HAMP.L Regulatory News (HAMP)

8 August 2011

Hampson Industries PLC

Interim Management Statement

Hampson Industries PLC ("Hampson" or "the Group"), the international aerospace group, today issues the following trading statement covering the period from 1 April 2011 to the current date.

Trading update 

Aerospace Composites & Transparencies

Conditions within the aerospace tooling market remain largely unchanged since the year end and the preliminary announcement released in June 2011 and we continue to see opportunities in the marketplace, although the timing of conversion remains difficult to predict.

In the period, Coast Composites, Inc. ("Coast"), Global Tooling Systems, Inc. ("GTS") and Odyssey Industries, Inc. ("Odyssey") received orders totaling c.£30 million on a variety of programmes, the largest related to the B787 and A350 aircraft. In spite of this, the current order book at Odyssey continues to be lower than forecast, which has impacted on revenues and profitability in the business and overall Group trading performance.

Whilst ongoing operational improvements are being made at both the Odyssey and GTS tooling businesses in relation to cycle time reductions and labour efficiencies, the benefits of these actions are taking longer to realise than anticipated due to the lower revenues. In addition, the period saw the completion of a number of lower margin jobs in both businesses. As a result, it is expected that the results of Odyssey and GTS for the first half of the year and the full year will be lower than initially forecast. We anticipate the recovery at GTS to precede that at Odyssey; however we remain confident that the results of our operational improvement actions will provide both these businesses with a firm base from which to achieve improved results in the future.

Performance of the Group's largest ever tooling contract, with an initial revenue value of US$53 million, has modestly exceeded expectations and the outlook for the remainder of the year on this contract is in line with management's expectations.

Composites Horizons, Inc. ("CHI") has seen a positive start to the year, with revenues and profits in line with management's expectations and higher than in the comparative period of the prior year. This has been achieved through continued demand for high temperature composite components and operational improvement initiatives implemented in the period. As a result of CHI's critical role on the Group's largest tooling contract, we have received a number of opportunities to quote on other larger composite tooling packages. This is alongside ongoing quoting opportunities as customers continue to switch from metallic to composite components as part of weight and fuel saving initiatives. These composite tooling quoting opportunities are currently at an early stage.

Texstars has continued to grow and diversify its order book over the period, with the order book having increased by 18% since the year end. However, due to legacy programme order book reductions, customer delays and rescheduling requests on new programme introductions, revenues have reduced by c.30% compared to the prior year and consequently a small loss has been made year to date. Management anticipates that performance will recover in the second half of the year as legacy programme orders begin to recover and new programme work builds up.

Aerospace Components & Structures

Lamsco, Attewell, Bolsan and PSG have continued to deliver strong performances during the period as customer demand increased. On an aggregated basis, this has resulted in revenue and trading profit being higher than management's expectations and the prior year.

Revenues at BHW have been slightly lower than expected, despite the benefit of earlier than anticipated delivery of the first modification kits for a pan-European military aerospace programme. As previously documented, following the sharp volume decline in the business jet market and the loss of a significant customer as part of its supply chain rationalisation, BHW continues to be loss making, although restructuring actions taken over the past 18 months are largely containing losses to projected levels. However, based on current visibility, the slower than expected ramp up in the HondaJet programme is likely to impact on results in the second half of the year and thus may require further cost base realignment to the business if alternative work is not secured.

The Group's Indian operations have continued to grow revenues over the period, although not to the level expected due to reduced demand from one of the company's largest customers following closure of one of its US sites. The business continues to win both indigenous and international customers, but is currently operating at a small monthly loss due to the lower volumes.

Indebtedness and disposal update

Despite the challenges faced by some of the Group's larger businesses, net debt is marginally lower than anticipated at £92.4 million. This has been achieved through an increased focus on working capital management, especially the collection of receivables and negotiating "stage" or "milestone" payments on larger contracts.

As outlined in previous statements, the reduction of net borrowings remains a priority for the Group. Negotiations with a third party relating to the divestment of certain non-core assets continue to progress and are now well advanced. Further information will be announced accordingly.

Outlook

Whilst there are encouraging signs of growth in certain of our businesses, the volatility the Group is experiencing in the aerospace tooling market, particularly at Odyssey, is causing it to face short term revenue, operational and timing challenges. Through an ongoing focus on cost reduction, lean management and improvement initiatives, the Board is optimistic that progress will be made in the remainder of the financial year. The Board also believes that the medium and long term prospects remain strong for the Group as the use of composites continues to increase in aircraft manufacturing and OEM's focus on fewer, larger suppliers, like Hampson.

Further information:

Norman Jordan, Chief Executive +44 (0)1384 485 345

Ram Swamy, Finance Director +44 (0)1384 472 946

Marylène Guernier/Ann-marie Wilkinson, M:Communications +44 (0)20 7920 2369

Cautionary Statement:

This 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, is confident, 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, including, but not limited to, those risks identified in the annual report for year ended 31 March 2011.

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 a required by law and regulations.