TIDMMPAC
RNS Number : 6367L
Mpac Group PLC
07 September 2023
7 September 2023
AIM: MPAC
Mpac Group plc
("Mpac", "the Company" or "the Group")
Half Year Results for the six months to 30 June 2023
Strong order intake and healthy prospects pipeline; remain
confident in long term prospects
Mpac Group (AIM: MPAC), the global packaging and automation
solutions Group, today announces its unaudited financial results
for the six months to 30 June 2023 (the "period").
Financial Highlights
-- Order intake of GBP62.4m (2022: GBP32.8m) contributing to a
closing order book of GBP77.5m (30 June 2022: GBP62.6m; 31 Dec
2022: GBP67.2m)
-- Group revenue of GBP52.8m, up 4% (2022: GBP50.6m)
-- Underlying* profit before tax of GBP1.9m (2022: GBP1.1m)
-- Statutory profit before tax of GBP0.2m (2022: loss of GBP0.4m)
-- Underlying* earnings per share of 6.5p (2022: 3.6p)
-- Basic loss per share of (2.2)p (2022: earnings per share of 3.6p)
-- Net cash of GBP2.2m (30 June 2022: GBP8.6m; 31 December 2022: Net borrowings of GBP4.7m)
*Underlying results are stated before pension related credits of
GBP0.3m (H1 2022: charges of GBP0.4m); amortisation of acquired
intangible assets of GBP0.8m (H1 2022: GBP0.8m); restructuring
costs of GBP1.1m (H1 2022: GBP0.1m) and other non-underlying items
of GBP0.1m (H1 2022: GBP0.3m).
Operational and Strategic Highlights
-- Shipment, installation, and commissioning of battery cell
assembly Customer Qualification Plant ("CQP") automation line to
FREYR Battery ("Freyr") progressing to schedule
-- Commenced pre-engineering work to define specification of Giga America for Freyr
-- Winning new customers in target sectors
-- Strong growth in Service business, delivering on strategic
focus to improve and sustain customer support
-- Reduction of working capital progressing to plan
-- Implementation of One Mpac business systems in our Cleveland, USA site
-- Strengthened leadership team with new appointments in UK and North America
-- Second year cohort joined Mpac Academy to develop future leaders and to retain talent
-- Strong pipeline of potential acquisitions for future strategic growth
Current trading and outlook
-- Current trading is in line with the Board's expectations and
full year market guidance remains unchanged. Margins are
normalising as anticipated and with a strong order book and
prospects pipeline, Mpac is well positioned to deliver on the
previously announced H2 weighting to the financial year, despite
the challenging trading environment.
Adam Holland, Chief Executive Officer, commented:
"I am delighted to report my first set of interim results as
Chief Executive Officer, which were in line with our expectations.
I am pleased to be able to report significant progress in the first
half of 2023, with increases in Original Equipment and Service
order intake and a closing order book significantly up on the prior
year. In addition, the prior year expansion of working capital has
unwound in line with expectations, and we close H1 in a positive
net cash position. We have a lot to do in the second half but are
anticipating normalising margins in the period and are focused on
delivering the strong order book for our customers. We have made
good progress in developing the leadership team and I am confident
that Mpac has the employee skillset to take advantage of the
attractive markets in which we operate and deliver on our strategic
objectives."
For further information, please contact:
Mpac Group plc Tel: +44 (0) 2476
Adam Holland, Chief Executive Officer 421100
Will Wilkins, Group Finance Director
Shore Capital (Nominated Adviser & Broker)
Advisory Tel: +44 (0) 20 7408
Patrick Castle 4050
Iain Sexton
Broking
Henry Willcocks
Hudson Sandler Tel: +44 (0) 20 7796
Nick Lyon / Nick Moore 4133
Notes to Editor
Mpac Group (AIM: MPAC) is a global leader in engineering and
technology, designing, precision engineering, manufacturing, and
supporting high-speed packaging equipment and solutions.
Mpac serves 80 countries across four key regions around the
world including the Americas, EMEA, APAC and the UK. The Company
operates in the attractive growth markets of Food & Beverage,
Healthcare and Clean Energy. These targeted markets boast
significant growth opportunities.
Through its three core product lines - Lambert, Langen and
Switchback - the Company provides full line Original Equipment and
Services for automated high-speed packaging, from assembly of
products through to case packing and palletising. Mpac's high
margin Service offering ensures a stable and recurring revenue
after the sale of Original Equipment.
Mpac is a people-driven business. It employs more than 500
colleagues around the world including 180 dedicated global
engineers & designers. The business is also underpinned by
innovation, as one of Mpac's key strategic pillars which remains
fundamental to the Company's long-term sustainable growth.
Mpac is headquartered in Tadcaster, UK and operates sites in the
US, Canada, the Netherlands and Singapore.
HALF-YEAR MANAGEMENT REPORT
Introduction
Mpac serves customers' needs for ingenious, innovative
automation and packaging machinery. We design, precision engineer,
manufacture and support high-speed automation and packaging
solutions, with embedded process monitoring systems.
The Group is focused on the high growth, resilient, Healthcare
and Food and Beverage markets and benefits from an exclusive
commercial framework agreement to supply a customer in the Clean
Energy storage market.
The opportunities for the Group are based on the following
fundamental strengths:
-- Robust long-term growth drivers in our target Healthcare and
Food and Beverage markets
-- Exciting opportunity to become a key supplier of automation
solutions for the Clean Energy storage market
-- Leadership in innovative, high-speed packaging machinery and automation solutions
-- Global reach with embedded local presence providing
exceptional service to our customers
-- A talented and engaged workforce
-- Extensive machine installed base to drive Service revenues
The Board believes that these fundamental strengths place Mpac
in a strong position for growth and that the Group continues to
make good progress towards achieving its long-term strategic
objectives.
Overview
2023 started with good revenue coverage from the opening order
book, but with a project mix impacted by 2022 supply chain
disruption. The effects of this have now largely cleared and
accordingly, second half trading is anticipated at normalising
margins, giving confidence to the second half earnings weighting
which we indicated earlier in the year.
Year to date order intake of GBP62.4m is significantly ahead of
the prior year (H1 2022: GBP32.8m) and the H1 2023 closing order
book of GBP77.5m is above the 2023 opening order book of GBP67.2m,
providing extensive coverage over forecast revenue for the
remainder of 2023. Furthermore, the focus on developing our
recurring, higher margin Service business continues with
significant growth in order intake and revenue.
The prior year expansion of working capital has begun to unwind
and is in line with expectations, and we closed the half year with
a strong balance sheet and positive net cash.
Beyond the challenging trading environment, the outlook for the
business remains positive. We carry forward a strong prospect
pipeline and order book, concentrated on companies in our core,
resilient, end markets of Healthcare and Food and Beverage. Our
strong balance sheet provides us with the ability to invest for
growth over the medium term and beyond.
FREYR progress
In 2022 Mpac signed a three-year exclusive commercial framework
agreement with FREYR, a developer of battery cell production
capacity, for the supply of casting and unit cell assembly
equipment. Mpac is completing the commissioning of the CQP line for
FREYR, which is progressing in line with the customer's planning
and expectations. We anticipate that the line will be fully
commissioned in H2 2023. In Q2 2023, we started work on the
pre-engineering activities for FREYR's first intended production
line order, Giga America, to define the specification and scoping.
If the customer proceeds to order production series cell assembly
units, Mpac is well positioned to be selected as the supplier of
these lines. There remains no certainty around the timing or
quantum of production line orders and Mpac remains focused on
delivering the projects within the order book.
Working capital reduction
Due to extended supplier lead times, resulting in longer build
times of Mpac equipment, there was a significant expansion of
working capital in 2022 which resulted in the Group drawing down
against its committed revolving credit facility and reporting net
debt at the 2022 year end. As anticipated, with the wider project
build portfolio from 2022 largely completing in H1 2023, working
capital has fallen in 2023 and we closed the half year with a net
cash position and a GBP7.3m reduction in working capital.
Strategic progress
Our focus in H1 2023 has been on our customers, deepening our
relationship with them to establish their longer term investment
plans and Service requirements. We have extended the bandwidth of
our commercial, field service and back-office teams to ensure that
Mpac continues to provide a long term sustainable, best in class,
service to all our customers and an improved response time. The
impact of this increased focus is already evident from the
increased order intake from both existing and new key accounts, and
improved Service performance in H1.
Continuing with our longer-term strategy to operate as a single
entity business, we have deployed our common business systems to
our site in Cleveland, USA to enhance operational leverage and we
have made considerable progress in developing a product selector
based customer website which will go live in Q3 2023.
Innovation remains one of Mpac's key strategic pillars and is
fundamental to the Group's long-term sustainable growth. We made
further progress in H1 2023 with the continued development of the
Mpac Cube, which incorporates innovations focused on improved
machine performance, digital enhancements plus further Industry 4.0
enabled technology. In addition, the next phase of product
development has been defined in an updated roadmap with deployment
commencing in H2 2023.
Financial results
The Group entered 2023 with a diverse and good quality order
book which, along with a strong H1 order intake resulted in sales
in the period of GBP52.8m (H1 2022: GBP50.6m), a 4% increase on
prior year. Gross profit margins increased to 23.9% (H1 2022:
21.1%), driven by a stronger product mix in the period. Order
intake in the period increased to GBP62.4m, 90% above the prior
year. We have a GBP77.5m order book going into the second half of
2023.
Underlying profit before tax was GBP1.9m (H1 2022: GBP1.1m).
After a net tax charge of GBP0.5m (H1 2022: GBP0.4m), underlying
profit after tax for the period was GBP1.4m (H1 2022: GBP0.7m).
Underlying earnings per share was 6.5p (H1 2022: 3.6p).
The underlying results are stated before pension-related credits
of GBP0.3m (H1 2022: charges of GBP0.4m), comprising charges in
respect of administering the Group's defined benefit pension
schemes of GBP0.4m (H1 2022: GBP0.7m) and finance income on pension
scheme balances of GBP0.7m (H1 2022: GBP0.3m), amortisation of
acquired intangible assets of GBP0.8m (H1 2022: GBP0.8m) and
reorganisation costs of GBP1.2m (H1 2022: GBP0.2m),
On a statutory basis, the loss after tax for the period was
GBP0.4m (H1 2022: GBP0.7m). The basic loss per share amounted to
2.2p (H1 2022: 3.6p).
Operating performance
Overall revenue increased by 4% to GBP52.8m (H1 2022: GBP50.6m)
supported by strong order intake and execution of projects.
The Group manages the business in two parts, Original Equipment
(OE) and Service, and across three regions (Americas, EMEA and Asia
Pacific). Individual contracts received by the OE business can be
sizeable. Accordingly, one significant order can have a
disproportionate impact on the growth rates seen in individual
markets year on year.
Original Equipment ("OE")
OE order intake increased by 131% to GBP46.0m (H1 2022:
GBP19.9m). Our customers in the Healthcare and Food & Beverages
markets continue to demonstrate resilient performance despite
rising interest rates, fuelling demand for Mpac's products.
Revenue decreased by 12% to GBP35.2m (H1 2022: GBP39.8m) with
the reduction being primarily in the Americas and driven by the
timing of the orders received last year as customers sought
acceleration of capital investment into 2021, supported by
post-covid tax incentives.
OE revenue in the Americas decreased by 34% to GBP16.4m (H1
2022: GBP25.0m) while in EMEA OE revenue increased by 12% to
GBP14.5m (2022: GBP12.9m). Growth in EMEA was primarily due to a
stronger performance across our traditional markets in healthcare
and food & beverage, supported by the continuing development of
the customer qualification battery cell assembly line for
FREYR.
Revenue development in all regions is dependent upon the timing
of customers' investment cycles, with differing industries and
regions experiencing differing effects from global inflationary
pressures.
Service
Service order intake of GBP16.4m represents a 25% increase on
the prior year and has been driven mainly by order intake for
upgrades and spares as a result of the Group's focus on developing
the Service business.
Service revenue grew strongly, up 63% to GBP17.6m (H1 2022:
GBP10.8m) as our customers look to increase their productivity by
enhancing their existing machines and reducing downtime. Service
revenue represented approximately 33% of Group revenue in the
period, which demonstrates the success of Mpac's 'Make Service a
Business' strategy.
Finances
Gross cash at 30 June 2023 was GBP8.1m (30 June 2022: GBP9.5m;
31 December 2022: GBP4.2m) after utilisation of the Revolving
Credit Facility of GBP5.0m (30 June 2022: GBPnil, 31 December 2022:
GBP8.0m). Cash balances are impacted by the timing of project order
intake and associated working capital cycles.
Net cash inflow from operating activities in the first half of
the year was GBP9.4m, after a decrease in working capital levels of
GBP7.3m, due mainly to the timing of project execution, partially
offset by deficit recovery payments to the Group's defined benefit
pension schemes of GBP0.9m. Capital and product development
expenditure in the first half of the year was GBP1.1m (2022:
GBP0.6m).
The Group maintains bank facilities appropriate to its expected
needs including committed borrowing facilities with HSBC UK Bank
Plc of GBP20.0m. These facilities, which are committed until July
2025, are subject to covenants covering interest cover and adjusted
leverage and are both sterling and multi-currency denominated.
Dividend
Having considered the trading results to 30 June 2023, together
with the opportunities for investment in the growth of the Group,
the Board has decided that it is appropriate not to pay an interim
dividend in respect of the period. No dividends were paid in 2022.
Future dividend payments and the development of a new dividend
policy will be considered by the Board in the context of the
trading performance for 2023 and when the Board believes it is
prudent to do so.
Pension schemes
The Group is responsible for defined benefit pension schemes in
the UK and the USA in which there are no active members. The
Company is responsible for the payment of a statutory levy to the
Pension Protection Fund.
The IAS 19 valuation of the UK scheme as at 30 June 2023 shows a
surplus of GBP35.2m (GBP22.9m net of deferred tax), compared with a
surplus of GBP31.5m (GBP20.4m net of deferred tax) at 31 December
2022. The main driver of the increase in the surplus was the
increase in the discount rate required by IAS19, partially offset
by the effect of the liability matching programme on asset values
when discount rates rise and by increases in anticipated inflation
on future benefits.
The net valuation of the USA pension schemes at 30 June 2023,
with total assets of GBP7.9m, showed a deficit of GBP1.6m, a
decrease of GBP0.5m from 31 December 2022, caused entirely by
exchange rate movements.
The aggregate expense of administering the pension schemes was
GBP0.4m (H1 2022: GBP0.7m). The net financing income on pension
scheme balances was GBP0.7m (H1 2022: GBP0.3m).
Acquisition strategy
The Board continues to evaluate potential acquisition
opportunities that strategically fit the Group, and which will
enhance our global presence in packaging solutions serving the
Healthcare and Food and Beverage markets. Good progress was made
during the period in developing the pipeline of potential
acquisition opportunities. The Company will provide updates on
acquisitions whenever appropriate to do so.
Outlook
Current trading is in line with the Board's expectations and
full year market guidance remains unchanged. Margins are
normalising as anticipated and with a strong order book and
prospects pipeline, Mpac is well positioned to deliver on the
previously announced H2 weighting to the financial year despite the
challenging trading environment.
We continue to be focused on executing our long-term strategy of
delivering OE and Service growth, broadening our customer base, and
delivering on our exciting new product development roadmap.
Our balance sheet remains healthy and provides us with the
ability to invest in the Group for growth. Accordingly, the Board
remains confident in the Group's longer-term prospects.
Adam Holland
Chief Executive
6 September 2023
CONDENSED CONSOLIDATED INCOME STATEMENT
6 months to 30 June 6 months to 30 June 2022
2023 (unaudited) (unaudited)
----------------------------------------- -----------------------------------------
Non-underlying Non-underlying
(note (note 5)
Underlying 5) Total Underlying GBPm Total
Note GBPm GBPm GBPm GBPm GBPm
Revenue 4 52.8 - 52.8 50.6 - 50.6
Cost of sales (40.2) - (40.2) (39.9) - (39.9)
------------ ---------------- --------- ------------ ---------------- ---------
Gross profit 12.6 - 12.6 10.7 - 10.7
Distribution expenses (3.6) - (3.6) (3.4) - (3.4)
Administrative
expenses (6.2) (2.4) (8.6) (5.8) (1.8) (7.6)
Other operating
expenses (0.6) - (0.5) (0.3) - (0.3)
------------ ---------------- --------- ------------ ---------------- ---------
Operating profit/(loss) 4, 5 2.2 (2.4) (0.2) 1.2 (1.8) (0.6)
Financial income - 0.7 0.7 - 0.3 0.3
Financial expenses (0.3) - (0.3) (0.1) - (0.1)
------------ ---------------- --------- ------------ ---------------- ---------
Net financing
income/(expense) (0.3) 0.7 0.4 (0.1) 0.3 0.2
------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss) 4 1.9 (1.7) 0.2 1.1 (1.5) (0.4)
before tax
(0.5)
Taxation (0.1) (0.6) (0.4) 0.1 (0.3)
------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss)
for the period 1.4 (1.8) (0.4) 0.7 (1.4) (0.7)
============ ================ ========= ============ ================ =========
Earnings/(loss) per ordinary share
Basic 7 (2.2p) (3.6p)
Diluted 7 (2.2p) (3.6p)
============ ================ ========= ============ ================ =========
CONDENSED CONSOLIDATED INCOME STATEMENT (CONTINUED)
12 months to 31 December
2022 (audited)
-------------------------------------------
Non-underlying
Underlying (note Total
Notes GBPm 5) GBPm
GBPm
Revenue 4 97.7 - 97.7
Cost of sales (73.3) - (73.3)
------------- ----------------- ---------
Gross profit 24.4 - 24.4
Distribution expenses (8.0) - (8.0)
Administrative expenses (11.9) (3.9) (15.8)
Other operating expenses (0.5) - (0.5)
------------- ----------------- ---------
4,
Operating profit 5 3.9 (3.9) -
Financial income - 0.6 0.6
Financial expenses (0.4) - (0.4)
------------- ----------------- ---------
Net financing expense (0.4) 0.6 0.2
------------- ----------------- ---------
Profit before tax 4 3.5 (3.3) 0.2
Taxation (0.8) 0.2 (0.6)
------------- ----------------- ---------
Profit / (Loss) for
the period 2.7 (3.1) (0.4)
============= ================= =========
Earnings / (Loss) per ordinary share
Basic 7 (2.0p)
Diluted 7 (2.0p)
--------------------------- -------- ------------- ----------------- ---------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2023 (unaudited) 2022 (unaudited) 2022 (audited)
GBPm GBPm GBPm
Loss for the period (0.4) (0.7) (0.4)
------------------- ------------------- -----------------
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss 2.9 23.5 (5.0)
Actuarial gains/(losses)
(1.2) (8.4) 1.3
Tax on items that will not be reclassified
to profit or loss
------------------- ------------------- -----------------
1.7 15.1 (3.7)
------------------- ------------------- -----------------
Items that may be reclassified subsequently
to profit or loss
Currency translation movements arising (1.0) 1.2 2.1
on foreign currency net investments
0.5 (1.0) (1.0)
Effective portion of changes in fair
value of cash flow hedges 0.3 (0.1) (0.3)
Reclassified to income statement from
hedge reserve
------------------- ------------------- -----------------
(0.2) (0.1) 0.8
------------------- ------------------- -----------------
Other comprehensive income for the
period 1.5 15.2 (2.9)
------------------- ------------------- -----------------
Total comprehensive income for the
period 1.1 14.5 (3.3)
=================== =================== =================
All income for the period was derived from continuing
operations
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Share Share Translation redemption Hedging Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
6 months to 30 June
2023
Balance at 1 January
2023 5.1 26.0 2.4 3.9 (1.8) 26.6 62.2
---------- ---------- -------------- ------------ ---------- ----------- ---------
Profit for the period
Other comprehensive - - - - - (0.4) (0.4)
(expense) / income
for the period - - (1.0) - 0.8 1.7 1.5
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
(expense) / income
for the period - - (1.0) - 0.8 1.3 1.1
---------- ---------- -------------- ------------ ---------- ----------- ---------
Equity-settled share-based - - - - - - -
transactions
Purchase of own shares - - - - - - -
Total transactions
with owners, recorded - - - - - - -
directly in equity
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 30 June
2023 5.1 26.0 1.4 3.9 (1.0) 27.9 63.3
========== ========== ============== ============ ========== =========== =========
6 months to 30 June
2022
Balance at 1 January
2022 5.0 26.0 0.3 3.9 (0.5) 30.7 65.4
---------- ---------- -------------- ------------ ---------- ----------- ---------
Profit for the period
Other comprehensive - - - - - (0.7) (0.7)
(expense) / income
for the period - - 1.2 - (1.1) 15.1 15.2
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
(expense) / income
for the period - - 1.2 - (1.1) 14.4 14.5
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners, recorded
directly in equity - - - - - 0.2 0.2
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 30 June
2022 5.0 26.0 1.5 3.9 (1.6) 45.3 80.1
========== ========== ============== ============ ========== =========== =========
12 months to 31 December
2022
Balance at 1 January
2022 5.0 26.0 0.3 3.9 (0.5) 30.7 65.4
---------- ---------- -------------- ------------ ---------- ----------- ---------
Profit for the period
- - - - - (0.4) (0.4)
Other comprehensive
(expense) / income
for the period - - 2.1 - (1.3) (3.7) (2.9)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total comprehensive
(expense) / income
for the period - - 2.1 - (1.3) (4.1) (3.3)
---------- ---------- -------------- ------------ ---------- ----------- ---------
Equity-settled share-based
transactions - - - - - 0.1 0.1
Purchase of own shares 0.1 - - - - (0.1) -
---------- ---------- -------------- ------------ ---------- ----------- ---------
Total transactions
with owners, recorded
directly in equity 0.1 - - - - - 0.1
---------- ---------- -------------- ------------ ---------- ----------- ---------
Balance at 31 December
2022 5.1 26.0 2.4 3.9 (1.8) 26.6 62.2
========== ========== ============== ============ ========== =========== =========
CONDSENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 31 Dec
Note 2023 (unaudited) 2022 (audited)
GBPm GBPm
Non-current assets
Intangible assets 24.3 25.4
Property, plant and equipment 4.0 4.0
Investment property 0.8 0.8
Right of use assets 4.5 5.0
Employee benefits 6 35.2 31.5
Deferred tax assets 1.0 1.3
------------------ ----------------
69.8 68.0
------------------ ----------------
Current assets
Inventories 10.2 9.6
Trade and other receivables 44.0 47.3
Current tax assets 0.8 0.6
Cash and cash equivalents 8.1 4.2
------------------ ----------------
63.1 61.7
Current liabilities
Lease liabilities (1.3) (1.4)
Trade and other payables (43.6) (39.0)
Current tax liabilities (0.3) (0.1)
Provisions (1.0) (1.0)
Interest-bearing loans and borrowings (5.0) (8.0)
------------------ ----------------
(51.2) (49.5)
------------------ ----------------
Net current assets 11.9 12.2
------------------ ----------------
Total assets less current liabilities 81.7 80.2
------------------ ----------------
Non-current liabilities
Interest-bearing loans and borrowings (0.9) (0.9)
Employee benefits 6 (1.7) (2.1)
Deferred tax liabilities (12.4) (11.1)
Lease liabilities (3.4) (3.9)
------------------ ----------------
(18.4) (18.0)
------------------ ----------------
Net assets 63.3 62.2
================== ================
Equity
Issued capital 5.1 5.1
Share premium 26.0 26.0
Reserves 2.9 2.1
Retained earnings 29.3 29.0
------------------ ----------------
Total equity 63.3 62.2
================== ================
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months 6 months 12 months
to 30 to 30 June to 31 Dec
June
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Operating activities Operating loss
Non-underlying items included in operating
profit / (loss) (0.2) (0.6) -
Amortisation Depreciation Other non-cash 2.4 1.8 3.9
items Pension payments Working capital 0.3 0.3 0.9
movements: - increase in inventories 0.9 1.0 2.0
- decrease / (increase) in trade and - 0.4 0.2
other receivables - increase in contract (0.9) (1.1) (2.1)
assets - increase in trade and other
payables - increase / (decrease) in (0.8) (0.5) (2.2)
contract liabilities - increase/(decrease) 3.7 6.1 (6.3)
in provisions (0.6) (4.7) (5.9)
1.7 1.5 1.7
3.4 (7.6) (4.0)
(0.1) 0.1 0.5
--------------- -------------- ------------
Cash flows from continuing operations 9.8 (3.3) (12.8)
before reorganisation Acquisition
and reorganisation costs paid (0.4) - (0.8)
--------------- -------------- ------------
Cash flows from operations Taxation 9.4 (3.3) (13.6)
paid
(0.3) (0.2) (0.4)
--------------- -------------- ------------
Cash flows (used in) / from operating
activities 9.1 (3.5) (14.0)
--------------- -------------- ------------
Investing activities Proceeds from
sale of property, plant and equipment
Acquisition of property, plant and
equipment Capitalised development
expenditure Payment of deferred consideration
- 0.1 -
(0.5) (0.6) (1.4)
(0.6) (0.1) (1.0)
- - (0.8)
--------------- -------------- ------------
Cash flows from investing activities (1.1) (0.6) (3.2)
--------------- -------------- ------------
Financing activities Interest paid
Purchase of own shares (0.3) (0.1) (0.3)
Proceeds from borrowings - - (0.2)
Principal elements of lease payments (3.0) - 8.0
(0.4) (0.6) (1.1)
--------------- -------------- ------------
Cash flows from financing activities (3.7) (0.7) 6.6
--------------- -------------- ------------
Net increase/(decrease) in cash and 4.3 (4.8) (10.6)
cash equivalents
Cash and cash equivalents at 1 January 4.2 14.5 14.5
Effect of exchange rate fluctuations (0.4) (0.2) 0.3
on cash held
--------------- -------------- ------------
Cash and cash equivalents at period
end 8.1 9.5 4.2
=============== ============== ============
NOTES TO ANNOUNCEMENT
1. General information
The half-year results for the current and comparative period are
unaudited but have been reviewed by the auditors, PKF Littlejohn
LLP, and their report is set out after the notes. The comparative
information for the year ended 31 December 2022 does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. The Group's statutory accounts have been reported on by the
Group's auditor and delivered to the Registrar of Companies. The
report of the auditor was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying its report, and (iii) did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006. The Group's statutory accounts for the year ended 31
December 2022 are available from the Company's registered office at
Station Estate, Station Road, Tadcaster, North Yorkshire, LS24 9SG
or from the Group's website at www.mpac-group.com .
The Directors have considered the trading outlook of the Group
for an 18-month period ending 31 December 2024, its financial
position, including its cash resources and access to borrowings,
and its continuing obligations, including to its defined benefit
pension schemes. Having made appropriate enquiries, the Directors
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern basis in
preparing the condensed set of financial statements.
The condensed set of interim financial statements was approved
by the Board of directors on 6 September 2023.
2. Basis of preparation
(a) Statement of compliance
The condensed set of interim financial statements for the 6
months ended 30 June 2023 has been prepared in accordance with
UK-adopted international accounting standards, and in particular
IAS 34 Interim financial reporting. It does not include all the
information required for full annual financial statements and
should be read in conjunction with the financial statements of the
Group for the year ended 31 December 2022.
(b) Judgements and estimates
The preparation of the condensed set of interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing the condensed set of financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were of the same type as those that applied to the financial
statements for the year ended 31 December 2022.
Mpac is subject to a number of risks which could have a serious
impact on the performance of the business. The Board regularly
considers the principal risks that the Group faces and how to
mitigate their potential impact. The key risks to which the
business is exposed are set out on pages 17 to 21 of the Group's
2022 Annual Report and Accounts.
3. Significant accounting policies
The accounting policies, presentation and methods of computation
applied by the Group in this condensed set of interim financial
statements are the same as those applied in the Group's latest
audited financial statements. No new accounting standards have been
applied for the first time in these condensed interim financial
statements.
4. Operating segments
It is the Group's strategic intention to develop "One Mpac",
accordingly segmental reporting reflects the split of sales by both
Original Equipment (OE) and Service together with the regional
split, Americas, EMEA and Asia. The Group's operating segments
reflect the basis of the Group's management and internal reporting
structure.
Unallocated costs include distribution and administrative
expenditure. Further details in respect of the Group structure and
performance of the segments are set out in the half-year management
report.
6 months to 6 months to 30 12 months to 31
30 Jun 2023 Jun 2022 Dec 2022
OE Service Total OE Service Total OE Service Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- ------------- ------- -------- ---------- ------- -------- -----------
Revenue
Americas 16.1 8.3 24.4 25.0 5.1 30.1 40.9 11.9 52.8
EMEA 14.9 8.3 23.2 12.9 5.1 18.0 27.8 9.7 37.5
Asia Pacific 4.2 1.0 5.2 1.9 0.6 2.5 5.9 1.5 7.4
-------- -------- ------------- ------- -------- ---------- ------- -------- -----------
Total 35.2 17.6 52.8 39.8 10.8 50.6 74.6 23.1 97.7
======== ======== ============= ======= ======== ========== ======= ======== ===========
Gross profit 12.6 10.7 24.4
Selling,
distribution
& administration (10.4) (9.5) (20.5)
------------- ---------- -----------
Underlying 2.2 1.2 3.9
operating
profit
(2.4) (1.8) (3.9)
Unallocated
non-underlying
items included
in operating
profit
------------- ---------- -----------
Operating profit
Net financing (0.2) (0.6) -
income /
(expense) 0.4 0.2 0.2
------------- ---------- -----------
Profit before
tax 0.2 (0.4) 0.2
============= ========== ===========
5. Non-underlying items and alternative performance measures
Non-underlying items merit separate presentation in the
consolidated income statement to allow a better understanding of
the Group's financial performance, by facilitating comparisons with
prior periods and assessments of trends in financial performance.
Pension administration charges and interest, significant
reorganisation costs, acquisition or disposal costs, amortisation
of acquired intangible assets, profits or losses arising on
discontinued operations, significant impairments of tangible and
intangible assets and related taxation are considered
non-underlying items as they are not representative of the core
trading activities of the Group and are not included in the
underlying profit measure reviewed by key stakeholders.
The Group elects to include costs relating to the defined
benefit pension scheme in non-underlying as the costs would be
immaterial to the Group should the scheme not exist.
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2023 2022 2022
GBPm GBPm GBPm
Defined benefit pension scheme administration (0.4) (0.7) (1.1)
costs (note 6)
Reorganisation costs (1.2) (0.1) (0.6)
Amortisation of intangibles from business (0.8) (0.8) (1.6)
combinations
Acquisition costs - (0.2) (0.3)
Total non-underlying operating expenditure (2.4) (1.8) (3.6)
Net financing income on pension scheme
balances
0.7 0.3 0.3
-------------- -------------- -------------
Total non-underlying expense before
tax (1.7) (1.5) (3.3)
============== ============== =============
The Group uses alternative performance measures (APM's), in
addition to those reported under IFRS, as management believe these
measures enable the users of financial statements to better assess
the underlying trading performance of the business. The APM's used
include underlying operating profit, underlying profit before tax
and underlying earnings per share. These measures are calculated
using the relevant IFRS measure as adjusted for non-underlying
income/(expenditure) listed above.
6. Employee benefits
The Group accounts for pensions under IAS 19 Employee benefits.
The most recent formal valuation of the UK defined benefit pension
scheme (Fund) was completed as at 30 June 2021, which identified a
deficit of GBP28.4m. The deficit funding agreement focusses the
scheme on achieving risk transfer to an alternative arrangement
which the company would not be liable for the performance of. The
principal terms of the deficit funding agreement, which is
effective until 31 December 2035 and is subject to reassessment
every 3 years, are as follows:
-- the Company will continue to pay a sum of GBP2.0m per annum
to the Fund (increasing at 2.1% per annum) in deficit recovery
payments;
-- Once the funding level on a technical provisions basis
exceeds 103% (based upon an annual test), contributions will be
redirected to an escrow account which can only be used to either
enable risk transfer, remedy a deficit arising or be returned to
the Group should risk transfer be achieved without the funds being
required; and
-- Should the funding level (including the escrow account) reach
110% on a technical provisions basis (based upon an annual test),
contributions will cease.
Formal valuations of the USA defined benefit schemes were
carried out as at 1 January 2022, and their assumptions, updated to
reflect actual experience and conditions at 31 December 2022 and
modified as appropriate for the purposes of IAS 19, have been
applied in this set of financial statements.
Profit before tax includes charges in respect of the defined
benefit pension schemes' administration costs of GBP0.4m (2022:
GBP0.7m) and a net financing income on pension scheme balances of
GBP0.7m (2022: GBP0.3m). In respect of the UK scheme, the Group
paid deficit recovery contributions of GBP0.9m (2022: GBP1.0m).
Contributions to the US scheme totalled GBP0.1m (2022: GBP0.1m)
Employee benefits include the net pension asset of the UK
defined benefit pension scheme of GBP35.2m (2022: GBP59.7m) and the
net pension liability of the USA defined benefit pension schemes of
GBP1.0m (2022: GBP2.8m), all figures before tax.
Employee benefits as shown in the condensed consolidated
statement of financial position were:
30 June 31 Dec
2023 2022
GBPm GBPm
UK scheme
Fair value of assets 295.8 311.1
Present value of defined benefit obligations (260.6) (279.7)
---------- ---------
Defined benefit asset 35.2 31.5
---------- ---------
USA schemes
Fair value of assets 7.9 8.1
Present value of defined benefit obligations (9.5) (10.2)
---------- ---------
Defined benefit liability (1.6) (2.1)
---------- ---------
Total net defined benefit asset 33.6 29.4
========== =========
7. Earnings per share
Basic earnings per ordinary share is calculated by dividing the
profit or loss attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the
period excluding shares held by the employee trust in respect of
the Company's long-term incentive arrangements. For diluted
earnings per ordinary share, the weighted average number of shares
includes the diluting effect, if any, of own shares held by the
employee trust and the effect of the Company's long-term incentive
arrangements.
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2023 2022 2022
Basic - weighted average number of ordinary
shares 20,474,424 20,035,439 20,261,505
Diluting effect of shares held by the
employee trust - 261,568 41,304
Effect of shares conditionally granted
under the LTIP 94,849 - -
----------------------- ---------------------- ---------------------
Diluted - weighted average number of
ordinary shares 20,569,273 20,297,007 20,302,809
======================= ====================== =====================
Underlying earnings per share, which is calculated on the
earnings before non-underlying items, for the 6 months to 30 June
2023 amounted to 6.5p (6 months to 30 June 2022: 3.6p; 12 months to
31 December 2022: 13.3p).
In the 6 months to 30 June 2023 and 30 June 2022 the effect of
dilution was nil pence per share. The effect of the dilution at 31
December 2022 was nil pence per share.
8. Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the financial statements for
the year ended 31 December 2022.
The Group enters forward foreign exchange contracts solely for
the purpose of minimising currency exposures on sale and purchase
transactions. The Group has classified its forward foreign exchange
contracts used for hedging as cash flow hedges and states them at
fair value.
9. Related parties
The Group has related party relationships with its directors and
with the UK and USA defined benefit pension schemes. There has been
no material change in the nature of the related party transactions
described in note 31 of the 2022 Annual Report and Accounts.
10. Dividends
Having considered the trading results to 30 June 2023, together
with the opportunities for investment in the growth of the Company,
the Board has decided that it is appropriate not to pay an interim
dividend. No dividends were paid in 2022. Future dividend payments
and the development of a new dividend policy will be considered by
the Board in the context of 2023 trading performance and when the
Board believes it is prudent to do so.
11. Half-year report
A copy of this announcement will be made available to
shareholders from 7 September 2023 on the Group's website at
www.mpac-group.com . This announcement will not be made available
in printed form.
12. Future accounting policies
There are no changes anticipated to the Group's accounting
policies in the foreseeable future.
INDEPENDENT REVIEW REPORT TO MPAC GROUP PLC
Conclusion
We have been engaged by the group to review the condensed set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprise the Condensed
Consolidated Income Statement, the Condensed Consolidated Statement
of Changes in Equity, the Condensed Consolidated Statement of
Financial Position, the Condensed Consolidated Statement of Cash
Flows and related notes. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the AIM
Rules for Companies.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity", issued for use in the United Kingdom. A review of interim
financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2a, the annual financial statements of the
group are prepared in accordance with UK adopted IASs. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial
Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the AIM Rules for
Companies.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the group a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions relating to going concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report.
Use of our report
This report is made solely to the company's directors, as a
body, in accordance with the terms of our engagement letter dated 8
August 2023. Our review has been undertaken so that we might state
to the company's directors those matters we have agreed to state to
them in a reviewer's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's
directors as a body, for our work, for this report, or for the
conclusions we have formed.
PKF Littlejohn LLP 15 Westferry Circus
Statutory Auditor Canary Wharf
London E14 4HD
6(th) September 2023
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END
IR UNARROAUKRUR
(END) Dow Jones Newswires
September 07, 2023 02:00 ET (06:00 GMT)
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