Interim Results

Dickinson Legg Group PLC 09 February 2006 Dickinson Legg Group PLC Interim Results for the Six Months ended 31 December 2005 Dickinson Legg Group is a specialist engineering group, incorporating Dickinson Legg Limited and Spooner Industries Limited. Dickinson Legg Limited is a world leader in the manufacturing and installation of primary tobacco processing equipment and Spooner Industries Limited is a specialist air drying equipment manufacturer for the paper, converting, metals and food industries. • Dickinson Legg commenced the year with a low order book but increasing growth in order intake in the period should lead to a significant improvement in trading performance in the second half year relative to the first. • Spooner Industries is expected to make a positive contribution towards the reduction of its first half deficit. Financials • Turnover £11.977 million (2004: £13.804 million) • Loss before tax £0.89 million (2004: £0.62 million) • Basic loss per share 2.62p (2004: 2.36p) • Net funds £0.891 million (2004: £1.293 million) For further information, please contact: Dickinson Legg Group PLC 01962 841788 Tom Mackie, Chief Executive David Heath, Financial Director Rowan Dartington 0117 933 0011 Barrie Newton Operating Review The Chairman's statement at the annual general meeting in December 2005 indicated that trading performance would be heavily biased to the second half. This is reflected in the results for the first half year, with Dickinson Legg Group reporting turnover of £11.977 million and an operating loss of £0.834 million. The performance of the tobacco businesses was constrained by a low order book at the start of the financial year, which has improved in line with management's expectations. Dickinson Legg, the primary tobacco process equipment manufacturer and Dickinson Fowler, its Indian joint venture, had combined revenues of £8.889 million (2004: £11.157 million) and an operating loss of £0.198 million (2004: profit £0.448 million). Sales of machines, spares and wear parts were lower, than the comparative period last year. Order intake in the period resulted in a growing order book and recent successful awards of new projects for Expanded Stem System (ESS) and High Expansion Drying (HXD), should lead to a significant improvement in trading performance in the second half year relative to the first. Dickinson Fowler should have an improved trading performance in the second half as a result of an increase in orders placed by Dickinson Legg. Spooner Industries, the specialist air drying equipment manufacturer had turnover of £3.446 million (2004: £3.507 million) and an operating loss of £0.296 million (2004: £0.478 million) as a result of pressure on margins and lack of volume. An increase in activity levels in the second half should lead to an improvement on the half year trading performance. Results Group turnover at £11.977 million was 13.2% lower than the previous half year and the operating loss, including the joint venture before exceptional items, was £0.874 million compared to a loss of £0.295 million. The majority of the reduction in sales and profits is attributable to the tobacco business, which commenced the year with a low order book. However, despite the competitive pressures in the market, margins in the tobacco business are being maintained. Whilst Spooner's losses have been reduced, the combination of erratic volumes and the pressure on margins will continue to weigh on the business. The Group's net interest payable in the period was £0.014 million and is in line with that of the comparative period. The improvement in the interest earned by the joint venture has been offset by the interest charge arising from the prior year tax adjustment disclosed in the 2005 Report and Accounts. The basic loss per share was 2.62p (2004: 2.36p). Net funds at the half year were £0.891 million, which is a reduction of £0.402 million for the comparative period, but are £0.054 million higher than the year ended 30 June 2005. Taxation The tax charge for the period is £0.064million (2004: £0.237million). This is a result of our overseas earnings incurring a tax charge and this again will impact on the second half. Dividend The Directors are not recommending payment of an interim dividend. Prospects As a result of a much improved order book, Dickinson Legg should produce a significant improvement in trading performance in the second half year and Spooner Industries is expected to make a positive contribution towards the reduction of its first half deficit. The markets we serve are highly competitive and it is too early to say if the upturn will be sustained in the tobacco sector. Barry Stevenson Chairman 9 February 2006 Dickinson Legg Group PLC Group profit and loss account (unaudited) for the six months ended 31 December 2005 Six months to 31 Six months Year December 2005 to 31 December ended 30 2004 June 2005 Notes £000 £000 £000 Turnover including share of joint venture 1 12,335 14,664 33,452 Less: Share of turnover of joint venture 1 (358) (860) (1,257) Group turnover 11,977 13,804 32,195 Group operating (loss)/profit before 1 (834) (481) 186 exceptional items Operating exceptional items 2 - (310) 2,586 Group operating (loss)/profit (834) (791) 2,772 Share of operating (loss)/profit in joint 1 (40) 186 196 venture (Loss)/profit on ordinary activities before 1 (874) (605) 2,968 interest Net interest (payable)/receivable Group (58) (26) - Joint venture 44 11 42 (Loss)/profit on ordinary activities before (888) (620) 3,010 taxation Taxation on (loss)/profit on ordinary 3 (64) (237) (1,290) activities (Loss)/profit on ordinary activities after (952) (857) 1,720 taxation Dividends 4 - - - Retained (loss)/profit for the period (952) (857) 1,720 Basic (loss)/earnings per 20p share (2.62)p (2.36)p 4.73p All results relate to continuing activities. Dickinson Legg Group PLC Group balance sheet (unaudited) as at 31 December 2005 31 December 2005 31 December 2004 30 June (restated - 2005 note 5) Notes £000 £000 £000 Fixed assets Intangible assets 2,955 3,159 3,059 Tangible assets 464 721 576 Investments Interests in joint venture: Share of gross assets 1,414 1,286 1,300 Share of gross liabilities (725) (565) (621) Share of net assets 689 721 679 4,108 4,601 4,314 Current assets Stock 1,886 1,536 1,463 Debtors - due within one year 7,455 7,610 7,993 - due after more than one year 1,183 - 2,974 Cash at bank and in hand 921 5,429 3,920 11,445 14,575 16,350 Current liabilities Creditors - amounts falling due within one (8,148) (13,896) (12,130) year Net current assets 3,297 679 4,220 Total assets less current liabilities 7,405 5,280 8,534 Provisions for liabilities and charges (1,583) (1,250) (1,822) Net assets 5,822 4,030 6,712 Capital and reserves Called up share capital 7,271 7,271 7,271 Merger reserve 45,234 45,234 45,234 Other reserves 39,496 39,496 39,496 Profit and loss account (86,179) (87,971) (85,289) Shareholders' funds - equity 6 5,822 4,030 6,712 Dickinson Legg Group PLC Group statement of cashflows (unaudited) for the six months ended 31 December 2005 Six months to 31 Six months Year December 2005 to 31 December to 30 2004 June 2005 £000 £000 £000 Net cash inflow/(outflow) from operating activities 101 312 (196) Dividends received from joint venture - 85 97 Returns on investments and servicing of finance Net interest paid (10) (15) - Taxation (39) (111) (118) Capital expenditure and financial investment Purchase of fixed assets (24) (18) (41) Sale of tangible fixed assets 12 - 19 Equity dividends paid to shareholders - (909) (909) Increase/(decrease) in cash 40 (656) (1,148) Reconciliation to net funds Change in net funds from cashflows 40 (656) (1,148) Currency translation differences 14 (26) 10 Movement in net funds in the period 54 (682) (1,138) Net funds at beginning of period 837 1,975 1,975 Net funds at end of period 891 1,293 837 Shown in the balance sheet as: Cash at bank and in hand 921 5,429 3,920 Included in: Creditors - Amounts falling due within (30) (4,136) (3,083) one year Net funds at end of period 891 1,293 837 Dickinson Legg Group PLC Notes to the Interim Statements 1 Segmental analysis By business segment Six months to 31 Six months Year December 2005 to 31 December to 30 2004 June 2005 £000 £000 £000 Turnover: Tobacco processing equipment Group 8,531 10,297 22,938 Joint venture 358 860 1,257 8,889 11,157 24,195 Air drying equipment 3,446 3,507 9,257 Continuting operations 12,335 14,664 33,452 Operating (loss)/profit: Tobacco processing equipment Group (158) 262 1,261 Joint venture (40) 186 196 (198) 448 1,457 Air drying equipment (296) (478) (481) Other activities (380) (265) (594) Operating (loss)/profit before exceptional items (874) (295) 382 Exceptional items - (310) 2,586 Continuing operations (874) (605) 2,968 2 Exceptional items Six months to Six months to Year to 31 December 31 December 30 June 2005 2004 2005 Notes £000 £000 £000 Exceptional items within operating profit: Profit on surrender of lease i - - 2,953 Abortive acquisition costs ii - (310) (367) - (310) 2,586 i The comparative amount relates to an agreement with the Landlord of the leasehold premises occupied by Spooner Industries Limited in Ilkley, West Yorkshire, to surrender the existing lease and vacate the current premises within eighteen months in a deal worth £3.5 million to the Group. Payment will be received over the remaining eighteen month period through a combination of cash or land & cash. The value shown is the net value of the cash and land that will be received less the estimated relocation costs. In accordance with the agreement, £0.06 million of cash was received in the year ended 30 June 2005 but there have been no cash inflows in the six month period to 31 December 2005. The estimated tax charge on this gain is £1.05 million for which full provision has been made in the financial statements for the year ended 30 June 2005. This may be mitigated by future actions and options available to the Group. ii The comparative amount relates to third party service costs incurred in the abortive acquisition. 3 Taxation The tax charge for the period is £0.064 million (Dec 2004: £0.237 million). The tax charge for this period is entirely foreign corporation taxes. 4 Dividends The Directors do not recommend the payment of an interim dividend. 5 Prior year adjustment As reported in the Report and Accounts 2005, the Group had taken advice on the availability of certain unrelieved Advance Corporation Tax (ACT) utilized by the Group in prior periods. It would appear that surrendered ACT used by a Group company since the de-merger from Brunel Holdings plc in December 2002, was not available. The estimated tax liability was £269,000 and full provision was made and shown as a prior year adjustment. The effect of the prior year adjustment on the December 2004 comparative was to increase Creditors - amounts falling due within one year by £269,000 and reduce the profit and loss account by the same amount. 6 Reconciliation of movement in equity shareholders' funds Called up Merger Other Profit and Total equity share capital reserves reserves loss account shareholders' funds £'000 £000 £000 £000 £000 At 1 July 2005 7,271 45,234 39,496 (85,289) 6,712 Retained loss - - - (952) (952) Currency translation - - - 62 62 differences At 31 December 2005 7,271 45,234 39,496 (86,179) 5,822 7 Accounts The Group results for the six months ended 31 December 2005 and 31 December 2004 are neither audited nor reviewed by independent auditors. The results for the year ended 30 June 2005 set out above are an abridged version of the Group's full accounts for that year and do not constitute statutory accounts. Statutory accounts for the year ended 30 June 2005 for the United Kingdom subsidiary companies have been delivered to the Registrar of Companies and included the auditors' report, in accordance with section 235 of the Companies Act 1985, which were unqualified and did not contain a statement under either section 237 (2) or section 237(3) of the Companies Act 1985. Accounting policies have been consistently applied on the basis set out in the Group's financial statements for the year ended 30 June 2005. This information is provided by RNS The company news service from the London Stock Exchange

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