Charter plc - AGM statement
24/06/2005
At today's Annual General Meeting of shareholders, at which shareholders consider the Annual Report and Accounts for the year ended 31 December 2004, David Gawler, Chairman & Chief Executive made the following statement:
Financial Highlights for the year ended 31 December 2004
I am pleased to report that 2004 was a highly successful year for the Company. After some four years of restructuring, disposals and debt reductions, Charter has been transformed into a healthier and far more profitable company and significant value has been created for shareholders.
The Company's adjusted operating profit in 2004 from continuing businesses, before exceptional items and amortisation of goodwill, amounted to £54.3 million compared with £30.0 million the previous year, an increase of 81 per cent. Net debt halved from £136.8 million to £66.5 million, the Company settled a dispute with its US loan note holders and completed a rights issue, which successfully raised £44.6 million net of costs. These actions have strengthened the Company's balance sheet and enabled the Group to resume its restructuring programme and to invest in its core businesses.
The Welding and Cutting business (“Esab”) produced excellent results during the year, with adjusted operating profits of £48.7 million, compared with £31.8 million in 2003, an increase of 53 per cent. Esab's operating margins improved to 7.8 per cent from 5.5 per cent in 2003.
During the year the Air and Gas Handling business (“Howden”) also produced excellent results, with adjusted operating profits of £15.1 million, compared with £6.3 million in 2003, an increase of 140 per cent. Howden's operating margins improved markedly from 2.5 per cent in 2003 to 6.3 per cent in 2004. Its order intake was extremely strong with orders in hand at year-end of £181.0 million, some 57 per cent ahead of the previous year.
Specialised Engineering's two small non-core businesses recorded a net operating loss of £2.1 million in 2004. The business that generated these losses is now being closed.
Net exceptional charges in 2004 amounted to £14.0 million. These included restructuring costs of £12.8 million, £4.5 million in respect of a series of unauthorised payments and a £5.2 million credit arising from disposals and other items.
Adjusted earnings per share increased by 62 per cent to 16.0 pence compared with 9.9 pence in 2003 and during the year shareholders' funds rose from £4.4 million to £75.7 million at the year-end.
Post year-end developments
In March 2005, the Company cancelled the onerous syndicated banking facility and replaced it with a new two-year £50 million facility on conventional banking terms and in April 2005 the Company raised some £19.4 million before expenses by placing 7,531,800 new Ordinary shares for cash at 258 pence per share.
International Financial Reporting Standards (‘IFRS')
The Company is required to adopt International Financial Reporting Standards (‘IFRS') in preparing its consolidated results with effect from 1 January 2005. As part of the transition to IFRS, the Company released an announcement on 17 June 2005 setting out its 2004 results restated under IFRS, together with explanations of the new accounting policies adopted and their effect on the results. It should be noted that the adoption of IFRS should have no direct impact on the fundamental economics of the group's businesses or its underlying cash flows.
Board and Committees
Since the last Annual General Meeting there have been a number of changes on the Charter Board. Michael Foster, who had joined the Board as a Non-Executive in December 2001, was appointed Commercial Director on 1 January 2005.
Homi Mullan, the Senior Non-Executive Director and Chairman of the Audit and Remuneration Committees, resigned on 6 December 2004 and was succeeded in these roles on that date by the Hon. James Bruce. Since the year-end, the Company has appointed three new Non-Executive Directors: Grey Denham and Andrew Osborne on 8 February and John Biles on 1 April.
A Nominations Committee has been re-established and a Disclosure Committee will be created on 1 July 2005. At the conclusion of the Annual General Meeting John Biles will assume the Chairmanship of the Audit Committee and John Neill, who will be continuing as a Non-Executive Director, will step down as a member of the Audit and Remuneration Committees.
I would like to thank all my Board colleagues for their support and commitment to the success of the Company.
Prospects
When the Company released its results for 2004 in March 2005, the Board announced that it viewed the outlook for 2005 with confidence on the basis of the excellent results during 2004, the improved financial position, current trading and the expected incremental restructuring benefits.
On 27 April 2005 the Company announced that the first quarter's trading was ahead of the Directors' expectations and on 26 May 2005 a further trading update was released. This confirmed that Esab was enjoying strong performances in its core businesses, and that Howden's order book was continuing to strengthen, given the strong economic growth in China and North America. Consequently, the Board expected the group's full year forecast to be ahead of its previous expectations.
I am pleased to be able to confirm that the improvement seen in trading earlier in the year has been sustained during the first five months of 2005 and the Board now views the group’s full year forecast with increasing confidence.
Contact
Andrew Fenwick, Pamela Small, Brunswick +44 (0) 20 7404 5959