Final Results

Renold PLC 10 June 2002 10 June 2002 Renold plc 2002 PRELIMINARY RESULTS Precision engineering group, Renold plc, a leading international manufacturer and supplier of industrial chains and related power transmission products, automotive cam drive systems and machine tools and rotors, today announces its preliminary results for the year ended 30 March 2002. Summary • Major restructuring activities carried out during the year to reduce cost base: employee numbers down 14% year on year; Jones & Shipman relocated to a smaller site; Manifold Indexer operation closed. • Turnover £190.2 million (2001 - £216.7 million). • Profit before tax, goodwill amortisation and exceptional items £4.2 million (2001 - £12.2 million). • Cash inflow from operating activities strong at £16.5 million. • Adjusted earnings per share at 3.8 pence (2001 - 11.5 pence). • Final dividend 3.0 pence, giving 4.5 pence for the year (2001 - 9.25 pence). Prospects Roger Leverton, Chairman of Renold plc, said today: 'There are indications in both Europe and North America that the worst of the manufacturing downturn may be at an end with order intake recovering from the low point in the quarter to December towards levels achieved earlier last year. The Group's performance in 2002/3 will be underpinned by the benefits of the lower cost base feeding through in full and by the actions taken to strengthen our market position.' 10 June 2002 Renold plc Chairman: Roger Leverton Preliminary Results for the Financial Year ended 30 March 2002 FINANCIAL SUMMARY 2002 2001 as restated £m £m Turnover 190.2 216.7 Trading profit before goodwill amortisation and exceptional items 7.8 16.1 Profit before tax, goodwill amortisation and exceptional items 4.2 12.2 (Loss)/profit before tax (5.6) 11.1 Adjusted earnings per share 3.8p 11.5p Basic earnings per share (7.2)p 10.7p Dividends per ordinary share, paid or proposed 4.5p 9.25p Capital expenditure 5.4 9.5 Gearing (net borrowings to shareholders' funds) 35% 32% GROUP RESULTS AND DIVIDEND This has been a particularly challenging year for the Group with its key markets experiencing a marked deterioration as the year progressed, although with some improvement in the last quarter. The machine tool sector was particularly affected by a slump in demand for capital goods worldwide. As I indicated in my half year statement Ian Trotter, the new Chief Executive, carried out a review of the Group activities early in the year as a result of which action has been taken to address under performing operations, to reduce the Group's cost base and to refocus the ongoing business for the future. The Group's results showed some improvement in the last quarter of the year as a direct consequence of these actions. Group Results Turnover for the year was £190.2 million (2001 - £216.7 million), and was 12% lower than the previous year. Pre-exceptional operating margins were 4.1% compared with 7.4% the previous year and pre-exceptional profit before tax (before goodwill amortisation) was £4.2 million (2001 - £12.2 million). Exceptional redundancy and restructuring charges of £3.9 million (2001 - £2.4 million) were charged in the year, and an exceptional loss of £4.4 million was incurred for the closure of the Manifold indexer operation, of which £1.6 million related to goodwill previously written off to reserves. Adjusted earnings per share were 3.8 pence (2001 - 11.5 pence). The Board is recommending the payment of a final dividend of 3.0 pence per share. Together with the interim dividend of 1.5 pence per share paid on 25 January 2002, this gives total dividends for the year of 4.5 pence, compared with 9.25 pence last year. Cash flow and borrowings There was a small increase in net borrowings of £0.8 million in the year (2001 - £8.7 million reduction). Cash flow from operating activities was £16.5 million, compared with £25.5 million the previous year. The reduced operating profit and exceptional costs in the year were partially offset by a reduction in working capital. Capital spending was reduced in line with activity levels and was £6.0 million in the year (2001 - £10.4 million). Borrowings at 30 March 2002 were contained to £29.1 million, (2001 - £28.3 million), and resultant gearing at year end was 35% (2001 - 32%). Reflecting the management actions referred to earlier, net cash flow from operating activities in the second half of the year amounted to £13.3 million, close to that achieved in the similar period for the previous year. Comment The performance of the power transmission businesses was creditable in a difficult year, with turnover 7% lower on a like for like basis. Jeffrey Chain in the USA, maintained profitability despite lower demand from its key distributors and original equipment customers. The programme to resource Jeffrey's roller chain requirement to the Group's European factories was successfully completed during the year, and in part offset reduced demand from European customers. Despite this, markedly weaker domestic and export markets for the German chain business, particularly in the second half of the year, led to a reduction in profits from last year's record level. UK manufacturing industry generally remained weak, the UK chain business results were lower and the UK based gear and coupling businesses underwent major restructuring during the year. The Manifold indexer operation was closed, and redundancies were necessary in other UK operations. However, the French industrial chain business increased market share and grew both sales and orders. Renold Automotive Systems, based in Calais, increased sales by 8%, as a result of growing demand for new engine programmes. Profitability there was constrained by weaker manufacturing performance as the one-off effect of the introduction of the 35 hour working week was absorbed. A rapidly deteriorating capital goods market caused the machine tool and rotor business to fall back into losses on turnover which was 36% lower than last year. As announced at the half year, a major rationalisation programme has been undertaken which has substantially reduced the cost base, with all manufacturing having been consolidated into the UK. Prospects Going forward our strategy is clearly focused upon the chain operations and those niche power transmission products which complement the industrial chain business. Renold has a strong market position in Europe and North America with its industrial chains, and a growing reputation as a global supplier of automotive cam drive systems; we aim to build upon these. There are indications in both Europe and North America that the worst of the manufacturing downturn may be at an end with order intake recovering from the low point in the quarter to December towards levels achieved earlier last year. The Group's performance in 2002/3 will be underpinned by the benefits of the lower cost base feeding through in full and by the actions taken to strengthen our market position. _______________________________________________________________________ Annual Report to be published 18 June 2002 Annual General Meeting 18 July 2002 Dividend - to be paid 8 August 2002 - record date for shareholders 12 July 2002 Annual Report: This preliminary announcement does not form the Group's statutory accounts. The figures shown in this release have been extracted from the Group's full financial statements which, for the year ended 31 March 2001 have been delivered, and for the year ended 30 March 2002, will be delivered to the Registrar of Companies. Both carry an unqualified audit report. The financial statements for the year ended 30 March 2002 have been prepared in accordance with applicable accounting standards, using the same accounting policies as set out in the Annual Report for the year ended 31 March 2001, with the exception of the change in accounting policy for deferred tax, following the adoption of the new Financial Reporting Standard 19, Deferred Tax. The comparative figures for the year ended 31 March 2001 have been restated accordingly and the net impact of the prior period adjustment is a cumulative charge to reserves of £0.2 million. Full details are provided in the Annual Report. For further information, please contact: Ian Trotter, Chief Executive ) 10 June 2002 Telephone: 020 7950 2800 Tony Brown, Finance Director ) Renold plc ) Thereafter Telephone: 0161 498 4500 Ben Padovan/Stephanie Smart Weber Shandwick Square Mile Telephone: 020 7950 2800 RENOLD PLC PRELIMINARY RESULTS Group Profit and Loss Account ______________________________________________________________________________________________________ for the financial year ended 30 March 2002 2002 2001 as restated £m £m Turnover 190.2 216.7 Trading costs - normal operating costs (182.4) (200.6) - goodwill amortisation (1.5) (1.4) - exceptional redundancy and restructuring costs (3.9) (2.4) - exceptional gain on disposal of asset held for sale 2.7 _________ _________ (187.8) (201.7) _________ _________ Trading profit 2.4 15.0 Exceptional loss on termination of operation (4.4) _________ _________ (2.0) 15.0 Net interest payable (3.6) (3.9) _________ _________ (Loss)/profit on ordinary activities before tax (5.6) 11.1 Taxation 0.6 (3.7) _________ _________ (Loss)/profit for the financial year (5.0) 7.4 Dividends (including non-equity) (3.2) (6.5) _________ _________ Retained (loss)/profit for the year (8.2) 0.9 ======= ======= Adjusted earnings per share 3.8p 11.5p Basic and diluted earnings per share (7.2)p 10.7p RENOLD PLC PRELIMINARY RESULTS Group Balance Sheet ______________________________________________________________________________________________________ as at 30 March 2002 2002 2001 as restated £m £m Fixed assets Intangible asset - goodwill 26.2 27.7 Tangible assets 54.6 59.2 _________ _________ 80.8 86.9 _________ _________ Current assets Stocks 46.9 52.0 Debtors 38.3 43.5 Cash and short term deposits 6.4 7.1 _________ _________ 91.6 102.6 Creditors - amounts falling due within one year Loans and overdrafts (9.9) (7.1) Other creditors (41.2) (51.8) _________ _________ Net current assets 40.5 43.7 _________ _________ Total assets less current liabilities 121.3 130.6 Creditors - amounts falling due after more than one year Loans (25.6) (28.2) Other creditors (0.6) (0.4) Provisions for liabilities and charges (12.6) (12.7) _________ _________ Net assets 82.5 89.3 ======= ====== Capital and reserves (including non-equity interests) Called up share capital 17.9 17.9 Share premium 6.0 6.0 Revaluation reserve 3.8 7.1 Other reserves 0.9 1.2 Profit and loss account 53.9 57.1 _________ _________ Shareholders' funds 82.5 89.3 ====== ====== RENOLD PLC PRELIMINARY RESULTS Extracts from the Group Cash Flow Statement ________________________________________________________________________________ for the financial year ended 30 March 2002 2002 2001 £m £m £m £m Net cash inflow from operating activities 16.5 25.5 Servicing of finance (2.9) (4.2) Taxation (3.5) (2.5) Capital expenditure and financial investment - Purchase of tangible fixed assets (6.0) (10.4) - Proceeds from disposal of asset held for sale 7.7 - Proceeds from disposal of fixed assets 0.5 ______ ______ (5.5) (2.7) Acquisitions - Purchase consideration including costs (0.9) Equity dividends paid (5.4) (6.5) ______ ______ Net cash (outflow)/inflow before use of liquid resources and financing (0.8) 8.7 Management of liquid resources Transfers from short term deposits 0.7 1.8 Financing Decrease in debt and lease financing (1.8) (9.6) ______ ______ (Decrease)/increase in cash in the year (1.9) 0.9 ==== ==== Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the year (1.9) 0.9 Cash flow from decrease in debt and lease financing 1.8 9.6 Cash flow from decrease in liquid resources (0.7) (1.8) ______ ______ Change in net debt resulting from cash flows (0.8) 8.7 Exchange translation difference (3.5) ______ ______ Movement in net debt in the year (0.8) 5.2 Net debt at beginning of year (28.3) (33.5) ______ ______ Net debt at end of year (29.1) (28.3) ==== ==== RENOLD PLC PRELIMINARY RESULTS Note to the Financial Statements ________________________________________________________________________________ for the financial year ended 30 March 2002 Analysis of activities (a) Activities classified by business segment: 2002 2001 Turnover Trading Trading Turnover Trading Trading profit assets profit assets £m £m £m £m £m £m Power transmission 168.0 10.8 80.9 182.1 15.2 87.7 Machine tool and rotor 23.6 (3.0) 16.4 36.7 0.9 20.2 _______________________________________________________________ 191.6 7.8 97.3 218.8 16.1 107.9 Less: Inter activity sales (1.4) (2.1) Goodwill amortisation (1.5) (1.4) Exceptional redundancy and restructuring costs (3.9) (2.4) Add: Exceptional gain on disposal of asset held for sale 2.7 _______________________________________________________________ 190.2 2.4 97.3 216.7 15.0 107.9 _______________________________________________________________ Activities of terminated operation included in power transmission above 3.9 (0.8) 5.9 (1.3) ____________________ ________________ The exceptional redundancy and restructuring cost of £3.9 million is attributed £1.2 million to the power transmission segment (2001 - £2.4 million) and £2.7 million to the machine tool and rotor segment. Of the total goodwill charge of £1.5 million, £1.3 million (2001 - £1.2 million) relates to the power transmission businesses and £0.2 million (2001 - £0.2 million) to the machine tool and rotor businesses. The exceptional gain of £2.7 million in 2001 related to the disposal of a non-trading property held for sale. (b) Activities classified by geographical region of operation: 2002 2001 Turnover Trading Trading Turnover Trading Trading profit assets profit assets £m £m £m £m £m £m United Kingdom 74.2 (0.4) 43.7 91.9 2.5 49.8 Germany 29.0 2.4 11.5 33.7 4.8 11.3 France 35.0 1.7 10.3 34.3 2.5 11.2 Rest of Europe 16.2 1.1 4.2 16.5 1.3 4.4 North America 56.4 2.6 21.6 68.3 4.5 25.0 Other countries 16.5 0.4 6.0 17.4 0.5 6.2 _________________________________________________________ 227.3 7.8 97.3 262.1 16.1 107.9 Less: Intra Group sales (37.1) (45.4) Goodwill amortisation (1.5) (1.4) Exceptional redundancy and restructuring costs (3.9) (2.4) Add: Exceptional gain on disposal of asset held for sale 2.7 _________________________________________________________ 190.2 2.4 97.3 216.7 15.0 107.9 _________________________________________________________ The exceptional cost of £3.9 million arises £3.1 million in the UK (2001 - £2.4 million), £0.1 million in the Rest of Europe, £0.6 million in North America and £0.1 million in other countries. The goodwill amortisation is attributed to business acquisitions in North America. The exceptional gain on disposal of the asset held for sale in 2001 arose in the United Kingdom. Turnover by geographical region includes intra group sales as follows: United Kingdom £26.4 million (2001 - £30.2 million), Germany £7.9 million (2001 - £10.8 million) and France £2.0 million (2001 - £2.3 million). Trading assets comprise fixed assets, current assets less creditors but exclude goodwill, cash, borrowings, dividends, current and deferred corporate tax, finance lease obligations and other provisions for liabilities and charges. This information is provided by RNS The company news service from the London Stock Exchange

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