TIDMRNO
RNS Number : 1802T
Renold PLC
13 November 2019
Renold plc
("Renold" or the "Group")
Interim results for the half year ended 30 September 2019
13 November 2019
Renold, a leading international supplier of industrial chains
and related power transmission products, today announces its
unaudited interim results for the half year ended 30 September 2019
(the 'period').
Financial highlights
Half year ended
30 Sept
30 Sept 2018
2019 (restated(1)
)
GBPm GBPm
Underlying adjusted interim results(2) (from
continuing operations)
Underlying revenue 98.2 100.8
Underlying adjusted operating profit 7.7 7.5
Underlying adjusted operating margin 7.8% 7.4%
Adjusted earnings per share 1.5p 1.6p
Reported interim results (from continuing
operations)
Revenue 98.2 98.2
Operating profit 6.3 5.9
Profit before tax 3.5 3.6
Basic earnings/(losses) per share 1.0p 0.9p
1 See Note 14 for details of the restatement
2 See overleaf for reconciliation of reported, underlying and
adjusted figures
-- Underlying revenue from continuing operations down 2.6% to
GBP98.2m; reported revenue from continuing operations unchanged
-- Underlying adjusted operating profit from continuing
operations GBP7.7m (2018: GBP7.5m); adjusted operating margin 7.8%
(2018: 7.4%) reflecting further progress in delivery of strategic
initiatives
-- Net debt GBP34.2m (31 March 2019: GBP30.3m); net debt to
adjusted EBITDA 1.4x (unchanged from prior year)
-- Adjusted EPS of 1.5p (2018: 1.6p) after deduction of pension
administration costs and IAS 19R finance costs
Trading and operational highlights
-- The impact of tougher market conditions on revenue is being
offset by improved efficiency from capital investment and
operational improvement
-- The new factory in China continues to make progress with
improvements in efficiency and reduced headcount and should see
accelerating performance in the second half
-- Disposal of the loss-making, non-strategic South African
Torque Transmission business unit to management for nominal
consideration, securing future routes to market for product
manufactured elsewhere in the Group
-- Completed a GBP1.7m share buy-back of the 25% joint venture
partner's share of the Indian chain business in November, which
becomes a wholly owned subsidiary operating in a growing market
with significant potential
Robert Purcell, Chief Executive of Renold plc, said:
"A more challenging economic backdrop impacted on revenue and
order intake in the first half of the year. Despite this, ongoing
actions to improve the business have sustained profits and improved
margins. In addition, we have seen further strategic evolution in
the Group's manufacturing footprint with the exit from the non-core
South African Torque Transmission business, the purchase of the
minority stake in the Indian Chain business and the ongoing
successful ramp-up of the Chinese facility.
Assuming no further deterioration in trading conditions, these
measures will continue to deliver benefits in the second half and
beyond, providing resilience through uncertain markets. As market
conditions improve and we return to revenue growth, the operational
platform being established will enable us to make further progress
in growing margins and returns."
Reconciliation of reported, underlying and adjusted results
Revenue Operating Profit
H1 H1 H1 H1
2019/20 2018/19 2019/20 2018/19
GBPm (restated(1) GBPm (restated(1)
) )
GBPm GBPm
Previously reported 99.7 5.8
Exchange impact 2.6 0.1
Discontinued operations(2) (1.5) 0.1
------------------------------------- ---------- -------------- ---------- --------------
Continuing underlying 98.2 100.8 6.3 6.0
Restructuring costs - - 0.9 1.0
Amortisation of acquired intangible
assets - - 0.5 0.5
Continuing underlying adjusted 98.2 100.8 7.7 7.5
------------------------------------- ---------- -------------- ---------- --------------
(1) See Note 14 for details of the restatement
(2) Reported revenue and operating profit for H1 2019/20 are
presented on a continuing basis with no adjustment required for
discontinued operations. Revenue and adjusted operating losses for
discontinued operations in H1 2019/20 of GBP0.8m and GBP0.3m loss
respectively are already deducted in arriving at reported
results
ENQUIRIES:
Renold plc Peel Hunt LLP Instinctif Partners
Robert Purcell, CEO Mike Bell Mark Garraway
Ian Scapens, Group FD Ed Allsopp Rosie Driscoll
Tel: 0161 498 4500 Tel: 020 7418 8900 Tel: 020 7457 2020
Cautionary statement regarding forward-looking statements
Some of the information in this document may contain projections
or other forward-looking statements regarding future events or the
future financial performance of Renold plc and its subsidiaries.
You can identify forward-looking statements by terms such as
"expect", "believe", "anticipate", "estimate", "intend", "will",
"could", "may" or "might", the negative of such terms or other
similar expressions. Renold plc (the Company) wishes to caution you
that these statements are only predictions and that actual events
or results may differ materially. The Company does not intend to
update these statements to reflect events and circumstances
occurring after the date hereof or to reflect the occurrence of
unanticipated events. Many factors could cause the actual results
to differ materially from those contained in projections or
forward-looking statements of the Group, including among others,
general economic conditions, the competitive environment as well as
many other risks specifically related to the Group and its
operations. Past performance of the Group cannot be relied on as a
guide to future performance.
NOTES FOR EDITORS
Renold is a global leader in the manufacture of industrial
chains and also manufactures a range of torque transmission
products which are sold throughout the world to a broad range of
original equipment manufacturers and distributors. The Company has
a reputation for quality that is recognised worldwide. Its products
are used in a wide variety of industries including manufacturing,
transportation, energy, metals and mining.
Further information about Renold can be found on their website
at: www.renold.com
Chief Executive's Statement
Following a relatively stable first quarter of the year,
conditions in a number of international industrial markets weakened
during the second quarter, resulting in a decline of underlying
revenue from continuing operations for the six-month period of 2.6%
versus the same period in the prior year. The decline in revenue
most significantly reflects a deterioration in demand from
distributors and OEMs in the Group's key European and US industrial
chain markets during the late summer period.
Demand for Torque Transmission products was more stable, with
stronger US markets more than offsetting weaker demand in other
markets.
The ongoing focus on operational efficiency is helping to
mitigate the impact of a weakening market environment and has been
sufficient to offset the operating profit impact of reduced
revenues in the first half of the year. Further cost and efficiency
benefits are expected in the second half which will combine with
improved efficiency in the new Chinese factory, the removal of
losses from the South African business unit and improved
performance of the Gears business unit.
Business and Financial Review
Underlying revenue Underlying adjusted Underlying adjusted
operating profit operating margin
----------------------- ------------------------- ------------------------- -------------------------
Six month period 2019/20 2018/19 2019/20 2018/19 2019/20 2018/19
GBPm (restated(1) GBPm (restated(1) % (restated(1)
) ) )
GBPm GBPm %
Chain 78.5 82.1 8.4 9.7 10.7 11.8
Torque Transmission 19.7 18.7 2.1 1.7 10.7 9.1
Head office
costs - - (2.8) (3.9) - -
----------------------- --------- -------------- --------- -------------- --------- --------------
Total from continuing
operations 98.2 100.8 7.7 7.5 7.8 7.4
----------------------- --------- -------------- --------- -------------- --------- --------------
(1) See Note 14 for details of the restatement
Trading performance in the period was mixed. A slowing market
for industrial products impacted upon certain business units,
particularly in the Chain division. However, some business units
continue to deliver growth, including Australasia and India in the
Chain Division and our North American Torque Transmission business
unit. These pockets of growth have benefitted from an enhanced
commercial focus, seeking out sectors of the market where Renold is
under-represented, but where Renold's industry leading product
capabilities can deliver value to customers over the product's
life.
Underlying revenue from continuing operations declined by 2.6%
(GBP2.6m) in the period. Reported revenue from continuing
operations was unchanged, benefiting from foreign exchange as the
US dollar strengthened.
The effect of the slowing market has been more keenly felt in
order intake, which on an underlying, continuing basis declined by
8.1% to GBP95.7m (2018: GBP104.1m). While this decline is against a
strong prior year comparator, the order intake levels indicate a
continuation of subdued revenues into the second half.
As outlined below, there are a number of accounting changes that
affect adjusted operating profit, including adoption of IFRS 16
'Leases' (increases adjusted operating profit by GBP0.3m in period
ended 30 September 2019; no change in adjusted profit before tax),
restatement of prior period results for the historical misstatement
at the Gears business unit (reduction of adjusted operating profit
by GBP0.6m in period ended 30 September 2018) and re-presentation
of adjusting items to no longer adjust for ongoing pension costs
(reduces adjusted operating profit in the periods ended 30
September 2018 and 2019 by GBP0.3m and GBP0.4m respectively).
Details of these accounting changes are included in Notes 2, 14 and
15.
After applying these accounting changes, underlying adjusted
operating profit from continuing operations increased to GBP7.7m
(2018: GBP7.5m) with an adjusted operating profit margin of 7.8%
(2018: 7.4%).
Chain
Chain division underlying revenue from continuing operations was
down 4.4% (GBP3.6m) to GBP78.5m.
Geographic market dynamics have been volatile over the period. A
slow start to the year across European markets continued into the
second quarter. US markets experienced a stronger first quarter
weakening into the second quarter and with limited benefits
realised from seasonal agricultural markets, particularly for sugar
cane in Mexico.
Sales through distributors across Europe and the US account for
the largest element of revenue decline with destocking evident in a
number of areas, in addition to the underlying softness in customer
demand.
In order to mitigate the impact of slowing revenues in these key
geographic regions, our operational management teams have been
focused on delivering efficiency benefits from recent investments
and through cost actions. This has included headcount reductions in
a number of sites, along with production efficiencies which have
contributed to reduced material costs.
Progress continues to be made in improving performance in the
new Chinese factory. As previously indicated, start-up
inefficiencies acted as a drag on margins, particularly in the
first quarter of the year. While good progress has been made,
opportunity exists to further reduce headcount and improve output
and service levels which underpin confidence in an improving
contribution through the second half.
Underlying adjusted operating profit from continuing Chain
division operations declined to GBP8.4m (2018: GBP9.7m) with the
impact of reduced volumes partially mitigated by cost reductions.
As a result, underlying adjusted operating profit margin from
continuing operations fell from the record 11.8% delivered in the
first half of the prior year to 10.7%.
Underlying order intake from continuing operations reflects
similar trends to revenue and declined by 5.9%. The Chain division
book to bill for the first half of the year was 99% (2018:
101%).
Earlier in November 2019, we completed a share buy-back from the
former 25% joint venture partner of our Indian chain business unit.
The GBP1.7m share buy-back was funded by cash resources held by the
Indian business which is now a wholly owned subsidiary of the
Group.
With the weaker macro-economic backdrop expected to continue
into the second half of the year, there will be an ongoing focus on
delivering improved operational efficiency, including the
annualisation of changes already effected and removal of the margin
drag from the new Chinese factory experienced in the first half of
the year.
Torque Transmission
Trading was more stable in the Torque Transmission division,
although the performance of the individual business units differed
considerably. Underlying revenue from continuing operations for the
division grew by 5.3% to GBP19.7m, with the strongest performance
being delivered in the US markets, where revenue was supported by
strong order books brought forward from the prior year. Revenue in
the Gears business unit remained largely stable, but a revenue
decline was experienced in Couplings.
Sales of industrial couplings, mainly into maintenance markets,
remained robust but revenue decline was experienced in the HiTec
product category, where end customers are more exposed to market
cycles. The major multi-year order only delivered limited revenue
in the first half as order phasing delivers the larger element
during the second half.
Identification of the historical overstatement of profit in the
Gears unit resulted in an in-depth review of the business.
Restructuring of the team and a reassessment of margin by product
has allowed progress to be made in recovering profitability and
regaining stability following the disruption, further benefit of
which should be seen as the year progresses.
As part of the focus on optimising returns, and as a result of
the continued challenges faced in the South African market, the
Group disposed of the non-strategic South African Torque
Transmission business unit to its management team in late September
for nominal consideration. This business unit, which generated
revenue of GBP0.8m and an adjusted operating loss of GBP0.3m in the
period, would have required significant capital investment and
management input to make meaningful progress. The disposal to local
management provides a continuing channel to market for products
sourced from elsewhere in the Group. The trading results for South
Africa have been treated as discontinued operations as outlined in
Note 15.
Divisional underlying adjusted operating profit from continuing
operations of GBP2.1m was 23.5% higher than the prior year,
benefiting from the US growth, resulting in an adjusted operating
profit margin of 10.7% (2018: 9.1%).
Underlying order intake from continuing operations of GBP17.9m
reduced by 16.4% in the period against a particularly strong order
intake period in the prior year. The book to bill ratio for the
first half of the year was 91%.
Further progress is expected in the Gears business unit in the
second half of the year following the remedial actions taken, which
along with the sale of the loss making South African business and
improved revenues from the large multi-year Couplings contract in
the second half of the year, will help to off-set the impact of the
reduced order book.
Impact of adoption of IFRS 16 'Leases'
In the period ended 30 September 2019, the Group has applied
IFRS 16 'Leases' for the first time. Adoption of this new
accounting standard has increased adjusted operating profit by
GBP0.3m. An offsetting increase in finance costs of GBP0.3m
resulted in no net impact on adjusted profit before tax. Further
detail of the impact of adoption of IFRS 16 'Leases' is outlined in
Note 2.
Restructuring costs
Restructuring costs of GBP1.5m, disclosed as a loss from
discontinued operations, relate to the disposal of the South
African Torque Transmission business unit and comprise asset write
downs (GBP1.1m), cash costs (GBP0.1m) and operating losses in the
period (GBP0.3m).
Restructuring costs of GBP0.9m, shown as adjusting items in
calculating adjusted operating profit, arise principally from
headcount reductions and the costs associated with investigating
the historical overstatement of profit in the Gears business
unit.
Prior period restatement
The misstatement of historical results in the Gears business
unit was identified earlier in the financial year and the Annual
Report for the year to 31 March 2019 was revised to correct for
these issues. Previously reported results for the six months ended
30 September 2018 overstated net assets by GBP2.1m and adjusted
operating profit by GBP0.6m and have been corrected by a prior
period restatement, which is detailed in Note 14. No restatement
for the results for the year ended 31 March 2019 is required as
revised results were included in the Annual Report.
Re-presentation of results
As outlined at the time of the preliminary results for 31 March
2019, we have reconsidered the treatment of costs associated with
legacy pension schemes across the Group. In previous years, pension
administration costs and IAS 19R finance charges have been treated
as adjusting items as they are not indicative of the underlying
performance of the ongoing business. Renold's treatment of these
items has differed from comparable companies and in order to assist
users of the financial statements, these legacy pension costs will
no longer be treated as adjusting items.
Thus, no adjustment has been made for these pension costs in
these interim results and adjusted profit measures for the six
months ended 30 September 2018 and the year ended 31 March 2019
have been restated to be comparable. A reconciliation is provided
in Note 14. The impact of this change is to reduce adjusted profit
after tax by GBP1.7m in each of the periods ending 30 September
2018 and 2019 with a corresponding reduction in adjusted EPS of
0.75p in each period.
Cash Flow and Net Debt
Half year to 30 September 2019/20 2018/19
GBPm (restated(1)
)
GBPm
------------------------------------------------ --------- --------------
Adjusted operating profit from continuing
operations 7.7 7.4
Operating loss from discontinued operation (0.3) (0.1)
Add back depreciation and amortisation 5.1 3.7
------------------------------------------------ --------- --------------
Adjusted EBITDA 12.5 11.0
Net working capital movement (4.4) (5.7)
Pension cash costs (1.8) (2.3)
Restructuring costs (0.9) (1.5)
Income taxes paid (1.4) (1.2)
Other operating cash flows (0.1) -
------------------------------------------------ --------- --------------
Net cash flow from operating activities 3.9 0.3
Capital expenditure net of disposal proceeds (4.6) (5.8)
Repayment of principal under lease liabilities (1.6) -
Net financing costs (1.6) (1.1)
Disposal of business (0.1) -
Impact of foreign exchange 0.1 (0.6)
------------------------------------------------ --------- --------------
Change in net debt (3.9) (7.2)
------------------------------------------------ --------- --------------
Net debt (Note 11) (34.2) (31.5)
------------------------------------------------ --------- --------------
(1) See Note 14 for details of the restatement
Cash of GBP5.7m was generated from operations before legacy
pension costs. In line with normal seasonal trends the Group saw an
overall cash outflow in the first half with net debt increasing by
GBP3.9m to GBP34.2m.
The adoption of IFRS 16 'Leases' results in changes to the
presentation of the cash flow, increasing adjusted EBITDA by
GBP1.5m (mainly through increased depreciation) and reducing
onerous lease costs by GBP0.4m reflected in reduced restructuring
costs. The cash costs of the leases are included in the cash flow
as repayments of principal under lease liabilities of GBP1.6m and
GBP0.3m of lease related financing costs included within net
financing costs.
Working capital increased by GBP4.4m. Most of the increase is in
Chain inventory (GBP3.9m) and is aimed at improvements in customer
service. Receivables and payables together increased GBP0.5m.
Capital expenditure of GBP4.6m largely related to plant and
machinery and continues to include the cost of rolling out the
Group's standardised IT systems.
Net debt of GBP34.2m at 30 September 2019 represents a net debt
to adjusted EBITDA leverage ratio of 1.4x (1.4x at 31 March
2019).
Pensions
The Group has a number of defined benefit pension schemes
(accounted for in accordance with IAS 19 'Employee benefits'). The
Group's retirement benefit obligations increased from GBP101.9m
(GBP85.3m net of deferred tax) at 31 March 2019 to GBP111.5m
(GBP93.4m net of deferred tax) at 30 September 2019.
Continuing declines in discount rates have increased the
deficits in the key UK and German schemes. In the UK, discount
rates falling to 1.8% (30 March 2019: 2.4%) has the effect of
increasing the value of future liabilities by GBP18.5m. Strong
asset returns and a continuation of mortality experience being
greater than the expected levels helped to mitigate the impact of
discount rates with the total UK deficit increasing by GBP5.9m to
GBP78.5m.
The continued decline in discount rates also impacts upon the
non-UK schemes where the deficit, including unfavourable foreign
exchange and other movements, increased by GBP3.7m to GBP33.0m.
The net financing expense (a non-cash item) was GBP1.1m (2018:
GBP1.2m).
Dividend
In light of the continuing investment in equipment and revenue
expenditure to improve the performance of the business, the Board
has decided not to declare an interim dividend. The dividend policy
will remain under review as margin and cash flow performance
continue to develop.
Going concern
The directors have a reasonable expectation that the business
has adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis in preparing the condensed consolidated interim financial
information.
Risks and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group, as well as the risk mitigating controls
put in place, remain those detailed on page 32 of the 2018/19
Annual Report and Accounts. These include macro-economic and
political uncertainty risks as well as various risks relating to
Group treasury activities. Key operational risks are raw material
prices and other input cost prices.
During the period, risks relating to macro-economic factors and
political uncertainty have continued. The sustained effect of
uncertainty has the potential to reduce demand in end-markets for
Renold's products. The diverse global customer base and the spread
of manufacturing locations can help to mitigate the impact of
localised issues, but cannot mitigate the effects of wide-spread
reductions in demand.
The valuation of retirement benefit obligations can be
significantly impacted by changes to the yields on corporate bonds
and inflation prospects. The schemes' investment strategies provide
a partial hedge against these risks, and other de-risking
strategies are employed where sensible. However, it should be noted
that the actual cash flows to support the pension scheme are more
stable and subject to long term funding plans which are reviewed
every three years. A triennial valuation for the UK scheme is
currently underway with an effective date of 5 April 2019.
Outlook
A more challenging economic backdrop has impacted order intake
in the first half of the year. While we continue to create
opportunities in sectors of the market where Renold is
under-represented and where Renold's products can generate value
for customers, this has not been sufficient to counter-act the
reduction in demand in our traditional markets and this trend is
expected to continue into the second half of the year.
However, a continuing focus on efficiency and effectiveness
resulting from ongoing strategic initiatives and investments has
mitigated the impact on adjusted operating profits of reduced
revenues in the first half of the year. These benefits are expected
to continue and combine with improved efficiency at the new Chinese
factory during the second half of the year. As a result, and
assuming no significant further deterioration in trading
conditions, the Group remains on track to deliver an overall result
for the full year in line with the Board's expectations with a
broadly consistent weighting between the first and second halves of
the year.
Responsibility statement
The Directors' confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting;
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
and their impact during the first six months of the financial year
and description of principal risks and uncertainties for the
remaining six months of the financial year); and
-- the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
The directors of Renold plc are listed in the Annual Report for
the year ended 31 March 2019. A list of current directors is
maintained on the Group website at www.renold.com.
By order of the Board
Robert Purcell Ian Scapens
Chief Executive Group Finance
Director
13 November 2019 13 November 2019
Condensed Consolidated Income Statement
for the six months ended 30 September 2019
First half 2018/19 Full year 2018/19
(unaudited, restated(1) (audited, re-presented(2)
First half 2019/20 (unaudited) ) )
Statutory Adjustments Adjusted Statutory Adjustments Adjusted Statutory Adjustments Adjusted
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Revenue 3 98.2 - 98.2 98.2 - 98.2 199.6 - 199.6
Operating costs (91.9) 1.4 (90.5) (92.3) 1.5 (90.8) (184.2) (0.6) (184.8)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Operating profit 6.3 1.4 7.7 5.9 1.5 7.4 15.4 (0.6) 14.8
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Operating profit
is analysed
as:
Before adjusting
items 6.3 - 6.3 5.9 - 5.9 15.4 - 15.4
Restructuring
costs 4 - 0.9 0.9 - 1.0 1.0 - 2.9 2.9
Amortisation of
acquired
intangible
assets - 0.5 0.5 - 0.5 0.5 - 0.9 0.9
Pension past
service
credits - - - - - - - (4.4) (4.4)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Operating profit 6.3 1.4 7.7 5.9 1.5 7.4 15.4 (0.6) 14.8
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Net financing
costs 5 (2.8) - (2.8) (2.3) - (2.3) (5.0) 0.4 (4.6)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Profit before
tax 3.5 1.4 4.9 3.6 1.5 5.1 10.4 (0.2) 10.2
Taxation 6 (1.2) (0.2) (1.4) (1.4) (0.1) (1.5) (3.5) 0.5 (3.0)
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Profit for the
period
from continuing
operations 2.3 1.2 3.5 2.2 1.4 3.6 6.9 0.3 7.2
Discontinued
operations 15 (1.5) 1.5 - (0.1) 0.1 - (0.2) 0.2 -
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Profit for the
period 0.8 2.7 3.5 2.1 1.5 3.6 6.7 0.5 7.2
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Attributable to:
Owners of the
parent 0.7 2.0 6.5
Non-controlling
interests 0.1 0.1 0.2
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
0.8 2.1 6.7
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Earnings per
share from
continuing
operations 7
Basic 1.0p 1.5p 0.9p 1.6p 3.0p 3.1p
Diluted 0.9p 1.5p 0.9p 1.5p 2.9p 3.0p
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
Earnings per
share from
continuing and
discontinued
operations 7
Basic 0.3p 0.9p 2.9p
Diluted 0.3p 0.8p 2.8p
----------------- ----- ---------- ------------ --------- --- ---------- ------------ --------- --- ---------- ------------ ---------
(1) See Note 14 for details of the restatement of the results
for first half 2018/2019
(2) See Note 14 for the details of the re-presentation of full
year 2018/19
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2019
First half
2018/19
(unaudited, Full year
restated(1) 2018/19
)
First half GBPm (audited)
2019/20
(unaudited)
GBPm GBPm
--------------------------------------------- ---- ------------- -------------- ------------
Profit for the period 0.8 2.1 6.7
Other comprehensive income/(expense):
Items that may be reclassified to
the income statement in subsequent
periods:
Net loss on cash flow hedges (0.1) (0.8) (0.7)
Foreign exchange translation differences 3.5 2.3 2.7
Foreign exchange differences on loans
hedging the net investment in foreign
operations (0.4) (0.4) (0.5)
--------------------------------------------------- ------------- -------------- ------------
3.0 1.1 1.5
-------------------------------------------------- ------------- -------------- ------------
Items not to be reclassified to the
income statement in subsequent periods:
Re-measurement (losses)/gains on retirement
benefit obligations (9.5) 2.2 (11.2)
Tax on re-measurement losses/(gains)
on retirement benefit obligations 1.7 (0.5) 2.1
--------------------------------------------------- ------------- -------------- ------------
(7.8) 1.7 (9.1)
-------------------------------------------------- ------------- -------------- ------------
Other comprehensive (expense)/income
for the period, net of tax (4.8) 2.8 (7.6)
--------------------------------------------------- ------------- -------------- ------------
Total comprehensive (expense)/income
for the period, net of tax (4.0) 4.9 (0.9)
--------------------------------------------------- ------------- -------------- ------------
Attributable to:
Owners of the parent (4.2) 4.9 (1.1)
Non-controlling interests 0.2 - 0.2
--------------------------------------------------- ------------- -------------- ------------
(4.0) 4.9 (0.9)
-------------------------------------------------- ------------- -------------- ------------
(1) See Note 14 for details of the restatement
Condensed Consolidated Statement of Financial Position
as at 30 September 2019
30 September
2018
30 September (unaudited, 31 March
2019 restated(1)
)
(unaudited) GBPm 2019
GBPm (audited)
Note GBPm
---------------------------------- ----- -------------- --- -------------- --- ------------
Assets
Non-current assets
Goodwill 24.3 22.9 23.1
Other intangible fixed assets 6.0 7.5 6.6
Property, plant and equipment 57.0 50.8 55.5
Right-of-use assets 9.5 - -
Deferred tax assets 22.9 20.0 21.5
119.7 101.2 106.7
---------------------------------- ----- -------------- --- -------------- --- ------------
Current assets
Inventories 49.1 46.2 44.3
Trade and other receivables 37.1 40.1 37.5
Current tax 1.7 - -
Cash and cash equivalents 11 17.6 12.1 17.6
---------------------------------- ----- -------------- --- -------------- --- ------------
105.5 98.4 99.4
Total assets 225.2 199.6 206.1
---------------------------------- ----- -------------- --- -------------- --- ------------
Liabilities
Current liabilities
Borrowings 11 (0.2) (1.0) -
Trade and other payables (41.5) (43.1) (42.1)
Lease liabilities (3.3) - -
Current tax (1.2) (1.0) (0.4)
Derivative financial instruments (0.5) (0.1) (0.4)
Provisions (0.2) (4.6) (0.8)
---------------------------------- ----- -------------- --- -------------- --- ------------
(46.9) (49.8) (43.7)
---------------------------------- ----- -------------- --- -------------- --- ------------
Net current assets 58.6 48.6 55.7
---------------------------------- ----- -------------- --- -------------- --- ------------
Non-current liabilities
Borrowings 11 (51.1) (42.1) (47.4)
Preference stock 11 (0.5) (0.5) (0.5)
Trade and other payables (5.2) (0.3) (5.4)
Lease liabilities (13.6) - -
Deferred tax liabilities (6.0) (4.4) (5.6)
Retirement benefit obligations 8 (111.5) (94.7) (101.9)
Provisions - (2.8) (2.5)
---------------------------------- ----- -------------- --- -------------- --- ------------
(187.9) (144.8) (163.3)
---------------------------------- ----- -------------- --- -------------- --- ------------
Total liabilities (234.8) (194.6) (207.0)
---------------------------------- ----- -------------- --- -------------- --- ------------
Net (liabilities) / assets (9.6) 5.0 (0.9)
---------------------------------- ----- -------------- --- -------------- --- ------------
Equity
Issued share capital 12 11.3 11.3 11.3
Share premium 30.1 30.1 30.1
Capital reserve 15.4 15.4 15.4
Currency translation reserve 13.4 9.1 10.4
Other reserves (0.5) 0.6 (0.4)
Retained earnings (81.7) (63.5) (69.9)
---------------------------------- ----- -------------- --- -------------- --- ------------
Equity attributable to owners
of the parent (12.0) 3.0 (3.1)
Non-controlling interests 2.4 2.0 2.2
---------------------------------- ----- -------------- --- -------------- --- ------------
Total shareholders' equity (9.6) 5.0 (0.9)
---------------------------------- ----- -------------- --- -------------- --- ------------
(1) See Note 14 for details of the restatement
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 September 2019
First half Full year
2019/20 2018/19 2018/19
(unaudited,
restated(1)
(unaudited) ) (audited)
GBPm GBPm GBPm
------------------------------------------- ------------- -------------- -----------
Cash flows from operating activities
Cash generated by operations (Note
9) 5.3 1.5 10.1
Income taxes paid (1.4) (1.2) (1.8)
------------------------------------------- ------------- -------------- -----------
Net cash flows from operating activities 3.9 0.3 8.3
------------------------------------------- ------------- -------------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (4.0) (5.5) (9.2)
Purchase of intangible assets (0.6) (0.3) (1.6)
Disposal of business (0.1) - -
------------------------------------------- ------------- -------------- -----------
Net cash flows from investing activities (4.7) (5.8) (10.8)
------------------------------------------- ------------- -------------- -----------
Cash flows from financing activities
Repayment of principal under lease
liabilities (1.6) - -
Financing costs paid (1.6) (1.1) (3.0)
Proceeds from borrowings 4.6 5.7 12.0
Repayment of borrowings (1.0) - -
------------------------------------------- ------------- -------------- -----------
Net cash flows from financing activities 0.4 4.6 9.0
------------------------------------------- ------------- -------------- -----------
Net (decrease)/increase in cash and
cash equivalents (0.4) (0.9) 6.5
Net cash and cash equivalents at
beginning of period 17.4 12.3 12.3
Effects of exchange rate changes 0.2 (0.6) (1.4)
------------------------------------------- ------------- -------------- -----------
Net cash and cash equivalents at
end of period 17.2 10.8 17.4
------------------------------------------- ------------- -------------- -----------
Cash and cash equivalents (Note 11) 17.6 12.1 17.6
Overdrafts (included in borrowings
- Note 11) (0.4) (1.3) (0.2)
------------------------------------------- ------------- -------------- -----------
Net cash and cash equivalents at
end of period 17.2 10.8 17.4
------------------------------------------- ------------- -------------- -----------
(1) See Note 14 for details of the restatement
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 September 2019
Share Currency Capital Attributable
Share premium Retained translation redemption Other to owners Non-controlling Total
capital account earnings reserve reserve reserves of parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2018 as
previously
reported 11.3 30.1 (66.2) 7.1 15.4 1.4 (0.9) 2.0 1.1
Prior period
adjustment - - (1.5) - - - (1.5) - (1.5)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2018
(restated(1)
) 11.3 30.1 (67.7) 7.1 15.4 1.4 (2.4) 2.0 (0.4)
Profit for the
year
(restated(1)
) - - 6.5 - - - 6.5 0.2 6.7
Other
comprehensive
income/(expense) - - (9.1) 3.3 - (1.8) (7.6) - (7.6)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the year - - (2.6) 3.3 - (1.8) (1.1) 0.2 (0.9)
Employee share
options:
- value of
employee
services - - 0.4 - - - 0.4 - 0.4
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 31
March 2019 11.3 30.1 (69.9) 10.4 15.4 (0.4) (3.1) 2.2 (0.9)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Impact of change
in accounting
policy (Note 2) - - (4.5) - - - (4.5) - (4.5)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Adjusted balance
at 1 April 2019 11.3 30.1 (74.4) 10.4 15.4 (0.4) (7.6) 2.2 (5.4)
Profit for the
period - - 0.7 - - - 0.7 0.1 0.8
Other
comprehensive
income/(expense) - - (7.8) 3.0 - (0.1) (4.9) 0.1 (4.8)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the period - - (7.1) 3.0 - (0.1) (4.2) 0.2 (4.0)
Employee share
options:
- value of
employee
services - - (0.2) - - - (0.2) - (0.2)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 30
September 2019 11.3 30.1 (81.7) 13.4 15.4 (0.5) (12.0) 2.4 (9.6)
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 1
April 2018
(restated(1)
) 11.3 30.1 (67.7) 7.1 15.4 1.4 (2.4) 2.0 (0.4)
Profit for the
period
(restated(1)
) - - 2.0 - - - 2.0 0.1 2.1
Other
comprehensive
income/(expense) - - 1.7 2.0 - (0.8) 2.9 (0.1) 2.8
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Total
comprehensive
income/(expense)
for the period - - 3.7 2.0 - (0.8) 4.9 - 4.9
Employee share
options:
- value of
employee
services - - 0.5 - - - 0.5 - 0.5
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
Balance at 30
September 2018
(restated(1) ) 11.3 30.1 (63.5) 9.1 15.4 0.6 3.0 2.0 5.0
------------------ -------- -------- --------- ------------ ----------- --------- ------------- ---------------- -------
(1) See Note 14 for details of the restatement
Notes to the Interim Condensed Consolidated Financial
Statements
1. Corporate information
The interim condensed consolidated financial statements for the
six months to 30 September 2019 were approved by the Board on 13
November 2019. These statements have not been audited or reviewed
by the Group's auditor pursuant to the Auditing Practices Board
guidance on the Review of Interim Financial Information.
Renold plc is a limited liability company, incorporated and
registered under the laws of England and Wales, whose shares are
publicly traded. The principal activities of the Company and its
subsidiaries are described in Note 3.
These interim condensed consolidated financial statements do not
constitute statutory accounts of the Group within the meaning of
Section 434 of the Companies Act 2006. The statutory accounts for
the year ended 31 March 2019 have been filed with the Registrar of
Companies. The auditor's report on those accounts was unqualified
but contained an emphasis of matter paragraph in relation to the
revision of historical accounting errors in the Gears business unit
(see Notes 27 and 28 of the statutory accounts for the year ended
31 March 2019). The auditor's report did not contain any statement
under Section 498(2) or Section 498(3) of the Companies Act
2006.
2. Accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 September 2019 have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority and with IAS 34 'Interim Financial Reporting' as
adopted by the European Union. It does not include all of the
information and disclosures required in the annual consolidated
financial statements and should be read in conjunction with the
Group's annual consolidated financial statements for the year ended
31 March 2019.
The accounting policies, presentation and methods of computation
applied by the Group in these interim condensed consolidated
financial statements are the same as those applied in the Group's
latest audited annual consolidated financial statements for the
year ended 31 March 2019, except as noted below.
New and amended standards adopted by the Group
The Group has implemented the following standards for the first
time in the financial year beginning on 1 April 2019:
-- Amendment to IAS 19 'Employee Benefits'
The amendments to IAS 19 relate to pension plan amendments,
curtailments and settlements and clarify the calculation of current
service cost and net interest for the remainder of an annual period
when a plan amendment or curtailment occurs. The adoption of the
amendments to IAS 19 has not had a material impact on the Group's
financial position or performance.
-- IFRIC 23 'Uncertainty over income tax treatments'
The interpretation clarifies that if it is considered probable
that a tax authority will accept an uncertain tax treatment, the
tax charge should be calculated on that basis. If it is not
considered probable, the effect of the uncertainty should be
estimated and reflected in the tax charge. In assessing the
uncertainty, it is assumed that the tax authority will have full
knowledge of all information related to the matter. The Group has
assessed the potential impact of the new interpretation and the
application of IFRIC 23 at 1 April 2019 has not resulted in a
material change to the provisions held for uncertain tax
positions.
-- IFRS 16 'Leases'
From 1 April 2019 the Group has adopted IFRS 16 'Leases' on a
modified retrospective basis. As permitted under the standard no
restatement of prior year comparatives has been performed and the
adjustments arising on adoption have been recognised in the opening
balance sheet at 1 April 2019.
Approach to transition
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
operating leases. These liabilities were measured at the present
value of the remaining lease payments, discounted using the Group's
incremental borrowing rate as of 1 April 2019. The associated
right-of-use assets were measured on a retrospective basis as if
the new rules had always been applied.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
- The use of a single discount rate to a portfolio of leases
with reasonably similar characteristics;
- Reliance on previous assessment of whether leases are onerous
and deduction of onerous lease provisions from the initial
right-of-use asset recognised;
- The exclusion of initial direct costs for the measurement of
the right-of-use asset at the date of initial application;
- The use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease; and
- Not to reassess whether a contract is or contains a lease.
The Group's weighted average incremental borrowing rates applied
to lease liabilities as at 1 April 2019 are 2.6% in respect of
property leases, 4.3% in respect of plant and equipment leases and
4.1% in respect of vehicle leases.
Financial impact
As the Group has used the modified retrospective approach in
adopting IFRS 16, comparatives have not been restated. The adoption
of this new accounting policy resulted in the following changes to
the opening balance sheet at 1 April 2019:
GBPm
-------------------------------------- -------
Increase in right-of-use assets 10.2
Decrease in onerous lease provisions 3.2
Increase in lease liabilities (17.9)
-------------------------------------- -------
Net decrease in retained earnings (4.5)
-------------------------------------- -------
Of the total GBP10.2m of right-of-use assets recognised at 1
April 2019, GBP7.0m related to leases of property, GBP2.2m to
leases of machinery and GBP1.0m to leases of vehicles.
The impact on profit or loss for the six month period ended 30
September 2019 was the following:
GBPm
--------------------------------------- ------
Increased depreciation charge (1.2)
Decreased lease rental expense 1.5
--------------------------------------- ------
Net increase in operating profit 0.3
--------------------------------------- ------
Increased finance costs (0.3)
--------------------------------------- ------
Net increase in profit for the period -
--------------------------------------- ------
The adoption of IFRS 16 has also had an impact on the
presentation of the payment of lease rentals in the cash flow
statement. In the comparative periods, lease rentals were recorded
in operating expenses (or where relevant, against the associated
onerous lease provision) and therefore deducted in cash flows from
operating activities. In the six months ended 30 September 2019,
operating expenses includes a depreciation charge which has
subsequently been added back within cash flows from operating
activities. The interest element of lease repayments is presented
within finance costs paid and the principal element of the lease
payment has been included within cash flows from financing
activities.
The impact on the cash flow statement for the six months ended
30 September 2019 is as follows:
GBPm
------------------------------------------------ ------
Increased operating profit 0.3
Increased depreciation of property plant
and equipment 1.2
Movement in provisions for onerous leases 0.4
------------------------------------------------ ------
Net increase in cash from operating activities 1.9
Repayment of principal element of lease
liabilities (1.6)
Repayment of interest element of lease
liabilities (0.3)
------------------------------------------------ ------
Net decrease in cash used in financing
activities (1.9)
------------------------------------------------ ------
Net change in cash and cash equivalents -
------------------------------------------------ ------
Total cash outflows for leases in the period ended 30 September
2019 were GBP1.9m.
A reconciliation of total operating lease commitments to the
IFRS 16 lease liability at 1 April 2019 is as follows:
GBPm
----------------------------------------- ------
Operating lease commitments disclosed
under IAS 17 at 31 March 2019 18.8
Effect of discounting (4.4)
Other(1) 3.5
Lease liabilities recognised at 1 April
2019 17.9
----------------------------------------- ------
(1) Other principally includes inflationary increases of GBP3.7m
on long property leases (48 years). These inflationary increases
were not previously recognised in the IAS 17 operating lease
commitment disclosure.
Accounting policy
Until the year ended 31 March 2019, leases of property, plant
and equipment were classified as either finance or operating
leases. Payments made under operating leases were charged to profit
or loss on a straight-line basis over the period of the lease. From
1 April 2019, leases are recognised as a right-of-use asset and a
corresponding lease liability at the date at which the leased asset
is available for use by the Group. Each lease payment is allocated
between the lease liability and associated finance cost. The
finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis. The Group has a large number
of material property, equipment and vehicle leases.
To the extent that a right-of-control exists over an asset
subject to a lease, with a lease term exceeding one year, a
right-of-use asset, representing the Group's right to use the
underlying leased asset, and a lease liability, representing the
Group's obligation to make lease payments, are recognised in the
Group's Consolidated Balance Sheet at the commencement of the
lease. The right-of-use asset is initially measured at cost and
includes the amount of initial measurement of the lease liability
and any direct costs incurred, including advance lease payments and
an estimate of the dismantling, removal and restoration costs
required by the terms and conditions of the lease. Depreciation is
charged to the Consolidated Income Statement to depreciate the
right-of-use asset from the commencement date until the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. The lease term shall include the period of any
extension option where it is reasonably certain that the option
will be exercised. Where the lease contains a purchase option the
asset is written off over the useful life of the asset when it is
reasonably certain that the purchase option will be exercised.
The lease liability is measured at the present value of the
future lease payments, including variable lease payments that
depend on an index and the exercise price of purchased options
where it is reasonably certain that the option will be exercised,
discounted using the interest rate implicit in the lease, if
readily determinable. If the rate cannot be readily determined, the
lessee's incremental borrowing rate is used. Finance charges are
recognised in the Consolidated Income Statement over the period of
the lease. Lease arrangements that are short term in nature or low
value are charged directly to the Consolidated Income Statement
when incurred. Short-term leases are leases with a lease term of 12
month or less. Low-value assets comprise small items of furniture
or equipment.
New standards and interpretations not yet effective and not
adopted
At the date of publishing these interim condensed consolidated
financial statements, a number of new and revised standards and
interpretations have been issued by the International Accounting
Standards Board (IASB). None of these new and revised standards and
interpretations are considered relevant to the Group and they have
not been adopted early.
Going Concern
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed financial statements.
Significant accounting judgements, estimates and assumptions
In the course of preparing these interim condensed consolidated
financial statements, no judgements have been made in the process
of applying the Group's accounting policies that have had a
significant effect on the amounts recognised in the financial
statements, other than those involving estimation uncertainty. The
key sources of estimation uncertainty are those which applied in
the annual consolidated financial statements for the year ended 31
March 2019, namely;
-- assumptions used to evaluate the potential impairment of non-financial assets;
-- recognition and valuation of deferred tax assets;
-- assumptions used in the valuation of retirement benefit obligations;
-- assumptions used to determine future obligations from leases; and
-- judgements and assumptions used to allocate indirect
production costs to manufactured and work in progress
inventory.
Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the consolidated financial
statements for the year ended 31 March 2019.
3. Segment information
The Group is organised into business units according to the
nature of their products and services. Having considered the
management reporting and organisational structure of the Group, the
directors have concluded that Renold plc has two reportable
operating segments as follows:
-- The Chain segment manufactures and sells power transmission
and conveyor chain and also includes sales of Torque Transmission
product through Chain National Sales Centres; and
-- The Torque Transmission segment manufactures and sells Torque
Transmission products such as gearboxes and couplings used in power
transmission with modest sales of chain products.
No operating segments have been aggregated to form the above
reportable segments. Management monitors the operating results of
its business units separately for the purpose of making decisions
about resource allocation and performance assessment.
The segment results for the period ended 30 September 2019 were
as follows:
Head office
Torque costs
Period ended 30 September Chain Transmission and eliminations Consolidated
2019 GBPm GBPm GBPm GBPm
------------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue 78.5 19.7 - 98.2
Inter-segment 0.5 2.0 (2.5) -
------------------------------------- ------ -------------- ------------------ -------------
Total revenue 79.0 21.7 (2.5) 98.2
------------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss) 8.4 2.1 (2.8) 7.7
Restructuring costs (0.4) (0.4) (0.1) (0.9)
Amortisation of acquired
intangible assets (0.5) - - (0.5)
------------------------------------- ------ -------------- ------------------ -------------
Segment operating profit/(loss) 7.5 1.7 (2.9) 6.3
Net financing costs (2.8)
------------------------------------- ------ -------------- ------------------ -------------
Profit before tax from continuing
operations 3.5
Taxation (1.2)
Discontinued operations (1.5)
------------------------------------- ------ -------------- ------------------ -------------
Profit after tax and discontinued
operations 0.8
------------------------------------- ------ -------------- ------------------ -------------
Other disclosures
Working capital 36.2 9.3 (0.8) 44.7
Capital expenditure 4.1 0.2 0.6 4.9
Depreciation and amortisation
included in adjusted operating
profit/(loss) 3.2 1.0 0.9 5.1
Amortisation of acquired
intangibles 0.5 - - 0.5
------------------------------------- ------ -------------- ------------------ -------------
Total depreciation and amortisation 3.6 1.0 0.8 5.6
------------------------------------- ------ -------------- ------------------ -------------
The segment results for the period ended 30 September 2018 were
as follows:
Head office
Torque costs
Period ended 30 September Chain Transmission and eliminations Consolidated
2018 (restated(1) ) GBPm GBPm GBPm GBPm
------------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue 80.0 18.2 - 98.2
Inter-segment 1.1 1.9 (3.0) -
------------------------------------- ------ -------------- ------------------ -------------
Total revenue 81.1 20.1 (3.0) 98.2
------------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss) 9.5 1.8 (3.9) 7.4
Restructuring costs (0.8) - (0.2) (1.0)
Amortisation of acquired
intangible assets (0.5) - - (0.5)
------------------------------------- ------ -------------- ------------------ -------------
Segment operating profit/(loss) 8.2 1.8 (4.1) 5.9
Net financing costs (2.3)
------------------------------------- ------ -------------- ------------------ -------------
Profit before tax from continuing
operations 3.6
Taxation (1.4)
Discontinued operations (0.1)
Profit after tax and discontinued
operations 2.1
------------------------------------- ------ -------------- ------------------ -------------
Other disclosures
Working capital 29.1 12.7 1.4 43.2
Capital expenditure 5.4 0.1 0.6 6.1
Depreciation and amortisation
included in adjusted operating
profit/(loss) 2.4 0.8 0.5 3.7
Amortisation of acquired
intangibles 0.5 - - 0.5
------------------------------------- ------ -------------- ------------------ -------------
Total depreciation and amortisation 2.9 0.8 0.5 4.2
------------------------------------- ------ -------------- ------------------ -------------
(1) See Note 14 for details of the restatement
The Board also reviews the performance of the business using
information presented at consistent exchange rates. The prior year
results have been restated using this year's exchange rates as
follows:
Head office
Torque costs
Period ended 30 September Chain Transmission and eliminations Consolidated
2018 (restated(1) ) GBPm GBPm GBPm GBPm
----------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue from continuing
operations 80.0 18.2 - 98.2
Foreign exchange 2.1 0.5 - 2.6
----------------------------------- ------ -------------- ------------------ -------------
Underlying external revenue
from continuing operations 82.1 18.7 - 100.8
----------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss)
from continuing operations 9.5 1.8 (3.9) 7.4
Foreign exchange 0.2 (0.1) - 0.1
----------------------------------- ------ -------------- ------------------ -------------
Underlying adjusted profit/(loss)
from continuing operations 9.7 1.7 (3.9) 7.5
----------------------------------- ------ -------------- ------------------ -------------
(1) See Note 14 for details of the restatement
The segment results for the year ended 31 March 2019 were as
follows:
Head office
Torque costs
Chain Transmission and eliminations Consolidated
Year ended 31 March 2019 GBPm GBPm GBPm GBPm
------------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue 163.9 35.7 - 199.6
Inter-segment 1.0 4.4 (5.4) -
------------------------------------- ------ -------------- ------------------ -------------
Total revenue 164.9 40.1 (5.4) 199.6
------------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss) 18.4 3.3 (6.9) 14.8
Pension past service credits 4.4 4.4
Restructuring costs (2.2) - (0.7) (2.9)
Amortisation of acquired
intangible assets (0.9) - - (0.9)
------------------------------------- ------ -------------- ------------------ -------------
Operating profit/(loss) 15.3 3.3 (3.2) 15.4
Net financing costs (5.0)
------------------------------------- ------ -------------- ------------------ -------------
Profit before tax from continuing
operations 10.4
Taxation (3.5)
Discontinued operations (0.2)
------------------------------------- ------ -------------- ------------------ -------------
Profit after tax and discontinued
operations 6.7
------------------------------------- ------ -------------- ------------------ -------------
Other disclosures
Working capital 26.8 10.6 2.0 39.4
Capital expenditure 13.0 0.9 1.3 15.2
Depreciation and amortisation
included in adjusted operating
profit/(loss) 5.0 1.6 1.1 7.7
Amortisation of acquired
intangibles 0.9 - - 0.9
------------------------------------- ------ -------------- ------------------ -------------
Total depreciation and amortisation 5.9 1.6 1.1 8.6
------------------------------------- ------ -------------- ------------------ -------------
The prior year results have been restated using this year's
exchange rates as follows:
Head office
Torque costs
Chain Transmission and eliminations Consolidated
Year ended 31 March 2019 GBPm GBPm GBPm GBPm
----------------------------------- ------ -------------- ------------------ -------------
Revenue
External revenue from continuing
operations 163.9 35.7 - 199.6
Foreign exchange 3.5 0.8 - 4.3
----------------------------------- ------ -------------- ------------------ -------------
Underlying external revenue
from continuing operations 167.4 36.5 - 203.9
----------------------------------- ------ -------------- ------------------ -------------
Adjusted operating profit/(loss)
from continuing operations 18.4 3.3 (6.9) 14.8
Foreign exchange 0.3 0.1 - 0.4
----------------------------------- ------ -------------- ------------------ -------------
Underlying adjusted profit/(loss)
from continuing operations 18.7 3.4 (6.9) 15.2
----------------------------------- ------ -------------- ------------------ -------------
4. Adjusting items
First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
------------------------------------- -------- -------- ----------
Included in operating costs:
Restructuring costs 0.9 1.0 2.9
Amortisation of acquired intangible
assets 0.5 0.5 0.9
Pension past service credits - - (4.4)
Included in financial costs:
Discount unwind on provisions - - 0.1
Amortisation of financing costs on
refinancing - - 0.3
Included in taxation:
Taxation on adjusting items (0.2) (0.1) 0.5
------------------------------------- -------- -------- ----------
Adjusting items 1.2 1.4 0.3
------------------------------------- -------- -------- ----------
Restructuring costs of GBP0.9m arise from redundancy costs
associated with headcount reductions, the costs associated with
investigating the historical overstatement of profit in the Gears
business unit and various other smaller costs associated with
restructuring.
Prior period adjusting items
Various restructuring costs were incurred in the prior period as
part of the STEP 2020 Strategic Plan, relating principally to the
China factory relocation (GBP0.8m) which completed ahead of
schedule in the second half of financial year 2018/19.
5. Net financing costs
First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
-------------------------------------------- -------- -------- ----------
Financing costs:
Interest payable on bank loans and
overdrafts (1.2) (1.1) (1.9)
Interest paid on right-of-use lease
liabilities (0.3) - -
Amortised financing costs (0.1) - (0.3)
Amortisation of financing costs on
refinancing - - (0.3)
Loan financing costs (1.6) (1.1) (2.5)
-------------------------------------------- -------- -------- ----------
Net IAS 19 financing costs (1.1) (1.2) (2.4)
Discount unwind on non-current liabilities (0.1) - (0.1)
Net financing costs (2.8) (2.3) (5.0)
-------------------------------------------- -------- -------- ----------
6. Taxation
First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
----------------------------------- -------- -------- ----------
Current tax:
- UK - - -
- Overseas (0.4) (0.9) (1.1)
----------------------------------- -------- -------- ----------
(0.4) (0.9) (1.1)
Deferred tax:
- UK (0.1) (0.1) (1.0)
- Overseas (0.7) (0.4) (1.8)
- Adjustments in respect of prior
periods - - 0.4
----------------------------------- -------- -------- ----------
(0.8) (0.5) (2.4)
----------------------------------- -------- -------- ----------
Total income tax expense (1.2) (1.4) (3.5)
----------------------------------- -------- -------- ----------
Tax charged within the interim results has been calculated by
applying the effective tax rate which is expected to apply to
Renold Group entities for the year ending 31 March 2020 using rates
substantively enacted by 30 September 2019 as required by IAS 34
'Interim Financial Reporting.'
The UK Government announced that it intends to reduce the main
rate of corporation tax to 17% with effect from 1 April 2020. This
change was substantively enacted in September 2016. The deferred
tax balances were revalued to the lower rate of 17% in the year
ended 31 March 2017.
Factors affecting current and future tax charges
The Group's tax charge in future years will be impacted by the
profit mix, effective tax rates in the different countries where
the Group operates and utilisation of tax losses. No deferred tax
is recognised on the unremitted earnings of overseas
subsidiaries.
The Group's effective tax rate of 34.2% (calculated on
unadjusted interim results) is above the UK statutory tax rate of
19%. The main items increasing the Group effective tax rate
relative to the UK rate include the current tax liability in
Germany at higher corporate tax rates and non-recognition of
deferred tax assets in respect of losses in certain jurisdictions
where recoverability is considered uncertain.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit
for the period by the weighted average number of shares in issue
during the period. The calculation of earnings per share is based
on the following data:
First half Full year
2018/19 2018/19
2019/20 (restated(1) (re-presented(1)
) )
Pence per Pence per Pence per
share share
share
-------------------------------------------- ------------ --- -------------- --- ------------------
Basic continuing EPS 1.0 0.9 3.0
Diluted continuing EPS 0.9 0.9 2.9
Basic continuing and discontinued
EPS 0.3 0.9 2.9
Diluted continuing and discontinued
EPS 0.3 0.8 2.8
Adjusted EPS 1.5 1.6 3.1
Diluted adjusted EPS 1.5 1.5 3.0
-------------------------------------------- ------------ --- -------------- --- ------------------
GBPm GBPm GBPm
-------------------------------------------- ------------ --- -------------- --- ------------------
Profit for calculation of continuing
and adjusted EPS
Profit for the financial period from
continuing and discontinued operations 0.7 2.0 6.5
Add: Loss for the period from discontinued
operations 1.5 0.1 0.2
-------------------------------------------- ------------ --- -------------- --- ------------------
Profit for the financial period from
continuing operations 2.2 2.1 6.7
Effect of adjusted items, after tax:
- Restructuring costs in operating
costs 0.8 1.0 2.9
- Refinancing costs - - 0.3
- Discount unwind on restructuring
costs - - 0.1
- Pension past service cost - - (3.6)
- Amortisation of acquired intangible
assets 0.4 0.4 0.6
-------------------------------------------- ------------ --- -------------- --- ------------------
Profit for the calculation of adjusted
EPS 3.4 3.5 7.0
-------------------------------------------- ------------ --- -------------- --- ------------------
Thousands Thousands Thousands
Weighted average number of ordinary
shares
For calculating basic earnings per
share 225,418 225,418 225,418
-------------------------------------------- ------------ --- -------------- --- ------------------
(1) See Note 14 for details of the restatement
Diluted EPS is calculated by adjusting the weighted average
number of shares used for the calculation of basic EPS as increased
by the dilutive effect of potential ordinary shares.
Dilutive shares arise from employee share option schemes where
the exercise price is less than the average market price of the
Company's ordinary shares during the period. Their dilutive effect
is calculated on the basis of the equivalent number of nil cost
options. Where the option price is above the average market price,
the option is not dilutive and is excluded from the diluted EPS
calculation. Inclusion of the dilutive securities, comprising
6,900,055 (2019: 10,012,000) additional shares affects EPS as shown
above.
The adjusted EPS numbers have been provided in order to give a
useful indication of the underlying performance of the business by
the exclusion of adjusting items. Due to the existence of
unrecognised deferred tax assets, there was no associated tax
credit on some of the restructuring costs and in these instances
restructuring costs are therefore added back in full.
8. Retirement benefit obligations
The Group's retirement benefit obligations are summarised as
follows:
At 30 At 30 At 31
September September March
2019 2018 2019
GBPm GBPm GBPm
-------------------------------------- ----------- ----------- --------
Funded plan obligations (244.1) (220.1) (237.0)
Funded plan assets 160.9 151.0 152.4
-------------------------------------- ----------- ----------- --------
Net funded plan obligations (83.2) (69.1) (84.6)
Unfunded obligations (28.3) (25.6) (17.3)
-------------------------------------- ----------- ----------- --------
Total retirement benefit obligations (111.5) (94.7) (101.9)
-------------------------------------- ----------- ----------- --------
Analysed as follows:
Non-current liabilities
Retirement benefit obligations (111.5) (94.7) (101.9)
----------------------------------- -------- ------- --------
Net retirement benefit obligation (111.5) (94.7) (101.9)
Net deferred tax asset 18.1 15.2 16.6
Retirement benefit obligation net
of deferred tax (93.4) (79.5) (85.3)
----------------------------------- -------- ------- --------
The increase in the Group's pre-tax liability from GBP101.9m at
31 March 2019 to GBP111.5m at 30 September 2019 primarily reflects
the increase in discount rates across all schemes which together
increase the value of future liabilities by GBP19.6m. This increase
has been partially offset by asset outperformance and experience
gains in the UK scheme, which limit the net increase in the deficit
to GBP9.6m.
9. Cash generated from operations
First half Full year
2018/19
2019/20 (restated(1) 2018/19
)
GBPm GBPm GBPm
----------------------------------------- --------- --- -------------- --- ----------
Operating profit from continuing and
discontinued operations 6.0 5.8 15.2
Depreciation and amortisation 5.6 4.2 8.6
Loss on disposal of plant and equipment 0.1 - 0.9
Equity share plans (0.2) - 0.4
(Increase) in inventories (3.9) (4.4) (2.6)
Decrease/(increase) in receivables 1.0 (3.5) (0.8)
(Decrease)/increase in payables (1.5) 2.2 1.9
(Decrease) in provisions - (0.5) (4.6)
Cash contribution to pension plans (1.8) (2.3) (4.5)
Pension past service credit (non cash) - - (4.4)
Cash generated from operations 5.3 1.5 10.1
----------------------------------------- --------- --- -------------- --- --------------
(1) See Note 14 for details of the restatement
10. Reconciliation of the movement in cash and cash equivalents
to movement in net debt
First half Full year
2018/19
2019/20 (restated(1) 2018/19
)
GBPm GBPm GBPm
------------------------------------------ --------- --- -------------- --- ----------
(Decrease)/increase in cash and cash
equivalents (0.4) (0.9) 6.5
Change in net debt resulting from
cash flows (3.6) (5.7) (12.0)
Non-cash movement - refinancing costs
capitalised - - 0.9
Foreign currency translation differences 0.1 (0.6) (1.4)
------------------------------------------ --------- --- -------------- --- ----------
Change in net debt during the period (3.9) (7.2) (6.0)
Net debt at start of period (30.3) (24.3) (24.3)
------------------------------------------ --------- --- -------------- --- ----------
Net debt at end of period (34.2) (31.5) (30.3)
------------------------------------------ --------- --- -------------- --- ----------
(1) See Note 14 for details of the restatement
11. Net Debt
At 30
September
At 30 2018
September (restated(1) At 31 March
2019 ) 2019
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
Cash and cash equivalents 17.6 12.1 17.6
Borrowings:
Bank overdrafts (0.4) (1.3) (0.2)
Capitalised costs 0.2 0.3 0.2
Sub-total - current borrowings (0.2) (1.0) -
Bank loans - non-current (51.7) (42.4) (48.1)
Capitalised costs 0.6 0.3 0.7
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
Sub-total - non-current
borrowings (51.1) (42.1) (47.4)
Preference stock (0.5) (0.5) (0.5)
Total debt (51.8) (43.6) (47.9)
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
Net debt (34.2) (31.5) (30.3)
-------------------------------- ------- ------- --- ------- ------- --- ------- -------
(1) See Note 14 for details of the restatement
12. Called up share capital
At 30 At 30 At 31
September September March
2019 2018 2019
GBPm GBPm GBPm
---------------------------- ----------- ----------- -------
Ordinary shares of 5p each 11.3 11.3 11.3
11.3 11.3 11.3
---------------------------- ----------- ----------- -------
At 30 September 2019, the issued ordinary share capital
comprised 225,417,740 ordinary shares of 5p each (30 September
2018: 225,417,740 shares).
13. Capital commitments
At 30 September 2019 capital expenditure contracted for but not
provided for in these accounts amounted to GBP0.9m (30 September
2018: GBP6.3m).
14. Prior period adjustment and re-presentation of the income
statement
A prior period adjustment has been recorded in this condensed
set of financial statements following the identification of
historical accounting issues over the three years ending 31 March
2017, 2018 and 2019, arising from an overstatement of certain asset
values and understatement of certain liabilities resulting in an
overstatement of profit over this period by GBP2.5m in the Gears
business unit, which is part of the Torque Transmission
division.
A re-presentation of the income statement has been performed for
the six months ended 30 September 2018 and the year ended 31 March
2019. The revised presentation has been performed in order to:
- separately identify the discontinued element of the Group's
income statement following the sale of Renold Crofts (Pty) Ltd (see
Note 15); and
- remove pension administration costs and IAS 19 financing costs
as adjusting items from the Group's 'Adjusted' income statement. In
previous years, the pension administration costs and the IAS 19R
finance charges have been treated as adjusting items as they relate
to historical pension schemes which are not indicative of the
underlying performance of the operating businesses. While this
continues to be the case, Renold's treatment of these items differs
from other companies in the peer group, and in order to assist
users of the financial statements, the legacy pension costs will no
longer be treated as adjusting items.
The impact, on a line item basis for those affected, on the
Condensed Consolidated Statement of Comprehensive Income for the
year ended 31 March 2019 and the period ended 30 September 2018,
and on the Condensed Consolidated Balance Sheet as at 31 March 2018
and as at 30 September 2018 is as follows:
Condensed
Consolidated
Statement of
Comprehensive
Income
for the year
ended
31 March 2019 Statutory Adjusted(1)
------------------
Pension
admin Full
Full and IAS year
As year As 19 2018/19
previously Discontinued 2018/19 previously Discontinued financing Adjusted
reported operations (re-presented) reported operations costs (re-presented)
------------------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Revenue 202.4 (2.8) 199.6 202.4 (2.8) - 199.6
Operating costs (187.2) 3.0 (184.2) (187.0) 3.0 (0.8) (184.8)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Operating profit 15.2 0.2 15.4 15.4 0.2 (0.8) 14.8
Net financing
costs (5.0) - (5.0) (2.2) - (2.4) (4.6)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Profit before tax 10.2 0.2 10.4 13.2 0.2 (3.2) 10.2
Taxation (3.5) - (3.5) (2.9) - (0.1) (3.0)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Profit/(loss) for
the period from
continuing
operations 6.7 0.2 6.9 10.3 0.2 (3.3) 7.2
Discontinued
operations - (0.2) (0.2) - - - -
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Profit/(loss) for
the period 6.7 - 6.7 10.3 0.2 (3.3) 7.2
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Total
comprehensive
income/(expense)
for the period,
net of tax (0.9) - (0.9)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
Attributable to:
Owners of the
parent (1.1) - (1.1)
Non-controlling
interest 0.2 - 0.2
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
(0.9) - (0.9)
------------------ ----------- ------------- --------------- ----------- ------------- ---------- ---------------
(1) Adjusted for the after-tax effects of restructuring costs,
changes in the provision discounts and amortisation of acquired
intangible assets.
Condensed
Consolidated
Statement of
Comprehensive
Income
for the six
months
ended 30
September
2018 Statutory Adjusted(1)
------------------
Pension
admin
and First
First IAS half
As half As 19 2018/19
previously Dis-continued 2018/19 previously financing Dis-continued Adjusted
reported Re-statement operations (restated) reported Re-statement costs operations (restated)
------------------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Revenue 99.7 - (1.5) 98.2 99.7 - - (1.5) 98.2
Operating costs (93.3) (0.6) 1.6 (92.3) (91.5) (0.6) (0.3) 1.6 (90.8)
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Operating profit 6.4 (0.6) 0.1 5.9 8.2 (0.6) (0.3) 0.1 7.4
Net financing
costs (2.3) - - (2.3) (1.1) - (1.2) - (2.3)
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Profit before
tax 4.1 (0.6) 0.1 3.6 7.1 (0.6) (1.5) 0.1 5.1
Taxation (1.4) - - (1.4) (1.3) - (0.2) - (1.5)
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Profit/(loss)
for the period
from continuing
operations 2.7 (0.6) 0.1 2.2 5.8 (0.6) (1.7) 0.1 3.6
Discontinued
operations - - (0.1) (0.1) - - - - -
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Profit/(loss)
for the period 2.7 (0.6) - 2.1 5.8 (0.6) (1.7) 0.1 3.6
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Total
comprehensive
income/(expense)
for the period,
net of tax 5.5 (0.6) - 4.9
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
Attributable to:
Owners of the
parent 5.5 (0.6) - 4.9
Non-controlling
interest - - - -
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
5.5 (0.6) - 4.9
------------------ ----------- ------------- -------------- ----------- ----------- ------------- ---------- -------------- ------------
(1) Adjusted for the after-tax effects of restructuring costs,
changes in the provision discounts and amortisation of acquired
intangible assets.
Condensed Consolidated
Balance Sheet 30 September 2018 31 March 2018
30 Sept
2018
31 March
As previously As previously 2018
reported Restatement (restated) reported Restatement (restated)
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
ASSETS
Non-current assets
Property, plant and
equipment 51.2 (0.4) 50.8 47.7 (0.4) 47.3
Other non-current assets 50.4 - 50.4 50.5 - 50.5
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
101.6 (0.4) 101.2 98.2 (0.4) 97.8
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
Current assets
Inventories 46.4 (0.2) 46.2 41.0 (0.2) 40.8
Trade and other
receivables 40.7 (0.6) 40.1 36.4 (0.3) 36.1
Other current assets 12.6 (0.5) 12.1 14.3 - 14.3
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
99.7 (1.3) 98.4 91.7 (0.5) 91.2
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
TOTAL ASSETS 201.3 (1.7) 199.6 189.9 (0.9) 189.0
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables (42.7) (0.4) (43.1) (39.6) (0.6) (40.2)
Other current
liabilities (6.7) - (6.7) (7.1) - (7.1)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
(49.4) (0.4) (49.8) (46.7) (0.6) (47.3)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
NET CURRENT ASSETS 50.3 (1.7) 48.6 45.0 (1.1) 43.9
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
Non-current liabilities (144.8) - (144.8) (142.1) - (142.1)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
TOTAL LIABILITIES (194.2) (0.4) (194.6) (188.8) (0.6) (189.4)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
NET ASSETS 7.1 (2.1) 5.0 1.1 (1.5) (0.4)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
EQUITY
Other equity items 66.5 - 66.5 65.3 - 65.3
Retained earnings (61.4) (2.1) (63.5) (66.2) (1.5) (67.7)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
Equity attributable
to equity holders of
the parent 5.1 (2.1) 3.0 (0.9) (1.5) (2.4)
Non-controlling
interests 2.0 - 2.0 2.0 - 2.0
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
TOTAL SHAREHOLDERS'
EQUITY 7.1 (2.1) 5.0 1.1 (1.5) (0.4)
------------------------- -------------- ------------ ------------ --- -------------- ------------ ------------
15. Discontinued operations and sale of subsidiary
On 23 September the Group sold its shareholding in Renold Crofts
(Pty) Ltd, the legal entity for the South African Torque
Transmission business unit, for GBP0.1m consideration. This
business unit would have required significant capital investment
and management input to make meaningful progress. The disposal to
management provides a continuing channel to market for products
sourced from elsewhere in the Group.
The results of the discontinued operations, which have been
included as a single line item in the consolidated income
statement, were as follows:
First half First half Full year
2019/20 2018/19 2018/19
GBPm GBPm GBPm
--------------------------------------------- ----------- ----------- ----------
Revenue 0.8 1.5 2.8
Expenses (1.1) (1.6) (3.0)
--------------------------------------------- ----------- ----------- ----------
Loss before tax (0.3) (0.1) (0.2)
Attributable tax expense - - -
--------------------------------------------- ----------- ----------- ----------
Loss for the year generated by discontinued
operations (0.3) (0.1) (0.2)
Loss on disposal of discontinued operations
(see below) (1.2) - -
Net loss attributable to discontinued
operations (attributable to owners
of the parent) (1.5) (0.1) (0.2)
--------------------------------------------- ----------- ----------- ----------
The net assets of Renold Crofts (Pty) Ltd at the date of
disposal were as follows:
23 September
2019
GBPm
--------------------------------------------- -------------
Property, plant and equipment 0.8
Inventories 0.5
Trade receivables 0.3
Bank balances and cash 0.1
Trade payables (0.7)
Net assets disposed 1.0
Disposal costs 0.3
Loss on disposal of discontinued operations (1.2)
--------------------------------------------- -------------
Total consideration 0.1
Satisfied by:
Deferred consideration 0.1
--------------------------------------------- -------------
Net cash flow arising on disposal:
Cash and cash equivalents disposed
of (0.1)
--------------------------------------------- -------------
The deferred consideration will be settled in cash by the
purchaser on or before 23 September 2021. The loss on disposal is
included in the loss for the year from discontinued operations.
Ends
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BRBDBUDBBGCD
(END) Dow Jones Newswires
November 13, 2019 02:00 ET (07:00 GMT)
Grafico Azioni Renold (LSE:RNO)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Renold (LSE:RNO)
Storico
Da Apr 2023 a Apr 2024