RNS Number:5325P
Ennstone PLC
09 September 2003
ENNSTONE plc
("Ennstone" or "the Group")
Interim Results for the six months ended 30 June 2003
Ennstone, an aggregates and building products company with operations in the UK
and eastern USA, reports another record set of results for the half year period.
HIGHLIGHTS
* Group turnover up 26% to #46.2 million (2002: #36.7 million)
* EBITDA up 9.5% to #7.0 million (2002: #6.4 million)
* Earnings per share rose 1% to 0.72p (2002: 0.71p)
* Cash inflow from operations up over 40% to #5.9 million (2002: #4.2 million)
* Interim dividend increased by 9.4% to 0.35 pence per ordinary share
(2002: 0.32 pence)
* UK - Excellent performance. Operating profit up 22%
* US - Satisfactory performance despite severe weather conditions
Vaughan McLeod, Chairman commented:
"Overall, the Group achieved a record performance in challenging first half
conditions. The resilience of our business is built around a low cost base,
product flexibility and delivering the customers' requirements. This strategy
will enable the Group to make further progress in 2003."
9 September 2003
Further information about Ennstone can be found at www.ennstone.co.uk
ENQUIRIES:
Ennstone plc 01332 694444
Vaughan McLeod, Chairman (9 September 2003) 020 7457 2020
College Hill 020 7457 2020
Mark Garraway or Matthew Gregorowski
CHAIRMAN'S STATEMENT
I am delighted to announce that the Group has achieved record profits for the
first six months of the year. The UK operations made an excellent contribution
to the Group's overall result whilst the US, despite the impact of severe
weather conditions and adverse US dollar movements, produced a satisfactory
performance.
Financial Results
Six months to 30 Six months to 30 Increase
June 2003 June 2002
#'000 #'000
Group turnover 46,153 36,660 + 25.9%
EBITDA 6,976 6,372 +9.5%
Group operating profit 3,507 3,341 + 5.0%
Profit before tax 1,735 1,653 + 5.0%
Basic earnings per share 0.72p 0.71p + 1.4%
Interim dividend per share 0.35p 0.32p + 9.4%
Earnings before interest, tax, depreciation and amortisation ("EBITDA")
increased by 9.5% to #7.0 million on Group turnover up 25.9% to #46.2 million.
Profit before taxation increased by 5.0% to #1.7 million. Group operating
margin on sales of 7.6% was affected by an increase in surfacing and contracting
work in Scotland, which is at significantly lower margins, and the impact of a
full six months aggregates levy.
The Group's net interest charge was at a similar level to the comparative period
last year at #1.4 million. The effective tax rate for the period of 30% is
based on our estimate of the overall tax charge for the year. Basic earnings
per share were 0.72p per share (2002: 0.71p).
Net cash inflow from operating activities increased by 40.6% to #5.9 million.
Capital expenditure in the period amounted to #11.1 million, of which #6.2
million was in cash, relating mainly to a major upgrade of plant at Cloud Hill
Quarry and continuing investment in new greenfield production facilities in the
US. During the period, the Group invested #5.6 million on acquisitions. Net
debt at the end of the period was #60.7 million.
Equity shareholder funds at 30 June 2003 were #77.0 million (31 December 2002:
#74.2 million), resulting in gearing of 78.9%.
Dividend
The interim dividend has been increased by almost 10% to 0.35p per ordinary
share reflecting the Board's confidence that further progress will be made
throughout the remainder of the year.
The interim dividend will be paid on 9 January 2004 to shareholders on the
register at close of business on 12 December 2003.
UK Aggregates (Turnover: #36.9 million; Operating Profit: #3.5 million)
Our UK business is built around a low cost base, a focussed range of products
and the production capacity to respond to short term peaks in demand. These
strengths were amply demonstrated in the first six months of this year.
England - Ennstone Breedon
Crushed rock and sand and gravel volumes were buoyant throughout the period,
particularly in the first quarter, and resulted in an excellent contribution
from this business. Development of new production facilities at Cloud Hill
Quarry are nearing completion and will provide significant additional capacity
of single size aggregates in the second half. In line with our strategy of
expanding niche products, we have recently installed a new automated bagging
facility in Breedon Quarry, giving us an important foothold in this market.
Sales of decorative aggregates are continuing to grow.
Our stone products business had an excellent first half. Overall sales
increased by 39% with the strongest performance coming from reconstituted stone
products. Whilst the busy housing market contributed to this performance,
productivity improvements, arising from capital expenditure last year at both
Stainton and Burford, resulted in a lower cost base and have been an important
platform for growth. Our brand named products are becoming well established in
the market place.
In June, we acquired the entire share capital of T & T Aggregates Limited,
incorporating a limestone quarry near Doncaster, expanding our regional market
especially in the important M1-A1 region. Additional capital expenditure on new
plant at this quarry will be incurred in the second half which will enable us to
maximise the potential of this acquisition.
Scotland - Ennstone Thistle
Increased turnover from surfacing and contracting work in Scotland, although at
lower margins, enabled Ennstone Thistle to deliver record profits in the first
half. Our operations on the West Coast of Scotland delivered a strong
performance, with focused cost reductions combined with the addition of a small
contracting business placing us in an excellent position.
Expenditure by the Scottish Executive on highway maintenance increased our sales
of asphalt and dry stone in the first half. Sales of single size aggregates
into the pre-cast and ready mixed concrete markets have also increased and, with
the development of our own ready mixed concrete business, further growth in dry
stone sales are anticipated.
BEAR Scotland Limited, our associated highway maintenance business,
significantly improved its operational performance during the six months to 30
June 2003. A recent review by the independent Performance Audit Group, on
behalf of the Scottish Executive, publicly acknowledged this improved
performance. Future success relies upon further funds being released by the
Scottish Executive and continuing efforts to achieve the challenging cost
assumptions made at the time of the tender in 2000. BEAR is currently on track
to achieve its 2003 forecasts, but its 2004 targets may be a little optimistic.
US Aggregates (Turnover: #9.3 million; Operating Profit: #0.9 million)
The performance of our US operations was dominated by the extreme weather
conditions in the first half of the year. For the first time since our
acquisition of this business, snow remained on the ground in Pennsylvania until
early April. Snow also virtually eliminated concrete production in Virginia in
February and early March, whilst exceptionally wet conditions severely hampered
us again in May.
Turnover was broadly similar to the comparative period last year. However, an
increase in the proportion of lower margin products sold, as a result of the
adverse weather, coupled with the negative effect of US dollar movements,
resulted in a reduction in US operating profit.
Quarry developments in Pennsylvania and Virginia are nearing completion and
these, together with the planned opening of Charlottesville concrete plant in
September, will provide us with a strong base for increasing performance in the
second half of this year.
Our US operations continued to expand with the acquisition, in June 2003, of
Valley Redi Mix Inc., based in North West Virginia. Cost and synergy benefits
are rapidly being achieved and once operational integration has been fully
completed, further improvements are anticipated.
Enneurope
Enneurope plc ("Enneurope"), an AIM listed aggregates company with operations in
Poland in which Ennstone has a 29.99 per cent. interest, has today announced a
placing and open offer of #3 million, before expenses, to fund its acquisition
strategy which is aimed at developing a 25% market share in North West Poland.
Enneurope recently acquired a concrete plant and related assets in Stargard to
supplement its existing operations.
Ennstone has entered into an agreement with Arlington Group plc ("Arlington")
and Enneurope which will provide for Arlington to invest up to #3 million in
Enneurope by way of a firm placing and underwriting of an open offer of new
Enneurope shares at a price of 15 pence per share (the "Proposals"). The
Proposals are subject to Enneurope shareholder approval.
The Board of Ennstone believes that this fundraising should enable Enneurope to
make strong progress towards building a significant market presence in North
West Poland over the next few months. This will leave Enneurope well placed to
take advantage of Poland's entry into the EU in 2004, following the strong
referendum vote in favour of EU membership.
Outlook
Demand in the UK remains firm with encouraging levels of activity and we expect
to deliver a good performance for the year as a whole.
In the US, following the bad weather in the first half, there is a substantial
backlog of orders which should improve demand prospects and, combined with the
development of our new quarries, we remain optimistic of achieving our
performance targets for the full year.
Overall, the Group achieved a record performance in challenging first half
conditions. The resilience of our business is built around a low cost base,
product flexibility and delivering the customers' requirements. This strategy
will enable the Group to make further progress in 2003.
Vaughan Mcleod
Chairman
9 September 2003
Consolidated Profit and Loss Account
for the six months ended 30 June 2003
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
unaudited unaudited audited
#'000 #'000 #'000
Group turnover 46,153 36,660 76,950
Cost of sales (31,282) (23,631) (47,164)
Gross profit 14,871 13,029 29,786
Net operating expenses (11,364) (9,688) (20,909)
Group operating profit 3,507 3,341 8,877
Share of loss of associated undertakings (373) (250) (1,887)
Profit on reduction in interest in associated - - 845
undertaking
(373) (250) 1,042
Loss on sale of investments and fixed assets - (8) (81)
Income from other fixed asset investments - 26 42
Profit on ordinary activities before interest 3,134 3,109 7,796
Interest payable and similar charges (1,399) (1,456) (2,787)
Profit on ordinary activities before taxation 1,735 1,653 5,009
Tax on profit on ordinary activities (530) (500) (1,259)
Profit on ordinary activities after taxation 1,205 1,153 3,750
Minority interests 6 9 24
Profit for the financial period 1,211 1,162 3,774
Dividends (601) (521) (1,680)
Retained profit for the financial period 610 641 2,094
Earnings per ordinary share
Basic 0.72p 0.71p 2.32p
Diluted 0.72p 0.71p 2.31p
There were no material acquisitions and no discontinued operations during either
the current or preceding periods.
Consolidated Balance Sheet
as at 30 June 2003
30 June 30 June 31 December
2003 2002 2002
unaudited unaudited audited
#'000 #'000 #'000
Fixed assets
Intangible assets 25,578 22,401 23,120
Tangible assets 112,002 92,110 98,500
Investments 1,687 2,703 1,966
139,267 117,214 123,586
Current assets
Stocks 5,494 5,055 5,259
Debtors 21,716 19,651 19,287
Investments 1,813 2,090 2,478
Cash at bank and in hand 1,522 2,649 2,120
30,545 29,445 29,144
Creditors: amounts falling due within one year (29,903) (24,176) (27,627)
Net current assets 642 5,269 1,517
Total assets less current liabilities 139,909 122,483 125,103
Creditors: amounts falling due after more than one year (56,474) (43,823) (44,646)
Provisions for liabilities and charges (6,478) (4,248) (6,226)
Net assets 76,957 74,412 74,231
Capital and reserves
Called up share capital 67,823 65,685 65,697
Share premium account 11,296 10,785 10,787
Other reserves 2,347 2,347 2,347
Profit and loss account (4,612) (4,565) (4,712)
Equity shareholders' funds 76,854 74,252 74,119
Minority interests - equity and non-equity 103 160 112
76,957 74,412 74,231
Consolidated Cash Flow Statement
for the six months ended 30 June 2003
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2003 2002 2002
unaudited unaudited audited
#'000 #'000 #'000
Operating profit 3,507 3,341 8,877
Depreciation and amortisation 3,842 3,263 6,957
Working capital movements (1,495) (2,440) (1,501)
Net cash inflow from operating activities 5,854 4,164 14,333
Returns on investments and servicing of finance (1,464) (1,403) (2,757)
Taxation (291) 101 (593)
Capital expenditure and financial investment (5,481) (2,504) (3,616)
Acquisitions and disposals (5,571) 1,907 (3,322)
Equity dividends paid - - (1,517)
Net cash (outflow)/inflow before financing (6,953) 2,265 2,528
Management of liquid resources 458 295 1,059
Financing 3,898 (2,569) (2,153)
(Decrease)/increase in cash in the period (2,597) (9) 1,434
Reconciliation of Net Cash Flow to Movement in Net Debt
for the six months ended 30 June 2003
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2003 2002 2002
unaudited unaudited audited
#'000 #'000 #'000
(Decrease)/increase in cash in the period (2,597) (9) 1,434
Cash (inflow)/outflow from movements in debt and (1,567) 2,569 2,167
lease financing
Cash inflow from change in liquid resources (458) (295) (1,059)
Changes in net debt resulting from cash flows (4,622) 2,265 2,542
Loans and finance leases acquired with subsidiary (46) - (1,553)
undertaking
New finance leases (4,956) (2,399) (6,020)
Exchange movements 361 704 1,317
Movement in net debt in the period (9,262) 570 (3,714)
Net debt at the beginning of period (51,471) (47,757) (47,757)
Net debt at the end of period (60,734) (47,187) (51,471)
Consolidated Statement of Total Recognised Gains and Losses
for the six months ended 30 June 2003
Six months Six months Year ended
ended ended 31 December
30 June 2003 30 June 2002 2002
unaudited unaudited audited
#'000 #'000 #'000
Profit for the financial period 1,211 1,162 3,774
Exchange movements (510) (1,093) (2,071)
Total recognised gains for the period 701 69 1,703
Change in accounting policy for deferred tax - - (622)
Total recognised gains since last report 701 69 1,081
Segmental analysis
for the six months ended 30 June 2003
Six months Six months Year ended
ended ended 31 December
30 June 2003 30 June 2002 2002
unaudited unaudited audited
#'000 #'000 #'000
Group turnover
United Kingdom 36,873 27,239 57,232
United States 9,280 9,421 19,718
46,153 36,660 76,950
Operating profit
United Kingdom 3,459 2,835 7,436
United States 863 1,345 3,029
Central administration (815) (839) (1,588)
Group operating profit 3,507 3,341 8,877
United Kingdom
Share of loss of associated undertakings (373) (250) (1,887)
Profit on reduction in interest in associated
undertaking - - 845
(373) (250) (1,042)
Loss on sale of investments and fixed assets - (8) (81)
Income from other fixed asset investments - 26 42
Profit on ordinary activities before interest 3,134 3,109 7,796
Notes to the Interim Financial Statements
for the six months ended 30 June 2003
1. Basic earnings per ordinary share are calculated by dividing the profit
attributable to ordinary shareholders of #1,211,000 (2002:#1,162,000) by
the weighted average number of ordinary shares in issue during the period
of 167,808,095 (2002: 163,018,790).
2. The financial information for the six months ended 30 June 2003 and the
comparative figures for the six months ended 30 June 2002 have not been
audited or reviewed. The unaudited financial information is stated on a
basis of accounting policies and presentation consistent with that adopted
in the most recent audited consolidated financial statements for the year
ended 31 December 2002. The summarised financial information in respect of
the year ended 31 December 2002 does not constitute financial statements
within the meaning of section 240 of the Companies Act 1985. The financial
statements for that year have been reported on by the Company's auditor and
delivered to the Registrar of Companies. The audit report was unqualified
and did not contain a statement under section 237(2) or section 237(3) of
the Companies Act 1985.
3. Copies of the 2003 Interim Report are available from the Company's
Registered Office, Breedon Hall, Breedon on the Hill, Derby, DE73 1AN.
This information is provided by RNS
The company news service from the London Stock Exchange
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