CHARTER plc Preliminary Results 2003
20/02/2004
for the year ended 31 December 2003
CHAIRMAN AND CHIEF EXECUTIVE’S STATEMENT
Summary of results (unaudited)
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Year ended 31 December | |||
| 2003 | 2002 | |||
| £m | £m | |||
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| Turnover | ||||
| Continuing operations | 842.4 | 867.6 | ||
| Discontinued operations | 28.8 | 32.9 | ||
| 871.2 | 900.5 | |||
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| Adjusted operating profit1 | ||||
| Continuing operations1 | 33.5 | 29.8 | ||
| Goodwill amortisation | (1.2) | (1.2) | ||
| Operating exceptional items | (10.8) | (25.3) | ||
| 21.5 | 3.3 | |||
| Discontinued operations | 6.6 | 6.2 | ||
| Operating profit | 28.1 | 9.5 | ||
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| Non-operating exceptional items | (1.0) | 21.8 | ||
| Profit before interest | 27.1 | 31.3 | ||
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| Interest | (16.8) | (19.3) | ||
| Exceptional financing costs | (6.5) | - | ||
| Profit before tax | 3.8 | 12.0 | ||
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| Earnings/(loss) per share - basic and diluted | ||||
| Headline | (7.9)p | 5.1p | ||
| Adjusted1 | 12.5p | 8.6p | ||
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| 1before exceptional items and amortisation of goodwill | ||||
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| Net debt | 136.8 | 194.0 | ||
Overview of results
I am pleased to report improved results for 2003, resulting from the benefits of the restructuring initiatives implemented since 2001 and some recovery in key markets in which the group operates. The financial improvement was especially marked in the second half of the year in both the principal businesses.
The adjusted operating profit in respect of continuing operations, before exceptional items and amortisation of goodwill, increased by 12 per cent. to £33.5 million in 2003 from £29.8 million in 2002. Adjusted earnings per share was 12.5 pence in 2003 compared with 8.6 pence in 2002, an increase of 45 per cent.
The results for the second half of 2003 for the welding and cutting business (“Esab”) were encouraging with adjusted operating profits of £19.5 million, an increase of £3.7 million over the first half. For the year as a whole Esab generated adjusted operating profits of £35.3 million compared with £36.0 million for 2002.
The operating profits of the air and gas handling business (“Howden”) for the second half of 2003 were £5.9 million, an increase of £5.5 million over the £0.4 million achieved in the first half. Howden’s adjusted operating profit for the year as a whole was £6.3 million compared with £1.5 million for 2002.
The sale of the group’s US Defence businesses was completed in December 2003 and consequently their turnover for 2003 of £28.8 million (2002: £32.9 million) and operating profits of £6.6 million (2002: £6.2 million) are shown as discontinued operations. In 2003 the continuing Specialised Engineering businesses comprise two small non-core businesses that generated turnover of £8.4 million (2002: £18.3 million) and recorded operating losses of £1.3 million (2002: losses of £0.8 million).
During the year, net exceptional charges totalled £18.3 million before taxation and minority interests (2002: £3.5 million), principally in connection with restructuring initiatives, profits and losses on the disposal of assets and non-recurring financing costs.
The charge for operating exceptional items in 2003 was £10.8 million compared with £25.3 million in the previous year. Most of the operating exceptional items related to restructuring costs. Non-operating exceptional costs were £1.0 million (2002: exceptional gain of £21.8 million), in respect of the profits or losses arising on the disposal of certain properties and non-core businesses in 2003, including the associated goodwill. Exceptional financing costs of £6.5 million were incurred mainly in connection with the renewal in July 2003 of the syndicated bank facility.
Net debt reduced by £57.2 million in 2003 from £194.0 million at the end of 2002 to £136.8 million at 31 December 2003. This improvement was achieved through disposals of non-core assets, improved profitability, tighter management of working capital and constraints imposed on restructuring and capital expenditure.
In the light of the recent settlement of the dispute with certain of the US loan note holders, the improved trading results and reduced indebtedness, the Company has reached a stage where it is appropriate to raise new equity. Accordingly, a proposed Rights Issue was announced today which will generate net proceeds of approximately £44.6 million. Details of the Rights Issue are being sent today in a circular to shareholders.
View the Full announcement.