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1:48pm, 22 Feb 2013 | FLLYR MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND REPORTS ALL-TIME RECORD PROFIT
Millennium & Copthorne Hotels New Zealand Limited (NZX: MCK) today reported its preliminary results for the year ended 31 December 2012 and announced a profit after tax and non-controlling interests of $46.1 million (2011: $20.6 million) on total revenue of $105.2 million (2011: $99.5 million). The result is the best in the Groups history.
Exceptional contributions from our investment in China through First Sponsor Capital Limited and from our residential property development company CDL Investments New Zealand and one-off gains significantly boosted our profit for 2012, said MCKs Managing Director Mr. B K Chiu.
MCK recorded a profit contribution of $10.1 million from its 34% associate company First Sponsor Capital Limited (FSCL) which had recognised profits on completion of the residential portions of its Cityspring Chengdu development in China. The Group also received $9.3million from its 67% subsidiary CDL Investments New Zealand Limited which also posted an increased profit for 2012.
Reflecting the profit result, the Company will pay a total dividend of 2.4 cents per share fully imputed which comprises an ordinary dividend of 1.2 cents per share and a special dividend of 1.2 cents per share (2011: ordinary dividend of 1.2 cents per share, no special dividend). The dividend will be paid to shareholders on 10 May 2013. The record date will be 3 May 2013.
Looking at the year ahead, Mr. Chiu noted that there was still work to be done and the focus would be on the core hotel operations business.
With the fast-changing hotel environment, we need to adapt and innovate in order to meet new market trends quickly and effectively. The same applies to CDL Investments as we match the pace of our development to meet our customers demands, he said.
Summary of results:
--Profit after tax and non-controlling interests: $46.1 million (2011: $20.6 m) --Profit before tax and non-controlling interests: $59.6 million ((2011: $33.5 m) --Total group revenue: $105.2 million (2011: $99.5 m) --Shareholders funds excluding non-controlling interests: $443.3. million (2011: $419.1 m) --Total assets: $686.1 million (2011: $660.3 m)
ENDS Issued by Millennium & Copthorne Hotels New Zealand Limited
B K Chiu Managing Director (09) 353 5058
MCK - FY2012 NZX Appendix 1.pdf
MCK - FY2012 Audited Financial Statements.pdf
MC - FY2012 Chairman's Review.pdf
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1:32pm, 22 Feb 2013 | FLLYR CDL INVESTMENTS NEW ZEALANDS 2012 PROFITS INCREASE BY 146%
Property development company CDL Investments New Zealand Limited (NZX: CDI) today reported its results for the year ended 31 December 2012.
CDI increased its profit after tax by 145.6% to $9.3 million (2011: $3.8 million) Revenue increased by 131.1% to $27.0 million (2011: $11.7 million) over the previous year. The Company said that the result was its best in the past five years.
We are pleased to have delivered a very positive result which reflects careful management, a high-quality product and pricing that is attractive to the market, said Managing Director Mr. B K Chiu.
CDIs land portfolio was independently valued at the end of 2012 at $157.9 million at 31 December 2012, down from $162.7 million in 2011. The decrease reflected increased sales of land and the fact that CDI did not make any new acquisitions in 2012.
Reflecting the increased profit, CDI increased its ordinary dividend to 1.7 cents per share fully imputed (2011: 1.4 cents per share fully imputed) and payable on 10 May 2013. The Record date would be 26 April 2013. The Dividend Reinvestment Plan would apply to this dividend.
Mr. Chiu also said that CDI was looking to better its 2012 profits in 2013.
To do that, we need to maintain our current sales tempo and that means making sure we have the right sections for sale in the right places. We have accelerated development in areas where we are seeing demand and demand is strongest in Auckland, Hamilton and Canterbury. That is where we will direct our focus in 2013, he said.
Summary of results:
--Profit after tax: $9.3 million (2011: $3.8 million) --Profit before tax: $12.9 million (2011: $5.4 million) --Total group revenue: $27.0 million (2011: $11.7 million) --Shareholders funds: $106.5 million (2011: $98.0 million) --Total assets: $108.0 million (2011: $99.2 million) --Net tangible asset value (at book value): 39.6 cents per share (2011:37.6cps) --Earnings per share: 3.50 cents per share (2011:1.47cps)
Issued by CDL Investments New Zealand Limited
Enquiries to: B K Chiu Managing Director (09) 353 5058
Opus International Consultants (Opus) had, in many respects, a very good year in 2012, with revenue up, some important major project wins and strong progress on numerous improvement and business development initiatives.
Growth in Operating Revenue was pleasing, up by 3.6% to $407.5m, but the challenging conditions in some markets were reflected in a 2.4% reduction in EBIT to $30.1m, said Chairman Kerry McDonald. NPAT was $23.4m, down 4.6% but after removing the effect of the prior year R&D tax credit, NPAT was up 1%.
While the on-going, serious fiscal and other difficulties in our main market economies are of concern, said Mr McDonald, the Group is now achieving real momentum and progress in its comprehensive and fundamental improvement processes.
The NZ business continued to perform strongly and achieved EBIT of $30m, a 7.9% increase on 2011. Our strong presence in Christchurch was a contributing factor and we expect further growth as more projects come to market, said Chief Executive, Dr David Prentice. Early successes as part of the Christchurch Central Recovery Plan include the major anchor project to lead the consortium to deliver the design and development of the Avon River Precinct.
The operations in Canada and the UK both reported a substantial improvement. While the UK recorded an EBIT loss of $0.6m, this was a 49% improvement on 2011, and the Canadian business improved its EBIT result by 28% to $1.3m.
The UK team grew by over 120 staff in 2012 following the award of a long-term asset management contract with the Hertfordshire County Council. This was a major win - one of the largest in our history, achieved in the face of continued economic uncertainty and intense competition in the Eurozone markets.
In Australia, Operating Revenue increased 21% on the previous year to $78.5m following a series of growth initiatives. These included the successful integration of the new acquisition, Opus Rail. However, the EBIT loss of $0.9m reflects a number of one-off costs and the sharp decline of the Australian non-resource market.
While business conditions continue to be challenging, they also bring new opportunities, said Dr Prentice. And we continue to strongly focus on delivering business improvements to increase efficiency, productivity and profitability.
Mr McDonald announced a fully imputed Final Dividend of 3.9 cents per share and a special dividend of 1 cent per share to utilise some imputation credits at 30 cents in the dollar before the change in the rate. This brings the total Dividend for the year to 8.9 cents per share.
ENDS For further information please contact: Dr David Prentice Managing Director Tel: 04 471 7022
TRANSPACIFIC INDUSTRIES GROUP LTD FY13 HALF YEAR RESULTS PROFIT AFTER TAX INCREASES, DEBT REDUCTION CONTINUES
Transpacific Industries Group Ltd (ASX:TPI) today announced a statutory profit after tax attributable to ordinary equity holders of $32.3 million for the six months ended 31 December 2012. This represents an increase of 314% over the previous corresponding period.
Included in these results are certain items which in the Directors view should be excluded in order to provide a result which is more closely aligned with the ongoing operations. These adjustments have been reviewed by the auditors. Excluding the impact of these items, underlying profit after income tax attributable to ordinary equity holders was $35.8 million, an increase of 42% over the previous corresponding period.
Highlights of the underlying results compared to the previous corresponding period: Group revenue up 3.8% to $1.16 billion Group underlying EBITDA down 3.6% to $211.0 million; underlying EBIT down 7.7% to $120.1 million Waste Management businesses increased revenue by 0.9%; however EBITDA was down 7.8% Commercial Vehicles division increased revenue by 16.6% and EBITDA by 71% Net finance costs down $20.8 million or 25% Earnings per share increased 1.6% to 2.3 cents Operating cash flow increased 21% to $120 million
Gross debt has been reduced by $61 million since 30 June 2012.
The Company has progressed its divestment program having sold two businesses and two surplus properties in the half year for aggregate cash proceeds of $10 million. Subsequent to 31 December 2012, the Company has exchanged unconditional sales contracts for the sale of the Australian and New Zealand Metals manufacturing businesses and the sale of several surplus properties totalling $15 million.
Debt repayment and strengthening of the balance sheet remain key priorities of the Company. No interim dividend will be paid.
Sustainable cost reductions
A number of actions, which are targeted at sustainable cost reductions, are being implemented across the Company, including: A complete review of the organisational structure has been completed leading to the retrenchment of circa 200 employees, saving $15 million per annum, with $3 million of these savings expected to be realised in the second half (before approximately $7 million in restructuring charges) Obtaining improved pricing and trading terms from a number of major suppliers via our new procurement initiatives The roll-out of biometric time and attendance and fleet management systems to boost productivity
These actions will result in total cost savings of $10 million in the second half and $15 million for the full year.
Transpacifics Australian Waste Management businesses experienced varied trading conditions during the half year. While demand continued from customers in the resources and oil & gas markets, trading activity from traditional manufacturing and industrial markets were lower.
The results were also adversely affected by the combined impact of the introduction of the carbon tax and further increases in landfill levies. This has been exacerbated by the large landfill levy differential between NSW and Queensland. Australian landfill volumes were down 24% on the previous corresponding period.
In New Zealand, while activity has increased on the rebuild of Christchurch, overall trading conditions have been difficult, particularly in the industrial markets. Weaker commodity prices have also impacted the results.
The Commercial Vehicles division increased both revenue and earnings on increased demand for heavy duty vehicles in Australia and a modest increase in market share.
Kevin Campbell, Chief Executive Officer of Transpacific, said: The reduction in debt levels, the better than expected interest cost savings and the solid operating cash flows reflect our commitment to further improving the balance sheet of the Company.
The operational performance of our Waste Management businesses is disappointing and we need to improve our performance markedly. We are taking concrete actions to improve efficiency, lower operating costs, sell or close unprofitable or uneconomic businesses, and generate organic growth. The organisational restructure is just one example of initiatives that will make us more effective and efficient.
In Australia, where our Cleanaway landfill businesses have been significantly impacted by the variation in landfill levies between New South Wales and Queensland, we continue to make representations to the governments of both states to resolve this untenable situation as soon as possible.
We expect market conditions in the second half to remain similar to those experienced in the first half.
Mr Campbell concluded by saying: We remain focused on maintaining our position as the premium waste solutions provider in the region and improving shareholder value.
The Company will be holding a teleconference briefing for shareholders and analysts on the results at 10.30am Sydney time (AEDST) today.
Presenters: CEO Mr Kevin Campbell CFO Mr Stewart Cummins
9:44am, 22 Feb 2013 | HALFYR This report has been prepared in a manner which complies with New Zealand International Financial Reporting Standards and gives a true and fair view of the matters to which the report relates and is based on unaudited financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
Current Full year NZ$000; Up/Down %; Previous Corresponding Full year NZ$000
Trading revenue: 443,346; Up 3.9%; 426,862
Total Operating Revenue: 443,346; Up 3.9%; 426,862
OPERATING SURPLUS BEFORE TAXATION: 93,657; Up 6.3%; 88,082
Less taxation on operating profit: 26,298; Up 3.6%; 25,380
NET SURPLUS: 67,359; Up 7.4%; 62,702
Earnings per share: 17.53 cps; 16.08 cps
SKY has reported $67.4 million in after- tax earnings, a 7.4% increase on the previous period. Revenues are up 3.9% to $443.3 million and earnings before interest, tax and depreciation (EBITDA) increased by 4.2% to $177.2 million.
This improved financial position is primarily due to the continued success of the MY SKY HDi decoders and an increase in average revenue per subscriber (ARPU). The increase in ARPU is mainly the result of SKY customers upgrading to new services such as MY SKY HD or to premium channels such as SOHO.
Advertising revenue was down 9.5% for the six month period ending 31 December 2012 compared to the same period ending 31 December 2011. This is due to advertising sales being unusually high in the prior period attributable to Rugby World Cup advertising which was not repeated in the current year.
Installation revenue has decreased by $3.1 million from the previous period primarily due to promotions including free installation to new subscribers.
MY SKY subscribers now represent 51.2% of SKYs satellite subscriber base compared to 40.1% in the previous period. At 31 December 2012, SKY had 423,973 MY SKY subscribers compared to 331,041 in December 2011, a significant increase of 28.1%. Subscribers continue to find great value in the MY SKY product which is demonstrated by strong sales and increasing penetration despite the current economic environment.
Gross churn for the period ending 31 December 2012 was 14.6% up slightly from 14.2% from the previous period. MY SKY HDi continues to deliver churn benefits. For the rolling 12 months to 31 December 2012, the gross churn for MY SKY HDi was 10.9% compared to the churn rate of 18.1% for subscribers on the standard digital decoder during this period. This compares to gross churn for MYSKY of 10.4% and a churn rate for subscribers on the standard digital decoders of 16.3% in the comparative period.
Taking a closer look at SKYs financial results, you will note a 7.0% increase in DBS (satellite) subscription revenues compared to the comparative period. This can be attributed largely to a 5.5% increase in ARPU to $75.78 from $71.81.
SKYs operating costs (excluding depreciation) for the six months to 31 December 2012 increased by $9.4 million, or 3.7%. Programming costs which comprise both the costs of purchasing programme rights and also programme operating costs increased by $15.1 million (11.1%). This can be mainly attributed to the cost of the Summer Olympics. This was compensated by a decline in sales and marketing costs of $7.1 million. Sales and marketing costs were unusually high in the previous comparative period because of the Rugby World Cup and the duration of this marketing campaign. Sales and marketing costs for the six- month period January 2012 to June 2012 were $15.8 million compared with $16.5 million in the current period.
SKY decreased its capital expenditure during the six months to $42.8 million from $69.6 million in the comparative period, a decrease of $26.8 million. This is mainly due to a combined decrease in decoder costs and installation costs of $20.6 million.
The Board of Directors has considered the performance of the business over the last six months and its prospects for the full year and announced on 22 February 2013 that it will pay an increased fully imputed dividend of 12 cents per share (prior interim dividend 11 cents) with the record date being 8 March 2013. A supplementary dividend of 2.1176 cents per share will also be paid to non-resident shareholders
SKT - Amended Presentation 2013.pdf
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Decline in publishing offset by solid performances in radio and outdoor Net debt reduced by $180m Net Profit After Tax before exceptional items of $54m in line with guidance Weak markets offset publishing improvements. Cost initiatives delivered $25m of savings in 2012 with another $25m reduction expected in 2013 Australian Radio Network outperforms with market share up 7% Adshel EBITDA up 29% with strong gains in market share GrabOne doubles revenue, increases EBITDA by 7 times and leads market with 75% share Non-cash impairment drives post exceptional loss of $456m
SYDNEY, 21 February 2013 APN News & Media [ASX, NZX: APN] today released its results for the twelve months ending 31 December 2012. Revenue was down 13% to $929m and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) was down 25% to $156m. Net Profit After Tax (NPAT) before exceptional items was $54m in line with guidance. The revenue decline comes from deconsolidation of APN Outdoor following the formation of the joint venture with Quadrant Private Equity. Revenue from continuing operations was up 2% to $857m and EBITDA from continuing operations was down 14%. As advised in the Companys trading update in December 2012, NPAT was diluted by $8m by the joint venture. APN today announced a non-cash impairment charge of $151m, associated with APNs publishing assets in Australia and New Zealand. This impairment is in addition to the $485m announced in August 2012. Taking these factors into account, the Company reported a Net Loss After Tax of $456m. APN FINANCIAL RESULT 2012 AUD million 2012 2011 Revenue 928.6 1,072.4 EBITDA* 156.0 208.9 EBIT* 122.5 171.4 Net profit after tax pre-exceptionals 54.4 78.2 Exceptional items (including impairment) (510.2) (123.3) Statutory net loss after tax (455.8) (45.1) *Before exceptional items based on segment reporting The Company reduced its debt by $180m during 2012. This was achieved through asset sales, the formation of the APN Outdoor joint venture and a focus on cash management. Reducing APNs debt levels is an ongoing objective. APN will reduce debt by a further $40-$50m in 2013. This will be delivered by organic earnings including the cost reduction program in publishing, as well as small asset and property sales. The Board has decided not to pay a final dividend for 2012. APN Chairman, Peter Cosgrove said: The structural changes to media together with the weak advertising markets have impacted the results. Work has been done to reposition the business and we are seeing encouraging improvements. We have also been disciplined in reducing costs while investing in growth where appropriate. Australian Radio Network, Adshel and GrabOne all delivered good performances in 2012, with strong increases in revenue, earnings and market share. These results have been achieved in a difficult environment. Our publishing divisions are pushing through extensive change agendas which have been well received by our audiences and are gaining traction with advertisers. Cost reduction programs delivered $25m in savings in 2012 with another $25m reduction expected this year. APN SEGMENT RESULT 2012 AUD million (YoY growth %) Revenue EBITDA 2012 Local currency As reported 2012 Local currency As reported Australian Regional Media 248.8 (10%) (10%) 38.7 (30%) (30%) New Zealand Media 287.4 (7%) (5%) 47.8 (24%) (23%) Australian Radio Network 140.0 5% 5% 50.8 7% 7% The Radio Network (NZ) 86.7 (2%) (0%) 15.1 (12%) (11%) Outdoor group 110.5 (58%) (58%) 19.6 (57%) (57%) Digital group 55.3 367% 374% (0.8) 82% 82% Corporate - - - (15.2) (7%) (7%) Total 928.6 (14%) (13%) 156.0 (26%) (25%) * Outdoor group consists of a 48% interest in APN Outdoor and 50% interest in Adshel and Hong Kong Outdoor. ** 2012 result has been impacted by the formation of the APN Outdoor Joint Venture and the brandsExclusive acquisition. Further detail is provided in APNs 2012 results presentation available on http://www.apn.com.au.
Publishing Australian Regional Media (ARM) advertising revenue was substantially impacted by the slowdown in the mining sector in Queensland and the decline of federal and state government advertising. ARM reduced its cost base and delivered a range of product initiatives, however the overall result was down. During the year, ARM overhauled its management structure, transformed the approach of its editorial and sales teams and relaunched its network of 30 news websites. The digital first sites in Coffs Harbour and Tweed Heads delivered an EBITDA improvement of $2m on a lower revenue base. ARM had a solid start to 2013 with revenue run rates stabilising. However, Cyclone Oswald and the floods in January have caused significant disruption across much of the region. The immediate impact on ARMs operations has been less significant than the floods of 2011. However, the full financial impact is still being assessed. New Zealand Media (NZM) was also affected by the weak markets. Advertising revenue declined 8% mainly in display and employment advertising. NZM continued to deliver substantial cost savings during the year. NZM has successfully delivered its rejuvenation program. The relaunch of the weekday New Zealand Herald as compact, as well as the relaunch of regional titles, have been positively received by readers and advertisers as has the new multimedia sales approach. Further product rejuvenation will take place in 2013, which started with the relaunch of the Herald on Sunday earlier this month. In relation to 2013, NZM has a major cost reduction program underway and is progressing with the sale of its publishing businesses in Christchurch, Oamaru and Wellington. Radio Australian Radio Network (ARN) had a very successful year increasing market share by 7%. While the Australian radio market was down 1%, ARN revenue was up 5% to $140m and EBITDA up 7% to $51m. As at January 2013, ARN has exceeded market revenue growth for 19 consecutive months. In 2012, ARN achieved the highest ratings for its target audience, aged 25-54, in five years. In 2013 to date, ARN has maintained its strong revenue growth. Mix has just launched a new breakfast show in Sydney and new drive shows in Sydney and Melbourne. ARN and The Radio Network (TRN) will launch leading digital platform iHeartRadio in Q2. In New Zealand the radio market was flat. TRNs revenue was $87m, down 2% and EBITDA was $15m, down 12%. The results reflect, in part, closing the Easy Mix network, investment in digital content and capabilities as well as marketing. Newstalk ZB remains #1 station nationally and Coast moved to #1 music station nationally. New CEO Jane Hastings started in September and is driving a program of change to rebuild TRN. A restructure of the management team and sales team is already complete. 2013 has had a strong start to the year with revenue and bookings more than 10% ahead of this time last year. Content, sales strategy and iHeartRadio are all high priorities for the year ahead. Outdoor In Australia, the outdoor market was up 2% while the New Zealand market was down 19% accentuated by strong Rugby World Cup comparisons for billboards in particular. Adshel delivered an outstanding performance with revenue of $143m, up 17% and EBITDA of $35m, up 29%. It also made strong gains in market share. Adshels success was driven by a number of strategic contract wins in 2011 as well as improved sales strategy and market proposition. Adshel delivered a number of innovative interactive campaigns for clients including Qantas, Expedia and Emirates. Revenue and bookings for 2013 to date are ahead of last year and Adshel relaunched its brand in February 2013. APN Outdoor was established as a joint venture with the sale of 50% to Quadrant Private Equity in May. Full year revenue was $208m, down 3% and EBITDA was $30m, down 19%. During 2012, APN Outdoor strengthened its senior team and created a new digital team. It continued its digital rollout, establishing Brisbanes first premium large format digital billboard and receiving approval for another two. APN Outdoor renewed several exclusive transit advertising contracts and secured advertising rights to Virgin Australias Brisbane terminal, APN Outdoors fifth airport contract. In January 2013, APN Outdoors revenue was up year on year, but the market remains short. Revenue for Hong Kong Outdoor was A$39m, up 17% and EBITDA was A$4m, down 16%. Hong Kong Outdoors billboard business performed well. In transit, investment to deliver new offerings introducing wifi and multimedia on buses increased revenue but decreased EBITDA. Digital APN strengthened its digital ventures portfolio in 2012, increasing equity in GrabOne from 75% to 100% and acquiring 82% of brandsExclusive in June. GrabOne achieved exceptional results with revenue of $14.8m, up 93% and EBITDA of $4.4m, up 7 times. GrabOne continues to lead the market with approximately 75% market share. Membership is now more than 1m, a 40% increase on last year. GrabOne continues to trade strongly in 2013 and is expected to continue its EBITDA trajectory this year. brandsExclusive has been investing for growth. Since acquisition, brandsExclusive has increased its membership by 500,000 to 2.4m and launched in New Zealand. Full year revenue was $57.0m, up 13% and EBITDA was a $4.2m loss which includes $3.0m investment in growth initiatives. There has been a focus on increasing the conversion of membership to sales and stronger revenue growth is expected in 2013 as a result. CC Media produced solid results with revenue of $5.2m, up 7% and EBITDA of $1.5m, up 52%. Outlook Trading has been positive in the early part of 2013. Revenue declines have moderated in publishing, and the identified cost reduction programme is being implemented. The impact of the recent Queensland floods is still being assessed but is expected to be lower than in 2011. Revenue in all other divisions is ahead of prior year.
Investor Inquiries: Jeff Howard, APN CFO, 02 9333 4915 Media Inquiries: Peter Brookes, Citadel, 02 9290 3033
APN - Full Year Results Presentation 2013.pdf
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8:41am, 25 Feb 2013 | INTERIM STOCK EXCHANGE ANNOUNCEMENT 25 February 2013
Chorus announces interim FY13 result
$84m NPAT and 10cps dividend for six months Updated CAPEX guidance for FY13 and UFB communal CAPEX
Chorus Limited today reported its financial result for the six months to 31 December 2012.
The fixed line communications infrastructure company reported net earnings before interest, tax, depreciation and amortisation (EBITDA) of $331 million for the period, and a net profit of $84 million after tax (NPAT).
The companys sound underlying earnings result is attributed to good growth in fixed line and broadband connections. Chorus reports growth of 10,000 fixed line connections to 1,793,000, and 36,000 new broadband connections to total 1,076,000. There was also 50% growth in fibre connections to 15,000.
Chorus Chief Executive, Mark Ratcliffe said that this demonstrated New Zealanders demand for higher performing broadband services to meet their developing online needs.
While Chorus earnings result is pleasing, Ratcliffe also said that the company faces challenging headwinds in its efforts to build New Zealands fibre future.
While we have made progress and reduced deployment costs for about 90% of our ultra fast broadband build areas, we did not anticipate the extreme costs in the remaining 10% of areas. This is specifically because of the significant variability in regional compliance requirements and civil work that is driving up the cost per premises passed, he said.
As a consequence of higher than expected costs in its Ultra-Fast Broadband (UFB) programme, Chorus updated its capital expenditure guidance:
FY13 Gross CAPEX increased from $560-$610 million to $640-$690 million Total UFB communal CAPEX increased from $1.4-$1.6 billion to $1.7-1.9 billion FY13 average cost per premises passed increased from $2,500-$2,700 to $2,900-$3,200
Were on track to deliver fibre past 149,000 premises by 30 June 2013 and continue to introduce a steady stream of initiatives to gain operational and cost efficiencies across the UFB and RBI programmes. We are also rigorously pursuing alternative deployment approaches in particular areas to address the high cost of civil work, Ratcliffe said. Fibre related investment, principally for UFB and the Rural Broadband Initiative (RBI), accounted for $290 million of capital expenditure for the six months, which is 85% of Chorus gross capital expenditure for the six months to 31 December.
The company also faced on-going challenges with the current regulatory environment. Commenting on the recent Government announcement to bring forward the regulatory framework review, Ratcliffe said; This is a positive step for the industry and for New Zealand, though there is a rigorous process to go through before we know the final outcomes.
Were seeking a clearer, more aligned regulatory environment that delivers the right incentives to encourage the transition to our fibre network, and help New Zealand realise the productivity and economic benefits UFB and RBI can deliver, Ratcliffe said.
The Chorus Board approved a fully imputed interim dividend of 10.0 cents per share to be paid on 12 April 2013.
Following the 8 February announcement from the Minister of Communications and Information Technology, Chorus considers that it has sufficient near term certainty to announce its FY14 dividend guidance of a fully imputed dividend of 25.5 cents per share (subject to there being no material adverse change in circumstances, operating outlook or Chorus guidance for expected total UFB communal build costs of $1.7 to $1.9 billion).
The Board currently expects to announce longer term dividend guidance when the outcomes from the Governments reviews have been announced. At that stage, Chorus will also have an updated view of how its capital expenditure programmes are tracking.
Results summary for the six months ending 31 December 2012:
Chorus achieved EBITDA of $331 million. Revenue has increased 2% to $525 million. Chorus will pay a fully imputed dividend of 10.0 cents per share. Gross capital expenditure was $341 million with 85%, or $290 million, spent on fibre related projects. Fixed line connections increased by 10,000 to total 1,793,000. Continued growth in broadband with 36,000 new connections to total 1,076,000. Fibre connections increase of 50% to total 15,000.
Chorus Chief Executive, Mark Ratcliffe, and Chief Financial Officer, Andrew Carroll, will discuss the interim results at a briefing in Wellington from 10.00am (NZ time). The webcast will be available at http://www.chorus.co.nz/webcast.
-Underlying profit for FY12 up 88% on FY11, 56% above IPO forecast -Net profit after tax up 243% on FY11, 12% above IPO forecast -Net operating cash flow up 52% on FY11, 27% above IPO forecast -Total sales of occupation rights up 43% on FY11 -160 units delivered, 31% increase on FY11 -2012 final dividend announced
Retirement village and aged care operator Summerset Group today announced an 88% increase in its underlying profit.
The $15.2 million result was 56% above figures forecast at the companys 2011 IPO.
The Wellington based company exceeded both prior year and forecast figures, more than tripling its net profit after tax result on the previous year.
Net profit after tax (NPAT) for FY12 was $14.8 million 243% above FY11 and 12% ahead of IPO forecast.
Summerset has also announced its first dividend for shareholders of 2.5 cents per share. This represents a total dividend of $5.4 million, an increase of 25% on the IPO forecast.
The company has established a dividend reinvestment plan to further its growth path. Its major shareholder QPE Funds Management has indicated it will support the plan.
Managing director and CEO Norah Barlow said 2012 had been a year of significant growth for Summerset.
Our financial results reflect another year of hard work and commitment to driving this company forward.
We purchased two new sites in Auckland, opened our village in Dunedin and began development in Katikati our first Bay of Plenty village. It has been another good year for us and I am pleased the financial results reflect this.
The company is working through the planning process for its Karaka and Hobsonville villages. The company is continuing to examine new sites across the country.
The new Auckland sites lift the Summersets land bank to 1,400 retirement units.
We are also increasing our focus on care provision and will be looking to build substantial care facilities of up to 80 beds at both of our new Auckland sites, Mrs Barlow said.
There is demand for care in retirement villages, especially care provision into care apartments. We are working to meet that demand. This is not only through focusing on building care beds but also looking at innovative ways to meet our residents care needs care apartments are one way to do this.
The company saw its second year of record sales with a 43% increase in the sales of occupation rights for 2012. Gross sales for the year were more than $100 million - this is the first time Summerset has achieved this figure.
Mrs Barlow said demand was strong across all 15 villages. Summerset was working to meet that demand by supplying new units quickly.
Our results were driven by very good sales and a continued strengthening of the companys internal development capabilities, she said.
Summerset completed 160 units built across four sites, up 31% on the previous year and ahead of its 2012 target build rate.
In November 2012, The company upgraded its longer term build rate to 300 retirement units per annum by the end of the 2015 financial year. Guidance given during IPO was for 150 units per annum by 2016.
Our strong sales of occupation rights, range of quality new sites, and increased efficiency through the in-house management of the development and construction process has increased the rate at which we can expand.
We have the banking facilities to enable this and are not seeking additional funds from our shareholders.
The build rate of 300 retirement units per annum represents 18% annual growth on Summersets current portfolio of 1,646 retirement units.
The value of the companys total assets has grown 14% to $702 million from $617 million in 2011.
Summerset was also named Best Retirement Village Operator for the third consecutive year at the Australasian over 50s Housing Awards.
Summerset chairman Rob Campbell said Summerset was continuing to grow and perform.
The company has been performing well and has been making good progress in all key areas.
This is the Wellington based companys second set of results since it listed on the New Zealand Stock Exchange in November 2011. Summerset became part of the NZX50 in December 2012.
Established in 1997 Summerset owns 15 retirement villages nationwide offering both retirement village living and aged care.
9:19am, 25 Feb 2013 | HALFYR NZX and Media Release
HEARTLAND POSTS $10.7M HALF YEAR PROFIT
25 February 2013
Achievements for half year
Bank registration achieved Dividend policy set, special dividend paid Interim dividend announced Investment grade credit rating reaffirmed Milestones going forward Acceptable and sustainable earnings
FINANCIAL PERFORMANCE (1)
Heartland New Zealand Limited (Heartland) (NZX : HNZ) today announced a net profit after tax (NPAT) of $10.7m for the half year ended 31 December 2012 (the Current Reporting Period). This is up $0.9m from the $9.8m NPAT (which included a one-off deferred tax benefit of $6.2m) for the previous corresponding half year ended 31 December 2011 (the Previous Corresponding Reporting Period).
Net profit before tax was $14.9m for the Current Reporting Period. This is up $9.3m from the $5.6m net profit before tax for the Previous Corresponding Reporting Period.
Earnings Per Share was $0.03 calculated on weighted average shares.
BALANCE SHEET (2) Heartlands total assets were stable during the Current Reporting Period, growing by $2.0m.
Net finance receivables reduced from $2.1bn at 30 June 2012 to $2.0bn at 31 December 2012, a reduction of $33.5m, as asset growth overall in the core business (Rural, Business and Consumer channels) was offset by reductions in Non-Core Property and Retail (where the mortgage book declined).
Cash and cash equivalents increased from $89.7m at 30 June 2012 to $125.4m at 31 December 2012 as higher cash holdings are held to support ongoing liquidity targets.
Borrowings remained $1.9bn at 30 June 2012 and 31 December 2012, due to the small movement in total assets.
Net Tangible Assets (NTA) increased from $343.7m to $350.0m during the Current Reporting Period - on a per share basis NTA was $0.90 at 31 December 2012 compared to $0.88 at 30 June 2012 and $0.85 at 31 December 2011.
Net Operating Income Net Operating Income (NOI) was $51.8m for the Current Reporting Period, up from $44.9m for the Previous Corresponding Reporting Period. The increase in NOI was mostly attributable to:
The acquisition of PGG Wrightson Finance Limited (PWF) on 31 August 2011; and
Lower cost of funds.
Costs Operating costs were $31.9m for the Current Reporting Period, a decrease of $3.7m from the Previous Corresponding Reporting Period. This is due to cost reductions made in the last half of the 2012 financial year having an impact in the current year. The operating expense ratio was 62% for the Current Reporting Period, compared to 79% for the Previous Corresponding Reporting Period.
Impairments and revaluations of investment properties Impaired asset expense was $5.3m for the Current Reporting Period, up from $3.8m for the Previous Corresponding Reporting Period. The higher impairment expense came from the non-core property book given that the RECL Agreement was regarded as fully utilised as at 30 June 2012, meaning that Heartland now has to bear any further losses in the legacy noncore property book.
The non-core property book had an impairment expense of $4.0m (or 76% of the total impaired asset expense) during the Current Reporting Period compared to $1.6m in the Previous Corresponding Reporting Period. Impairments remain low in the core areas of rural, business and retail consumer lending.
Investment properties held on balance sheet reduced by $0.2m to $55.3m during the Current Reporting Period. There were no revaluations of these properties during this six month period.
Net impaired, restructured and past due loans over 90 days were $80.2m (or 3.9% of net finance receivables - Net Impairment Ratio) as at 31 December 2012 down from $90.5m (or 4.4% of net finance receivables) as at 30 June 2012. The level of impaired, restructured and past due loans are primarily due to the legacy non-core property book and are expected to continue to reduce as a percentage of total assets as lending in the core business grows and the non-core property book runs down.
The Net Impairment Ratio on the core business (excluding the non-core property book) was 1.7% as at 31 December 2012, compared to 1.8% as at 30 June 2012.
Funding and liquidity The liquidity of Heartland Bank Limited (Heartland Bank) (Heartlands principal operating subsidiary) was $482.4m as at 31 December 2012, which consisted of cash, liquid assets and unutilised available funding lines. The liquidity mix continues to evolve with increased holdings of cash and liquid assets replacing unutilised funding lines.
Investment grade rating reaffirmed On 17 December 2012 Standard & Poors affirmed Heartland Banks investment grade credit rating of BBB- stable after bank registration approval by the Reserve Bank of New Zealand.
BUSINESS PERFORMANCE HEARTLANDS CORE BUSINESS DIVISIONS
Business The business receivables book contracted by $9.7m to $530.5m during the Current Reporting Period. NOI was $12.6m, an increase of $2.7m from the Previous Corresponding Reporting Period. The current lending pipeline is solid, however, higher levels of repayments in a low credit growth market causes monthly variability. The business receivables book grew in January 2013.
Rural The rural receivables book grew from $478.6m to $480.6m during the Current Reporting Period. NOI was $11.5m, an increase of $3.6m from the Previous Corresponding Reporting Period due to a full six months earnings from the PWF book. The minimal book growth was due to low seasonal demand in livestock trading and a low credit growth environment. Growth is expected in the second half of the 2013 financial year through anticipated higher turnover in livestock resulting in undrawn client limits being drawn.
Retail and Consumer The retail & consumer receivables book contracted by $9.0m to $945.8m during the Current Reporting Period. NOI was $24.1m, an increase of $2.3m from the Previous Corresponding Reporting Period. Strong motor vehicle receivables growth of $39.0m was offset by the residential mortgage book which was impacted by a competitive market and reduced by $48.0m during the Current Reporting Period.
Property Total non-core property assets reduced by 11% during the Current Reporting Period - from $160.2m at 30 June 2012 to $143.2m at 31 December 2012. These non-core property assets are made up of net receivables of $87.9m and investment properties of $55.3m. RECL manages the ex-MARAC non-core property assets.
A review of the strategy of managing the property book is being undertaken for the purpose of testing the current exit strategy (being a managed exit over a five year period beginning in January 2011) against alternatives with respect to value maximisation. The outcome of this review will be determined by the end of the 2013 financial year.
BANK REGISTRATION AND CORPORATISATION OF SUBSIDIARY Heartland Bank became a registered bank on 17 December 2012, and converted to a company on 31 January 2013. The corporatisation process included a change in Heartland Banks name from its previous name Heartland Building Society to its current name Heartland Bank Limited.
INTERIM DIVIDEND The directors of Heartland have resolved to pay an interim dividend of 2.0 cents per share on 5 April 2013 to shareholders on the companys register as at 5.00pm on 20 March 2013. This dividend will be fully imputed.
BOARD COMPOSITION A review of board composition is being undertaken, at both the parent company (i.e. Heartland New Zealand Limited) board level, and the bank subsidiary (i.e. Heartland Bank Limited) level. Objectives include increasing the representation of broader shareholder interests on the parent company board, increasing diversity and the depth of professional bank experience on the bank board, and moving to the position where at least 50% of the bank board is fully independent from the parent company board. Progress to date has included the recent appointment of Richard Wilks to the Heartland Bank Limited board (for a brief profile of Richard Wilks see the NZX release of 1 February 2013). In addition, the Heartland New Zealand Limited board has now resolved to invite Greg Tomlinson to join the parent company board. Greg Tomlinson is from Marlborough, and maintains private investments in the wine, healthcare, pharmaceutical and finance industries, including a substantial investment in Heartland.
LOOKING FORWARD Heartland is focused on generating acceptable and sustainable earnings from the 2014 financial year onwards. Strategies are being formulated to ensure that in the 2014 financial year there is increasing NOI through both asset growth and cost of funds reduction, reduced costs throughout the business, reducing non-core property impairments and more efficient use of capital.
(1) This announcement is based on the 31 December 2012 unaudited summary consolidated financial statements of Heartland New Zealand Limited. For more detailed analysis and explanation please refer to the attached interim financial statements.
(2) Heartland Trust and CBS Canterbury Charitable Trust were deconsolidated on 1 July 2012.
- Ends -
For further information, please contact:
Jeff Greenslade Chief Executive Officer Heartland New Zealand Limited DDI 09 927 9149 M 021 563 593
Simon Owen Chief Financial Officer Heartland New Zealand Limited DDI 09 927 9195 M 027 629 4602
11:39am, 26 Feb 2013 | HALFYR Northland Port Corporation (NZ) Ltd today reported a net surplus of $3.672 million for the 6 month period to 31 December 2012 as compared with $3.196 million for the corresponding period in the previous year, representing an increase of just on 15%. Commenting on the result, Chairman, Sir John Goulter said the improved result was largely due to further growth experienced in export log volumes handled by associate company Northport Ltd. He went on to say that all other areas of the Group had also performed ahead of budget for the period under review.
Overall cargo volumes were up 11.25% to 1.542 million tonnes for the 6 months with log throughput reaching 1.137 million tonnes. The significant increase in cargo volumes has continued to place considerable pressure on existing storage capacity at the port. This has accelerated Northport's plans to pave a further area of 3ha and this project is expected to be completed by the end of the financial year.
Northland Port is currently working with a number of parties that have expressed recent interest in establishing business operations within its industrial sub-division. The Company expects to be in a position to provide positive updates on these prospects later in the year and is continuing to give considerable effort to identifying and capturing further such opportunities.
Construction is expected to commence shortly on a new office building at Marsden Point, part of which will be occupied by the company's small management team. Interest from other prospective tenants has also been received in respect of this building. Commenting on the project, Sir John said that the building's prominent location would significantly enhance the Company's profile in the area, in turn leading to a potential increase in the level of leasehold enquiries for its commercial estate.
With seasonal factors taken into account, it is anticipated that total annual cargo throughput at Northport for all trades will surpass 3.0 million tonnes this year (2011/12 - 2.728m tonnes) which is marginally ahead of that previously signalled. Assuming this projected volume is reached, a further uplift in the overall profitability of the Group can reasonably be expected.
DIVIDEND A fully imputed interim dividend of 4.5 cents per share (2012 - 3.5 cents/share) will be paid on 22 March 2013.
Sir John Goulter KNZM, JP Chairman 26 February 2013
For more information please contact: Graham Wallace Chief Executive (09) 432 7378 (027) 476 1037
8:33am, 26 Feb 2013 | HALFYR DELEGAT'S GROUP LIMITED Results for announcement to the market Reporting Period 6 months to 31 December 2012 Previous Reporting Period 6 months to 31 December 2011
Amount (000s) Percentage change Revenue from ordinary activities $129,108 (+1%) Profit from ordinary activities after tax attributable to shareholders $19,252 (+31%) Net profit attributable to shareholders $19,252 (+31%)
Audit: The financial statements attached to this report have not been audited.
Comments: Refer to the Chairman's Report appended.
Interim Dividend Cents per share Cents per share (imputed) Not Applicable Not Applicable
Net Tangible Assets per share Current Year Previous corresponding year Net Tangible Assets per share $1.94 $1.73
CHAIRMAN'S REPORT Delegat's Group Limited (Delegat's) presents its unaudited operating and financial results for the six months ended 31 December 2012. Performance Highlights o Achieved global case sales of 1.090 million. o Achieved record operating NPAT of $19.2 million. o Generated Cash from Operations of $17.2 million.
I am pleased to be able to report another strong first half performance for the six months ended 31 December 2012. Consistent with the last reported results Directors produce both an operating report (before NZ IFRS adjustments) and a financial report to provide a better understanding of the Group's performance. NZ$ millions Dec 2010 Dec 2009 Operating Performance A record operating NPAT of $19.2 million was generated compared to $17.4 million for the same period the previous year. Operating EBIT of $30.4 million is $2.1 million higher than for the same period in the prior year. Operating expenses (before NZ IFRS adjustments) at $42.4 million are $0.7 million higher compared to last year. 'In-market' case price realisations are being maintained in each of the major markets.
NZ$ millions Notes Dec 2010 Dec Delegat's achieved Sales Revenue of $123.4 million on global case sales of 1.090 million in the six month period. Sales Revenue was up $4.4 million on the same period last year, due to global case sales being 7% higher. This increase was partially offset by adverse foreign exchange rate changes, which has contributed to case price realisation of $113.2, compared with the $116.4 achieved in 2011.
NZ IFRS Fair Value adjustments In accordance with NZ IFRS the Group is required to account for certain of their assets at 'fair value' rather than at historic cost. All movements in these fair values are reflected in and impact the Statement of Financial Performance. The Group records adjustments in respect of three significant items at the half-year reporting date: o Biological Assets (Vines) - This represents the fair value of grapes that are growing on the vines before harvest less the associated growing costs. The net effect is a fair value write-down of $1.4 million; o Harvest Provision Release (Grapes) - This represents the reversal of prior periods' fair value adjustments in respect of biological produce as finished wine is sold in subsequent years. The adjustment provides a write-up of $0.9 million; o Derivative Instruments held to hedge the Group's foreign currency and interest rate exposure. The mark to market movement of these instruments at balance date resulted in a fair value write-up of $0.7 million; In addition the Group makes some minor adjustments in respect of share-based payments. In aggregate, and after deducting taxation, the impact of fair value adjustments in the period to 31 December 2012 amounted to a write-up of $0.1 million.
Reported Accounting Performance Accounting for all fair value adjustments under NZ IFRS the Group's reported unaudited financial performance for the six months ended 31 December 2012 is as follows:
o Net Profit after Tax is $19.3 million; o Earnings before Interest, Tax, Depreciation and Amortisation is $36.5 million; o Operating Cash Flows are $17.2 million; o Net debt increase of $17.0 million to fund capital expenditure for future growth.
Looking forward The Directors continue to see the Global economic headwinds as a challenge but have confidence in the resilience of the Group's business model and its ability to deliver sustainable earnings into the future. The drive to pursue those markets that deliver value and to achieve the forecast volumes and resulting profitability continues. The Group is on target to achieve operating profit in line with consensus of $27.0 million.
Robert Wilton Chairman Delegat's Group Limited
For further information contact: Jim Delegat Managing Director Delegat's Group Limited Tel: (64)9 359 7300
8:30am, 27 Feb 2013 | FLLYR GUINNESS PEAT GROUP plc ("GPG" or "the Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
The Company is in an unusual transitional process and this report reflects that with some unavoidable complexity. In this statement I endeavour to set out the main items which shareholders should consider. The aim is to give shareholders the necessary level of information to judge appropriately the value of their ownership of the Coats business and the value which will be returned to them from assets which have been or will be realised.
The 2012 financial year saw the advancement of the strategy to realise value for shareholders through the orderly realisation of the Group's investment portfolio and the progression of initiatives to transform GPG into the Coats business as a stand-alone, listed entity. As has been reported at various points throughout the year, good progress has been made on asset realisations with the result that GPG's balance sheet has been greatly simplified and cash reserves expanded. The Company's composition of net assets is now comprised of its 100% investment in Coats, cash resources, the GPG pension schemes and a remaining pool of 5 material investment portfolio assets. Further detail on each of these balance sheet categories is provided below.
Divestments from the investment portfolio between 1 January and 31 December 2012 have generated cash proceeds of 314 million with a further 37 million between the year end and 22 February 2013 (a combined total of NZ$689 million). Sales during 2012 included: ClearView Wealth; Green's General Foods; and Gosford Quarry Holdings, together with the completion of the disposal of Turners & Growers. Since the year end, the Group has successfully disposed of Capral and AVJennings. Total net proceeds since 1 January 2011 are 495 million (NZ$971 million) as at 22 February 2013; further details are provided in the Appendix to this Statement. GPG's Parent Group unaudited cash balance as at 22 February 2013 stands at approximately 275 million (NZ$540 million), having increased from 243 million (NZ$477 million) at year end.
The Board continues to review how best to use these cash proceeds to pursue capital management initiatives. Following the 80 million (NZ$157 million) return of capital and 12 million (NZ$24 million) net cash dividend paid in 2011, a 10 million (NZ$20 million) on-market buyback programme was announced on 3 September 2012 and this was extended on 25 October 2012 with a revised upper limit of 70 million (NZ$137 million). As at 22 February 2013, the Company has bought back 34 million (NZ$67 million) of shares and currently intends to continue with this initiative. In particular, as a result of the Company coming out of its close period by publication of this preliminary statement of results, the buyback programme will recommence in Australia. As the asset realisation process progresses, further surplus cash will be returned to shareholders utilising appropriate mechanisms, including making efforts to facilitate exits for those small shareholders who are seeking an efficient route to realisation of their investment. The quantum and timing of future cash distributions will be determined taking into account, in particular, the Group's obligation to support the GPG pension schemes and the appropriate capital structure to be established for Coats. Further capital management initiatives will be outlined to shareholders at or prior to the forthcoming Annual General Meeting of shareholders.
It is the Board's intention that GPG will be re-launched as Coats as the various arrangements for the disposal of assets, return of value to shareholders and establishment of Coats as an independent business are completed. The current target for completion of this transition is the second half of 2013, however both external and internal events may impact on this. The GPG Annual Report, which will be published towards the end of the first quarter of 2013, will reflect progress on this transition.
The transition plan includes the following key initiatives: o Reconstitution of the Board to ensure it has the requisite skills to develop Coats as a stand-alone, listed entity for the long term; o A continued focus on enhancing the business performance and strategic positioning of Coats; o Finalisation of support for the UK pension schemes; o Determination of the optimal capital structure necessary to provide the stand-alone Coats entity with the resources and mix of debt and equity required for it to achieve its strategic objectives and optimise its capital markets positioning; and o Evaluation and implementation of the most efficient method to return the maximum amount of excess cash to GPG shareholders, taking into consideration all of the above factors.
Reported (Consolidated) Financial Results
Shareholders' funds decreased by 168 million (NZ$330 million) to 434 million (NZ$852 million) at 31 December 2012. As a consequence, the net asset backing per share decreased during the year from 37.1p (NZ$0.74) to 27.7p (NZ$0.54).
Movements in shareholders' funds million million
Opening shareholders' funds 602 Shareholders' returns - Share buyback (25) Loss for the year - EC Fine, including related interest (76) - Other profits 73 (3) Movements in unrealised gains reserve - Gains realised in the period (recycled through the income statement) (39) - Net unrealised movements on available-for-sale investments (14) - Deferred tax movement 3 (50) IAS19 adjustments - GPG schemes (17) - Coats (23) (40) Foreign currency movements (primarily amounts re-cycled through the income statement on disposals)
(50) Total million 434 Total NZ$ million 852
Consolidated Income Statement:
The presentation of GPG's income statement has significantly changed in 2012. While GPG remains principally an investment group and the activity of the Board and senior officers is that of managing the public company activity, supervising its investment in Coats and maximising value for shareholders through the asset realisation programme and liability management exercise, the reclassification of all remaining non-Coats fixed asset investments as held-for-sale supports the presentation of the gains and losses on investment sales and other investment activity as discontinued. GPG's net loss attributable to members in the year was 3 million (NZ$6 million) compared to a profit of 1 million (NZ$2 million) in 2011.
The key elements of GPG's result for the year are presented in a non-statutory format below:
Elements of reported result for the year 2012 m 2011 m Continuing activity Coats - Profit after tax before exceptionals 34 51 - EC fine and related interest (76) 1 - Other exceptional items (28) (7) (70) 45 Parent Group - Overheads (21) (34) - Foreign exchange (losses)/gains (2) 3 - Other income 1 1 - Net interest expense (8) (12) (30) (42) Net (loss)/profit from continuing activity (100) 3
Discontinued activities Coats (2) (1) Parent Group subsidiary and associated undertakings and joint ventures 61 (21) Investment activity - Gains realised in the period (recycled from the unrealised gains reserve)
28 - Dividend income 6 12 - Mark-to-market adjustments - (1) - Impairments (3) (10) 42 29 Other income 1 1 Parent Group tax charge (5) (10) Net profit/(loss) from discontinued activities 97 (2)
Net (loss)/profit for the year attributable to GPG shareholders million
1 Total NZ$ million (6) 2
Simplified Balance Sheet:
GPG's financial position on a non-statutory basis is shown in the 31 December 2012 Simplified Balance Sheet below:
2012 2011 m m m m Operating subsidiaries excluding Coats (book value) - 50 Associated undertakings and joint ventures (book value) - 212 Fixed asset investments available for sale - 202 Net held for sale assets 222 66 Current asset investments 9 10 Total investments 231 540 Cash 243 200 GPG assets, excluding Coats 474 740 Capital notes - (214) GPG pension schemes (74) (64) Other sundry Parent Group net liabilities (14) (10) 386 452
Coats Other net assets 481 504 Net debt (226) (153) Employee benefit obligations (207) (201) 48 150 Shareholders' Funds million 434 602 Shareholders' Funds NZ$ million 852 1,181
NAV/share (p) 27.7 37.1 NAV/share (NZ ) 54.4 73.9
Overview of GPG's Key Net Asset Value Components
Cash at bank
Parent Group cash at bank on 31 December 2012 was 243 million (NZ$477 million) (2011: Parent Group net debt 14 million (NZ$27 million)). Disposals of investments during 2012 saw net cash generated from investment activity and realisations totalling 314 million (NZ$616 million). Between 1 January 2013 and 22 February 2013 a further 37 million (NZ$73 million) has been realised, including full realisation of investments in Capral and AVJennings. GPG's (unaudited) cash balance as at 22 February 2013 stands at approximately 275 million (NZ$540 million).
As at 22 February 2013, the total net proceeds including dividend and other cash distributions generated since 1 January 2011 are approximately 495 million (NZ$971 million), with circa 67% of the opening investment portfolio (excluding Coats and cash) at 1 January 2011 now realised. A schedule showing the proceeds from disposals since 1 January 2011 is set out in an appendix.
Investment Portfolio (excluding Coats)
As at 22 February 2013, GPG's investment portfolio including former subsidiary and associated undertakings had a valuation of 216 million (NZ$424 million), representing the mark to market value of its listed investments and the current book value of its non-listed investments. A summary of the major holdings in the current investment portfolio is outlined below:
Investments (excluding Coats) Shareholding Market Value ( m)
* Listed investments at market value translated at exchange rate ruling on 22 February 2013 ** Tandou and non-listed investments, which includes GPG's investment in Tourism Property Investment Group (10.0%) and a freehold site formerly owned by Gosford Quarry Holdings, are shown at book value
The Board continues to pursue a programme to maximise the value of its investment portfolio, measured to take into account both timing and execution and operating risk. Investors will form their own view on the likely realisation value for the remaining investments but the overall rate of conversion of carrying values into cash proceeds has been encouraging to date. In particular, the recent sale of GPG's 48% shareholding in Capral has removed uncertainty in relation to one of GPG's more illiquid historical positions. The Board has completed a further review of carrying values of its investment assets and has determined that net impairments totalling 3 million (NZ$6 million) should be made including the reversal of previous impairments relating to Capral of 10 million (NZ$20 million). These net impairments are reflected in the full year results.
In relation to GPG's remaining investment portfolio, it is not appropriate to discuss publicly the range of initiatives that continue to be implemented in order to maximise and ultimately unlock value. Nevertheless, a number of work in progress items relevant to some of the remaining investments are noteworthy:
o Tower is GPG's most significant remaining investment, wherein we remain the single largest shareholder (33.6%). Tower confirmed on 19 February 2013 that, following the sale of its Health business, it had obtained High Court orders in relation to the proposed return of approximately NZ$120 million of capital to shareholders pursuant to a scheme of arrangement. GPG's share of that return, which is in the form of a pro-rata cancellation of shares, is NZ$40 million ( 21 million). The proposed scheme of arrangement is due to be voted on by members of that company on 21 March 2013. Tower's strategic review continues and the company's stated ambition to become a more focused insurance business has GPG's full support. Another step towards achieving this strategy occurred on 26 February 2013, wherein Tower announced the sale of its Investments business for NZ$79 million. Subject to completion of this transaction, GPG expects that Tower will have the ability to implement additional capital management initiatives over and above the current capital return outlined here.
o Ridley Corporation is expected to complete the sale of its Salt division at the end of February 2013. GPG believes this transaction will more effectively position the company as a focused agri-business within the Australian market and consequently enhance its investor appeal.
o On 15 February 2013, PrimeAg Australia announced that it had agreed to sell approximately 60% of its portfolio of land and water entitlements for some A$125 million in cash. Additionally, and separate from the recent sale, the PrimeAg board has resolved to distribute available excess cash which, based on market expectations, is understood to be in the order of a further A$125 million. However this is subject to confirmation by the company. PrimeAg anticipates an initial distribution, post shareholder approval, in mid April 2013. A subsequent distribution relating to the recent land and water portfolio sale is expected to occur in early August 2013. These anticipated distributions are in addition to the A$0.15 per share distributed during the second half of 2012.
o On 22 February 2013, GPG agreed to sell its entire shareholding in Tandou to a number of unrelated parties. Proceeds from this transaction are expected to total A$15 million.
GPG has significant capital tax losses both in the UK and Australia. To the extent that GPG generates capital gains from the balance of its realisation programme, it is anticipated that the proceeds can be returned to the UK without significant tax leakage.
Coats' overall result for 2012 was a loss attributable to GPG of 72 million (US$113 million) (2011 profit: 44 million, US$71 million). This loss included the impact of the final outcome of the European Commission fine ( 76 million charge) and other exceptional costs after tax of 28 million. Hence, Coats' net profit after tax attributable to GPG, excluding exceptional items, totalled 32 million (2011: 50 million).
Coats' sales of US$1,653 million ( 1,043 million) were 3% below the prior year. The challenges faced by Coats were communicated to shareholders at the half year. However, the full year results do reflect the anticipated recovery in the second half with sales on a like-for-like basis increasing in both the Industrial (2%) and Crafts (8%) businesses. For 2012, sales per working day at constant currencies showed a year-on-year increase of 2% for the Coats Group.
The business achieved an increased level of cash conversion, with free cash flow (excluding the US$175 million European Commission fine payment) increasing from US$18 million ( 11 million) to US$45 million ( 28 million). This was after reorganisation spend of US$21 million ( 13 million) (2011: US$14 million ( 9 million)) and capital spend of 0.7 times (2011: 0.9 times) depreciation.
As previously announced, Coats has now embarked on a further rationalisation of European Crafts and is taking the actions necessary to vacate freehold properties which are not delivering the return on capital to justify their retention. Over the course of this project it is expected that funds generated from the disposal of these properties will cover the costs arising from the accelerated rationalisation.
Prospects for the underlying Coats business for 2013 and beyond are good, with nascent signs of recovering confidence in world markets being a positive indicator for the drivers of demand for Coats.
The book value of Coats in the GPG consolidated balance sheet at 31 December 2012 was 48 million (US$78 million). This represents a decrease of 102 million from the balance reported at the previous year end. The movement during the year included inter alia the charge relating to the final resolution of the European Commission fine ( 76 million), other exceptional costs after tax (primarily reorganisation projects) of 28 million, foreign exchange losses taken directly to reserves of 22 million and actuarial losses of 23 million, partially offset by the attributable profit after tax before exceptional items of 32 million. The foreign currency losses arose mainly as a result of the strengthening of the US dollar against the currencies in which Coats' assets are denominated. The funding position of the Coats UK Pension Plan is specifically dealt with in more detail under 'Pensions'.
A full review of the year for Coats and its financial position is included in a separate section of this report.
Two issues of capital notes remained outstanding at the commencement of 2012. Notice of early repayment of the notes with an initial election date of 15 December 2013 was given in September 2011 and this issue, with a principal value of NZ$77 million ( 39 million), was purchased on 15 March 2012. The remaining capital notes having an initial election date of 15 November 2012 and a principal value of NZ$350 million ( 178 million) were repurchased on that date. There are, therefore, now no outstanding capital notes.
The carrying values of the Coats UK Pension Plan ("Coats Plan"), Coats' other employee benefit obligations and the two GPG pension schemes: Brunel and Staveley ("the GPG Pension Schemes") on an IAS19 financial reporting basis (which, irrespective of assets held, requires the liabilities to be discounted using the yield on high quality corporate bonds; which in the UK is generally taken to be those with a AA credit rating) are summarised in the table below:
31 December 2012 31 December 2011 IAS19 deficit m m Coats Plan 161 161 Other Coats net employee benefit obligations 46 40 Total Coats net employee obligations 207 201 Brunel 38 31 Staveley 36 34 Total million 281 266 Total NZ$ million 551 522
As previously acknowledged, these accounting outcomes have a significant impact on the balance sheet of GPG. While the accounting presentation has its place, it only reflects the particular circumstances at the reporting date. Discount rate changes and temporary movements in markets can give rise to large fluctuations in scheme accounting surpluses and deficits and the measurement is based on very prescriptive rules. In judging the commercial impact of the schemes on the Group, the Board places greater emphasis on the cash contributions required by the respective funding arrangements. Changes to these contribution plans are generally driven by the triennial valuation process. The current status of the funding arrangements for GPG's three UK schemes is as follows:
o as announced in July 2012, the April 2011 funding valuation of the Staveley scheme was agreed during the year and the sponsor company is now making regular contributions. The deficit on the funding basis was 20 million and, taking into account the scheme actuary's assumptions on future investment returns, this is in the process of being made good. A one-off payment was made in July 2012 of 5 million from which point monthly contributions of 0.1 million over eight years commenced; o negotiations over the Coats Plan valuation as at April 2012 continue and management expects these to be concluded during the first half of 2013. The last valuation of the Coats Plan (as at April 2009) resulted in a funding deficit of 101 million (NZ$198 million) which Coats agreed to make good by contributions of 7 million (NZ$14 million) per annum over a period of ten years. It is anticipated, when the 2012 valuation is finalised, that contributions in respect of past service will increase by approximately 7 million per annum to some 14 million per annum; o no contributions are currently being made to the Brunel pension scheme and the next triennial valuation (effective date 31 March 2013) is due to be completed by 30 June 2014. Given the Company's current value realisation programme and a likely funding deficit at 31 March 2013, the Trustee and the Companyare engaged in discussions regarding the continuing form of support for that scheme.
The accounting standard dealing with employee benefits (IAS19) has been revised and that revised standard will be adopted by GPG from 1 January 2013. This will have a significant impact on the consolidated income statement from 2013 onwards, although there will be no impact on the Group's net defined benefit obligation nor cash flow. The key impacts on the consolidated income statement will be from the replacement of expected returns on plan assets and liabilities with an interest charge derived from the prior year discount rate and the net defined benefit asset or liability at the beginning of the current year and the recognition in operating profit of pension scheme administration costs paid out of plan assets. Had the amended IAS19 been applied in 2012, the estimated full year impact would have been a reduction in operating profit of 5 million and an increase in net interest costs of 22 million. This would have led to a corresponding improvement of 27 million in the actuarial loss arising within reserves. The additional charges primarily relate to the UK pension schemes and, consequently, the associated tax relief recognised in the income statement would be minimal.
The Board continues to develop its plans for how to manage the obligations to the GPG Pension Schemes in the context of the GPG value realisation strategy and the re-launch of Coats. The agreement of the Staveley funding valuation, including the backing of some 70 million in net assets as at 31 December 2012, was a positive step in this process. Furthermore, based on advice received, the Board believes that the Group's obligations to the Brunel scheme are limited to the covenant directly provided by its sponsor company; this represents 54 million. Thus, the current support provisions provide the Trustees of the GPG Pension Schemes with a contingent claim over net assets of approximately 124 million (NZ$243 million).
As reported previously, the Board intends that the support currently provided by GPG to back the GPG Pension Schemes should be maintained. As a result, it is expected that investment portfolio realisation proceeds equivalent to at least 124 million (NZ$243 million) will be required to be retained by the GPG group and will not be available for distribution to shareholders.
Further details in respect of Coats' non-UK employee benefit obligations are provided in the attached report from Coats.
Net operating expenses arising in the 2012 financial year of 21 million for the Parent Group are further analysed as follows:
2012 2011 m m One-off advisors' fees relating to the strategic review and return of capital - 9 Cost of redundancies arising in the year 1 2 Other staff incentives 6 6 Other operating costs - Staff costs 5 7 - Non-executive directors' fees 1 1 - Legal & professional fees 3 4 - Bank facility fees 1 2 - Property costs 2 2 - Legacy costs 1 - - Other 1 2 Total million 21 35 Total NZ$ million 41 69
The other staff incentives represent the cost of staff retention and reward programmes and future redundancies. As previously reported, these costs are in part dependent on the outcome of the investment portfolio realisation programme. The estimated cost is being spread over the period the related services are being provided. Following the announcement in October 2012 of the transition to New Coats, work streams have been established to ensure the efficient rundown of GPG's corporate offices and the migration of administration responsibility to the Coats management team. Later in 2013, this is likely to involve a merger of all activities with those of Coats. There were, at the year end, 15 permanent members of staff other than Directors within the Parent Group: 3 investment professionals, 9 covering finance, company secretarial and administration; and 3 support staff.
All decisions relating to capital management are taken by the Board with the intention of achieving the best overall value for shareholders. The Group has been running an on-market share buyback programme since September 2012. As at 22 February 2013, shares with a market value of 34 million (NZ$67 million) had been acquired leaving up to a further 36 million (NZ$71 million) to be purchased, subject to shareholder appetite. There are no plans for a final or interim dividend at this time. Further capital management initiatives will be outlined to shareholders at or prior to the forthcoming Annual General Meeting of shareholders.
At the year end the Parent Group cash was held in the following currencies:
The policy of migrating surplus funds into NZD is being continued. The slight fall in the absolute level of NZD funds during 2012 is in part due to the purchase of the two tranches of outstanding capital notes and the cost of servicing them prior to acquisition.
Board Changes and Corporate Governance
On 19 January 2012, Scott Malcolm was appointed an independent Non-Executive Director of the Company. The Board comprises five Non-Executive Directors, of whom three are considered to be independent. This composition is in line with the UK Corporate Governance Code issued by the UK Financial Reporting Council and provides a board of appropriate calibre and experience to pursue the current strategy, while at the same time providing a suitable corporate governance framework. In addition, the Board has the appropriate committee structures and procedures, including a board performance review. The constitution of the Board is currently under review and changes are planned as part of the Coats transition.
Annual General Meeting
The Annual General Meeting is intended to be held on Thursday, 23 May 2013 in Auckland. Further details of the exact location and timing of the meeting will be provided in the Notice of Meeting which GPG intends to send to shareholders in April 2013.
I should like to thank the management team and staff of GPG and Coats, who have all contributed to GPG's achievements in 2012, and to their commitment to enhancing value for all GPG shareholders.
Rob Campbell Chairman 27 February 2013
Note: All amounts stated in NZ$ are for illustrative purposes only, based on the NZ$ : GBP exchange rate on 31 December 2012, NZ$1.9621 : 1.00.
Summary and highlights
2012 2011 Before exceptional items Exceptional items** Total Before exceptional items Exceptional items** Total Unaudited * Unaudited * Unaudited * Unaudited * Unaudited * Unaudited * US$m US$m US$m US$m US$m US$m Revenue 1,653.4 1,653.4 1,701.6 1,701.6
Profit/(loss) before taxation 111.3 (167.5) (56.2) 136.2 (12.0) 124.2
Net profit/(loss) attributable to GPG 50.6 (163.6) (113.0) 81.1 (9.9) 71.2
Net cash inflow from normal operating activities*** 171.8 150.3
*see note 1 to the Coats financial information - basis of preparation **see Coats consolidated income statement ***see note 6 to the Coats financial information All figures included in this document are at actual exchange rates, unless otherwise stated Coats Group Chief Executive's review
I am pleased to report that Coats' underlying results for the year are in line with market expectations and demonstrate encouraging progress in strengthening our foundations for future growth. This robust performance was underpinned by Coats' position as a global market leader with presence in a broad range of end markets and geographies.
Full year sales of $1,653.4 million (2011 - $1,701.6 million) and a pre-exceptional operating profit of $127.0 million (2011 - $143.6 million) were achieved in 2012 despite, as anticipated, market conditions remaining challenging. At constant exchange rates, which give the best view of underlying performance, full year sales increased by 2%. After a weaker first half driven by customer destocking and raw material cost increases, the second half saw improvement versus both the second half of 2011 and the first half of 2012. Sales in the second half increased by 4% year-on-year at constant exchange rates. Second half pre-exceptional operating profit showed a marked improvement on the prior year with growth of 16% at constant exchange rates and operating margins rising from 7.2% to 8.0%. Post exceptional items, the operating loss for the year was $4.7 million (2011 - $131.6 million profit).
The business achieved an increased level of cash conversion, with the net cash inflow from normal operating activities increasing to $171.8 million (2011 - $150.3 million) and free cash flow (excluding the $174.8 million European Commission fine payment) increasing from $18.0 million to $44.8 million. This was after reorganisation spend of $21.4 million (2011 - $13.7 million) and capital spend of 0.7 times (2011 - 0.9 times) depreciation. Year end net working capital as a percentage of sales reduced from 17.6% to 17.1% at constant exchange rates.
Attributable profit for the year, however, was significantly impacted by $120.4 million of exceptional operating and finance charges (in excess of the provision held at 31 December 2011) in respect of the European Commission fine, following the European General Court's decision in June 2012, and accelerated reorganisation costs of $24 million.
Operating results Despite a stronger second half, sales for the year at actual exchange rates were 3% down on 2011 and pre-exceptional operating profit was 12% down. Year-on-year comparisons were negatively impacted by the very strong first half for the Coats Group in 2011 and currency fluctuations also had an adverse impact. However, in the second half of the year, the year-on-year sales growth of 4% and the pre-exceptional operating profit increase of 16% ($9.3 million) at constant exchange rates demonstrate an improving performance, albeit against a softer 2011 comparable period.
Sales per working day (at constant exchange rates) for the Coats Group were 2% up on 2011. Sales per working day for the Industrial and Crafts Divisions were up 1% and 7% respectively.
COATS GROUP Full year 2012 reported $m Full year 2011 reported $m Full year 2011 like-for-like * $m Reported increase/(decrease) Like-for-like increase/(decrease) Full year First half Second half Full year First half Second half Sales 1,653.4 1,701.6 1,618.2 -3% -5% -1% +2% +1% +4%
Operating margin ** 7.7% 8.4% 8.4% -70bps -240bps +80bps -70bps -230bps +80bps *2011 like-for-like restates 2011 figures at 2012 exchange rates **Pre reorganisation, impairment, and other exceptional items (see note 2 to the Coats financial information)
Post exceptional items, the operating loss for the year was $4.7 million (2011 - $131.6 million profit).
Industrial Industrial divisional sales are largely driven by underlying demand for clothing and footwear in developed economies as well as changes in inventory levels in the related retail supply chains. Demand over the year has been impacted by uncertain economic conditions, particularly in Europe, and by tight inventory control by clothing and footwear retailers. In addition, Industrial sales in Latin America were impacted by a deteriorating economic situation in the key Brazilian market, with local apparel and footwear production being replaced by imports. The division operates across a wide range of markets and, as a result, currency fluctuations can have a significant impact on sales. Sales for the year fell by 4% at actual exchange rates, reflecting the strength of the US dollar against currencies such as the Brazilian real, the Indian rupee and the euro, but grew by 1% at constant exchange rates. Although profitability for the full year for the division was 6% down on 2011 at constant exchange rates, profitability on that basis for the second half was 14% up year-on-year.
Crafts Crafts divisional sales benefitted from expanded shelf space won with large retail customers and strong growth in handknittings. Divisional sales increased by 1% at actual exchange rates and by 6% at constant exchange rates. However, there was pressure on margins across the division both from changes in product mix and the impact of raw material input costs incurred in the second half of 2011 flowing through into the income statement in the first half of 2012. Profitability for the Crafts Division for the full year was 10% down on 2011 at constant exchange rates, but improved 35% year-on-year in the second half due to the effect of price increases implemented across both regions. In Europe, the Middle East and Africa ("EMEA"), although the consumer environment was weak overall, sales were encouragingly up 5% on a like-for-like basis after years of decline. At actual exchange rates, EMEA Crafts sales of $167.7 million were $3.1 million down on 2011 but operating losses improved, being $4.4 million lower than the prior year.
Further details on Industrial and Crafts performance on a constant exchange rate basis are included in the Operating Review.
Over the course of 2012, investment continued to be made to support the growth of the business and to improve its operational performance.
Investment in new plant and IT systems amounted to $38.8 million (2011 - $50.5 million), representing 0.7 times (2011 - 0.9 times) depreciation (including computer software amortisation) of $52.8 million (2011 - $57.0 million). This capital expenditure was focused on the Industrial Division, including capacity and productivity improvements in Asia, and supporting growth initiatives across Coats, including investment to support Coats' digital strategy.
Reorganisation costs of $39.9 million (2011 - $14.6 million) were incurred during the year, of which approximately $24 million related to the accelerated programme to bring forward projects originally planned for future years. The focus of reorganisation in 2012 has been on: o restructuring low operating margin Crafts business in EMEA to reduce fixed costs and drive improved profitability; and o rationalisation of the EMEA zips business to enhance operational efficiency.
The further refocusing of EMEA Crafts is expected to have an adverse effect on turnover due to the elimination of unprofitable areas of activity, but should support improvements to operating performance.
Prospects The global economy is likely to remain mixed and uncertain during 2013. While some modest economic growth can be expected in North America and growth in Asian markets should remain relatively strong, activity in EMEA is likely to be subdued. It is expected that raw material costs will continue to trend marginally upwards, and payroll and other inflationary pressures will be a feature in many of the countries in which Coats operates.
Year-on-year improvement in Industrial sales is expected during 2013, with contributions from both price and volume. Passing on cost increases via price rises remains an important factor in maintaining profitability. Underlying demand for clothing and footwear from consumers is expected to remain stable during the year and the expectation is that there will not be further material reductions in retailer inventories. Growth is expected in the speciality (non-apparel and footwear) markets, which continue to grow globally.
The Crafts Division achieved sales growth of 6% in 2012 at constant exchange rates and, while the reorganisation activity will deliver an improvement in profitability, it is expected that continued high customer inventory levels in Brazil will dampen growth in Latin America, contributing to year-on-year sales growth being more limited. Further improvement in margins is anticipated in the second half as the benefits of price increases being implemented in the first half of 2013 and European cost reductions begin to take effect. As referred to above, the further rationalisation of the EMEA Crafts business in 2013 will adversely impact sales growth as non-core product ranges are exited, but should facilitate improved operating results.
Restructuring activity in 2013 is expected to be in line with that set out in GPG's November 2012 Interim Management Statement, which noted that reorganisation charges in total for 2012 and 2013 were projected to be up to $75 million. This accelerated programme brings forward projects planned for future years, however, overall net cash outflows on these accelerated projects are expected to be largely offset by disposal proceeds (before tax) of some $50 million from surplus properties.
Coats occupies a strong position as a market leader with a robust and defendable business model and stable operating margins, even in challenging market conditions. The company operates on a truly global basis with its own well-known brands and has deep and long-standing relationships with the leading retailers and manufacturers in apparel and footwear, speciality customers, crafts retailers and consumers.
The business is focused on accelerating profitable and cash generative growth across its three discrete end markets - apparel and footwear, speciality and textile crafts. These markets, together with an unparalleled geographic footprint, ensure that Coats is well hedged, both geographically and through sector diversification.
The business has well-invested operations in more than 70 countries, together with a highly engaged workforce of more than 20,000 people across six continents.
Coats' growth strategy is underpinned by a pioneering history and culture and the business continues to show industry leadership: providing complementary and value added products and services to the apparel and footwear industries; extending the crafts offer into new markets and online; and applying innovative techniques to develop products in new areas such as tracer threads, aramids and fibre optics.
Coats has seen a period of substantial investment by GPG in developing a world class manufacturing footprint and, more recently, in new product development, digital technology and other enabling assets. We are confident that these actions will sustain and build Coats' market leadership, revenue and profit growth.
Paul Forman Group Chief Executive, Coats plc
27 February 2013
Industrial Trading Performance INDUSTRIAL Full year 2012 reported $m Full year 2011 restated*** $m Full year actual decrease
% Full year 2011 like-for-like* $m Like-for-like increase/(decrease) Full year % First half % Second half % Sales Asia and Rest of World 624.8 633.1 -1% 609.1 +3% 0% +6% Americas 295.8 321.1 -8% 304.1 -3% -2% -3% EMEA 254.1 273.6 -7% 254.4 0% -1% +1% Total sales 1,174.7 1,227.8 -4% 1,167.6 +1% -1% +2%
Pre-exceptional operating profit**
110.8 124.3 -11% 117.9 -6% -21% +14% Operating margin** 9.4% 10.1% -70bps 10.1% -70bps -230bps +100bps *2011 like-for-like restates 2011 figures at 2012 exchange rates **Pre reorganisation, impairment, and other exceptional items (see note 2 to the Coats financial information) *** In line with changes in 2012 to the Coats Group's internal management structure, results for Crafts Asia and Rest of World are now reported in the Industrial Division, and the comparative figures for 2011 and first half 2012 have been restated accordingly In the following commentary, all comparisons with 2011 are on a like-for-like basis Asian sales growth of 3% for the year as a whole was impacted by weak demand in European end-user markets. However, sales growth of 6% was achieved in the second half, with benefits from volume growth in segments catering to domestic rather than export demand in territories such as India, as domestic markets continue to expand. Coats' long-standing relationships with global apparel and footwear suppliers and brand owners continue to help underpin the business.
Sales in the Americas were impacted by the poor economic situation in Latin America. In the key market of Brazil, notwithstanding some currency depreciation during the year, local apparel and footwear production continued to be replaced by imports. In North America, there was good sales growth in speciality segments such as fibre optics and aramids, but this was offset by significant reductions in the defence sector.
In EMEA, consumer demand was weak throughout 2012 and the first half was also impacted by retailers exercising caution in terms of inventory management.
For the full year, pre-exceptional operating profits for the Division were 6% lower than 2011 at like-for-like exchange rates. The 14% improvement in profitability in the second half reflects sales growth, easing of raw material price increases and improving gross margins, plus the benefit of soft comparatives in 2011 when a contraction of customer inventory levels in the second half impacted profits. Operating profit margin in the second half improved from 9.0% in 2011 to 10.0%.
Crafts Trading Performance CRAFTS Full year 2012 reported
$m Full year 2011 restated***
$m Full year actual increase/ (decrease) % Full year 2011 like-for-like*
16.2 19.3 -16% 18.1 -10% -36% +35% Operating margin** 3.4% 4.1% -70bps 4.0% -60bps -200bps +70bps *2011 like-for-like restates 2011 figures at 2012 exchange rates **Pre reorganisation, impairment, and other exceptional items (see note 2 to the Coats financial information) *** In line with changes in 2012 to the Coats Group's internal management structure, results for Crafts Asia and Rest of World are now reported in the Industrial Division, and the comparative figures for 2011 and first half 2012 have been restated accordingly In the following commentary, all comparisons with 2011 are on a like-for-like basis Sales growth of 7% in the Americas in 2012 reflects volume increases achieved through gains in shelf space with large retail store customers in North America. This growth was achieved in both handknittings and consumer sewings. However, Latin America's performance was adversely impacted by customer overstocking in handknittings from 2011, followed by a warm winter in 2012.
The overall EMEA crafts market remained weak, particularly traditional consumer sewings in Southern Europe, where austerity measures and cuts in public spending continue to dampen consumer confidence. However, there was strong demand for handknittings, the largest product category, which led to sales growth of 5% for the year after years of decline. The continued focus on digital channels, class-leading product ranges and service levels gave additional sales impetus and supported the very positive EMEA sales growth in the second half of the year. The further rationalisation of the business in 2013 will adversely impact top line sales, but should facilitate improved operating results before exceptional charges.
Pre-exceptional operating profits for the division for the full year were 10% lower than 2011. The 35% improvement in profitability in the second half reflected the impact of price increases implemented across all regions during the first half of 2012 and volume growth, as well as the easing of the impact of raw material price increases in the second half. Operating profit margin in the second half improved from 2.8% in 2011 to 3.5%, notwithstanding adverse changes in product mix. However, the profit of the division continued to be held back by losses in EMEA, which are being addressed by the previously referred to accelerated reorganisation activity.
Coats Group Finance Review Exceptional items Net exceptional costs charged to profit before taxation totalled $167.5 million (2011 - $12.0 million), of which $120.4 million (2011 - $1.0 million credit) related to the European Commission fine.
In June 2012, the European General Court dismissed Coats' appeal against the EUR110.3 million fine imposed by the European Commission in 2007. An exceptional charge of $120.4 million was incurred in the year to recognise the previously unprovided element of the fine and interest accrued from the date of the original European Commission decision in 2007. Within the consolidated income statement, $84.6 million represents an exceptional item within operating profit and $35.8 million represents an exceptional item within finance costs. Coats refinanced its senior debt facilities in October 2011, making allowance for the possibility of an unfavourable judgment. It therefore had adequate banking facilities in July 2012 to enable it to settle the fine and associated interest.
Coats is subject to a lawsuit in the US that followed on from the original decision by the European Commission. While that decision focused on conduct in the European Union relating to fasteners, the consolidated class action complaint filed by US plaintiffs in the Eastern District of Pennsylvania against Coats and three other manufacturers makes allegations under US antitrust laws relating to sales of zippers and other fasteners from January 1991 until September 2007 in the US. Coats considers that the plaintiffs' case is without merit and is vigorously defending it.
A further $47.1 million (2011 - $13.0 million) of operating exceptional items have been incurred, including reorganisation costs of $39.9 million (2011 - $14.6 million) and $8.0 million (2011 - $2.5 million) of US environmental costs. As noted in previous reports, the US Environmental Protection Agency has notified Coats & Clark, Inc. ("CC") that it is a potentially responsible party under the US Superfund law for investigation and remediation costs at the Lower Passaic River Study Area ("LPRSA") in New Jersey, in respect of an alleged predecessor's former facilities which operated in that area prior to 1950. CC has joined a Cooperating Parties Group ("CPG") of approximately 70 potentially responsible parties that have agreed to fund the study of the LPRSA. During the year, the members of the CPG, including CC, also agreed to fund the remediation of part of the LPRSA, and CC's interim allocation of the cost of this remediation is estimated at approximately $0.7 million. The $8.0 million charge is primarily connected with this, CC's latest estimated share of LPRSA study costs, and associated legal and consultancy costs (see note 2 to the Coats financial information for further details).
Non-operating results Investment income was $2.6 million (2011 - $7.3 million), with the differential largely due to $4.1 million compensation received in 2011 in relation to a compulsory state financing arrangement in Latin America in the 1980s and 1990s.
Excluding exceptional items, finance costs of $19.4 million were $2.6 million higher than in 2011, primarily due to a $2.0 million lower net return on pension scheme assets and liabilities. The impact of payment of the European Commission fine on overall finance costs is not significant given that, during the period of the appeal, guarantees (with an associated finance cost) were provided to the European Commission for the full amount of the fine plus interest.
A tax charge of $46.6 million (2011 - $45.6 million) has been incurred. Excluding all exceptional items plus any associated tax effect and prior year tax adjustments, the effective tax rate on pre-tax profits of $111.3 million (2011 - $136.2 million) is 46% (2011 - 35%). The increase in the underlying tax rate reflects the lower profitability in Latin America. No tax relief is available on the European Commission fine and associated interest.
The $2.7 million loss from discontinued operations (2011 - $1.8 million) primarily relates to provisioning for historical UK employer liability claims.
The net loss attributable to GPG was $113.0 million (2011 - $71.2 million profit). Excluding exceptional items and their associated tax effect, the Coats Group generated a net profit of $50.6 million (2011 - $81.1 million).
EBITDA (defined as pre-exceptional operating profit before depreciation and amortisation) was $179.8 million (2011 - $200.6 million).
The net cash inflow from normal operating activities improved to $171.8 million (2011 - $150.3 million). This reflects a net working capital inflow of $7.0 million (2011 - $29.5 million outflow) generated by lower inventory levels and improvements in creditor terms.
Spend on reorganisation and capital projects totalled $60.2 million (2011 - $64.2 million) representing 1.1 times (2011 - 1.1 times) depreciation.
Interest (excluding the exceptional interest of $35.8 million) and tax paid totalled $62.6 million (2011 - $60.7 million).
Excluding the $174.8 million payment of the European Commission fine and associated interest, a free cash flow (being the change in net debt resulting from cash flows) of $44.8 million (2011 - $18.0 million) was generated which would have resulted in net debt reducing from $238.4 million at the 2011 year end to $192.8 million. Including the impact of the fine and associated interest payment, net debt in fact increased to $367.6 million.
A key metric for the Coats Group is the leverage ratio of net debt to EBITDA. Under the definitions of net debt and EBITDA prescribed in Coats' senior debt facility, net debt at 31 December 2012 was 2.1 times EBITDA (2011 - 2.1 times); well within Coats' covenant limits of 3.0 times.
Equity shareholders' funds fell from $233.7 million at the end of 2011 to $77.9 million. This primarily reflects the $113.0 million attributable loss and a $35.9 million actuarial loss taken directly to reserves in respect of all of the Coats Group's retirement benefit arrangements.
Pension and other post-employment benefits
Coats' UK scheme has been commented on within the GPG Chairman's statement.
At 31 December 2012, Coats' US scheme showed a gross surplus of $78.0 million (2011 - $72.1 million) and a recoverable surplus of $37.3 million (2011 - $33.7 million). An employer contribution holiday for this scheme continues to be taken based on actuarial advice. The recoverable surplus for this scheme is predominantly included in non-current assets.
There are various pension and leaving indemnity arrangements in other countries (primarily in Europe) where the Coats Group operates. The vast majority of these schemes, in line with local market practice, are not funded but are fully provided in the Coats Group financial information and are predominantly included in current and non-current liabilities.
APPENDIX GUINNESS PEAT GROUP plc
Net Proceeds from portfolio divestments from 1 January 2011 to 22 February 2013
million NZ$ million 2011 Disposals CSR Chrysalis 43 15 84 29 Pertama 13 26 Alinta Energy (now Redbank Energy) 11 21 Marshalls 6 12 Maryborough SF 6 12 NIB Holdings 5 9 99 193 Disposals less than 5 million, dividend receipts and other investment activity 45 89 Total generated in the period 144 282
Year ended 31 December 2012 2011 IFRS IFRS Unaudited Unaudited Unaudited Unaudited Unaudited Audited * m m m m m m Coats Other Total Coats Other Total Continuing Operations Revenue 1,043 - 1,043 1,059 - 1,059 Cost of sales (755) - (755) (687) - (687) Gross profit 288 - 288 372 - 372
Attributable to: EQUITY HOLDERS OF THE PARENT (72) 69 (3) 44 (43) 1 Non-controlling interests 5 (2) 3 4 (8) (4) (67) 67 - 48 (51) (3) (Loss)/earnings per Ordinary Share from continuing and discontinued operations: Basic & diluted (0.15)p 0.03p
(Loss)/earnings per Ordinary Share from continuing operations: Basic & diluted (6.15)p 0.14p * Restated to reflect the results of Gosford Quarry Holdings Ltd, Touch Holdings Ltd, CIC Australia Ltd and Parent Group investment operations as discontinued operations. Guinness Peat Group plc financial information
Consolidated Statement of Comprehensive Income
Year ended 31 December 2012 2011 IFRS IFRS Unaudited Audited m m
LOSS FOR THE YEAR - (3)
Losses on revaluation of fixed asset investments (13) (27) Losses on cash flow hedges (3) (5) Exchange losses on translation of foreign operations (14) (23) Actuarial losses on retirement benefit schemes (39) (214) Tax on items taken directly to equity 4 9 Net loss recognised directly in equity (65) (260)
Transfers Transferred to profit or loss on sale or of fixed asset investments (40) (43) Transferred to profit or loss on sale of businesses (39) (3) Transferred to profit or loss on cash flow hedges 3 4 (76) (42)
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (141) (305)
Attributable to: EQUITY HOLDERS OF THE PARENT (143) (301) Non-controlling interests 2 (4)
Guinness Peat Group plc financial information
Consolidated Statement of Financial Position 2012 2011 IFRS IFRS 31 December Unaudited Audited m m NON-CURRENT ASSETS Intangible assets 160 169 Property, plant and equipment 226 303 Investments in associated undertakings - 186 Investments in joint ventures 9 62 Fixed asset investments 2 203 Deferred tax assets 9 12 Pension surpluses 21 20 Trade and other receivables 13 10 440 965
CURRENT ASSETS Inventories 191 216 Trade and other receivables 190 217 Current asset investments 10 10 Derivative financial instruments 2 2 Cash and cash equivalents 322 276 715 721
Assets held for sale 273 215
TOTAL ASSETS 1,428 1,901
CURRENT LIABILITIES Trade and other payables 220 250 Current income tax liabilities 10 5 Capital notes - 214 Other borrowings 27 50 Derivative financial instruments 4 6 Provisions 46 63 307 588
NET CURRENT ASSETS 408 133
Liabilities directly associated with assets held for sale 37 94
Consolidated Statement of Financial Position (continued)
31 December 2012 2011 IFRS IFRS Unaudited Audited m m EQUITY Share capital 78 81 Translation reserve 89 139 Unrealised gains reserve 14 64 Capital reduction reserve 118 118 Other reserves 112 109 Retained earnings 23 91 EQUITY SHAREHOLDERS' FUNDS 434 602 Non-controlling interests 24 64 TOTAL EQUITY 458 666
Net asset backing per share 27.73p 37.10p
Guinness Peat Group plc financial information
Consolidated Statement of Changes in Equity
Year ended 31 December 2012
Share Unrealised Capital Non- Share premium Translation gains reduction Other Retained controlling capital account reserve reserve reserve reserves earnings Total interests m m m m m m m m m
Balance as at 1 January 2011 91 62 165 124 - 270 281 993 69
Total comprehensive expense for the year - - (26) (60) - (1) (214) (301) (5) Return of capital (11) (63) - - 118 (161) 37 (80) - Dividends - - - - - - (18) (18) (4) Scrip dividend alternative 1 (1) - - - - 6 6 - Other share issues - 2 - - - - - 2 - Share based payments - - - - - 1 - 1 - Dilution of investments in subsidiaries - - - - - - (1) (1) 4
Balance as at 31 December 2011 81 - 139 64 118 109 91 602 64
Total comprehensive expense for the year - - (50) (50) - - (43) (143) 2 Share buy-backs (3) - - - - 3 (25) (25) - Dividends - - - - - - - - (4) Disposal of subsidiaries - - - - - - - - (38)
Balance as at 31 December 2012 78 - 89 14 118 112 23 434 24
Guinness Peat Group plc financial information
Consolidated Statement of Cash Flows
Year ended 31 December 2012 2011 IFRS IFRS Unaudited Audited m m
Cash inflow/(outflow) from operating activities Net cash inflow from operating activities** 134 203 Interest paid (58) (39) Taxation paid (24) (28) Net cash generated by operating activities 52 136
Cash inflow/(outflow) from investing activities Dividends received from joint ventures 6 13 Capital expenditure and financial investment (27) (38) Acquisitions and disposals ** 193 (1) Net cash generated by/(absorbed in) investing activities 172 (26)
Cash outflow from financing activities Net buy-back/capital return of Ordinary Shares (24) (78) Equity dividends paid to the Company's shareholders - (12) Dividends paid to non-controlling interests (5) (4) Net decrease in borrowings (142) (45) Net cash absorbed in financing activities (171) (139)
Net increase/(decrease) in cash and cash equivalents 53 (29) Cash and cash equivalents at beginning of the year 259 287 Exchange (losses)/gains on cash and cash equivalents (1) 1 CASH AND CASH EQUIVALENTS AT END OF THE YEAR 311 259
Cash and cash equivalents per the Consolidated Statement of Financial Position 322 276 Bank overdrafts (11) (17) CASH AND CASH EQUIVALENTS AT END OF THE YEAR 311 259
Summary of net debt
- Parent Group * cash 243 200 - Capital notes - (214) - Parent Group net cash/(debt) 243 (14) - Other group cash 79 76 - Other group debt (305) (266)
Total group net cash/(debt) 17 (204)
* Parent Group comprises the Group's central investment activities.
** Acquisitions and disposals include the proceeds of sale of Parent Group operating subsidiary and associated undertakings and joint ventures. Proceeds of sale of other Parent Group fixed and current asset investments are included within net cash inflow from operating activities.
Guinness Peat Group plc
NOTES TO FINANCIAL INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2012
1. The preliminary financial information ("the financial information") set out in this report is based on GPG's unaudited consolidated financial statements, which are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, and complies with the disclosure requirements of the Listing Rules of the UK Financial Services Authority and the Listing Rules of the Australian Securities Exchange. The accounting policies adopted by the Group have been applied consistently to all periods presented.
2. The financial information set out in this report does not constitute the GPG Group's statutory accounts for the years ended 31 December 2012 and 2011. Other than the restatement of the Consolidated Income Statement to reflect Gosford Quarry Holdings Ltd ("Gosford"), Touch Holdings Ltd ("Touch"), CIC Australia Ltd ("CIC") and Parent Group investment operations as discontinued operations, the financial information for the year ended 31 December 2011 is derived from the statutory accounts for that year, which have been filed with the Registrar of Companies. The audit report on those accounts did not contain a statement under Sections 498(2) or 498(3) of the Companies Act 2006. The audit opinion contained in that report was unmodified but contained an emphasis of matter paragraph drawing attention to the significant uncertainty surrounding the ultimate outcome of the appeal by Coats plc against the European Commission competition fine of EUR110.3 million. The outcome of this appeal is now known and has been reflected in the unaudited results for the year ended 31 December 2012. The audit of the statutory accounts for the year ended 31 December 2012 is not yet complete. Those accounts will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
Whilst the financial information included in this report has been compiled in accordance with the recognition and measurement principles of applicable IFRS, this report does not itself contain sufficient information to comply with IFRS. GPG expects to publish full financial statements that comply with IFRS; these will be available to shareholders in March 2013.
At the year end the Parent Group had net cash, after purchase and cancellation of the capital notes during the year, totalling 243 million (2011: net debt 14 million). The Parent Group also has various other actual and contingent liabilities. The Board expects to be able to meet these obligations from existing resources. Further information on the net cash position of the Group is provided in the table at the foot of the Consolidated Statement of Cash Flows.
Giving due consideration to the nature of the Group's business and underlying investments, and taking account of the following matters: the ability of the Group to realise its liquid investments and to manage the timing of such liquidations; the uncertainty inherent in the capital markets in which the Group trades; the Group's foreign currency exposures; the potential requirement to provide funding to the Group's defined benefit pension schemes; and also taking into consideration the cash flow forecasts prepared by the Group and the sensitivity analysis associated therewith, the directors consider that the Company and the Group are going concerns and this financial information is prepared on that basis.
Guinness Peat Group plc
3. Group foreign exchange movements - during the year ended 31 December 2012, GPG recognised in operating profit 2 million of net foreign exchange losses (2011: 1 million net foreign exchange gains). Net foreign exchange losses of 14 million (2011: 23 million) were recognised in reserves.
4. Finance costs
2012 2011 Restated m m
Interest payable on bank loans and overdrafts (44) (21) Net finance income on pension scheme net assets 10 12 Unwinding of discount on provisions (1) - Interest payable on Capital notes (14) (18) (49) (27)
5. Tax on (loss)/profit from continuing operations
The tax charge for both years reflects the impact of unrelieved losses in certain subsidiary undertakings.
6. Associated undertakings and joint ventures
The Parent Group's associated undertakings and joint ventures at 31 December were as follows:
Australian Country Spinners Ltd na 50.0% Autologic Holdings plc na 26.2% Capral Ltd 47.4% 47.4% ClearView Wealth Ltd na 48.6% Green's General Foods Pty Ltd na 72.5% Tower Ltd 33.6% 34.1%
At 31 December 2012 the investments in Capral Ltd and Tower Ltd are included in Assets Held for Sale (note 7). Subsequent to the year end the Group sold its entire interest in Capral Ltd.
6. Associated undertakings and joint ventures (continued)
Associated Joint undertakings ventures m m At 1 January 2012 186 62 Currency translation differences (1) (1) Additions - 17 Dividends receivable (9) (5) Share of profit after tax and minorities 14 12 Impairments - (10) Transfer to non-current assets held for sale (note 7) (113) (36) Capital return - (2) Disposals (77) (28) At 31 December 2012 - 9
The remaining joint ventures at 31 December 2012 are those held by Coats.
Guinness Peat Group plc
7. Discontinued operations
In November 2012, the Board signed heads of agreement for the sale of each of Gosford, GPG's Australian quarry operator subsidiary, and Touch, its Australian electronics subsidiary. Those investments were reclassified as assets held for sale at 30 November 2012 and their results reclassified as discontinued operations for each of 2011 and 2012. The sale of each of those subsidiaries was completed in December 2012. It is the Board's expectation that CIC, its Australian property development subsidiary, and the remaining investments within the Parent Group (other than Coats), will be sold within 12 months of the balance sheet date and consequently CIC and those remaining investments, together with related assets and liabilities within the Parent Group, have been reclassified as assets (and related liabilities) held for sale at 31 December 2012, and their results reclassified as discontinued operations for each of 2011 and 2012. No opening statement of financial position has been presented for the prior year in this financial information as it is unchanged from that previously reported.
Gosford, Touch and CIC together comprise the "unallocated" business segment previously reported.
The net assets of those businesses at reclassification were as follows:
Parent Group Unallocated m m Book and carrying value Book value Impairment Carrying value
Intangible assets - 1 - 1 Property, plant and equipment 2 30 (7) 23 Associated undertakings 113 - - - Joint ventures - 46 (10) 36 Other fixed asset investments 76 - - - Inventories - 10 - 10 Deferred tax assets - 4 - 4 Trade and other receivables - 20 - 20 Cash and cash equivalents - 8 - 8 Trade and other payables - (34) - (34) Borrowings - (20) - (20) Net assets at reclassification 191 65 (17) 48
Assets classified as held for sale 191 119 (17) 102 Liabilities directly associated with assets classified as held for sale - (54) - (54) 191 65 (17) 48
The sale of Turners & Growers, which was classified as an asset held for sale at 31 December 2011, was completed in March 2012.
Guinness Peat Group plc
7. Discontinued operations (continued) The combined results of discontinued operations were as follows:
2012 2011 m m Turners & Growers Coats Parent Group Unallocated Total Total
Loss arising on measurement to fair value - - - (17) (17) (11)
Gain on disposal of businesses 23 - - 6 29 -
Gain/(loss) on discontinued operations
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows: 2012 2011 m m
Property, plant and equipment 20 102 Associated undertakings 113 - Joint ventures 36 - Other fixed asset investments 76 8 Deferred tax assets 4 - Biological assets - 16 Inventories 7 34 Trade and other receivables 14 48 Cash and cash equivalents 3 7 Assets held for sale 273 215
Trade and other payables (17) (41) Borrowings (20) (45) Deferred tax liabilities - (8) Liabilities directly associated with assets held for sale (37) (94)
Guinness Peat Group plc
8. Other investments - Fixed asset investments within non-current assets are classified in 2011 under IFRS as available-for-sale investments, and current asset investments within current assets are classified under IFRS as held-for-trading investments.
9. (Loss)/earnings per share - The calculation of basic (loss)/earnings per Ordinary Share from continuing and discontinued operations is based on (loss)/profit for the year attributable to equity shareholders of the parent and the weighted average number of 1,618,876,707 (2011: 1,715,466,321) Ordinary Shares in issue during the year.
The calculation of basic (loss)/earnings per Ordinary Share from continuing operations is based on (loss)/profit for the year from continuing operations attributable to equity shareholders of the parent and the weighted average number of 1,618,876,707 (2011: 1,715,466,321) Ordinary Shares in issue during the year.
Calculations of (loss)/earnings per Ordinary Share are based on results to the nearest '000.
10. The net tangible assets (net assets excluding intangible assets) per share at 31 December 2012 were 19.07p (2011: 30.66p).
11. Changes in the issued share capital during the year ended 31 December 2012 comprise the following:
m At 1 January 2012 81 Share buy-backs (3) At 31 December 2012 78
During November and December 2012 a total of 57,079,102 Ordinary Shares were purchased and cancelled. A further 23,480,921 Ordinary Shares were purchased in December 2012 but remained in issue at 31 December 2012.
12. Dividends - No dividends were paid or proposed during the year (an interim cash dividend of 1.15 pence per share in respect of the year ended 31 December 2011 was paid on 24 October 2011 to GPG shareholders).
13. Directors - The following persons were, except as noted, directors of GPG during the whole of the year and up to the date of this report:
R J Campbell M N Allen Sir Ron Brierley S L Malcolm (appointed 19 January 2012) B A Nixon
14. Directors' Report - The Chairman's Statement appearing in the Preliminary Results and signed by Rob Campbell provides a review of the operations of the Group for the year ended 31 December 2012.
15. Publication - This statement will be available at the registered office of the Company, First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP. A copy will also be displayed on the Company's website on www.gpgplc.com.
Coats financial information
Consolidated Income Statement (unaudited)
2012 2011 Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited For the year ended 31 December 2012 Notes US$m US$m US$m US$m US$m US$m Continuing operations Revenue 1,653.4 - 1,653.4 1,701.6 - 1,701.6
Cost of sales (1,065.0) (132.5) (1,197.5) (1,087.9) (16.1) (1,104.0)
Profit/(loss) before taxation 2 111.3 (167.5) (56.2) 136.2 (12.0) 124.2
Taxation 4 (50.5) 3.9 (46.6) (47.7) 2.1 (45.6)
Profit/(loss) from continuing operations 60.8 (163.6) (102.8) 88.5 (9.9) 78.6
Discontinued operations Loss from discontinued operations (2.7) - (2.7) (1.8) - (1.8)
Profit/(loss) for the year 58.1 (163.6) (105.5) 86.7 (9.9) 76.8
Attributable to: EQUITY SHAREHOLDERS OF THE COMPANY 50.6 (163.6) (113.0) 81.1 (9.9) 71.2 Non-controlling interests 7.5 - 7.5 5.6 - 5.6 58.1 (163.6) (105.5) 86.7 (9.9) 76.8
Coats financial information Consolidated Statement of Comprehensive Income (unaudited) 2012 2011 Unaudited Unaudited For the year ended 31 December 2012 US$m US$m
(Loss)/profit for the year (105.5) 76.8
Cash flow hedges: Losses arising during the year (4.7) (7.5) Transferred to profit or loss on cash flow hedges 5.7 6.2
Exchange differences on translation of foreign operations (7.4) (36.7) Actuarial losses in respect of retirement benefit schemes (35.9) (299.3) Tax relating to components of other comprehensive income (0.4) (0.1)
Other comprehensive income and expense for the year (42.7) (337.4)
Total comprehensive income and expense for the year (148.2) (260.6)
Attributable to: EQUITY SHAREHOLDERS OF THE COMPANY (155.8) (265.8) Non-controlling interests 7.6 5.2 (148.2) (260.6)
Coats financial information
Consolidated Statement of Financial Position (unaudited)
2012 2011 At 31 December 2012 Unaudited Unaudited Non-current assets Notes US$m US$m Intangible assets 260.1 262.1 Property, plant and equipment 366.9 393.4 Investments in joint ventures 13.4 16.1 Available-for-sale investments 3.1 2.7 Deferred tax assets 15.1 13.5 Pension surpluses 34.6 30.7 Trade and other receivables 15.1 14.6 708.3 733.1
Current assets Inventories 310.8 316.7 Trade and other receivables 309.3 305.7 Available-for-sale investments 0.2 1.0 Cash and cash equivalents 7 128.4 112.0 748.7 735.4
Non-current assets classified as held for sale 3.0 0.1
Total assets 1,460.0 1,468.6
Current liabilities Trade and other payables (347.4) (347.4) Current income tax liabilities (14.6) (7.9) Bank overdrafts and other borrowings (43.9) (60.9) Provisions (71.1) (97.8) (477.0) (514.0)
Balance as at 1 January 2011 20.5 412.1 (8.8) 27.4 48.3 499.5
Profit for the year - - - - 71.2 71.2
Other comprehensive income and expense for the year - - (1.3) (36.3) (299.4) (337.0)
Total comprehensive income and expense for the year - - (1.3) (36.3) (228.2) (265.8)
Balance as at 31 December 2011 20.5 412.1 (10.1) (8.9) (179.9) 233.7
Loss for the year - - - - (113.0) (113.0)
Other comprehensive income and expense for the year - - 1.0 (7.5) (36.3) (42.8)
Total comprehensive income and expense for the year - - 1.0 (7.5) (149.3) (155.8)
Balance as at 31 December 2012 20.5 412.1 (9.1) (16.4) (329.2) 77.9
Coats financial information
Consolidated Statement of Cash Flows (unaudited)
2012 2011 Unaudited Unaudited For the year ended 31 December 2012 Notes US$m US$m Cash inflow/(outflow) from operating activities Net cash inflow generated by operations 6 8.3 134.0 Interest paid (63.1) (20.5) Taxation paid (35.3) (40.2) Net cash (absorbed)/generated from operating activities (90.1) 73.3
Cash inflow/(outflow) from investing activities Dividends received from joint ventures 0.9 0.8 Acquisition of property, plant and equipment and intangible assets (38.8) (50.5) Disposal of property, plant and equipment and intangible assets 1.7 2.0 Acquisition of financial investments (0.5) (0.9) Disposal of financial investments 0.3 - Acquisition of businesses - (1.1) Disposal of subsidiaries (0.7) (1.0) Disposal of investments in joint ventures 2.8 - Net cash absorbed in investing activities (34.3) (50.7)
Cash inflow/(outflow) from financing activities Dividends paid to non-controlling interests (5.6) (4.6) Increase/(decrease) in debt and lease financing 151.9 (36.3) Net cash generated/(absorbed) in financing activities 146.3 (40.9)
Net increase/(decrease) in cash and cash equivalents 21.9 (18.3) Net cash and cash equivalents at beginning of the year 85.6 115.5 Foreign exchange gains/(losses) on cash and cash equivalents 2.9 (11.6) Net cash and cash equivalents at end of the year 7 110.4 85.6
Reconciliation of net cash flow to movement in net debt Net increase/(decrease) in cash and cash equivalents 21.9 (18.3) Cash (inflow)/outflow from change in debt and lease financing (151.9) 36.3 Change in net debt resulting from cash flows (130.0) 18.0 Other (2.3) (4.5) Foreign exchange 3.1 (10.0) (Increase)/decrease in net debt (129.2) 3.5 Net debt at start of year (238.4) (241.9) Net debt at end of year 7 (367.6) (238.4)
Coats financial information
1 Basis of preparation The financial information contained in this section of the report represents the unaudited results of Coats as contained within the unaudited consolidated financial information of GPG for the year end 31 December 2012 and the audited consolidated financial information of GPG for the year ended 31 December 2011.
It incorporates the consolidated results of Coats Group Limited ("CGL") as adjusted to account for the Coats capital incentive plan ("CIP"), on a basis consistent with that required to be adopted by GPG, and for the inclusion in the balance sheet both at 31 December 2011 and 2012 of $6.0 million of intangible assets held at the GPG level but which are associated with its acquisition of Coats. The CIP is operated by GPG for the benefit of certain senior CGL employees. In accordance with IFRS, this is accounted for by CGL as an equity-settled compensation plan as CGL has no obligation to settle the share-based payment. Under IFRS, equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant and this fair value is expensed on a straight-line basis over the vesting period, with a corresponding increase recognised in equity as a contribution from the parent. GPG accounts for this arrangement as a cash-settled share-based compensation plan and, in accordance with IFRS, is required to reassess the fair value of the CIP at each reporting date.
Following the market update announcement made on 25 October 2012 regarding the strategy to realise value, GPG has estimated the CIP is unlikely to have any value in its current form and has released the provision held for this arrangement. That release has been incorporated into these Coats results (see note 2).
The Board of GPG determined in 2013 that an amendment should be made to the CIP scheme to provide for an appropriate retention mechanism to reward Coats' senior management for their role in the further development of that business over the next two to three years. That amendment is yet to be formalised.
CGL is incorporated in the British Virgin Islands. It does not prepare consolidated statutory accounts and, therefore, the financial information contained in this section of the report does not constitute full financial statements and has not been, and will not be, audited, other than in so far as it is contained within the financial information of its ultimate parent company, GPG.
The financial information for the year ended 31 December 2012 has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards ("IFRS") endorsed by the European Union. The same accounting policies have been applied to the financial information presented for the year ended 31 December 2011.
The principal exchange rates (to the US dollar) used are as follows: 2012 2011
Average Sterling 0.63 0.62 Euro 0.78 0.72 Year end Sterling 0.62 0.64 Euro 0.76 0.77
Coats financial information
2 Profit/(loss) before taxation is stated after charging/(crediting): 2012 2011 Unaudited Unaudited US$m US$m Exceptional items: Cost of sales: European Commission fine and associated exchange losses/(gains) 84.6 (1.0) Reorganisation costs and impairment of property, plant and equipment and intangible assets 39.9 14.6 US environmental costs 8.0 2.5 132.5 16.1 Administrative expenses: Capital incentive plan (credit)/charge (see note 1) (2.6) 2.6 UK pension increase exchange offer - (4.0) (2.6) (1.4) Other operating costs/(income): Loss/(profit) on disposal of property 1.8 (2.7) 131.7 12.0 Finance costs: European Commission fine interest costs 35.8 - Total 167.5 12.0
As noted in previous reports, the US Environmental Protection Agency ("USEPA") has notified Coats & Clark, Inc. ("CC") that it is a potentially responsible party under the US Superfund law for investigation and remediation costs at the Lower Passaic River Study Area ("LPRSA") in New Jersey in respect of an alleged predecessor's former facilities which operated in that area prior to 1950. Approximately 70 companies to date have formed a cooperating parties group ("CPG") to fund and conduct a remedial investigation and feasibility study ("RI/FS") of the area. CC joined the CPG in 2011. The total costs of the RI/FS and related expenditures are currently estimated by the CPG to be approximately $110 million.
Under the interim allocation in place when CC joined the CPG, CC was responsible for approximately 1.7% of the total RI/FS and related costs. During the year, three companies that had shared a common allocation within the CPG - Tierra Solutions, Inc, Maxus Energy Corporation and Occidental Chemical Corporation (collectively "TMO") - withdrew from the CPG, and TMO's continued funding of the RI/FS is in question. If TMO continues to fund the RI/FS pursuant to its independent agreement with USEPA, CC's interim allocation of future RI/FS costs would remain approximately 1.7%. If TMO ceases its RI/FS funding, CC's interim allocation of future RI/FS costs would be approximately 2.2%. The interim allocation is expressly limited to the RI/FS and related expenditures, and is subject to reallocation after the RI/FS has been issued. CC believes that a final allocation will include TMO as well as additional parties not currently in the CPG.
USEPA has indicated that it expects to issue a Focused Feasibility Study ("FFS") for remediation of the lower 8 miles of the Lower Passaic River in 2013, before the CPG's RI/FS for the entire 17 mile stretch of the river is completed. At this time, Coats cannot reasonably estimate CC's potential share or a range of future costs because: (a) USEPA has not made a final remedial decision for the FFS; (b) the scope, nature and timing of the remediation is not known; and (c) the total number of parties that will participate in funding future remediation and their respective allocations are not known.
During the year, the members of the CPG, including CC, agreed to fund the remediation of one part of the LPRSA (River Mile 10.9). CC's interim allocation of the cost of this is estimated at approximately $0.7 million. The $8.0 million (2011 - $2.5 million) US environmental charge is primarily connected with this remediation, CC's latest estimated share of study costs and associated legal and consultancy costs.
CC has identified a number of insurance policies that it believes will cover some of the costs previously incurred and to be incurred in respect of this matter, and it is investigating and pursuing its rights under those policies. The availability and extent of coverage under those policies has yet to be determined, and therefore CC has not assumed any insurance recovery in calculating its environmental charge.
Coats believes that CC's predecessors did not generate any of the contaminants which are driving the current and anticipated remedial actions in the LPRSA, that it has valid legal defences that are based on its own analysis of the relevant facts, and that additional parties not currently in the CPG will be responsible for a significant share of the ultimate costs of remediation. The foregoing, as well as other mitigating factors, should result in a reduced share of any exposure for future remedial and other costs. At the present time, there can be no assurance as to the scope of future remedial action and other costs, nor can Coats predict what CC's ultimate share will be. Accordingly, no provision has been made for these costs.
3 Finance costs 2012 2011 Unaudited Unaudited US$m US$m Non-exceptional items Interest on bank and other borrowings 25.0 23.8 Net return on pension scheme assets and liabilities (14.9) (16.9) Other 9.3 9.9 19.4 16.8 Exceptional items European Commission fine interest costs (see note 2) 35.8 - Total 55.2 16.8
4 Taxation 2012 2011 Unaudited Unaudited US$m US$m UK taxation based on profit for the year: Corporation tax at 24.5% (2011: 26.5%) 3.7 3.5 Double taxation relief (3.7) (3.5) Total UK taxation - -
At 1 January 17.9 17.3 Total recognised income and expense for the year 7.6 5.2 Dividends paid (5.6) (4.6) At 31 December 19.9 17.9
6 Reconciliation of operating (loss)/profit to net cash inflow generated by operations
2012 2011 Unaudited Unaudited US$m US$m
Operating (loss)/profit (4.7) 131.6 Depreciation 47.1 49.0 Amortisation of intangible assets (computer software) 5.7 8.0 Reorganisation costs and impairment (see note 2) 39.9 14.6 Other exceptional items (see note 2) 91.8 (2.6) Decrease/(increase) in inventories 2.9 (33.6) Increase in debtors (5.3) (1.3) Increase in creditors 9.4 5.4 Provision movements (16.3) (23.2) Other non-cash movements 1.3 2.4 Net cash inflow from normal operating activities 171.8 150.3 Net cash outflow in respect of reorganisation costs (21.4) (13.7) Net cash outflow in respect of other exceptional items (142.1) (2.6) Net cash inflow generated by operations 8.3 134.0
7 Net debt
2012 2011 Unaudited Unaudited US$m US$m
Cash and cash equivalents 128.4 112.0 Bank overdrafts (18.0) (26.4) Net cash and cash equivalents 110.4 85.6 Other borrowings (478.0) (324.0) Total net debt (367.6) (238.4)