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Molins PLC (MPAC)

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Wednesday 26 February, 2014

Molins PLC

Final Results

RNS Number : 9311A
Molins PLC
26 February 2014
 



 

26 February 2014                                                                                       FOR IMMEDIATE RELEASE

 

 

Molins PLC

Preliminary Announcement for the twelve months ended 31 December 2013

 

Molins PLC, the international specialist technology and services group, announces its results for the twelve months ended 31 December 2013.

 

 

 

Group Highlights

·      Sales increase of 13% to £105.2m (2012: £93.0m)

·      Underlying profit before tax increase of 10% to £5.4m (2012: £4.9m)

·      Underlying earnings per share increase of 10% to 23.9p (2012: 21.8p)

·      Net funds of £5.2m

·      Maintained full year ordinary dividend of 5.5p per share

 

Commenting on the performance and outlook Dick Hunter, Chief Executive, said:

"I am pleased to report a strong performance for the Group over the year, with sales growth achieved across all three of our divisions, leading to an increase in profits. Our ability to provide products and services that meet the specific needs of our customers, across a range of markets, has helped to consolidate Molins' established position.

"We remain mindful of the uncertain economic and regulatory environment, but are confident the Group will continue to demonstrate progress on its various growth initiatives, and through acquisition."

 

Divisional Highlights

Scientific Services

·      Increase in sales of 15% with strong growth at Cerulean

·      Cerulean delivered its strongest annual performance and maintained its market leading position

·      Sales at Arista Laboratories lower than the prior year, as a regulatory regime for the testing of tobacco products in the USA has yet to be confirmed

 

Packaging Machinery

·      Increase in sales of 14%, with increased demand in Europe

·      Development of sales and service organisation in Asia to support customers' growth plans

·      Molins Technologies (ITCM) delivered robust sales growth and improved profitability

 

Tobacco Machinery

·      Increase in sales of 11%, leading to improved profitability

·      Benefited from meeting the challenging service and delivery requirements of customers

·      Ongoing investment in new and enhanced products

 

 

For further information, please contact:

 

Molins PLC

Dick Hunter, Chief Executive

David Cowen, Group Finance Director

 

Panmure Gordon (UK) Limited  

Hugh Morgan

Tel: +44(0)1908 246870

 

 

 

Tel: +44(0)20 7886 2500

 

 

MHP Communications

Andrew Jaques, Simon Hockridge, Naomi Lane

Tel: +44(0)20 3128 8100

 

 

MOLINS is an international specialist technology and services group, providing high performance instrumentation, machinery and analytical services to the FMCG, healthcare and pharmaceutical sectors, together with extensive aftermarket support.  The Group serves its customers through its wide geographic spread of sales, service and manufacturing locations.  The Group is focused on the organic development of its businesses, through targeted product development, excellence in customer service and ongoing operational efficiency improvements, supported by acquisitive growth where appropriate.

 


 

 

2013




 

 

2012

(restated) 2

 


Sales

Underlying operating profit1

Underlying profit before tax1

 

Underlying earnings per share1

Dividends per share

 

Net funds

 

Statutory profit before tax

Statutory profit for the period

Basic earnings per share

 

£105.2m

£5.5m

£5.4m

 

23.9p

5.5p

 

£5.2m

 

£3.8m

£3.5m

18.0p

 




£93.0m

£4.9m

£4.9m

 

21.8p

5.5p

 

£7.4m

 

£4.5m

£3.8m

20.6p


1 Before non-underlying items

2 Restated to reflect amendments to IAS 19 Employee benefits and consequent changes to the Group's accounting policies

 

OPERATING REVIEW

 

The Group delivered an improved performance in the year, with sales growth of 13% to £105.2m (2012: £93.0m) and underlying profit before tax increasing by 10% to £5.4m (2012: £4.9m).  Underlying earnings per share increased by 10% to 23.9p (2012: 21.8p).  Basic earnings per share amounted to 18.0p (2012: 20.6p).  Net funds at the end of the year were £5.2m (2012: £7.4m).

 

Encouragingly, each of the three divisions contributed to the growth.  Within Scientific Services, Cerulean continued to perform well and delivered its strongest annual performance, which helped to offset the impact of under utilisation at Arista Laboratories.  The Packaging Machinery division experienced growth across its business in most regions.  Tobacco Machinery sales also increased by greater than 10%, with sales of new machinery more than compensating for a reduction in sales in the aftermarket business.

 

The Group entered 2014 with the order book at similar levels to the previous year and with each of the divisions well placed to continue to progress.

 

The Board is recommending a final dividend of 3.0p, resulting in a maintained dividend for the year of 5.5p.

 

Scientific Services

The division, which comprises Cerulean and Arista Laboratories, delivered an increase in sales of 15% to £26.5m (2012: £23.1m).  Operating profit, before non-underlying items, was £1.1m (2012: £1.2m), with Cerulean's strong performance being offset by reduced activity at Arista.

 

Cerulean is the market-leading supplier of quality control instruments and analytical smoke constituent capture machinery to the tobacco industry, as well as a supplier of instruments to other industrial sectors.  The business is based in Milton Keynes, UK, with sales and service offices in a number of key locations that support the needs of its global customer base.  Arista Laboratories, based in Richmond, Virginia, USA, is an independent tobacco and cigarette smoke constituent testing laboratory for regulatory, research and product development purposes.     

 

Sales at Cerulean grew significantly in the year.  Demand from Cerulean's largest market, China, continued to be strong.  Good progress was also made with the multinational cigarette companies, with Cerulean's ability to supply both standard instruments and machines, as well as to work in partnership with customers to produce customised products to meet their particular production and development needs, helping generate growth.  Cerulean uses its experience and skills to advise customers on a range of issues relating to quality control in both production and laboratory environments, and benefited in the year from a large project from an important customer in North Africa to design and fit-out their new laboratories, incorporating both Cerulean's equipment and other laboratory fixtures.  Sales of aftermarket products increased and the business is continuing its focus on maintaining growth in this area.

 

In contrast to the previous year, sales at Arista decreased, with no regulatory testing required in the USA in 2013 as a result of ongoing delays in the confirmation of a testing regime.  This resulted in the activity levels continuing to be considerably lower than the business is capable of delivering and for which investment has been made.  Consequently, the performance of the business was lower than in the previous year.  However, good progress has been made in a number of areas, with the laboratory demonstrating its full range of tobacco products testing capabilities to a wide range of customers, and with orders being secured for a variety of testing requirements, including for cigars and the growing e-cigarette market.

 

The division has a number of growth initiatives in place. As well as the continued development of its wide range of tobacco related equipment, Cerulean also continues to develop its product range for a variety of industrial applications, with progress in sales for both its carton tester and enzyme sampler.  At Arista there is a strong focus on the development of the business in both non-regulatory tobacco testing and in non-tobacco markets, as well as in international markets.   

 

Cerulean started 2014 with an order book at a similar level to the previous year, and although the competitive landscape may become more challenging following its two main competitors recently being acquired by the same parent company, the business is well placed to continue to perform strongly.  The outlook for Arista continues to be uncertain, with as yet no firm indication when further regulatory testing will be required.  In the meantime the business is focused on developing in other areas to utilise its capacity more effectively.

 

Packaging Machinery

Sales in the year increased by 14% to £44.3m (2012: £38.8m).  Operating profit, before non-underlying items, was maintained at £1.5m (2012: £1.5m), with lower margin projects and increased sales and marketing costs offsetting the profitability from increased sales.

 

The division comprises the Langen Group, based primarily in Mississauga, Canada, in Wijchen, the Netherlands and in Singapore, which supplies highly automated product handling, cartoning and robotic end-of-line machinery and systems, and Molins Technologies (formerly ITCM), based in Coventry, UK, which provides innovative machinery and engineering solutions to challenging packaging and processing requirements.

 

Langen's order intake was at similar levels to the previous year, although there was a change in regional mix, with momentum in the European part of the business being offset by weaker demand in North America.  Langen Asia was established in the year, with its main sales and service office in Singapore sharing the existing Group infrastructure.  This investment will support the growth plans of the business' existing multinational customers in the region, and help facilitate new relationships with regionally based prospective customers.  As a consequence of this investment, sales and marketing costs increased in the year ahead of the anticipated increase in sales levels, which is expected to gain traction through 2014 and into the medium-term.  Although sales increased, margins reduced owing to the impact of an uneven factory loading and a greater proportion of high-engineering content projects compared with higher margin standardised machines.

 

Molins Technologies performed well in the year, with order intake increasing significantly compared with recent years.  Good progress has been made in its strategy of broadening the customer base, whilst continuing to support its existing customers.  Particular progress has been made in the pharmaceutical sector, with orders for both new machinery and engineering solutions, as well as for repeat applications.  Sales growth helped the business return to strong levels of profitability, upon which, with a much improved opening order book for 2014, the business is well placed to build.

 

The division is progressing a number of growth initiatives focused on both the development of the customer base and its range of products and services.  The development of the sales and service infrastructure to support global key accounts is at an advanced stage and plans are being evaluated for the development of an Asian engineering and assembly operation.  Focus is being applied to key account management across a number of sectors, including nutrition, pharmaceutical and tobacco.  The division is continuing the development of its product range, in particular to standardise a number of machine platforms and product handling techniques, which helps provide customers with proven solutions for targeted applications.

 

The division has established a growth platform and has strong customer relationships with many large, multinational customers.  Although market demand remains changeable, the division's strategy of providing excellent service across all global markets has positioned it well as an important and reliable supplier of high quality machinery and systems.  The division entered 2014 with an order book 10% higher than twelve months previously, although order prospects over the first part of the year are not as strong as last year the division is expected to progress in the year as a result of an anticipated improvement in margins.

 

Tobacco Machinery

Sales in the year increased by 11% to £34.4m (2012: £31.1m).  Operating profit increased to £2.9m (2012: £2.2m).

 

The division designs, manufactures, markets and services specialist machinery for the tobacco industry and provides extensive aftermarket support to its customers.  The business is headquartered in Princes Risborough, UK, where the division's central engineering and logistics teams are located, along with the main distribution centre for spare parts.  It is also the base for the sales and service teams for Europe, Middle East and Africa (EMEA).  South American markets are served from the facility in Curitiba, Brazil, which includes a full manufacturing capability.  Sales, service and distribution operations are located in Richmond, Virginia, USA and in Singapore, from where the North American and Asia Pacific regions are supported.  Additionally the division is supported by a sales office in Moscow, Russia.  The division's main machining and assembly operation is in Plzen, Czech Republic, which also supports the other divisions in the Group, as well as servicing a number of non-tobacco industry customers.

 

Order intake overall was slightly higher than the previous year, with increased orders for new and rebuilt machinery compensating for a reduction in aftermarket orders.  The increase in orders for machinery was experienced across most regions, most significantly in Asia, North America and South America.  With a relatively strong opening order book together with the additional orders received in the year, sales of machinery also increased significantly across the division.  The division benefited from being able to respond quickly to the specific product demands and challenging service requirements of its customers, with relatively short order lead times owing to the flexibility and efficiency of its logistics and manufacturing operations.  Sales of spare parts, having increased by 10% in each of the previous two years, fell back by 15%, reflecting mainly softer demand in Asia and some customer specific inventory management timing issues.  The division continues to focus on serving its global customer base efficiently, with over 600,000 part designs available to be supplied to the industry.

 

The division's manufacturing facilities experienced a strong and level loading through the year, which helped contribute to the efficiency of the operations.  With the increase in sales, and despite a reduction in higher margin aftermarket business, the division improved its profitability and return on sales.

 

The division continues to focus on new product development, with the first order received for its new filter making machine and the delivery of the first Alto making machine, which produces cigarettes at a rate of 10,000 per minute, to a customer for production trials.  These developments, together with the ongoing commercial success of the Octave making machine and the current development, in collaboration with Molins Technologies, of a new cigarette packing machine that will be available for production trials in 2015, will help to reinforce Molins' established position within the tobacco industry.

 

The division entered 2014 with a slightly reduced order book than the previous year but with good prospects for machinery orders and an active aftermarket requirement.  The business continues to focus on the efficiency of its operations and logistics, product development and the service and support of its customers.

 

Summary and outlook

 

The Group progressed well in the year and has established a platform for further development, both organically and through acquisition.  We remain mindful of the uncertain economic and regulatory environment, but are cautiously optimistic the Group will continue to demonstrate progress. 

 

 

 

FINANCIAL REVIEW

Underlying profit before tax increased by 10% to £5.4m (2012: £4.9m) and underlying earnings per share also increased by 10% to 23.9p (2012: 21.8p), both measures being before non-underlying items.  Profit for the period was £3.5m (2012: £3.8m) and basic earnings per share amounted to 18.0p (2012: 20.6p).  Net funds at the end of the year were £5.2m (2012: £7.4m).

 

Operating results

The trading performance of the Group is discussed in the Operating review.

 

Group revenue increased by 13% to £105.2m (2012: £93.0m), with all three divisions delivering sales growth in excess of 10%.  Sales in the Scientific Services division were £26.5m (2012: £23.1m) and underlying operating profit was £1.1m (2012: £1.2m).  Packaging Machinery division sales were £44.3m (2012: £38.8m) and underlying operating profit was £1.5m (2012: £1.5m).  Tobacco Machinery division sales were £34.4m (2012: £31.1m) and underlying operating profit was £2.9m (2012: £2.2m). 

 

Non-underlying items

The Group has reported a non-underlying operating charge in the year of £0.9m (2012: £0.3m), which comprises charges of £0.8m (2012: £0.8m) in respect of administration costs relating to the Group's defined benefit pension schemes (see Pension schemes section for more detail) and £0.1m (2012: £1.0m) of reorganisation costs relating in 2013 to the Scientific Services division.  Additionally in the 12 months to 31 December 2012 was a credit of £1.5m in respect of actions taken in the Group's UK defined benefit pension scheme.  Financing expense on pension scheme balances (see Interest and taxation below) is also considered to be a non-underlying item.

 

Interest and taxation

Net financing expense was £0.8m (2012: £0.1m), which includes a charge of £0.7m (2012: £0.1m) in respect of financing expense on pension scheme balances, which is explained in the Pension schemes section.  The tax charge on underlying profit before tax was £0.8m (2012: £0.8m), an effective rate of 14% (2012: 16%).  The total taxation charge on the Group's profit before tax was £0.3m (2012: £0.7m), an effective rate of 8% (2012: 16%).

 

Dividends

The Board is recommending a final dividend of 3.0p per ordinary share which, together with the interim dividend of 2.5p paid in October 2013, results in a total dividend of 5.5p per ordinary share in respect of 2013 (2012: 5.5p per ordinary share).  The dividend, if approved, will be paid on 9 May 2014 to shareholders registered at the close of business on 22 April 2014.

 

Cash, treasury and funding activities

Group net funds were £5.2m (2012: £7.4m) at the end of the year.  Net cash inflow from operating activities was £4.1m (2012: £6.6m), which was after an increase in working capital of £1.6m (2012: £0.5m decrease), reorganisation payments of £0.7m (2012: £0.5m), defined benefit pension payments of £1.5m (2012: £1.6m) and net taxation payments of £1.0m (2012: £0.8m).  Capital expenditure on plant and equipment was £1.9m (2012: £3.9m), expenditure on an investment property was £0.7m and capitalised product development expenditure was £2.2m (2012: £1.2m).  Proceeds from the sale of plant and equipment were £0.2m (2012: £0.1m).  Dividends of £1.1m (2012: £1.0m) were paid in the year.

 

There were no significant changes during the year in the financial risks, principally currency risks and interest rate movements, to which the business is exposed and the Group treasury policy has remained unchanged.  The Group does not trade in financial instruments and enters into derivatives (principally forward foreign exchange contracts) solely for the purpose of minimising currency exposures on sales or purchases in other than the functional currencies of its various operations.

 

The Group maintains bank facilities appropriate to its expected needs.  These were renegotiated in the year and comprise secured, committed borrowing facilities with Lloyds Bank plc of £13.0m in aggregate.  These facilities are committed until September 2018 and are subject to covenants covering leverage, interest cover, tangible net worth and capital expenditure and are both sterling and multi‑currency denominated.  Additionally, ancillary facilities are in place, covering bonds, indemnities and guarantees.  The Group is operating well within its covenant levels.  Short‑term overdrafts and borrowings are utilised in certain parts of the Group to meet local cash requirements and these are typically denominated in local currencies.  Foreign currency borrowings are used to hedge investments in overseas subsidiaries where appropriate.

 

Pension schemes

The Group is responsible for defined benefit pension schemes in the UK and the USA, in which there are no active members, which it accounts for in accordance with IAS 19 Employee benefits.  Changes to IAS 19 have taken effect for 2013 reporting, with the prior year comparative figures being restated.  Financing income/expense is now calculated by applying the discount rate used for valuing the schemes' liabilities to the value of the net pension asset/liability at the beginning of the year, rather than calculating financing income by applying the expected return on assets to the value of the schemes' assets at the beginning of the year and financing expense by applying the discount rate to the value of the schemes' liabilities at the beginning of the year.  As the discount rate is lower than the expected return on assets, financing income/expense is lower than would have been reported under IAS 19 before its requirements changed.  Additionally for 2013 reporting, the expense of administering the pension schemes can no longer be accounted for as a reduction in the expected return on schemes' assets and is instead charged separately to operating profit within the income statement.

 

The IAS 19 valuation of the UK scheme's assets and liabilities was undertaken as at 31 December 2013 based on the funding valuation work carried out as at 30 June 2012, updated to reflect conditions existing at the 2013 year end and to reflect the specific requirements of IAS 19.  The smaller USA defined benefit schemes were valued as at 31 December 2013, using actuarial data as of 1 January 2013, updated for conditions existing at the year end.  Under IAS 19 the Group has elected to recognise all actuarial gains and losses outside of the income statement.

 

The IAS 19 valuation of the UK scheme resulted in a net deficit at the end of the year of £2.5m (2012: £13.9m), before tax.  The value of the scheme's assets at 31 December 2013 was £337.9m (2012: £322.5m) and the value of the scheme's liabilities was £340.4m (2012: £336.4m).  The main cause of the positive movement in the valuation in the year was that the investment returns on assets were more favourable than expected, partially offset by an increase in liabilities resulting from an increase in expected long-term inflation rates.

 

The accounting valuations of the USA pension schemes showed an aggregated netdeficit of £3.1m (2012: £5.3m), all amounts being before tax, with total assets of £14.3m (2012: £14.7m).

 

The last completed scheme specific funding valuation of the Group's UK defined benefit scheme, which was carried out as at 30 June 2012, showed a funding level of 86% of liabilities, which represented a deficit of £53.0m.  The solvency position of the scheme at that date, which reflects the scheme's position if it was wound up, showed a funding level of 56%.  Valuations are extremely sensitive to a number of factors outside the control of the Group, including discount rates.  The trustee of the scheme and the Company agreed a deficit recovery plan, which commits the Company to paying to the scheme £1.7m per annum, in monthly instalments from July 2013, with a then estimated recovery period of 17 years from 30 June 2012.  The annual deficit recovery payment will increase by 2.1% per annum, except in respect of the payments for the year to 30 June 2015 and for the year to 30 June 2016 which will increase by the percentage increase in ordinary dividends in respect of the Company's 2013 and 2014 financial years if higher than 2.1%.  The deficit recovery plan will be formally reassessed following the next scheme specific funding valuation, which will be carried out as at 30 June 2015.

 

The aggregate pension service cost relating to the defined benefit schemes charged to operating profit was £nil (2012: £0.9m).  In 2012 an aggregate credit of £1.5m was reported, arising as a result of all UK employees ceasing to accrue benefits in the Group's UK scheme from November 2012.  Net financing expense in respect of the schemes was £0.7m (2012: £0.1m).

 

During the year the Company made payments to the UK defined benefit scheme of £1.4m in respect of the deficit recovery plan and £0.2m in respect of curtailment costs arising from actions in 2010.  Payments of £0.1m (2012: £nil) were made to the USA schemes in the year.

 

Equity

Group equity at 31 December 2013 was £40.5m (2012: £30.5m).  The movement arises mainly from profit for the period of £3.5m and net actuarial gains in respect of the Group's defined benefit pension schemes of £9.9m less currency translation losses on foreign currency net investments of £1.5m and dividend payments of £1.1m, all figures net of tax where applicable.

 

CONSOLIDATED INCOME STATEMENT

 



2013


2012 (restated)


 

 

 

 

Notes

 

 

 

Underlying

£m

 

Non-underlying

(note 3)

 £m

 

 

 

Total

£m


 

 

 

Underlying

£m

 

Non-underlying

(note 3)

£m

 

 

 

 

Total

£m

 

Revenue

 

Cost of sales

 

 

2

 

105.2

 

(76.6)

 

-

 

-

 

105.2

 

(76.6)


 

93.0

 

(65.7)

 

 

-

 

-

 

 

93.0

 

(65.7)

 

Gross profit

 

Other operating income

Distribution expenses

Administrative expenses

Other operating expenses

 


28.6

 

 

-

(8.5)

 

(13.8)

 

(0.8)

-

 

 

-

-

 

(0.9)

 

-

28.6

 

 

-

(8.5)

 

(14.7)

 

(0.8)


27.3

 

 

-

(8.0)

 

(13.7)

 

(0.7)

 

-

 

 

1.5

-

 

(1.8)

 

-

 

27.3

 

 

1.5

(8.0)

 

(15.5)

 

(0.7)

 

Operating profit

 

2, 3

5.5

(0.9)

4.6


4.9

(0.3)

4.6

Financial income

Financial expenses


0.2

(0.3)

-

(0.7)

0.2

(1.0)


0.2

(0.2)

 

-

(0.1)

 

0.2

(0.3)

 

Net financing expense

 

4

 

(0.1)

 

(0.7)

 

(0.8)


 

-

 

 

(0.1)

 

 

(0.1)

 

Profit before tax

 

Taxation

 

 

 

5.4

 

(0.8)

(1.6)

 

0.5

3.8

 

(0.3)


4.9

 

(0.8)

 

(0.4)

 

0.1

 

4.5

 

(0.7)

 

Profit for the period

 


4.6

(1.1)


4.1

 

(0.3)

 

3.8

 

 

Basic earnings per ordinary share

 

Diluted earnings per ordinary share

 

 

5

 



 

 

18.0p

 

 

17.6p




 

 

20.6p

 

 

19.9p

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 



 

 

2013

£m


 

2012

(restated)

£m

 

Profit for the period

 


3.5


3.8

 

Other comprehensive income/(expense)

 




 

 

Items that will not be reclassified to profit or loss

Actuarial gains/(losses)

 

Tax on items that will not be reclassified to profit or loss


 

13.5

 

(3.6)


 

(17.6)

 

4.4

 



9.9


(13.2)

 

Items that may be reclassified subsequently to profit or loss

Currency translation movements arising on foreign currency net investments

 

Effective portion of changes in fair value of cash flow hedges

 

Tax on items that will not be reclassified to profit or loss

 


 

 

(1.5)

 

(0.8)

 

0.1


 

 

(0.7)

 

0.3

 

-



(2.2)


(0.4)

 

Other comprehensive income/(expense) for the period

 


7.7


(13.6)

 

Total comprehensive income/(expense) for the period

 


11.2


(9.8)

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 


 

Share

capital

£m

 

Share

premium

£m

 

Translation

reserve

£m

Capital

redemption

reserve

£m

 

Hedging

reserve

£m

 

Retained

earnings

£m

 

Total

equity

£m

 

Balance at 1 January 2012

 

5.0

 

26.0

 

4.2

 

3.9

 

(0.1)

 

2.0

 

41.0

 

Profit for the period, as restated

Other comprehensive income/(expense) for the period, as restated

 

 

-

 

-

 

-

 

-

 

-

 

(0.7)

 

-

 

-

 

-

 

0.3

 

3.8

 

(13.2)

 

3.8

 

(13.6)

Total comprehensive income/(expense) for the period

 

 

-

 

 

-

 

 

(0.7)

 

 

-

 

 

0.3

 

 

(9.4)

 

 

(9.8)

 

Dividends to shareholders

Equity-settled share-based transactions

Tax on items taken directly to equity

-

 

-

 

-

-

 

-

 

-

-

 

-

 

-

-

 

-

 

-

-

 

-

 

-

(1.0)

 

0.2

 

0.1

(1.0)

 

0.2

 

0.1

Total transactions with owners, recorded directly in equity

 

 

-

 

-

 

-

 

-

 

-

 

(0.7)

 

(0.7)

Balance at 31 December 2012

 

5.0

 

26.0

 

3.5

 

3.9

 

0.2

 

(8.1)

 

30.5

 

 

 

Balance at 1 January 2013

 

 

5.0

 

 

26.0

 

 

3.5

 

 

3.9

 

 

0.2

 

 

(8.1)

 

 

30.5

 

Profit for the period

Other comprehensive income/ (expense) for the period

 

 

-

 

-

 

-

 

-

 

-

 

(1.5)

 

-

 

-

 

-

 

(0.7)

 

3.5

 

9.9

 

3.5

 

7.7

Total comprehensive income/ (expense) for the period

 

 

-

 

-

 

(1.5)

 

-

 

(0.7)

 

13.4

 

11.2

Dividends to shareholders

Equity-settled share-based transactions

Purchase of own shares

Tax on items recorded directly in equity

 

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

(1.1)

 

0.2

(0.2)

 

(0.1)

(1.1)

 

0.2

(0.2)

 

(0.1)

 

Total transactions with owners, recorded directly in equity

 

 

-

 

-

 

-

 

-

 

-

 

(1.2)

 

(1.2)

Balance at 31 December 2013

 

5.0

 

26.0

 

2.0

 

3.9

 

(0.5)

 

4.1

 

40.5

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION







 

Notes

2013

£m


2012

£m

Non-current assets

Intangible assets

Property, plant and equipment

Investment property

Deferred tax assets

 

 

 

 

6

 

15.2

11.2

0.8

3.2

 


 

14.5

11.7

-

7.8

 

 

 


30.4

 


34.0

 

Current assets

Inventories

Trade and other receivables

Cash and cash equivalents


 

18.5

24.3

15.0

 


 

18.1

21.5

13.3

 



57.8


52.9

Current liabilities

Trade and other payables

Current tax liabilities

Provisions


 

 (29.5)

(1.2)

(1.6)

 


 

 (26.9)

(1.0)

(1.7)

 

 


(32.3)

 


(29.6)

 

Net current assets


25.5

 


23.3

 

Total assets less current liabilities


55.9

 


57.3

 

 

Non-current liabilities

Interest-bearing loans and borrowings

Employee benefits

Deferred tax liabilities

 

 

 

6

 

 

 

(9.8)

(5.6)

-

 


 

 

(5.9)

(19.2)

(1.7)

 

 


(15.4)


(26.8)

Net assets

2

40.5

 


30.5

 

 

Equity

Issued capital

Share premium

Reserves

Retained earnings


 

 

5.0

26.0

5.4

4.1


 

 

5.0

26.0

7.6

(8.1)

Total equity


40.5

 


30.5

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 


 

Notes

2013

£m


2012

£m

Operating activities

Operating profit

Non-underlying items included in operating profit

Amortisation

Depreciation

Defined benefit pension service costs

Other non-cash items

Pension payments

Working capital movements:

  - increase in inventories

  - increase in trade and other receivables

  - increase in trade and other payables

  - increase in provisions


 

4.6

0.9

1.4

1.8

-

0.2

(1.5)

 

(1.0)

(3.4)

2.4

0.4


 

4.6

0.3

1.4

2.1

0.9

(0.3)

(1.6)

 

(2.6)

(0.7)

3.5

0.3

Cash generated from operations before reorganisation

 

Reorganisation costs paid

 

 

3

5.8

 

(0.7)


7.9

 

(0.5)

Cash generated from operations

 

Taxation paid

 


5.1

 

(1.0)

 


7.4

 

(0.8)

 

Net cash from operating activities


4.1

 


6.6

 

Investing activities

Interest received

Proceeds from sale of property, plant and equipment

Acquisition of property, plant and equipment

Acquisition of investment property

Capitalised development expenditure


 

0.2

0.2

(1.9)

(0.7)

(2.2)

 


 

0.2

0.1

(3.9)

-

(1.2)

 

Net cash from investing activities

 


(4.4)

 


(4.8)

 

Financing activities

Interest paid

Purchase of own shares

Net increase against revolving facilities

Dividends paid

 






 

(0.3)

(0.2)

 4.2

(1.1)

 


 

(0.2)

-

 0.7

(1.0)

 

Net cash from financing activities

 


2.6

 


(0.5)

 

 

Net increase in cash and cash equivalents

Cash and cash equivalents at 1 January

Effect of exchange rate fluctuations on cash held

 


7

 

2.3

13.3

(0.6)

 


 

1.3

12.3

(0.3)

 

Cash and cash equivalents at  31 December


15.0

 


13.3

 

 

 

NOTES TO PRELIMINARY ANNOUNCEMENT

 

1.      The Group's accounts have been prepared in accordance with International Accounting Standards and International Financial Reporting Standards that were effective at 31 December 2013 and adopted by the EU.

 

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2013 or 2012.  Statutory accounts for 2012 have been delivered to the Registrar of Companies.  The auditors have reported on the 2013 and 2012 statutory accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

2.             Operating segments

         Segment information


Scientific Services


Packaging Machinery


Tobacco Machinery


Total


 

2013

 

£m


 

2012

 

£m


 

2013

 

£m


 

2012

 

£m


 

2013

 

£m


 

2012

 

£m


 

2013

 

£m


 

2012

(restated)

£m

 

Revenue

 

 

26.5


 

23.1


 

44.3


 

38.8


 

34.4


 

31.1


 

105.2


 

93.0

 

 

 

Underlying segment operating profit

 

Segment non-underlying items

 

 

 

 

1.1

 

 

(0.1)

 


 

 

 

1.2

 

 

(0.9)

 


 

 

 

1.5

 

 

-

 


 

 

 

1.5

 

 

(0.1)

 


 

 

 

2.9

 

 

 -

 

 


 

 

 

2.2

 

 

 -

 

 


 

 

 

5.5

 

 

(0.1)

 


 

 

 

4.9

 

 

(1.0)

 

 

Segment operating profit

 

 

1.0


 

0.3


 

1.5


 

1.4


 

2.9


 

2.2


 

5.4


 

3.9

 

Unallocated

non-underlying items - defined benefit pension (costs)/credits

 













 

 

 

(0.8)

 


 

 

 

0.7

 

 

Operating profit

 

Net financing expense

 













4.6

 

(0.8)


4.6

 

(0.1)

 

Profit before tax

 

Taxation

 













3.8

 

(0.3)


4.5

 

(0.7)

 

Profit for the period

 













3.5

 


3.8

 

 

















 

Segment assets

Segment liabilities

 

14.0

(5.9)

 


13.6

(5.4)

 


25.1

(12.9)

 


19.1

(12.1)

 


23.8

(10.1)

 


26.5

(12.4)

 


62.9

(28.9)

 


59.2

(29.9)

 

 

Segment net assets

 - continuing operations

8.1


8.2


12.2


7.0


13.7


14.1


34.0


29.3

 

 

Net liabilities

 - discontinued operations

 

Unallocated net assets

 













 

(0.1)

 

 

6.6

 


 

(0.1)

 

 

1.3

 

 

Total net assets

 













40.5


30.5

 

 

 

Geographical information

        


Revenue

(by location of customer)


2013

£m


2013

%


2012

£m


2012

%









UK

USA
Europe (excl. UK)

Americas (excl. USA)
Africa

Asia

 

9.8

27.9

23.5

9.5

7.3

27.2

 


9

27

22

9

7

26

 


6.9

24.1

21.1

9.4

6.4

25.1

 


7

26

23

10

7

27

 

 

 

105.2

 


100

 


93.0

 


100

 

 

3.      Charges classified as non-underlying items were incurred in respect of reorganisation of £0.1m (2012: £1.0m), administration costs of the Group's defined benefit pension schemes of £0.8m (2012: £0.8m), which were paid for out of the assets of those schemes, and the financial expense on pension scheme balances of £0.7m (2012: £0.1m).  In addition, in the year to 31 December 2012 a credit of £1.5m was recorded relating to the cessation of future benefit accruals from December 2012 in the Group's UK defined benefit pension scheme.  Cash payments of £0.7m were made in 2013 (2012: £0.5m) in respect of reorganisation in earlier periods, of which £0.2m (2012: £0.3m) was paid to the UK defined benefit pension scheme.

 

4.      The Group accounts for pensions under IAS 19 Employee benefits.  The 2013 accounting valuation of the UK defined benefit pension scheme was carried out as at 31 December 2013 based on the funding valuation carried out as at 30 June 2012, updated to reflect conditions existing at the 2013 year end and to reflect the specific requirements of IAS 19.  The smaller USA defined benefit pension schemes were valued as at 31 December 2013 using actuarial data as of 1 January 2013, updated for conditions existing as at the year end.  Profit before tax includes charges in respect of the defined benefit pension schemes' administration costs of £0.8m (2012: £0.8m) and financing expense on pension scheme balances of £0.7m (2012: £0.1m).  Also included within profit before tax in the 12 months to 31 December 2012 were credits totalling £1.5m in respect of actions taken within the Group's defined benefit pension scheme in the UK.  Payments to the Group's UK defined benefit pension scheme in the period included £1.5m in respect of the agreed deficit recovery plan.

 

5.      Basic earnings per ordinary share is based upon the profit for the period of £3.5m (2012: £3.8m) and on a weighted average of 19,399,424 shares in issue during the year (2012: 19,067,302).  The weighted average number of shares excludes shares held by the employee trust in respect of the Company's long-term incentive arrangements. 

 

Underlying earnings per ordinary share amounted to 23.9p for the year (2012: 21.8p) and is based on underlying profit for the period of £4.6m (2012: £4.1m), which is calculated on profit before non-underlying items.

 

6.      Employee benefits include the net pension liability of the UK defined benefit pension scheme of £2.5m (2012: £13.9m) and the net pension liability of the USA defined benefit pension schemes of £3.1m (2012: £5.3m), all figures before tax.

 

7.      Reconciliation of net cash flow to movement in net funds

 



2013

£m

 


2012

£m

 

Net increase in cash and cash equivalents

Cash inflow from movement in borrowings

 


2.3

(4.2)

 


1.3

(0.7)

 

Change in net funds resulting from cash flows

 

Translation movements

 


(1.9)

 

(0.3)

 


0.6

 

(0.3)

 

Movement in net funds in the period

 

Opening net funds

 


(2.2)

 

7.4

 


0.3

 

7.1

 

Closing net funds

 


5.2


7.4

 

8.      Analysis of net funds

 



2013

£m

 


2012

£m

 

Cash and cash equivalents - current assets

Interest-bearing loans and borrowings - non-current liabilities

 


15.0

(9.8)

 


13.3

(5.9)

 

Closing net funds

 


5.2


7.4

 

9.      The Annual Report and Accounts will be sent to all shareholders in March 2014 and copies will be available on the Group's website at www.molins.com, or from the Company's registered office at Rockingham Drive, Linford Wood East, Milton Keynes MK14 6LY.


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