TIDMDVO
RNS Number : 5295Y
Devro PLC
06 March 2017
6 March 2017
Devro plc
RESULTS FOR THE YEARED 31 DECEMBER 2016
Devro plc ("Devro" or the "group"), one of the world's leading
manufacturers of collagen products for the food industry, announces
its results for the year ended 31 December 2016.
Financial highlights 2016
Unaudited 2015
Revenue GBP241.1m GBP230.2m
Underlying EBITDA* GBP58.8m GBP49.7m
Underlying operating profit* GBP38.1m GBP33.3m
Underlying profit before GBP28.9m GBP29.2m
tax*
Underlying basic earnings
per share* 13.3p 15.4p
Total dividend per share 8.8p 8.8p
Statutory reported results
Operating profit GBP15.4m GBP19.2m
Profit before tax GBP6.2m GBP15.1m
Basic earnings per share 1.3p 8.8p
* Underlying figures are stated before exceptional items (see
Alternative Performance Measures section of Financial Review for
definition, explanation and reconciliation to equivalent statutory
measures)
Full year highlights
* Revenue increased 4.7% year on year
o Exchange rate benefits offset lower sales
volumes
* Underlying EBITDA GBP9.1 million ahead of prior year
o Lower input prices and exchange rate benefits
more than compensated for reduced year-on-year
sales volumes
* Capital investment projects now complete
o Old USA plant closed in June 2016 as planned
o Commissioning and start-up of new plants in
China and USA now complete
o Related exceptional costs of GBP20.7 million
for 2016, in line with expectations and now
ended
* Devro 100 programme initiated to accelerate delivery
of revenue and profit growth
o Focuses on growing revenue through improving
our sales capabilities, further improving manufacturing
efficiencies to reduce unit costs and introducing
the next generation of differentiated products
o Related exceptional costs of GBP2.0 million
for 2016; further exceptional costs expected
of between GBP10-12 million over the next two
years, plus capital investments of between GBP7-8
million, with expected returns of between GBP13-16
million per annum by 2019
Peter Page, Chief Executive of Devro, commented
"Whilst volumes declined by 6.6% year-on-year, underlying
operating profit increased due to lower input prices and exchange
rate benefits. The decline in sales volumes in 2016 was due to a
series of region-specific factors. We have taken actions to ensure
a return to growth in 2017 and beyond.
"Following the significant capital investments we have made in
recent years, we are now focused on using our high-technology
assets to supply a growing global market. Overall demand remains
strong and we continue to see many attractive opportunities to grow
the business.
"In 2017, we will focus on increasing revenue to regain market
share, achieving cost savings across our global operations and
commencing the launch of new, differentiated products, as part of
the Devro 100 programme. The further exceptional costs of this
programme are expected to be between GBP10-12 million over the next
two years, plus capital investments of between GBP7-8 million, with
expected benefits of between GBP13-16 million per annum by 2019.
Over this period there will also be a focus on reducing net debt
levels. Combined with our upgraded global manufacturing asset base,
we are confident this will deliver long term growth."
This announcement contains inside information.
Contacts
Peter Page Chief Executive 020 3727 1340
Group Finance
Rutger Helbing Director 020 3727 1340
Richard Mountain/Nick
Hasell FTI Consulting 020 3727 1340
There will be a presentation today at 9.00am for investors and
analysts at the offices of FTI Consulting, 200 Aldersgate,
Aldersgate Street, London, EC1A 4HD. A live audio feed will be
available to those unable to attend this meeting in person. To
connect to the webcast facility, please go to the following link:
http://view-w.tv/943-1289-17842/en approximately 10 minutes before
the start of the briefing (8.50am). The presentation will also be
available on the company's website.
CHAIRMAN'S STATEMENT
Global demand for collagen casings and related products grew by
approximately 4% in 2016. Regional variations led to a range of
opportunities and challenges and the higher levels of capacity in
the market provided customers with a range of options of varying
quality and functionality.
Devro's reported revenues were 4.7% above the prior year. This
includes exchange rate movements, which were particularly
beneficial in the second half. As previously guided, Devro's
revenues in constant currency declined 6.9% in the year. Volumes in
Latin America, Continental Europe, Russia and China reduced,
although China returned to year-on-year growth in the final
quarter. The performance in these areas was partially offset by
increased volumes, and stable or increasing local currency average
sales prices, in Japan, South East Asia and the UK &
Ireland.
After a three-year transformation period we achieved a major
milestone in 2016 with the completion, as planned, of our two
capital investment projects in the USA and China. These new plants
are now an integral part of our global manufacturing footprint.
In our November 2016 trading update we highlighted that our
anticipated sales volumes for 2017 will result in an
under-utilisation of available global capacity. As a consequence
the Board decided to accelerate and implement more extensively the
next stage of the group's strategic development. This programme,
known as Devro 100, focuses on growing revenue through improving
our sales capabilities, further improving manufacturing
efficiencies to reduce unit costs and introducing the next
generation of differentiated products.
To underpin the Devro 100 programme, a significant change in the
group's organisation structure was implemented in the fourth
quarter, under which we moved from local sales and manufacturing
responsibilities to three sales-focused commercial regions,
supported by global business development and global supply chain
operations. The Board believes this will result in a strong focus
on areas of future profit growth, faster development of new
products and greater use of local operational expertise for the
benefit of Devro worldwide by sharing best practices.
Given the extensive nature of this programme there will be a
significant level of incremental costs during 2017 and 2018 which
will be reported separately as exceptional items.
FINANCIAL HIGHLIGHTS
Underlying operating profit increased 14% to GBP38.1 million
(2015: GBP33.3 million), as it benefited from currency movements
and lower input prices, which more than offset the effects of lower
sales volumes.
After including exceptional items, operating profit was GBP15.4
million (2015: GBP19.2 million). A breakdown of exceptional items,
together with a more detailed explanation of the group's financial
performance, is set out in the Financial Review below.
BOARD
Rutger Helbing joined the Board in April 2016 as Group Finance
Director following Simon Webb's retirement in March 2016.
In December 2016, Malcolm Swift agreed to join our Board as a
non-executive director with effect from 26 April 2017. At this
time, Paul Neep will stand down after 12 years as a non-executive
director. I am extremely grateful for his significant
contribution.
EMPLOYEES
The expertise, experience and commitment of so many people who
work in Devro are key to the future success of the business. 2016
was a demanding year for all colleagues as we progressed with the
transformation of the business. On behalf of the Board, I thank all
employees for their contribution.
I am particularly impressed by the way that new employees, in
China and elsewhere, have integrated and strengthened our
capabilities in many areas.
DIVID
The Board is proposing to maintain the final dividend at 6.1p
per share (2015: 6.1p) bringing the total for the year to 8.8p per
share (2015: 8.8p). Subject to shareholder approval at the Annual
General Meeting in April, the dividend will be paid on 12 May 2017,
to those shareholders on the register at 31 March 2017.
RETURN ON INVESTMENTS
Having completed the transformation of our global manufacturing
footprint, we are now focused on the need to deliver a return on
our investments at the same time as generating strong cash flow for
the reduction of debt. The actions planned under the Devro 100
programme will accelerate these returns. However we do recognise
that the further exceptional items in 2017 and 2018 represent an
additional investment from our investors. We are convinced that,
with the quality of our new production facilities and strengthened
senior management capability across the group, combined with a new
global organisation structure, Devro is well-positioned to grow
sales and reduce costs over the coming years. Our markets are
dynamic and continue to grow, providing good opportunities for
Devro to create long-term value for our shareholders.
Gerard Hoetmer
Chairman
CHIEF EXECUTIVE'S REVIEW
Following the significant capital investments we have made in
recent years, our objective is to use our high-technology assets to
supply a growing global market with differentiated quality
products, whilst reducing costs to levels substantially lower than
has historically been possible with legacy facilities.
MARKETS OVERVIEW
Devro supplies collagen casings, gel and film to over 100
countries worldwide. Current estimates are that this market is
growing by 2-4% per annum. After a period of contraction in China
in 2015, demand in this market returned to growth in 2016.
Markets have become increasingly competitive and customers are
ever more demanding. Our markets are dynamic, presenting real
opportunities for growth and development.
STRATEGY
Devro's three-part strategy focuses on revenue growth,
manufacturing efficiency and product differentiation. The Devro 100
programme will accelerate progress across all three elements, as
outlined below.
Revenue growth
Reported revenue increased 4.7%, strongly impacted by movements
in exchange rates, particularly during the second half. Revenue in
constant currency reduced 6.9%, reflecting lower sales volumes.
Over 80% of the group's sales come from edible collagen casings,
for which total volumes declined 8.2% compared to prior year. This
was due to a series of region-specific factors and actions have
been taken to ensure a return to growth during 2017 and 2018.
Volumes in the UK & Ireland increased by 1.3% accompanied by
continued progress in pricing. There have been some significant
transfers of volume between UK sausage manufacturers during 2016,
which has enabled Devro to increase its market share.
In Continental Europe, volumes declined 7.5% in an environment
of increased competition over recent years. In order to compete
more effectively in this market we are in the process of
significantly upgrading our sales capabilities, as part of the
Devro 100 programme. Volumes in Germany grew 2.1% as a result of
working closely with customers to address their needs through our
extensive product portfolio.
Volumes in Russia and surrounding markets were down 13.0% for
the year reflecting the extremely competitive nature of the market
in Russia that has been further exacerbated by the weak rouble. Our
sales run-rate improved in the second half following the launch of
a new product offering in Russia that was specifically developed to
meet these market conditions. Other markets in the region,
including Ukraine, Kazakhstan and Belarus, maintained similar
volumes to prior year.
North America volumes declined 4.8% over the year, with most of
the decline in the final quarter, particularly as one key account
reduced inventories to manage working capital. We expect our
volumes in this market to return to growth in 2017.
Our Latin America business was impacted by the change in
sourcing away from the old USA plant, as part of the transformation
of our global manufacturing operations. Despite extensive
development and testing, when manufactured on a commercial scale it
was found that the redesigned products were not able to meet
customer needs, given their unique and demanding applications,
resulting in a 33.5% volume reduction. Whilst many technical
challenges have now been resolved, the process of scaling up
testing and requalifying products will take time and we do not
expect a major recovery in Latin America volumes until 2018. This
remains a key area of focus for the group.
Volume growth remained strong in Japan (+4.5%), where Devro
casings have been used to develop a successful application in the
confectionery market, sales of which have continued to expand.
Volumes in South East Asia increased 5.9%, principally due to a
strong recovery in Korea related to sales growth in the food
service sector and a new product developed to meet local
requirements. Volumes in Australia declined 7.8%, including the
impact of one significant customer who moved to dual sourcing.
Devro's volumes in China for the year as a whole were 31.4%
below prior year, but were strong in the final quarter as volumes
came on-stream from the new plant in Nantong. In 2016 there was an
oversupply of product at the lower end of the market, which
resulted in significant price-led promotional activity. Devro
decided not to participate in this activity, particularly given the
higher costs of importing products before the new plant became
operational. Devro is now in a period of testing products from the
new plant with existing and potential customers. The new casings
are performing well, which is reflected in the return to
year-on-year sales growth in the final quarter.
Total volumes of gel sold across the group increased over 30%
through a combination of further growth in the US, as our existing
customers increased their market share, and new volumes in Europe,
as a result of the acquisition of Devro BV in 2015 plus the
development of an additional key account.
Devro 100 - Revenue growth
A key element of the Devro 100 programme is to significantly
upgrade our sales capabilities. An extensive, structured plan is
being implemented, with particular focus on 'key account
management' processes. Several new senior sales managers joined the
business, strengthening our presence in key markets. This programme
has progressed well in 2016 and will continue during 2017.
Manufacturing efficiency
Over the past three years, the business has undergone a
significant programme of investment and restructuring, to ensure
that we have modern production capacity capable of supplying future
demand efficiently. This investment has been completed and all
operations are now managed by the new global supply chain
function.
As the new China plant started up in the first half, 160 new
colleagues joined the business in Nantong and, through the training
and commissioning process, rapidly developed an impressive
capability to manufacture high quality products. The plant is
approved for sales inside China and for exports, has been
accredited for FS22000 (the global food safety standard) and has
recently achieved full Halal certification.
In the US, as well as bringing the new plant into operation, the
closure of the old plant was completed at the end of the first half
with the number of employees reduced by 200.
Devro 100 - Improving manufacturing efficiency
With the global manufacturing footprint now complete, the Devro
100 programme will focus efforts on delivering significant further
cost savings to improve the unit cost of production. The
establishment of the global supply chain function will support this
improvement through identifying and applying best practice across
the global operations to achieve better efficiency and cost
savings.
As the new plants have been completed, engineering teams have
returned to regular operations, enabling them to support this
programme. In addition we are engaging external support, alongside
our experienced employees, to assist with improving our existing
processes through external benchmarking.
Product differentiation
Effective research and development is key to product
differentiation. An experienced group research team was established
in 2015, which actively collaborates with external research
projects to extend knowledge and identify opportunities. These
capabilities were further enhanced through the acquisition of Devro
BV, which had built a strong technical skills base in coextrusion
gel.
Devro 100 - Next generation of differentiated products
The third element of Devro 100 is the development of next
generation products, which will deliver casings offering a step
change in attributes and performance. During 2016 significant
progress was made on this development and in 2017 we plan to
commence the launch of some of these new products in certain
regions, reflecting the specific requirements of these markets.
OUTLOOK
Overall demand remains strong and we continue to see many
attractive opportunities to grow the business.
In 2017, we will focus on increasing revenue to regain market
share, achieving cost savings across our global operations and
commencing the launch of new, differentiated products, as part of
the Devro 100 programme. The further exceptional costs of this
programme are expected to be between GBP10-12 million over the next
two years, plus capital investments of between GBP7-8 million, with
expected benefits of between GBP13-16 million per annum by 2019.
Over this period there will also be a focus on reducing net debt
levels.
Combined with the upgraded global manufacturing asset base, we
are confident this will deliver long term growth.
Peter Page
Chief Executive
FINANCIAL REVIEW
The financial results for 2016 comprised a number of significant
moving parts. In terms of operating profit for the year the adverse
impact from lower sales volumes was offset by lower input prices
and exchange rate benefits.
Cash flow in the year continued to be impacted by the completion
of the capital investment projects in 2016 which required further
planned capital expenditure as well as exceptional cash costs. The
total cash outflow related to completion of these projects was
material at GBP40 million, although GBP17 million below 2015. Due
to these cash investments net debt increased as expected during the
year, but was further impacted by the significant weakening of
sterling. With underlying EBITDA for the year of GBP58.8 million
and covenant net debt (including derivative financial liabilities)
of GBP156.2 million at year end, the net debt to EBITDA covenant
ratio was 2.7 times at 31 December 2016.
There will be no further exceptional charges related to the
capital investment projects. As highlighted in our November 2016
trading update the Devro 100 programme will result in additional
exceptional costs until 2018, together with some related capital
expenditure. However, the amounts will be at lower levels than
those we have seen in each of the last three years.
Going forward the continued strong underlying cash generation
from the business, combined with lower cash requirements for
capital expenditure and exceptional items, will enable further
reduction in net debt.
REVENUE
2016 2015 Change Change
GBPm GBPm Constant
currency
--------- ------ ------ ------- ----------
Revenue 241.1 230.2 +4.7% -6.9%
--------- ------ ------ ------- ----------
Revenue for the year was ahead of 2015, with the benefits of
exchange rate movements more than offsetting the reduction in sales
volumes. Year-on-year revenue growth can be analysed as
follows:
2016 vs 2015 2015 vs 2014
------------------ ------------- -------------
Volume -6.6% +0.9%
Price/mix -0.3% +0.3%
Foreign exchange +11.6% -2.1%
------------------ ------------- -------------
Total +4.7% -0.9%
------------------ ------------- -------------
The reduction in sales volumes primarily related to China,
Continental Europe, Russia and Latin America. Volumes in China,
Continental Europe and Russia were impacted by region-specific
competitive pressures, although performance improved significantly
in the second half of the year in China and Russia. In Latin
America the lower volumes resulted from product performance issues
related to the change in sourcing away from the old USA plant as
part of the transformation of the global manufacturing operations.
Sales volumes grew in Japan, South East Asia and the UK &
Ireland.
Sales of gel continued to grow well in the USA, as customers
transferred from cellulose applications to collagen co-extrusion.
There was a full year of gel sales in Continental Europe following
the acquisition of PV Industries B.V. (now renamed Devro BV) in
October 2015, which contributed 1.7% to volume growth.
Price/mix was slightly adverse, through a combination of changes
in the geographical mix of sales and an investment in pricing in a
number of competitive markets, where tactical pricing was applied.
The geographical mix impact primarily related to the reduction in
volumes in the Americas where market prices are above the global
average, partially offset by the reduced volumes in China where the
prices are lower.
OPERATING PROFIT
Operating profit for the year can be analysed as follows:
2016 2015 Change
GBPm GBPm
------------------------- ------ ------ -------
Underlying EBITDA 58.8 49.7 +18.3%
Underlying depreciation
& amortisation -20.7 -16.4 -26.2%
------------------------- ------ ------ -------
Underlying operating
profit 38.1 33.3 +14.4%
Exceptional items -22.7 -14.1
------------------------- ------ ------ -------
Operating profit 15.4 19.2
------------------------- ------ ------ -------
Underlying operating profit
Underlying operating profit increased GBP4.8 million between
2015 and 2016, as a result of a number of factors which are
described below.
The reduction in sales volumes by 6.6% reduced underlying
operating profit by GBP6.5 million, and price/mix by a further
GBP0.8 million as explained above.
Input prices were GBP4.5 million lower than prior year, which
increased underlying operating profit, following further reductions
in raw materials prices, particularly in the USA and Australia,
combined with lower energy prices.
Overall manufacturing costs increased by GBP0.7 million,
incorporating a number of factors. Production efficiency improved
in Scotland and Australia compared with the first half of the prior
year, which had been temporarily affected by the restructuring
actions implemented in late 2014. With the new plants completing in
2016, there were changes in the fixed costs associated with the
global manufacturing operation, comprising savings from the closure
of the old USA plant and additional costs associated with the new
plant in China. Given that capacity from the new plants was only
available for a restricted period in 2016 these additional costs
had a limited impact on underlying operating profit in 2016.
However there will be a full year impact in 2017.
As highlighted in our November 2016 trading update, the lower
sales volumes in 2016, which will result in a lower starting point
for sales in 2017, combined with the full year availability of the
capacity from our new plants will result in an under-utilisation of
available global capacity in 2017. This will adversely affect
underlying operating profit in 2017, although it is expected to be
partially offset by the full year impact of the savings from the
closure of the old USA plant, together with global manufacturing
efficiency savings from the Devro 100 programme.
Devro has operations around the world in multiple currencies.
Net movements in exchange rates had a favourable impact on
underlying operating profit of GBP5.3 million, reflecting the
weakening of sterling against most other key trading currencies of
the group compared to 2015, particularly during the second half of
the year.
Underlying operating profit also included the effects of a full
year contribution from Devro BV of GBP0.6 million, which was
acquired in October 2015, and other movements of GBP2.4 million
including reduced bonus payments.
Depreciation & amortisation
The increase in underlying depreciation and amortisation of
GBP4.3 million comprises the commencement of depreciation of the
new plants in 2016 (GBP2.3 million) and foreign exchange movements
(GBP2.0 million).
Exceptional items
2016 2015
GBPm GBPm
--------------------- ------ ------
Capital investment
projects 20.7 14.4
Devro 100 programme 2.0 -
Restructuring and
other - (0.3)
--------------------- ------ ------
Total exceptional
items 22.7 14.1
--------------------- ------ ------
Cash 20.4 12.7
Non-cash 2.3 1.4
--------------------- ------ ------
22.7 14.1
--------------------- ------ ------
During 2016 exceptional costs were incurred in completing the
capital investment projects and on the implementation of the Devro
100 programme. Further details of these costs is set out in note 4
to the financial statements.
For the Devro 100 programme, further exceptional costs are
expected of between GBP10-12 million over the next two years, plus
capital investments of between GBP7-8 million, with expected
returns of between GBP13-16 million per annum by 2019.
OPERATING MARGIN
2016 2015
---------------------- ------ ------
Underlying operating
margin 15.8% 14.5%
---------------------- ------ ------
The underlying operating margin for the year improved by 1.3
percentage points, with underlying operating profit growth
outstripping revenue growth.
The reported operating margin reduced from 8.3% to 6.4%, with
the improvement in underlying operating margin being offset by the
increase in exceptional items.
CAPITAL INVESTMENT
2016 2015
GBPm GBPm
-------------------- ------ ------
Capital investment 22.2 55.4
-------------------- ------ ------
The group has invested GBP110 million on the two capital
investment projects to build new plants in China and the USA over
the last three years, and the majority of the group's capital
investment during the year was related to the final phase of these
projects. Both new plants are now in operation and the capital
investment is complete, subject to approximately GBP3 million of
capital retention payments which will be paid in 2017 once the
associated criteria have been met.
WORKING CAPITAL
2016 2015
----------------- -------------- --------------
GBPm Number GBPm Number
of of
days days
----------------- ----- ------- ----- -------
Inventories 34 60 29 45
Trade and other
receivables 35 39 38 50
Trade and other
payables (38) 40 (34) 30
----------------- ----- ------- ----- -------
31 33
----------------- ----- ------- ----- -------
Working capital improved by GBP2 million during the year with
the benefits of lower receivables and higher payables being
partially offset by increased inventories.
The movements in receivables and payables reflected improved
working capital management, and the increase in inventories
resulted from movements in foreign exchange (+GBP4 million)
combined with some effects from the reduced sales volumes.
CASH FLOW AND NET DEBT
Devro continues to be a highly cash generative business. In
order to fund the significant investments made as part of the
transformation of the manufacturing footprint, additional long term
facilities were put in place in 2014 to supplement the shorter term
facilities.
The three year investment programme came to an end in 2016 and
as expected net debt increased, to GBP153.6 million at 31 December
2016 (or GBP156.2 million including derivative financial
liabilities) compared with GBP125.5 million at year end 2015. This
includes the effect of a significant weakening of sterling during
2016 (given that a part of the group's debt is denominated in US
dollars), in particular following the result of the EU Referendum
vote on 23 June 2016, which increased the reported net debt figure
at 31 December 2016 by approximately GBP19 million (including the
effect on derivative financial liabilities).
Key financial measures are as follows:
2016 2015
---------------------------- ---------- ----------
Net debt GBP153.6m GBP125.5m
Covenant net debt / 2.7 times 2.6 times
underlying EBITDA ratio
Underlying operating GBP64.4m GBP53.1m
cash flow
Return on capital employed
(ROCE) 11.5% 11.5%
---------------------------- ---------- ----------
At 31 December 2016 the covenant net debt / underlying EBITDA
ratio was 2.7 times. As expected this was a reduction from the 2.9
times ratio reported at 30 June 2016. The underlying EBITDA to net
interest payable ratio was 7.6 times at 31 December 2016, meaning
that both ratios were within their limits despite the changes in
exchange rates during the year.
Now that the capital investment projects are complete, cash
generated from the business will enable net debt levels to be
reduced, which will ultimately result in the covenant ratios
returning nearer to historic levels.
The group remained within its funding facilities throughout the
year, which include the US$100 million US private placement that
took place in the first half of 2014, and the GBP110 million
revolving credit facility which was negotiated in December 2014 and
will be in place until 2019.
Underlying operating cash flow (before pension deficit funding)
was GBP64.4 million (2015: GBP53.1 million), an increase of GBP11.3
million relating to higher EBITDA and lower net working
capital.
Cash outflow from exceptional items was GBP22.9 million (2015:
GBP15.5 million) and from pension deficit funding was GBP2.5
million (2015: GBP3.2 million), resulting in operating cash flow of
GBP39.0 million (2015: GBP34.4 million).
FINANCE COSTS
2016 2015
GBPm GBPm
------------------- ------ ------
Net finance cost 6.9 2.0
Net finance cost
on pensions 2.3 2.1
------------------- ------ ------
Total net finance
cost 9.2 4.1
------------------- ------ ------
As expected the net finance cost for the year was higher than
2015 due to the increased level of net debt in 2016, which also
attracts a higher rate of interest, and the ceasing of
capitalisation of interest during the first half once the new
plants became available for use. Capitalisation of interest in 2016
was GBP0.5 million (2015: GBP2.7 million).
The small increase in net finance cost on pensions over 2015
reflects the higher discount rates assumed at the end of last year
compared to the year before.
PENSION SCHEMES
Devro operates a number of defined benefit schemes around the
group, although all of these are now closed to new entrants. The
net pension liabilities of these schemes can be analysed as
follows:
2016 2015
GBPm GBPm
------------------------- -------- --------
Fair value of scheme
assets 254.8 225.4
Present value of
scheme liabilities (350.8) (281.8)
------------------------- -------- --------
Net pension liabilities (96.0) (56.4)
------------------------- -------- --------
The increase in net pension liabilities during the year largely
reflects the lower discount rates at the end of 2016, compared with
the end of last year, especially in the UK. Further analysis of the
movement in net pension liabilities is set out in note 6 to the
financial statements.
TAX
2016 2015
GBPm GBPm
--------------------------- ------ ------
Tax charge on underlying
profit before tax 6.7 3.6
Tax credit on exceptional
items (2.7) (3.1)
--------------------------- ------ ------
Tax charge in income
statement 4.0 0.5
--------------------------- ------ ------
The group operates around the world and earns profits which are
subject to tax at differing rates in different tax jurisdictions.
The investment incentives the group had previously benefited from
in the Czech Republic became fully utilised in 2015 and as a result
the group's underlying tax rate increased this year to 23% (2015:
12%).
EARNINGS PER SHARE
2016 2015
--------------------------- ------ ------
Underlying basic earnings
per share 13.3p 15.4p
Basic earnings per share 1.3p 8.8p
--------------------------- ------ ------
We have again presented an adjusted earnings per share (EPS)
measure, which excludes exceptional items, to provide a better
indication of our underlying performance of the group. Underlying
basic EPS reduced by 2.1 pence with the improvement in underlying
EPS due to increased underlying operating profit (+2.9p) being more
than offset by the effects of increased interest (-3.1p) and the
higher effective tax rate (-1.9p).
The change in reported basic EPS reflects the lower underlying
basic EPS plus higher exceptional costs in 2016.
DIVID
2016 2015
------------------- ----- -----
Interim per share 2.7p 2.7p
Final per share 6.1p 6.1p
------------------- ----- -----
Total 8.8p 8.8p
------------------- ----- -----
The Board is recommending an unchanged final dividend of 6.1
pence per share, which will be payable on 12 May 2017 to
shareholders on the register at 31 March 2017.
ALTERNATIVE PERFORMANCE MEASURES
In addition to statutory financial measures, management uses
certain alternative performance measures (which are not defined by
IFRS) to assess the operating performance and financial position of
the group. The alternative performance measures that Devro uses are
'constant exchanges rates', 'underlying', 'earnings before
interest, tax, depreciation and amortisation (EBITDA)', 'net debt',
'covenant net debt' and 'return on capital employed'.
Constant exchange rates
The group has operations across the world in multiple
currencies, and is exposed to translation risk on fluctuations in
foreign exchange rates. As a result the group's reported revenue
will be impacted by movements in actual exchange rates. The group
presents revenue growth on a constant currency basis in order to
eliminate the translation effect of foreign exchange rate
movements, enabling investors to better understand the operational
performance of the group.
Revenue growth at constant currency is calculated by translating
both the current and prior year local currency amounts using the
prior period average exchange rates.
Underlying
Underlying figures are stated before exceptional items. Devro is
undergoing a major transformation including the construction and
start-up of two new plants in China and the US which completed in
2016, a restructuring of operations in Scotland and Australia
initiated in 2014 and the Devro 100 programme which will continue
until 2018. The incremental costs associated with implementing this
transformation are significant, and as a result have been
classified as exceptional items.
Reported operating profit reflects the costs associated with the
transformation without the benefits of the additional volumes
expected to be generated in 2017 and beyond. The underlying
measures have been adjusted to exclude exceptional items in order
to give a more accurate representation of the costs incurred to
manufacture the volumes produced in 2016. This treatment is
consistent with the internal reporting used to manage the
business.
A reconciliation from the underlying figures to the equivalent
reported figures is presented below:
2016 2015
Underlying Exceptional Reported Underlying Exceptional Reported
items items
------------------- ----------- ------------ --------- ----------- ------------ ---------
Operating profit
(GBPm) 38.1 (22.7) 15.4 33.3 (14.1) 19.2
Operating margin
(%) 15.8% (9.4%) 6.4% 14.5% (6.2%) 8.3%
Profit before tax
(GBPm) 28.9 (22.7) 6.2 29.2 (14.1) 15.1
Basic earnings
per share (p) 13.3p (12.0p) 1.3p 15.4p (6.6p) 8.8p
------------------- ----------- ------------ --------- ----------- ------------ ---------
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
EBITDA is defined as operating profit excluding depreciation and
amortisation. This measure is used by management to assess
operational efficiency and, given that it excludes non-cash
depreciation and amortisation, it is a useful approximation for
cash generation from operations. This measure is in common use
elsewhere and a reconciliation from reported figures is shown
below:
2016 2015
Underlying Exceptional Reported Underlying Exceptional Reported
items items
Operating profit
(GBPm) 38.1 (22.7) 15.4 33.3 (14.1) 19.2
Depreciation &
amortisation (GBPm) 20.7 2.3 23.0 16.4 1.2 17.6
---------------------- ----------- ------------ --------- ----------- ------------ ---------
EBITDA (GBPm) 58.8 (20.4) 38.4 49.7 (12.9) 36.8
---------------------- ----------- ------------ --------- ----------- ------------ ---------
Net debt
Net debt is defined as the excess of total borrowings over cash
and cash equivalents. It is a measure that provides additional
information on the group's financial position and is a measure in
common use elsewhere. A reconciliation from reported figures is
presented below:
2016 2015
GBPm GBPm
--------------------------- -------- --------
Current borrowings (1.9) (1.9)
Non-current borrowings (161.6) (133.2)
--------------------------- -------- --------
Total borrowings (163.5) (135.1)
Cash and cash equivalents 9.9 9.6
--------------------------- -------- --------
Net debt (153.6) (125.5)
--------------------------- -------- --------
Furthermore, the definition of net debt used to calculate one of
the group's banking covenant ratios also includes derivative
financial liabilities, as shown below:
2016 2015
GBPm GBPm
---------------------- -------- --------
Net debt (153.6) (125.5)
Derivative financial
liabilities (2.6) (2.3)
---------------------- -------- --------
Covenant net debt (156.2) (127.8)
---------------------- -------- --------
Return on capital employed
Return on capital employed (ROCE) is used as a measure of how
well the group is utilising its available capital, and is a measure
in common use elsewhere. ROCE is calculated by presenting
underlying operating profit as a proportion of average capital
employed.
Capital employed for this purpose is defined as net assets
excluding interest-bearing assets and liabilities, derivative
financial instruments, current and deferred tax balances, pension
obligations and provisions for liabilities and other charges.
A reconciliation from reported figures for 2016 and 2015 is
presented below:
2016 2015 2014
GBPm GBPm GBPm
---------------------- ------- ------- -------
Goodwill 3.1 3.1 -
Intangible assets 7.3 6.1 4.0
Property, plant
and equipment 308.6 270.1 230.3
Trade and other
receivables 35.2 38.4 33.7
Inventories 33.8 28.5 33.4
Trade and other
payables (37.8) (33.7) (34.1)
---------------------- ------- ------- -------
Capital employed 350.2 312.5 267.3
Average capital
employed* 331.4 289.9
Underlying operating
profit 38.1 33.3
Return on capital
employed 11.5% 11.5%
---------------------- ------- ------- -------
* Average capital employed is calculated as the average between
the balances as at the start of the year and as at the end of the
year.
GOING CONCERN
At 31 December 2016 the group was operating within the banking
covenants related to its revolving credit facility and US private
placement facilities. The group's detailed financial forecasts
indicate that there is sufficient headroom in the facilities for
the foreseeable future and that they can be repaid in line with the
expected terms.
After making enquiries, the directors have a reasonable
expectation that the group have adequate resources to continue in
operation for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
Rutger Helbing
Group Finance Director
Consolidated income statement (unaudited)
for the year ended 31 December 2016
2016 2016 2016 2015 2015 2015
Underlying Exceptional Reported Underlying Exceptional Reported
items items
Note GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 2 241.1 - 241.1 230.2 - 230.2
--------- --------- --------- --------- --------- ---------
Operating profit 3,4 38.1 (22.7) 15.4 33.3 (14.1) 19.2
Finance income 0.1 - 0.1 - - -
Finance cost (7.0) - (7.0) (2.0) - (2.0)
Net finance
cost on pensions (2.3) - (2.3) (2.1) - (2.1)
--------- --------- --------- --------- --------- ---------
Profit before
tax 28.9 (22.7) 6.2 29.2 (14.1) 15.1
Tax (6.7) 2.7 (4.0) (3.6) 3.1 (0.5)
--------- --------- --------- --------- --------- ---------
Profit for
the year attributable
to owners of
the parent 22.2 (20.0) 2.2 25.6 (11.0) 14.6
--------- --------- --------- --------- --------- ---------
Earnings per
share
Basic 5 1.3p 8.8p
Diluted 5 1.3p 8.7p
All results relate to continuing operations.
Consolidated statement of comprehensive income (unaudited)
for the year ended 31 December 2016
2016 2015
GBP'm GBP'm
Profit for the year 2.2 14.6
--------- ---------
Other comprehensive (expense)/income
for the year
Items that will not be reclassified
to profit or loss
Pension obligations:
* re-measurements (33.0) 4.0
* movement in deferred tax 5.2 (2.6)
---------- ----------
Total items that will not be
reclassified to profit or loss (27.8) 1.4
Items that may be reclassified
subsequently to profit or loss
Cash flow hedges:
- net fair value (losses)/gains (0.1) 1.1
- reclassified and reported
in profit (1.0) 0.1
- tax on fair value movements 0.2 (0.2)
Net investment hedges:
- fair value (losses)/gains (1.6) 0.9
- tax on fair value movements 0.3 (0.2)
Net exchange adjustments 19.8 (6.0)
---------- ----------
Total items that may be reclassified
subsequently to profit or loss 17.6 (4.3)
Other comprehensive expense
for the year, net of tax (10.2) (2.9)
---------- ----------
Total comprehensive (expense)/income
for the year attributable to
owners of the parent (8.0) 11.7
====== ======
Consolidated Balance sheets (unaudited)
at 31 December 2016
2016 2015
Note GBP'm GBP'm
ASSETS
Non-current assets
Goodwill 3.1 3.1
Intangible assets 7.3 6.1
Property, plant and
equipment 308.6 270.1
Deferred tax assets 40.3 25.5
Trade and other receivables 4.7 3.2
-------- --------
364.0 308.0
-------- --------
Current assets
Inventories 33.8 28.5
Current tax assets 0.1 -
Trade and other receivables 30.5 35.2
Derivative financial
instruments 1.4 3.5
Cash and cash equivalents 9.9 9.6
-------- --------
75.7 76.8
-------- --------
Total assets 439.7 384.8
===== =====
LIABILITIES
Current liabilities
Borrowings 1.9 1.9
Derivative financial
instruments 2.6 2.3
Trade and other payables 34.4 31.1
Current tax liabilities 7.0 5.4
Provisions for other
liabilities and charges 0.8 5.5
-------- --------
46.7 46.2
-------- --------
Non-current liabilities
Borrowings 161.6 133.2
Deferred tax liabilities 19.4 14.8
Pension obligations 6 96.0 56.4
Other payables 3.4 2.6
Provisions for other
liabilities and charges 3.6 0.5
-------- --------
284.0 207.5
-------- --------
Total liabilities 330.7 253.7
===== =====
Net assets 109.0 131.1
===== =====
EQUITY
Capital and reserves
attributable to owners
of the parent
Ordinary shares 16.7 16.7
Share premium 9.3 9.3
Other reserves 70.8 52.9
Retained earnings 12.2 52.2
--------- ---------
Total equity 109.0 131.1
===== =====
Consolidated statement of changes in equity (unaudited)
for the year ended 31 December 2016
Ordinary Share Other Retained Total
shares premium reserves earnings equity
Attributable
to owners
of
the
parent
GBP'm GBP'm GBP'm GBP'm GBP'm
Balance at 1 January 2016 16.7 9.3 52.9 52.2 131.1
-------- ------- -------- -------- ----------
Comprehensive income/(expense)
Profit for the year - - - 2.2 2.2
-------- ------- -------- -------- ----------
Other comprehensive income/(expense)
Cash flow hedges, net
of tax - - (0.9) - (0.9)
Net investment hedges,
net of tax - - (1.3) - (1.3)
Pension obligations, net
of tax - - - (27.8) (27.8)
Exchange adjustments - - 19.8 - 19.8
-------- ------- -------- -------- ----------
Total other comprehensive
income/( expense) - - 17.6 (27.8) (10.2)
-------- ------- -------- -------- ----------
Total comprehensive income/(expense) - - 17.6 (25.6) (8.0)
-------- ------- -------- -------- ----------
Transactions with owners
Performance Share Plan
charge, net of tax - - 0.6 - 0.6
Performance Share Plan - - - - -
credit in respect of shares
vested
Performance Share Plan
credit in respect of awards
lapsed - - (0.3) 0.3 -
Issue of share capital - - - - -
Dividends paid - - - (14.7) (14.7)
-------- ------- -------- -------- ----------
Total transactions with
owners - - 0.3 (14.4) (14.1)
-------- ------- -------- -------- ----------
Balance at 31 December
2016 16.7 9.3 70.8 12.2 109.0
===== ==== ===== ===== ======
Balance at 1 January 2015 16.7 9.3 56.5 50.7 133.2
-------- ------- -------- -------- ----------
Comprehensive income/(expense)
Profit for the year - - - 14.6 14.6
-------- ------- -------- -------- ----------
Other comprehensive income/(expense)
Cash flow hedges, net
of tax - - 1.0 - 1.0
Net investment hedges,
net of tax - - 0.7 - 0.7
Pension obligations, net
of tax - - - 1.4 1.4
Exchange adjustments - - (6.0) - (6.0)
-------- ------- -------- -------- ----------
Total other comprehensive
income/(expense) - - (4.3) 1.4 (2.9)
-------- ------- -------- -------- ----------
Total comprehensive expense - - (4.3) 16.0 11.7
-------- ------- -------- -------- ----------
Transactions with owners
Performance Share Plan
charge - - 0.9 - 0.9
Performance Share Plan - - - - -
credit in respect of shares
vested
Performance Share Plan
credit in respect of awards
lapsed - - (0.2) 0.2 -
Issue of share capital - - - - -
Dividends paid - - - (14.7) (14.7)
-------- ------- -------- -------- ----------
Total transactions with
owners - - 0.7 (14.5) (13.8)
-------- ------- -------- -------- ----------
Balance at 31 December
2015 16.7 9.3 52.9 52.2 131.1
===== ==== ===== ===== ======
Consolidated cash flow statement (unaudited)
for the year ended 31 December 2016
2016 2015
Note GBP'm GBP'm
Cash flows from operating
activities
- Cash generated from
operations 7 39.0 34.4
- Interest received 0.1 -
- Interest paid (7.8) (4.4)
- Tax paid (5.8) (4.0)
---------- ----------
Net cash generated from
operating activities 25.5 26.0
---------- ----------
Cash flows from investing
activities
- Purchase of property,
plant and equipment (22.3) (54.2)
- Purchase of intangible
assets (1.7) (1.1)
- Capital grants received 0.7 0.1
- Acquisition of subsidiary - (6.4)
----------- -----------
Net cash used in investing
activities (23.3) (61.6)
----------- -----------
Cash flows from financing
activities
- Proceeds from the issue - -
of ordinary shares
- Borrowing under the
loan facilities 8.4 48.6
- Proceeds from financial 3.4 -
instruments
- Dividends paid (14.7) (14.7)
----------- -----------
Net cash (used in)/generated
from financing activities (2.9) 33.9
----------- -----------
Net decrease in cash and
cash equivalents (0.7) (1.7)
====== ======
Net cash and cash equivalents
at 1 January 7.7 9.4
Net decrease in cash and
cash equivalents (0.7) (1.7)
Exchange gain on cash 1.0 -
and cash equivalents
----------- ----------
Net cash and cash equivalents
at 31 December 8.0 7.7
====== ======
Cash and cash equivalents 9.9 9.6
Bank overdrafts (1.9) (1.9)
----------- ----------
Net cash and cash equivalents
at 31 December 8.0 7.7
====== ======
1. Financial information
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 December 2016
or 2015.
The financial information for 2015 is derived from the statutory
accounts for 2015 which have been delivered to the registrar of
companies. The auditor has reported on the 2015 accounts; their
report was (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The statutory accounts for 2016 will be finalised on the basis
of the financial information presented by the directors in this
preliminary announcement and will be delivered to the registrar of
companies in due course.
2. Segment information
The chief operating decision maker has been identified as the
Board. The Board reviews the group's financial results on a
geographical segment basis with three identifiable operating
segments:
-- Americas: which includes North America and Latin America.
-- Asia - Pacific: which includes Australia, New Zealand, Japan,
China and the rest of South East Asia.
-- Europe: which includes Continental Europe, UK, Ireland and
Africa.
The Board assesses the performance of the operating segments
based on underlying operating profit. This measurement basis
excludes the effects of exceptional income and expenditure from the
operating segments. The Board assesses the operating segments based
on group profit for external sales in each region, rather than
statutory profit for the region which also includes profit on
intercompany sales.
Finance income and cost, and net finance cost on pensions, are
not included in the segment results that are reviewed by the
Board.
Americas Asia - Europe Total group
Pacific
2016 2015 2016 2015 2016 2015 2016 2015
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue
Sales to external
customers 64.0 64.0 75.5 69.6 101.6 96.6 241.1 230.2
--------- --------- --------- --------- --------- --------- --------- ----------
Underlying operating
profit before
corporate overheads 7.5 2.8 14.3 13.0 18.6 21.3 40.4 37.1
Corporate overheads (2.3) (3.8)
-------- --------
Underlying operating
profit 38.1 33.3
Exceptional
items (13.0) (10.7) (8.7) (3.7) (0.9) 0.3 (22.6) (14.1)
Corporate (0.1) -
exceptional
items
-------- ---------
Operating profit 15.4 19.2
Finance income 0.1 -
Finance cost (7.0) (2.0)
Net finance
cost on pensions (2.3) (2.1)
--------- ---------
Profit before
tax 6.2 15.1
====== ======
3. Operating profit
2016 2016 2016 2015 2015 2015
Underlying Exceptional Reported Underlying Exceptional Reported
items items
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 241.1 - 241.1 230.2 - 230.2
Cost of sales (152.1) (18.5) (170.6) (153.0) (11.1) (164.1)
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 89.0 (18.5) 70.5 77.2 (11.1) 66.1
---------- ---------- ---------- ---------- ---------- ----------
Selling and distribution
costs (19.1) - (19.1) (15.4) - (15.4)
Administrative expenses (19.5) (4.2) (23.7) (20.1) (3.0) (23.1)
Research and development
expenditure (7.2) - (7.2) (5.3) - (5.3)
Other expenses (5.3) - (5.3) (3.2) - (3.2)
---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses (51.1) (4.2) (55.3) (44.0) (3.0) (47.0)
Other operating
income 0.2 - 0.2 0.1 - 0.1
---------- ---------- ---------- ---------- ---------- ----------
Net operating expenses (50.9) (4.2) (55.1) (43.9) (3.0) (46.9)
---------- ---------- ---------- ---------- ---------- ----------
Operating profit/(expense) 38.1 (22.7) 15.4 33.3 (14.1) 19.2
====== ====== ====== ====== ====== ======
An additional GBP0.8m (2015:GBP0.8m) of development expenditure
has been capitalised within intangible assets
4. Exceptional items
Exceptional charges included in operating profit were GBP22.7m
(2015: GBP14.1m).
2016 2015
GBP'm GBP'm
Investment projects
Pre-operating costs to establish
new manufacturing plants (i) 20.3 10.9
Costs related to the closure of old
manufacturing plant (ii) 0.4 3.5
-------- --------
20.7 14.4
Devro 100 programme (iii) 2.0 -
Restructuring and other (iv) - (0.3)
--------- --------
Total exceptional items 22.7 14.1
===== ====
Exceptional items comprise incremental costs that are directly
related to the actions being taken to transform the business.
During 2015 and 2016 these costs principally related to the two
capital investment projects to establish new plants in the USA and
China and the closure of the old plant in the USA. Exceptional
costs were also incurred in 2016 relating to the Devro 100
programme, which is focussed on growing revenue through
significantly improving sales capabilities, further improving
manufacturing efficiencies to reduce unit costs and introducing the
next generation of differentiated products.
(i) Costs related to the projects to establish new manufacturing
plants in the USA and China, including project management,
training, legal and professional fees, and other incremental costs
incurred prior to the commencement of normal production that are
not eligible for capitalisation.
(ii) Costs incurred in the USA related to the closure of the old
manufacturing plant. 2016 costs comprise redundancy and retention
costs. 2015 costs comprise redundancy and retention costs,
decommissioning costs, accelerated depreciation and the write off
of raw materials which are specific to the old manufacturing
process in the USA and cannot be re-used.
(iii) Redundancy and retention costs and other incremental
external cost, including professional fees.
(iv) Release of excess decommissioning provisions established in
prior period net of acquisition related costs, including
professional fees.
5. Earnings per share
2016 2015
GBP'm GBP'm
Profit attributable to equity holders 2.2 14.6
-------- --------
Underlying profit attributable to
equity holders 22.2 25.6
-------- --------
Earnings per share
- Basic 1.3p 8.8p
- Underlying basic 13.3p 15.4p
- Diluted 1.3p 8.7p
- Underlying diluted 13.2p 15.3p
2016 2015
Shares in issue
Weighted average number of shares 166,941,137 166,928,534
Adjustments for:
- Performance Share Plan 1,717,046 1,477,842
----------------- -----------------
Weighted average number of shares
adjusted for potential dilution 168,658,183 168,406,376
========== ==========
Basic earnings per share is calculated by dividing the profit
for the year attributable to owners of the parent of GBP2.2m (2015:
GBP14.6m) by 166,941,137 (2015: 166,928,534) shares, being the
weighted average number of shares in issue throughout the year.
Shares arising from the Performance Share Plan are only treated
as dilutive where the effect is to reduce earnings per share.
Diluted earnings per share is calculated by dividing the profit for
the year attributable to ordinary shareholders of GBP2.2m (2015:
GBP14.6m) by the average number of shares, including the effect of
all dilutive potential shares, of 168,658,183 (2015:
168,406,376).
Underlying earnings per share is calculated in order to
eliminate the effect of exceptional items after tax in 2015 of
GBP20.0m (2015: GBP11.0m) on the results. Underlying basic earnings
per share is calculated by dividing the underlying profit
attributable to ordinary shareholders of GBP22.2m (2015: GBP25.6m)
by 166,941,137 (2015: 166,928,534) shares, being the weighted
average number of shares in issue throughout the year.
6. Pension obligations
The group operates a number of pension schemes throughout the
world. The major schemes are of the defined benefit type and, with
the exception of Germany where book reserves are supported by
insurance policies, the assets of the schemes are held in separate
trustee-administered funds. The defined benefit schemes are closed
to new entrants. The total pension obligation cost for the group
was GBP8.2m (2015: GBP7.5m), of which GBP4.0m (2015: GBP3.2m)
related to the overseas schemes. On the advice of the actuaries,
cash contributions to the group's defined benefit schemes are
expected to be GBP5.2m for the year ending 31 December 2017.
The last formal actuarial valuations of the group's material
defined benefit schemes have been updated to 31 December 2016 by
qualified independent actuaries. The major assumptions used by the
actuaries in the following principal countries were:
Australia United USA
Kingdom
2016 2015 2016 2015 2016 2015
% % % % % %
Discount rate 4.05 4.00 2.60 3.75 3.85 3.95
Rate of increase in
salaries* 3.50 3.50 1.00 1.00 - -
General inflation 2.50 2.50 3.25 3.00 - -
* As part of the changes to the United Kingdom plan agreed in
2010, future pensionable salary increases are capped at 1% per
annum. No rate of increase in salaries has been assumed in respect
of the USA plan as the plan is now frozen.
Net pension assets and liabilities at 31 December 2016 were as
follows:
Australia United Kingdom USA Other Total
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Total fair
value of
scheme
assets 10.6 9.2 190.7 169.4 51.3 44.8 2.2 2.0 254.8 225.4
Present
value of
scheme
liabilities (10.6) (9.2) (251.8) (198.7) (84.4) (70.7) (4.0) (3.2) (350.8) (281.8)
-------- -------- --------- --------- --------- --------- -------- -------- --------- ---------
Deficit - - (61.1) (29.3) (33.1) (25.9) (1.8) (1.2) (96.0) (56.4)
Related
deferred
tax assets - - 10.4 5.2 11.2 8.9 0.5 0.4 22.1 14.5
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net pension
liabilities - - (50.7) (24.1) (21.9) (17.0) (1.3) (0.8) (73.9) (41.9)
===== ===== ====== ====== ====== ====== ===== ===== ====== ======
Australia United Kingdom USA Other Total
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Deficit
in scheme
at beginning
of year - (0.2) (29.3) (33.8) (25.9) (23.5) (1.2) (1.5) (56.4) (59.0)
Movement
in year:
Pension
charge (0.6) (0.6) (2.7) (3.2) (1.8) (1.4) (0.1) 0.1 (5.2) (5.1)
Employer
contributions 0.4 0.4 3.8 3.7 - 0.7 - - 4.2 4.8
Re-measurements 0.1 0.4 (32.9) 4.0 0.1 (0.5) (0.3) 0.1 (33.0) 4.0
Exchange
(losses)/
gains 0.1 - - - (5.5) (1.2) (0.2) 0.1 (5.6) (1.1)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Deficit
in scheme
at end of
year - - (61.1) (29.3) (33.1) (25.9) (1.8) (1.2) (96.0) (56.4)
===== ===== ===== ===== ===== ===== ===== ==== ===== ====
7. Reconciliation of profit before tax to cash generated from operations
2016 2015
GBP'm GBP'm
Profit before tax 6.2 15.1
Adjustments for:
Finance income (0.1) -
Finance cost 7.0 2.0
Net finance cost on pensions 2.3 2.1
Pension cost adjustment for
normal contributions 1.1 1.4
Depreciation of property,
plant and equipment - including
exceptional items of GBP2.3m
(2015: GBP1.2m) 22.1 16.5
Amortisation of intangible
assets 0.9 1.1
Release from capital grants
balance (0.2) (0.1)
Pension deficit funding (2.5) (3.2)
Performance Share Plan 0.6 0.8
Changes in working capital:
(Increase)/decrease in inventories (1.1) 5.2
Decrease/(increase) in trade
and other receivables 5.4 (4.2)
(Decrease)/increase in trade
and other payables (0.2) 0.6
Decrease in provisions (2.5) (2.9)
-------- --------
Cash generated from operations 39.0 34.4
===== =====
Of which:
Cash generated from underlying
operations before pension
deficit funding 64.4 53.1
Pension deficit funding (2.5) (3.2)
Exceptional items (22.9) (15.5)
-------- --------
Cash generated from operations 39.0 34.4
===== =====
8. Analysis of net debt
2016 2015
GBP'm GBP'm
Cash and cash equivalents 9.9 9.6
Bank overdrafts (1.9) (1.9)
-------- --------
8.0 7.7
Other bank borrowings (80.4) (66.5)
US dollar private placement (81.2) (66.7)
---------- ----------
Net Debt (153.6) (125.5)
====== ======
The company news service from the London Stock Exchange
END
FR OKNDKABKDFNK
(END) Dow Jones Newswires
March 06, 2017 02:00 ET (07:00 GMT)
Devro (LSE:DVO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Devro (LSE:DVO)
Historical Stock Chart
From Apr 2023 to Apr 2024
