TIDMLCT
RNS Number : 4193J
Lincat Group PLC
31 March 2010
Lincat Group plc
Preliminary Results for the year to 1 January 2010
Lincat Group plc ("the Group"), the AIM listed manufacturer of commercial
catering appliances and bar equipment, announces its preliminary results for the
year to 1 January 2010.
Financial highlights:
· Pre-tax profit of GBP9.9m (2008: GBP5.3m), including profit of GBP5.1m on
the sale of vacated manufacturing site
· Profitable disposal of loss-making subsidiary, Mercury
· Year-end net cash balance of GBP5.1m (2008: net debt of GBP3.0m)
· Earnings per share of 157.8p (2008: 56.8p)
· Revenues of GBP30.8m (2008: GBP32.9m)
· Operating profit on continuing operations, excluding exceptional items, of
GBP4.9m (2008: GBP5.7m)
· Final dividend of 19.8p per share (2008: 18.8p), for a total dividend of
30.0p (2008: 29.0p) per share for the year.
Commenting on the year's results, Alan Schroeder, Chairman, said:
"The twelve months to 1 January 2010 has been a challenging, busy and ultimately
successful year for the Group. Given the tough trading conditions that prevailed
throughout the year we can be reasonably satisfied with both our activities and
our financial performance. The disposals of IMC's redundant Hertfordshire site
and of Mercury leave the Group in an exceptionally strong financial position."
+------------------------+---+-----------------------+
| Contacts: | | |
+------------------------+---+-----------------------+
| | | |
+------------------------+---+-----------------------+
| Lincat Group plc | | |
+------------------------+---+-----------------------+
| Alan Schroeder, | } | |
| Chairman | | |
+------------------------+---+-----------------------+
| Paul Bouscarle, Chief | } | 01522 875555 |
| Executive | | |
+------------------------+---+-----------------------+
| Terry Storey, Finance | } | |
| Director | | |
+------------------------+---+-----------------------+
| | | |
+------------------------+---+-----------------------+
| Cenkos Securities plc | | |
| Ivonne Cantu | } | 0207 397 8980 |
| Jeremy Warner Allen | } | |
+------------------------+---+-----------------------+
| | | |
| | | |
| | | |
+------------------------+---+-----------------------+
31 March 2010
CHAIRMAN'S STATEMENT
The twelve months to 1 January 2010 has been a challenging, busy and ultimately
successful year for the Group. During this time, after a period of exceptionally
weak demand, we have seen increasingly resilient trading from our operations, as
well as the sale of our domestic appliance subsidiary, Mercury, and the disposal
for residential development of IMC's former manufacturing site in Hertfordshire.
Against a backdrop of a marketplace for catering and bar equipment both in the
UK and overseas that remains generally depressed, we can be satisfied with both
our activities and our financial performance.
Financial result
Group sales from continuing operations - that is to say, excluding Mercury - for
the period were GBP30.8m, a fall of 7% against 2008's equivalent turnover of
GBP32.9m. Whilst disappointed to be reporting a decline, we do believe that our
businesses have collectively outperformed the market: industry statistics
indicate that the UK foodservice equipment market has contracted by
approximately 13% during that period.
Underlying operating profit from continuing operations of GBP4.9m (2008:
GBP5.7m) demonstrates the Group's ability to trade profitability even under
harsh economic conditions. Pre-tax profit of GBP9.9m includes a profit of
GBP5.1m on the disposal of IMC's Hertfordshire site, completed in December 2009.
Adjusted earnings per share, excluding the exceptional and discontinued items
referred to above, were 63.0p, a fall of 13% on the 2008 figure of 72.0p. Total
earnings per share, including exceptional and discontinued items, were 157.8p.
Sale of Mercury
Our domestic range cooker subsidiary, Mercury, was sold in August 2009. The
severe downturn in demand for big-ticket consumer appliances had led to a sharp
fall in sales of Mercury's products during 2008 and 2009, to the point where the
business was generating material trading losses. As a non-core business - our
other three businesses manufacture commercial rather than domestic appliances -
the Board concluded that not only should Mercury not be retained within the
Group but also that it would better prosper within a larger domestic appliance
group, which has indeed proved to be the case.
I would like to acknowledge the tireless commitment of Mercury's managing
director, Jenny Hyatt, and her team during the ten years that the business
formed part of the Group.
Disposal of IMC's Hertfordshire site
This site was vacated when IMC relocated to Wrexham in 2006. The sale of the
site for residential development was completed on 21 December 2009, when the
final payment of GBP4.5m was received from the purchaser. The total
consideration paid, including three earlier deposits of GBP1.0m that were
received during 2008 and 2009, was GBP7.5m, compared with a book value and
associated disposal costs of GBP2.4m.
Cash and gearing
The Group partly financed the GBP13.0m tender offer concluded in July 2007 with
a GBP9.5m term loan. Operating cash flows generated since then, combined with
three GBP1.0m deposits received against IMC's land sale, were sufficient to
repay that loan even before the receipt of the final payment of GBP4.5m. At the
year end the Group held net cash of GBP5.1m, compared with net debt of GBP3.0m
at the end of 2008. We continue to look for suitable acquisition opportunities
within our sector and to that end we intend to retain these cash reserves for
the time being.
Dividend
The Board is recommending a final dividend of 19.8p (2008: 18.8p), giving a
total dividend for the year of 30.0p (2008: 29.0p), an increase of 3.4%. If
approved by shareholders at the Company's AGM in May, the dividend will be paid
on 28 May 2010 to shareholders on the register at the close of business on 30
April 2010.
Change of Chairman
This is my first report as Chairman, having taken on the role on 1 January 2010,
and I would like to take this opportunity to pay tribute to the contribution of
my predecessor, Martin Craddock. Martin chaired the Group for 21 years, during
which time the Group grew and prospered to the considerable benefit of its
customers, employees and shareholders. I am personally delighted that Martin
continues to serve on the Board, where his insight into our businesses and the
industries in which they operate is highly valued.
Trading outlook
The catering equipment industry is typically late cycle, going into decline
later than the general economy and emerging correspondingly later. As a result,
we remain cautious about the rate at which overall demand will grow, if at all,
during 2010. Indeed, public sector spending is expected to contract although,
at around 15% of total Group sales, our exposure to this market segment is
modest.
In a flat or falling market, our ambition is to leverage the experience and
commitment of our employees, our well-invested, efficient manufacturing
facilities and our robust margins to increase market share. We have been
successful with this approach during 2009 and we are looking to new initiatives
already rolled out earlier this year to stimulate demand for our products during
2010.
Alan Schroeder
Chairman
FINANCIAL AND OPERATIONS REVIEW
The Group completed 2009 in robust health, despite the difficult trading
conditions that continue to challenge our operations. In addition to another
strong trading performance, the key events of the year included the sale of
Mercury in August 2009 and completing the disposal of IMC's Hertfordshire site
last December.
Financial
The Group finished the year with net cash of GBP5.1m, having started 2009 with
GBP0.7m of cash and GBP3.7m of debt, which represented the outstanding balance
of a GBP9.5m term loan taken out to part-fund a GBP13.0m tender offer in July
2007. This exceptionally high cash flow resulted from a strong operational
performance as well as the disposals of Mercury and IMC's redundant
Hertfordshire site.
The weakness of the market and the corresponding impact on selling prices caused
our gross margin to decline marginally from 50.4% in 2008 to 49.9% in 2009. Our
long tradition of design-for-manufacture and investment in well equipped
factories with an experienced workforce underpins the resilience of margins at
this level.
Underlying operating profits on continuing operations of GBP4.874m (2008:
GBP5.714m) were substantially higher than seemed likely at the start of 2009.
Indeed, 57% of those profits were earned in the second half of the year, which
gives some indication of the improvement during the course of the year.
The Group's result was further enhanced by a GBP5.092m profit on the sale of
IMC's Hertfordshire site. The sale in December 2009 of this site, which was
vacated at the end of 2006 when IMC finalised its move to Wrexham, marks the
final chapter of a company relocation that has greatly strengthened both IMC and
the Group. IMC's efficiency and competitiveness have been lifted by
consolidating its operations onto one site with lower operating costs and in an
area with a good availability of high quality staff. The table below summarises
the cash flow impact of IMC's move and land sale between 2005 and 2009.
+------------------------------+-----------------+
| IMC relocation: cash flow | GBP'000 |
| summary | |
+------------------------------+-----------------+
| | |
+------------------------------+-----------------+
| Hertfordshire site proceeds | 7,500 |
| of sale | |
+------------------------------+-----------------+
| Less associated costs: | |
+------------------------------+-----------------+
| Sale costs | (306) |
+------------------------------+-----------------+
| Relocation costs | (2,017) |
+------------------------------+-----------------+
| | --------------- |
+------------------------------+-----------------+
| Net proceeds of sale | 5,177 |
+------------------------------+-----------------+
| | |
+------------------------------+-----------------+
| Reinvested in: | |
+------------------------------+-----------------+
| Wrexham factory, plant & | (2,722) |
| equipment | |
+------------------------------+-----------------+
| | --------------- |
+------------------------------+-----------------+
| Net proceeds retained | 2,455 |
+------------------------------+-----------------+
| | ========= |
+------------------------------+-----------------+
Pre-interest profit on continuing operations totalled GBP9.966m. After net
interest charges of GBP114k, the Group recorded a pre-tax profit on continuing
operations of GBP9.852m.
Our domestic range cooker manufacturer, Mercury, which was sold in August 2009,
has been shown as a discontinued operation. A pre-tax loss for the period prior
to the date of disposal of GBP194k was more than offset by a pre-tax profit on
disposal of GBP258k.
Total Group pre-tax profit for the year, including exceptional items and
discontinued operations, was GBP9.916m (2008: GBP5.214m).
Cash flow for the year from operating and investing activities totalled
GBP9.621m (2008: GBP7.566m), including GBP5.500m received during the year in
respect of the IMC land sale. Dividend payments absorbed GBP1.530m and GBP3.682m
was used to pay off the balance of Group borrowings.
The Group operates one final salary pension scheme, at IMC, with 15 active
members. This scheme has been closed to new members since 2003 and steps are
being taken to close it to future accrual by June 2010.
Operations
The combined sales of our continuing operations for the year were GBP30.763m, a
fall of 7% against 2008. This figure compares with a decline of 8% up to the end
of June 2009, indicating a stronger performance in the second half of the year.
The improvement in the performance of Lincat Ltd has been particularly
encouraging. In our June 2009 Interim Report the Chairman made reference to a
recovery led by Lincat Ltd, following the introduction of enhanced dealer
incentives. This recovery continued throughout the rest of the year and shows
every sign of being sustained.
Our other two operations, IMC and Britannia, had a more even split of sales
between the first and the second half. These two businesses saw a sharp decline
in orders in the third quarter of the year but both have subsequently seen
orders recover from that low point. IMC's export business has held up well,
accounting for over 40% of their sales during 2009.
Our businesses continue to drive growth through new product introductions.
During 2009 Lincat Ltd launched a re-engineered Opus 700 medium-duty six-burner
range at a substantially lower and highly competitive price. This model holds
the key to offering a value package to mid-market restaurants and pubs.
In August 2009 Britannia acquired the intellectual property rights to an
ultra-violet air treatment system that had been outsourced for a number of
years. UV systems are increasingly used where kitchen operators want to
eliminate the discharge of cooking odours, especially in built-up areas. By
controlling the design and manufacture of these systems, Britannia is now able
to offer UV-enabled ventilation canopies that are both more compact and less
expensive, thereby significantly improving their competitiveness in this
important growth area.
Outlook
2009 has been a tough year for trading and overall we do not expect 2010 to show
a significant change; demand both in the UK and in most of our export markets
remains comparatively weak and we will have to compete hard to win business. To
this end, our operations are encouraged to invest in new product design, in
value engineering projects and in automated machinery wherever these can be
shown to reduce manufacturing costs and improve competitiveness. For example, in
the last few days Lincat Ltd has installed an automated laser cutting line at a
total cost of GBP550k, which will increase sheet steel utilisation by up to 20%
as well as delivering higher capacity and greater flexibility than the
punch-press that it has replaced.
Whilst conscious of the fragile nature of any recovery in demand - and therefore
cautious about the general outlook for the foodservice sector over the coming
year - we do believe that there are opportunities for the Group to prosper at
this time. The continuing weakness of sterling is squeezing the margins of
competitors that import their products, whilst at the same time enhancing our
relative competitiveness and, where we export in Euros, our margins. With a
steady stream of new product introductions expected from our businesses during
2010, we can look forward to a challenging but rewarding year.
Paul Bouscarle
Chief Executive
CONDENSED CONSOLIDATED INCOME STATEMENT
+--------------------------------+------+-------------+-------------+------------+------------+
| | | Before | Exceptional | Total | Total |
| | | exceptional | items | | |
| | | items | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| | Note | Year | Year | Year | Year |
| | | to | to | to | to |
| | | 1 | 1 | 1 | 2 |
| | | January | January | January | January |
| | | 2010 | 2010 | 2010 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+------+-------------+-------------+------------+------------+
| CONTINUING OPERATIONS | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Revenue | 1 | 30,763 | - | 30,763 | 32,903 |
+--------------------------------+------+-------------+-------------+------------+------------+
| Costs of sales | | (15,419) | - | (15,419) | (16,307) |
+--------------------------------+------+-------------+-------------+------------+------------+
| | | ---------- | ---------- | ---------- | ---------- |
| | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Gross profit | | 15,344 | - | 15,344 | 16,596 |
+--------------------------------+------+-------------+-------------+------------+------------+
| Distribution costs | | (4,676) | - | (4,676) | (5,213) |
+--------------------------------+------+-------------+-------------+------------+------------+
| Administrative expenses | | (2,665) | - | (2,665) | (2,526) |
+--------------------------------+------+-------------+-------------+------------+------------+
| Other operating expenses | | (3,129) | - | (3,129) | (3,143) |
+--------------------------------+------+-------------+-------------+------------+------------+
| Exceptional item | 2 | - | 5,092 | 5,092 | - |
+--------------------------------+------+-------------+-------------+------------+------------+
| | | ---------- | ---------- | ---------- | ---------- |
| | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Operating profit | | 4,874 | 5,092 | 9,966 | 5,714 |
+--------------------------------+------+-------------+-------------+------------+------------+
| Net finance costs | 3 | | | (114) | (369) |
+--------------------------------+------+-------------+-------------+------------+------------+
| | | | | ---------- | ---------- |
+--------------------------------+------+-------------+-------------+------------+------------+
| Profit before taxation | | | | 9,852 | 5,345 |
+--------------------------------+------+-------------+-------------+------------+------------+
| Taxation | 4 | | | (1,337) | (2,169) |
+--------------------------------+------+-------------+-------------+------------+------------+
| | | | | ---------- | ---------- |
+--------------------------------+------+-------------+-------------+------------+------------+
| Profit after tax from | | | | 8,515 | 3,176 |
| continuing operations | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Profit/(loss) after tax from | 5 | | | 58 | (90) |
| discontinued operations | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Profit for the year | | | | 8,573 | 3,086 |
| attributable to shareholders | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| | | | | ===== | ===== |
+--------------------------------+------+-------------+-------------+------------+------------+
| | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Earnings per share | 6 | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| From continuing operations: | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Basic | | | | 156.7p | 58.5p |
+--------------------------------+------+-------------+-------------+------------+------------+
| Diluted | | | | 156.7p | 58.4p |
+--------------------------------+------+-------------+-------------+------------+------------+
| From continuing and | | | | | |
| discontinued operations: | | | | | |
+--------------------------------+------+-------------+-------------+------------+------------+
| Basic | | | | 157.8p | 56.8p |
+--------------------------------+------+-------------+-------------+------------+------------+
| Diluted | | | | 157.8p | 56.7p |
+--------------------------------+------+-------------+-------------+------------+------------+
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+--------------------------------------------------+------------+------------+
| | Year | Year to |
| | to | 2 January |
| | 1 | 2009 |
| | January | GBP'000 |
| | 2010 | |
| | GBP'000 | |
+--------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------+------------+------------+
| Profit for the period | 8,573 | 3,086 |
+--------------------------------------------------+------------+------------+
| Other comprehensive income: | | |
+--------------------------------------------------+------------+------------+
| Actuarial losses on defined benefit pension | (1,476) | (694) |
| scheme | | |
+--------------------------------------------------+------------+------------+
| Tax on the above | 413 | 194 |
+--------------------------------------------------+------------+------------+
| | ---------- | ---------- |
+--------------------------------------------------+------------+------------+
| Other comprehensive income for the year, net of | (1,063) | (500) |
| tax | | |
+--------------------------------------------------+------------+------------+
| Total comprehensive income for the year | 7,510 | 2,586 |
+--------------------------------------------------+------------+------------+
| | ---------- | ---------- |
+--------------------------------------------------+------------+------------+
| Total comprehensive income for the year | 7,510 | 2,586 |
| attributable to equity shareholders | | |
+--------------------------------------------------+------------+------------+
+----------------------------------------+------+------------+------------+
| CONDENSED CONSOLIDATED BALANCE SHEET | Note | 1 January | 2 January |
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----------------------------------------+------+------------+------------+
| ASSETS | | | |
+----------------------------------------+------+------------+------------+
| Non-current assets | | | |
+----------------------------------------+------+------------+------------+
| Goodwill | | 693 | 693 |
+----------------------------------------+------+------------+------------+
| Other intangible assets | | 234 | 124 |
+----------------------------------------+------+------------+------------+
| Property, plant and equipment | | 8,584 | 9,157 |
+----------------------------------------+------+------------+------------+
| Deferred tax asset | | 85 | 6 |
+----------------------------------------+------+------------+------------+
| | | ---------- | ---------- |
+----------------------------------------+------+------------+------------+
| | | 9,596 | 9,980 |
+----------------------------------------+------+------------+------------+
| Current assets | | | |
+----------------------------------------+------+------------+------------+
| Inventories | | 3,459 | 3,930 |
+----------------------------------------+------+------------+------------+
| Trade and other receivables | | 5,227 | 5,036 |
+----------------------------------------+------+------------+------------+
| Cash and cash equivalents | | 5,141 | 732 |
+----------------------------------------+------+------------+------------+
| | | ---------- | ---------- |
+----------------------------------------+------+------------+------------+
| | | 13,827 | 9,698 |
+----------------------------------------+------+------------+------------+
| Non-current assets classified as held | | - | 2,178 |
| for sale | | | |
+----------------------------------------+------+------------+------------+
| | | ---------- | ---------- |
+----------------------------------------+------+------------+------------+
| Total assets | | 23,423 | 21,856 |
+----------------------------------------+------+------------+------------+
| | | | |
+----------------------------------------+------+------------+------------+
| LIABILITIES | | | |
+----------------------------------------+------+------------+------------+
| Non-current liabilities | | | |
+----------------------------------------+------+------------+------------+
| Bank loans | | - | (3,042) |
+----------------------------------------+------+------------+------------+
| Retirement benefit obligation | 7 | (1,889) | (435) |
+----------------------------------------+------+------------+------------+
| Deferred tax liabilities | | (523) | (928) |
+----------------------------------------+------+------------+------------+
| | | ---------- | ---------- |
+----------------------------------------+------+------------+------------+
| | | (2,412) | (4,405) |
+----------------------------------------+------+------------+------------+
| Current liabilities | | | |
+----------------------------------------+------+------------+------------+
| Trade and other payables | | (4,192) | (4,098) |
+----------------------------------------+------+------------+------------+
| Current tax liabilities | | (726) | (703) |
+----------------------------------------+------+------------+------------+
| Bank overdrafts and loans | | - | (640) |
+----------------------------------------+------+------------+------------+
| Provisions | | (371) | (354) |
+----------------------------------------+------+------------+------------+
| | | ---------- | ---------- |
+----------------------------------------+------+------------+------------+
| | | (5,289) | (5,795) |
+----------------------------------------+------+------------+------------+
| Liabilities directly associated with | | | |
| non-current assets classified as held | | | |
| for sale | | | |
+----------------------------------------+------+------------+------------+
| Non-refundable deposit on sale of | | - | (2,000) |
| property | | | |
+----------------------------------------+------+------------+------------+
| | | | |
+----------------------------------------+------+------------+------------+
| Total liabilities | | (7,701) | (12,200) |
+----------------------------------------+------+------------+------------+
| | | ---------- | ---------- |
+----------------------------------------+------+------------+------------+
| Net assets | | 15,722 | 9,656 |
+----------------------------------------+------+------------+------------+
| | | | |
+----------------------------------------+------+------------+------------+
| Shareholders' equity | | | |
+----------------------------------------+------+------------+------------+
| Issued share capital | | 543 | 543 |
+----------------------------------------+------+------------+------------+
| Share premium account | | 2 | 2 |
+----------------------------------------+------+------------+------------+
| Investment in own shares | | (16) | (16) |
+----------------------------------------+------+------------+------------+
| Other reserves | | 874 | 874 |
+----------------------------------------+------+------------+------------+
| Retained earnings | | 14,319 | 8,253 |
+----------------------------------------+------+------------+------------+
| | | ---------- | ---------- |
+----------------------------------------+------+------------+------------+
| Total equity | | 15,722 | 9,656 |
+----------------------------------------+------+------------+------------+
| | | | |
+----------------------------------------+------+------------+------------+
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
+----------------------------+------------+------------+------------+------------+------------+------------+
| | Share | Share | Investment | Other | Retained | Total |
| | capital | premium | in own | reserve | earnings | |
| | | | shares | | | |
+----------------------------+------------+------------+------------+------------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+------------+------------+------------+------------+------------+------------+
| At 1 January 2008 | 543 | 2 | (16) | 874 | 7,097 | 8,500 |
+----------------------------+------------+------------+------------+------------+------------+------------+
| Total comprehensive income | - | - | - | - | 2,586 | 2,586 |
| for the year | | | | | | |
+----------------------------+------------+------------+------------+------------+------------+------------+
| Credit to equity for | - | - | - | - | 68 | 68 |
| share-based payments | | | | | | |
+----------------------------+------------+------------+------------+------------+------------+------------+
| Dividends paid | - | - | - | - | (1,498) | (1,498) |
+----------------------------+------------+------------+------------+------------+------------+------------+
| | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- |
+----------------------------+------------+------------+------------+------------+------------+------------+
| At 2 January 2009 | 543 | 2 | (16) | 874 | 8,253 | 9,656 |
+----------------------------+------------+------------+------------+------------+------------+------------+
| Total comprehensive income | - | - | - | - | 7,510 | 7,510 |
| for the year | | | | | | |
+----------------------------+------------+------------+------------+------------+------------+------------+
| Credit to equity for | - | - | - | - | 86 | 86 |
| share-based payments | | | | | | |
+----------------------------+------------+------------+------------+------------+------------+------------+
| Dividends paid | - | - | - | - | (1,530) | (1,530) |
+----------------------------+------------+------------+------------+------------+------------+------------+
| | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- |
+----------------------------+------------+------------+------------+------------+------------+------------+
| At 1 January 2010 | 543 | 2 | (16) | 874 | 14,319 | 15,722 |
+----------------------------+------------+------------+------------+------------+------------+------------+
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
+----------------------------------------+------+------------+------------+----------+
| | Note | Year to | Year to | |
| | | 1 January | 2 January | |
| | | 2010 | 2009 | |
| | | GBP'000 | GBP'000 | |
+----------------------------------------+------+------------+------------+----------+
| | | | | |
+----------------------------------------+------+------------+------------+----------+
| Net cash inflow from operating | 8 | 4,473 | 6,470 | |
| activities | | | | |
+----------------------------------------+------+------------+------------+----------+
| | | | | |
+----------------------------------------+------+------------+------------+----------+
| Investing activities | | | | |
+----------------------------------------+------+------------+------------+----------+
| Interest received | | 2 | 8 | |
+----------------------------------------+------+------------+------------+----------+
| Proceeds of sale of business | | 323 | - | |
+----------------------------------------+------+------------+------------+----------+
| Disposal proceeds of property | | 5,500 | 2,000 | |
+----------------------------------------+------+------------+------------+----------+
| Disposal proceeds of plant and | | 62 | 34 | |
| equipment | | | | |
+----------------------------------------+------+------------+------------+----------+
| Purchase of intangible assets | | (27) | (35) | |
+----------------------------------------+------+------------+------------+----------+
| Purchases of property, plant and | | (576) | (876) | |
| equipment | | | | |
+----------------------------------------+------+------------+------------+----------+
| Expenditure on product development | | (136) | (35) | |
+----------------------------------------+------+------------+------------+----------+
| | | ---------- | ---------- | |
+----------------------------------------+------+------------+------------+----------+
| Net cash released by investing | | 5,148 | 1,096 | |
| activities | | | | |
+----------------------------------------+------+------------+------------+----------+
| | | | | |
+----------------------------------------+------+------------+------------+----------+
| | | | | |
+----------------------------------------+------+------------+------------+----------+
| Financing activities | | | | |
+----------------------------------------+------+------------+------------+----------+
| Dividends paid | | (1,530) | (1,498) | |
+----------------------------------------+------+------------+------------+----------+
| Repayment of borrowings | | (3,682) | (4,399) | |
+----------------------------------------+------+------------+------------+----------+
| | | ---------- | ---------- | |
+----------------------------------------+------+------------+------------+----------+
| Net cash from financing activities | | (5,212) | (5,897) | |
+----------------------------------------+------+------------+------------+----------+
| | | | | |
+----------------------------------------+------+------------+------------+----------+
| | | | | |
+----------------------------------------+------+------------+------------+----------+
| Increase in cash and cash equivalents | | 4,409 | 1,669 | |
+----------------------------------------+------+------------+------------+----------+
| Cash and cash equivalents at beginning | | 732 | (937) | |
| of the year | | | | |
+----------------------------------------+------+------------+------------+----------+
| | | ---------- | ---------- | |
+----------------------------------------+------+------------+------------+----------+
| Cash and cash equivalents at the end | | 5,141 | 732 | |
| of the year | | | | |
+----------------------------------------+------+------------+------------+----------+
| | | | | |
+----------------------------------------+------+------------+------------+----------+
Notes to the consolidated financial statements
+--+---------------------------------------------------------------------+
| 1.| Segmental information |
+--+---------------------------------------------------------------------+
| The Group has adopted IFRS 8 "Operating Segments" with effect from 3 |
| January 2009. IFRS 8 requires operating segments to be identified on |
| the basis of internal reports about operating units of the Group that |
| are regularly reviewed by the Chief Executive to allocate resources |
| and to assess their performance. The Group is organised into three |
| operating units in line with its statutory entities and these are the |
| business segments for which information is supplied to the Chief |
| Executive. |
+--+---------------------------------------------------------------------+
+--------------------+------------+------------+--------+------------+------------+--------+
| Business segment | Year to 1 January | Year to 2 January |
| | 2010 | 2009 |
+--------------------+----------------------------------+----------------------------------+
| | Revenue | Profit | Margin | Revenue | Profit | Margin |
| | GBP'000 | GBP'000 | % | GBP'000 | GBP'000 | % |
+--------------------+------------+------------+--------+------------+------------+--------+
| Lincat | 19,440 | 3,167 | 16.3 | 20,644 | 3,448 | 16.7 |
+--------------------+------------+------------+--------+------------+------------+--------+
| IMC - underlying | 9,035 | 1,928 | 21.3 | 9,713 | 2,292 | 23.6 |
+--------------------+------------+------------+--------+------------+------------+--------+
| IMC - profit on | - | 5,092 | | - | - | |
| sale of property | | | | | | |
+--------------------+------------+------------+--------+------------+------------+--------+
| Britannia | 2,692 | 361 | 13.4 | 3,358 | 508 | 15.1 |
+--------------------+------------+------------+--------+------------+------------+--------+
| Inter-segment | (404) | - | | (812) | - | |
| sales | | | | | | |
+--------------------+------------+------------+--------+------------+------------+--------+
| | ---------- | ---------- | | ---------- | ---------- | |
+--------------------+------------+------------+--------+------------+------------+--------+
| Continuing | 30,763 | 10,548 | | 32,903 | 6,248 | |
| operations | | | | | | |
+--------------------+------------+------------+--------+------------+------------+--------+
| Central costs | - | (582) | | - | (534) | |
+--------------------+------------+------------+--------+------------+------------+--------+
| Net finance costs | - | (114) | | - | (369) | |
+--------------------+------------+------------+--------+------------+------------+--------+
| Taxation | - | (1,337) | | - | (2,169) | |
+--------------------+------------+------------+--------+------------+------------+--------+
| Discontinued | 901 | 58 | | 1,794 | (90) | |
| operations | | | | | | |
+--------------------+------------+------------+--------+------------+------------+--------+
| | ---------- | ---------- | | ---------- | ---------- | |
+--------------------+------------+------------+--------+------------+------------+--------+
| Total for the year | 31,664 | 8,573 | | 34,697 | 3,086 | |
+--------------------+------------+------------+--------+------------+------------+--------+
+------------------------------------------------------------------------+
| Geographical segments |
+------------------------------------------------------------------------+
| The Group's operations are all located in the United Kingdom. |
+------------------------------------------------------------------------+
+-----------------------------------+-------------+-------------+
| | Revenue by destination |
+-----------------------------------+---------------------------+
| | Year to | Year to |
| | 1 January | 2 January |
| | 2010 | 2009 |
+-----------------------------------+-------------+-------------+
| | GBP'000 | GBP'000 |
+-----------------------------------+-------------+-------------+
| United Kingdom | 25,691 | 27,507 |
+-----------------------------------+-------------+-------------+
| Rest of World | 5,072 | 5,396 |
+-----------------------------------+-------------+-------------+
| | ---------- | ---------- |
+-----------------------------------+-------------+-------------+
| Total | 30,763 | 32,903 |
+-----------------------------------+-------------+-------------+
+--+--------------------------------------------------------------------+
| 2.| Exceptional items |
+--+--------------------------------------------------------------------+
+---------------------------------------+---------+-------------+
| | Year to | Year to |
| | 1 | 2 January |
| | January | 2009 |
| | 2010 | GBP'000 |
| | GBP'000 | |
+---------------------------------------+---------+-------------+
| Profit on sale of IMC's Hertfordshire | 5,092 | - |
| freehold property | | |
+---------------------------------------+---------+-------------+
The sale of IMC's former manufacturing site in Hertfordshire was completed on 21
December 2009 following the receipt of the final instalment of GBP4.5m. As at 1
January 2009, non-refundable deposits of GBP2m had been received and another
GBP1m was received in July 2009, making the total proceeds of sale of the site
of GBP7.5m.
+--+-+--------------------------------------+------------+-------+----------+
| 3.| Finance income and finance costs | |
+--+-------------------------------------------------------------+----------+
| | | Year | Year to |
| | | to | 2 January |
| | | 1 | 2009 |
| | | January | GBP'000 |
| | | 2010 | |
| | | GBP'000 | |
+----+--------------------------------------+------------+------------------+
| | Finance income: | | |
+----+--------------------------------------+------------+------------------+
| | Interest receivable on short term | 2 | 8 |
| | deposits | | |
+----+--------------------------------------+------------+------------------+
| | Expected return on pension scheme | 393 | 480 |
| | assets | | |
+----+--------------------------------------+------------+------------------+
| | Finance costs: | | |
+----+--------------------------------------+------------+------------------+
| | Interest payable on bank loans and | (116) | (469) |
| | overdrafts | | |
+----+--------------------------------------+------------+------------------+
| | Interest on pension scheme | (393) | (388) |
| | liabilities | | |
+----+--------------------------------------+------------+------------------+
| | | ---------- | ---------- |
+----+--------------------------------------+------------+------------------+
| | Net finance costs | (114) | (369) |
+----+--------------------------------------+------------+------------------+
| | | | | | |
+--+-+--------------------------------------+------------+-------+----------+
+----------+--+-------------------------------+---+------------+-----------------+
| 4. | Taxation | |
+-------------+-----------------------------------+------------------------------+
| | | Year to | Year to |
| | | 1 January | 2 January |
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+----------+----------------------------------+----------------+-----------------+
| | Basic | 1,337 | 1,434 |
+----------+----------------------------------+----------------+-----------------+
| | Deferred tax charge due to | - | 735 |
| | withdrawal of IBA's | | |
+----------+----------------------------------+----------------+-----------------+
| | | ---------- | ---------- |
+----------+----------------------------------+----------------+-----------------+
| | | 1,337 | 2,169 |
+----------+----------------------------------+----------------+-----------------+
| | | | | | |
+----------+--+-------------------------------+---+------------+-----------------+
+--+---------------------------------------------------------------------+
| 5.| Discontinued operations |
+--+---------------------------------------------------------------------+
Following a strategic review, the Group decided to seek a buyer for its domestic
appliance business, Mercury Appliances. This disposal was completed on 25 August
2009; the disposal proceeds were GBP425,000, with associated costs of
GBP102,000. The results of Mercury Appliances, which have been shown as
discontinued operations in the condensed consolidated income statement, were as
follows:
+-----------------------------------+-------------+-------------+
| | Year to | Year to |
| | 1 January | 2 January |
| | 2010GBP'000 | 2009GBP'000 |
+-----------------------------------+-------------+-------------+
| Revenue | 901 | 1,794 |
+-----------------------------------+-------------+-------------+
| Expenses | (1,095) | (1,925) |
+-----------------------------------+-------------+-------------+
| | ---------- | ---------- |
+-----------------------------------+-------------+-------------+
| Loss before tax | (194) | (131) |
+-----------------------------------+-------------+-------------+
| Tax | 54 | 41 |
+-----------------------------------+-------------+-------------+
| | ---------- | ---------- |
+-----------------------------------+-------------+-------------+
| Loss after tax | (140) | (90) |
+-----------------------------------+-------------+-------------+
| Profit on disposal | 258 | - |
+-----------------------------------+-------------+-------------+
| Tax on disposal | (60) | - |
+-----------------------------------+-------------+-------------+
| | ---------- | ---------- |
+-----------------------------------+-------------+-------------+
| Total profit attributable to | 58 | (90) |
| discontinued operations | | |
+-----------------------------------+-------------+-------------+
+--+--------------------------------------------------------------------+
| 6.| Earnings per share |
+--+--------------------------------------------------------------------+
+-----------------------------------+-------------+-------------+
| | Year to | Year to |
| | 1 January | 2 January |
| | 2010 | 2009 |
| | GBP'000 | GBP'000 |
+-----------------------------------+-------------+-------------+
| Earnings | | |
+-----------------------------------+-------------+-------------+
| From continuing operations | 8,515 | 3,176 |
+-----------------------------------+-------------+-------------+
| Exceptional items | (5,092) | - |
+-----------------------------------+-------------+-------------+
| Deferred tax adjustment due to | - | 735 |
| withdrawal of IBA's | | |
+-----------------------------------+-------------+-------------+
| | ---------- | ---------- |
+-----------------------------------+-------------+-------------+
| Adjusted earnings from continuing | 3,423 | 3,911 |
| operations | | |
+-----------------------------------+-------------+-------------+
| | | |
| Average number of shares during | | |
| year ('000) | | |
+-----------------------------------+-------------+-------------+
| For basic earnings per share | 5,434 | 5,434 |
+-----------------------------------+-------------+-------------+
| Dilutive effect of Sharesave | - | 8 |
| Scheme options | | |
+-----------------------------------+-------------+-------------+
| | ---------- | ---------- |
+-----------------------------------+-------------+-------------+
| For diluted earnings per share | 5,434 | 5,442 |
+-----------------------------------+-------------+-------------+
| | | |
+-----------------------------------+-------------+-------------+
| Earnings per share | | |
+-----------------------------------+-------------+-------------+
| From continuing operations, | | |
| adjusted: | | |
+-----------------------------------+-------------+-------------+
| Basic | 63.0p | 72.0p |
+-----------------------------------+-------------+-------------+
| Diluted | 63.0p | 71.9p |
+-----------------------------------+-------------+-------------+
| From continuing operations, | | |
| total: | | |
+-----------------------------------+-------------+-------------+
| Basic | 156.7p | 58.5p |
+-----------------------------------+-------------+-------------+
| Diluted | 156.7p | 58.4p |
+-----------------------------------+-------------+-------------+
| From discontinued operations: | | |
+-----------------------------------+-------------+-------------+
| Basic | 1.1p | (1.7)p |
+-----------------------------------+-------------+-------------+
| Diluted | 1.1p | (1.7)p |
+-----------------------------------+-------------+-------------+
| From continuing and discontinued | | |
| operations: | | |
+-----------------------------------+-------------+-------------+
| Basic | 157.8p | 56.8p |
+-----------------------------------+-------------+-------------+
| Diluted | 157.8p | 56.7p |
+-----------------------------------+-------------+-------------+
+--+--------------------------------------------------------------------+
| 7.| Retirement benefit obligation |
+--+--------------------------------------------------------------------+
An estimate of the assets and liabilities of the defined benefit scheme was
updated to 1 January 2010 by an independent actuary in accordance with IAS 19.
The principal assumptions were:
+-----------------------------------+----------------+--------------+
| | Year to | Year to |
| | 1 January 2010 | 2 January |
| | | 2009 |
+-----------------------------------+----------------+--------------+
| Rate of increase in salaries | 3.8% | 2.6% |
+-----------------------------------+----------------+--------------+
| Rate of increase of pensions in | 3.6% | 2.6% |
| payment | | |
+-----------------------------------+----------------+--------------+
| Discount rate | 5.7% | 6.5% |
+-----------------------------------+----------------+--------------+
| Inflation assumption | 3.8% | 2.6% |
+-----------------------------------+----------------+--------------+
| Expected return on plan assets | 7.4% | 7.0% |
+-----------------------------------+----------------+--------------+
| | | |
+-----------------------------------+----------------+--------------+
Year to 1
January 2010 Year to 2 January 2009
+-------------------+------------+-------------+------------+------------+-------------+------------+
| | Scheme | Scheme | Net | Scheme | Scheme | Net |
| | assets | obligations | | assets | obligations | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| At beginning of | 5,704 | (6,139) | (435) | 6,922 | (6,758) | 164 |
| the year | | | | | | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| Current service | - | (43) | (43) | | (60) | (60) |
| cost | | | | | | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| Employer | 65 | - | 65 | 63 | - | 63 |
| contributions | | | | | | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| Employee | 39 | (39) | - | 38 | (38) | - |
| contributions | | | | | | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| Actuarial | 674 | (2,150) | (1,476) | (1,563) | 869 | (694) |
| (losses)/gains | | | | | | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| Finance | 393 | (393) | - | 480 | (388) | 92 |
| income/(expense) | | | | | | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| Benefits paid | (273) | 273 | - | (236) | 236 | - |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- |
+-------------------+------------+-------------+------------+------------+-------------+------------+
| At end of the | 6,602 | (8,491) | (1,889) | 5,704 | (6,139) | (435) |
| year | | | | | | |
+-------------------+------------+-------------+------------+------------+-------------+------------+
+--+---------------------------------+-------------------+-----------------+
| 8.| Consolidated cash flow statement: reconciliation of operating profit |
| | to net cash inflow from operating activities |
+--+-----------------------------------------------------------------------+
| | | |
+------------------------------------+-------------------+-----------------+
| | Year to | Year to |
| | 1 January 2010 | 2 January 2009 |
| | GBP'000 | GBP'000 |
+------------------------------------+-------------------+-----------------+
| Operating profit from continuing | 4,874 | 5,714 |
| activities | | |
+------------------------------------+-------------------+-----------------+
| Operating loss from discontinued | (187) | (113) |
| activities | | |
+------------------------------------+-------------------+-----------------+
| Amortisation of intangible assets | 75 | 97 |
+------------------------------------+-------------------+-----------------+
| Depreciation | 950 | 948 |
+------------------------------------+-------------------+-----------------+
| Loss on disposal of tangible fixed | - | 44 |
| assets | | |
+------------------------------------+-------------------+-----------------+
| Share based payments | 86 | 68 |
+------------------------------------+-------------------+-----------------+
| Decrease in provisions | (8) | (114) |
+------------------------------------+-------------------+-----------------+
| Decrease in inventories | 454 | 499 |
+------------------------------------+-------------------+-----------------+
| (Increase)/decrease in trade and | (419) | 1,603 |
| other receivables | | |
+------------------------------------+-------------------+-----------------+
| Decrease/(increase) in trade and | 142 | (282) |
| other payables | | |
+------------------------------------+-------------------+-----------------+
| | ---------- | ---------- |
+------------------------------------+-------------------+-----------------+
| Cash generated by operations | 5,967 | 8,464 |
+------------------------------------+-------------------+-----------------+
| Interest paid | (103) | (437) |
+------------------------------------+-------------------+-----------------+
| Corporation tax paid | (1,391) | (1,557) |
+------------------------------------+-------------------+-----------------+
| | ---------- | ---------- |
+------------------------------------+-------------------+-----------------+
| Net cash from operating activities | 4,473 | 6,470 |
+------------------------------------+-------------------+-----------------+
| | | | |
+--+---------------------------------+-------------------+-----------------+
9. Basis of preparation
This preliminary report, which has been agreed with the auditors, was approved
by the Board on 30 March 2010. The financial information set out above does not
constitute statutory accounts within the meaning of section 435 of the Companies
Act 2006. Statutory accounts will be sent to shareholders shortly.
The statutory accounts for the period ended 2 January 2009, which have been
delivered to the Registrar of Companies, carry an unqualified report by the
auditors and do not contain a statement under Section 498 (2) or section 498 (3)
of the Companies Act 2006.
The statutory accounts for the year ended 1 January 2010 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAFDEDELEEFF
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