has been taken and continues to be taken to reduce the Group's cost base and to reduce working capital levels. Cash generated from operations increased by 15% to £11.1 million compared with the comparative period in 2008/09, and net debt reduced by £4.6 million since 31 March 2009, with disposal proceeds offsetting the settlement of all remaining earn-out obligations relating to prior acquisitions. Continuing focus on driving improved operational efficiency and cash generation remains a key management priority throughout the Group.

In August 2009, we successfully divested our metallic engine components machining business, Hampson Aerospace Machining Limited ("HAML") at an attractive valuation in a difficult market. Following the disposal, approximately 75% of the group's activities are now linked to the use of composite materials, leaving us strategically very well placed for the future.

Texstars and CHI, our composite component businesses, continued to perform well in the period, with military aerospace demand remaining solid and strong order books providing a robust foundation for further growth.

Tooling order books have increased in September and October and with leading indicators now generally more encouraging, we are cautiously optimistic of seeing further order strengthening over the course of the second half, which we anticipate will leave us well positioned for 2010/11.  Accordingly, the Board propose to maintain the interim dividend at 0.80p per share.

Chris Geoghegan

Chairman

26 November 2009

In addition to the "statutory" measures of profit, reference is made throughout to the impact on the Group's profit and earnings of excluding the following items; restructuring and rationalisation charges, impairment charges, gains and losses on disposal or closure of businesses, amortisation of intangible assets arising on acquisition and changes in the net fair value of financial instruments. The Directors believe that exclusion of these items allows trends in the underlying performance of the Group's business to be more easily identified and understood. Reference is made throughout to the term "trading profit" which is defined as operating profit excluding all of the fore-going items.

Business Review

Group Performance

Revenue for the six month period was £97.0 million, a net decrease of £13.5 million (12%) compared with the first half of the previous year. This reduction primarily reflected lower revenue in the Aerospace Components & Structures division as the result of a number of factors. Principal amongst these were the termination of the Eclipse 500 programme, the disposal of Hampson Aerospace Machining Limited ("HAML") and reduced activity in our UK aerostructures and in our shims businesses. The Automotive Turbocharger division also experienced a steep decline in revenue as global demand plummeted compared to the first half of 2008/09. These factors were partially offset by increased revenues in the Aerospace Composites & Transparencies businesses and the benefit of translating revenue generated by the Group's US operations into sterling at an improved average rate of exchange. 

Group trading profit reduced by £5.5 million (27%) to £14.6 million for the six months to 30 September 2009, compared with the equivalent period in 2008/09. This was principally due to the lower revenue as a result of the factors highlighted above. Central costs also increased by £1.7 million compared to the first half of 2008/09, reflecting the launch of Hampson Aerospace Services, costs related to the group-wide SAP implementation programme and the strengthening of management resource in light of the Group's recent structural changes, offset by a net contribution of £1.7 million in the period from the release of provisions.

The results for the six month period to 30 September 2009 were translated at an average rate of exchange of GBP1 = US$ 1.60 (year ended 31 March 2009: GBP1 = US$ 1.72, six months ended 30 September 2008: GBP1 = US$ 1.94). On a constant currency basis with that of the comparative half year, revenue and trading profit would have been £12.3 million and £3.1 million lower, respectively. 

On a statutory basis, operating profit decreased by £0.4 million (2%) over the equivalent half year period, which was primarily due to the favourable movements in the fair values of derivative financial instruments in the period to 30 September 2009 and a net gain recognised on the disposal of HAML of £0.6 million.

Net financing costs (including changes in the net fair value of derivative financial instruments) reduced by almost £1.4 million to £3.5 million over the six month period. This was due to a combination of lower prevailing interest rates in 2009/10 and the non-recurrence of charges incurred in the prior year resulting from the refinancing of the Group's borrowings facilities.

Profit before tax for the six month period decreased by £5.1 million (32%) to £11.0 million on an underlying basis, although increased by £1.0 million (8%) to £13.5 million on a statutory basis. 

Following the disposal of HAML in August 2009, the Group now has an increased proportion of its business within North America, where combined average federal and state tax rates are approximately 40%. The Group's overall effective rate of tax on profits for the period was 30% due to the availability of certain reliefs. As a result of available deductions arising from acquisition-related tax elections which should continue to benefit the Group for many years, cash tax payments have been reduced.

Earnings per share on a management basis reduced by 3.50p to 4.80p and on a statutory basis by 0.51p to 5.95p. The earnings per share figure was further impacted by bringing into account the additional shares issued as part of the acquisition of Odyssey and GTS for the full six month period in 2009/10.

Funding and Liquidity 

During the six month period, committed borrowing facilities were increased through a new $12.0 million revolving line of credit being made available to the Group's US businesses. £34.0 million of the Group's committed borrowing facilities (excluding lease facilities) remained undrawn as at 30 September 2009.

After discharging all remaining earn-out obligations of £22.4 million in respect of previous acquisitions, and the receipt of funds from the disposal of HAML of £24.1 million, net indebtedness at 30 September 2009 stood at £140.7 million, a decrease of £4.6 million from the previous year end. This was assisted through effective working capital management, which remains an ongoing management focus.

 

Balance sheet "gearing" (net indebtedness expressed as a percentage of shareholders' equity), increased by 7 percentage points to 69%, primarily due to adverse currency fluctuations upon retranslation of the Group's US dollar denominated assets at 30 September 2009. 

Interest cover (trading profit divided by net financing costs excluding unamortised debt issuance costs and changes in the net fair value of derivative financial instruments - interest instruments) for the six month period was 4.59 times, compared with the covenanted ratio of greater than 3.50 times. 

The ratio of net indebtedness to EBITDA (trading profit before depreciation and amortisation) on a trailing twelve month basis (adjusted for the disposal of HAML) was 3.11 times, compared with the covenanted ratio of less than 3.25 times. In light of the reduced headroom against this financial covenant, the Group has agreed certain amendments with its senior lenders such that the covenant ratio for all future periods to 31 December 2010 will increase to not less than 4.00 times. In respect of all future measurement periods thereafter, the ratio will reduce to 3.00x. The Board intends to seek to reduce the absolute level of net indebtedness and is currently considering a range of initiatives to achieve this.

Dividend

The Board has declared an unchanged interim dividend of 0.80p per share. The dividend will be paid on or around 12 February 2010 to those shareholders on the register on 22 January 2010.

Operational Review

Aerospace Composites & Transparencies

Hampson's Aerospace Composites & Transparencies businesses comprise the design and fabrication of large very close tolerance tooling systems for composite aerostructures and satellite applications and the manufacture of high performance aircraft and anti-ballistic transparencies, moulded thermo-plastic assemblies, composite components for internal and external airframe structural applications, and complex, high temperature composite components for high performance aero-engine applications.

The first half of the financial year saw divisional revenue increase by £11.7 million (22%) to £64.9 million, and trading profit increase by £2.7 million (19%) to £17.1 million compared to the first half of the prior year. This was primarily due to six months of contribution from Odyssey and GTS being included in the results of the current period (period to 30 September 2008: four months) and the strengthening of the US Dollar against sterling compared to the comparative half year period.

Programmes served by the composite tooling businesses including the Boeing 787, Airbus A350, Boeing 747-8 and F-35 Joint Strike Fighter have been subject to a number of engineering design changes and development delays which has resulted in the temporary deferral of a number of high value tooling orders. Despite this, there are early signs that customers may now be beginning to release new orders for manufacture over the next twelve months and the Group has seen a significant increase in the value of new work being quoted.

Revenues in relation to military contracts, primarily at Texstars and CHI, have increased in the period with military markets in general remaining robust.

Aerospace Components & Structures

Hampson's Aerospace Components & Structures businesses supply highly-engineered, performance-critical metallic components, sub-assemblies and fully assembled structures to many of the world's leading airframe manufacturers and their tier one suppliers.

As expected, due to the previously reported supply chain rationalisation of one of the division's major customers following acquisition by a third party, revenues at our largest UK facility which manufactures metallic aerostructural components and sub-assemblies reduced notably. Coupled with the disposal of the engine components machining business, HAML, in August 2009, and the non-recurrence of revenues from the terminated Eclipse 500 programme, revenue for the division fell by £18.4 million (40%) to £27.9 million compared to the first six months of the previous year. Since HAML formed part of the Aerospace Components & Structures division which remains ongoing, its results continue to be included as part of the continuing operations of the Group. Revenue in the Group's shims businesses was adversely impacted by destocking activity by major airframe customers during the first quarter.

In light of this decline, rapid action has been taken to rationalise and realign the cost base of the division, with employee numbers having been cut by 21% over the period. Despite this, and other ongoing management initiatives, trading profit declined to £1.0 million for the six months to 30 September 2009. Further cost reduction initiatives will be undertaken during the second half as part of a strategic priority to deliver improved results.

Automotive Turbocharger

The Automotive Turbocharger division manufactures small, highly engineered precision components and rotating assemblies in medium to high volume for automotive turbocharger, fuel delivery and other very close tolerance applications.

Trading conditions remained difficult for the division in the six months to 30 September 2009, resulting in revenue falling 62% compared to the first six months of the prior year. Rapid and effective action has however limited the trading loss for the period to £1.2 million despite the substantially lower revenue base and cash break-even has been achieved at the UK site.

Market conditions are now starting to show some tentative improvement, with new car sales boosted by fiscal incentives and commercial heavy diesel components benefiting from pre-buying ahead of the new US emission standard in 2010. 

The Automotive Turbocharger division remains a non core operation of the Group and as such the Board continues to carefully assess the strategic options available.

The Group's fledgling Indian operation has sought and gained initial work for aerospace components and other specialist engineering projects in the period. Consequently, the results of this operation are now included within the Aerospace Components & Structures division and the segmental analysis presented within these financial statements has been adjusted accordingly.

Outlook

As indicated in the Group's August 2009 IMS, the outturn for the current year will ultimately be determined by the timing of conversion of pipeline demand for high value tools required by the larger aerospace programmes into firm orders. Although the timing of order placement continues to be uncertain, present customer indications and the scale of new work in the pipeline point to a gradual increase in the release of new orders over the next twelve months.

The long term outlook remains one of significant growth potential, with the market for aerospace tooling projected to grow from its current estimated size of approximately US$1.5 billion, to in excess of US$2.0 billion by 2012, based on currently identified aerospace programmes and their estimated tooling requirements. This growth is driven by the continued substitutional use of advanced, lightweight carbon composite materials in current and future commercial, military and general aviation airframe construction, being the markets in which Hampson is now principally positioned.

The Board therefore remains of the view that in spite of the shorter-term uncertainty arising from major programme delays, the Group is well positioned to convert the long term opportunities available into attractive returns for shareholders. 

Principal risks and uncertainties

In common with all trading businesses, the Group is exposed to a variety of risks in the conduct of its normal business operations. Set out on pages 20 to 23 of the Group's Annual Report for the year ended 31 March 2009 is a summary of some of the most important risks and uncertainties which, in the opinion of the Directors, could impact its performance. These are equally applicable to the current financial year of which the period covered by these condensed financial statements forms part. Although it is not possible to completely record or quantify every risk that the Group faces, on a short term, forward-looking basis over the remainder of this financial year, a key area of potential risk and uncertainty relates to the size and timing of receipt of further tooling orders, which have a significant impact on the Group's potential future revenue generation and profitability. Significant further delays by customers in the award of purchase orders could also increase the risk of an impairment of goodwill being required due to the carrying value of the assets of a cash generating unit being higher than their recoverable amount. Other principal risks and uncertainties include those related to the global economic environment, funding and liquidity, cyclical markets, market competition, customer concentration, programme dependencies & relationships, commercial dispute resolution and litigation and interest rate and foreign exchange risk. The Group seeks to put in place strategies and actions to mitigate the potential effect of these risks wherever practical.

Directors' Responsibility Statement

The Directors confirm that to the best of their knowledge:

The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as endorsed and adopted by the EU;

The Interim Management Report includes a fair review of the information required by: 

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

The Directors of Hampson Industries PLC as at 3 June 2009 are listed in the Group's Annual Report for the year ended 31 March 2009 on pages 28 and 29. There have been no changes to Directors since this report.

By order of the Board:

Chris Geoghegan	Kim Ward	Howard Kimberley
Chairman	Chief Executive	Finance Director
26 November 2009	26 November 2009	26 November 2009

Condensed Consolidated Income Statement

For the half year ended

		Unaudited
		30 September  2009	30 September  2009	30 September 2009
		Underlying  results before adjustments*	Adjustments*	Total
	Notes	£'000	£'000	£'000
Continuing operations
Revenue	3	97,003	-	97,003
Operating profit	4	14,550	2,422	16,972
Analysed as:
Trading profit		14,550	-	14,550
Restructuring and rationalisation charges	5	-	-	-
Impairment charges	5	-	-	-
Gains and losses on disposal or closure of businesses	5	-	585	585
Changes in net fair value of derivative financial instruments - non interest instruments	5	-	4,444	4,444
Amortisation of intangible assets on acquisition	5	-	(2,607)	(2,607)
Net financing costs		(3,598)	119	(3,479)
Analysed as:
Financial income		205	-	205
Financial expense		(3,803)	-	(3,803)
Restructuring and rationalisation charges - Unamortised debt issuance costs	5	-	-	-
Changes in net fair value of derivative financial instruments - interest instruments	5	-	119	119
Profit before taxation		10,952	2,541	13,493
Taxation	7			(4,048)
Profit after taxation				9,445
Discontinued operations
Post tax results from discontinued operations	8			(18)
Profit for the financial period				9,427
Attributable to:
- Equity shareholders of the parent company				9,427
- Minority interests				-
				9,427
Earnings per 25p ordinary share
Continuing Operations:
Basic	10			5.95p
Diluted	10			5.84p
Discontinued Operations:
Basic	10			(0.01p)
Diluted	10			(0.01p)
Total Operations:
Basic	10			5.94p
Diluted	10			5.83p

* Adjustments relate to exceptional items, being restructuring and rationalisation charges and impairment charges, gains and losses arising from the disposal or closure of businesses that do not meet the criteria to be classified as discontinued operations under IFRS 5, changes in net fair value of derivative financial instruments required under IAS 39 and amortisation of intangible assets on acquisition required under IFRS 3.

Condensed Consolidated Income Statement

For the half year ended 

		Unaudited
		30 September  2008	30 September  2008	30 September2008
		Underlying  results before adjustments*	Adjustments*	Total
	Notes	£'000	£'000	£'000
Continuing operations
Revenue	3	110,512	-	110,512
Operating profit	4	20,005	(2,645)	17,360
Analysed as:
Trading profit		20,005	-	20,005
Restructuring and rationalisation charges	5	-	(547)	(547)
Impairment charges	5	-	-	-
Gains and losses on disposal or closure of businesses	5	-	-	-
Changes in net fair value of derivative financial instruments - non interest instruments	5	-	1	1
Amortisation of intangible assets on acquisition	5	-	(2,099)	(2,099)
Net financing costs		(3,947)	(906)	(4,853)
Analysed as:
Financial income		677	-	677
Financial expense		(4,624)	-	(4,624)
Restructuring and rationalisation charges - Unamortised debt issuance costs	5	-	(586)	(586)
Changes in net fair value of derivative financial instruments - interest instruments	5	-	(320)	(320)
Profit before taxation		16,058	(3,551)	12,507
Taxation	7			(3,752)
Profit after taxation				8,755
Discontinued operations
Post tax results from discontinued operations	8			(30)
Profit for the financial period				8,725
Attributable to:
- Equity shareholders of the parent company				8,725
- Minority interests				-
				8,725
Earnings per 25p ordinary share
Continuing Operations:
Basic	10			6.46p
Diluted	10			6.44p
Discontinued Operations:
Basic	10			(0.02p)
Diluted	10			(0.02p)
Total Operations:
Basic	10			6.44p
Diluted	10			6.42p

* Adjustments relate to exceptional items, being restructuring and rationalisation charges and impairment charges, gains and losses arising from the disposal or closure of businesses that do not meet the criteria to be classified as discontinued operations under IFRS 5, changes in net fair value of derivative financial instruments required under IAS 39 and amortisation of intangible assets on acquisition required under IFRS 3.

Condensed Consolidated Income Statement

For the year ended

		31 March 2009	31 March 2009	31 March 2009
		Underlying  results before adjustments*	Adjustments*	Total
	Notes	£'000	£'000	£'000
Continuing operations
Revenue	3	256,648	-	256,648
Operating profit/(loss)	4	47,374	(50,522)	(3,148)
Analysed as:
Trading profit		47,374	-	47,374
Restructuring and rationalisation charges	5	-	(2,878)	(2,878)
Impairment charges	5	-	(28,299)	(28,299)
Gains and losses on disposal or closure of businesses	5	-	-	-
Changes in net fair value of derivative financial instruments - non interest instruments	5	-	(12,557)	(12,557)
Amortisation of intangible assets on acquisition	5	-	(6,788)	(6,788)
Net financing costs		(9,725)	(2,499)	(12,224)
Analysed as:
Financial income		1,308	-	1,308
Financial expense		(11,033)	-	(11,033)
Restructuring and rationalisation charges - Unamortised debt issuance costs	5	-	(586)	(586)
Changes in net fair value of derivative financial instruments - interest instruments	5	-	(1,913)	(1,913)
Profit/(loss) before taxation		37,649	(53,021)	(15,372)
Taxation	7			4,393
Loss after taxation				(10,979)
Discontinued operations
Post tax results from discontinued operations	8			(251)
Loss for the financial year				(11,230)
Attributable to:
- Equity shareholders of the parent company				(11,230)
- Minority interests				-
				(11,230)
Earnings per 25p ordinary share
Continuing Operations:
Basic	10			(7.47p)
Diluted	10			(7.47p)
Discontinued Operations:
Basic	10			(0.17p)
Diluted	10			(0.17p)
Total Operations:
Basic	10			(7.64p)
Diluted	10			(7.64p)

* Adjustments relate to exceptional items, being restructuring and rationalisation charges and impairment charges, gains and losses arising from the disposal or closure of businesses that do not meet the criteria to be classified as discontinued operations under IFRS 5, changes in net fair value of derivative financial instruments required under IAS 39 and amortisation of intangible assets on acquisition required under IFRS 3.

Condensed Consolidated Statement of Comprehensive Income

For the periods ending

	Unaudited
	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Profit/(loss) for the financial period	9,427	8,725	(11,230)
Other comprehensive income:
- Foreign exchange translation differences	(39,327)	14,272	87,878
- Unrecoverable surplus on retirement benefit scheme	-	-	160
- Actuarial losses on retirement benefit scheme - gross	(77)	-	(1,292)
- Deferred taxation related thereto	22	-	(320)
Total comprehensive (expense)/income for the period	(29,955)	22,997	75,196
Attributable to:
- Equity shareholders of the parent company	(29,955)	22,997	75,196
- Minority interests	-	-	-
	(29,955)	22,997	75,196

Condensed Consolidated Balance Sheet

As at

	Unaudited
	30 September 2009	30 September 2008	31 March 2009
	£'000	£'000	£'000
Assets
Non-current assets
Goodwill	267,412	217,580	301,926
Intangible assets	20,861	32,501	25,392
Property, plant and equipment	45,212	44,863	48,817
Deferred tax assets	6,806	-	6,242
	340,291	294,944	382,377
Current assets
Inventories	29,857	46,069	37,826
Trade and other receivables - due within one year	43,324	50,840	63,608
Financial assets - derivatives	103	11	978
Current tax assets	731	252	4,702
Cash and cash equivalents	27,925	11,832	18,782
	101,940	109,004	125,896
Total assets	442,231	403,948	508,273
Liabilities
Current liabilities
Trade and other payables	(47,412)	(57,578)	(61,866)
Financial liabilities - derivatives	(15,392)	(5,712)	(20,830)
Provisions	(8,616)	(25,642)	(24,789)
	(71,420)	(88,932)	(107,485)
Non-current liabilities
Financial liabilities - borrowings	(160,850)	(124,967)	(159,782)
Deferred tax liabilities	(5,106)	(5,308)	(4,018)
Provisions	-	(81)	-
Retirement benefit liabilities	(1,531)	(360)	(1,507)
	(167,487)	(130,716)	(165,307)
Total liabilities	(238,907)	(219,648)	(272,792)
Net assets	203,324	184,300	235,481
Equity
Called up share capital	39,659	39,659	39,659
Reserves	163,665	144,641	195,822
Equity attributable to shareholders of the parent	203,324	184,300	235,481
Minority interest	-	-	-
Total equity	203,324	184,300	235,481

Condensed Consolidated Statement of Changes in Equity

For the periods ending

		Reserves
	Share capital	Share premium	Share based payment reserve	Exchange reserve	Other reserves	Retained earnings	Equity share-holders' funds	Minority interest	Total equity
Unaudited	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2009	39,659	123,237	805	79,467	-	(7,687)	235,481	-	235,481
Total comprehensive (expense)/income for the period	-	-	-	(39,327)	-	9,372	(29,955)	-	(29,955)
Transfers	-	-	-	-	-	-	-	-	-
Issue of ordinary share capital	-	-	-	-	-	-	-	-	-
Dividends	-	-	-	-	-	(2,538)	(2,538)	-	(2,538)
Share based payments	-	-	336	-	-	-	336	-	336
Changes in minority interests	-	-	-	-	-	-	-	-	-
At 30 September 2009	39,659	123,237	1,141	40,140	-	(853)	203,324	-	203,324

		Reserves
	Share capital	Share premium	Share based payment reserve	Exchange reserve	Other reserves	Retained earnings	Equity share-holders' funds	Minority interest	Total equity
Unaudited	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2008	23,806	56,337	534	(8,411)	2,062	6,572	80,900	79	80,979
Total comprehensive income for the period	-	-	-	14,272	-	8,725	22,997	-	22,997
Transfers	-	-	-	-	-	-	-	-	-
Issue of ordinary share capital	15,853	66,900	-	-	-	-	82,753	-	82,753
Dividends	-	-	-	-	-	(2,379)	(2,379)	-	(2,379)
Share based payments	-	-	20	-	-	9	29	-	29
Changes in minority interests	-	-	-	-	-	-	-	(79)	(79)
At 30 September 2008	39,659	123,237	554	5,861	2,062	12,927	184,300	-	184,300

		Reserves
	Share capital	Share premium	Share based payment reserve	Exchange reserve	Other reserves	Retained earnings	Equity share-holders' funds	Minority interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2008	23,806	56,337	534	(8,411)	2,062	6,572	80,900	79	80,979
Total comprehensive income/(expense) for the year	-	-	-	87,878	-	(12,682)	75,196	-	75,196
Transfers	-	-	-	-	(2,062)	2,062	-	-	-
Issue of ordinary share capital	15,853	66,900	-	-	-	-	82,753	-	82,753
Dividends	-	-	-	-	-	(3,648)	(3,648)	-	(3,648)
Share based payments	-	-	271	-	-	9	280	-	280
Changes in minority interests	-	-	-	-	-	-	-	(79)	(79)
At 31 March 2009	39,659	123,237	805	79,467	-	(7,687)	235,481	-	235,481

Condensed Consolidated Cash Flow Statement

For the periods ending

	Unaudited
	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	11,108	9,622	23,806
Interest received	205	677	949
Interest paid	(3,478)	(4,538)	(10,240)
Tax paid	(102)	(1,723)	(4,079)
Net cash from operating activities	7,733	4,038	10,436
Cash flows from investing activities
Acquisitions (net of cash acquired)	(22,408)	(115,135)	(135,461)
Disposals (net of cash disposed)	24,168	120	240
Purchase of property, plant and equipment	(3,631)	(2,585)	(9,544)
Purchase of intangible assets	(687)	(831)	(1,327)
Proceeds on sale of property, plant and equipment	11	43	97
Development costs	(171)	(189)	(299)
Net cash used in investing activities	(2,718)	(118,577)	(146,294)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital	-	62,581	62,581
New borrowings	23,000	123,383	153,825
Issuance costs of new borrowings	-	-	(1,651)
Dividends paid	-	-	(3,648)
Finance lease principal payments	(457)	(653)	(1,176)
Finance lease interest payments	(123)	(86)	(147)
Repayments of loans	(16,669)	(80,034)	(80,070)
Net cash flow used in financing activities	5,751	105,191	129,714
Currency variations on cash and cash equivalents	(1,623)	(594)	3,152
Increase/(decrease) in cash and cash equivalents	9,143	(9,942)	(2,992)
Cash and cash equivalents at the beginning of the period	18,782	21,774	21,774
Cash and cash equivalents at the end of the period	27,925	11,832	18,782

Reconciliation of movement in cash and cash equivalents to movement in net debt

For the periods ending

	Unaudited
	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Movement in cash and cash equivalents	9,143	(9,942)	(2,992)
Net proceeds of borrowings	(23,000)	(43,349)	(73,755)
Currency variations on borrowings	3,933	(1,719)	(9,764)
Repayment of borrowings	16,669	-	-
Finance lease payments	457	653	1,176
New finance leases	(2,396)	-	(226)
Other movements in net debt	(166)	909	748
Movement in period	4,640	(53,448)	(84,813)
Net debt at beginning of period	(145,389)	(60,576)	(60,576)
Net debt at end of period	(140,749)	(114,024)	(145,389)

Other movements in net debt reflect movements in the unamortised issuance costs in relation to borrowings within the Group.

Condensed Cash Flow from Operating Activities

For the periods ending

	Unaudited
	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Continuing operations
Profit/(loss) before tax	13,493	12,507	(15,372)
Add back: financial expense	3,479	4,853	12,224
Operating profit/(loss)	16,972	17,360	(3,148)
Depreciation of property, plant and equipment	2,663	2,594	6,083
Amortisation of intangible assets	3,009	2,611	8,135
Amortisation of government grants	(1,081)	-	(110)
Impairment charges	-	-	28,299
Results of discontinued operations	(18)	(30)	(251)
Loss on sale of property, plant and equipment	-	7	22
Share based payments	600	120	371
Decrease/(increase) in inventories	62	(6,952)	(2,543)
Decrease/(increase) in trade and other receivables	7,258	(6,519)	(16,244)
(Decrease)/increase in trade and other payables	(7,113)	(363)	(10,228)
(Decrease)/increase in provisions	(6,177)	795	939
Contribution to defined benefit pension schemes	(38)	-	(76)
(Gains)/losses on disposal or closure of businesses	(585)	-	-
Movement in derivative financial instruments	(4,444)	(1)	12,557
Cash generated from operations	11,108	9,622	23,806

Reconciliation of cash and cash equivalents and net debt

For the periods ending

	Unaudited
	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Cash and cash equivalents within current assets	27,925	11,832	18,782
Bank overdrafts included within current liabilities	-	-	-
Cash and cash equivalents at end of period	27,925	11,832	18,782
Short term and secured loans within current liabilities	(6,766)	(73)	(3,824)
Finance lease and hire purchase obligations within current liabilities	(1,058)	(816)	(565)
Finance lease and hire purchase obligations within non-current liabilities	(2,635)	(1,264)	(1,189)
Long term secured loans within non-current liabilities	(159,401)	(125,216)	(159,945)
Unamortised debt issuance costs within non-current liabilities	1,186	1,513	1,352
Net debt at end of period	(140,749)	(114,024)	(145,389)

Cash and cash equivalents comprise cash on hand and demand deposits and overdrafts together with highly liquid investments of less than three months maturity. Unless an enforceable right of set-off exists, the components of cash and cash equivalents are reflected on a gross basis in the balance sheet.

Net debt is defined as the Group's borrowings (net of unamortised issuance costs) and finance leases, less cash and cash equivalents.

Notes to the Half Year Report

1. Basis of preparation

Basis of preparation

Hampson Industries PLC (the "Company") is a Company domiciled in the United Kingdom. The unaudited condensed consolidated half year financial statements for the six months ended 30 September 2009 comprise of the Company and its subsidiaries.

These half year condensed consolidated financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. They do not include all information required for full annual financial statements, and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 March 2009. The comparative figures for the year ended 31 March 2009 do not constitute statutory accounts for the purposes of section 240 of the Companies Act 1985. A copy of the statutory accounts for the year ended 31 March 2009 has been delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

Going concern

The Group meets its day-to-day working capital requirements and medium term funding requirements through a mixture of committed bank borrowing facilities, finance leases and loan notes. The bank borrowing and loan note facilities which total £200 million include certain covenant tests. The failure of a covenant test renders the entire facilities repayable on demand at the option of the lender. The Directors expect that the Group will meet these covenants based upon its forecast trading results and cashflows for the period to 31 December 2010. The forecasts make assumptions in respect of future trading conditions and in particular, in the immediate 12 months, assume no further significant slippage in the development of major aircraft programmes, a continuation of the current US Dollar exchange rate and a continuation of current working capital requirements. The forecasts have been appropriately sensitised to take into account reasonably possible downside scenarios and mitigating actions considered to be available to management, and this process has indicated that the covenants will not be breached for the period to 31 December 2010. For this reason, the Directors continue to adopt the going concern basis in preparing these financial statements.

Measurement and performance reporting

In addition to the "statutory" measures of profit, reference is made throughout to the impact on the Group's profit and earnings of excluding the following items; restructuring and rationalisation charges, impairment charges, gains and losses on disposal or closure of businesses, amortisation of intangible assets arising on acquisition and changes in the net fair value of financial instruments. The Directors believe that exclusion of these items allows trends in the underlying performance of the Group's business to be more easily identified and understood. Reference is made throughout to the term "trading profit" which is defined as operating profit excluding all of the fore-going items.

Changes in accounting policies

Except as described below, the accounting policies and basis of consolidation applied by the Group in these unaudited half year condensed consolidated financial statements are the same as those applied by the Group in its audited consolidated financial statements for the year ended 31 March 2009.

IFRS 8 "Operating Segments"

IFRS 8 has been adopted during the period. Under IFRS 8, the Group is required to identify its operating segments on the basis of internal reports about segments of the Group that are regularly reviewed by the chief operating decision maker to allocate resources and assess their performance. The chief operating decision maker has been identified as the Board of Hampson Industries PLC, led by the Chairman.

The adoption of this standard has not resulted in any change to the operating segments previously disclosed by the Group, although management have transferred the results of its Indian operations from the Automotive Turbocharger segment to the Aerospace Components & Structures segment. The rationale for this transfer was that with the downturn in automotive markets since the second half of 2008, the Indian business has increasingly moved away from the automotive sector and quoted and won work for aerospace components and specialist engineering projects, and is now part of the Group's wider strategy to offer lower blended cost manufacturing within the aerospace industry. As a result, the only business within the Automotive Turbocharger segment is now Hampson Precision Automotive Limited.

The key measures that the chief operating decision maker uses are revenue and trading profit by segment, with other key performance indicators such as profit before tax, operating cashflow and working capital only being monitored on a Group basis.

IAS 23 "Borrowing Costs" (revised)

IAS 23 (revised) has been adopted prospectively during the period. IAS 23 (revised) requires borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset to be capitalised as part of the cost of the asset. During the half year to 30 September 2009, the borrowing costs eligible for capitalisation were immaterial.

IAS 1 "Presentation of Financial Statements" (revised)

IAS 1 (revised) has been adopted during the period. The main impact of the adoption of IAS 1 (revised) is the presentational changes to the financial statements, and the inclusion of new primary statements of the "Statement of Comprehensive Income" and "Statement of Changes in Equity". The adoption of this standard has not affected the reported income or net assets of the Group.

Other changes in accounting policies

Other new standards, revisions and amendments to standards and interpretations have been adopted in the period with no material impact on the Group's results, assets and liabilities. As noted in the Annual Report for the year ended 31 March 2009, the main accounting standard that will impact the Group for financial years beginning after 1 April 2010 is IFRS 3 "Business Combinations" (revised), which will change the recognition of goodwill, acquisition costs and contingent consideration on any future acquisitions.

Re-presentation of prior period accounts

As noted above, as part of adopting IFRS 8, the Group has transferred the results of its Indian operations from the Automotive Turbocharger segment to the Aerospace Components and Structures segment in line with the changing strategy of the business and the way this is reported to the chief operating decision maker. At a group level there is no impact to the reported revenues, profits or net assets.

The impact of this change is that external revenue for the Automotive Turbocharger division for the six months to 30 September 2008 has reduced by £3,000, with the Aerospace Components & Structures division increasing by £3,000, and for the year ended 31 March 2009 Automotive Turbocharger revenues reducing by £8,000, and Aerospace Components & Structures increasing by £8,000. Due to the Indian operations being loss making during these periods, the impact of this change is that for the six months to 30 September 2008 and year to 31 March 2009 the operating profit of the Automotive Turbocharger division improved by £136,000 and £1,935,000 respectively, and Aerospace Components & Structures operating profit decreased by similar amounts. As at 30 September 2008 £3,374,000 and as at 31 March 2009 £2,055,000 of assets were transferred from the Automotive Turbocharger to Aerospace Components & Structures division.

Critical accounting estimates and judgements

In the process of applying the Group's accounting policies, management has made a number of judgements. The process of preparing these unaudited half year condensed consolidated financial statements inevitably requires the Group to make estimates and assumptions concerning the future and the resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and judgements that have the most significant effect on the amounts included with these unaudited half year condensed consolidated financial statements were the same as those that applied to the audited consolidated financial statements for the year ended 31 March 2009, along with the specific risks and uncertainties regarding the timing of future aerospace tooling orders as previously noted in the principal risks and uncertainties section.

.

Seasonality

The Group does not have any revenue or results that are materially impacted by seasonality.

Approval of unaudited half year condensed consolidated financial statements

The unaudited half year condensed consolidated financial statements were approved for issue on behalf of the board of directors on 26 November 2009.

2. Exchange rates

The principal exchange rates used were as follows:

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
Sterling to US Dollar (GBP 1 = US$):
Average for period	1.60	1.94	1.72
Period end	1.59	1.82	1.42
Sterling to Indian Rupee (GBP 1 = INR):
Average for period	78.14	82.50	79.13
Period end	76.97	86.89	74.16

Assets and liabilities of overseas undertakings are translated at the rate of exchange ruling at the balance sheet date and the income statement is translated at the average rate of exchange.

3. Segmental analysis

For internal decision making purposes, the Group is organised into three operating divisions according to the products and market segments they serve, being Aerospace Components & Structures, Aerospace Composites & Transparencies and Automotive Turbocharger. Further details on each of the operating divisions can be noted on pages 8 - 15 of the Annual Report for the year ended 31 March 2009. This is consistent with the way the Group is managed and the format of internal financial reporting. 

Segment information for revenue and profit:

Half year to 30 September 2009	Aerospace Components & Structures	Aerospace Composites & Transparencies	Automotive Turbocharger	Segment Total	Corporate & Unallocated	Group Total
	£'000	£'000	£'000	£'000	£'000	£'000
Continuing operations:
Revenue	27,940	64,874	4,189	97,003	-	97,003
Trading profit/(loss)	986	17,091	(1,237)	16,840	(2,290)	14,550
Restructuring and rationalisation charges	-	-	-	-	-	-
Impairment charges	-	-	-	-	-	-
Gains and losses on disposal or closure of businesses	585	-	-	585	-	585
Changes in fair value of derivative financial instruments	-	-	-	-	4,444	4,444
Amortisation of intangible assets on acquisition	(103)	(2,504)	-	(2,607)	-	(2,607)
Operating profit/(loss)	1,468	14,587	(1,237)	14,818	2,154	16,972
Net financing costs	-	-	-	-	(3,479)	(3,479)
Profit/(loss) before taxation	1,468	14,587	(1,237)	14,818	(1,325)	13,493
Taxation	-	-	-	-	(4,048)	(4,048)
Profit/(loss) for the period after taxation	1,468	14,587	(1,237)	14,818	(5,373)	9,445
Discontinued operations:
Post tax results from discontinued operations	-	-	-	-	(18)	(18)
Profit attributable to minority interests	-	-	-	-	-	-
Net profit/(loss) attributable to equity shareholders	1,468	14,587	(1,237)	14,818	(5,391)	9,427

Intra segment sales for the half year to 30 September 2009 were £67,000 (half year to 30 September 2008: £429,000, year ended 31 March 2009: £643,000). Intra segment sales are priced on an arms length basis.

 

	Re-presented (note 1)
Half year to 30 September 2008	Aerospace Components & Structures	Aerospace Composites & Transparencies	Automotive Turbocharger	Segment Total	Corporate & Unallocated	Group Total
	£'000	£'000	£'000	£'000	£'000	£'000
Continuing operations:
Revenue	46,354	53,136	11,022	110,512	-	110,512
Trading profit/(loss)	5,617	14,392	542	20,551	(546)	20,005
Restructuring and rationalisation charges	(492)	-	(28)	(520)	(27)	(547)
Impairment charges	-	-	-	-	-	-
Gains and losses on disposal or closure of businesses	-	-	-	-	-	-
Changes in fair value of derivative financial instruments	-	-	-	-	1	1
Amortisation of intangible assets on acquisition	(164)	(1,935)	-	(2,099)	-	(2,099)
Operating profit/(loss)	4,961	12,457	514	17,932	(572)	17,360
Net financing costs	-	-	-	-	(4,853)	(4,853)
Profit/(loss) before taxation	4,961	12,457	514	17,932	(5,425)	12,507
Taxation	-	-	-	-	(3,752)	(3,752)
Profit/(loss) for the period after taxation	4,961	12,457	514	17,932	(9,177)	8,755
Discontinued operations:
Post tax results from discontinued operations	-	-	-	-	(30)	(30)
Profit attributable to minority interests	-	-	-	-	-	-
Net profit/(loss) attributable to equity shareholders	4,961	12,457	514	17,932	(9,207)	8,725

	Re-presented (note 1)
For the year ended  31 March 2009	Aerospace Components & Structures	Aerospace Composites & Transparencies	Automotive Turbocharger	Segment Total	Corporate & Unallocated	Group Total
	£'000	£'000	£'000	£'000	£'000	£'000
Continuing operations:
Revenue	88,028	150,798	17,822	256,648	-	256,648
Trading profit/(loss)	10,725	43,172	(1,099)	52,798	(5,424)	47,374
Restructuring and rationalisation charges	(1,586)	(5)	(1,276)	(2,867)	(11)	(2,878)
Impairment charges	(21,521)	(1,299)	(5,479)	(28,299)	-	(28,299)
Gains and losses on disposal or closure of businesses	-	-	-	-	-	-
Changes in fair value of derivative financial instruments	-	-	-	-	(12,557)	(12,557)
Amortisation of intangible assets on acquisition	(191)	(6,597)	-	(6,788)	-	(6,788)
Operating profit/(loss)	(12,573)	35,271	(7,854)	14,844	(17,992)	(3,148)
Net financing costs	-	-	-	-	(12,224)	(12,224)
Profit/(loss) before taxation	(12,573)	35,271	(7,854)	14,844	(30,216)	(15,372)
Taxation	-	-	-	-	4,393	4,393
Profit/(loss) for the year after taxation	(12,573)	35,271	(7,854)	14,844	(25,823)	(10,979)
Discontinued operations:
Post tax results from discontinued operations	-	-	-	-	(251)	(251)
Profit attributable to minority interests	-	-	-	-	-	-
Net profit/(loss) attributable to equity shareholders	(12,573)	35,271	(7,854)	14,844	(26,074)	(11,230)

Segment information for assets:

Half year to 30 September 2009	Aerospace Components & Structures	Aerospace Composites & Transparencies	Automotive Turbocharger	Segment Total	Corporate & Unallocated	Group Total
	£'000	£'000	£'000	£'000	£'000	£'000
Segment assets	42,274	367,529	5,076	414,879	19,815	434,694
Unallocated assets:
- Current taxation assets	-	-	-	-	731	731
- Deferred taxation assets	-	-	-	-	6,806	6,806
Total assets	42,274	367,529	5,076	414,879	27,352	442,231

	Re-presented (note 1)
Half year to 30 September 2008	Aerospace Components & Structures	Aerospace Composites & Transparencies	Automotive Turbocharger	Segment Total	Corporate & Unallocated	Group Total
	£'000	£'000	£'000	£'000	£'000	£'000
Segment assets	90,519	291,289	15,118	396,926	6,770	403,696
Unallocated assets:
- Current taxation assets	-	-	-	-	252	252
- Deferred taxation assets	-	-	-	-	-	-
Total assets	90,519	291,289	15,118	396,926	7,022	403,948

	Re-presented (note 1)
For the year ended  31 March 2009	Aerospace Components & Structures	Aerospace Composites & Transparencies	Automotive Turbocharger	Segment Total	Corporate & Unallocated	Group Total
	£'000	£'000	£'000	£'000	£'000	£'000
Segment assets	69,207	414,945	3,485	487,637	9,692	497,329
Unallocated assets:
- Current taxation assets	-	-	-	-	4,702	4,702
- Deferred taxation assets	-	-	-	-	6,242	6,242
Total assets	69,207	414,945	3,485	487,637	20,636	508,273

4. Operating profit/(loss)

Reconciliation of revenue to total operating profit/(loss):

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Revenue	97,003	110,512	256,648
Cost of sales	(72,869)	(78,838)	(212,891)
Gross profit	24,134	31,674	43,757
Other income	1,490	529	583
Distribution costs	(1,507)	(1,850)	(3,181)
Administrative expenses	(7,145)	(12,993)	(44,307)
Operating profit/(loss)	16,972	17,360	(3,148)

5. Non trading adjustments

Restructuring and rationalisation charges

Charges of £nil (half year to 30 September 2008: £547,000, year ended 31 March 2009: £2,878,000) included within operating profit relate primarily to employment termination and legal costs. Charges of £nil (half year to 30 September 2008: £586,000, year ended 31 March 2009: £586,000) included within net financing costs relate to the write off of unamortised debt issuance costs in relation to old banking facilities that were renegotiated as part of the acquisition of Odyssey Industries Inc. and Global Tooling Systems Inc. in June 2008.

Impairment charges

As part of a review undertaken as to the utilisation and carrying value of certain assets, impairment charges of £nil (half year to 30 September 2008: £nil, year ended 31 March 2009: £28,299,000) were incurred as follows:

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Impairment of intangible assets	-	-	7,757
Impairment of property, plant & equipment	-	-	5,481
Impairment of inventory	-	-	10,172
Impairment of receivables	-	-	4,889
Total impairment charges	-	-	28,299

Impairment of assets in relation to the Eclipse 500 programme

On 25 November 2008 Eclipse Aviation Corporation filed for Chapter 11 bankruptcy protection under the US Bankruptcy Code. After further funding could not be secured on a timely basis, on 24 February 2009 a group of creditors filed a motion to convert the Chapter 11 proceedings into a Chapter 7 liquidation under the US Bankruptcy Code.

Due to these circumstances, and the unlikely recoverability of assets by the Group, management decided to impair the full carrying value of the following assets:

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Impairment of intangible assets - development costs	-	-	5,922
Impairment of intangible assets - software costs	-	-	804
Impairment of property, plant & equipment	-	-	1,531
Impairment of inventory	-	-	8,066
Impairment of receivables - receivables and other debts due	-	-	4,889
Total impairment charges in relation to the Eclipse 500 programme	-	-	21,212

Impairment of assets in relation to automotive business

Due to the downturn in automotive markets, and the resulting reduction in orders and visibility within the market, management undertook a review of assets held in relation to the Group's automotive business and assessed their carrying value. As a result, management decided to impair certain assets where these assets were underutilised, and inventory balances where reductions in customer order levels have left the business with inventory that cannot be used on any other projects. The allocation of the impairment charges was:

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Impairment of intangible assets - development costs	-	-	1,031
Impairment of property, plant & equipment	-	-	3,950
Impairment of inventory	-	-	2,106
Total impairment charges in relation to automotive business	-	-	7,087

Gains and losses on disposal or closure of businesses

During the half year to 30 September 2009 gains of £585,000 were made in relation to the disposal or closure of businesses (half year to 30 September 2008: £nil, year ended 31 March 2009: £nil). For further details on the disposal of Hampson Aerospace Machining Limited, see note 18.

Changes in net fair value of derivative financial instruments

IAS 39 requires derivative financial instruments to be valued at the balance sheet date and any difference between that value and the intrinsic value of the instrument to be reflected in the balance sheet as an asset or liability. Any subsequent change in value is reflected in the Income Statement unless hedge accounting is achieved. Such movements do not affect cash flow or the economic substance of the underlying transaction, and thus to aid in year on year comparability, the change in value has been identified separately. As a result the changes in net fair value of derivative financial instruments were:

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
(Credits)/charges included within operating profit relating to non interest instruments	(4,444)	(1)	12,557
(Credits)/charges included within net financing costs relating to interest instruments	(119)	320	1,913
	(4,563)	319	14,470

Amortisation of intangible assets on acquisition

As required under IFRS 3 'Business Combinations' and IAS 38 'Intangible Assets', intangible assets identified on acquisition have been amortised during the period - £2,607,000 (half year to 30 September 2008: £2,099,000, year to 31 March 2009: £6,788,000). 

Adjustments are included within cost of sales £2,607,000 charge (half year to 30 September 2008: £2,579,000 charge, year to 31 March 2009: £37,799,000 charge) and administrative expenses £5,029,000 credit (half year to 30 September 2008: £66,000 charge, year to 31 March 2009: £12,723,000 charge).

The net cash outflow from adjustments charged during the period amounted to £nil (half year to 30 September 2008: £547,000, year to 31 March 2009: £2,878,000). 

6. Share based payments

No new share schemes were introduced during the half year to 30 September 2009 (half year to 30 September 2008: none, year to 31 March 2009: three schemes). Further details of schemes introduced during the prior year can be located in note 9 on pages 63 to 65 within the Group's Annual Report for the year ended 31 March 2009.

During the half year to 30 September 2009 no (half year to 30 September 2008: 365,120, year to 31 March 2009: 365,120) shares were issued under the August 2005 LTIP scheme, out of a possible maximum of 700,000 shares if full vesting conditions had been met.

During the half year to 30 September 2009 no (half year to 30 September 2008: 20,000, year to 31 March 2009: 20,000) share options were exercised under the March 2005 ESOS scheme at an exercise price of 127.5p per share, creating no (half year to 30 September 2008: 20,000, year to 31 March 2009: 20,000) new ordinary shares of 25p each with the remaining value being classified as share premium on each ordinary share.

During the half year to 30 September 2009 the performance conditions of the July 2006 LTIP scheme and September 2006 ESOS scheme were met in full, resulting in 330,000 and 275,000, respectively, shares options vesting. No share options have been exercised under either of these schemes. 

7. Taxation

The taxation charge for the half year to 30 September 2009 is based on the estimated effective tax rate for the full year to 31 March 2010 of 30% (half year to 30 September 2008: 30% charge, year to 31 March 2009: 29% credit).

8. Discontinued operations

Charges of £18,000 (half year to 30 September 2008: £30,000 charge, year ended 31 March 2009: £251,000 charge) included within discontinued operations relate to legal and property costs paid in order to discharge liabilities in relation to companies previously classified as discontinued operations.

9. Dividends

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	£'000	£'000	£'000
Equity dividends paid in the period:
Previous year final: 1.60p (2008: 1.50p) per 25p ordinary share	2,538	2,379	2,379
Current year interim: 0.00p (2008: 0.80p) per 25p ordinary share	-	-	1,269
	2,538	2,379	3,648

In addition, the Directors propose that an interim dividend be paid in respect of the financial year ended 31 March 2010 of 0.80p per 25p ordinary share, at a cost of approximately £1,269,000.

10. Earnings per share

Basic Earnings per Share

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of ordinary shares in issue during the year.

Diluted Earnings per Share

Diluted earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of ordinary shares in issue during the year, adjusted for any dilutive potential ordinary shares, primarily share options. The calculation is performed for share options by determining the number of shares that could have been acquired at fair value and compared with the number of shares that would have been issued assuming the exercise of the share options.

	Half year to 30 September 2009	Half year to 30 September 2009	Half year to 30 September 2009
	Earnings	Weighted average number of shares	Earnings per 25 pence share
	£'000	Number	Pence
Continuing Operations:
Basic EPS	9,445	158,634,996	5.95
Dilutive potential ordinary shares	-	2,994,928	(0.11)
Diluted EPS	9,445	161,629,924	5.84
Discontinued Operations:
Basic EPS	(18)	158,634,996	(0.01)
Dilutive potential ordinary shares	-	2,994,928	0.00
Diluted EPS	(18)	161,629,924	(0.01)
Total Operations:
Basic EPS	9,427	158,634,996	5.94
Dilutive potential ordinary shares	-	2,994,928	(0.11)
Diluted EPS	9,427	161,629,924	5.83

	Half year to 30 September 2008	Half year to 30 September 2008	Half year to 30 September 2008
	Earnings	Weighted average number of shares	Earnings per 25 pence share
	£'000	Number	Pence
Continuing Operations:
Basic EPS	8,755	135,449,184	6.46
Dilutive potential ordinary shares	-	477,359	(0.02)
Diluted EPS	8,755	135,926,543	6.44
Discontinued Operations:
Basic EPS	(30)	135,449,184	(0.02)
Dilutive potential ordinary shares	-	477,359	0.00
Diluted EPS	(30)	135,926,543	(0.02)
Total Operations:
Basic EPS	8,725	135,449,184	6.44
Dilutive potential ordinary shares	-	477,359	(0.02)
Diluted EPS	8,725	135,926,543	6.42

	Year to 31 March 2009	Year to 31  March 2009	Year to 31  March 2009
	Earnings	Weighted average number of shares	Earnings per 25 pence share
	£'000	Number	Pence
Continuing Operations:
Basic EPS	(10,979)	147,010,329	(7.47)
Dilutive potential ordinary shares	-	-	-
Diluted EPS	(10,979)	147,010,329	(7.47)
Discontinued Operations:
Basic EPS	(251)	147,010,329	(0.17)
Dilutive potential ordinary shares	-	-	-
Diluted EPS	(251)	147,010,329	(0.17)
Total Operations:
Basic EPS	(11,230)	147,010,329	(7.64)
Dilutive potential ordinary shares	-	-	-
Diluted EPS	(11,230)	147,010,329	(7.64)

For the year ended 31 March 2009, no potential ordinary shares have been included with the statutory diluted earnings per share calculations, due to these being anti-dilutive. The weighted average number of potential ordinary shares would have been 1,687,096. The potential ordinary shares have been included within the diluted adjusted earnings per share noted below, due to these having a dilutive effect.

Adjusted Earnings per Share

Earnings per share based on continuing activities before restructuring and rationalisation charges, impairment charges, gains and losses on the sale or closure of businesses, changes in the net fair value of financial instruments and amortisation of intangible assets on acquisition, which the Directors consider gives a useful additional indication of the underlying performance of the Group, is calculated on the earnings of the year adjusted as follows:

	Half year to 30 September 2009	Half year to 30 September 2009
	Earnings	Earnings per 25 pence share
	£'000	Pence
Continuing operations:
Profit attributable to equity shareholders	9,445	5.95
Adjustments for:
- Restructuring and rationalisation charges	-	0.00
- Impairment charges	-	0.00
- Gains and losses on disposal or closure of businesses	(585)	(0.37)
- Changes in net fair value of derivative financial  instruments - non interest instruments	(4,563)	(2.87)
- Amortisation of intangible assets on acquisition	2,607	1.64
Taxation on adjustments	712	0.45
Adjusted earnings per share attributable to equity shareholders	7,616	4.80
Diluted adjusted earnings per share attributable to equity shareholders	7,616	4.71

	Half year to 30 September 2008	Half year to 30 September 2008
	Earnings	Earnings per 25 pence share
	£'000	Pence
Continuing operations:
Profit attributable to equity shareholders	8,755	6.46
Adjustments for:
- Restructuring and rationalisation charges	1,133	0.84
- Impairment charges	-	0.00
- Gains and losses on disposal or closure of businesses	-	0.00
- Changes in net fair value of derivative financial  instruments - non interest instruments	319	0.23
- Amortisation of intangible assets on acquisition	2,099	1.55
Taxation on adjustments	(1,065)	(0.78)
Adjusted earnings per share attributable to equity shareholders	11,241	8.30
Diluted adjusted earnings per share attributable to equity shareholders	11,241	8.27

	Year to 31  March 2009	Year to 31 March 2009
	Earnings	Earnings per 25 pence share
	£'000	Pence
Continuing operations:
Loss attributable to equity shareholders	(10,979)	(7.47)
Adjustments for:
- Restructuring and rationalisation charges	3,464	2.36
- Impairment charges	28,299	19.25
- Gains and losses on disposal or closure of businesses	-	0.00
- Changes in net fair value of derivative financial  instruments - non interest instruments	14,470	9.84
- Amortisation of intangible assets on acquisition	6,788	4.62
Taxation on adjustments	(14,846)	(10.10)
Adjusted earnings per share attributable to equity shareholders	27,196	18.50
Diluted adjusted earnings per share attributable to equity shareholders	27,196	18.29

11. Goodwill

During the six months ended 30 September 2009 the Group acquired goodwill with a cost of £nil (half year to 30 September 2008: £136,635,000, year ended 31 March 2009: £166,072,000) through acquisition of subsidiary undertakings. 

Goodwill with a net book value of £1,793,000 was disposed during the six months ended 30 September 2009 (half year to 30 September 2008: £nil, year ended 31 March 2009: £nil) through disposal of subsidiary undertakings. 

During the six months ended 30 September 2009, goodwill with a net book value of £nil was subject to impairment (half year to 30 September 2008: £nil, year ended 31 March 2009: £nil).

All remaining movements in goodwill relate to exchange adjustments between financial reporting periods due to the majority of the Group's goodwill being held in US Dollars.

12.  Intangible assets

During the six months ended 30 September 2009 the Group acquired assets with a cost of £858,000 (half year to 30 September 2008: £1,021,000, year ended 31 March 2009: £1,632,000). £nil of assets were acquired through acquisition of subsidiary undertakings (half year to 30 September 2008: £10,987,000, year ended 31 March 2009: £10,987,000).

Assets with a net book value of £nil were disposed during the six months ended 30 September 2009 (half year to 30 September 2008: £3,000, year ended 31 March 2009: £6,000). In addition, assets with a net book value of £161,000 were disposed through the process of disposal of subsidiary undertakings (half year to 30 September 2008: £nil, year ended 31 March 2009: £nil).

During the six months ended 30 September 2009, assets with a net book value of £nil were subject to impairment (half year to 30 September 2008: £nil, year ended 31 March 2009: £7,757,000).

13. Property, plant and equipment

During the six months ended 30 September 2009 the Group acquired assets with a cost of £4,350,000 (half year to 30 September 2008: £2,707,000, year ended 31 March 2009: £9,770,000). £nil of assets were acquired through acquisition of subsidiary undertakings (half year to 30 September 2008: £2,660,000, year ended 31 March 2009: £2,660,000).

Assets with a net book value of £9,000 were disposed during the six months ended 30 September 2009 (half year to 30 September 2008: £67,000, year ended 31 March 2009: £119,000). In addition, assets with a net book value of £4,062,000 were disposed through the process of disposal of subsidiary undertakings (half year to 30 September 2008: £nil, year ended 31 March 2009: £nil).

During the six months ended 30 September 2009, £nil assets were subject to impairment (half year to 30 September 2008: £nil, year ended 31 March 2009: £5,481,000).

As at 30 September 2009 the Group had entered into contractual commitments to purchase assets with a cost of £2,955,000 (30 September 2008: £3,415,000, 31 March 2009: £8,772,000).

14. Pension and post-retirement benefits

As at 30 September 2009, the Group's defined benefit scheme and unfunded post-retirement medical scheme have been calculated on a year to date basis using the latest valuations as at 31 March 2009. There have been no significant fluctuations or one-off events during the period that would require adjustments to the assumptions made at 31 March 2009.

15. Financial risk management

During the period, the two floating interest rate swaps with a notional principal amount of $25,000,000 each matured.

On 31 May 2009 the US businesses of the Group entered into a cash pooling arrangement with Comerica Bank. As part of this arrangement an annual $12,000,000 revolving line of credit was also made available to the US businesses, subject to the interest cover of the US businesses being 2.5:1 or higher. Interest cover is defined as earnings before interest, tax, depreciation and amortisation (excluding adjustments included within operating profit) divided by net interest payable. There have been no breaches of this covenant or the covenants on the Group's main committed facilities during the period.

On 17 August 2009 the Group disposed of its entire 100% shareholding in Hampson Aerospace Machining Limited to Darwin Private Equity LLP, for further details see note 18. Under the terms of the Group's senior borrowing facilities, the consideration (net of retentions for transaction expenses and taxation) was utilised to pay down part of the Group's external borrowings, and the total facilities available to the Group were reduced by an amount equal to this prepayment.

As a result of the above transactions, as at 30 September 2009 the Group had committed bank, loan note and lease facilities of £217,079,000 (£169,968,000 bank facilities, £30,053,000 loan note facilities, £17,058,000 lease facilities). £24,211,000 of the bank facilities expire within one year, £8,475,000 within one to two years, with the remainder within two to five years. All loan note facilities expire in May 2015. All lease facilities are renewed on a rolling annual basis.

As at 30 September 2009 the Group had undrawn committed borrowing facilities, on a floating rate basis, of £47,333,000 (£33,968,000 bank facilities, £13,365,000 lease facilities). £30,885,000 (£17,520,000 bank facilities, £13,365,000 lease facilities) of the undrawn committed borrowing facilities expire within one year, with the remainder (£16,448,000 bank facilities, £nil lease facilities) expiring in more than two years' time.

16. Called up share capital

	As at 30 September 2009
	Number	£'000
Authorised:
Ordinary shares of 25p each - equity	220,000,000	55,000
Allotted, called up and fully paid:
Ordinary shares of 25p each - equity	158,634,996	39,659

 

	As at 30 September 2008
	Number	£'000
Authorised:
Ordinary shares of 25p each - equity	220,000,000	55,000
Allotted, called up and fully paid:
Ordinary shares of 25p each - equity	158,634,996	39,659

 

	As at 31 March 2009
	Number	£'000
Authorised:
Ordinary shares of 25p each - equity	220,000,000	55,000
Allotted, called up and fully paid:
Ordinary shares of 25p each - equity	158,634,996	39,659

17. Acquisitions

No acquisitions were made by the Group during the period, although contingent cash consideration was paid out on historic acquisitions after certain financial performance levels were achieved. An analysis of the net outflow of cash in respect of acquisitions is as follows:

	£'000
Contingent cash consideration - Odyssey Industries Inc.	14,474
Contingent cash consideration - Global Tooling Systems Inc.	6,203
Contingent cash consideration - Composites Horizons Inc.	1,664
Directly attributable costs in relation to the above acquisitions	67
	22,408

During the period management finalised the fair values attributable to the acquisition of Odyssey Industries Inc. and Global Tooling Systems Inc. The finalised fair values were the same as the provisional fair values included within the financial statements for the year ended 31 March 2009. Further details on the acquisition of Odyssey Industries Inc. and Global Tooling Systems Inc. in the prior year can be located in note 33 on pages 89 to 93 within the Group's Annual Report for the year ended 31 March 2009.

18. Disposals

Disposal of Hampson Aerospace Machining Limited

On 17 August 2009 the Group disposed of its entire 100% shareholding in Hampson Aerospace Machining Limited to Darwin Private Equity LLP. Due to the Group continuing to operate within the aerospace components and structures market, in accordance with IFRS 5 the results of this business have not been reclassified as discontinued operations.

The results of Hampson Aerospace Machining Limited, that are included within continuing operations, were as follows:

	Half year to 30 September 2009	Half year to 30 September 2008	Year to 31 March 2009
	Total	Total	Total
	£'000	£'000	£'000
Revenue	9,412	13,783	28,319
Operating profit	511	1,773	3,246
Analysed as:
Trading profit	511	1,845	3,318
Restructuring and rationalisation charges	-	(72)	(72)
Net financing costs	(28)	(439)	(660)
Analysed as:
Financial income	2	1	29
Financial expense	(30)	(440)	(689)
Profit before taxation	483	1,334	2,586
Taxation	(127)	(378)	(729)
Profit after taxation	356	956	1,857

The net cash flows in relation to Hampson Aerospace Machining Limited were £3,610,000 inflow from operating activities (half year to 30 September 2008: inflow £4,083,000, year to 31 March 2009: inflow £5,702,000), £146,000 inflow from investing activities (half year to 30 September 2008: outflow £86,000, year to 31 March 2009: outflow £211,000) and £297,000 outflow from financing activities (half year to 30 September 2008: outflow £439,000, year to 31 March 2009: outflow £660,000).

The Group's profit on disposal of Hampson Aerospace Machining Limited was as follows:

	£'000
Consideration - satisfied by cash	22,227
Consideration - total	22,227
Goodwill	1,793
Intangible fixed assets	161
Property, plant and equipment	4,062
Inventories	5,394
Trade and other receivables	15,916
Taxation	477
Cash and cash equivalents	(2,944)
Trade and other payables	(4,300)
Net assets disposed	20,559
Profit on disposal before directly attributable costs	1,668
Directly attributable costs in relation to disposal	(1,083)
Profit on disposal of Hampson Aerospace Machining Limited	585

Directly attributable costs relate to legal and other professional costs associated with the disposal.

As part of the disposal of Hampson Aerospace Machining Limited, Hampson Industries PLC disposed of the freehold interest in the properties in Leicester, UK and Alcester, UK occupied by the business to Darwin Private Equity LLP. The carrying value of the properties as at the date of disposal was £1,677,000, and was sold for £1,510,000, creating a loss on disposal of £167,000, and is included within the above disposal calculation.

An analysis of the net inflow of cash in respect of disposals is as follows:

	£'000
Deferred cash consideration - Lattimer Limited & I.S. Parts International Inc.	80
Cash consideration - Hampson Aerospace Machining Limited	22,227
Directly attributable costs in relation to the disposal of Hampson Aerospace Machining Limited	(1,083)
	21,224
Add: net bank overdraft transferred in relation to the disposal of Hampson Aerospace Machining Limited	2,944
Net inflow of cash and cash equivalents for disposals	24,168

19. Related party transactions

Definition of key management personnel

Key management personnel is defined as the main Board of Directors of Hampson Industries PLC and the Executive Committee of the Board of Directors of Hampson Industries PLC, which includes, in addition to the Executive Directors, a number of other senior managers with operational or functional responsibility within the Group.

Related party transactions with key management personnel

On 28 July 2009, Mr Randal Bellestri, former President of Odyssey Industries Inc., and Global Tooling Systems Inc. having served notice, left the service of the Group, although continues to hold approximately 9% of the Ordinary shares of Hampson Industries PLC. Details of related transactions, and comparatives, with Mr Bellestri have been disclosed within related party transactions with significant shareholders.

During the period there have been no transactions with key management personnel other than the remuneration of each individual.

Related party transactions with other senior personnel

Composites Horizons Inc. leases part of its facility from a company that is part owned by a member of local senior management. This is considered a related party since Mr Jeffrey Hynes is President and CEO of Composites Horizons Inc. Mr Hynes does not sit on the main Board of Directors of Hampson Industries PLC or the Executive Committee of the Board of Directors of Hampson Industries PLC. Details of related transactions with Mr Hynes are as follows:

	Relationship  of Mr Hynes			Total value of transaction for period ending
				30 September 2009	30 September 2008	31 March 2009
Counterparty		Transaction	Note	$'000	$'000	$'000
1517 Building LLC	33.3% owned	Lease of one factory as part of Composites Horizons Inc. facility - 1517 Industrial Park Street	(a)	86	84	170

(a) Composites Horizons Inc. leases part of its facilities from 1517 Building LLC. Under the terms of the ten year lease, which commenced on 1 July 2006, Composites Horizons Inc. is required to make total monthly rental payments of US$14,280 plus the payment of property taxes, maintenance and insurance, which was externally assessed as market value at the date of the lease. Monthly rental payment increases 4% each 1st July, and payments are due by the first of each month.

No balance was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: no balance).

Other than transactions noted above and the remuneration of each individual, there have been no other transactions with senior personnel.

Related party transactions with significant shareholders 

Related party transactions with businesses owned by Mr Randal Bellestri

As part of, and subsequent to, the acquisitions of Odyssey Industries Inc. and Global Tooling Systems Inc., the Group entered into various contracts with the principal vendor of both companies. These are considered to be related party transactions as the vendor, Mr. Randal Bellestri, is a significant shareholder and owns approximately 9% of the Ordinary shares of the Company. Details of related transactions with Mr Bellestri for the period are noted below:

	Relationship  of Mr Bellestri			Total value of transaction for period ending
				30 September 2009	30 September 2008	31 March 2009
Counterparty		Transaction	Note	$'000	$'000	$'000
RSS Holdings LLC	100% owned	Lease of Odyssey Industries Inc facility - 3020 IndianWood Road	(a)	600	400	1,000
C & Sons Inc	50% owned	Lease of Global Tooling Systems Inc. facility - 51400 Bellestri Court	(b)	585	250	600
SSS Holdings LLC	100% owned	Lease of Global Tooling Systems Inc. facility - 16445 23 Mile Road	(c)	708	-	354
RDB Industries Inc	100% owned	Rental of warehouse space to Odyssey Industries Inc - N Lapeer Road	(d)	180	-	180
RDB Industries Inc	100% owned	Rental of warehouse space to Global Tooling Systems Inc. - N Lapeer Road	(e)	30	-	60
RDB Industries Inc	100% owned	Purchase of electrical equipment for 16445 23 Mile Road	(f)	-	-	9
Laser Technologies Holdings LLC	50% owned	Rental of operational equipment to Odyssey Industries Inc	(g)	-	-	101
Laser Technologies Holdings LLC	50% owned	Rental of operational equipment to Global Tooling Systems Inc.	(h)	-	-	101
Laser Technologies Holdings LLC	50% owned	Sale of operational equipment to Odyssey Industries Inc	(i)	-	-	324
Laser Technologies Holdings LLC	50% owned	Sale of operational equipment to Global Tooling Systems Inc.	(j)	-	-	306

 (a) During the period Odyssey Industries Inc. leased its principal facilities from RSS Holdings LLC. Under the terms of the five year lease, which commenced on 1 May 2008, Odyssey Industries Inc. is required to make total monthly rental payments of US$100,000 plus the payment of property taxes, maintenance and insurance, which was externally assessed as market value at the date of the acquisition. Payment terms of this lease are payable within one month of invoice.

 

Odyssey Industries Inc. has the ability to extend the lease under two five year option terms provided appropriate notice is given under the terms of the lease. For the five year period commencing 1 May 2013 total monthly rental payments would be US$110,000 plus property taxes, maintenance and insurance, and for the five year period commencing 1 May 2018 total monthly rental payments would be US$121,000 plus property taxes, maintenance and insurance.

No balance was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: no balance).

(b) During the prior year Global Tooling Systems Inc. leased its facilities from C & Sons Inc. Under the terms of the five year lease, which commenced on 1 May 2008, Global Tooling Systems Inc. was required to make monthly rental payments of US$55,000 plus the payment of property taxes, maintenance and insurance, which was externally assessed as market value at the date of the acquisition. Payment terms of this lease are payable within one month of invoice.

On 8 October 2008 notice was served by Global Tooling Systems Inc. to the landlord to terminate the lease so that they could move to larger premises. As part of the termination negotiations it was agreed between both parties that the total termination cost would be US$585,000 payable on 1st April 2009.

No balance was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: $110,000).

(c) During the period and part of the prior year Global Tooling Systems Inc. leased new, enlarged facilities from SSS Holdings LLC. Under the terms of the five year lease, which commenced on 1 October 2008, Global Tooling Systems Inc. is required to make total monthly rental payments of US$118,000 plus the payment of property taxes, maintenance and insurance from 1 January 2009, which was externally assessed as market value at the date of the lease agreement. Payment terms of this lease are payable within one month of invoice.

 

Global Tooling Systems Inc. has the ability to extend the lease under two five year option terms provided appropriate notice is given under the terms of the lease. For the five year period commencing 1 January 2014 total monthly rental payments would be US$130,000 plus property taxes, maintenance and insurance, and for the five year period commencing 1 January 2019 total monthly rental payments would be US$143,000 plus property taxes, maintenance and insurance.

No balance was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: no balance).

(d) During the prior year Odyssey Industries Inc. rented warehouse space from RDB Industries Inc. to store inventory. Rent of US$30,000 is payable monthly and is due upon receipt of invoice. Subsequently, Odyssey Industries Inc. leased this warehouse space from 1 January 2009 under a two year lease, whereby Odyssey Industries Inc. is required to make total monthly rental payments of US$30,000 plus the payment of property taxes, maintenance and insurance. Payment terms of this lease are payable within one month of invoice. Rental and lease costs are in line with market value of similar warehouse units in the surrounding area to Odyssey Industries Inc.

No balance was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: no balance).

(e) During the period and prior year Global Tooling Systems Inc. rented warehouse space from RDB Industries Inc. to store inventory. Rent of US$15,000 is payable quarterly and is due upon receipt of invoice. The rental of this warehouse space can be cancelled at any point in time with no termination costs due by Global Tooling Systems Inc.. Rental costs are in line with market value of similar warehouse units in the surrounding area to Global Tooling Systems Inc.

$5,000 was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: no balance).

(f) As part of the move by Global Tooling Systems Inc. from 51400 Bellestri Court to 16445 23 Mile Road, a one-off purchase of electrical equipment was made from RDB Industries Inc. for US$8,500. The cost of the equipment was equivalent to market value.

No balance was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: no balance).

(g - j) On 1 January 2009 Odyssey Industries Inc. & Global Tooling Systems Inc. entered into rental agreements with Laser Technologies Holdings LLC. The other 50% shareholder in Laser Technologies Holdings LLC is Mr Ronald Bellestri, brother to Mr Bellestri. Under the terms of the rental agreement for certain measurement and calibration assets, Odyssey Industries Inc. & Global Tooling Systems Inc. paid $7,800 per week per asset. Rental values are considered to be comparable with market rates for similar assets. Payment terms are rentals are payable within one month of invoice.

On 11 March 2009 Odyssey Industries Inc. purchased the aforementioned assets due to the increasing use of these items in day to day manufacturing requirements for $108,000 per asset. The cost of these assets were equivalent to market value and were payable within one month of invoice.

On 11 March 2009 Global Tooling Systems Inc. purchased the aforementioned assets due to the increasing use of these items in day to day manufacturing requirements for $102,000 per asset. The cost of these assets were equivalent to market value and were payable within one month of invoice.

No balance was outstanding as at 30 September 2009 (30 September 2008: no balance, 31 March 2009: $664,000).

Related party transactions with close family of Mr Randal Bellestri

A number of close family members of Mr Randal Bellestri work at either Odyssey Industries Inc. or Global Tooling Systems Inc., over whom he may be able to exert influence. Other than the transactions noted above with his brother, the only other transactions are the remuneration of each individual.

The aggregated compensation of Mr Bellestri and close family for the period was:

	30 September 2009	30 September 2008	31 March 2009
	£'000	£'000	£'000
Salaries and short term employee benefits	369	208	3,756

Salaries and short term employee benefits comprise annual salary, benefits in kind, employer pension contributions and amounts accrued in respect of short term variable remuneration schemes. No members of Mr Bellestri's family were part of any post retirement defined benefit pension or healthcare schemes. No share options have been granted to Mr Bellestri or his family during the year.

Other than transactions noted above and the remuneration of each individual, there have been no other transactions with significant shareholders.

Other related party transactions

During the six months ended 30 September 2009, the Company has entered into transactions with its subsidiary undertakings in respect of internal funding loans and provision of Group services (including IT, accounting and procurement services). Recharges are made for Group services based on the utilisation of those services.

Annual management recharges are levied by the Company to subsidiary undertakings to cover services provided, which for the half year ended 30 September 2009 amounted to £nil (half year to 30 September 2008: £nil, year ended 31 March 2009: £6,095,000). In addition to these services the Company acts as a buying agent for certain Group purchases e.g. insurance, which are recharged based on utilisation by the subsidiary undertaking.

Recharges are made to subsidiary undertakings for Group loans based on funding provided at an interest rate linked to the prevailing base rate of the country where the undertaking is based. No recharges are made in respect of balances due to or from otherwise dormant companies. Total interest

received by the Company from subsidiary undertakings for the six months ending 30 September 2009 was £574,000 (half year to 30 September 2008: £1,991,000, year ended 31 March 2009: £2,767,000) and total interest paid by the Company to subsidiary undertakings for the six months ending 30 September 2009 was £nil (half year to 30 September 2008: £178,000, year ended 31 March 2009: £288,000).

Dividends of £4,073,000 were received by the Company from subsidiary undertakings during the six months to 30 September 2009, no dividends were paid by the Company to subsidiary undertakings during the half year to 30 September 2009 (half year to 30 September 2008: received £nil, paid £nil, year ended 31 March 2009: received £18,920,000, paid: £nil).

The amount outstanding from subsidiary undertakings to the Company at 30 September 2009 totalled £40,259,000 (30 September 2008: £127,159,000, 31 March 2009: £44,028,000). Amounts owed to subsidiary undertakings by the Company at 30 September 2009 totalled £487,000 (30 September 2008: £9,063,000, 31 March 2009: £8,944,000). The Company had no expense in respect of bad or

doubtful debts of subsidiary undertakings during the half year to 30 September 2009 (half year to 30 September 2008: £nil, year to 31 March 2009: £nil). 

The Company acts as principal employer to the Group's defined benefit pension scheme, which is closed to accrual of further benefit.

20. Contingent liabilities

Multi-lateral cross-guarantees have been given by the Company and certain subsidiaries in respect of financial indebtedness under bank borrowing facilities. Contingent liabilities exist in respect of performance bonds, forward foreign exchange commitments and other guarantees which arise in the normal course of business and are not expected to give rise to any loss.

A former subsidiary of the Group is pursuing a commercial claim against a third party for wasted costs arising as a result of alleged repudiatory breach of contract and is defending a counterclaim alleging similar breach. As of 30 September 2009, confidential arbitration proceedings have been undertaken although adjudication has not yet been made known to the parties. The Group remains liable for any liability arising as a result of these proceedings. Since the outcome of these proceedings remains uncertain at the date of approval of these financial statements it is not practical to estimate their financial effect. Any financial impact will be dealt with in the financial statements of the Group relating to the financial period in which the outcome is notified.

21. Post balance sheet events

On 25 November 2009 the Group agreed certain amendments to its senior committed borrowing facilities. For the covenant measurement period to 31 December 2009, the debt cover ratio (being the ratio of net indebtedness to EBITDA) will increase to 4.50 times, reducing to 4.00 times at 31 March 2010, 4.25 times at 30 June 2010 and 4.00 times at 30 September 2010 and 31 December 2010. For the measurement period to 31 March 2011 and all periods thereafter, the debt cover ratio will reduce to 3.00 times.

22. Other information

This statement will be posted to shareholders on or around 3 December 2009 and will be available for review at the Group's website shown below. Copies are also available from the Company's registered office, at the address shown below:

Group Headquarters and Registered Office

Hampson Industries PLC,

7 Harbour Buildings, 

Waterfront West, 

Dudley Road, 

Brierley Hill,

West Midlands,

DY5 1LN.

Tel: +44 (0)1384 485345

Fax: +44 (0)1384 472962

Website: www.hampsongroup.com

Registrars and Transfer Office

Equiniti,

Aspect House,

Spencer Road, Lancing, West Sussex, BN99 6DA.

Tel: +44 (0)871 384 2030

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