RNS No 0903x
BANNER CHEMICALS PLC
25th November 1998
Contacts: Stuart Lloyd, Chairman and Chief Executive
Banner Chemicals PLC Tel: 01928 597000
Tom Baldock
Financial Dynamics Tel: 0171 831 3113
Banner Chemicals PLC
Interim results for the six months ended 30th September 1998
Banner Chemicals PLC, a leading distributor of solvents and chemicals in the
UK, is pleased to announce its interim results.
Highlights:
* Disposal of Carbon and Engineering businesses for #25.6m net; #18.85m
in cash returned to shareholders via tender offer
* Profit before tax of #14.03m, including profit on disposal of
discontinued businesses of #12.73m
* Profit on continuing operations of #1.1m (1997: #1.0m) after interest
* Strong balance sheet showing net cash in hand of #0.6m
* Dividend maintained at 0.5p (net) per share
* Acquisition in July of Joseph Storey, a specialist manufacturer of
environmentally friendly flame-retardants and inorganic chemicals, for
#3.3m
* Group reorganised into 3 complementary speciality chemical divisions
encompassing manufacturing, distribution and materials handling
Commenting on the results, Banner's Chairman and Chief Executive Stuart
Lloyd said:
"These results represent a resilient performance in difficult market
conditions. The Board is now focused on expanding the business, both
organically and through acquisition, in niche, speciality market sectors."
Chairman's Statement
The last six months have seen a number of major changes in the Group, most
notably the sale of the Carbon and Environmental Engineering businesses in
May for #25.6 million net and the acquisition of Joseph Storey in July for
#3.3 million, with the result that Banner Chemicals is now a focused group
of companies encompassing the manufacture and distribution of speciality and
performance chemicals.
Despite difficult trading conditions the group has met expectations helped
by its distribution flexibility and broad product portfolio, centred on high-
performance applications. Profit before tax for the six months ended 30
September 1998 was #14.03 million (1997: # 2.51 million), including profit
on disposal of discontinued businesses of #12.73 million, on a turnover of
#21.68 million (1997 : # 34.73 million) which equates to basic earnings per
share of 9.4p (1997 : 1.23p). The scale of the changes over the six month
period makes direct comparison to previous years difficult.
In view of these results and the outlook for the remainder of the year, your
Board has declared an interim dividend of 0.5p (net) per ordinary share.
(1997 : 0.5p net) payable on 15 January 1999 to shareholders on the
register at 11 December 1998.
On 21 October 1998 the company, with the sanction of the High Court,
cancelled the Share Premium Account and the Capital Redemption Reserve in
accordance with the special resolutions approved at the Annual General
Meeting in July. This eliminates the deficit on Group Reserves created by
the change in accounting policy to comply with the current Financial
Reporting Standard concerning goodwill arising on consolidation.
I am pleased to welcome Terry Smith to the Board as a Non-Executive
Director. His appointment was announced on 21 September 1998. Terry has
held executive board positions with two major chemical groups and most
recently as Finance Director of Wellman PLC. He is currently Non-Executive
Director of Spring Ram Corporation PLC.
Business review
The key event in the period was the disposal in May of the Carbon and
Environmental Businesses to Waterlink Inc. and the return of #18.85 million
of cash to ordinary shareholders via a tender offer.
In July we acquired Joseph Storey, a specialist manufacturer of
environmentally friendly flame-retardants and inorganic chemicals. Their
products for the plastics industry complement our existing speciality
products range and offer world-wide growth potential for the Group.
In October we moved our Head Office to purpose built offices at Runcorn,
enabling us to utilise the Liverpool depot for the further expansion of our
chemical business.
We have also set up Prism Chemicals as a separate entity (previously a
division of Samuel Banner), to target contract packing and specialist
chemical formulation.
Banner Chemicals now comprises a group of three complementary speciality
chemical companies providing a distribution service through Samuel Banner,
manufacturing through Joseph Storey and a materials handling service through
Prism Chemicals.
Chemical distribution
The bulk chemical business has performed reasonably well against a difficult
trading background in the paints and surface coatings sector. Fluctuating
sales from customers affected by the strength of Sterling has been offset by
improvements in gross margin and the steady developments in blended product
sales.
The sales of our additive products have progressed satisfactorily across the
coatings, pharmaceutical and cosmetic industries and they continue to meet
the challenge of new technologies. An increased emphasis on precision
engineering products has led to their performance exceeding volume and gross
margin expectations.
Contract Packing
The development of our contract packing and specialist formulating business
has shown a good six months activity with improvements in both turnover and
margin. We anticipate that this will continue as environmental and health
and safety requirements encourage manufacturers to outsource their blending
and filling requirements, rather than undertake the necessary investment
themselves.
Chemical Manufacture
Since acquiring Joseph Storey the Board has made significant strides to
ensure that the company maximises its various strengths. Its range of
stannates and borates impart fire resistance properties to fabrics, plastics
and coatings. It also manufactures other speciality inorganic chemicals
which offer opportunities for growth through the existing customer base,
with applications as diverse as metal processing, rubber bonding agents and
sugar refining.
Their products are sold world-wide, to over 20 countries, through a network
of agents and there is considerable scope to develop existing partnerships
in the US, Europe and the Far East. These partnerships will ensure that
product sales and market penetration are maximised. The UK sales operation
has also been enhanced to provide a greater focus on local opportunities,
whilst the increasing customer awareness of the requirement for smoke
suppressants bodes well for continued growth .
Current Trading
The second half has begun with similar demand and pricing pressure as seen
during the first six months. Reduced interest rates and a weaker Sterling
hopefully should improve the business opportunities as the year progresses.
The future
Banner Chemicals is a dynamic organisation, dedicated to improving our
strong links with customers and suppliers alike. The chemical industry has
seen a great deal of consolidation over the past year and the requirement
for specialist niche distributors looks set to increase as the chemical
producers re-examine their portfolios.
The Board's strategy is to grow your business organically by increasing our
product ranges in targeted markets and by making selected acquisitions which
match our stringent acquisition criteria. Our policy is to expand the
business, focusing predominantly on niche and speciality market sectors.
The outcome for the next six months is difficult to predict and any further
economic slowdown will be challenging for the business. The existing close
co-operation with the principal suppliers will position the business to
manage any reduction in activity.
Stuart J Lloyd
Chairman
25 November 1998
BANNER CHEMICALS PLC
Consolidated Profit and Loss Account
For the six months ended 30 September 1998
Unaudited Unaudited Audited
six months six months Full year
ended ended ended
30 September 30 31 March
1998 September 1998
Note #'000 1997 #'000
#'000
Turnover 2
Continuing businesses 16,529 18,083 35,023
Discontinued businesses 5,154 16,645 34,753
21,683 34,728 69,776
Operating profit 2
Continuing businesses 1,047 1,197 2,468
Discontinued businesses 186 1,507 3,183
1,233 2,704 5,651
Profit on disposal of
discontinued businesses 12,725 - -
Profit on ordinary activities
before interest and taxation 13,958 2,704 5,651
Net interest
receivable/(payable) 67 (199) (344)
Profit on ordinary activities
before taxation 14,025 2,505 5,307
Taxation 3 (3,343) (601) (1,284)
Profit for the period 10,682 1,904 4,023
Dividends (including non-
equity) 4 (377) (809) (1,920)
Retained profit for the period 10,305 1,095 2,103
Earnings per share 5
Accounting standards basis 9.40p 1.23p 2.60p
IIMR headline basis 0.78p 1.23p 2.60p
Fully diluted basis 9.40p 1.23p 2.60p
BANNER CHEMICALS PLC
Consolidated Balance Sheet
As at 30 September 1998
Unaudited Audited
as at as at
30 September 31 March
1998 1998
Note #'000 #'000
Fixed Assets
Intangible assets 2,160 -
Tangible assets 3,979 8,002
6,139 8,002
Current Assets
Stocks 2,837 7,841
Debtors 8,164 16,068
Deferred consideration due after more
than one year 1,200 -
Cash at bank and in hand 6 3,868 2,646
16,069 26,555
Creditors: Amounts falling due within one
year
Creditors and accruals (11,325) (14,356)
Borrowings 6 (1,356) (1,518)
(12,681) (15,874)
Net Current Assets 3,388 10,681
Total assets less current liabilities 9,527 18,683
Creditors: Amounts falling due after more
than one year
Borrowings 6 (1,909) (2,155)
Deferred consideration (125) (125)
Net assets 7,493 16,403
Capital and reserves
Called up share capital 7 3,770 8,707
Share premium account 7 14,588 14,578
Capital redemption reserve 8 4,941 -
Goodwill reserve 8 - (14,186)
Profit and loss account 8 (15,806) 7,304
Shareholders' funds 9 7,493 16,403
Equity shareholders' funds 7,493 15,233
Non-equity shareholders' funds - 1,170
7,493 16,403
BANNER CHEMICALS PLC
Consolidated Cash Flow Statement
For the six months ended 30 September 1998
Unaudited Unaudited Audited
Six months Six Full year
ended months ended
Note 30 ended 31 March
September 30 1998
1998 September #'000
#'000 1997
#'000
Net cash inflow from
operating activities 10(a) 1,409 3,663 6,940
Returns on investments and
servicing of finance
Net interest received/(paid) 91 (199) (344)
Preference dividends paid - (56) (111)
91 (255) (455)
Taxation paid (62) (434) (1,093)
1,438 2,974 5,392
Capital expenditure and
financial investment
Payments for tangible fixed (305) (266) (657)
assets
Receipts from sale of 237 85 74
tangible fixed assets
(68) (181) (583)
Acquisitions and disposals
Acquisition of subsidiary (3,305) - -
undertaking
Cash acquired with subsidiary 213 - -
undertaking
Disposal proceeds of
subsidiary undertakings 24,371 - -
Cash disposed of with
subsidiary undertaking 47 - -
Deferred consideration - (360) (416)
payments
21,326 (360) (416)
Equity dividends paid (1,055) (1,009) (1,762)
Cash flow before use of
liquid resources and 21,641 1,424 2,631
financing
Management of liquid
resources
Cash deposits utilised - 9 9
Financing
Redemption of preference (1,170) - -
shares
Purchase of Ordinary share (18,855) - -
capital
Repayment of loans (364) (124) (415)
Loan notes repaid - (9) (9)
Capital element of finance
lease payments (44) (100) (127)
Issue of ordinary shares for
cash, net of expenses 14 39 39
Net cash outflow from
financing (20,419) (194) (512)
Increase in cash 10(b) 1,222 1,239 2,128
BANNER CHEMICALS PLC
NOTES TO THE INTERIM RESULTS
1. Accounting Policies and Companies Act 1985, Section 240
The results for the half year have been prepared on a basis consistent with
the accounting policies disclosed in the Group's 1998 Annual Report, except
for the effects of two new accounting standards which have had implications
for the Group.
In accordance with FRS 10, goodwill arising on acquisitions in the period
has been capitalised and is being amortised over a 20 year life. Goodwill
previously written off to reserves has not been reinstated and the balance
in the goodwill write off reserve has now been transferred to the profit and
loss account.
In accordance with FRS 14, the fully diluted earnings per share is
disclosed.
The results disclosed for the year ended 31 March 1998 are not the statutory
accounts. The statutory accounts, which have been filed with the Registrar
of Companies, received an unqualified audited report and did not contain a
statement under Sections 237(2) or (3) of the Companies Act 1985.
2. Segmental Analysis
Turnover Operating Profit
Un- Un- Audited Un- Un- Audited
audited audited Year audited audited
6 6 to 6 6 Year
(a) By activity months months 31/03/ months months to
30/09/ 30/09/ 98 30/09/ 30/09/ 31/03/
98 97 98 97 98
#'000 #'000 #'000 #'000 #'000 #'000
Chemicals 16,022 18,083 35,023 1,141 1,321 2,700
Acquisitions 507 - - 122 - -
Total -
continuing
businesses 16,529 18,083 35,023 1,263 1,321 2,700
Discontinued
businesses
Carbon 4,901 10,900 21,297 222 1,341 2,324
Environmental
engineering 253 5,745 13,456 24 279 1,089
21,683 34,728 69,776 1,509 2,941 6,113
Amortisation of
goodwill (27) - -
Central costs (249) (237) (462)
1,233 2,704 5,651
Turnover Operating Profit
(b) By Un- Un- Audited Un- Un- Audited
geographical audited audited Year audited audited Year
origin 6 6 to 6 6 to
months months 31/03/ months months 31/03/
30/09/ 30/09/ 98 30/09/ 30/09/ 98
98 97 98 97
#'000 #'000 #'000 #'000 #'000 #'000
United Kingdom 18,182 23,288 46,461 1,037 1,571 3,371
United States 3,501 11,440 23,315 196 1,133 2,280
21,683 34,728 69,776 1,233 2,704 5,651
3. Taxation
The tax charge for the six months ended 30 September 1998 has been based on
the estimated tax rate for the year to 31 March 1999 on profits of the
United Kingdom subsidiaries, less an allowance for utilisation of brought
forward tax losses. It comprises :
Full year
Six months Six months Ended
30 30 31 March
September September 1998
1998 1997 #'000
#'000 #'000
UK Corporation tax 3,175 185 518
Overseas taxation 168 416 811
3,343 601 1,329
Adjustment to prior years - - (15)
Advance corporation tax
recoverable - - (30)
Charge for the period 3,343 601 1,284
4. Dividends
Full year
Six months Six months Ended
30 30 31 March
September September 1998
1998 1997 #'000
#'000 #'000
Preference dividends - 56 111
Interim ordinary dividend 377 753 754
Final ordinary dividend
provided - - 1,055
377 809 1,920
The interim dividend of 0.50p (1997: 0.50p) per share will be paid on 15
January 1999 to ordinary shareholders on the register on 11 December 1998.
The ex-dividend date will be 7 December 1998.
5. Earnings Per Share
The earnings per ordinary share has been calculated on the profit for the
half year available to ordinary shareholders of #10,682,000 (half year 1997
: #1,848,000), and on the weighted average number of ordinary shares in
issue during the period of 113.68 million (half year 1997 : 150.52 million).
5. Earnings Per Share (continued)
The disclosed figures are reconciled as follows :
Full year
Six Six Ended
months months 31 March
30 30 1998
September September
1998 1997
Profit attributable to
ordinary shareholders
(accounting standards basis) 10,682 1,848 3,912
Profit on disposal of
discontinued businesses (net
of tax) (9,825) - -
Amortisation of goodwill 27 - -
IIMR headline basis earnings 884 1,848 3,912
6. Analysis of Borrowings
At
At 30
1 April Cash Flow September
1998 #'000 1998
#'000 #'000
Change in cash at bank and 1,660 1,222 2,882
in hand
Debt due after 1 year (2,055) 255 (1,800)
Debt due within 1 year (1,395) 109 (1,286)
Finance leases (223) 44 (179)
Change in debt (3,673) 408 (3,265)
Cash deposit 986 - 986
Change in net funds/(debt) (1,027) 1,630 603
7. Share Capital and Share Premium
Share Share
Premium Capital
#'000 #'000
At 1 April 1998 14,578 8,707
Issue on exercise of options on 10 10 4
June 1998
Redemption of 9+% Preference shares - (1,170)
on 23 June 1998
Purchase of ordinary shares as a
result of the tender offer on 2 July - (3,771)
1998
At 30 September 1998 14,588 3,770
The number of ordinary shares in issue at 30 September 1998 was 75,388,573
(30 September 1997 : 150,734,005).
8. Reserves
Capital Profit
Redempti Goodwill and
on Reserve Loss
Reserve #'000 Account
#'000 #'000
At 1 April 1998 - (14,186) 7,304
Profit for the period (total
recognised gains) - - 10,305
Exchange movement - - 118
Goodwill realised on disposal
of subsidiaries - 678 -
Transfer on redemption of 9+%
cumulative preference shares 1,170 - (1,170)
Transfer on purchase of
ordinary shares 3,771 - (3,771)
Premium on repurchase of
ordinary share capital - - (15,084)
Transfer in accordance with FRS
10 (note 1) - 13,508 (13,508)
At 30 September 1998 4,941 - (15,806)
In accordance with resolutions 7 and 8 passed at the Annual General meeting
held on 29 July 1998, on 21 October 1998, by Order of the High Court of
Justice Chancery Division, the Company cancelled its Share Premium Account
and its Capital Redemption Reserve.
The pro-forma table below shows the effect on shareholders' funds of these
changes :
Capital Profit
Share Share Redemption and
Capital Premium Loss
#'000 #'000 Reserve Account
#'000 #'000
Balance at 30 September
1998 3,770 14,588 4,941 (15,806)
Capital reduction
scheme - (14,588) (4,941) 19,529
3,770 - - 3,723
9. Reconciliation of Movement in Shareholder's Funds
Six months Year ended
ended 31 March 1998
30 September #'000
1998
#'000
Profit for the financial period 10,682 4,023
Exchange adjustments 118 (189)
Total recognised gains 10,800 3,834
Dividends (377) (1,920)
New share capital 14 39
Purchase of share capital (20,025) -
Goodwill written back 678 -
(Decrease)/increase in
shareholders' funds (8,910) 1,953
Opening shareholders' funds 16,403 14,450
Closing shareholders' funds 7,493 16,403
10. Consolidated cash flow statement
(a) Reconciliation of operating profit to net cash inflow from operating
activities
30 30 31 March
September September 1998
1998 1997 #'000
#'000 #'000
Operating profit 1,233 2,704 5,651
Depreciation 126 406 854
Amortisation of goodwill 27 - -
Decrease/(increase) in
stocks (497) (529) - (702)
Decrease in debtors 2,162 1,691 813
(Decrease)/increase in
creditors (1,642) (609) 324
Net cash inflow from
operating activities 1,409 3,663 6,940
(b) Reconciliation of net cash flow to movement in net funds/(debt)
30 30 31 March
September September 1998
1998 1997 #'000
#'000 #'000
Increase in cash 1,222 1,239 2,128
Decrease in cash deposit - (9) (9)
Cash outflow from decrease
in debt and lease finance 408 233 551
Decrease in net debt from
cash flows 1,630 1463 2,670
Exchange movement - - 29
Decrease in net debt 1,630 1,463 2,699
Net debt brought forward (1,027) (3,726) (3,726)
Net funds/(debt) carried
forward 603 (2,263) (1,027)
This report is being sent to all shareholders and is not being advertised in
newspapers. Copies may be obtained from The Secretary, Banner Chemicals
PLC, Hampton Court, Tudor Road, Manor Park, Runcorn, Cheshire WA7 1TU.
END
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