LONDON, May 11, 2004 (PRIMEZONE) -- Enodis Plc (NYSE:ENO):
Results for the 26 weeks ended 27 March 2004 (H104)
STEADY PROGRESS CONTINUES
Group Financial Highlights -- GBPm (except EPS) Q204 Q203 H104 H103 Turnover 142.5 154.1 290.8 310.9 Operating profit 8.0 3.8 13.8 6.7 Adjusted operating 10.8 11.4 19.8 19.5 profit* Profit/(loss) before tax 5.1 (1.8) 7.2 (2.0) Adjusted profit before 6.6 5.8 11.0 8.3 tax** Basic and diluted 1.0 (0.9) 1.3 (0.9) earnings/(loss) per share (pence) Adjusted basic and 1.3 1.2 2.3 1.7 diluted earnings per share (pence) Like-for-like Food 142.5 140.5 290.5 290.3 Equipment turnover*** Like-for-like Food 13.1 12.0 25.1 21.9 Equipment operating profit*** Net debt (121.9) (181.0) Key Points -- Food Equipment like-for-like operating profit in H104 up 15% to GBP25.1m o Food Service Equipment -- North America H1 like-for-like operating profit up 11% to GBP20.3m on broadly unchanged like-for-like turnover. Q2 like-for-like operating profit up 15% to GBP10.7m on like-for-like turnover up 4% o Food Service Equipment -- Europe/Asia H1 like-for-like operating profit down 35% to GBP2.4m on broadly unchanged like-for-like turnover reflecting planned investment in new products and the absence of a major rollout. Q2 like-for-like operating profit down 35% to GBP1.3m on a 1% decline in like-for-like turnover o Food Retail Equipment H1 like-for-like operating profit up GBP2.5m from breakeven as management actions at Kysor Warren continue to show benefits. Q2 like-for-like operating profit up 57% to GBP1.1m -- Adjusted H104 profit before tax up 33% to GBP11.0m despite a GBP1.7m adverse foreign exchange impact in Food Equipment operating results -- Basic and diluted EPS 1.3p (H103: loss per share of 0.9p) -- Net debt down 13% to GBP121.9m from September 2003 and 33% from March 2003. * Before operating exceptional items and goodwill amortisation (see Other unaudited financial information in the attached results for more details). ** Before all exceptional items and goodwill amortisation (see Other unaudited financial information in the attached financial statements for details). *** Prior year turnover and adjusted operating profit adjusted for foreign exchange (see Other unaudited financial information in the attached financial statements for details).
The above adjusted information is used throughout this document and is presented to indicate underlying operating performance of the Group.
Peter Brooks, Chairman, said:
"We are pleased with the momentum we have built from our key initiatives and our steady progress in the face of mixed markets, commodity cost inflation and adverse foreign exchange translations of profits. Overall, we are maintaining our cautious optimism for the second half and our expectations for underlying performance for the year remain consistent with those at the time of our full year announcement last November."
Dave McCulloch, Chief Executive Officer, added:
"We are beginning to see the first signs of growth in our North American food service equipment markets, but markets in Europe and Retail remain tough. We continue to mitigate the effect of substantially increased commodity costs through the acceleration of our ongoing lean manufacturing and purchasing initiatives, as well as by the introduction of further price increases. At the same time, we are investing more in R&D and our IT infrastructure to build a solid platform for the future. Compared to last year, the weakness of the US dollar will negatively impact the translation of profits."
A meeting for equity investors and analysts will be held today at 9.00am at the offices of Financial Dynamics. We will also host a conference call for bond holders and other interested parties at 4.00pm today. The format of this call will be a brief resume of the interim results and a Q&A session. For details, please contact Elaine Holder at Financial Dynamics on +44 (0) 20 7269 7121, or Tina Mularski at Enodis on +44 (0) 20 7304 6006.
SEC Filings
Enodis plc has a secondary listing on the New York Stock Exchange (Ticker symbol: ENO) and files reports with the Securities and Exchange Commission (SEC) in the US. These reports contain additional information that is not included in this press release. Copies of the reports are available on the SEC website at www.sec.gov.
This press release contains "forward-looking statements," within the meaning of the U.S. federal securities laws, that represent our expectations or beliefs regarding future events, based on currently available information, including statements concerning our anticipated performance. These statements by their nature involve risks and uncertainties, many of which are beyond our control. Our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, including our substantial debt obligations and restrictive covenants; susceptibility to economic downturns including delays on market improvements; competitive pricing pressures; consolidation or loss of large customers; changes in customer purchasing patterns; unfavorable changes in the price of commodities or raw materials; the results of technological developments; currency fluctuations; the outcome of current lawsuits; and other risks related to our U.S., U.K. and foreign operations. A more complete description of our risk factors is included under "Risk Factors" in our Form 20-F which was filed with the SEC during December 2003, as well as in more recent Form 6-K reports furnished with the SEC.
CHIEF EXECUTIVE OFFICER'S REVIEW
Results
Turnover in H104 was GBP290.8m (H103: GBP310.9m). The GBP20.1m decline was primarily due to the translation effect of foreign currency exchange rate movements, principally the weakening US dollar. Like-for-like Food Equipment turnover in H104 was broadly unchanged compared to the prior year. Q204 like-for-like Food Equipment turnover was up 1% at GBP142.5m. Due to seasonality effects, our turnover is traditionally higher in the second half.
Adjusted operating profit in H104 was GBP19.8m (H103 : GBP19.5m). Like-for-like Food Equipment operating profit was up 15 % (GBP3.2m) in the half to GBP25.1m. Food Service Equipment -- North America was up 11% with strong performances at our ice and refrigeration businesses. This more than offset lower European operating profits where the prior year comparative figures reflected a major chain rollout that was not repeated and increased current year product development spend. The actions taken in early 2003 at Kysor Warren continued to be reflected in improved results in our Food Retail segment. The increase in like-for-like operating profit was partially offset by foreign currency translation effects, mainly brought about by the weakening US dollar (GBP1.7m in the half).
Q204 like-for-like operating profit was up GBP1.1m (9%) to GBP13.1m which was more than offset by GBP1.4m of currency effects.
H104 adjusted profit before tax increased by 33% to GBP11.0m (H103: GBP8.3m) with adjusted operating profit GBP0.3m higher (including currency effects) and interest GBP2.4m lower than the prior year. In Q204 adjusted profit before tax was GBP6.6m (Q203: GBP5.8m) with adjusted operating profit GBP0.6m lower than last year, offset by a GBP1.4m lower interest charge.
Profit after tax in H104 was GBP5.3m compared to a loss of GBP3.4m in H103. Q204 profit after tax was GBP3.9m compared to a loss of GBP3.4m in Q203.
Net debt fell to GBP121.9m (at 27 September 2003: GBP139.7m) with GBP10.8m of the decrease arising from favourable foreign exchange rate movements. Compared to H103, net debt was down GBP59.1m (33%) at period end.
Net cash flow before financing of GBP6.6m (H103: GBP5.1m) included increased capital expenditure (of which around GBP1.8m relates to improving our IT infrastructure). Cash flow has improved in part due to lower tax and interest costs and the non-recurrence of a prior year disposal warranty payment. There has been increased cash flow in respect of vacant properties. Cash conversion days were 40, an improvement of six days from H103.
REVIEW OF OPERATIONS
Global Food Service Equipment
Global Food Service Equipment comprises our operations in North America, which contribute approximately 75% of Global Food Service Equipment annual turnover, and those in Europe/Asia.
Turnover reduced by GBP15.2m from H103 primarily due to the translation effect of foreign currency exchange rate movements, principally the weakening US dollar. Like-for-like sales were broadly unchanged as we offset the impact of lower sales to certain QSR chains by increased sales in most product lines.
The cost reduction actions that we implemented in March 2003 delivered approximately GBP2m of savings in the second quarter, a total of approximately GBP4m in the half, in line with our plans, and contributed to a 3% improvement in like-for-like operating profit.
In Q204 like-for-like turnover improved by 3% as, for the first time since Q103, our North American businesses increased quarter on quarter sales contributing to a 6% increase in like-for-like operating profit.
Turnover GBPm H104 H103 FX Like-for-Like H103 Food Service 179.3 196.3 (17.8) 178.5 Equipment -- North America Food Service 67.7 65.9 1.8 67.7 Equipment -- Europe/Asia Global Food Service 247.0 262.2 (16.0) 246.2 Equipment
Food Service Equipment -- North America like-for-like sales in H104 were broadly unchanged compared to last year as a 3% decline in Q104 was offset in Q204. The effect of continued lower sales to certain QSR chains reduced in our quarter on quarter comparatives. We increased like-for-like turnover by 4% in Q204, the first quarter on quarter increase since Q103. Sales in most product lines have increased particularly in our ice businesses.
Food Service Equipment -- Europe/Asia like-for-like sales in both H1 and Q2 were broadly unchanged as the impact of a difficult UK market was offset by strong performances in the ice businesses.
Adjusted operating H104 H103 FX Like-for-Like profit GBPm H103 Food Service Equipment 20.3 20.1 (1.8) 18.3 -- North America Food Service Equipment 2.4 3.6 0.1 3.7 -- Europe/Asia Global Food Service 22.7 23.7 (1.7) 22.0 Equipment
Food Service Equipment -- North America like-for-like operating profit was up 11% in H104 and 15% in Q204. The year on year improvement in like-for-like operating profit arose from the combined effect of increased sales in most product lines and last year's division-wide cost reduction programme, which offset the effects of reduced sales to certain QSR chains. We saw particular improvements in our ice and refrigeration businesses. As discussed in our Q104 announcement, the results for our North American operations in H104 included a one-off pension credit of GBP0.5m.
In line with our objective of becoming a low cost producer of high quality products, our lean manufacturing and purchasing initiatives are gaining momentum and are mitigating the commodity cost pressures, especially steel surcharges, that began to impact us in Q204.
In Food Service Equipment -- Europe/Asia, similar factors affected both the half and the second quarter. Improvements in our ice businesses have been offset by two factors: increased product development costs in continental Europe and the lack of contribution in the UK from a prior year rollout of Merrychef ovens to a North American chain.
Food Retail Equipment
Our Food Retail Equipment businesses operate predominantly in the USA with sales/service offices in Canada and Mexico.
GBPm H104 H103 FX Like-for-Like H103 Turnover 43.5 48.7 (4.6) 44.1 Adjusted operating 2.4 (0.1) -- (0.1) profit
Kysor Warren has continued the progress shown in Q104 and made small adjusted operating profits in both H104 and Q204.
Food Retail Equipment like-for-like turnover was down in Q204 compared to Q203 as a result of market conditions affecting Kysor Warren's current customer base. This has been offset by improved sales at Kysor Panel Systems and the benefits, particularly in Q204, of new business in Mexico. Q204 like-for-like sales were down by GBP1.4m compared to Q203.
In addition to the operating profit effect of increased sales at both Kysor Panel Systems and in Mexico, Kysor Warren continued its trend of improved results and was profitable in H104 compared to a loss reported last year.
In Q204, the focus on profitable business, improved quality, on-time delivery and customer service led to Kysor Warren being able to absorb the effect of reduced turnover. The quarter on quarter benefits of the Kysor Warren turnaround, which commenced in Q203, will lessen over the balance of the year. In addition, we expect trading conditions to continue to be difficult.
OTHER
Exceptional items
The exceptional item in H104 relates to the release of disposal warranty accruals that are no longer required following the expiry of the associated warranty periods. There is no cash impact of this release.
Interest
The interest charge in the half reduced by GBP2.4m to GBP8.8m. This is primarily the result of lower average debt balances.
Property
As discussed in our 2003 full year statement, we continue to expect annual profits from property development to reduce over time. The charge in the period related to the ongoing costs of managing our residual property portfolio and the phasing of costs relating to development projects.
Earnings per share
Adjusted diluted earnings per share were 2.3p (H103: 1.7p). Basic earnings per share were 1.3p (H103: loss of 0.9p).
Dividends
No dividend is proposed for the period (2003: nil).
OUTLOOK
Since the time of our Q1 announcement, food equipment markets have moved as we anticipated.
We are beginning to see the first signs of growth in our North American food equipment markets. Improving macro economic indicators, growth in food and beverage sales particularly at a number of QSR chains, indications that purchasers of food service equipment are becoming more confident and improving order rates, all support our view that food equipment demand will increase in the second half.
In contrast, European food equipment markets remain mixed with the UK market particularly challenging. We expect Food Retail markets to continue to be difficult.
In Q204 we year saw substantial increases in commodity costs, especially in steel surcharges, which were in excess of our expectations. We continue to mitigate the effect of these increases through the acceleration of our ongoing lean manufacturing and purchasing initiatives, as well as by the introduction of further price increases.
The weaker US dollar continues to impact the translation of profits to sterling, but is helping the competitive position of our US-made products in international markets.
Overall we are maintaining the cautious optimism for the second half that we indicated at the time of our Q1 announcement. Our expectation of the Group's underlying performance for the full year ending 2 October 2004 has not changed since the time of our 2003 full year statement in November 2003.
We remain confident in the long-term outlook for Enodis.
Dave McCulloch
Chief Executive Officer
11 May 2004
Group profit and loss account 26 weeks to 27 March 2004 26 weeks to 27 March 2004 Before Exceptional Total exceptional items items (note 4) Notes GBPm GBPm GBPm (unaudited) (unaudited) (unaudited) Turnover Food 290.5 -- 290.5 Equipment Property 0.3 -- 0.3 Total 2 290.8 -- 290.8 turnover Operating profit/(loss) before goodwill amortisation Food 25.1 -- 25.1 Equipment Property (0.9) -- (0.9) Corporate (4.4) -- (4.4) costs 19.8 -- 19.8 Goodwill (6.0) -- (6.0) amortisation Operating 3 13.8 13.8 profit/(loss) Profit/(loss) 4 -- 2.2 2.2 on disposal of businesses Profit/(loss) 13.8 2.2 16.0 on ordinary activities before interest and taxation Net interest (8.8) -- (8.8) payable and similar charges Profit/(loss) 5.0 2.2 7.2 on ordinary activities before taxation Tax on 5 (1.9) -- (1.9) profit/(loss) on ordinary activities Profit/(loss) 3.1 2.2 5.3 on ordinary activities after taxation Equity (0.1) -- (0.1) minority interests Retained 3.0 2.2 5.2 profit/(loss) Earnings/(loss) 6 Pence per share (pence) (unaudited) Basic earnings/(loss) per share 1.3 Adjusted basic earnings/(loss) per share 2.3 Diluted earnings/(loss) per share 1.3 Adjusted diluted earnings/(loss) per share 2.3 26 weeks to 29 March 2003 Before Exceptional exceptional items items (note 4) Total Notes GBPm GBPm GBPm (unaudited) (unaudited) (unaudited) Turnover Food Equipment 310.9 -- 310.9 Property -- -- -- Total turnover 2 310.9 -- 310.9 Operating profit/(loss) before goodwill amortisation Food Equipment 23.6 (1.6) 22.0 Property -- (2.5) (2.5) Corporate (4.1) (1.9) (6.0) costs 19.5 (6.0) 13.5 Goodwill (6.8) -- (6.8) amortisation Operating 3 12.7 (6.0) 6.7 profit/(loss) Profit/(loss) 4 -- 2.5 2.5 on disposal of businesses Profit/(loss) 12.7 (3.5) 9.2 on ordinary activities before interest and taxation Net interest (11.2) -- (11.2) payable and similar charges Profit/(loss) 1.5 (3.5) (2.0) on ordinary activities before taxation Tax on 5 (1.4) -- (1.4) profit/(loss) on ordinary activities Profit/(loss) 0.1 (3.5) (3.4) on ordinary activities after taxation Equity -- -- -- minority interests Retained 0.1 (3.5) (3.4) profit/(loss) Earnings/(loss) 6 Pence per share (pence) (unaudited) Basic (0.9) earnings/(loss) per share Adjusted basic 1.7 earnings/(loss) per share Diluted (0.9) earnings/(loss) per share Adjusted 1.7 diluted earnings/(loss) per share Group statement of total recognised 26 weeks to 26 weeks to gains and losses 27 March 29 March 2004 2003 GBPm GBPm (unaudited) (unaudited) Retained profit/(loss) 5.2 (3.4) Currency translation differences on (10.6) 0.3 foreign currency net investments Total recognised gains and losses (5.4) (3.1) for the period Prior period adjustment (note 1) 1.4 -- Total recognised gains and losses (4.0) (3.1) since last annual report Group profit and loss account 13 weeks to 27 March 2004 13 weeks to 27 March 2004 Before Exceptional Total exceptional items items (note 4) Notes GBPm GBPm GBPm (unaudited) (unaudited) (unaudited) Turnover Food 142.5 -- 142.5 Equipment Property -- -- -- Total 2 142.5 -- 142.5 turnover Operating profit/(loss) before goodwill amortisation Food 13.1 -- 13.1 Equipment Property (0.2) -- (0.2) Corporate (2.1) -- (2.1) costs 10.8 -- 10.8 Goodwill (2.8) -- (2.8) amortisation Operating 3 8.0 -- 8.0 profit/(loss) Profit/(loss) 4 -- 1.3 1.3 on disposal of businesses Profit/(loss) 8.0 1.3 9.3 on ordinary activities before interest and taxation Net interest (4.2) -- (4.2) payable and similar charges Profit/(loss) 3.8 1.3 5.1 on ordinary activities before taxation Tax on (1.2) -- (1.2) profit/(loss) on ordinary activities Profit/(loss) 2.6 1.3 3.9 on ordinary activities after taxation Equity (0.1) -- (0.1) minority interest Retained 2.5 1.3 3.8 profit/(loss) Earnings/(loss) 6 Pence per share (pence) (unaudited) Basic earnings/(loss) per share 1.0 Adjusted basic earnings/(loss) per share 1.3 Diluted earnings/(loss) per share 1.0 Adjusted diluted earnings/(loss) per share 1.3 13 weeks to 29 March 2003 Before Exceptional exceptional items items (note 4) Total Notes GBPm GBPm GBPm (unaudited) (unaudited) (unaudited) Turnover Food Equipment 154.1 -- 154.1 Property -- -- -- Total turnover 2 154.1 -- 154.1 Operating profit/(loss) before goodwill amortisation Food Equipment 13.4 (1.6) 11.8 Property -- (2.5) (2.5) Corporate (2.0) (0.2) (2.2) costs 11.4 (4.3) 7.1 Goodwill (3.3) -- (3.3) amortisation Operating 3 8.1 (4.3) 3.8 profit/(loss) Profit/(loss) 4 -- -- -- on disposal of businesses Profit/(loss) 8.1 (4.3) 3.8 on ordinary activities before interest and taxation Net interest (5.6) -- (5.6) payable and similar charges Profit/(loss) 2.5 (4.3) (1.8) on ordinary activities before taxation Tax on (1.0) (0.6) (1.6) profit/(loss) on ordinary activities Profit/(loss) 1.5 (4.9) (3.4) on ordinary activities after taxation Equity -- -- -- minority interest Retained 1.5 (4.9) (3.4) profit/(loss) Earnings/(loss) 6 Pence per share (pence) (unaudited) Basic (0.9) earnings/(loss) per share Adjusted basic 1.2 earnings/(loss) per share Diluted (0.9) earnings/(loss) per share Adjusted 1.2 diluted earnings/(loss) per share Group statement of total recognised 13 weeks to 13 weeks to gains and losses 27 March 29 March 2004 2003 GBPm GBPm (unaudited) (unaudited) Retained profit/(loss) 3.8 (3.4) Currency translation differences on (3.4) 3.5 foreign currency net investments Total recognised gains and losses 0.4 0.1 for the period Group profit and loss account 52 weeks to 27 September 2003 52 weeks to 27 September 2003 Before Exceptional Total exceptional items items (note 4) Notes GBPm GBPm GBPm Turnover Food Equipment 663.7 -- 663.7 Property 15.7 -- 15.7 2 679.4 -- 679.4 Operating profit/(loss) before goodwill amortisation Food Equipment 64.9 (4.7) 60.2 Property 5.4 (3.3) 2.1 Corporate costs (9.5) (4.5) (14.0) 60.8 (12.5) 48.3 Goodwill amortisation (13.8) -- (13.8) Operating 3 47.0 (12.5) 34.5 profit/(loss) Profit/(loss) on 4 -- 3.3 3.3 disposal of businesses Profit/(loss) on 47.0 (9.2) 37.8 ordinary activities before interest and taxation Net interest (21.9) -- (21.9) payable and similar charges Profit/(loss) on 25.1 (9.2) 15.9 ordinary activities before taxation Tax on 5 (8.2) 1.8 (6.4) profit/(loss) on ordinary activities Profit/(loss) on 16.9 (7.4) 9.5 ordinary activities after taxation Equity minority (0.1) -- (0.1) interests Retained 16.8 (7.4) 9.4 profit/(loss) Earnings per 6 pence share (pence) Basic earnings 2.4 per share Adjusted basic 7.7 earnings per share Diluted 2.4 earnings per share Adjusted diluted 7.7 earnings per share 52 weeks to 27 September 2003 Group statement of total recognised gains and losses GBPm Retained 9.4 profit/(loss) for the period Currency translation differences on foreign currency (4.6) net investments Total recognised gains and (losses) for the period 4.8 Group balance sheet 27 March 29 March 27 September 2004 2003 2003 GBPm GBPm GBPm (unaudited) (unaudited) (restated note (restated 1) note 1) Fixed assets Intangible 186.7 227.0 208.8 assets: Goodwill Tangible assets 74.5 84.8 81.6 Investments 3.9 4.9 4.0 265.1 316.7 294.4 Current assets Stocks 76.6 84.9 75.2 Debtors 102.4 115.3 118.3 Deferred tax 21.7 25.1 23.8 asset Cash at bank and 50.9 58.7 77.7 in hand 251.6 284.0 295.0 Creditors falling due within one year Borrowings (25.7) (38.9) (49.3) Other creditors (157.2) (170.4) (174.6) (182.9) (209.3) (223.9) Net current assets 68.7 74.7 71.1 Total assets less 333.8 391.4 365.5 current liabilities Financed by: Creditors falling due after more than one year Borrowings 140.0 191.2 160.2 Provisions for 38.0 47.5 44.6 liabilities and charges 178.0 238.7 204.8 Capital and reserves Called up equity 200.5 200.2 200.2 share capital Share premium 234.3 234.2 234.2 account Profit and loss (276.8) (279.3) (271.4) account ESOP Trust (2.4) (2.4) (2.4) Equity 155.6 152.7 160.6 shareholders' funds Equity minority 0.2 -- 0.1 interests 333.8 391.4 365.5 Group cash flow statement 26 weeks to 26 weeks to 52 weeks 27 March 29 March to 27 September 2004 2003 2003 Notes GBPm GBPm GBPm (unaudited) (unaudited) Net cash flow 21.2 23.9 80.0 from operations before exceptional items Net cash flow -- (1.8) (6.5) effect of exceptional items Net cash (a) 21.2 22.1 73.5 inflow/(outflow) from operating activities Return on investments and servicing of finance Interest paid (8.0) (9.7) (18.9) Taxation Overseas and UK (1.9) (3.1) (7.1) tax paid Capital expenditure and financial investment Payments to (4.7) (3.3) (10.0) acquire tangible fixed assets Receipts from -- 0.4 0.6 sale of tangible fixed assets (4.7) (2.9) (9.4) Acquisitions and disposals Disposal of -- (1.3) (1.3) subsidiary undertakings Cash 6.6 5.1 36.8 inflow/(outflow) before financing Financing Issue of share 0.4 -- -- capital Net increase/(decrease) (32.3) (19.8) (32.3) in term loans and other borrowings Capital element of -- (0.2) (0.2) finance lease payments (31.9) (20.0) (32.5) Increase/(decrease) in (25.3) (14.9) 4.3 cash in the period Notes to the group cash flow statement (a) Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities 26 weeks to 27 March 26 weeks to 29 March 2004 2003 Before Effect Total Before Effect except of excepti of ional excepti onal excepti Total items onal items onal items items GBPm GBPm GBPm GBPm GBPm GBPm (unaud (unaudi (unaudi (unaudi (unaudi (unaudi ited) ted) ted) ted) ted) ted) Operating 13.8 -- 13.8 12.7 (6.0) 6.7 profit/(loss) Depreciation 5.8 -- 5.8 6.3 -- 6.3 Amortisation 6.0 -- 6.0 6.8 -- 6.8 of goodwill Increase/ (3.4) -- (3.4) (0.6) 3.2 2.6 (decrease) in provisions (Increase)/ (5.5) -- (5.5) (5.5) -- (5.5) decrease in stock (Increase)/ 9.5 -- 9.5 14.4 -- 14.4 decrease in debtors Increase/ (5.0) -- (5.0) (10.2) 1.0 (9.2) (decrease) in creditors Net cash 21.2 -- 21.2 23.9 (1.8) 22.1 inflow/ (outflow) from operating activities 52 weeks to 27 September 2003 Before Effect of Total exceptional exceptional items items GBPm GBPm GBPm Operating profit/(loss) 47.0 (12.5) 34.5 Depreciation 12.4 -- 12.4 Amortisation of 13.8 -- 13.8 goodwill Increase/(decrease) in (2.8) 4.5 1.7 provisions (Increase)/decrease in 2.6 -- 2.6 stock (Increase)/decrease in 7.5 -- 7.5 debtors Increase/(decrease) in (0.5) 1.5 1.0 creditors Net cash 80.0 (6.5) 73.5 inflow/(outflow) from operating activities (b) Reconciliation of net cash flow to movement in net debt 27 March 29 March 27 September 2004 2003 2003 GBPm GBPm GBPm (unaudited) (unaudited) Net debt at the start (139.7) (186.1) (186.1) of period Increase/(decrease) (25.3) (14.9) 4.3 in net cash in the period Net 32.3 20.0 32.5 (increase)/decrease in other loans Translation 10.8 -- 9.6 differences Net debt at the end (121.9) (181.0) (139.7) of the period (c) Reconciliation of net debt to balance sheet 27 March 29 March 27 September 2004 2003 2003 GBPm GBPm GBPm (unaudited) (unaudited) Cash at bank and in 50.9 58.7 77.7 hand Short term (25.7) (38.9) (49.3) borrowing Long term borrowing (140.0) (191.2) (160.2) (114.8) (171.4) (131.8) Exclude deferred (7.1) (9.6) (7.9) financing costs (121.9) (181.0) (139.7)
Notes to the financial statements
1. Basis of Preparation
The accompanying condensed consolidated financial statements ("interim financial statements") have been prepared in accordance with accounting principles generally accepted in the United Kingdom ("UK GAAP"). The interim financial statements are unaudited but include all adjustments which management considers necessary for a fair presentation of the financial position of the Group (Enodis plc and subsidiary undertakings) for the 13 and 26 week periods ended 27 March 2004 and 29 March 2003 and the operating results and cash flows for the periods. Certain information and footnote disclosures normally included in statutory financial statements prepared in accordance with UK GAAP have been condensed or omitted. The results of operations for the 13 and 26 weeks ended 27 March 2004 may not necessarily be indicative of the operating results that may be achieved for the 53 week period ending 2 October 2004.
The quarterly and interim financial statements have been prepared on the basis of the accounting policies set out in the Group's financial statements for the period ended 27 September 2003, other than as noted below in respect of UITF Abstract 38 "Accounting for ESOP Trusts" ("UITF38").
During Q104, the Group adopted UITF38. Consequently the impairments booked against the Group's investment in own shares of GBP1.1m and GBP0.3m in FY01 and FY02 respectively, have been reversed and recorded in the profit and loss reserve. The original cost of investment has been reclassified from fixed asset investments to being a deduction in equity shareholders' funds. Comparative periods have been restated to reflect this accounting treatment. The Group's ESOP Trust holds 1,269,341 ordinary shares of Enodis plc at a cost of GBP2.4m. At 27 March 2004, the market value of the shares was GBP1.2m.
UK GAAP differs in certain significant respects from accounting principles generally accepted in the United States of America ("US GAAP"). The application of the latter would have affected the determination of profit/(loss) to the extent summarised in Note 8 to the interim financial statements.
These interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Group's latest Annual Report.
The accounts in this statement do not comprise full accounts within the meaning of section 240 of the Companies Act 1985. The figures for the 52 weeks to 27 September 2003 are based upon the 2003 Annual Report but do not comprise statutory accounts for that period. The audited financial statements have been delivered to the Registrar of Companies following approval at the Annual General Meeting of the Company on 11 February 2004. The Auditors made an unqualified report on those accounts and their report did not contain any statement under section 237 (2) or (3) of the Companies Act 1985. The figures for the 13 and 26 week periods to 27 March 2004 and 29 March 2003 have been extracted from underlying accounting records and have not been audited.
2. Turnover
26 26 13 13 52 weeks weeks weeks weeks weeks to to to to to 27 29 27 29 27 March March March March September 2004 2003 2004 2003 2003 GBPm GBPm GBPm GBPm GBPm (unaudi (unaudited) (unaudited) (unaudited) ted) Food 179.3 196.3 88.8 96.2 408.4 Service Equipment -- North America Food 67.7 65.9 33.9 33.9 144.5 Service Equipment -- Europe/ Asia Global 247.0 262.2 122.7 130.1 552.9 Food Service Equipment Food 43.5 48.7 19.8 24.0 110.8 Retail Equipment Food 290.5 310.9 142.5 154.1 663.7 Equipment Property 0.3 -- -- -- 15.7 290.8 310.9 142.5 154.1 679.4
Notes to the financial statements (continued)
3. Operating profit/(loss)
26 weeks to 27 March 26 weeks to 29 March 2004 2003 Before Except Total Before Except Total Except ional Except ional ional items ional items items items GBPm GBPm GBPm GBPm GBPm GBPm (unaudi (unaudi (unaudi (unaudi (unaudi (unaudi ted) ted) ted) ted) ted) ted) Food 20.3 -- 20.3 20.1 (1.4) 18.7 Service Equipment -- North America Food 2.4 -- 2.4 3.6 (0.2) 3.4 Service Equipment -- Europe/Asia Global Food 22.7 -- 22.7 23.7 (1.6) 22.1 Service Equipment Food Retail 2.4 -- 2.4 (0.1) -- (0.1) Equipment 25.1 -- 25.1 23.6 (1.6) 22.0 Food (6.0) -- (6.0) (6.8) -- (6.8) Equipment goodwill amortisation Food 19.1 -- 19.1 16.8 (1.6) 15.2 Equipment Property (0.9) -- (0.9) -- (2.5) (2.5) Corporate (4.4) -- (4.4) (4.1) (1.9) (6.0) costs 13.8 -- 13.8 12.7 (6.0) 6.7 13 weeks to 27 March 13 weeks to 29 March 2004 2003 Before Except Total Before Except Total Except ional except Ional ional items ional items items items GBPm GBPm GBPm GBPm GBPm GBPm (unaudi (unaudi (unaudi (unaudi (unaudi (unaudi ted) ted) ted) ted) ted) ted) Food Service 10.7 -- 10.7 10.7 (1.4) 9.3 Equipment -- North America Food 1.3 -- 1.3 2.0 (0.2) 1.8 Service Equipment -- Europe/Asia Global Food 12.0 -- 12.0 12.7 (1.6) 11.1 Service Equipment Food Retail 1.1 -- 1.1 0.7 -- 0.7 Equipment 13.1 -- 13.1 13.4 (1.6) 11.8 Food (2.8) -- (2.8) (3.3) -- (3.3) Equipment goodwill amortisation Food 10.3 -- 10.3 10.1 (1.6) 8.5 Equipment Property (0.2) -- (0.2) -- (2.5) (2.5) Corporate (2.1) -- (2.1) (2.0) (0.2) (2.2) costs 8.0 -- 8.0 8.1 (4.3) 3.8 52 weeks to 27 September 2003 Before Exceptional Total exceptional Items items GBPm GBPm GBPm Food Service Equipment -- 50.7 (3.0) 47.7 North America Food Service Equipment -- 10.2 (1.7) 8.5 Europe/Asia Global Food Service 60.9 (4.7) 56.2 Equipment Food Retail Equipment 4.0 -- 4.0 64.9 (4.7) 60.2 Food Equipment goodwill (13.8) -- (13.8) amortisation Food Equipment 51.1 (4.7) 46.4 Property 5.4 (3.3) 2.1 Corporate costs (9.5) (4.5) (14.0) 47.0 (12.5) 34.5
Notes to the financial statements (continued)
4. Exceptional items
(a) Operating 26 weeks to 26 weeks to 52 weeks to exceptional items 27 March 29 March 27 September 2004 2003 2003 GBPm GBPm GBPm (unaudited) (unaudited) Restructuring -- 1.8 6.1 costs and cost reduction measures Vacant leasehold -- 2.5 3.3 provisions Litigation costs -- 1.7 3.1 Operating -- 6.0 12.5 exceptional items
2003
On 8 April 2003, the Group announced a restructuring and cost reduction programme including salaried headcount reduction and the relocation of the CEO's office to Tampa, Florida. Subsequently, further restructuring programmes were announced in Europe.
In addition, as a result of a slowdown in the property market, GBP3.3m was recognised in respect of vacant leasehold properties.
During 2003, the Group reassessed its accruals for legal costs for defending the claims in the Consolidated Industries litigation following an adverse summary judgement on certain of the claims totalling $8.6m, and provided GBP1.7m and GBP1.4m in Q103 and Q403 respectively. The Group continues to believe that the adverse decision is incorrect, and intends to appeal the decision. The Group's view of the outcome of the Consolidated Industries litigation remains unchanged.
(b) Disposal of 26 weeks to 26 weeks to 52 weeks to businesses 27 March 29 March 27 September 2004 2003 2003 GBPm GBPm GBPm (unaudited) (unaudited) Profit/(loss) on 2.2 2.5 3.3 disposals
2004
In November 2003 and in April 2004 respectively, the majority of warranties and indemnities that the Group gave at the time of the disposals of two of its subsidiaries expired. As a result, excess provisions of GBP0.9m and GBP1.3m have been credited to the profit and loss account in Q104 and Q204 respectively.
2003
In February 2003, the Group paid GBP1.3m to release it from the majority of the warranties and indemnities that were given at the time of the disposal of one of its subsidiaries. As a result, excess accruals of GBP2.5m, along with GBP0.8m from other disposals, were credited to the profit and loss account in Q103 and Q403 respectively.
Notes to the financial statements (continued)
5. Taxation
(a) Analysis of 26 weeks to 26 weeks to 52 weeks to charge in period 27 March 29 March 27 September 2004 2003 2003 GBPm GBPm GBPm (unaudited) (unaudited) The tax charge for the current period comprised: UK taxation at 30% -- -- -- (2003:30%) Foreign 1.9 1.4 7.4 taxation -- current year -- prior year -- -- (0.7) 1.9 1.4 6.7 Deferred taxation -- -- 1.5 1.9 1.4 8.2 Tax relief on -- -- (1.8) exceptional items 1.9 1.4 6.4
(b) The Group tax rate benefits from the effect of tax losses brought forward. A current tax charge arises principally because of profits arising in overseas countries where there are no available losses.
Notes to the financial statements (continued)
6. Earnings/(loss) per share
26 26 13 13 52 weeks weeks weeks weeks Weeks to to to to to 27 29 27 29 27 March March March March September 2004 2003 2004 2003 2003 GBPm GBPm GBPm GBPm GBPm (unaudi (unaudi (unaudi (unaudi ted) ted) ted) ted) Retained 5.2 (3.4) 3.8 (3.4) 9.4 profit/(loss) attributable to shareholders m m m m m Basic 399.4 399.2 399.6 399.2 399.2 weighted average number of shares Dilutive 2.0 -- 3.0 -- -- number of shares from executive share option schemes Diluted 401.4 399.2 402.6 399.2 399.2 weighted average number of shares 26 26 13 13 52 weeks weeks weeks weeks weeks to to to to to 27 29 27 29 27 March March March March September 2004 2003 2004 2003 2003 pence pence pence pence pence (unaudi (unaudi (unaud (unaudi ted) ted) ited) ted) Basic 1.3 (0.9) 1.0 (0.9) 2.4 earnings/(loss) per share Effect per (0.5) 0.9 (0.3) 1.2 1.8 share of exceptional items Effect per 1.5 1.7 0.6 0.9 3.5 share of goodwill amortisation Adjusted basic 2.3 1.7 1.3 1.2 7.7 earnings/(loss) per share Diluted 1.3 (0.9) 1.0 (0.9) 2.4 earnings/(loss) per share Effect per share of (0.5) 0.9 (0.3) 1.2 1.8 exceptional items Effect per share of 1.5 1.7 0.6 0.9 3.5 goodwill amortisation Adjusted diluted 2.3 1.7 1.3 1.2 7.7 earnings/(loss) per share
Adjusted earnings per share before exceptional items (note 4) and goodwill amortisation are disclosed to reflect the underlying performance of the Group.
7. Foreign currency translation
The results of subsidiary companies reporting in currencies other than pounds sterling, principally US dollars, have been translated at the following rates:
26 26 13 13 52 weeks weeks weeks weeks weeks to to to to to 27 29 27 29 27 March March March March September 2004 2003 2004 2003 2003 (unaudi (unaudi (unaudi (unaudi ted) ted) ted) ted) Average 1.78 1.58 1.83 1.60 1.60 exchange rate GBP1= US$ Closing 1.81 1.57 1.81 1.57 1.66 exchange rate GBP1 =US$
Notes to the financial statements (continued)
8. Supplementary information for US Investors
Reconciliation to generally accepted accounting principles in the United States of America
The consolidated financial statements have been prepared in accordance with UK GAAP, which differs from US GAAP. The following is a summary of adjustments to operating profit/(loss) and retained profit/(loss) for the period required when reconciling such amounts recorded in the consolidated financial statements to the corresponding amounts in accordance with US GAAP. This note does not include all disclosures required by US GAAP.
26 weeks to 26 weeks 52 weeks to to 27 March 29 March 27 September 2004 2003 2003 GBPm GBPm (unaudited) (unaudited) (restated) Retained 5.2 (3.4) 9.4 profit/(loss) in accordance with UK GAAP Items increasing/(decreasing) UK GAAP operating profit/(loss)(*): -- Goodwill 6.0 6.8 13.5 amortisation -- Pension costs (0.2) (1.0) 2.2 -- Leasing (0.1) (0.1) (0.1) transactions -- Share option plans -- -- 0.1 -- Restructuring (0.8) -- 0.8 charges -- Derivative 0.2 0.1 0.1 instruments -- Long-lived assets -- -- (0.5) -- Loss contingencies -- -- 1.8 Items increasing/(decreasing) UK GAAP non-operating profit/(loss): -- Deferred taxation (4.2) (1.8) (36.9) -- Capitalised interest 0.4 0.2 0.4 Retained profit/(loss) in 6.5 0.8 (9.2) accordance with US GAAP before cumulative effect of change in accounting principle Cumulative effect of change in -- (84.9) (84.9) accounting principle Retained profit/(loss) in 6.5 (84.1) (94.1) accordance with US GAAP Retained profit/(loss) in accordance with US GAAP is represented by: Net profit/(loss) from continuing 4.3 (1.7) (11.7) operations Gain on sale of discontinued 2.2 2.5 2.5 operations Cumulative effect of change in -- (84.9) (84.9) accounting principle Retained profit/(loss) in accordance 6.5 (84.1) (94.1) with US GAAP
(*) All adjustments exclude the effect of taxes, with all tax related adjustments included within the deferred taxation line item.
Description of differences
A discussion of the material variations in the accounting principles, practices and methods used in preparing the audited consolidated financial statements in accordance with UK GAAP from the principles, practices and methods generally accepted in the United States of America is provided in our Annual Report at 27 September 2003. Other than our adoption of UITF 38 (See Note 1), there have been no new material variations between UK GAAP and US GAAP accounting principles, practices and methods used in preparing these consolidated financial statements.
Notes to the financial statements (continued)
8. Supplementary information for US investors (continued) Adoption of new accounting standards
Effective from 29 September 2002, under US GAAP, the Group adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). In accordance with SFAS 142, goodwill is no longer amortised but instead is subject to a transitional impairment test in the year of adoption as well as annual impairment tests. Using discounted cash flow valuation methods and also considering the Group's market capitalisation, the Group reviewed the fair values of each of its reporting units. As a result of the transitional impairment test, the Group recorded a goodwill impairment charge of GBP84.9 million in its Global Food Service Equipment segment. The amount was calculated in the fourth quarter of Fiscal 2003 and recorded as a cumulative effective of a change in accounting principle as at 29 September 2002, as required under SFAS 142.
Other unaudited financial information
(i) Reconciliation of like-for-like information for the 26 weeks to 27 March 2004
26 26 Effect Like-for- Like-for- weeks weeks of like like to to Foreign 29 March increase/ 27 29 Exchange 2003 (decrease) March March 2004 2003 a) Turnover GBPm GBPm GBPm GBPm % Food Service 179.3 196.3 (17.8) 178.5 -- Equipment -- North America Food Service 67.7 65.9 1.8 67.7 -- Equipment -- Europe/Asia Global Food 247.0 262.2 (16.0) 246.2 -- Service Equipment Food Retail 43.5 48.7 (4.6) 44.1 (1)% Equipment Food 290.5 310.9 (20.6) 290.3 -- Equipment b) Operating profit before exceptional items, goodwill amortisation, property and corporate costs Food Service 20.3 20.1 (1.8) 18.3 11% Equipment -- North America Food Service 2.4 3.6 0.1 3.7 (35)% Equipment -- Europe/Asia Global Food 22.7 23.7 (1.7) 22.0 3% Service Equipment Food Retail 2.4 (0.1) -- (0.1) n/m Equipment Food 25.1 23.6 (1.7) 21.9 15% Equipment
(ii) Reconciliation of like-for-like information for the 13 weeks to 27 March 2004
13 13 Effect Like-for- Like-for- weeks weeks of like like to to Foreign 29 March increase/ 27 29 Exchange 2003 (decrease) March March 2004 2003 a) Turnover GBPm GBPm GBPm GBPm % Food Service 88.8 96.2 (11.0) 85.2 4% Equipment -- North America Food Service 33.9 33.9 0.2 34.1 (1)% Equipment -- Europe/Asia Global Food 122.7 130.1 (10.8) 119.3 3% Service Equipment Food Retail 19.8 24.0 (2.8) 21.2 (7)% Equipment Food 142.5 154.1 (13.6) 140.5 1% Equipment b) Operating profit before exceptional items, goodwill amortisation, property and corporate costs Food Service 10.7 10.7 (1.4) 9.3 15% Equipment -- North America Food Service 1.3 2.0 -- 2.0 (35)% Equipment -- Europe/Asia Global Food 12.0 12.7 (1.4) 11.3 6% Service Equipment Food Retail 1.1 0.7 -- 0.7 57% Equipment Food 13.1 13.4 (1.4) 12.0 9% Equipment
Other unaudited financial information (continued)
(iii) Reconciliation of non-UK GAAP measures
26 26 13 13 52 weeks weeks weeks weeks weeks to to to to to 27 29 27 29 27 March March March March September 2004 2003 2004 2003 2003 GBPm GBPm GBPm GBPm GBPm a) Adjusted operating profit/(loss) Operating 13.8 6.7 8.0 3.8 34.5 profit/(loss) Add back: Goodwill 6.0 6.8 2.8 3.3 13.8 amortisation Exceptional -- 6.0 -- 4.3 12.5 profit/(loss) Adjusted 19.8 19.5 10.8 11.4 60.8 operating profit/(loss) b) Adjusted profit/(loss) before tax Profit/(loss) before 7.2 (2.0) 5.1 (1.8) 15.9 tax Add back: Goodwill amortisation 6.0 6.8 2.8 3.3 13.8 Operating exceptional (2.2) 3.5 (1.3) 4.3 9.2 profit/(loss) Adjusted 11.0 8.3 6.6 5.8 38.9 Profit/(loss) before tax This information is provided by RNS The company news service from the London Stock Exchange